Basic Approach to Corporate Governance
We believe that our corporate value can be steadily improved over the long term by quickly implementing responses to changes in the operating environment and increasing the transparency of our management activities from the perspectives of both internal and external stakeholders, including shareholders, customers, trading partners, local communities and our employees. Based upon this belief, we consider corporate governance to be one of our most important management issues and we actively promote efforts to strengthen our corporate governance function.
We have adopted a corporate structure of a "Company with a Board of Company Auditors" as defined by the Companies Act of Japan to establish an effective management supervision function for our Board of Directors, and to leverage the management oversight function of the Audit & Supervisory Board. We have also introduced an Executive Officer system in 2013, and seek to accelerate the management decision-making process and to enhance business execution functions.
Board of Directors
Our President and Representative Director serves as Chairman of the Board of Directors.
The Board is comprised of eight directors, three of whom are external directors. As the highest decision-making body, the Board makes decisions on matters defined by laws, and our Articles of Incorporation, while also supervising the execution of duties by directors and executive officers.
We increase diversity on our Board of Directors. In April 2022, a younger-generation female director was appointed President and Representative Director. In addition, two foreign national and one woman were appointed as external directors, and one woman was appointed as an external corporate auditor to ensure diversity on the Board of Directors further. We will further strengthen governance by stimulating discussion at the Board of Directors from diverse perspectives regarding gender, age, and nationality.
External directors provide advice and guidance on corporate management strategies and play an essential role in increasing the objectivity of our decision-making process and strengthening our corporate governance function.
In addition, three Audit and Supervisory Board members, including two external Audit and Supervisory Board members, attend meetings of the Board of Directors to provide opinions from an objective and neutral standpoint based on their specialized knowledge.
|Shuichi Yoneyama||Executive Managing
|Wataru Hirokawa||Executive Managing Director
|Michael N. Morizumi||External Director||◎||◯||◯||◯||◯|
|Fukiko Otsubo||External Director||◯||◯||◯||◯||◯|
|Duncan Ryuken Williams||External Director||◯||◯|
Meetings of the Board of Directors
|Number of Meetings||12||12||13||13||13|
|Attendance by External Directors||100%||100%||100%||100%||100%|
|Attendance by External Audit & Supervisory Board Members||100%||100%||100%||100%||100%|
Evaluation of the Effectiveness of the Board of Directors
We evaluate the effectiveness of the Board of Directors to improve its function and strengthen our corporate governance.
The overview of the valuation methodology and results for FY2022 is as follows.
|Method||Self-evaluation through a questionnaire by an external organization（23 questions in total）|
|Respondents||All directors and auditors (10 members in total)|
|Major Categories of Questions||① Organization and operation of the board
② Management and business strategies
③ Business ethics and risk management
④ Monitoring of business performance; appointment and remuneration of the management
⑤ Dialogue with shareholders and other related parties
Dialogue with shareholders and business ethics and risk management were highly evaluated. Meanwhile, the shift of discussion focus to mid- and long-term strategies by reviewing board meeting agenda standards and operating procedures, as well as proactive involvement in the development plan of senior management candidates, was identified as a priority issue to be addressed.
Based on the results, we will make continuous improvements to further enhance the effectiveness of the Board of Directors.
Audit & Supervisory Board
The Audit and Supervisory Board is comprised of three members, including two external Audit and Supervisory Board members. As a supervisory body that is separate from the Board of Directors and whose members have independent authority, it provides effective supervision through its strong authority to supervise the Board of Directors, including the authority to attend and provide opinions at meetings of the Board of Directors and to investigate operations and assets to help ensure soundness of our management.
Also, Audit and Supervisory Board members meet with the accounting auditor regularly to ascertain the status of their respective audits through information sharing and discussion.
Furthermore, Audit & Supervisory Board members meet with our President regularly to share opinions.
Compensation Advisory Committee
We have established a Compensation Advisory Committee as a voluntary advisory body to the Board of Directors in order to ensure fair and highly transparent procedures regarding the compensation of directors by obtaining appropriate involvement and advice from our independent external directors. This Committee discusses the basic policy for directors’ compensations, the amounts thereof, and other matters in response to consultation from the Board of Directors and reports its findings to the Board of Directors.
It is comprised of four directors (two of whom are external directors), and one of the external director serves as chair of the committee.
Internal Control System
We have established a Compliance Committee and a Risk Management Committee. Furthermore, we are working to maintain a rigorous compliance structure and to reinforce the structure of our internal control system. In addition, the Internal Audit Department, which is an independent organization that reports directly to our President, evaluates and supports the execution of operations from an independent standpoint to help us achieve our management goals.
Furthermore, we have established a basic policy regarding our internal control system. Based on this policy, we continually evaluate the design and operation of our internal control system, and take corrective actions as and when necessary. We also regularly review this policy in response to changes in the management environment and other developments to ensure its effectiveness and sound operation.
Objectivity and Transparency of Governance
We have established our own standards of independence in appointing external directors and external Audit & Supervisory Board members (“external officers”). We make recommendations for appointment of external officers based on whether sufficient independence (in light of their background and relationship to our Company) can be ensured in the execution of their duties as external officers who are independent from management.
Director compensation consists of base pay, performance-based bonuses for directors, excluding external directors, and a restricted stock compensation plan.
The amount of performance-based bonuses is determined based on the degree of achievement of consolidated net sales and consolidated operating profit as financial indicators and the percentage of women in managerial positions as a non-financial indicator.
We endeavor to ensure transparency and fairness in the determination of director compensation by respecting the opinions of the Compensation Advisory Committee, which is chaired by an external director.