Corporate Governance


Our Perspective on Corporate Governance
Under the Group’s management philosophy (i.e., the management policy, creed, and vision), We aims to increase its corporate value and will continue to develop and evolve while contributing to society through business activities. We consider that enhancing corporate governance is one of the most important management issues to achieve such goals, and have formulated the Corporate Governance Policy to address the issue.
Following the market reorganization of the Tokyo Stock Exchange on April 4, 2022, the Corporate Governance Code has been applied to our company for the prime market. Recognizing the importance of this development, we will further enhance our corporate governance to achieve continuous growth and increase corporate value.
Corporate Governance Structure
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Holding Company Structure
Under a holding company structure, the Group has been operating flexibly and effectively by setting clear management strategies and goals for the entire group and optimizing the allocation of management resources across the Group. This allows the Group to separate the functions for the development of management strategies from the business execution functions as well as to establish a more definite management responsibility structure.
Structures of Outside Directors and Auditors
The Company has set the Independence Criteria for Outside Directors and Auditors, which are clear standards for designating outside directors and auditors as Independent Directors and Independent Audit and Supervisory Board Members of the Company. The Board of Directors is composed of nine members, four of whom are Independent Outside Directors.
The Independent Outside Directors therefore represent more than one-third of the Board members. The Director’s term of office is set as one year in order to clarify the Director’s management responsibility and flexibly establish a management system that can swiftly respond to changes in business environment.
In addition to active discussions at the Board meetings, the outside Directors and Audit and Supervisory Board Members provide monitoring on management with an objective view of an outsider, which ensures that the surveillance function for the Company’s management structure works effectively.
Ratio of female directors: 1 out of 9 / Ratio of outside auditors: 2 out of 4
Executive Structure
The Company has adopted an operating officer system to ensure management efficiency and flexibility as well as to clearly distinguish between responsibility for management decision-making and supervision and responsibility for business execution. To ensure more effective management through developing basic management policies and implementing necessary measures swiftly and appropriately, the Company regularly conducts the Management Strategy Meeting and the Executive Management Meeting; the former is held monthly and attended by full-time Directors, Heads in charge of key rganizational functions, and Executive Officers, while the latter is scheduled twice a month in principle and attended by full-time Directors, Heads in charge of key organizational functions, Chief of Corporate R&D, and the presidents of major group companies. Standing Audit and Supervisory Board Members attend the both meetings to express their opinions as appropriate. The Company provides its directors and officers with training opportunities as needed to support them in acquiring and continuously updating necessary knowledge for appropriate performance of their duties.
The Company has also established the Governance Committee, a voluntary consultative body consisting of the representative director and the four independent outside directors. The committee is designed to achieve more objective, transparent and timely decision-making of the Board of Directors
regarding such issues as the appointment of representative directors and director and auditor candidates and the remuneration of directors and officers.
[Number of meetings held in fiscal year 2023] Board of Directors: 12 times / Audit and Supervisory Board: 15 times / Management Strategy Meeting: 13 times / Executive Management Meeting: 23 times / Governance Committee: 3 times
Structure of Internal Control System Management
The Company and its group companies have an internal control system that is operated by the legal division and other relevant organizations. To ensure complete compliance in business activities and improve management efficiency, the Internal Audit Office, which is directly under the President of the Company, and internal audit divisions of group companies regularly conduct an internal audit to check the development and management status of the internal control system and the status of compliance. Base on their audit results, we take corrective measures as necessary. In addition, the auditors of the Company and its group companies strive to increase the effectiveness and efficiency of audits by enhancing cooperation with internal audit divisions, through sharing information and opinions about material risks and audit plans and results. They also work on fostering human resources for audit activities.
Succession Plan
The Company develops successors to senior management, including the chief executive officer position, in a planned manner by conducting systematic management training programs for potential candidates and providing them with opportunities to participate in key management projects. To this end, we have set succession plan rules, which stipulate the requirements to become President of the Company, the selection process, the training plan, and the maintenance and utilization of the presidential candidate list.
As a voluntary consultative body, the Governance Committee provides the Board of Directors with suggestions regarding the formulation and operation of the succession plan, the election and dismissal of the representative directors and the appointment of director and auditor candidates. The Board of Directors approves the succession plan, oversees the operation of the plan, and appoints directors and officers.
Successor candidates for President will, in principle, be selected from among talented employees within the Group and developed in stages, following a selection process in which assessments of suitability are carried out in several iterations as shown below.
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