Sustainability
Corporate Governance
We continue our efforts to further improve the transparency and supervisory function of management for stronger corporate governance in order to realize our corporate philosophy.
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Basic Policies
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Corporate Governance Framework
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Nomination and Remuneration Committee
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Appointment of Directors and Audit & Supervisory Board Members
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Independence Criteria for Outside Directors and Audit & Supervisory Board Members
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Activities of Outside Directors and Audit & Supervisory Board Members in Fiscal 2023
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Remuneration for Directors and Audit & Supervisory Board Members
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Initiatives to Improve the Board of Directors’ Effectiveness
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Audit & Supervisory Board Members and Internal Audits
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Policy on Cross-Shareholding
Basic Policies
In strengthening our corporate governance, our basic policies are to protect shareholder rights and ensure their equal treatment, cooperate appropriately with non-shareholder stakeholders, ensure proper information disclosure and transparency, execute the duties of the Board of Directors, and engage in dialogue with shareholders.
Corporate Governance Framework
Fuji Electric’s corporate governance framework consists of the Board of Directors, which performs the functions of management supervision and making important decisions, and the Audit & Supervisory Board Members and the Audit & Supervisory Board, which are in charge of the management audit function, and the framework guarantees objectivity and neutrality.
The Company actively appoints Outside Directors and Audit & Supervisory Board Members that satisfy the requirements for independence, endeavors to strengthen management supervisory and auditing functions, and has established the Nomination and Remuneration Committee comprising a majority of Outside Directors as an advisory body to the Board of Directors, and the majority of its members and its chairman are Outside Directors.
In addition, in order to clarify the roles of management and execution, we have introduced an executive officer system to clarify the responsibilities for business execution. In order to continue strengthening our operating platform as a company with sustainable growth, in fiscal 2022 we appointed a Chairman of the Board and CEO and President and COO. We are endeavoring to build an effective corporate governance framework by establishing the Executive Committee, which discusses and reports on important matters related to management as an advisory body to the Chairman of the Board and CEO and President and COO, as well as other committees tasked with planning and promoting key business strategy issues and key external issues, such as legal compliance.


Nomination and Remuneration Committee
Fuji Electric has established the Nomination and Remuneration Committee as the advisory body for the Board of Directors in order to enhance the Company’s corporate governance by reinforcing the fairness, transparency, and objectivity of procedures concerning the nomination of and remuneration for Directors and Audit & Supervisory Board Members.
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Policy on the composition of the Board of Directors
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Policies and criteria regarding the appointment or dismissal of Directors, the President and Chairman of the Board of Directors, and Audit & Supervisory Board Members
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Appointment or dismissal of Directors, the President and Chairman of the Board of Directors, and Audit & Supervisory Board Members
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Matters regarding the formulation and implementation of a succession plan for the President and Chairman of the Board of Directors
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Policies and criteria regarding the remuneration of Directors and Audit & Supervisory Board Members
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Details of remuneration for Directors and Audit & Supervisory Board Members
The committee comprises at least three Directors as members, the majority of which are elected from among the Company’s Outside Directors. The chairman is elected from among the Outside Directors that sit on the committee as members.
The Nomination and Remuneration Committee met a total of four times in fiscal 2023 to discuss and report to the Board of Directors on executive remuneration, the introduction of a share-based remuneration plan, and executive personnel matters.
Appointment of Directors and Audit & Supervisory Board Members
Candidates for Directors and Audit & Supervisory Board Members are decided by taking into account such factors as the overall balance of qualifications and experience on the Board of Directors, and other viewpoints such as diversity.
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Each Director’s term of office is one year so that we maintain the management framework capable of making clear the responsibilities of management in each fiscal year and of responding quickly to changes in the business environment.
Regarding the insight and experience required for the Board of Directors of Fuji Electric, in light of the Management Policies of Fuji Electric, including “contribute to the creation of a sustainable society through our energy and environment businesses,” and our business characteristics, we have defined the seven fields of “business management,” “finance and accounting,” “global business,” “environment and society,” “R&D, technology, manufacturing, and DX,” “corporate governance, legal matters, and risks” and “marketing and industry.”
Independence Criteria for Outside Directors and Audit & Supervisory Board Members
Fuji Electric judges the applicable candidate to be fully independent from the Company when he/she does not fall under any of the conditions listed below, in addition to the criteria for independence stipulated by domestic financial exchanges, including the Tokyo Stock Exchange.
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Major shareholder
A major shareholder of the Company (who owns 10% or more of the voting rights) or its executor of business. -
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Major business partner
A business partner (consultants such as lawyers, certified public accountants, and tax accountants, as well as consulting firms such as law firms, audit firms, and tax firms) or a person executing its business whose transactions with the Company exceed 2% of the annual consolidated net sales of the Company or the other entity in the past three fiscal years. -
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Major lender, etc.
A financial institution, other major creditor, or a person executing the business of these institutions that is indispensable for the Company’s funding and on which the Company depends to the extent that it is irreplaceable. -
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Accounting Auditor
A certified public accountant who belongs to an auditing firm that serves as the Accounting Auditor of the Company or an employee of or any other person belonging to such auditing firm. -
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Donee
A person executing the business of an organization which receives a donation exceeding 10 million yen per year that is greater than 2% of its annual income from the Company for the past three fiscal years.
Activities of Outside Directors and Audit & Supervisory Board Members in Fiscal 2023
To strengthen our management supervisory and auditing functions, and to ensure the validity and appropriateness of our important decisions, the Directors and Audit & Supervisory Board Members play the proper roles as stated below.
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The status of attendance of Ms. Yukari Tominaga, Mr. Yukihiro Tachifuji, and Mr. Tomonari Yashiro at the above Board of Directors and Nomination and Remuneration Committee meetings covers the Board of Directors and Nomination and Remuneration Committee meetings held after their respective appointments.
Remuneration for Directors and Audit & Supervisory Board Members
Process of determining remuneration
The Nomination and Remuneration Committee discusses the validity of the policies, criteria, and levels of remuneration in light of changes in the operating environment, objective external data, and other matters and then reports to the Directors, and then the Board of Directors resolves on the policy for the final decisions respecting the details of the committee’s report.
The actual decision on remuneration amounts for individual Directors is left to the discretion of Michihiro Kitazawa, Representative Director, Chairman of the Board and CEO, but within the limit resolved at the General Meeting of Shareholders and with reference to the details of the committee’s report.
Policy regarding decisions on remuneration
We have established a remuneration system and remuneration levels that are deemed appropriate for their respective duties and in accordance with shareholder mandates, giving due consideration to the aims of securing and maintaining competent personnel and providing incentives for the improvement of business performance.
We routinely verify that the system and levels are appropriate or whether they need reviewing in light of changes in the operating environment or objective external data.
Introduction of a performance-related Share-based Remuneration Plan for Directors (Fiscal 2024)
To clarify the link to stock value and to raise awareness of the need to contribute to medium- and long-term performance improvement and increased corporate value from a shareholder’s perspective, the 148th Ordinary General Meeting of Shareholders held on June 25, 2024, resolved to establish a new share-based remuneration, separate from the existing annual bonus, with respect to performance-linked remuneration.
Based on the Nomination and Remuneration Committee’s report that introducing such a plan is appropriate, the plan was determined by comprehensively considering the current level of remuneration paid to directors, the trend in the number of directors, and the future prospects for these factors.
Overview of the Plan
Within the scope of the resolution passed at the General Meeting of Shareholders, the Company grants points (each point is converted into one share of common stock of the Company, with a maximum of 42,000 points per fiscal year) to directors, the amount of which is determined based on performance and other factors, and the number of Company shares corresponding to the number of points is distributed at a specific time each year through a trust (The trust established under the Plan is hereinafter referred to as the “Trust.”). During their terms of office, directors are prohibited from transferring the shares granted to them.
The shares to be granted are acquired by the Trust through the stock market or by subscribing to the Company’s disposal of treasury stock.
Persons eligible for the Plan
Directors (excluding Outside Directors). As for Executive Officers, a performance-related share-based remuneration plan using the same framework as the Plan is introduced.
Initiatives to Improve the Board of Directors’ Effectiveness
In fiscal 2023, the Board of Directors met 13 times to receive regular reports on management conditions and to supervise the execution of business operations as well as to engage in lively discussions on important matters with an appropriate number of agenda items and time to deliberate.
Training for Directors and Audit & Supervisory Board Members

Evaluation of Effectiveness of the Board of Directors
We conduct the evaluation of the effectiveness of the Board of Directors with the use of a third-party survey once a year in order to verify whether the Board of Directors is properly fulfilling its expected roles and functions and to facilitate further improvements thereof. Furthermore, in order to deeply examine the survey results, individual interviews of the Directors and Audit & Supervisory Board Members are regularly implemented by the internal Board of Directors secretariat. Through all of these processes, we earned mostly positive assessments, thereby assuring the overall effectiveness of the Board of Directors. The results of the surveys and interviews are discussed and reported in the Board of Directors, and issues that require improvement are shared with everyone.

■ Main question categories
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Board of Directors make-up, administration, discussions, and monitoring functions
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Support structure and training for Directors and Audit & Supervisory Board Members
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Dialogue with shareholders
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Initiatives implemented by Directors and Audit & Supervisory Board Members themselves
The following is the policy for initiatives in fiscal 2024 to address the major issues identified in the fiscal 2023 effectiveness evaluation.
Internal Control System
With the aim of complying with laws and regulations, managing the risk of loss, and securing the efficiency of the execution of duties, the Fuji Electric Board of Directors has determined basic policies concerning the establishment of an internal control system as stipulated in the Companies Act of Japan, and the Company discloses those policies. Fuji Electric discloses information on the implementation of its internal control system, thereby taking steps to respond promptly and accurately to the demands placed upon the Company by society.
Main Systems Based on the Internal Control System
・Compliance system
Based on systems for ensuring that Directors and employees perform their duties in a manner that is compliant with laws and the articles of incorporation, Fuji Electric has established and promotes a compliance system in order to secure the transparency and soundness of business execution.
・Risk management system
Based on regulations and other systems pertaining to managing the risk of loss, Fuji Electric has developed an appropriate risk management system in order to manage business risks in a coordinated, systematic manner. In regard to specific cross-sectional risks, the Company determines departments to put in charge of each risk, thereby establishing a risk management system.
Audit & Supervisory Board Members and Internal Audits
Overall picture of strengthening collaboration between audit functions
In our auditing function, we ensure the effectiveness of audits by strengthening cooperation between the statutory auditing function (Audit & Supervisory Board Members and Accounting Auditors) and the internal auditing function (the Internal Audit Office). We have and will continue to strengthen our focus on the compliance activities of overseas subsidiaries, strict compliance with quality control and safety control rules, and the development and operation statuses of disclosure systems.

Audits by the Audit & Supervisory Board Members
Audit & Supervisory Board Members conduct audits in accordance with the audit policies and duties assigned and in compliance with the standards for audits established by the Audit & Supervisory Board. They report the details and results of their audits to the Audit & Supervisory Board. During the meetings, the Audit & Supervisory Board mainly reviewed audit policies and plans, the appropriateness of auditing methods and results of the Accounting Auditors, and undertook an assessment of the Accounting Auditors. It also reported on and reviewed important matters that the Standing Audit & Supervisory Board Members communicated to the Outside Audit & Supervisory Board Members.
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Attending and offering opinions at meetings of the Board of Directors, the Executive Committee, the Compliance Promotion Committee, and other important committees
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Reviewing documents pertaining to important resolutions
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Receiving explanations on the status of operational execution from Directors and internal auditing divisions
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Investigating the status of operations and assets at Fuji Electric itself, its consolidated subsidiaries in Japan and overseas, and companies undertaking M&As (done remotely as necessary)
Internal audits
As a general rule, every second year the internal auditing divisions as bodies directly under the President and COO perform the following audits on Fuji Electric’s business divisions and subsidiaries so as to comprehensively cover the entire organization in accordance with the Internal Auditing Rules. Regarding issues pointed out, we confirm the state of progress every quarter and implement follow-up audits as required. In fiscal 2023, utilizing remote auditing, we conducted audits at 45 bases, or about 40% of the audit bases. No risks or inadequacies with the potential to seriously affect management were discovered.
Policy on Cross-Shareholding
Fuji Electric holds listed shares as a matter of policy in order to maintain and strengthen relations with its investee companies. Our basic policy is to reduce cross-shareholdings. Even in cases where we recognize a certain rationality in holding these cross-shareholdings, we will reduce them while paying attention to the impact on management and business. Based on the above policy, we have reduced the number of different listed stocks we held from 102 as of the end of fiscal 2018 to 6 as of the end of fiscal 2023. The Board of Directors periodically evaluates the rationality of shareholding in light of whether it is necessary to maintain and strengthen relations with the investee companies and of the comparison of capital cost and return. The details of the review are disclosed. The voting rights that come with cross-shareholding are exercised after considering all relevant factors, including whether the proposed action will help the issuing company to establish an appropriate corporate governance framework and to increase its medium- to long-term corporate value, and what impact the action will have on Fuji Electric. We also have dialogue regarding the details of the proposal, among others, with the issuing company as necessary.
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In addition to the above, there are unlisted shares and shares deemed to be held by the Company, and the total amount of cross-stockholdings (including such unlisted shares and shares deemed to be held by the Company) at the end of fiscal 2023 will be 97 billion yen (14.7% of consolidated net assets).