Corporate Governance Structure
The Group has adopted a company with Nominating Committee, etc. as its system of corporate governance. We believe that the Board of Directors, which is in charge of the supervisory function, will be able to promote execution initiatives that require prompt responses in a rapidly changing environment by focusing on deciding on medium- to long-term business policies and supervising and advising business execution based on those policies. We also believe that having the three statutory committees determine the appointment and dismissal of Vice President & Executive Officers and their compensation, as well as auditing the execution of business operations, will further strengthen the supervisory function. The Vice President & Executive Officers, in contrast, are responsible for decision-making regarding individual businesses and business execution, and are held accountable for results. Recognizing that Vice President & Executive Officers have the same status as Directors under the Companies Act, we aim to build an appropriate balance of tension and trust between them. We have adopted the current corporate governance system because by fulfilling their respective roles of supervision and business execution, the two sides will be able to work together and cooperate to improve the quality and speed of business execution and decision-making, thereby increasing corporate value over the medium to long term.
Supervisory Function
Board of Directors
In line with the provisions of the Articles of Incorporation, the number of directors shall be no more than 15, and the majority of the directors shall be independent outside directors. The number of Directors who concurrently serve as Vice President & Executive Officers shall be kept to a minimum. In order to practice management backed by the trust of shareholders, the term of office for the directors of the Company is set as one (1) year.
The Board of Directors shall be comprised so as to be well balanced in knowledge, experience, and capabilities to effectively fulfill its roles and responsibilities, and it shall be constituted in such a manner as to achieve both diversity—including in terms of gender, internationality, career within and outside the company, and age—and appropriate size.
The current Board of Directors consists of eleven (11) members, including eight (8) independent Outside Directors.
The Board of Directors is entrusted by shareholders with the aim of achieving sustainable growth and increasing the corporate value of the Group over the medium to long term. To achieve these, considering its initiatives for sustainability as an important management issue, the Board of Directors shall determine the general direction of the Group, including corporate strategies, while improving profit earning capability and capital efficiency. To speed up management decision-making and business execution, authority for decision-making on business execution is largely delegated to Vice President & Executive Officers. The Board of Directors supervises the Vice President & Executive Officers’ execution of duties, determines the basic policy for the internal control system for business execution, and monitors and supervises the establishment and operation of the system.
An independent Outside Director shall, in principle, act as the Chairman of the Board of Directors in order to separate the execution and supervision of business, and the Chairman of the Board of Directors shall strive to set the agenda and conduct the meeting of the Board of Directors in a way which creates a place for holding free and open discussions and constructive debates based on the knowledge and experience of each member.
Based on the evaluations of each director, each year the Board of Directors shall identify issues for further boosting the strengths and effectiveness of the Board of Directors. In addition to analysis and evaluations in order to clarify the points that should be emphasized when working on each issue and striving to enhance corporate governance, the overview of the outcomes shall be disclosed in a timely and proper manner. The Board of Directors shall use third-party evaluation organizations as appropriate in order to receive support with analysis and evaluation thereof, as well as resolving issues from these analyses and evaluations.
Evaluation of the board of directors
As a result of the Board of Directors evaluation, the Board of Directors was evaluated as open and highly effective, and it was also confirmed that it is important to develop a system for setting appropriate management-related targets and indicators, and to exercise a function that encourages risk-taking.
Measures for improvement in the future include Establishment of governance structure as a company with Nominating Committee, etc., Deepen discussion of medium- and long-term management strategies, and Strengthen monitoring functions.
For more information, visit the Company's website.
Please refer to the Corporate Governance Report.
* In fiscal year 2023, we evaluated the Board of Directors as a company with Audit & Supervisory Board.
The Three Statutory Committees
Nominating Committee
The Nominating Committee sets out the standard and procedure for new appointment, reappointment and dismissal of Directors and Vice President & Executive Officers, and deliberates based on them, so that desired human resources (qualifications, achievements, etc.) required of Directors and Vice President & Executive Officers and the selection process is optimal from the perspective of all stakeholders for the continued development of the Group and corporate governance. The Nominating Committee makes decisions on items set forth below.
(1) Decisions on proposals regarding the election and dismissal of Directors to be submitted to the General Meeting of Shareholders
(2) Details of the agenda item to be discussed at a meeting of the Board of Directors concerning the appointment, and dismissal or removal of the Representative Executive Officers and Vice President & Executive Officers
(3) Establishment, amendment or abolition of necessary basic policies, regulations, procedures, etc. to enable a decision by the committee regarding an item stated in item (2)
(4) Other matters that the committee recognizes as important in relation to the appointment of candidates, and dismissal or removal of the Representative Executive Officers and Vice President & Executive Officers stated in items (1) and (2)
The Nominating Committee shall be composed of three or more Directors appointed by the Board of Directors, a majority of whom shall be independent Outside Directors. The committee shall be chaired by an independent Outside Director.
Compensation Committee
The Compensation Committee deliberates and makes decisions based on the prescribed standard and procedure in order to ensure that the compensation system and compensation for Directors and Vice President & Executive Officers promotes the appropriate challenging attitude toward the Group’s growth, enables hiring and retention of excellent human talent, and fosters a perspective that is held in common with all stakeholders. The Compensation Committee makes decisions on items set forth below.
(1) Policy in relation to decisions concerning the details of compensation, etc. for Directors and Vice President & Executive Officers
(2) Details and standards of compensation, etc. for individual Directors and Vice President & Executive Officers
(3) Establishment, amendment or abolition of necessary basic policies, regulations, procedures, etc. to enable a decision by the Compensation Committee regarding a matter stated in item (2).
(4) Other matters that the Compensation Committee recognizes as important in relation to compensation, etc. pertaining to each item above.
The Compensation Committee shall be composed of three or more Directors appointed by the Board of Directors, a majority of whom shall be independent Outside Directors. The committee shall be chaired by an independent Outside Director.
Audit Committee
The Audit Committee is responsible for auditing the execution of duties by Directors and Vice President & Executive Officers, preparing audit reports, deciding on proposals for the appointment and dismissal of Accounting Auditors, and other duties as stipulated by laws and regulations. From the viewpoint of Directors, the main focus of the committee is to conduct high value-added audits and appropriateness audit.
The Audit Committee shall consist of three or more Directors appointed by the Board of Directors who do not concurrently serve as Vice President & Executive Officers, and the majority of them shall be independent Outside Directors. The committee shall be chaired by an independent Outside Director. In addition, at least one person with sufficient knowledge of finance and accounting in particular is to be appointed as a member of the Audit Committee.
Executive Function
Vice President & Executive Officers
The Vice President & Executive Officers conduct the business of the entire Group, which has been entrusted to them by resolutions of the Board of Directors, with the aim of achieving sustainable corporate growth and increasing corporate value over the medium to long term. Currently, the Company has 24 Vice President & Executive Officers.