Corporate Governance

Basic Views on Corporate Governance

Resonac (the “Company”) shall hereby establish the Corporate Governance Basic Policies in order to increase corporate value and shareholders’ common interests through appropriate cooperation with all stakeholders including shareholders.

The Company formulated the Corporate Governance Basic Policies in line with Japan’s Corporate Governance Code and discloses the policies at its website.

Corporate Governance System

The Company, as a pure holding company, specializes in Group strategy and listed company functions. While flexibly responding to business challenges, the Company appropriately allocates its management resources in consideration of the entire Group, for business tie-up, M&A, etc.

The Company introduced a corporate officer system to explicitly divide management oversight and business execution functions, giving authority to Chief X Officers (CXOs) and chiefs of Business Units to execute business. In order to strengthen functional independence, objectivity, and accountability of the Board of Directors, the Company has organized the Nomination Advisory Committee and the Remuneration Advisory Committee as advisory bodies for the Board of Directors. Independent Outside Directors represent the majority of both committees.

Corporate Governance System

Board of Directors

To increase agility of business execution, the Board of Directors delegates part of decisions on important business execution to President and other corporate officers. The Board of Directors mainly focuses on deliberations and decisions concerning basic policies for management, establishment of the internal control system, etc. as well as oversight of execution of duties by Directors and Corporate Officers. We have also established an agile management system to quickly respond to changes in the business environment, and limit the term of office of directors to one year to more clearly define management responsibilities of Directors.

Audit & Supervisory Board

The Company has adopted the Audit & Supervisory Board system. The Audit & Supervisory Board Members attend the Board of Directors’ meetings and other important internal meetings, offering opinions as necessary. They also conduct audits on business execution through on-site investigations, interviews with responsible persons, inspection of important documents, and other appropriate measures, so as to provide suggestions, advice, and recommendations for securing soundness in management. In addition, Standing Statutory Members of the Audit & Supervisory Board concurrently serve as Audit & Supervisory Board Members of the business corporation to enhance audits on Group companies.

Nomination Advisory Committee

The Company has established the Nomination Advisory Committee, advisory bodies to the Board of Directors. Independent Outside Directors represent the majority of its members for the Nomination Advisory Committee. The Committee reports to the Board of Directors after deliberating matters related to election of candidates for Directors.

Remuneration Advisory Committee

The Company has established the Remuneration Advisory Committee, advisory bodies to the Board of Directors. Independent Outside Directors represent the majority of its members for the Remuneration Advisory Committee. The Committee reports to the Board of Directors after deliberating matters related to appointment of senior management, and remuneration of Directors and Corporate Officers, respectively.

Management Committee

The Company and its business corporation Resonac have formed the Integrated Management Committee that gives advice to President on important matters and serves as a body preceding the Board of Directors. For investment matters escalated to the Management Committee, their risks are analyzed and their results and progress are managed through preliminary risk review and assessment by task teams.

Committees and Promotion Councils

Under CXOs in charge of respective functional areas, the Company has established the Risk Management Committee, Compliance Committee, Sustainability Promotion Council, and other committees.

Risk Management Committee

The Committee deliberates on the Group's overall risk management system, the content of risk information to be disclosed externally, and the evaluation of the Group's most important risks and measures to address them. Risk Management

Compliance Committee

The Committee discusses the Company-wide compliance promotion policy, mid-term activity plan, etc., and reports on the progress of the annual plan and the status of issues to be addressed.Compliance

Sustainability Promotion Council

The Council discusses a wide range of agenda items, including measures to address climate change–related opportunities and risks in our businesses, the review of Resonac Pride products and services, and the status of initiatives related to human rights. Additionally, we have established several projects under this meeting to respond swiftly and collaboratively across the organization to specific challenges.Sustainability

Internal Audit Department

The Company has organized the Internal Audit Department reporting directly to the President. The Internal Audit Department forms annual internal audit plan under the provisions of the Company’s Internal Audit Rules, audits situations of compliance, conduct of business and internal control system of the Group including affiliated companies, reveals potential risks concerning overall business activities, and reports results of internal audit to the top management, the Board of Directors and the Audit & Supervisory Board.

In addition, the Internal Audit Department cooperates with the Accounts Auditor and Audit & Supervisory Board Members through various measures including periodic briefing session about annual internal audit pan and results of internal audit, while paying attention to each auditing body’s independence.

Accounting audits

The Company concluded an auditing contract with KPMG AZSA, and this audit corporation performs accounting audits for the Company. The Accounting Auditor confirms the annual audit plan with the Audit & Supervisory Board Members and reports the audit results to them. The Accounting Auditor and the Audit & Supervisory Board Members also exchange information and views as required, to promote their cooperation.

Corporate Governance Initiatives

Attendance at Meetings of the Board of Directors and Auditit & Supervisory Board（2025）

  • * Marked Directors and Audit & Supervisory Board Member :
    Number of attendances after appointment at the Ordinary General Meeting of Shareholders held in March 2025

Board Directors

  Bord of Directors
Representative Director, President Hidehito Takahashi 12/12（100％）
Director, Chairman of the Board Kohei Morikawa 12/12（100％）
Board Director Hideki Somemiya 12/12（100％）
Board Director Tomomitsu Maoka 12/12（100％）
Outside Director Nori Imai 12/12（100％）
Outside Director Tetsuo Tsuneishi 12/12（100％）
Outside Director Kenji Yasukawa 12/12（100％）
Outside Director Masaru Onishi* 9/9（100％）
Outside Director Izumi Sakakibara* 9/9（100％）

Audit & Supervisory Board Members

  Board of Directors Audit & Supervisory Board
Audit & Supervisory Board Members Toshiharu Kato 12/12（100％） 14/14（100％）
Audit & Supervisory Board Members Mitsuo Katayose 12/12（100％） 14/14（100％）
(Outside Member) Masako Yajima 12/12（100％） 14/14（100％）
(Outside Member) Yasuyuki Miyasaka 12/12（100％） 14/14（100％）
(Outside Member) Kiyoko Toda 12/12（100％） 14/14（100％）

Attendance at Nomination Advisory Committee and Remuneration Advisory Committee（April 2025 - March 2026）

Nomination Advisory Committee

  Attendance records
Representative Director, President Hidehito Takahashi 6/6（100％）
Board Director Nori Imai 6/6（100％）
Outside Director Tetsuo Tsuneishi（Chairman) 6/6（100％）
Outside Director Kozo Isshiki 6/6（100％）
Outside Director Noriko Morikawa 6/6（100％）
Outside Director Kenji Yasukawa 6/6（100％）

Remuneration Advisory Committee

  Attendance records
Representative Director, President Hidehito Takahashi 5/5（100％）
Board Director Hideki Somemiya 5/5（100％）
Outside Director Kenji Yasukawa（Chairman) 5/5（100％）
Outside Director Kozo Isshiki 5/5（100％）
Outside Director Noriko Morikawa 5/5（100％）
Outside Director Tetsuo Tsuneishi 5/5（100％）

Approach to the balance and size of the Board of Directors and Audit & Supervisory Board

1. Board of Directors
The Board of Directors shall have a personnel structure giving thoughtful attention to a good balance among specialties, experience, attribute, and other factors, and the size of the Board of Directors shall be set so as to ensure prompt decision-making and appropriate oversight of business execution. In addition, one-third or more of the Board of Directors shall consist of Independent Outside Directors with extensive experience and broad insight in order to secure the appropriateness of business execution and to increase the effectiveness of oversight.
The Board of Directors shall identify the skills necessary to improve its effectiveness, and disclose the status of fulfillment of such skills.

2. Audit & Supervisory Board
The Audit & Supervisory Board shall have a personnel structure that includes Member(s) who has sufficient expertise in financing or accounting. In order to ensure a structure that will increase the effectiveness of audits through independence and advanced information gathering capabilities, Standing Statutory Members of Audit & Supervisory Board shall be appointed and a half or more of the Audit & Supervisory Board shall be Outside Members of Audit & Supervisory Board.

Criteria on the independence of outside directors

The Board of Directors has established independence standards for Outside Directors based on independence criteria stipulated by law and the Tokyo Stock Exchange and selects candidates who meet the standards. See the Attachment of Corporate Governance Basic Policies for the independence standards.

Policies and procedures for determining the remuneration of directors, Audit & Supervisory Board members, and corporate officers

Outline of Director Compensation Scheme

The outline of the Company’s director compensation scheme in and after 2025 is as follows:

1.Basic policy

Directors (excluding outside directors)
  • A compensation scheme appropriate for recruiting and maintaining excellent human resources inside and outside Japan since the Company aims to become a world-leading chemical company for advanced functional materials
  • A compensation scheme that will help motivate efforts to achieve financial goals and increase medium-to-long-term enterprise value, thereby contributing to sustainable growth of the Group
  • A transparent, fair and rational process for deciding compensation from the viewpoint of accountability to all stakeholders, including shareholders
Outside directors
  • A compensation scheme appropriate for the role and responsibility for supervising the Company’s management from an independent and objective standpoint, and providing advice on management with an awareness of enhancing medium- to long-term corporate value

2.Composition and levels of compensation

  • Remuneration for Executive Directors (excluding Outside Directors) shall consist of a fixed remuneration (base salary) determined by their position, a short-term incentive compensation (STI) that varies based on annual performance, and a long-term incentive compensation (LTI) that fluctuates according to medium- to long-term performance and corporate value. LTI comprises "Performance Share Units (PSU)," which grant the company's common stock based on performance and stock price over a three-year period, and "Performance-based Restricted Stock (RS)," which grants restricted stock based on the sustainability evaluation for each period.
  • The compensation levels and the proportion of variable compensation (STI and LTI) relative to annual total compensation will be set at appropriate amounts and percentages, taking into account benchmarks from external specialist surveys comparing the Company to other major manufacturing companies with a focus on global operations. Considering the weight of responsibility regarding performance and stock price, the proportion of variable compensation will be set higher for higher-level positions.
  • Notwithstanding the foregoing provisions, the remuneration of the non-representative Chairman of the Board, the Chair of the Board, and other non-executive internal directors shall be determined individually in light of their respective roles and responsibilities. Performance-linked STI and LTI shall not be granted to directors whose primary role is the supervision of management.
[Outside Directors]
  • Remuneration for Outside Directors shall consist of fixed remuneration (base salary) and non-performance-based restricted stock (RS). The transfer restrictions on non-performance-based RS shall be lifted upon retirement from office.
  • For the members and Chairperson of the Remuneration Advisory Committee or the Nomination Advisory Committee, allowances shall be added according to their roles.
  • The amount of non-performance-based RS will be set at approximately 10% of the base salary (excluding committee and chairperson allowances).
  • The compensation levels will be set at appropriate amounts, taking into consideration the time and effort each Outside Director is expected to dedicate to fulfilling their expected roles and functions, as well as peer company levels based on external expert surveys (compared to major companies (all industries) with global operations at their core).

Chart 1 Type of compensation and scope of payment

Representative Director Executive Director Executive Officer Non-executive Director Outside Director
Basic Compensation Base amount by Position ● ● ● ● ●
Director Allowance ― ● ― ― ―
Committee　Member/Committee Chair Allowance* ― ― ― ― ●
STI ― ● ● ● ― ―
LTI PSU ● ● ● ― ―
Performance based RS ● ● ● ― ―
Non-performance linked RS ― ― ― ● ●

* Refers to members or chairs of the Nomination Advisory Committee and the Remuneration Advisory Committee.

 

Chart 2 Percentage of compensation components of FY2026 (Standard Amount)

< President and CEO>

 

< Senior Managing Executive Officer and Director >

 

< Chairman of the Board of Directors* >

 
  • * The compensation for the Chairperson of the Board of Directors, whose primary role is to oversee management (in their capacity as chairperson), will consist of basic compensation and non-performance linked RS. The transfer restrictions on the RS will be lifted upon their resignation.
    (Note: Due to rounding to the nearest tenth, the sum of each column may not equal 100%.)

3.Short-Term Incentive（STI）

The annual cash compensation for Short-Term Incentives (STI) is calculated using the formula below. To strengthen the incentive for achieving organizational targets, the base amount—determined by position—is multiplied by i) a company-wide performance coefficient (70% weight) and ii) an individual performance coefficient (30% weight). These coefficients range from 0% to 200%, depending on performance outcomes and other relevant factors.

Individual STI Payment Amount = Base Amount by Position ×
( i) Company-Wide Performance Coefficient + ii) Individual Performance Coefficient)

i) The company-wide performance coefficient and ii) the individual performance coefficient will be calculated using performance evaluation indicators (KPIs) selected from the financial and strategic indicators that the Company emphasizes for the realization of its long-term vision.

4.Stock compensation

(i) Performance Share Unit (PSU)

The Performance Share Unit (PSU), granted as consideration for the execution of duties in each fiscal year, is designed to enhance medium- to long-term corporate value. As shown in the formula below, the number of shares (or share equivalents) to be granted under the PSU is determined by multiplying the base points determined by position (standard points by position) by a coefficient linked to the Company’s Total Shareholder Return (TSR) over a three-year period (TSR coefficient). A certain portion of the calculated number of shares (currently uniformly set at 50%) is paid in cash equivalent to the market value.

Number of shares granted to each individual= Standard points by position × TSR coefficient (0%–240%)

The TSR coefficient is determined based on the Company’s TSR performance over a three-year period, evaluated through two primary components: (i) the Company’s ranking within a domestic peer group—comprising chemical and fiber companies of similar business models and scale—and (ii) a comparison with the growth rates of stock indices for the chemical sectors in Europe and the United States.
Regarding the domestic peer group ranking, the target is set at or above the median, aligned with our long-term vision of "achieving a top-quartile TSR within the chemical industry over the medium to long term."
To ensure objectivity and transparency, the European and U.S. sector indices are selected from representative benchmarks widely recognized by the investment community. Furthermore, starting from the fiscal 2025 plan, we have introduced an adjustment factor based on comparisons with major European and U.S. broad market indices to further refine the alignment with global market standards.

 

Chart 3: Overview of the TSR Evaluation in the 2026 Plan (Evaluation Period: January 2026 to December 2028)

 
(ii) Performance-Linked RS

Performance-Linked RS was introduced in fiscal year 2025 to enhance stock price-conscious management and support the realization of Sustainability Vision 2030. Performance-Linked RS is designed to grant a number of restricted stock (RS) each financial year (after the end of each financial year) calculated by multiplying the standard points, which correspond to the standard amount set for each position, by a coefficient (85% to 115%) based on sustainability evaluation for each financial year. The granted RS will be non-transferable until retirement. A certain percentage of the calculated RS (assumed to be 30% initially) will be retained as points and paid in cash equivalent to the market value at the time of retirement.

(iii)Non-performance-linked RS

Restricted Stock (RS) without performance conditions was introduced in fiscal 2025 for Directors whose primary roles are oversight and advice focused on enhancing medium- to long-term corporate value—specifically the Chair of the Board and Outside Directors. Under this plan, a number of RS shares equivalent to the standard points—determined by position-specific base amounts—are granted annually following the end of each fiscal year. These shares are subject to transfer restrictions until the Director’s retirement.

  • Note: No cash settlements (i.e., payments equivalent to the market value of the points) will be made under this plan.

5. Compensation governance

The Company’s Remuneration Advisory Committee is chaired by an independent outside director, and independent outside directors account for the majority of committee members. The committee will make proposals and reports as necessary to the Board of Directors in view of the latest situation concerning executive compensation and market trends, results of comparison with relevant competitors, and other pieces of advice. To ensure high levels of independence and objectivity, decisions on compensation for respective directors are entrusted to the Remuneration Advisory Committee as from 2022. the Company has appointed Willis Towers Watson, an external consultancy, as advisor.

Amount of remuneration paid to Directors and Audit & Supervisory Board Members （2025）

Remuneration, etc. (Millions of yen) Total Amount by Type of Remuneration, etc. (Millions of yen) Number of applicable persons
Basic Compensation Short-term Performance- linked Compensation (STI) Stock Compensation I (RS) Stock Compensation II (RS)
Performance- linked Non- Performance- linked
Board Directors 1,222 381 164 512 144 20 11
Outside members included in above 82 77 ー ー ー 5 6
Audit & supervisory Board Members 127 127 ー ー ー ー 5
Outside members included in above 50 50 ー ー ー ー 3
  1. 1. Basic remuneration
    The amount of basic remuneration represents the total amount of remuneration paid in fiscal year 2025, all of which was paid in cash.
  2. 2. Performance-linked remuneration and non-monetary remuneration
    Short-term incentive compensation (STI), Share-based Compensation I (PSU), and Performance-linked Share-based Compensation II (RS) constitute performance-linked remuneration. Among these, Share-based Compensation I (PSU) and Share-based Compensation II (RS) constitute non-monetary remuneration.
  3. 3. Short-term incentive compensation (STI)
    The amount of STI represents the total amount of remuneration paid in March 2025, all of which was paid in cash, based on the results of performance and other factors for fiscal year 2024.
  4. 4. Share-based Compensation I (PSU)
    The amount of Share-based Compensation I (PSU) represents the total amount expensed in fiscal year 2025.
    Under the PSU plan, a number of the Company’s shares and other equity instruments determined based on the results of a three-year total shareholder return (TSR) evaluation are granted promptly after the end of the three-year TSR evaluation period. A certain portion (50%) of the determined number is paid in cash equivalent to the market value.
    In operating the PSU plan, the Company utilizes a Board Benefit Trust (BBT) administered by Mizuho Trust & Banking Co., Ltd., under which shares to be delivered are acquired through a trust established by the Company and granted to eligible directors in accordance with the predetermined rules of the plan.
  5. 5. Share-based Compensation II (RS)
    The amount of Share-based Compensation II (RS) represents the total amount expensed in fiscal year 2025.
    RS granted to executive directors is performance-linked, and a number of the Company’s shares and other equity instruments determined based on the results of the annual sustainability evaluation are granted subject to transfer restrictions until retirement. A certain portion (30%) of the determined number is retained as points and paid in cash equivalent to the market value upon retirement.
    RS granted to the Chairperson of the Board and Outside Directors is not subject to performance conditions and is granted after the end of each fiscal year, with transfer restrictions lifted upon retirement; no cash settlement is made.
    In operating the RS plan, the Company utilizes a Board Benefit Trust for RS (BBT-RS) administered by Mizuho Trust & Banking Co., Ltd., whereby shares are acquired through a trust established by the Company and delivered to eligible directors upon satisfaction of the relevant conditions in accordance with the plan rules.
  6. 6. The directors' remuneration for the fiscal years from 2025 was resolved at the 116th Annual General Meeting of Shareholders held on March 26, 2025 as follows: for STI and LTI, the amount is for directors excluding outside directors.
    Date of resolution of the General Meeting of Shareholders monetary remuneration (Base Compensation + STI) Stock Compensation (LTI:BBT or BBT-RS) Number of applicable persons
    Amount of BBT contribution Points granted
    Board Director the 116th Ordinary General Meeting of Shareholders held on March 26, 2025 Up to 1,100 million yen per year (Of which, outside directors: 150 million yen) Up to 2.22 billion yen for 3 FY (Of which, outside directors:100 million yen) Up to 410,000 points per FY (Of which, outside directors:20,000 points per FY) 9 (Of which, 4 outside directors)
  7. 7. At the 96th Ordinary General Meeting of Shareholders held on March 30, 2005, it was resolved that the amount of remuneration for Audit & Supervisory Board Members shall be no more than 12 million yen per month. As of the close of the said General Meeting of Shareholders, the number of Audit & Supervisory Board Members was four, including three outside auditors.

Evaluation of the Board of Directors’ Effectiveness

Method of Evaluation

The Company evaluates the effectiveness of the Board of Directors every year, aiming to strengthen corporate governance and improve effectiveness of the Board of Directors in and after the next year. To be specific, in December 2025, the Company surveyed respective Directors and Audit & Supervisory Board Members through unidentified questionnaires and free descriptions to evaluate the effectiveness of the Board of Directors in fiscal 2025. Based on the collected self-evaluation results and discussions about the reform of the Board of Directors for exchange of views, all Directors and Audit & Supervisory Board Members discussed the topic at the Board of Directors’ meeting held in March 2026, evaluated the effectiveness of the Board of Directors in fiscal 2025, and formulated an execution plan for fiscal 2026. Note that we have outsourced the questionnaire survey and aggregation of the results to an outside institution in order to ensure its objectivity and enhance future effectiveness of the Board of Directors.

Evaluation results (Actions taken in 2025)

The issues identified in the effectiveness evaluation for the previous fiscal year (fiscal 2024) at the Company, along with the action plan established by the Board of Directors for fiscal 2025 based on those issues, and the achievements we have made in fiscal 2025 in relation to the action plan are as follows:

The issues identified in the effectiveness evaluation for fiscal 2024
  • While there are voices expressing appreciation for efforts to optimize the agenda in terms of the appropriateness of proposals, there is also a call for further enhancement of strategic discussions over the medium to long term.
  • Feedback on investor opinions and the sharing of information from advisory committees has received mixed evaluations among members. There are calls for improvements in the quantity and quality of information, opportunities for better understanding of the Company, and collaboration with various organizations.
  • Although a common understanding has been established regarding the role that the Board of Directors should fulfill, there is a significant disparity in evaluations of the Board's composition between internal and external directors, with calls for discussions on independence and diversity.
Action plan for fiscal 2025
  1. 1. Focus on enhancing the functions of the Board as a monitoring body by optimizing the agenda centered around sustainability, portfolio management, and risk management.
  2. 2. Enhance the effectiveness of the Board of Directors through ongoing improvements in communication opportunities and information-sharing mechanisms.
  3. 3. Continue discussions regarding the structure and functioning of the Board of Directors, including its composition.
Initiatives taken in fiscal 2025
  1. 1-1. The Board of Directors sets agendas aligned with its oversight responsibilities, including sustainability, portfolio management, and risk management.
  2. 1-2. For matters such as business restructuring, the Board ensures timely agenda scheduling by utilizing informal reporting sessions to supplement formal deliberations.
  3. 1-3. The Board has established three dedicated opportunities for in-depth discussion regarding the Long-Term Vision, which forms the core of the Company’s medium- to long-term strategy.
  4. 2-1. The Board has enhanced its advance briefing process by expanding the scope of prior explanations, promptly sharing discussion content with all members, and ensuring comprehensive supplementary explanations during Board meetings.
  5. 2-2. Minutes of advisory committee meetings are shared with all Board members, and the practice remains in place for committee chairpersons to report key discussion points during Board meetings.
  6. 2-3. The Board continues to facilitate regular dialogue between the Accounting Auditor and Outside Directors.
  7. 2-4. The Board maintains the practice of holding meetings (including lunch meetings) attended exclusively by Outside Officers.
  8. 2-5. The Board enhances the substance of feedback provided based on the views and opinions of investors.
  9. 3-1. To further improve the depth of deliberations, the Board continues to utilize “Deliberation Items,” a dedicated agenda category introduced in fiscal 2024.
  10. 3-2. Through these “Deliberation Items,” the Board engages in high-level discussions regarding its own composition and institutional design—including the optimal ratio of Outside Directors—to foster a shared strategic vision among all members.

Chart 4: Changes in the characteristics of matters discussed at the Board of Directors’ meetings from fiscal 2023 to fiscal 2025

 

 

 

Strategic & Priority Issues account for 60% of the agenda, aligning with the direction toward "strengthening supervisory functions." Major projects such as large-scale M&As that directly impact management strategy are also categorized not as "General Execution Items," but as "Strategic & Priority Issues" to facilitate discussions on sustainable corporate value enhancement.

Action plan for fiscal 2026

Action plan for fiscal 2026 based on the effectiveness evaluation of the Board of Directors for fiscal 2024 is as follows.

Challenges identified in the effectiveness evaluation of the Board of Directors for fiscal 2025
  • The Board's operations, including the conduct of meetings and the responsiveness of the Secretariat, continue to receive high evaluations and remain highly regarded for their overall effectiveness.
  • Regarding the appropriateness of agenda items and the follow-up on discussed matters, many Board members recognize steady progress and improvements. Concurrently, it is acknowledged that there remains room for further enhancement in these areas.
  • Regarding the provision of feedback on investor perspectives—which previously saw lower scores and wider variance—both the overall evaluation and the consistency of scores have improved. Nevertheless, the Board recognizes the need for ongoing improvement in the quality and depth of this feedback.
  • Further enhancements are sought in information sharing among advisory committees. The Board also identifies a need for stronger collaboration among Outside Officers, the Audit & Supervisory Board, and the Accounting Auditor.
Action plan for the Board of Directors for fiscal 2026
  1. 1. The Board will continue to optimize its agenda—with a focus on sustainability, portfolio management, and risk management—to further strengthen its oversight function as a monitoring board. Through these efforts, the Board remains committed to deepening the quality and substance of its deliberations.
  2. 2. The Board will further enhance its overall effectiveness by continuously improving various communication channels and information-sharing mechanisms, ensuring a robust framework for informed decision-making.