Corporate Governance Structure

Corporate Governance Structure

Corporate Governance Structure

Decision Making, Business Execution, and Audits

Under the company structure as a company with Audit & Supervisory Board, the Company shall invite independent outside directors and independent outside audit & supervisory board members who are independent of the current management to enhance the function of the Board of Directors, which supervises the execution of duties by directors, and the Audit & Supervisory Board, which supervises the Board of Directors. In addition, the Company shall establish both the Nomination Advisory Committee and the Compensation Advisory Committee as voluntary advisory bodies to give opinions in response to consultations from the Board of Directors regarding nominating directors and determining compensation thereof, thereby supporting the function of the Board of Directors and the Audit & Supervisory Board and thus further strengthening corporate governance. In addition, audit & supervisory board members, including independent outside audit & supervisory board members, shall work to enhance the management audit function by strictly auditing the legality and rationality of the work carried out by directors and the validity of their decision making processes.

Board of Directors

In line with the provisions of the Articles of Incorporation, at least one-third of the directors shall be independent outside directors. 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 year.The Board of Directors shall be composed 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 and appropriate size.
The Board of Directors, of which a meeting is held once a month in principle, is aiming to achieve sustainable growth and an increase in corporate value of the Group over the medium to long term as a decision-making body. To achieve these goals, the Board of Directors improves profit-earning capability and capital efficiency, and determines the general direction of the Group, including corporate strategies. Also, in addition to monitoring and supervising the execution of business by management, including Directors and officers, the Board of Directors develops provisions related to the execution of duties by Directors, and establishes a framework to take supervision responsibility related to the execution of business.
The Chairman of the Board of Directors shall strive to 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 and audit & supervisory board member, 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
In fiscal year 2019, the Board of Directors conducted a self-evaluation of the Board of Directors, its management, and its contribution to the current Transformation 2020 mid-term business plan. As a result, we confirmed that the effectiveness of the Board of Directors had been ensured. Measures for improvement in the future include further strengthening discussions on the company's major direction, medium- to long-term management strategies, and further improving the quality of discussions.
For more information, visit the Company's website.
Please refer to the Corporate Governance Report.

Audit & Supervisory Board

The Audit & Supervisory Board shall be comprised entirely of all the audit & supervisory board members. Based on its resolution, the Audit & Supervisory Board shall appoint at least 1 standing member of the Audit & Supervisory Board. The Audit & Supervisory Board shall be composed 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 and appropriate size. It is particularly prescribed that the Audit & Supervisory Board shall appoint at least one audit & supervisory board member with considerable knowledge of finance and accounting.
The Audit & Supervisory Board is held once a month in principle. In order to ensure the Group's sustainable growth and corporate soundness, the Audit & Supervisory Board shall make appropriate decisions and express its opinions from an independent and objective standpoint. Also, based on laws and regulations as well as the Auditing Standards for Audit & Supervisory Board Members and the Rules Governing the Audit & Supervisory Board, the Audit & Supervisory Board shall receive reports from each audit & supervisory board member on important matters related to audits, deliberate, and pass resolutions as necessary. Audit & supervisory board members perform audit & supervisory board member audits in accordance with the annual audit plan that specifies priority audit items. Audit & supervisory board members attend meetings of the Board of Directors and the Management Board and other important meetings, and hold regular meetings with departments that are in charge of internal audits, legal affairs and business ethics which promotes the compliance framework, and exchange and share information about the activities of each, as well as proactively offer opinions. In addition, the Audit & Supervisory Board members deepen mutual cooperation with the accounting auditor and exchange information with the accounting auditor regularly and as needed to improve the quality of audits by both sides and make the audits more efficient.

Management Board

The Board of Directors delegates decision-making related to the execution of business to the Management Board to promote swift decision-making. The Management Board, of which a meeting is held once a month in principle, is comprised of the President and Chief Executive Officer, officers and standing members of Audit & Supervisory Board. In addition, matters for resolution to be made by the Management Board and other matters shall be reported to the Board of Directors.

Nomination Advisory Committee and Compensation Advisory Committee

The Company has established both the Nomination Advisory Committee and the Compensation Advisory Committee as voluntary advisory bodies to give opinions in response to consultations from the Board of Directors regarding nominating Directors and determining compensation.
With respect to subjects such as nomination of director candidates and audit & supervisory board member candidates, evaluation, appointment and dismissal of representative director and president, appointment and dismissal of officers, proposals for dismissal of directors and audit & supervisory board members, the Nomination Advisory Committee shall provide recommendation to the Board of Directors following deliberations made in accordance with the standard and procedure prescribed to ensure optimal placement for the Group's sustainable growth and corporate governance from the perspective of all stakeholders.
The Nomination Advisory Committee makes decisions on items set forth below.
(1) Details of the agenda item to be discussed at a meeting of the Board of Directors concerning the appointment of officers or dismissal of officers or the Representative Director
(2) Establishment, amendment or abolition of necessary basic policies, regulations, procedures, etc. to enable a decision by the committee regarding a matter stated in item (1).
(3) Other matters that the committee recognizes as important in relation to the appointment of candidates, dismissal of officers or removal of the Representative Director stated in item (1).

The Compensation Advisory Committee makes decisions on the items set forth below in order to ensure that the compensation system and compensation for Directors and 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.
(1) Policy in relation to decisions concerning the details of compensation, etc. for directors and executive officers
(2) Details of compensation, etc. for each director and executive officer, individually
(3) Establishment, amendment or abolition of necessary basic policies, regulations, procedures, etc. to enable a decision by the committee regarding a matter stated in item (2).
(4) Other matters that the committee recognizes as important in relation to compensation, etc. pertaining to item (1) or item (2).

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