Corporate Governance

We intend to establish a system that enables quick and accurate management and executive decision-making so that we may fulfill our social responsibilities and increase our corporate value. At the same time, we strive to improve corporate governance by strengthening management oversight functions; specifically, enabling directors to more closely supervise business performance as well as encouraging directors on the audit and supervisory committees to perform legal audits.

Corporate Governance System

Corporate Governance System and Reasons for Adoption
The Company has adopted a system involving a board of directors and an audit and supervisory committee in the belief that corporate governance starts with informed judgments made by directors elected at the general meeting of shareholders who are familiar with the company’s business. The directors are engaged in mutual oversight and verification of the company’s business execution.

Institutions and Systems
The resolution adopted at the regular general meeting of shareholders held on March 25, 2016, called for a transition to an audit and supervisory committee. The company transitioned from a company with a board of auditors to a company with an audit and supervisory board. The intent of this transition was to further strengthen the corporate governance system and enhance management health and transparency.

1.Board of Directors
The Company’s Board of Directors is composed of six directors, including three from outside the company. The Board of Directors decides those matters set forth in laws and ordinances and important management matters, and exercises oversight of the director’s performance. In order to pass informed judgment in a timely fashion on the course of business, the directors attend a liaison meeting with the division heads and above every morning to confirm that tasks are carried out, even if there are no agenda items for the board. Important matters are discussed at meetings of the board of directors and decisions are taken.

2.Audit and Supervisory Committee
The Company’s Audit and Supervisory Committee is composed of four directors who are Audit and Supervisory Committee members, including three outside directors. The chairperson is an outside director. The directors who are audit and supervisory committee members attend meetings of the board of directors and other important meetings, review important documents, and monitor to ensure that there are no acts in violation of laws and ordinances or improprieties. They also monitor the independence of the auditors and review the auditors’ audit methodologies.

3.Executive Officer System
In order to speed up decision making and strengthen oversight functions, the company introduced an executive officer system in April 2002 that eliminated the conflict of the same individual being responsible for both executive and oversight functions. This was a means of strengthening the function of the director.

4. Nomination and Remuneration Committee
To deliberate the appointment and remuneration of directors, enhance the supervisory function of the Board of Directors and strengthen the corporate governance system, the Company has established the Nomination and Remuneration Committee as an optional advisory body to the Board of Directors. A majority of the Nomination and Remuneration Committee members are outside directors. The chairperson is an outside director. 

5.Liaison Council and Management Meetings
The company has adopted a system in which the business situation and issues in each business unit are discussed and shared horizontally across the entire company at a liaison council meeting held each morning. It is attended by business unit heads and above. In addition, extra management meetings are held as necessary at which policies and plans for overall execution of management activities are proposed in addition to investigations, studies, management, notifications, and coordination.

6.Sustainability Committee
The Company has established a Sustainability Committee, which is chaired by the Representative Director and President. The committee discusses policies and action plans for resolving issues related to sustainability in general and manages progress on addressing such issues. The results of the committee’s deliberations and other activities are reported to the Board of Directors and a structure for monitoring and supervision by the Board of Directors has been developed.

Directors

Number of Directors per Corporate Charter	15
Term of Directors per Corporate Charter	One year
Presiding Officer at Board of Directors Meetings	President
Number of Members of Board of Directors	Six
Election of Directors	Elected
Number of Outside Directors	Three
Number of External Directors, Number of Directors Designated as Independent	Three

Audit and Supervisory Committee

Number of Members	Number of Standing Members	Number of Internal Directors	Number of External Directors	Committee Chair (presiding member)
Four	One	One	Three	External Directors

Optional Committee

	Name of Committee	Number of Members	Number of Standing Members	Number of Internal Directors	Number of External Directors	Internal Employees	Other	Committee Chair (presiding)
Optional Committee Corresponding to Nominating Committee	Nominating Committee	Four	None	One	Three	None	None	External Directors
Optional Committee Corresponding to Remuneration Committee	Remuneration Committee	Four	None	One	Three	None	None	External Directors

 

Assessment of Effectiveness of Board of Directors
In order to verify on a regular basis that the board of directors is playing its role effectively and functioning properly, and to develop suitable measures for addressing problems and reinforcing strengths, the company conducts surveys of the effectiveness of the entire board of directors for each director and reports the analysis and results of the assessment to the board of directors. As a result of this analysis, the company’s board of directors has confirmed the effectiveness of the oversight of business processes and recognition of important management matters. However, the Company recognized that there are issues which still need to be addressed such as (i)enhancing discussions on sustainability and risk management and (ii) enhancement of training for Directors to develop their skills. We will continue to focus on resolving such issues in the future and will also work to improve the effectiveness of the Board of Directors and strengthen corporate governance.

Officers’ remuneration
(i) Matters related to policy for determining the amount and method of calculation of remuneration to officers
a．Policy for determining the amount and method of calculation of remuneration to officers, and composition of remuneration
The remuneration for the Company’s officers is composed of basic remuneration and a bonus. The bonus is performance-based remuneration, which is determined in consideration of results.
The basic remuneration for the Company’s officers is fixed monthly remuneration. It is determined in comprehensive consideration of the officer’s position, responsibility and years in office as well as remuneration levels at other companies, the Company’s results and the salary level of employees at the Company.

b．Matters related to determination of the ratios of basic remuneration and performance-based remuneration (bonus) to total remuneration for each officer
The Remuneration Committee (a majority of the members are outside directors) considers the breakdown of remuneration for each type of executive director in consideration of the level of remuneration at companies that belong to related business categories whose business scale is at the same level as that of the Company. The Board of Directors respects the report of the Remuneration Committee and determines remuneration for individual directors according to the composition of remuneration stated in the report.
Basic remuneration and performance-based remuneration (bonus) account for 60％ and 40%, respectively, of total remuneration. (The percentages are based on the assumption that the target achievement levels related to performance-based remuneration (bonus) are all 100%.)
The Representative Director is authorized to determine remuneration for each director (excluding directors who are members of the Audit and Supervisory Committee) based on a resolution of the Board of Directors. The Representative Director has authority over the amount of basic remuneration for each director, and performance appraisal and allocation of bonuses in consideration of each director’s role and contribution, performance evaluation and KPIs (key performance indicators) achievement levels. The reason for the authority being delegated is that the Representative Director is considered to be in the best position to evaluate each director’s role by taking into account the Company’s overall performance and other factors. 
Remuneration for directors who are members of the Audit and Supervisory Committee consists only of basic remuneration in consideration of their role and independence. No performance-based remuneration (bonus) is paid. Remuneration for each director who is a member of the Audit and Supervisory Committee is determined through discussion among the members of the Audit and Supervisory Committee.

ｃ．Performance-based remuneration (bonus)
The method of calculating performance-based remuneration (bonus), etc. was determined by the resolution of the Board of Directors at a meeting held on February 19, 2021. The method of calculation is as follows:
＜Method of calculating performance-based remuneration＞
To raise awareness about improving results in each fiscal year, performance-based remuneration reflects performance indicators and shareholders’ perspective and is paid in cash. Performance-based remuneration changes within the range of 0% to 200% year on year according chiefly to achievement levels related to year-on-year growth in consolidated EBITDA (operating profit + depreciation and amortization), consolidated profit and consolidated ROE (return on equity) and is paid as a bonus at a certain time every year. The amount of remuneration actually paid is rounded down to the nearest 100,000 yen. The Company has selected such indicators to offer appropriate incentives with a view to enhancing corporate value on a medium- to long-term basis. 
The KPIs (key performance indicators) related to performance-based remuneration and formulas for calculating performance-based remuneration are shown below.

KPI	Formula for performance evaluation	Formula for performance-based remuneration (bonus)
① Consolidated 　　EBITDA	Result for this fiscal year / Result for last fiscal year × 60％	Annual basic remuneration according to position × Performance evaluation factor ((i) consolidated EBITDA ＋ (ii) consolidated profit ＋ (iii) consolidated ROE) = Performance-based remuneration (bonus)
② Consolidated 　　profit	Result for this fiscal year / Result for last fiscal year × 20％
③ Consolidated 　　ROE	Result for this fiscal year / Result for last fiscal year × 20％

ｄ．Activities conducted by the Remuneration Committee and Board of Directors in the process of deciding directors’ remuneration, among other matters, for the most recent fiscal year.
The Remuneration Committee was convened on February 9, 2024 and deliberated and resolved the amount of remuneration for individual directors for the most recent fiscal year. A meeting of the Board of Directors held on the same date deliberated and resolved the amount of remuneration for individual directors based on the report of the Remuneration Committee.

ｅ．Date of resolution about upper limits for remuneration for officers at shareholders’ meeting
At the 41st General Meeting of Shareholders held in March 2016, it was resolved that the upper limit for annual remuneration for the director (excluding directors who are members of the Audit and Supervisory Committee) is 160 million yen (excluding employee salary) and the upper limit for annual remuneration for for the director who is a member of the Audit and Supervisory Committee is 40 million yen.

(ii) Total amount of remuneration, etc. for each officer category, total amount of remuneration, etc. by type and number of officers

Officer category	Total amount of remuneration (million yen)	Total amount by type of remuneration (million yen)			Number of eligible officers
		Basic remuneration	Performance-based remuneration, etc.	Stock options
Director (excluding Audit & Supervisory Committee member and outside director)	53	33	20	–	3
Director (Audit & Supervisory Committee member)(excluding outside director)	7	7	–	–	1
Outside director	4	4	–	–	3

 

Corporate Code of Conduct

Internal Control Policy

Anti-social power exclusion policy

Outside Officer Independence Criteria

Bribery Prevention Policy