Integrating the virtual and the physical

The Last Inch to IoT


Corporate Governance


Basic concept

We aim to realize sustainable growth and higher enterprise value on a medium- to long-term basis under our vision of becoming “the leader and most trusted company in the Auto-ID solutions industry worldwide, exceeding customer expectations in an ever-changing world.” We believe that building and continuously strengthening our corporate governance system to support these aims is critical to ensuring the soundness, transparency, and efficiency of our management.
In developing a sound foundation for this system, we seek to achieve effective corporate governance for our shareholders and other stakeholders by enhancing functionality of our Audit & Supervisory Board and management oversight of our Board of Directors which is structured to constitute a majority of Independent External Directors for a high standard of transparency.

SATO’s corporate governance
1.
General Meeting of Shareholders: Create deeper understanding of our company through dialogue with more shareholders

Besides submitting proposals about the distribution of earned surplus, election of board members, and other major matters for resolution at the general shareholders’ meeting, we regard the meeting as the most important opportunity for us to report on our business performance and engage in direct dialogue with shareholders to deepen their understanding of the company. To this end, we hold the meeting avoiding peak days, and take care to address any feedback or questions raised.

2.
Board of Directors: Improve effectiveness of the Board by continuously strengthening its functionality

We believe we can achieve effective corporate governance by making our Board of Directors function more robustly.

  • a.Involve External Directors in active discussions
    We have increased the number of our External Directors from one in 1999 to two or more since 2002, and to now account for the majority of our Board as board independence gains growing importance. All six selected External Directors at present (of which two are women) are registered as Independent External Directors with the Tokyo Stock Exchange, and have expert knowledge and extensive experience in diverse fields to support our aims in realizing sustainable growth and higher enterprise value on a medium- to long-term basis.
    To use this board structure/composition effectively toward reviewing critical management matters and overseeing the activities of the company’s executive function, the Board of Directors pays close attention to the activities of the executive function to set its agendas in a relevant manner throughout the year.

  • b.Revamp advisory committees for effective use
    In February 2018, we established a new Business Risk Committee to advise the Board of Directors with identifying, analyzing, and continuously monitoring risks that the company would take in driving business. As our Board is already comprised in majority of Independent External Directors from diverse backgrounds, we have abolished the Nominating and Compensation Advisory Committees for the Board to better serve its actual functions in line with Corporate Governance Code principles. This is because we believe that skipping unnecessary processes to directly discuss related matters among Board members helps add more speed and perspectives to the Board’s discussions and make it a stronger function.
  • c.Evaluate the Board’s effectiveness
    We regularly conduct surveys to analyze and evaluate the effectiveness of our Board of Directors to check our corporate governance and take appropriate measures. Evaluation results from May 2018 showed that the Board, with External Directors raising questions and opinions freely in constructive discussions, is functioning better than ever and maintains its effectiveness in making important management decisions and supervising business execution.
    For issues identified in these evaluations, we will make it a point to implement changes and continuous improvements so as to further enhance the Board’s effectiveness.
  • d.Have Directors chair the Board in rotation
    Since 2006, Directors (now limited to External Directors and Internal Directors without executive responsibilities) chair the Board in rotation to ensure transparency and fairness in management.
  • e.Set up meetings for non-executive Directors and Audit & Supervisory Board members
    Besides attending Board meetings, non-executive Directors also meet with Audit & Supervisory Board members regularly for free discussions to identify and sort out medium- to long-term management issues.
3.
Audit & Supervisory Board: Provide accountability to stakeholders through vigilant cooperation

Audit & Supervisory Board members (four including two external), who have been voted on by our shareholders, attend important meetings including Board of Directors meetings, and exchange opinions regularly with our Representative Director to share matters concerning corporate governance and discuss their solutions. This Board has access to Teiho and weekly reports (submitted by employees), information from internal networks (shared by in-house members on the same Board), and complaints of misconduct (reported via external channels) to help it develop a common understanding, duly reflecting the objective perspectives and knowledge of its external members. Board members also cooperate with our auditing firm and internal audit department to enable multiple layers of checks on our Directors’ execution of duties.

4.
Executive Committee: Make decisions for efficient business execution

The Executive Committee, comprised of Executive Officers, reviews important matters related to the company’s overall management and makes decisions for execution or submission to the Board of Directors.
Their meetings are also attended by Internal Directors and Audit & Supervisory Board members who provide advice as necessary.

5.
Teiho: Empower employees to participate in company management

Introduced in 1976, Teiho is SATO’s very own system for employees to submit short daily reports (written within a set word count) about new information or ideas derived from work and interactions with customers directly to top management.
The Teiho system is an important pillar of our corporate culture that helps top management stay at the forefront of situations inside and outside the company to facilitate quick decision-making and actions, while allowing employees to think and take part in running the company from the management’s perspective.
And as everyone regardless of rank or years of service participates, it serves as a form of monitoring to prevent misconduct or fraudulent behaviors for effective compliance.

6.
Other practices for supporting corporate governance
  • The Audit Department conducts financial audits, operational audits, and internal control evaluations for different departments and SATO Group companies.
  • The Group Compliance Department works with administrative departments in the SATO Group to establish operating standards, ensure compliance with existing rules, and provide support for improvement from the perspective of group-wide optimization.
  • The Risk Management Committee identifies risks associated with natural disasters, accidents, and other unforeseen circumstances that would significantly harm our business value, and draws up countermeasures for such risks should they occur.
  • The Health & Safety Committee defines basic guidelines to prevent accidents at work, maintaining and enhancing the well-being and safety of employees while creating a conducive environment for our workplaces at the same time.
  • Employees can report any governance failures or compliance breaches with anonymity via channels that are set up at external law firms and managed by the Audit & Supervisory Board.

SATO’s corporate governance

Corporate Governance Report

The latest corporate governance report can be found here.