Corporate Governance System

Corporate Governance System

Yamaha Motor's Corporate Governance System and Internal Control System

1) Reasons for Adoption of Current Corporate Governance System

Yamaha Motor supplies various kinds of products and services to markets around the world, including sensibility-focused personal mobility for individual customers’ recreational purposes, user friendly and practicality-focused personal mobility for travelling and transportation purposes, marine products to be used for a wide range of applications from recreational to business purposes, industrial robots, automotive engines, and industrial unmanned helicopters for corporate customers business use.

Overseas sales account for approximately 90% of the Company’s consolidated net sales. With the principal concept of developing and producing locally where the products are consumed, our development, procurement, production and sales and other activities have expanded worldwide.

To sustainably develop operational activities that are capable of flexibly responding to customer diversity, product diversity and the globally expanding market, we acknowledge that adequate risk-taking and decisive decision-making are necessary. We also place importance on multilaterally understanding and appropriately overseeing issues and risks associated with the implementation of management strategies.

We believe it is effective to structure a corporate governance system consisting of the Board of Directors, made up of Directors of the Company who are familiar with the Company’s customer characteristics, products, business operations and functions and Outside Directors who have a wealth of knowledge in global corporate management, and the Audit & Supervisory Board whose members include Outside Audit & Supervisory Board Members with professional knowledge in areas including accounting, legal affairs, and management administration. Under this corporate governance system, Executive Officers are appointed to execute operational duties in a timely manner, and the Board of Directors delegates matters related to the execution of business operations to the Executive Officers.

2) Summary of Current System

Composition of the Board of Directors and Audit & Supervisory Board

The Board of Directors and the Audit & Supervisory Board, which implement corporate governance, consist of five (5) Directors, five (5) Independent Outside Directors (two [2] of whom are female), two (2) Full-time Audit & Supervisory Board Members, and three (3) Independent Outside Audit & Supervisory Board Members (two [2] of whom are female). Of the fifteen (15) Directors and Audit & Supervisory Board Members in total, eight (8) are Independent Outside Directors / Audit & Supervisory Board Members.

Roles of the Board of Directors

To ensure the implementation of the Company’s growth strategies for the future, the Board of Directors establishes an environment that supports management’s appropriate risk-taking and decisive decision-making activities. In addition, the Board of Directors multilaterally understands and appropriately oversees issues and risks associated with the execution of management strategies from the viewpoint of fulfilling its responsibilities to various stakeholders including shareholders and investors. We acknowledge that these tasks are their roles in supporting the Company’s sustainable growth and enhancement of its corporate and brand value.

To ensure prompt execution of business operations, the Board of Directors appoints Executive Officers and delegates matters related to execution of business operations to them.

In accordance with the policies outlined above, matters to be judged and determined by the Board of Directors and matters to be delegated to Executive Officers are as follows:

1. Matters to be judged and determined by the Board of Directors
• Determining matters provided for in laws and regulations and the Articles of Incorporation
• Overseeing the execution of Directors’ duties
• Determining strategies and policies
• Determining Corporate Philosophy, Code of Ethics, Basic Policies on Internal Control, Basic Policies on Sustainability, Governance Policies on the Yamaha brand, Long-term Management Visions, Medium-Term Management Plan, etc.
• Overseeing execution of business operations
　　Oversight of the implementation of business portfolio strategies, approval of annual management plans, approval of financial statements, oversight of the status of the execution of duties, approval of internal auditing plans, oversight of the status of the development of systems based on Basic Policies on Internal Control, the status of the addressing of issues related to sustainability, and the status of the development of risk management systems, etc.

Executive Personnel Committee

Yamaha Motor has established an Executive Personnel Committee, which is involved in nominations and remuneration, as a voluntary advisory body of the Board of Directors, to improve transparency and objectivity in appointments and dismissals of executives and determining their remuneration, among other objectives. To ensure the transparency of the deliberation process, as well as to ensure the objectivity and validity of matters reported to the Board of Directors’ meetings, the majority of the members of the Executive Personnel Committee consists of Outside Directors, and the meeting of the Executive Personnel Committee is held more than six times a year, in principle.

In the role related to “nominations,” the Executive Personnel Committee deliberates upon the appointments and dismissals of the Chief Executive Officer (CEO), Directors, Audit & Supervisory Board Members and Executive Officers, as well as the selection of candidates for such senior management positions and their development plans, while confirming future management strategies and personnel requirements for putting them into practice, among other things.
As part of initiatives to strengthen governance, a system has been introduced for making judgements based on reviewing and assessing the operations of the CEO. More specifically, there is a round-table conference with CEO headed by Outside Director, and through strategic dialogues with CEO, the conference carries out non-financial evaluations regarding matters including the status of operations of the individual in question as a top-level manager, based on looking at whether the individual in question has the qualities needed to serve as the CEO of the Company and is appropriately demonstrating such. The Executive officer appointment plan is reported from the Executive Personnel Committee to the Board of Directors, and then deliberated regarding the appointment of the CEO and other Executive Officers. Thus, governance is established in which the most suitable and best top-level managers execute business operations, based on a process in which objectivity and fairness are ensured.
In the role related to “remuneration,” the Executive Personnel Committee deliberates upon the evaluation standards and remuneration system for the CEO, Directors and Executive Officers. The Executive Personnel Committee also evaluates the performance of the Company and individuals based on contributions to medium- to long-term corporate growth and business performance for the said fiscal year, in order to deliberate upon the compensation linked to performance within the limits of total remuneration resolved at the General Meeting of Shareholders.
The current members are as follows:
Chairman:        Chairman and Representative Director        Katsuaki Watanabe
Committee member:        President and Representative Director        Yoshihiro Hidaka
Committee member:        Outside Director (Independent)        Takuya Nakata
Committee member:        Outside Director (Independent)        Yuko Tashiro
Committee member:        Outside Director (Independent)        Tetsuji Ohashi
Committee member:        Outside Director (Independent)        Jin Song Montesano
Committee member:        Outside Director (Independent)        Keiji Masui

Audit & Supervisory Board Members and the Audit & Supervisory Board

The Audit & Supervisory Board Members are made up of 2 Full-time Audit & Supervisory Board Members and 3 Independent Outside Audit & Supervisory Board Members.
On the basis of fiduciary responsibilities to shareholders, Audit & Supervisory Board Members and the Audit & Supervisory Board, as a body independent from the Board of Directors, request the Company and its subsidiaries to submit reports on their business activities in accordance with laws and regulations, survey the status of business operations and property, exercise rights in respect of appointing or dismissing an External Accounting Auditor and audit compensation, attend meetings of the Board of Directors and other important meetings, and provide opinions as needed. Through these tasks, Audit & Supervisory Board Members and the Audit & Supervisory Board audit the legality and appropriateness of Directors’ execution of duties, internal control systems, and the performance and financial position of the Company and its subsidiaries. An Audit & Supervisory Board Members’ Office, with a dedicated staff of 3 persons, has been established to assist the Audit & Supervisory Board Members with their audit and supervisory operations.

In principle, the Audit & Supervisory Board meets monthly, and additionally from time to time as necessary.

Executive Officers and Management Committee, etc.

The Company has 26 Executive Officers (including Deputy Executive Officers), of whom 4 serve concurrently as Directors. A Management Committee, comprising 7 Executive Officers with specific posts, has been established to deliberate on matters of business execution, speeding up the Company’s decision-making process. In principle, the Management Committee meets at least monthly, and additionally from time to time as necessary.

In addition, a Global Executive Committee has been established to deliberate on important management policies and issues related to the Group’s management. The Global Executive Committee includes the Representative Directors, all Executive Officers with specific posts, Audit & Supervisory Board Member, and senior local managers of major Group companies, and has 41 members, of whom 23 are Japanese and 18 are non-Japanese. In principle, the Global Executive Committee meets at least once annually, and additionally from time to time as necessary.

Sustainability Committee

Sustainability Committee, comprising 7 Executive Officers with specific posts, has been established to address issues related to sustainability and deliberate measures related to risk management and compliance. The number of meetings for the Sustainability committee will be increased to 6 times annually from this year and additionally the meeting will be held from time to time as necessary.