Corporate governance system
The Company and its consolidated subsidiaries are building our business management system centered on the Board of Directors and Board of Auditors, placing focus on strengthening management transparency and enhancing corporate governance as our priorities.
Business execution system
The Board of Directors is comprised of nine members (of which two are female) including three members from outside the Company. The Board of Directors not only makes decisions on matters related to laws, regulations, and the articles of incorporation as well as basic matters related to business management and execution, but it is also positioned as a body that supervises the execution of duties by the Directors. Chaired by the Representative Director and Chairman of the Company, the Board of Directors meets once every month in principle and as necessary to make decisions on important matters and supervise the status of business execution.
The Board of Auditors is comprised of four members, of which two members are appointed from outside the Company. Each Auditor attends the Board of Directors Meetings and other important meetings and checks important documents according to the audit plan approved by the Board of Auditors. Through these activities and in cooperation with accounting auditors, the Auditors check the status of business execution by the Directors. The Auditors also implement activities as specified in “Collaboration between Auditors and Accounting Auditors,” “Collaboration between Auditors and the Internal Auditing Department,” and “Support by External Auditors” to strengthen the auditing function of the Board of Auditors.
Under the holding company system, we have established an Audit Office to strengthen internal auditing and ensure our business activities thoroughly comply with laws, regulations, fairness, and ethics.
Evaluation of the effectiveness of the Board of Directors
Every year, we commission a third-party organization to conduct a questionnaire survey to all Directors and Auditors on the overall effectiveness of the Board of Directors. Based on the analysis results of the survey, issues that need to be addressed and corresponding solutions are discussed by the Board.The results of the FY2021 effectiveness evaluation for the Board of Directors can be accessed in the document below.
Nomination and remuneration systems
Although we do not have a voluntary Nomination Committee at this point of time, we have set out the “Policy on Appointment and Removal of Directors and Auditors” to strengthen management transparency and enhance corporate governance as well as to expedite decision-making and promote delegation of authority.
For the purpose of selecting candidates for Directors and Auditors, the Policy requires the President to create a candidate proposal based on the Selection Standards and the Code of Conduct established by the Board of Directors. The proposal is then presented to each of the external Directors to solicit opinions before final decision is made by the Board of Directors. Proposals for Auditor candidates require consent from the Board of Auditors before final decision.
Our Board of Directors has established the “Policy on Remuneration of Directors and Auditors” so that remuneration for Directors and Auditors will provide a healthy incentive towards maximizing corporate value.
The combined amount of cash remuneration for Directors was decided not to exceed 300 million yen per year (of which combined remuneration for external Directors shall not exceed 30 million yen; the said amount does not include employee salary) at the 94th Annual General Meeting of Shareholders held on June 27, 2019. Besides this amount of cash remuneration, it was also decided that a total not exceeding 160 million yen will be contributed as share-based compensation to Directors (excluding external Directors) during the five-year period from June 28, 2019 to the closing day of the Annual General Meeting of Shareholders to be held in June 2024.
The combined amount of remuneration for Auditors was decided not to exceed 80 million yen per year at the 94th Annual General Meeting of Shareholders held on June 27, 2019.
Status of development of internal control system
We have developed a series of policies and rules on corporate ethics including “Corporate Philosophy,” “Group Vision,” “Basic Policy on Sustainability,” and “Code of Conduct for Officers and Employees” to ensure respect for human rights, environmental consideration, anti-corruption, elimination of antisocial forces, and other fair business practices at all Group companies. Based on the above policies and rules, our Group companies are encouraged to develop various rules of their own and issue notifications and communications as necessary to ensure fair business practices as a Group. We have clearly stipulated in our “Code of Conduct for Officers and Employees” to “Take a firm stand against antisocial elements and do not contribute to their interests in any way.” We are striving to keep this promise and will continue to take appropriate measures.
We have set up a “Compliance Committee” to maintain and further develop a firm compliance system for the whole Group, which meets four times a year as a general rule, to receive report on the status of compliance activities across the Group, collect information on laws and regulations as well as on administrative guidance and notices from government authorities, issue notifications and communications, develop rules and guidelines, and provide education and training toward ensuring fair business practices.
We promote early detection and correction of violation of laws, misconduct, and unfair action across all business operations, including unreasonable restraint of trade, unfair trade practices, and other violations of antitrust statutes, insider trading, and other violations of Financial Instruments and Exchange Act, bribery and other violations of anti-corruption statutes, and violations of industrial safety-related laws, as well as excessive entertainment and gifts that exceed socially acceptable standards, and various types of harassment by utilizing the whistle blowing system. Concerns raised and cases reported are promptly investigated and response taken according to internal rules to ensure appropriate business operations. The General Affairs Department functions to oversee compliance activities of the entire Group.
Status of risk management system
As for the risk management system, risk management of the entire Group is overseen by the “Risk Management Committee,” which is chaired by the President and held twice a year in principle. We strive to minimize risks by regularly performing risk identification and continuously responding to each of the risks identified. When a contingency arises, a crisis management headquarters headed by the President will be set up to quickly respond to the situation, prevent aggravation, and minimize damage.