Governance

Governance System

Corporate Governance Support System Corporate Governance Promotion Structure Improvement of our Corporate Governance System Remuneration for Corporate Officers and Directors

Corporate Governance Support System

Our support system of corporate governance is on top of various organizations stipulated under Companies Act (General Shareholders’ Meeting, Representative Director, Board of Directors, Board of Auditors, and Accounting Auditors). We have also deployed a Corporate Officer System in order to ensure prompt management decision making and execution of work operations by making clear the supervision of our management and execution of work operations.
Also, in order to fortify strategizing functions in our top management, we conduct deliberation to understand the current status of various business schemes and business strategies by holding Management Meeting among our Directors as core members. The Chair of the Board Meeting is our Chairman and President, who cannot serve as a Corporate Officer at the same time. In addition, at the 146th Ordinary General Shareholders' Meeting to be held on March 30, 2022, six Internal Directors and five External Directors were appointed, bringing the total number of Directors to 11. All of the appointed External Directors are Independent Directors.
The attendance rate of Internal Officers at meetings of the Board of Directors in 2021 was 100%, and the attendance rate of External Officers was as follows.

FY2021 attendance status

  Board of Directors
Number of times attended Attendance rate
Director Hideichi Okada 13/14 92.9%
Director Nobuo Takenaka 13/14 92.9%
Director Hirokazu Kono 14/14 100.0%
Director Takashi Yamane 14/14 100.0%
Director Masatoshi Hori 14/14 100.0%
Audit & Supervisory Board Member Atsushi Kamei 14/14 100.0%
Audit & Supervisory Board Member Megumi Shimizu 14/14 100.0%
Audit & Supervisory Board Member Hironori kimura 13/14 92.9%

Reasons for the selection of Outside Directors and Outside Audit & Supervisory Board Members

  • Hideichi Okada
    Hideichi Okada will have served as an outside director of the Company for eight years at the conclusion of this General Meeting of Shareholders.
    He has actively expressed his opinions and made proposals from an international perspective based on his deep insight into the economy, society, and other issues surrounding corporate management.
    He continues to serve as an outside director of the Company in order to reflect his abundant experience at government ministries and agencies and his insight into corporate management in the field of oil exploration and production, etc. in the management of the Company.
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Nobuo Takenaka
    Nobuo Takenaka will have served as an outside director of the Company for five years at the conclusion of this General Meeting of Shareholders.
    He has actively expressed his opinions and made proposals based on his many years of corporate management experience and extensive knowledge.
    He continues to serve as an outside director so that he can reflect his wealth of experience and insight as an officer of a major housing company and its group companies in the management of the Company.
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Hirokazu Kono
    Hirokazu Kono will have served as an outside director of the Company for three years at the conclusion of this General Meeting of Shareholders.
    He has actively expressed his opinions and made suggestions based on his deep insight gained from his many years of research in management engineering and business administration at universities in Japan and the United States.
    He has been appointed as an outside director of the Company so that his extensive academic knowledge of management engineering and business administration, as well as his experience and insight as an outside director at Stanley Electric, can be reflected in the management of the Company.
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Masatoshi Hori
    Masatoshi Hori will have held the position of Outside Director of the Company for two years at the conclusion of this General Meeting of Shareholders.
    In addition to his abundant experience and insight as a manager, he has actively expressed his opinions and made suggestions based on his practices and successful cases in M&A.
    He continues to serve as an outside director so that his experience and insight can be reflected in the management of the Company.
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Yuko Kaneko
    Yuko Kaneko is a certified public accountant with extensive experience working at an auditing firm and a university professor who researches and teaches auditing theory and practice.
    Although she has no direct experience of being involved in corporate management other than being an outside director, we believe that she will bring her wealth of knowledge and insight to the management of the Company, and we have therefore appointed her as a new outside director.
    She has maintained her independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Atsushi Kamei
    Atsushi Kamei has effectively utilized his experience and management perspective gained as an executive and CEO, which has been a leading company in the distribution sector in Japan for many years, to further strengthen our Company’s audit system; and he has fulfilled the role expected of him as an Outside Auditor (by monitoring the company’s operations from an external perspective, thereby helping to ensure the soundness of the Company’s management and enhance the transparency of its operations).
    He has maintained his independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
  • Megumi Shimizu
    Megumi Shimizu has provided us with useful suggestions and advice based on his extensive experience and high level of insight as a legal expert, which is based on his experience as a partner at a leading law firm in Japan and his track record as an outside director at other companies.
    We have asked her to continue to serve as an outside corporate auditor so that he can fulfill the role we expect of outside corporate auditors (monitoring management from an external perspective in order to ensure sound management and increase transparency).
    She does not fall under the category of any matter that may cause a conflict of interest with general shareholders as defined by the Tokyo Stock Exchange, and is considered to be independent, but we have not filed a notification of her appointment as an independent director or auditor.
  • Hiroki Kimura
    Hiroki Kimura has provided useful suggestions and advice based on his business experience as a manager of a financial institution, his extensive experience as an outside director at other companies, and his professional insight in accounting, finance, and asset management to date.
    He fulfills the role that we expect of outside auditors (monitoring management from an external perspective to ensure sound management and increase its transparency).
    He has maintained her independence, with no incidents that could have been deemed to be in conflict with the interests of ordinary shareholders, as defined by the Tokyo Stock Exchange.
The Board of Directors’ Meeting was held 14 times in fiscal 2021, and 66 proposals were deliberated.
In addition, we seek and incorporate the opinions of institutional investors in matters including proposals at the General Shareholders’ Meeting for Outside Officers, proposals on dividends and the Corporate Governance Code, and proposals regarding the Stewardship Code response policy.
Under our systems, Audit & Supervisory Board Members can get know the status of our business operations by attending various important meetings or committees such as the Management Meeting, and the Internal Audit Office that serves as an independent organization conducts internal audits of each business to check that operations are being conducted properly.
We have three pillars in our auditing system: the audits done by our Audit & Supervisory Board Members who supervise work execution by our Directors, accounting audits done by our independent accounting auditors as external audits, and finally, the audits done by our Internal Audit Department for work operation by our each corporate division and group companies, plus accounting audits. They function by maintaining each other’s independency; by establishing the three pillars of the audit system, our Audit & Supervisory Board Members can fortify the function of Audit & Supervisory Board Members by obtaining information from our Accounting Auditors and Internal Audit Department in a timely manner.
Also, in order to secure transparency and fairness in relation to the appointment and various benefits of our Directors, we determine them at the Board of Directors’ Meeting by establishing a voluntary Personnel/Remuneration Committee for Corporate Officers and Directors followed by our review.
The Personnel/Remuneration Committee for Corporate Officers had three Members (of which two were Outside Members) during the fiscal year from April 2020 to March 2021. As required by law, all transactions by directors that could be deemed to have conflict of interest implications and all transactions involving competitor firms were subject to approval by the Board of Directors, with the results being reported at Board Meetings.

Corporate Governance Promotion Structure

This information covers the fiscal year 2021.

Improvement of our
Corporate Governance System

We have made resolutions under the “Basic Guidelines for Corporate Governance in Accordance with the Companies Act” during our Board of Directors’ Meeting in May 2006. Not only do we follow up with their activity status every year, we also keep making further enhancements such as our review by aiming for clearer description of the “Guidelines of the Elimination of Anti-Social Behavior” in April 2009 and re-establishment of the Basic Guidelines following the revision of the Companies Act in June 2015. Also, to comply with the J-SOX Law effective from the fiscal year of 2008 (evaluation of support system for financial account in accordance with Financial Instruments and Exchange Act), it has been confirmed that our corporate governance system is effective both in internal and external evaluation in the fiscal year of 2021. We will continue to make improvements on this aspect as well in order to maintain sustainable and effective functionality.

Remuneration for
Corporate Officers and Directors

Candidates for Directors and Audit & Supervisory Board Members are selected by the Personnel/Remuneration Committee for Directors and Audit & Supervisory Board Members, which consists of one internal officer and two external officers, and after a resolution by the Board of Directors, the appointment is submitted to the General Meeting of Shareholders for approval. With regard to remuneration, transparency and fairness are secured by the Personnel/Remuneration Committee for Corporate Officers and Directors, and remuneration is decided on by the Board of Directors. Regarding the remuneration of Audit & Supervisory Board Members, the Board of Directors has established a policy of “determining remuneration by Audit & Supervisory Board Members after deliberation by the Board of Directors in order to ensure the transparency, fairness, and independence of audits.” It was 467 million yen for directors and 87 million yen for auditors in fiscal 2021. We seek the opinions of stakeholders through means such as a shareholder questionnaire and the “Contact Us” page of our official website.

Details of executive remuneration

Executive category Total remuneration
(Million yen)		 Total by type of remuneration
(Million yen)		 Number of
applicable executives
(persons)
Basic remuneration Performance-linked remuneration
Bonus Restricted stock compensation Medium-term performance-linked remuneration
Directors
(excluding Outside Directors)		 417 198 60 100 57 7
Audit & Supervisory Board Members
(excluding Outside Audit & Supervisory Board Members)		 63 45 17 - - 3
Outside Officers 74 74 - - - 8