“K” LINE is developing and strengthening its corporate governance and risk management framework in order to fulfill its social responsibility, respond to the mandate bestowed by its stakeholders, including shareholders, and achieve sustainable growth. While thoroughly enforcing its corporate ethics across the entire group, “K” LINE will continue to develop an organic and effective governance framework, strengthen its earnings / financial structure and enhance its corporate value.
Under the “Japan’s Corporate Governance Code” formulated by Tokyo Stock Exchange, Inc., we are enhancing our corporate governance structure and formulating Kawasaki Kisen Kaisha, Ltd. CORPORATE GOVERNANCE GUIDELINES to clarify our approach and management policy.
In line with Article 17 of our Corporate Governance Guidelines, the Criteria for Independence of Outside Directors is prescribed as below:
Corporate Governance Structure
Business Execution Structure
The Board of Directors and Audit & Supervisory Board are in charge of establishing, managing and monitoring the Company’s corporate governance structure, while committees and other organs work to enhance the structure. With effect from April, 2016, the Company has implemented “Unit Supervisory System” and “Unit Supervising Executive Officers” for further improvement of efficiency and reinforcement of business execution structure.
Board of Directors
The Board of Directors is an organ of the Company that meets at least once a month and determines fundamental management policies, matters required by laws and regulations, and other important management-related matters, as well as supervising the execution of duties by the Directors. Three of the nine Directors are Outside Directors. The Audit & Supervisory Board Members also attend the Board of Directors’ Meetings.
Nominating Advisory Committee
The Nominating Advisory Committee is comprised of all Outside Directors, the Chairman of the Board, and the President & CEO, while the Chair is appointed from among the Outside Directors through mutual election among themselves. The Committee conducts deliberations on reasonableness of proposals for appointment or dismissal of the Company’s Officers upon consultation from the Board of Directors.
Remuneration Advisory Committee
The Remuneration Advisory Committee is comprised of all Outside Directors, the Chairman of the Board, and the President & CEO, while the Chair is appointed from among the Outside Directors through mutual election among themselves. The Committee conducts deliberations on institutional design of Officers’ remuneration system and level of Officers’ remunerations upon consultation from the Board of Directors.
Audit & Supervisory Board
The Audit & Supervisory Board formulates and implements audit policies and plans, and undertakes to conduct efficient, expeditious auditing. Two of the three members of the Audit & Supervisory Board are outside members. As an independent organ, the Audit & Supervisory Board audits the execution of duties by the Directors through attendance at meetings of the Board of Directors and other important meetings and the inspection of important decision-making documents. “K” LINE assigns dedicated staff as assistants to the Audit & Supervisory Board Members.
The Management Conference function as a system to help the President & CEO and/or his/her representatives make decisions, through lively discussion. The conferences are held every week, attended by the Chairman of the Board, the President & CEO, Executive Officers equivalent to or higher than Senior Managing Executive Officer, the Executive Officers in charge of Corporate Planning, Finance and Accounting, and Members of the Audit & Supervisory Board.
Executive Officers’ Meeting
Executive Officers’ Meetings are held once a month in principle, attended by all the Executive Officers, including those concurrently serving as Directors, and Audit & Supervisory Board Members, where progresses of business executions (including monthly performances) and decision-matters are reported and discussed.
Meetings of the Investment Committee, consisting of Executive Officers in charge of Corporate Planning and Finance, and other Executive Officers and General Managers appointed by the President & CEO, are held periodically to deliberate on basic plans and important initiatives for maximizing investment effects, while taking the Company’s investment capacity into consideration. The Committee also monitors past investment effects and considers the termination or cessation of such investments.
Unit Supervisory System
Under the direction of the President & CEO, as a head of business execution, eight Unit Supervising Executive Officers who control and supervise multiple business departments or administration departments have been placed. Under the control of each Unit Supervising Executive Officer, Executive Officers in charge of each department have been placed. Each unit is as follows.
- Dry Bulk Carriers Unit
- Energy Transportation Business Unit
- Car Carriers Unit
- Containerships, Port Business, Logistics, Affiliated Business Promotion Unit
- General Affairs, Legal, Corporate Legal Risk & Compliance, Corporate Planning, Research Unit
- Human Resources Unit
- Marine Sector, Advanced Technology, Ship Technical and Environmental Affairs Unit
- Finance, Accounting, IR&PR Unit
- Information System Unit
Corporate Governance Structure
Officer’s Remuneration System
Policy and Procedures for the Determination of Officer’s Remuneration
Remuneration for Executive Directors shall reflect “K” LINE’s medium- to long-term business performance and the latent risks borne by said Executive Directors and to further enhance their willingness to bring about sustainable growth and maximize corporate value. Remuneration for Non-executive Directors shall reflect the amount of time devoted to business of “K” LINE and the responsibility borne by them. In line with this policy, the Remuneration Advisory Committee is responsible for the deliberation and determination of the design of our remuneration system and standards etc. and reporting back to the Board of Directors. The Board of Directors is responsible for determining levels of remuneration based on this report.
In addition to monthly remuneration, remuneration paid to Directors is comprised of a Performance-based Share Remuneration Plan (BBT=Board Benefit Trust) approved by the Ordinary General Meeting of Shareholders held in June 2016. The purpose of the BBT is to enhance Executive Directors’ awareness about contributions to improvement in business performance and increase in corporate value in the medium- to long-term. See below for an overview of our remuneration system.
For information on remuneration amounts for each fiscal year, please refer to Governance Data.
Establishment and Maintenance of the Internal Control System
The Board of Directors is responsible for establishing the internal control system, evaluating its effectiveness and ensuring that it functions properly. In addition, through monitoring and verifying the status of the internal control system, the Internal Audit Group plays a role in supporting the Board of Directors in carrying out its responsibilities for the development, maintenance and enhancement of the internal control system. The Audit & Supervisory Board Members oversee the processes by which the Directors establish the internal control system and confirm that it is functioning effectively.
Further, while respecting the autonomy of each of our Group companies, “K” LINE supports and supervises the establishment and effective management of internal control systems within each of these Group companies to ensure that activities conducted across all Group companies are appropriate.
To ensure proper business operations of the “K” LINE Group companies, we have established the Charter of Conduct for “K” LINE Group Companies, as a keystone for both corporate governance and compliance of the entire Group. Based on this Charter, each Group company has established its own Implementation Guideline for Charter of Conduct.
The “K” LINE Group has introduced an internal reporting system called “Hot Line System.” In addition to an internal contact, we have also established an external point of contact with outside lawyers and have appointed full-time Audit and Supervisory Board members as an additional contact window. The system is accessible to all people working at “K” LINE and Group companies that have joined the system, regardless of employment status or position. The Group also aims to make the system user-friendly for both executives and employees by establishing a preliminary consultation window for people who are undecided about making a report, in addition to clearly documenting the protection of whistle-blowers.
A list of governance-related data, including the composition of the Board of Directors, is posted in the ESG Data section.