Strengthen our governance system and make it more effective
― Basic approach and implementation
We believe that building strong relationships of trust with stakeholders and enhancing corporate value by ensuring soundness, appropriateness, and transparency in management is the role corporate governance must play. We are making efforts to secure an optimal system for achieving this.
To further strengthen our corporate governance and the supervisory functions of the Board of Directors, our company has adopted a company structure with an Audit and Supervisory Committee. Under this institutional design, the Audit and Supervisory Committee, of which outside directors make up a majority of the members, is responsible for auditing and overseeing the legality and validity of business execution to achieve more transparent management. By delegating the authority for the Board of Directors’ business execution decisions to the Directors, this structure seeks to expedite management decision-making and decision execution.
Our company’s primary convening management bodies are the Board of Directors, the Management Conference, and the Audit and Supervisory Committee.
The Board of Directors, a decision-making body specified by law and by the Articles of Incorporation, oversees and performs guidance related to business operations. In addition to regular monthly meetings, the Board of Directors holds extraordinary meetings as needed.
The Management Conference, a deliberative body in our management system, is a venue for discussing and resolving key management matters. Consisting of directors and executive officers, it aims to ensure clarity and transparency in the decision-making process by deliberating on financial statements, business execution, and other matters for the Board of Directors.
The Audit and Supervisory Committee performs overseeing and auditing of management decision-making and business operations. Our outside directors include persons who have experience in corporate management with considerable knowledge of corporate management strategies and business planning, attorneys, and persons who have considerable knowledge and expertise in the field of compliance. In FY2021, as well as the Business Operation Oversight Committee which was established with the aim of monitoring risk relating to the conduct of business by Group companies, and of supporting assessment operations when internal audits are conducted, we launched the Yamashin Sustainable Solutions (YSS) project for promoting the achievement of the SDGs, to realize management from a sustainability perspective, tasking the YSS Committee with driving this process. Both committees function as advisory bodies to the President, with the goal of further strengthening corporate governance.
- Number of Board of Directors meetings 24 times
- Board of Directors meeting attendance rate 97%
- Number of Management Conferences held 12 times
- Management Conference attendance rate 98%
To ensure transparency and objectivity in the appointment and treatment of directors, and to enhance our corporate governance, we have established a Nominating Committee and a Compensation Committee to examine director candidates and matters such as compensation. Each of these committees has outside directors as the majority of its members.
Compensation for directors (excluding those who are Audit and Supervisory Committee members) is determined by the Board of Directors on the basis of reports by the Compensation Committee, within the limit approved at the Ordinary General Meeting of Shareholders. To enhance directors’ motivation for continuous improvement of performance to meet the expectations of shareholders, the compensation system consists of basic compensation fixed in accordance with the role of each director, performance-linked compensation as a short-term incentive, and restricted stock compensation as a medium- to long-term incentive.
Every year, our company performs analysis and evaluation of the effectiveness of the Board of Directors based on directors’ self-evaluations, and shares the results with all directors. In FY2021, we once again conducted a questionnaire of all directors, including those who are Audit and Supervisory Committee members, and verified the results through the Board of Directors Secretariat and the Audit and Supervisory Committee to evaluate the effectiveness of the Board of Directors while ensuring objectivity.
The process returned the evaluation that effectiveness of the Board of Directors is ensured in terms of its composition and operational methods, the role of outside directors on the board, and other aspects. We will continue our efforts to strengthen the expertise and diversity of directors with regard to business operations, and we will strive to improve the effectiveness of the Board of Directors in all aspects through means such as further sharing of information at early stages.
