Governance

Corporate Governance

At Murata, we position corporate governance as one of our most important management focuses. Seeking to realize sound corporate growth and development while also considering all our stakeholders, we work constantly to establish and ensure the efficient functioning of optimal management systems.

Recognizing the importance of incorporating perspectives from outside the company, we first appointed Outside Statutory Auditors in 1971. In 2001, we appointed Outside Directors for the first time. More recently, we have made efforts to increase the diversity of our Outside Directors and boost the ratio of Outside Directors on our Board of Directors. Since we became a company with an audit and supervisory committee structure in 2016, Outside Directors now represent more than one-third of our Board of Directors. In addition to appointing Outside Officers, we have also worked to enhance corporate governance by progressively implementing the measures shown in the table below in order to strengthen our execution and oversight functions and increase management transparency.

Corporate Governance Guidelines (PDF: 186KB)別ウィンドウで開く

Corporate Governance Report (Submitted to the Tokyo Stock Exchange) (PDF: 501KB)別ウィンドウで開く

History of corporate governance enhancement

Changes in number of Directors

Overview of Murata’s Corporate Governance System

Corporate governance system

● Board of Directors
Murata’s Board of Directors decides on our basic direction and particularly important matters for execution and oversees the execution of duties by corporate Officers.

● Audit and Supervisory Committee
The Audit and Supervisory Committee audits our executives’ performance of their duties. Members also have the right to offer opinions regarding the appointment and remuneration of directors at General Shareholders’ Meetings.
Three of the members of the committee possess extensive knowledge in the areas of finance and accounting. We have one full-time Audit and Supervisory Committee member who shares information regarding the company’s business and financial status with the non-full-time members.

● Nomination Advisory Committee and Remuneration Advisory Committee
We have established advisory bodies for our Board of Directors to enhance the independence, objectivity, and accountability of the board’s functions in relation to the appointment and remuneration of corporate officers.
Members of these committees are directors who have been selected by the Board of Directors and must include multiple Independent Outside Directors.

● Management Executive Committee
The Management Executive Committee has been established as a deliberative body to assist decision making by the Board of Directors and the Representative Directors. It is made up of directors with special titles and members of the Board of Directors who concurrently serve as vice presidents, and is establishing a systemic framework for deliberation regarding management matters stipulated in the company’s internal regulations.

● CSR Management Committee
The CSR Management Committee has been established to promote CSR management at Murata continuously and systematically and works to ensure the entrenchment of CSR within the company and the implementation of unified CSR responses outside the company.

● Internal Control Management Committee
The Internal Control Management Committee has been established to maintain and continuously improve the systems that ensure Murata’s business procedures are conducted appropriately. It evaluates the status of establishment and operation of Murata’s internal control systems.

● Vice Presidents
To enable us to make management decisions more rapidly and execute them more flexibly, we have established a system under which vice presidents are granted responsibility and authority to execute management tasks.

Composition of the Board of Directors, etc. (as of June 26, 2020)

●:Chairman/committee chairperson 〇:Member
*Independent Outside Directors shown in red

Position Name Board of
Directors
Audit and
Supervisory
Committee
Nomination
Advisory
Committee
Remuneration Advisory
Committee
Chairman of the Board Tsuneo Murata
President Norio Nakajima
Member of the Board of Directors Hiroshi Iwatsubo
Member of the Board of Directors Yoshito Takemura
Member of the Board of Directors Masahiro Ishitani
Member of the Board of Directors Ryuji Miyamoto
Member of the Board of Directors Masanori Minamide
Member of the Board of Directors Takashi Shigematsu
Member of the Board of Directors Yuko Yasuda
Member of the Board of Directors
(Audit and Supervisory Committee Member; full-time)
Yoshiro Ozawa
Member of the Board of Directors
(Audit and Supervisory Committee Member)
Hyo Kambayashi
Member of the Board of Directors
(Audit and Supervisory Committee Member)
Takatoshi Yamamoto
Member of the Board of Directors
(Audit and Supervisory Committee Member)
Naoko Munakata

Please refer to the ESG Data Collection for information on the number of meetings and attendance rates of each meeting and committee.

To the ESG Data Collection page

Selecting “Company with an Audit and Supervisory Committee Structure” as Our Form of Governance

Murata Manufacturing has selected “Company with an Audit and Supervisory Committee Structure” as its form of corporate governance.
In a company with an audit and supervisory committee structure, the Board of Directors is able to delegate decisions regarding important matters for execution to the company’s Executive Directors. By delegating decisions on individual matters for execution, we can realize more rapid management decisions and more flexible execution. At the same time, because the Board of Directors is able to adopt a greater focus on discussion and monitoring in relation to management policy and business strategy, we believe that this organizational form also enhances the functions of our board.
In addition, Murata’s Directors who serve as Auditors have voting rights on the Board of Directors, and, asmembers of our Audit and Supervisory Committee, have the right to offer opinions regarding executive appointments and remuneration at General Shareholders’ Meetings. Given this, we believe that we have every expectation of realizing strong oversight functions, including in relation to our Executive Directors.

Analyzing and Evaluating the Effectiveness of Our Board of Directors

Once a year, we analyze and evaluate the effectiveness of our entire Board of Directors as a measure to boost its effectiveness and release an outline of the processes and results.

Analysis and Evaluation Process

We had all our directors fill in a questionnaire, and we conducted interviews with our Outside Directors. Our Board of Directors held repeated discussions based on the results of these questionnaires and interviews to analyze and evaluate efficiency.

The questionnaires and interviews confirm matters relating to the composition of the Board of Directors, matters for discussion, status of deliberations, participation of directors, and other matters relating to operation in general. Furthermore, we appointed a third party to administer, process, and analyze the questionnaires.

Analysis and Evaluation Results and Future Issues

We evaluated the effectiveness of the Board of Directors based on the results of questionnaires and analysis of and reports on interviews, considering the roles and responsibilities of the Board.

We have determined that an atmosphere enabling the free expression of opinions has been created, leading to open and constructive deliberation and exchanges of opinion.

We are also aware, however, that the following points will require additional effort in the future.

  • Comprehensive monitoring of the execution of duties in relation to management policies and business strategies
  • Increased and deeper discussion of management of business risks
  • Increased and deeper discussion of responses to ESG issues and measures addressing the SDGs
  • Enhanced supervision of the internal control systems of Group companies outside of Japan

With regard to the issues observed in the assessment results, we will continue to make efforts to enhance the effectiveness of the Board of Directors.

Nomination of Candidates for Director

Nomination Policy

Taking into consideration factors including the nature of Murata’s business and the company’s scale and management environment, we nominate candidates for board positions possessing the requisite knowledge, experience, and attributes to contribute to the realization of the functions of the Board of Directors (decision on basic management policy and important matters for execution and supervision of the execution of duties by company officers), while also considering the balance and diversity of knowledge, experience, and ability in the board as a whole.

With regard to our nomination of candidates for Outside Director, we search from a wide range of diverse fields, working to identify candidates from among individuals satisfying criteria for the judgment of independence set by the Tokyo Stock Exchange and Murata Manufacturing itself.

In particular,Regarding candidates for membership of the Audit and Supervisory Committee, in addition to the above, we nominate candidates possessing attributes that will enable them to audit the status of execution of management tasks by Executive Officers from a fair and objective standpoint and contribute to improving the soundness and transparency of management, in addition to enriching knowledge and experience in the areas of management oversight and business operation. It should also be noted that we nominate the majority of our candidates for director, who sit on the Audit and Supervisory Committee, from outside the company.

Nomination Procedures

The Nomination Advisory Committee deliberates and makes recommendations to the Board of Directors with regard to the standards for nomination of candidates for director, standards for evaluating the independence of Independent Outside Directors, nomination of candidates for director, nomination of candidates for representative director and directors with special titles, and the president succession plan.

The Board of Directors makes decisions with regard to the nomination of candidates for director based on the recommendations of the Nomination Advisory Committee. Approval must be obtained from the Audit and Supervisory Committee regarding candidates for director who are also Audit and Supervisory Committee members.

【Summary of independence criteria】

  • (1)

    Someone who is currently not an executive in Murata or its current subsidiaries or companies that have been subsidiaries of Murata within the past three years.

  • (2)

    Someone who is not a current major shareholder of Murata or an executive of a major shareholder.

  • (3)

    Someone who is not an executive of a company, etc. with which Murata or any of its current subsidiaries currently has a significant business relationship, or has had a significant business relationship within the past three years.
    *A "significant business relationship" is defined as one where Murata or its partners had transactions that accounted for 2% or more of the company's annual consolidated sales.

  • (4)

    Someone who is not an executive of an organization that has received donations or grants of more than 10 million yen per year within the past three years from Murata or its current subsidiaries.

  • (5)

    Someone who is not an executive of a company or its subsidiaries that has received a director, statutory auditor, or vice president from Murata or Murata’s current subsidiaries, or any company or subsidiary that has received such a director, auditor, or executive within the last three years.

  • (6)

    Someone who does not have, or did not have in the past, a material business relationship with Murata, such as a consulting or advisory agreement.

  • (7)

    Someone who is not an executive of Murata’s auditing firm.

  • (8)

    Someone who is not a spouse or a relative within a second degree of kinship of a director, statutory auditor, or vice president of Murata or any of Murata’s current subsidiaries.

  • (9)

    Someone who is unlikely to have a permanent and substantial conflict of interest with the general shareholders of Murata for reasons other than those considered in (1) to (8) above.

Executive Remuneration

Remuneration Policy

Murata Manufacturing’s basic policy with regard to executive remuneration is to provide remuneration that is appropriate for the top management cadre of a globally competitive manufacturer of electronic devices and components, to maintain a system and a level of remuneration that enables us to secure personnel with a comparable level of excellence to other companies in the same industry, and to boost morale and motivation in relation to improving business results, contributing to increased corporate value.

Remuneration for Internal Directors who are not members of the Audit and Supervisory Committee is made up of ① Monthly remuneration; ② Bonuses to provide short-term incentives; and ③ Share-based remuneration to provide medium- to long-term incentives and to promote a greater sharing of values between directors and shareholders.

Outside Directors who are not members of the Audit and Supervisory Committee and directors who are members of the committee receive monthly remuneration only.

Remuneration Determination Procedures

Systems and standards for the remuneration of directors are deliberated by the Remuneration Advisory Committee, which makes recommendations to the Board of Directors. The Board of Directors makes decisions with regard to the directors’ remuneration standards based on the recommendations of the Remuneration Advisory Committee.

Specifically, the amount of remuneration is calculated in accordance with the remuneration standards, and individual remuneration of directors who are not Audit and Supervisory Committee members is determined having received advice from the Remuneration Advisory Committee.

The remuneration for directors who are members of the Audit and Supervisory Committee is fixed remuneration, decided on the basis of consultation with the members of the Board of Directors who are Audit and Supervisory Committee members.

  • 1. Specifically, the amount of remuneration is calculated in accordance with the remuneration standards, and individual remuneration of directors who are not Audit and Supervisory Committee members is determined having received advice from the Remuneration Advisory Committee.

  • 2. The total amount of remuneration, etc. paid to the six Outside Directors mentioned above is 86 million yen.

  • ① Monthly remuneration:

    Fixed remuneration for each director, consisting of a fixed portion for each director and a portion that takes into account each director’s part of the business, the importance of his or her responsibilities, and the performance of the previous year.

  • ② Bonus:

    The total amount of the bonus is determined according to Murata’s performance. The key metric used to calculate the bonus is the consolidated operating income per employee, which also takes into account the cost of capital, and is used as a measure of the growth and productivity of the company. We do not set a target value as a precondition for calculating the bonus, but multiply the base amount for each position by a factor that corresponds to the actual performance value.

  • ③ Share-based remuneration:

    Restricted share-based remuneration is used to increase corporate value in the medium to long term. This is set for each director’s position and incorporates individual performance evaluations.

Internal Control System

Murata Manufacturing’s Board of Directors has formulated a basic policy regarding the establishment of a system to ensure that the company’s business is conducted appropriately (an internal control system)*.We are working on this basis to establish and operate a suitable internal control system

The Murata Group shares the Murata Philosophy as a fundamental management philosophy and, looking toward its realization, has established a basic philosophy of compliance and a Code of Conduct, which are being shared throughout the Group as a whole. We have also established regulations in relation to decision making across the entire Murata Group, including domestic and foreign affiliates. Based on these, we are consulting with our affiliates regarding their business operation, in addition to sharing a range of information related to business operation within the Group. In addition, matters that meet the criteria for submission will be submitted to the Management Executive Committee and Board of Directors for discussion and consideration.
In addition, Key Functional Staff Departments (General Administration, Personnel, Accounting, etc.) establish frameworks, procedures, and criteria for judgment in relation to each of these functions to ensure that operations are conducted appropriately and efficiently within the Murata Manufacturing Group. They also provide guidance to subsidiaries as necessary. Our internal audit department, the Office of Internal Audit, which functions as an independent body, conducts evaluations and engages in monitoring in order to ensure that procedures within the Group are conducted appropriately and efficiently, in accordance with laws and regulations, company regulations, etc.

∗For more details regarding Murata’s basic policy in relation to the establishment of an internal control system, please refer to “IV. Matters Related to Internal Control System” “1. Basic Views on Internal Control System and Progress of System Development” in the Murata Manufacturing Corporate Governance Report.