Fundamental Approach to Corporate Governance

Cognizant of the importance of complying with corporate ethics as well as laws and regulations, we strive to create corporate governance systems that place greater emphasis on shareholder value with the objectives of fulfilling our social responsibilities and increasing the soundness of management.　We proactively disclose information to enhance management transparency and fairness.

 

Fundamental Policy on Corporate Governance

1．Ensuring shareholder rights and equality

The Company respects the rights of shareholders and strives to create an environment in which those rights can be appropriately exercised and works to ensure substantive equality among shareholders.

2．Appropriate collaboration with stakeholders other than shareholders

In accordance with its corporate philosophy, the Company endeavors to engage in appropriate collaboration with stakeholders including not only shareholders, but also employees, customers, business partners, creditors, and local communities.

3．Ensuring transparency through appropriate disclosures

The Company’s fundamental stance is to proactively and fairly disclose corporate information, and we comply with rules on timely disclosure and also provide timely and appropriate disclosures of non-financial information.

4．Duties of the Board of Directors and other bodies

The Company’s Board of Directors makes decisions on important matters and oversees the execution of business by the directors to achieve sustained growth and enhance corporate value over the medium to long term.

5．Dialogue with shareholders

The Company seeks to engage in constructive dialogue and share information with shareholders. The Company periodically holds financial results briefings for individual and institutional investors.

 

Policies and Procedures Concerning Determination by the Board of Directors of Executive and Director Compensation

The compensation provided to the Company’s directors is based on a compensation system linked to the interests of shareholders in order to function as an adequate incentive to continuously increase corporate value. The Company’s fundamental policy is to set compensation for individual directors at appropriate levels based on their respective responsibilities. Following deliberation by the Nomination and Compensation Committee, the president makes a final decision, and in the case of directors who are also members of the Board of Company Auditors , the decision is made through discussions by the members of the Board of Company Auditors.

 

Policies and Procedures Concerning Decisions by the Board of Directors on Appointment and Dismissal of Executives and Nomination of Candidates for Director and Board of Company Auditors Member

The Company’s policy is to nominate as director candidates those individuals who will contribute to the Company’s sustained growth and increased corporate value over the medium to long term based on confirmation of their character, abilities, experience, and so on in light of our corporate philosophy and management strategies. The president submits a proposal to the Nomination and Compensation Committee, and following deliberation by the committee, the Board of Directors makes a decision. In the case of a candidate for director who will also be a Board of Company Auditors member, consent is obtained from the Board of Company Auditors. Criteria relating to dismissal have been established, and the president submits a proposal to the Nomination and Compensation Committee, which makes a decision following deliberation.

 

Explanations of Individual Appointments, Dismissals, and Nominations When the Board of Directors Appoints and Dismisses Executives and Nominates Director Candidates

The reasons for individual appointments and dismissals concerning director candidates are described in the reference documents to the notice of convocation of the General Shareholders Meeting.

 

Criteria for Determining the Independence of Outside Directors

Independent directors are nominated from among those outside directors who pose no risk of a conflict of interest with general shareholders. The appointment criteria are as follows.

1．Persons who do not fall under the Independence criteria set forth in Chapter III, Section 5(3)-2 of the guidelines on listing management and other provisions established by the Tokyo Stock Exchange

2．Persons who have not been officers or employees of a major shareholder, business partner, company with which we engage in reciprocal appointment of personnel, or donor recipient of the Company for at least five years

 

Director Training Policy

The Company believes that directors should understand the roles and duties that they are to perform and should strive to acquire and improve skills to perform those roles and duties. The Company appropriately provides information and opportunities to achieve this.

 

Policy on Constructive Dialogue with Shareholders

The president and representative director is responsible for relations with investors, and the Management Headquarters handles administrative aspects, holding financial results briefings and responding to individual inquiries from the media. In addition, the Company has established a disclosure policy and encourages constructive dialogue with shareholders.

 

Fundamental Policy on Capital Strategy

The Company believes that providing returns to shareholders is among the most important management measures, and the Company’s fundamental policy is to distribute profits according to financial results in each term while taking into consideration stable dividends. The Company comprehensively considers medium- to long-term capital demand relating to business investment for enhancing corporate value in the future, forecasts of financial status, and other factors and distributes profits to shareholders with a baseline dividend payout ratio of 35%.

 

Policy on Cross-Shareholdings

The Company holds shares that it has determined to be important for maintaining business relationships or for competition and business strategies or that will contribute to enhancing the Company’s corporate value over the medium to long term. The Company reduces holdings of those shares that are not consistent with these grounds for cross-shareholdings or the Company’s capital strategy.

The Board of Directors comprehensively considers, deliberates on, and verifies holdings of shares from the perspective of the status of business transactions on a regular basis.
With respect to the exercise of voting rights, all proposals are examined based on whether they will contribute to improving the corporate value of both the Company and the issuer of the shares over the medium to long term, and voting rights are exercised accordingly.

 

Transactions with Related Parties

In cases where a director engages in competitive transactions or transactions that give rise to a conflict of interests, approval must be obtained from the Board of Directors. Furthermore, in cases where the Company conducts transactions with a related party such as a major shareholder, estimated prices are presented taking into consideration the total cost and prices are negotiated for each product.