Corporate Governance

The Company adopts a structure of a company with Board of Corporate Auditors for corporate governance and implements an executive officer system. This system allows for timely decision-making and efficient business execution by clearly separating the roles of “decision-making/oversight” by the Board of Directors and “execution” by the Executive Officers. Due to the diverse and specialized nature of the Company Group businesses, the Board of Directors is comprised of Directors who also serve concurrently as Executive Officers, excluding outside Directors. Furthermore, one third or more of the Directors shall be outside Directors to ensure the transparency and fairness of Company management. Outside Officers are appointed based on standards of independence so that they will be able to execute its role and responsibilities.

The Board of Directors shall be comprised of Directors who serve concurrently as Executive Officers, excluding outside Directors. Executive Officers who serve concurrently as Directors are appointed from among Executive Officers based on whether an individual possesses the experience and qualities necessary for the field in charge, and whether they possessed a perspective that views the entire company. The Company considers that the system of six Directors who serve concurrently as Executive Officers and four outside Directors (the Directors in total) has composition and size which allows the overall Board of Directors to conduct accurate and timely decision-making while maintaining diversity.

From January to March 2020, in order to further enhance the functions of the Board of Directors, the Company carried out an overall analysis and evaluation of the effectiveness of the Board of Directors in fiscal 2020 with the support of an external organization.

A survey was conducted to Directors and Corporate Auditors. The responses to this survey were made directly to the external organization as in the previous fiscal year. Analysis and evaluation were carried out by the Board of Directors based on the aggregate results reported by the external organization.

1. The survey results gave a broadly positive evaluation regarding matters including the number of members of the Board of Directors, the ratio of internal and outside Directors, compositional aspects such as diversity, management of meeting of the Board of Directors, and confirmed the effectiveness of the entire Board of Directors.

2. In order to further enhance discussions on medium-to long-term management strategies, the Board of Directors will make efforts to promote sustainable growth by reviewing the agenda criteria and delegating appropriate authority to subordinate meetings.

3. As well as continuing last fiscal year’s initiatives, the Company aims to further strengthen the group management function.

The officer compensation system for the senior management (meaning “Directors who are concurrently Executive Officers”, the same shall apply hereinafter) and other Directors’ compensation shall be within the range of officer compensation amount approved at the General Meeting of Shareholders and designed based on the standard policy of:
1) driving motivation for the medium-to long-term improvement of corporate value and the sustainable growth of the Company Group:
2) leading to the securing of excellent management personnel; and
3) highly transparent and objective procedures for determination.
In order to ensure transparency in determination procedures, the Company established the Compensation Advisory Board, in which the majority of members are comprised of outside Directors, as an advisory organization for the Board of Directors. Based on surveys by external organizations, the Compensation Advisory Board conducts objective and fair deliberation and verification of systems, standards, and calculation methods and other factors for officer compensation, and reports the overall Company results evaluation for the previous year, a data point which comprises a part of monthly compensation. The Board of Directors will determine the amount of compensation based on the report of the Compensation Advisory Board and a performance evaluation of the department in charge.

Compensation of Directors (excluding outside Directors) is composed as follows:

- Monthly compensation
Basic compensation in accordance with position and monthly fixed compensation reflecting precious year’s results (overall company and department in charge)

- Compensation for granting restricted shares (non-performance linked)

Compensation for outside Directors is basic compensation in light of their roles and independent position.
Compensation for Corporate Auditors is basic compensation only in light of their roles and independent position and is decided by discussion with Corporate Auditors in reflection of each Corporate Auditor’s role and responsibilities.

The Company shall periodically review cross-shareholdings from assorted perspectives, such as the impact on improving medium-to long-term corporate value and economic rationality, and sell any stock which is no longer meaningful as is appropriate. On the other hand, the Company shall enter into cross-shareholdings with key business partners when judging that the maintenance and strengthening of stable relationships with the business partners will contribute to sustainable growth and enhancement of medium-to long-term corporate value of the Company.
The Board of Directors individually reviews cross-shareholdings every year, including future business strategies and operational relationships, and determines whether or not to continue holding these shares.
Also, with regard to the exercise of voting rights in cross-shareholdings, the Company deeply considers the status of the business partner and the content of the proposals, and as needed, discusses with the business partner. The Company thereby confirms whether these holdings contribute to the sustainable growth and medium-to long-term enhancement of corporate value of the Company and its business partner, and makes a comprehensive decision.