(v）The Company actively contributes to the achievement of a sustainable society.
* The Corporate Governance Guidelines were amended to become the Corporate Governance Principles on March 1, 2021.
Eisai's Corporate Governance System
Features of Eisai's Corporate Governance
- Clear Separation of the Functions between Oversight of Management and the Execution of Business
The Company fully leverages its system of being a company with a nomination committee, etc., with the Board of Directors entrusting a large portion of the decision-making authority over business execution to corporate officers to the extent permitted by laws and regulations in order to devote its attention to the oversight of management. This enables prompt, flexible decision making and business execution by corporate officers even in environments undergoing turbulent changes. Additionally, in order to achieve a clear separation between the oversight of management and the execution of business, the Company has established that the chair of the Company’s Board of Directors be an outside director and that the Representative Corporate Officer and CEO shall be the only individual to concurrently serve as a corporate officer and a director.
Clearly separating management oversight and business execution in this manner enhances corporate vitality including in the business execution of corporate officers, while the Board of Directors exercises the function of oversight from the perspective of stakeholders to ensure fairness and transparency in management. At the same time, directors and corporate officers communicate with each other and build trust in executing their respective duties and fulfilling their responsibilities, working together to increase corporate value and contribute to the creation of social value. Mechanisms such as these are the characteristics of the Company’s corporate governance.
- A Sustained, Autonomous Mechanism for Enhancement of Corporate Governance Centered on Outside Directors
The presence of 7 independent outside directors, who account for the majority of the Board of Directors, supports the effectiveness of the Company’s corporate governance structure. The Company has established and is operating a mechanism to enhance sustained, autonomous corporate governance centered on outside directors, including (1) a system of electing neutral and independent outside directors by a Nomination Committee, (2) operating the Board of Directors, etc., through the leadership of a chair who is an outside director, (3) an “hhc Governance Committee” for broad discussion of corporate governance, including dialogues with stakeholders and the consideration of succession plans, etc., and (4) corporate governance evaluations through Plan-Do-Check-Act (PDCA) cycles of the Board of Directors and each committee. We will continue to work to enhance the content of each of those efforts.
FY2020 Efforts Related to Corporate Governance
- Activity status of the hhc Governance Committee
(1) Establishment of the hhc Governance Committee
・ Starting in FY2020, what had been called the Outside Directors Meeting was renamed the “hhc Governance Committee” as a committee within the Board of Directors (established in April 2020)
(2) Dialogues with stakeholders
・ Outside directors held an opinion exchange session with approximately 70 institutional investors and others (December 2020)
・ Exchanges of opinions were carried out between individual institutional investors and outside directors (May 2020, January 2021)
・ Outside directors participated in an online briefing for individual shareholders (January 2021)
・ Dialogue was held between outside directors and labor union representatives (February 2021)
・ Outside directors shared information and held discussions with young and middle-ranking
employees at the Kawashima Plant and Tsukuba Research Laboratories (February 2021)
(3) CEO succession
・ The hhc Governance Committee shared information on and discussed the succession plan (September and October 2020, March 2021)
(4) Evaluation of the effectiveness of the Board of Directors
・ The hhc Governance Committee conducted a corporate governance evaluation (a self-review of the Corporate Governance Guidelines and the Internal Control Regulations, as well as a Board of Directors evaluation by individual directors) (March 2021)
・ An evaluation review of the past 2 years of activities by the Board of Directors (once every 3 years) was conducted by an outside organization in November 2020 and the summarized results of the Board of Directors evaluation in FY2020 were inspected and analyzed (March 2021)
・ Discussed Board of Directors agenda items (August 2020)
・ Formulated the Corporate Governance Principles & discussed ways of enhancing corporate governance (April 2020 - March 2021)
・ Conducted reviews for the medium-term business plan EWAY Future & Beyond (November 2020 - February 2021)
・ Shared information about issues in the Nomination Committee related to the composition of the Board of Directors, the diversity of the directors, and the Requirements for the Independence and Neutrality of Outside Directors, etc. (November 2020)
・ Shared information about issues in the Compensation Committee related to officer compensation systems (February 2021)
・ Shared information with the CFO about theory and practical application of ESG strategies that boost corporate value (March 2021)
- Dialogue with Stakeholders
a） Dialogues with Patients
・ After making sure to take sufficient precautions against the spread of COVID-19, the committee initiated dialogues with patients who are breast cancer survivors and also have experience helping care for their mothers suffering from dementia. The dialogue helped to gain a deeper understanding of the importance of empathy with the patient’s emotions, as well as the hhc Corporate Philosophy and its practical application.
b） Dialogues with Institutional Investors
・ An opinion exchange session was held with approximately 70 institutional investors and others through an online conferencing system, featuring roughly 2 hours of questions and answers, as well as discussions.
・ Individual dialogues with institutional investors were also held via online and telephone conferencing. Ten of these sessions were held, sharing information and exchanging opinions with about 7 companies overall.
・ Discussions with institutional investors offered the opportunity to hear candid opinions from various perspectives. The matters pointed out and knowledge gained from these dialogues are now being utilized in discussions and management oversight by the Board of Directors.
c） Dialogues with Employees
・ The committee remotely visited the Kawashima Plant, a pharmaceutical research and production facility, and the Tsukuba Research Laboratories which play a central role in our drug discovery efforts. After reviewing documents and videos detailing the histories of the plant and laboratories as well as their facilities and roles, young and middle-ranking employees and researchers then provided explanations about efforts in designing formulations, product quality assurance, and the state of the most recent research activities. Lively dialogues and discussions then ensued.
・ Exchanges of opinions were held (February 2021) with labor union representatives on behalf of employees, and discussions took place.
- Information Sharing and Discussion Regarding the Succession Plan
a）View Regarding Selection of the Chief Executive Officer (CEO)
The Company considers the selection of the CEO one of the most important decisions to be made by the Board of Directors. The CEO’s duty is to exhibit strong leadership while also nurturing the next CEO. The Company believes that having outside directors participate in this process with such recognition and having them offer advice, etc., increases the objectivity of the CEO’s proposal of successor candidates. It rationally ensures the fairness of the CEO selection process as the Board of Directors.
b）Procedures Regarding CEO Selection
Even after becoming a company with a nomination committee, etc., system in 2004, discussions had been repeated under a consistently optimal corporate governance system regarding the CEO succession process. In FY2016, with consideration given to developments up to that point, discussions were held in the Outside Directors Meeting (now the hhc Governance Committee) on how information should be shared by the Board of Directors in relation to a succession plan formulated by the CEO and how to prepare for unexpected situations. These procedures and other considerations were set out as rules. The outline of the procedures are as follows.1) Sharing of Information on the Succession Plan(a) Information about the succession plan proposal by the CEO is shared in the hhc Governance Committee twice each year.(b) The CEO and inside directors also participate in the hhc Governance Committee, and information on the succession plan is shared among all directors.2) Discussion on the Succession Plan(a) Criteria for evaluating candidates are expected to change in accordance with the business environment and other factors. For this reason, criteria will be set appropriately when the CEO proposes candidates.(b) The CEO evaluates candidates on the criteria that have been set, and presents evaluation results in the succession plan.(c) Outside directors provide advice on the succession plan. The CEO considers the advice provided by outside directors, and reflects it in the succession plan as appropriate.
c）Preparations for Unexpected Situations
Circumstances, such as unforeseen accidents, that necessitate the sudden selection of a new CEO by the Board of Directors are also possible. Contingency plans for such unexpected situations are also confirmed when considering the aforementioned succession plan.
- Implementation of Other Various Training Sessions, Etc.
In order to deepen the understanding of the Company’s business activities and business environment further, enhance deliberations by the Board of Directors, and fully utilize the oversight function, outside directors plan and carry out various training sessions as well as opportunities to interact with operational divisions (corporate officers, employees, etc.).
a) Training Sessions for Outside Directors
・ Before beginning their terms as newly appointed outside directors, these directors were provided with an overview of the Company and explanations of the Company’s Corporate Philosophy, state of business, important matters concerning corporate governance, various stipulations related to officers, and more.
・ After beginning their terms, outside directors were also given briefing sessions (11 times total) by corporate officers in charge in order to deepen their understanding of the Company. Subject matters included the Company’s business activities, current business environment, and trends in the pharmaceutical industry. Directors other than those just beginning their terms also voluntarily joined these briefing sessions to get the latest information.
・ Discussions were held with external experts (1) to share information about recent changes in the global economic environment, and (2) how the Board of Directors should operate in order to achieve the ideals of our Corporate Philosophy.
・ Compliance training for officers was carried out once in the first half and again in the second half of the year, and outside directors also voluntarily participated in this training.
b) Communication with Corporate Officers
In FY2020, discussions about EWAY Future & Beyond were held (3 times from November 2020 to February 2021) with corporate officers in charge of formulating the medium-term business plan ahead of deliberations in the Board of Directors. Sufficient time was also taken with corporate officers in charge of finance and accounting to share information and hold discussions about theory and practical application of ESG strategy that increases corporate value (March 2021).
- Implementation of Corporate Governance Evaluation
The effectiveness of the Board of Directors’ management oversight function is evaluated each year by the hhc Governance Committee. If any issues related to the operation of the Board of Directors, etc., are identified, a request and proposal for improvement are submitted to the Board of Directors and operational divisions. In the corporate governance evaluation, the status of the activities of the Board of Directors and other management councils is inspected and evaluated based on the recognition of issues in the previous fiscal year, issues are identified for the next fiscal year, and improvement measures are presented, thereby implementing the Plan-Do-Check-Act (PDCA) cycle. Beginning in FY2017, we have had an outside organization review our processes and results once every 3 years to regularly ensure the appropriateness and suitability of our corporate governance evaluations. This review was carried out in FY2020.< Results of the Review >
- Tireless efforts are clearly being dedicated to making the governance system more in-depth through use of the risk map and stronger monitoring that can identify risks whenever they arise.
- Sincere efforts are clearly being made to improve governance in a way that boosts corporate value, as regular checks by (outside) third parties are included in the evaluation methodology, and ways to create greater transparency are being devised.
- It was determined that the FY2020 Board of Directors evaluation overall had been performed properly from the perspectives of comprehensiveness, fairness, and appropriateness.
- It is effective from the standpoint of increasing support from stakeholders to explicitly re-confirm the items in the Board of Directors evaluation survey that people such as institutional investors emphasize. More highly effective corporate governance could thus be achieved.