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, two of whom are outside directors. As the highest decision-making body, the Board makes decisions on matters defined by laws and our Articles of Incorporation, and on other important matters, while also supervising the execution of duties by directors and executive officers.
We have appointed one foreign national and one woman as outside directors in keeping with our efforts to promote diversity. Outside directors provide advice and guidance on corporate management strategies, and play an important 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 outside Audit and Supervisory Board members, attend meetings of the Board of Directors to provide opinions from an objective and neutral standpoint, and based upon their specialized knowledge.
Meetings of the Board of Directors
|Number of Meetings||8||12||12|
|Attendance by Outside Directors||100%||100%||100%|
|Attendance by Outside Audit & Supervisory Board Members||100%||100%||100%|
Audit & Supervisory Board
The Audit and Supervisory Board is comprised of three members, including two outside 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 outside 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 outside directors), and one of the outside 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 outside directors and outside Audit & Supervisory Board members (“outside officers”). We make recommendations for appointment of outside 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 outside officers who are independent from management.
We have introduced a restricted stock compensation plan (as of the fiscal year ended March 31, 2020) in addition to base pay, performance-based bonuses and retirement allowances for directors (excluding outside directors).
The amount of performance-based bonuses is determined by the degree to which earnings for the fiscal year have been achieved relative to targets for consolidated net sales and consolidated operating profit.
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 outside director.