Corporate Governance

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Basic Philosophy

Guided by our corporate philosophy under the slogan “With established trust and confidence inside and outside the company, we aim to contribute to the peoples of the world by creating and putting at their disposal new values for the future”, we have established, and are working to enhance, our corporate governance system to promote management aimed at increasing our corporate value over the medium to long term. Our basic view on corporate governance is to build relationships of trust with our shareholders, customers, business partners, employees, local communities, and other stakeholders through management that ensures fairness and a high degree of transparency, and to develop and operate management framework and internal control system to achieve sustainable growth through efficient and sound management.

Corporate Governance System

In order to ensure management transparency, soundness, and efficiency, we have set up each organization within the framework of a company with audit & supervisory board. We have been adopting the following system to strengthen supervisory and auditing functions, strengthen decision-making functions, and achieve prompt business execution.

Corporate Governance System

Board of Directors

The Board of Directors comprises eleven members (of which four are outside directors), which in principle with the attendance of all directors, meets regularly once every month and holds ad hoc meetings when necessary. The Board of Directors deliberates and makes decisions on matters specified in laws and regulations and other important management issues, receives reports from each member and supervises the status of business execution. Several independent outside directors are appointed in order to strengthen the supervisory functions of the Board of Directors and secure transparency of management.

<Views on Balance and Diversity of Knowledge, Experience, and Skills within and Size of the Board of Directors as a Whole>
The Company’s Board of Directors believes that it is important for the Board to comprise diverse human resources with different backgrounds, including specialized knowledge and experience, in order to achieve sustainable growth and increases in corporate value over the medium to long term. The Board is made up of human resources with extensive experience, high levels of knowledge, and advanced specialization, with consideration given to gender and nationality, to achieve a good balance according to the business environment at a given time.
In addition, by establishing a Board with multiple outside directors (currently four) who have experience and specialized knowledge gained under environments that differ from the Company, the Board can engage in deliberations from various perspectives in an effort to ensure transparency and objectivity in decision making.
There are no restrictions on the human resources of directors such as race, ethnicity, nationality, country of origin, or cultural background.


<Skill Matrix of Directors and Audit & Supervisory Board Members>
Based on the above views, considering the business and management system of the Group, the Board of Directors identified the knowledge and experience which it should possess from “Basic areas from the perspective of important management decision-making and business execution supervision” and “Areas that need to be particularly promoted and supervised to realize the medium-term management plan”. According to this, Directors and Audit & Supervisory Board Members are assigned in well-balanced manner with consideration for diversity.

Audit & Supervisory Board

The Audit & Supervisory Board comprises four members (of which three are outside members) and, as an independent body with a mandate from the shareholders, audits the execution of duties by the directors. Standing members of the Audit & Supervisory Board perform auditing from the perspective based on their business experience at the Company, while outside members perform auditing from a neutral perspective leveraging their expertise, through which the Company seeks to secure the soundness of management.

Nomination Committee

To ensure reasonableness and transparency with regard to director nomination, a Nomination Committee, in which a majority of the members are independent outside directors, was established as advisory bodies to the Board of Directors.
Based on the Board of Directors’ request for opinion, the Nomination Committee deliberates on matters, including proposals on the appointment of directors and Audit & Supervisory Board members to be submitted to the General Meeting of Shareholders, the Company’s performance evaluations and, based on such evaluations, evaluation of the management’s performance, and then delivers its opinions to the Board of Directors.

Remuneration Committee

To ensure reasonableness and transparency with regard to director nomination, a Remuneration Committee, in which a majority of the members are independent outside directors, was established as advisory bodies to the Board of Directors.
Based on the Board of Directors’ request for opinion, the Remuneration Committee deliberates on matters, including proposals on the appointment of directors and Audit & Supervisory Board members to be submitted to the General Meeting of Shareholders, the Company’s performance evaluations and, based on such evaluations, evaluation of the management’s performance, and then delivers its opinions to the Board of Directors.

Corporate Management Committee

The Corporate Management Committee is composed mainly of representative directors, executive directors and certain executive officers. The Committee deliberates on important matters to be presented to the Board of Directors, and also discusses such matters as management issues to be addressed and risks for the Company, ascertains on these matters in advance, and establishes systems for responding promptly to changes in the business environment.

Corporate Officers and Company Presidents Meeting

The Company adopts the Corporate Officer framework, the objective of which is to expedite execution of business operations based on policies determined by the Board of Directors and clarify responsibilities for the results. The corporate officers are elected by the Board of Directors, and meet monthly at Corporate Officers and Company Presidents Meeting to report on the status of business execution for cross-divisional sharing and exchange of information.

Cooperation among Audit & Supervisory Board Members, Independent Auditors and Internal Audit Departments

The Company strives to enhance the effectiveness of audits through exchanges of information on audit policies, audit plans, the status of audit implementation, revisions to accounting systems, and so on and close collaboration between the independent auditor and Audit & Supervisory Board members by having Audit & Supervisory Board members attend audits conducted by the independent auditor and holding periodic and ad hoc meetings by Audit & Supervisory Board members, independent auditor, and members of the Internal Auditing Office.
Audit & Supervisory Board members and members of the Internal Auditing Office hold periodic and ad hoc meetings to exchange information on audit policies, audit plans, and the status of audit implementation and closely collaborate with one another.
When necessary, Audit & Supervisory Board members attend audits conducted by the Internal Auditing Office and the Internal Auditing Office conducts investigations, makes reports, and so on in accordance with requests from the Audit & Supervisory Board. Both organizations strive to enhance the quality of audits.

Remuneration for Director and Auditor

Officer remuneration comprises fixed remuneration paid in cash, bonuses linked to the degree of achievement of the Company’s performance over the course of a single year and other factors, and performance-linked, stock-based remuneration that is determined according to rank and the degree of achievement of performance targets set forth in the Medium-Term Management Plan and so on. This structure is intended to raise awareness regarding the contribution to improving corporate performance and maximizing corporate value over the medium- to long-term and is based on a fundamental policy of officers sharing interests with shareholders through ownership of Company shares. However, remuneration for Audit & Supervisory Board members and outside directors comprises only fixed remuneration.

Remuneration and bonus paid to directors and auditors in fiscal 2020

Total remuneration
(million yen)
Total remuneration by type
(million yen)
Number of recipients
(persons)
Fixed remuneration Bonus Performance-linked,
stock-based
remuneration
Directors
(excluding outside directors)
522 342 124 55 7
Auditors
(except for outside auditors)
49 49 - - 2
Outside directors 54 54 - - 4
Outside auditors 28 28 - - 2

*1 The following limits are set on the remuneration paid to directors according to the resolution made at the 117th general meeting of shareholders held on June 29, 2017.

Total amount of remuneration (excluding bonus):
60 million yen or below per month
Total amount of bonus:
180 million yen or below per year

According to the resolution made at the 117th general meeting of shareholders, a performance-linked stock remuneration system is to be implemented for four fiscal years from FY2020, targeting the company’s directors and corporate officers, with the upper limit on the total payment amount set at 1,000 million yen.

*2 The following limits are set on remuneration paid to Audit & Supervisory Board members according to the resolution made at the 106th general meeting of shareholders held on June 29, 2006.

Total amount of remuneration (excluding bonus):
10 million yen or below per month
Total amount of bonus:
10 million yen or below per year

*3 “Bonus” corresponds to “performance-linked remuneration, etc.”, and “performance-linked, stock-based remuneration, etc.” corresponds to “performance-linked remuneration, etc.” and “non-monetary remuneration, etc.” The total amount of “bonuses” and “performance-linked, stock-based remuneration” shown in the table was recorded as an expense for FY2020.