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Corporate Governance

Basic Approach to Corporate Governance

The corporate governance of the Company and the company group comprising its subsidiaries (hereinafter called the “Group”) is based on the development and operation of a system to ensure that actions are based on the company’s corporate philosophy and decisions are made in a transparent, fair, and efficient manner, and compliance with laws and regulations and appropriate supervision (monitoring) of corporate performance are carried out under the mission of "To inspire the world with entrepreneurship".

The Outline of Corporate Governance Structure

The Group is managed under a holding company structure in which the Company is a holding company and its group companies are operating companies. By separating the function of administering its overall business from executing its individual businesses, the Group has been working to facilitate the delegation of authority and strengthen the Company’s function of monitoring the Group’s businesses.
The Board of Directors shall consist of a majority, at the minimum, of highly independent Outside Directors. The Board currently consists of 7 Directors, five of whom are Outside Directors. It determines matters prescribed by laws and regulations and the Articles of Incorporation and matters concerning the execution of important business and oversees the execution of business. Furthermore, as part of strengthening of its corporate governance system, the Company introduced an executive officer system in January 2017. Under this system, the authority for making decisions and executing business operation is delegated to Executive Officers (hereinafter, “Group Executive Officers”) to the extent permitted by relevant laws and regulations, in order for the Board of Directors to mainly focus on the oversight (monitoring) of the Group Executive Officers who are responsible for the execution of business (monitoring model- oriented).
The Group Executive Officers are responsible for the execution of business of the Company, that of the business companies in its group or that across several business companies. The Board of Directors appoints Group Executive Officers in charge of respective areas of business operation, and the Group President and Chief Executive Officer who concurrently serves as Representative Director oversees the execution of business operations by the Group Executive Officers.
Moreover, matters to be resolved by meetings of the Board of Directors, those regarding which authority is to be delegated to the Group Executive Officers and those to be reported by the Group Executive Officers to the Company’s Board of Directors are clearly stipulated in the regulations of the Board of Directors.
In addition to the above, Group Management Meeting has been established, as a system regarding decision-making on the execution of business, with the functions of supporting decision-making by the Group President and Chief Executive Officer and of considering important managerial matters of the group. The Company has also established a Group Risk Management Committee that supervises risk management of the group, a Sustainability Committee that promotes sustainability activities to enhance the corporate value and a Financial Results and Disclosures Committee that reviews and evaluates financial results information, information for timely disclosure, among other things. In doing so, the Company has put in place a system that clarifies authority and responsibilities and enables prompt and appropriate decision-making.
On the other hand, Nomination Advisory Committee, the majority of which consists of Outside Directors, has been established as an optional committee of the Board of Directors to handle personnel matters regarding the group’s management team (appointment, removal etc. of Directors of the Company, Group Executive Officers and others), in order to ensure the independence, objectivity and accountability of the deliberation process. In addition, meetings attended only by the Outside Directors (Executive Session) are held once a month in principle, thereby securing a place for information exchange and shared awareness from objective standpoints. Outside Auditors, external accounting auditors and other independent outside persons may attend such meetings, thereby providing a place for promoting cooperation among independent outside persons.
The Company has adopted a company auditor system. Under the system, there are currently four Company Auditors including three highly independent Outside Auditors. Each Company Auditor audits the execution of business by the Directors, in accordance with the auditing policy, audit plans and so forth determined by the Board of Company Auditors.

Corporate Governance System

Progress of Governance Reforms

Main Initiatives
Number of Outside Directors
Fiscal Year
 Ended September 2015
  • Systematization of governance for greater effectiveness
Increased to two
(including a female director)
Fiscal Year
 Ended September 2016
  • Introduction of effectiveness evaluation to enhance the functioning of the Board of Directors
  • Establishment of the Financial Results and Disclosures Committee and the CSR Committee
  • Abolition of anti-takeover measures
  • Establishment of Group Risk Management Committee
Fiscal Year
 Ended September 2017
  • Introduction of performance-linked stock compensation system for officers
  • Seperation of execution and monitoring through the introduction of an entrustment-type executive system
Outside directors become
the majority of
the Board of Directors
Fiscal Year
 Ended September 2018
 
Fiscal Year
 Ended September 2019
 

Governance Highlights

(Fiscal year ended September 2022)

Number of Directors
(Outside Directors Included in Total)
7(5)
Number of Board of Directors' Meeting Held
14
Average Attendance Rates at Borad of Directors' Meetings
Directors
100%
Auditors
100%
Number of Auditors
(Outside Auditors Included in Total)
5(3)
Number of Borad of Auditors' Meetings Held
14
Average Auditor Attendance Rate at Board of Auditors' Meetings
98%

Note:Above figures include one auditor who retired during the fiscal year.

Evaluation of the Effectiveness of the Board of Directors

With the aim of enhancing the function of the Board of Directors, the Company conducts analysis, evaluation and follow-up examinations of issues on the effectiveness of the Board of Directors once a year in principle. The Company also conducts large-scale and detailed surveys by external third-party institutions once every 3 years. In FY2022, based on the advice of an external third-party organization, the Company conducted a questionnaire survey of all directors and company auditors, and interviewed directors.
As a result, it was confirmed that the Board of Directors has completed the transition to a Board of Directors (Monitoring Board) centered on outside directors, and has been able to engage in highly sophisticated and lively discussions. In addition, in terms of operation, practical measures such as devising the agenda of the Board of Directors, providing materials in advance, creating opportunities for discussions through camps, and strengthening cooperation among outside directors through executive sessions have already been sufficiently carried out, and that effectiveness has been confirmed.
On the other hand, it was confirmed that with the substantial reform of the Board of Directors, a common awareness of issues, such as how to think of the innovation board, which lies ahead of the monitoring board, how to realize the “co-creation of value between supervision and execution,” and how to think of the succession of the Board of Directors, has emerged. Going forward, the Company will advance initiatives to further enhance the effectiveness of the Board of Directors, while taking into account the awareness of these issues.

Officer Compensation Plan

In September 2017, the Group introduced a new compensation plan (a board incentive plan (BIP) trust) to more clearly define the relationship between the remuneration of the Company’s directors (excluding outside directors and non-residents of Japan) and executive officers (excluding non-residents of Japan; collectively, “Directors, etc.”) and the Group’s business results in the medium-to-long term as well as the Company’s shareholder value, while creating a sound incentive to enhance business results and corporate value in the mediumto-long term. As a result, remuneration for directors of the Company consists of monthly compensation and stock compensation, and remuneration for outside directors who are independent from business execution consists of monthly compensation only.

BIP Trust

This is a performance-linked stock compensation plan that aims to establish a clearer relationship between remuneration for Directors, etc. and the value of the Group’s stock. The Company's shares are purchased from the market as officer compensation, kept in a trust account and delivered in accordance with the recipient’s position and degree of achievement of the performance targets in the Midterm Business Policies.

Director and Auditor Remuneration

(units:thousand yen)

                         
CategoryNumber of payeesTotal amount of officers’ remunerations, etc.Total amount of remunerations, etc. by type
Basic remunerationPerformance-linked remuneration, etc.
Non-monetary remuneration, etc.
Director
(of which Outside Director)
8
(5)
228,228
(¥69,000)
196,440
(¥69,000)
31,788
(¥–)
Company Auditor
(of which Outside Company Auditor)
4
(3)
27,000
(¥24,000)
27,000
(¥24,000)
-
(¥–)

(units:thousand yen)

                       
CategoryNumber of payeesTotal amount of officers’ remunerations, etc.Total amount of remunerations, etc. by type
Basic remunerationPerformance-linked remuneration, etc.
Non-monetary remuneration, etc.
Director
(of which Outside Director)
8
(5)
228,228
(¥69,000)
196,440
(¥69,000)
31,788
(¥– thousand)
Company Auditor
(of which Outside Company Auditor)
4
(3)
27,000
(¥24,000 )
27,500
(¥24,000)
-
(¥–)

Notes:

  • The number of payees includes two directors and one company auditor who retired at the conclusion of the 31st Ordinary General Meeting of Shareholders held on December 22, 2021, and does not include one director and one company auditor who serve without remuneration.
  • The Company is introducing a performance-linked share-based remuneration system using the officers remuneration BIP (Board Incentive Plan) trust scheme for directors of the Company (excluding outside directors and those who are non-residents of Japan).
  • The performance indicator associated with performance-linked remuneration, etc. is consolidated Non-GAAP operating profit. As the reason for selecting this indicator, the Company has deemed that this is an appropriate indicator for evaluating the achievement of improvements to the medium- to long-term corporate value. In calculating performance-linked remuneration, basic points are allotted in a set period during each business year according to the role of each director and the level of achievement, etc. of performance targets during the covered trust period of the officers remuneration BIP trust. After the conclusion of the covered period, additional points allotted to persons covered by the system on the last day of the final business year of the covered period are cumulatively added to the cumulative value of basic points (“Cumulative Points”).
    A number of the Company’s shares equal to the number of Cumulative Points is delivered or paid to persons covered by the system as share-based remuneration. Furthermore, 50% of the shares corresponding to the points in question (share of less than one unit rounded down) will be delivered as shares, and from the standpoint of securing funds to pay taxes, the remainder will be converted into cash, and cash corresponding to the amount converted to cash will be paid.
  • At the 23rd Ordinary General Meeting of Shareholders held on December 20, 2013, the amount of cash remuneration for directors was set at up to ¥600 million annually (not including the portion of employee salaries paid to directors concurrently serving as employees). The number of directors as of the conclusion of this ordinary general meeting of shareholders is eight.
    Furthermore, in a separate framework from cash remuneration, at the 26th Ordinary General Meeting of Shareholders held on December 20, 2016, the amount of trust funds provided to the trust as funds for the acquisition of the Company’ shares associated with the points allotted to directors (excluding outside directors and non-residents of Japan) as performance-linked share-based payments (officers remuneration BIP trust) was set at a maximum of ¥700 million, and the total points at a maximum of 2,800,000 points (corresponding to 2,800,000 shares) for three business years. The number of directors as of the conclusion of this ordinary general meeting of shareholders (excluding outside directors and non-residents of Japan) is six.
  • The amount of cash remuneration for company auditors was set at a maximum of ¥50 million annually at the 9th Ordinary General Meeting of Shareholders held on December 14, 1999. The number of company auditors as of the conclusion of this ordinary general meeting of shareholders is one.
  • The board of directors has delegated the decisions on the amounts of individual director remuneration to Koki Sato, Representative Director, Group President and Chief Executive Officer. The reason for the delegation is that the board of directors deemed that the Representative Director, Group President and Chief Executive Officer is best suited to conduct evaluations of the division for which each director is responsible while considering the Company’s overall performance, etc. Furthermore, in deciding the details to be delegated, the board of directors reports on performance evaluations including the approach to evaluating independent outside directors and their personal evaluation to confirm the validity of remuneration levels, and decides remuneration levels while referencing the opinions of independent outside directors.

Reasons for Appointment of Outside Directors

The reasons are described on the Our Executives page.

Our Executives

Board of Directors’ Personality Matrix

The Company has incorporated the Five Factors & Stress (FFS) theory into its AI-based personnel system and other aspects of human resource management. Developed by Human Logic Laboratory, Inc., this theory can be used to scientifically build teams of people. It quantifies five factors as well as stress levels for individuals to understand their thought processes and behavior.
By examining the characteristics of Board members based on the FFS theory, the Company has structured a Board of Directors with leaders who drive a team that can readily adapt to emerging situations and relationships. This enables operational flexibility in a rapidly changing business environment. In addition, arrangements of offense type and defense type are well balanced, and the team is well-organized for both future creation and risk management.
Following here are a personality matrix of the Company’s Board of Directors and the results of an individual member personality analyses.

     
Name Position Personality Profile
Koki Sato Representative Director A leader who embraces change. Has excellent judgment and determination. Good at missions that require pushing the boundaries.
Etsuko Okajima Outside Director A team-builder who embraces change. Persuades others to get on board and cooperate. Good at reconnaissance missions for innovation.
Yusuke Asakura Outside Director A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.
Yoshiki Ishikawa Outside Director A team-builder who embraces change. Persuades others to get on board and cooperate. Good at reconnaissance missions for innovation.
Akie Iriyama Outside Director Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.
Mio Takaoka Outside Director A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.
Shuji Yamaguchi Director Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.
Tadahiro Mouri Outside Auditor
(Full-time)
A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.
Mamoru Furushima Outside Auditor A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.
Takeshi Okuyama Outside Auditor A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.

Executive Officers’ Personality Matrix

As a result of investigating the characteristics of the Company’s Executive Officers based on the FFS theory, a high percentage of members take the offense type or the driver type of leadership and excel at business promotion with a sense of speed.
On the other hand, officers with the defensive type are also allocated in a well-balanced manner, and risk management in business execution can also be easy to function in this individualized arrangement.
Following here are a personality matrix of the Company’s Executive Officers and the results of an individual member personality analyses.

     
Name Personality Profile
Koki Sato A leader who embraces change. Has excellent judgment and determination. Good at missions that require pushing the boundaries.
Isamu Ueno A team-builder who embraces change. Persuades others to get on board and cooperate. Good at reconnaissance missions for innovation.
Tadahiro Matsuda Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.
Yusuke Shimizu A leader who embraces change. Has excellent judgment and determination. Good at missions that require pushing the boundaries.
Yuichi Kouno A leader who embraces change. Has excellent judgment and determination. Good at missions that require pushing the boundaries.
Kei Hatano A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.
Teruyuki Noguchi Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.
Kana Setoguchi A rationalist who continues improvement.Good at missions that require risk management.
Masayuki Muto Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.
Daisuke Suefuji A rationalist who embraces change. Good at reconnaissance missions for innovation.
Masayuki Takano A rationalist and team-builder. Persuades others to get on board and cooperate. Good at missions that require planning.
Yusuke Fukuhara A team-builder who embraces change. Persuades others to get on board and cooperate. Good at reconnaissance missions for innovation.
Yuki Fukunishi A team-builder who embraces change. Persuades others to get on board and cooperate. Good at reconnaissance missions for innovation.
Tei Go Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.
Shuhei Ezaki A problem solver. Coordinates the interests of others. Good at missions requiring personal relations.
Yuta Suzuki A leader who embraces change. Has excellent judgment and determination. Good at missions that require pushing the boundaries.
Kazunari Kondo Multi-skilled with excellent flexibility. Balances offense and defense well. Good at missions that require resourcefulness.