Basic Policy

Basic Approach toward Corporate Governance

⑴ The Company respects the right of its shareholders and works to maintain a corporate environment in which such right can be appropriately exercised as well as to ensure the real fairness to shareholders.
⑵ While the Company engages in suitable cooperation with various stakeholders including shareholders, customers, business partners, employees, and regional societies, it fosters corporate culture and spirit that respect sound business operations.
⑶ The Company discloses information appropriately not only what is required by laws, regulations, etc., but also the information it deems necessary in order to ensure fairness and transparency in its management.
⑷ The Company makes efforts to maintain a system that enables Directors perform more effective supervision over its management and concurrently facilitates the management’s swift and resolute decision making.
⑸ In order to promote continuous growth and increase in medium-to-long-term corporate value, the Company undertakes constructive dialogue with shareholders through proactive IR and other activities.

Description of the main feature of the Company’s Corporate Governance

⑴ Organizational Framework

The Company has adopted the organizational framework that embraces an Audit & Supervisory Committee in accordance with the Companies Act with the objectives of strengthening the supervisory functions of the Board of Directors, facilitating swift decision making by enabling the Board of Directors to delegate the execution of important business matters to executive directors, and thus making it easier for the Board of Directors Meeting to engage in deeper discussion of strategic issues.
The Company also maintains a Nomination & Remuneration Committee to ensure objectivity and transparency in decision-making processes concerning the matter of the members of the Board of Directors such as candidate nomination, remuneration and dismissal.

⑵ Enhancing Functions of the Board of Directors and the Audit & Supervisory Committee

The Company has outside directors represent the majority of its Board of Directors, and it, in principle, appoints an outside director as the Chairperson of the Board, and thus it ensures the effectiveness of the Board of Directors while maintaining a high level of transparency and fairness. At present, the Board of Directors has five outside directors, including three who concurrently serve on the Audit & Supervisory Committee. Consequently, the majority of both the Board of Directors and the Audit & the Supervisory Committee is represented by outside directors. Thus, the Company maintains a heightened level of internal checks and balances.

⑶ Distinguish Clearly the Functions of “Business Execution” and “Management Supervision”

The Company’s directors each have clearly defined roles and they are the individuals holding positions of executive directors primarily in charge of business execution or non-executive directors basically in charge of overseeing business execution.

Corporate governance framework

The Company’s corporate governance as its distinguished feature, clearly delineates the functions of “business execution” and “management supervision.” On June 29, 2016, the Company converted itself from being a company with an Audit & Supervisory Board to the one with an Audit & Supervisory Committee with an objective of strengthening the functions of both the Board of Directors and the Audit & Supervisory Committee. The Company adopted the corporate governance framework presented below as its management and administrative organization for decision making, business execution, and supervision.

Corporate governance framework

Board of Directors

The Company’s Board of Directors comprises nine individuals: five directors (including two Outside Directors) who do not serve on the Audit & Supervisory Committee and four directors (including three Outside Directors) who serve on the Audit & Supervisory Committee. An Outside Director serves as the Chairperson of the Board. The Board of Directors meets, in principle, once a month to make decisions on fundamental company policy, management issues and important matters as provided for under the law and to deliberate the appropriateness of each agenda item as well as to supervise each Director’s execution of duties. Also, upon the transition of the Company to introduce an Audit & Supervisory Committee, the Board of Directors established a corporate a structure that facilitates swift business decision making and execution by executive directors at a reasonable level of risk taking. For that purpose, the Board delegated its authority of decision making on important business matters to executive directors.

Audit & Supervisory Committee

The Audit & Supervisory Committee comprises four individuals, including three Outside Directors with one of them serving as the Chairperson of the committee. The most important function of the Audit & Supervisory Committee is to conduct legality audit. The committee supervises and inspects the formulation and the operation of internal control system. Also, subsequent to the said audit and supervision, the committee audits each director’s duty execution by attending the Board of Directors Meeting and other important meetings. Further, in performing the audit on the execution of directors, the committee receives reports from directors, peruses important documents, issues audit orders to Audit Department and receives reports therefrom, and receives reports from accounting auditors.

Nomination & Remuneration Committee

The Company maintains a Nomination & Remuneration Committee to ensure impartiality and transparency in decision making processes associated with nomination of director candidates, and appointment, dismissal, and remuneration for directors. The committee conducts deliberations concerning candidate’s suitability to the position of director and the practice of remuneration for directors as well. The Committee attempts to find appropriate level both in general and for each director by referring to the relevant data provided by an external database supplier. We look at the data of the companies of the field comparable with the Company. The committee submits the result of the deliberations to the Board of Directors.
The Nomination & Remuneration Committee comprises a minimum of four committee members, including the Chairman and Representative Director. The majority of the Committee members are Outside Directors, and, in principle, an Outside Director serves as the Chairperson of the Committee. The Committee currently comprises one internal director (the Chairman and Representative Director) and four Outside Directors.

Committee membership

				Committees				Person’s main professional background
Name	Title / role			Audit & Supervisory Committee	Nomination & Remuneration Committee	Comprehensive Risk Management Committee	Human Resources Committee	Business administration	Overseas assignment	Legal	Financial accounting	Finance economics	Administration	ICT	Sustainability
Tateaki Ishida	Chairman and Representative Director		Business Execution		○	○	○	○	○		○	○		○	○
Masataka Sato	President and Representative Director		Business Execution			○	○	○	○		○	○		○	○
Naoko Kitagawa	Director		Non-Business Execution					○				○		○	○
Tsunehiro Nakayama	Outside Director	Independent Director	Non-Business Execution		○			○	○		○	○
Kazumasa Miyazawa	Outside Director	Independent Director	Non-Business Execution		○			○	○				○	○
Tetsuji Oono	Director		Non-Business Execution	○							○	○
Joichi Yamazaki	Outside Director	Independent Director	Non-Business Execution	○						○		○	○		○
Ayako Ikeda	Outside Director	Independent Director	Non-Business Execution	○	○				○	○
Katsuhiko Oota	Outside Director	Independent Director	Non-Business Execution	○	○			○	○		○	○