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  2. Governance
  3. Corporate Governance

Corporate Governance

Basic Approach

In order for Isuzu to continuously increase revenues and enhance corporate value through its corporate activities, the Company believes that it is essential to establish a corporate governance system that provides a framework for regulating such activities.
Furthermore, we believe that the fundamental purpose of corporate governance is to respect the perspectives of, and build constructive relationships with, all of our stakeholders, and to that end we endeavor to ensure fairness and transparency in our corporate affairs through timely and appropriate disclosure of important information. In particular, we believe that a key element of corporate governance is to develop an internal structure and environment that protects the rights and interests of all stakeholders and ensures equality among stakeholders.

Management Structure

Isuzu is a company with an Audit and Supervisory Committee. We have a Board of Directors and an Audit and Supervisory Committee to act as statutory meeting structures to resolve, supervise and audit the execution of our main business activities. In addition to these statutory meeting structures, the Management Meeting deliberates on important policies and plans, conducts business management and executes other overall business activities. We also have advisory bodies and meeting structures to facilitate supervision and decision-making on business execution.
The outline of our corporate governance structure is as follows (as of June 28, 2023).

Corporate Governance Structure

Board of Directors

The Board of Directors lives up to the mandates and confidence of shareholders and, for the purpose of consistently enhancing our corporate value, makes important decisions and conducts supervision on issues that concern our business management. In principle, the Board of Directors holds monthly meetings and may also hold extraordinary meetings on an as-needed basis to deliberate and make decisions on necessary agenda items.
Currently, the Board of Directors consists of 13 directors. The Board is chaired by Masanori Katayama, Chairman CEO, and Representative Director. Five of the 13 directors are independent outside directors.

Audit and Supervisory Committee

The Audit and Supervisory Committee follows the audit plan that it established, and audits and supervises the Board of Directors’ decision making and directors’ execution of business. Currently, the Audit and Supervisory Committee is composed of five directors who serve as Audit Committee Members. To strengthen the auditing and supervisory functions of the Audit Committee Members and to enable them to collect information daily, share information at important internal meetings, and fully cooperate with the accounting auditors and the internal audit division, three members (Makoto Anayama, Kenji Miyazaki, and Masao Watanabe) have been selected as Standing Audit and Supervisory Committee Member. The Committee is chaired by Makoto Anayama, a director and a Standing Audit and Supervisory Committee Member. Of the five Audit and Supervisory Committee members who are directors, three are independent outside directors.
All five members are selected members of the Audit and Supervisory Committee.

Nomination and Remuneration Committee

In addition to these statutory organizations, Isuzu has a Nomination and Remuneration Committee, an arbitrary organization on corporate governance that is designed to strengthen the independence, transparency and objectivity of the function of the Board of Directors involved in the nomination of candidate officers, selection of executives, decisions on officers’ remuneration and other processes. Isuzu's Nomination and Remuneration Committee consists of five members, including two internal directors (Masanori Katayama and Shinsuke Minami) and three outside directors (Mitsuyoshi Shibata, Kozue Nakayama, and Makoto Anayama). The chairman is Masanori Katayama, who holds the positions of Chairman, CEO, and Representative Director. The Committee deliberates and gives opinions on the questions it receives.

Executive Officer System and Management Meeting

By separating supervision and business execution, Isuzu is building a rapid decision-making and execution system through improvements in the deliberations in the Board of Directors, the supervisory organization, and the proper transfer of power from the Board of Directors. We also have executive officers and executives to take responsibility for a rapid decision-making and execution structure and for business execution in the areas of their assignment. The Management Meeting, consisting of Masanori Katayama, the Representative Director, Chairman of the Board, and CEO; Shinsuke Minami, the Representative Director, President, and COO; various Executive Vice Presidents (EVPs), group CxOs, and executive officers, is chaired by Shinsuke Minami and deliberates on issues concerning our business management and execution within the scope of power transferred from the Board of Directors.

Group CxO System

To further strengthen governance, we appointed the following CxOs. These officers have supervisory authority Company-wide over specific areas across different divisions and Group companies.

  • Group CFO (Chief Financial Officer)
  • Group CRMO (Chief Risk Management Officer)


Governance Themes

As corporate governance has been strengthened in Japan in recent years, Isuzu has endeavored to reform its governance. In June 2021, we shifted to a company with Audit and Supervisory Committee. We will remain committed to strengthening our governance and enhancing our corporate value.

Term 115th 116th 117th 118th 119th 120th 121st 122nd
Year Ended March 2017 March 2018 March 2019 March 2020 March 2021 March 2022 March 2023 March 2024
Outside Directors
2 (0) 2 (0) 2 (0) 2 (0) 2 (1) 5 (2) 5 (2) 5 (2)
Officer Compensation Introduced performance-linked stock-based compensation system Decide the upper limit of the annual Amount of Directors’ bonuses
Advisory Committee Establishment of Nomination and Remuneration Committee
Separation of Execution and Supervision Revise approval standards and rules Shift to a company with Audit and Supervisory Committee Appoint CCO Appoint CEO and COO
Appoint CxOs Delegate important decision-making on the execution of company business to Directors
Improving the Functioning of the Board of Directors Launch the Effectiveness Assessment Ratio Independent of Outside Directors: 1/3 or more
Setting the agenda for management strategy
Creation of Skills Matrix
Initiation of Institutional Shareholder Engagement

Board Effectiveness Assessment

Isuzu conducts an annual evaluation and analysis of the effectiveness of the Board of Directors to improve its operations. The following is a summary of the evaluation and analysis for FY2023 (ended March 31, 2023).

  1. Process of analysis and evaluation for FY2023
    Isuzu conducted an evaluation focusing on the separation of “execution” and “supervision” status resulting from the organizational changes implemented two years ago, as well as the performance of the monitoring function of the Board of Directors.
    Questionnaires targeting all directors and interviews conducted by a third-party organization were carried out and the results were analyzed. Additionally, countermeasures for the issues identified through the analysis were devised, and a report was presented to the Board of Directors in May 2023 for evaluation and confirmation of future initiatives.
  2. Summary of evaluation results (strengths)
    Isuzu's Board of Directors evaluated and confirmed the following three points as strengths.
    1) We are steadily, proactively, and urgently working on establishing and enhancing the governance structure. The "delegation of authority to the Management Meeting" and the "strengthening of the Board of Directors' supervisory function" are being progressed effectively. 2) To enhance understanding of the agenda, there is a well-established practice of conducting pre-briefing sessions and distributing materials in advance for outside directors. 3) The Board is composed of a balanced team of members with diverse backgrounds, qualifications, and skills.
  3. Summary of evaluation results (challenges)
    Isuzu's Board of Directors identified the following four points as challenges to enhance the Board’s monitoring function.
    1) Enhancement of appropriate agenda setting and discussions 2) Enhancement of reporting on internal control status, including the risk management structure. 3) Sharing the opinions of each stakeholder with the Board of Directors 4) Enhanced discussion of cost-of-capital strategies and business portfolios.
  4. Major issues in FY2022 and progress of initiatives for FY2023.
    Major issues in FY2022 Progress of initiatives for FY2023
    (1) Enhance discussions with an awareness of the diverse opinions of shareholders and stakeholders
    • The voices and opinions of various stakeholders such as employees, business partners, shareholders, and investors were shared with the Board of Directors as needed.
    • In particular, the sharing of the contents of financial reports and the provision of result updates have been strengthened.
    • We will systematically capture and share the opinions of various stakeholders, taking into account IR/SR activities and ESG-related discussions, and engage in discussions accordingly.
    (2) Enhanced discussion of cost-of-capital strategies and business portfolios
    • Efforts have been made to enhance the content of the performance explanations provided by the Group CFO.
    • In particular, the content of the "CFO Message" in the Integrated Report has been discussed to move toward the desired direction.
    • We will further enhance discussions on cost-of-capital strategies and business portfolio.
    (3) Enhancement of reports to the Board of Directors (reports on risk management, compliance, and nomination and remuneration.)
    • Throughout the year, discussions on Risk Management and Compliance were conducted, leading to an improvement in the monitoring function of the Board’s execution status.
    • Taking into account the rapidly changing environment, we will strive to enhance reporting and clarify the main points of discussions.

Officers’ Remuneration

Basic Principles

The following are Isuzu’s basic principles on remuneration for directors and executive officers.

  1. Contribute to sustained growth of Isuzu and enhancement of its corporate value, and facilitate the sharing of value with shareholders.
  2. Remuneration should be at the level necessary and appropriate for securing and keeping talented human resources with due consideration to the economic environment, market trends and the levels of remuneration in other companies.
  3. The amount of remuneration should reflect the performance of the Company and the individual as well as his/her job responsibilities and positions.
  4. The process for deciding remuneration should be objective, impartial and transparent.
  5. Our officer remuneration system and the amounts of payment to officers should be periodically reviewed whenever the Mid-Term management plan is updated and with consideration of factors such as the economic environment, the levels and systems of remuneration for officers in other companies and the status of Isuzu’s use of the system.

Remuneration for Directors (excluding Audit and Supervisory Committee Member)

Remuneration for directors (excluding the directors that are Audit and Supervisory Committee Member and outside directors) includes basic compensation, bonuses linked with the degree of achievement of the single-year consolidated performance target and the amount of remuneration that is based on the performance-linked stock compensation plan linked with the degree of achievement of the management indexes aimed within the period of a Medium-Term management plan. Methods for evaluating each officer’s performance and deciding the officers’ bonuses and the performance-linked stock compensation plan go through a procedure of consultation and provides opinions to the optional Nomination and Remuneration Committee, of which independent outside directors occupy the majority. In this procedure, the president fulfills his accountability and thereby secures the objectivity and impartiality of remuneration for officers.

Details of Remuneration and Non-monetary compensation Basic compensation Decided on the basis of the standard amounts that is predetermined for different positions and the evaluation of individuals’ performance.
Performance linked compensation Bonus
  • Linked to the degree of achievement of performance targets for a single fiscal year
  • A performance-linked coefficient in the range of 0% to 200% will be determined that represents the degree of achievement of consolidated operating income compared with the target in a single fiscal year, and bonuses will be determined by multiplying this coefficient by basic remuneration, which is the standard amount for the relevant position, and by the percentage of base pay (40%; 50% for the president and representative director).
Share based compensation
  • Linked with the degree of achievement of the target during the period of a mid-term management plan.
  • Apply the weighted average to the degree of achievement of target values, including consolidated sales, consolidated operating profits and consolidated return on equity (ROE) in the proportion of 35%:35%:30%. Multiply it with the coefficient of the degree of growth of shareholder’s value, etc.*1 to calculate the performance-linked coefficient within a range between 0% and 225.6%. Combined with this, use the standard amounts by position, which is the basis of basic compensation, and the component ratio (0.30 for president and 0.50 for Chairman) and assumed stock prices*2 to decide the points to give.
    1. *1Determined on the basis of the result of comparison between Isuzu’s total shareholder return (TSR) and the growth rate of TOPIX (dividends included) during the relevant period
    2. *2The average of the closing price of regular transactions of Isuzu shares in TSE on each day of the month before the month during which the relevant period started, with the exception of the days on which no transaction was closed (truncated to the closest whole number).
Method for deciding the proportion Basic compensation: Bonuses: Share-based compensation = 1.00:0.40:0.30 (1.00:0.50:0.50 for president and Chairman)
(Assuming that the performance target is fully achieved)
Policy regarding the time of payment Basic compensation Monthly compensation (1/12 of basic compensation is paid monthly)
Bonus Paid in July after the degree of achievement of the single-year (individual/Company) performance target is determined.
Share-based compensation Paid in July after the degree of achievement of the performance target stated in the mid-term management plan and the TSR coefficient in comparison with TOPIX are determined.
Procedure for deciding re-entrustment Basic compensation Evaluation of individuals’ performances is re-entrusted to the president after the Board of Directors’ resolutions.
Bonuses and share-based compensation Automatically calculated on the basis of the degree of achievement of the target, standard amount and coefficients. The amounts depend solely on the Company’s performance and thus involve no scope for discretion.

Remuneration for Outside Directors

Remuneration for outside directors consists of basic compensation only, in view of their roles and independence. Each director receives the fixed amount only and the remuneration involves no fluctuation that may result from performance evaluation and so on.

Compensation for Directors Who Are Also Audit and Supervisory Committee Member

The amount of remuneration for directors who are Audit and Supervisory Committee Member consists of basic compensation only, in view of their roles and independence. It is decided through discussion by the directors who are members of Audit and Supervisory Committee Member with consideration of factors such as the number of directors, economic environment, market trends and the levels of remuneration in other companies, within the range of the upper limit approved at the General Shareholders Meeting.

Total Remuneration Amounts and Other Payments to Directors

Classification Total amount of compensation (million yen) Amount of remuneration, etc. by type (million yen) Number of eligible officers
Basic compensation Bonus Remuneration based on the performance-linked stock compensation plan,etc. Non-monetary compensation
Directors (excluding Audit and Supervisory Committee Member and outside directors) 663 336 183 142 142 7
Audit and Supervisory Committee Members (excluding outside directors) 68 68 - - - 2
Outside officer 94 94 - - - 5
  1. *This figure includes one director who retired as of the conclusion of the 120th General Shareholders Meeting held on June 28, 2022.

Policy on Cross-shareholdings

Isuzu believes that holding its business partners’ shares on the assumption of long-term transactions is an effective means of building a stable relationship and should lead to the enhancement of its corporate value over the medium and long terms. To confirm the reasonability of holding business partners’ shares, the Board of Directors annually performs an examination from two different aspects: it conducts a quantitative evaluation of each issue in terms of criteria such as whether the benefit of holding the shares at least equals the capital cost, and a qualitative evaluation of the significance of the shareholding, among other aspects. Consequently, any shares that we no longer see a reason to hold will be swiftly reduced. In executing our voting rights as a shareholder, we respect, as a shareholder with individual trade relations, the aims and intentions of the proposals and resolutions submitted from share issuer. If we see a risk of damaging a share issuer’s value during the process of a dialogue with the share issuer or examination of a resolution; however, we will request the withdrawal or review of the resolution and will take action for each resolution, which may involve abstaining from the right to execute our voting rights.