The Company has established a basic policy of corporate governance to gain the trust of all stakeholders and aim to become a corporate group that grows and develops in a healthy manner by thoroughly incorporating compliance awareness and realizing fair and highly transparent management, in order to achieve its Corporate Philosophy and Management Vision in accordance with the spirit of the Company's Mission Statement: "Customers First"*.
In conformity with the basic policy and based on the organizational structure of a Company with an Audit & Supervisory Board, the Company is continuously working to strengthen the Taikisha Group's governance and reform of management. It is doing this by taking measures such as reinforcing the supervisory function of the Board of Directors through the activities of Outside Directors and speeding up the decision making of the Board of Directors through the adoption of the corporate officer system, aiming to further enhance and reinforce corporate governance of the Taikisha Group.
*"Customers" is defined as Overall Society in a broad sense. The spirit of "Customers First" is to win persistent trust from the Customers.
Corporate Governance Report
April 30, 2021
Pattern Diagram of Corporate Governance
Functions of the Board of Directors and the Audit & Supervisory Board
- The Board of Directors
- The Board of Directors, chaired by an Independent Outside Director, which consists of 9 Directors, including 2 Independent Outside Directors, is held once each month with additional meetings as and when required. The Board of Directors makes decisions regarding the Taikisha Group's management policy, items stipulated in laws and regulation and the Articles of Incorporation, and important management matters, as well as monitors and supervises the execution of duties by each Director and Corporate Officer.
Independent Outside Directors are appointed in order to revitalize deliberation and ensure the transparency of decision-making processes in the Board of Directors, and to reinforce the supervisory function of the Board of Directors over Directors and Corporate Officers.
- Audit & Supervisory Board
- The Company has 5 Audit & Supervisory Board Members, including 3 Outside Audit & Supervisory Board Members. The Audit & Supervisory Board holds a meeting once a month in principle, in which the Members mainly deliberate the audit plan, exchange opinions on audit result reports, etc., and consider matters related to the appointment, dismissal, or non-reappointment of an accounting auditor and matters that require the resolution of the Audit & Supervisory Board, such as consent to the compensation to be paid to the accounting auditor.
- Each Audit & Supervisory Board Member
- Each Audit & Supervisory Board Member conducts audits in accordance with the audit standard stipulated by the Audit & Supervisory Board and the assignment given to him, and requests Directors and Corporate Officers, etc. to report the execution of duties as needed in order to keep track of important decision-making processes and the progress of the execution of duties within the Company and group companies. The Audit & Supervisory Board Members also review important documents, including internal approval documents, attend major meetings, including meetings of the Board of Directors and the Management Meeting, and collect necessary information about the current progress of the process of considering important matters and making decisions on the same from the Internal Audit Office, the Corporate Compliance Dept., and other related departments and sections and make proposals for the improvement of operations as needed.
Nomination Advisory Committee/Compensation Advisory Committee
Taikisha has established the Nomination Advisory Committee and the Compensation Advisory Committee as advisory bodies for the Board of Directors, with the aim of enhancing the independence and objectivity of functions and the accountability of the Board of Directors regarding nomination and compensation of senior management and Directors. Each Committee is chaired by an Independent Outside Director and comprises 2 Independent Outside Directors, and 2 Representative Directors.
- Nomination Advisory Committee
- The Company deliberated the election of candidates for director and the planning of the successor to the President at a meeting of the Nomination Advisory Committee.
- Compensation Advisory Committee
- The Company made efforts to improve the effectiveness and transparency of the Compensation Advisory Committee by deliberating, for example, the stock-based compensation to Directors introduced in August 2019.
Functions that Support Corporate Governance
As functions to support its corporate governance, Taikisha has set up and operates: 1) Management Meeting; 2) Corporate Policy Review Meeting; 3) Risk management system; and 4) Compliance system. Taikisha makes improvements to each function while conducting a review on an ongoing basis.
Evaluation of the Effectiveness of the Board of Directors
Taikisha conducts an analysis and evaluation of the effectiveness of the Board of Directors at least once a year, deliberates relevant issues and policies for dealing with the same based on the evaluation results at a meeting of the Board of Directors, and discloses a summary of the results thereof in order to increase the effectiveness of the Board of Directors and enhance information provision to external stakeholders.
In FY2019, Taikisha was committed to further augmenting the supervisory function of the Board of Directors, including a review of the roles and operation method of each meeting body, the improvement of matters to be reported to the Board of Directors, the expansion of discussions about the risk management system of the Taikisha Group, the holding of a meeting to be attended only by the Outside Directors and the Outside Audit & Supervisory Board Members to exchange opinions, and the improvement of the functions of the Nomination Advisory Committee and the Compensation Advisory Committee. Considering these factors, in the analysis and evaluation of the effectiveness of the Board of Directors in FY2019, which targeted the Board of Directors as a whole under the direction of the Chairman of the Board of Directors, all of the Directors and the Audit & Supervisory Board Members replied to a self-evaluation questionnaire for the purpose of collecting their opinions about matters on the conventional "roles to be played by the Board of Directors" and "matters that should be considered by the Board of Directors in order to fulfill its roles" as well as other matters that should be preferentially discussed to further improve the effectiveness of the Board of Directors in view of the business environment surrounding Taikisha. In addition, based on the results of an objective analysis by an external advisor, deliberations were held on the sharing of issues recognized by the Board of Directors and policies to address such issues, and other matters.
Results of evaluation
As a result of the above, it was determined that the Board of Directors of Taikisha is sufficiently effective.
The Board of Directors of Taikisha has the role of making decisions on important management matters and effectively demonstrating its supervisory function over general management to put into practice the "Customers First" Mission Statement and contribute to sustained growth and the medium- to long-term improvement of corporate value. To fulfill these roles, the provision of materials and the time for discussions have been sufficiently ensured to stimulate deliberations at the Board of Directors meetings. Meanwhile, the status of the execution of important duties is regularly reported to the Board of Directors.
Initiatives to address the issues raised
With regard to the matters identified as issues in the effectiveness analysis and evaluation conducted in the preceding fiscal year, Taikisha has been improving such matters in order of precedence. In connection with long-term plans, the members of the Board of Directors held an off-site discussion envisaging the industrial structure, changes in the social environment, and future vision both 10 years and 20 years from now. Taikisha has commenced efforts in view of the changes resulting from the novel coronavirus (COVID-19) crisis and improved the method of reporting to the Board of Directors with the aim of effectively supervising the progress of the Mid-Term Business Plan. Moreover, Taikisha has expanded the scope of the content to be reported by the executive side about the status of the construction and operation of the risk management system of the Taikisha Group and analyzed and deliberated matters to a deeper level at meetings of the Risk Management Committee, the Corporate Policy Review Meeting, etc. based on the opinions of the Board of Directors. At the Nomination Advisory Committee, the election of candidates for directors and the planning of the President's successor were deliberated, and at the Compensation Advisory Committee, efforts were made to improve its effectiveness and transparency by deliberating, for example, the stock-based compensation plan for Directors introduced in August 2019.
In order to further strengthen the supervisory function of the Board of Directors, Taikisha will continue to discuss the long-term strategy and consider the effective supervision of the risk management and internal control systems of the Taikisha Group, including overseas affiliates.
What is more, in order to address the COVID-19 crisis, the Board of Directors is extending management's support to business operations based on the "basic policy that places the highest priority on securing the safety of employees and external parties involved and preventing the spread of infection," and focusing energies on the supervision of the status thereof. Taikisha will also continue to analyze the issues that have come to the surface in the current COVID-19 crisis, deepen deliberations for the purpose of further strengthening the crisis management system in preparation for the occurrence of situations that are difficult to predict even in normal times, and utilize the outcomes for deliberations on a "long-term strategy toward sustainable growth."
In order to further enhance and strengthen corporate governance, Taikisha will address the management issues identified through this year's effectiveness analysis and evaluation in order of priority, and continuously examine measures to improve the effectiveness of the Board of Directors.