Corporate Governance(Supervisory Framework ・ Business Execution Framework)

Progressing with Corporate Governance Reform

Our group continues to aim for improved transparency and fairness in corporate governance, and we believe it is important to strengthen the relationship of trust we have built with all of our stakeholders by fulfilling our corporate social responsibilities throughout our operations. For that reason, the Board of Directors has established Corporate Governance Policies and clarified the overall picture of governance organization and basic policies under which the governance framework is constructed, as we continue to enhance the system in pursuit of ideal corporate governance.
The Company aims to improve management fairness and soundness, and to that end, we have evolved the organizational structure of the Board of Directors in response to the changes in the business environment in order to maximize the functionality of Outside Directors and increase effectiveness of governance. That is why when the company was founded with an Audit & Supervisory Board, we also established a Nomination and Compensation Committee voluntarily. Half of the entire Board of Directors is comprised of Outside Directors, enabling us to construct the Group’s business foundation with the help of a more diverse selection of advice and counsel. In the process of expanding our business through the introduction of the Business Owner and Group Chief Officer (CxO) systems and other such efforts, we next introduced a “hybrid” system of governance, in which Outside Directors supervise the executive structure, focused on the Nomination and Compensation Committee, while the Audit & Supervisory Board monitors validity in addition to and beyond legality.
Moreover, in June 2019 it was decided that the company would transition to a company with committees, and three legally mandated Committees were established (Nomination, Audit, and Compensation). In addition, by forming the Board of Directors such that it was centered on the Outside Directors, we were able to fortify its supervisory function, as well as implement a system still in use today that allows for broader delegation of authority to the executive divisions.

Supervisory Framework

The Company elected to adopt a Company with Committees structure in June 2019 as part of efforts to strengthen corporate governance by separating management supervision from business execution, in order to reinforce the supervisory function of the Board of Directors and to accelerate business execution by delegating substantial authority to executive officers. The Company also established three committees: the Nomination Committee, the Audit Committee, and the Compensation Committee. This has put into place a governance system with improved transparency and fairness.

Board of Directors

The Board of Directors performs its duties as stipulated by law or the Articles of Incorporation, establishes important items for management defined in the Rules of Board of Directors, and serves a supervisory function overseeing the state of business execution. The chairman of the Board of Directors, who is appointed by the Board as stipulated in the Articles of Incorporation, also serves as a director and the Group CEO.
As of the conclusion of the 11th General Meeting of Shareholders, nine of the twelve directors are outside directors (a majority), consisting of eleven Japanese people and one non-Japanese person, of whom nine are men and three are women. The average length of service (including time served as an Audit & Supervisory Board member) is 4.1 years.

Nomination Committee

The Nomination Committee defines policy and standards for the appointment of directors and executive officers, determines the list of candidates, and is involved in the appointment of directors and executive officers at subsidiaries, depending on their business type and scale. In addition, the committee deliberates on the appointment and dismissal of the Group CEO based on a personal performance evaluation for the purpose of enhancing transparency and corporate governance.
The Nomination Committee consists of at least three directors, a majority of whom are from among the outside directors. The chair of the Nomination Committee is chosen from among the outside directors on the committee. As of July 2021, the committee comprises five outside directors.

Compensation Committee

The Compensation Committee determines the evaluation, compensation scheme, and compensation amounts of directors and executive officers, and is involved in deciding the compensation scheme of directors and executive officers at subsidiaries, depending on their business type and scale. In addition, the committee conducts a personal performance evaluation of the Group CEO to enhance transparency and objectivity in the compensation-deciding process, and to improve corporate governance.
The Compensation Committee consists of at least three directors, a majority of whom are from among the outside directors. The chair of the Compensation Committee is chosen from among the outside directors on the committee. As of July 2021, the committee comprises five outside directors.

Audit Committee

The Audit Committee audits—from a legal compliance and appropriateness perspective—the performance of duties by directors and executive officers, produces audit reports, and determines proposals regarding the appointment, dismissal, and non-reappointment of independent accounting auditors. It also exercises right of consent to decisions on auditor compensation and the like, formulates audit standards, basic policies for audits, and auditing plans, and conducts organization-wide audits.
The Audit Committee consists of at least three members selected from among directors who do not have any executive roles, and the majority of members are outside directors. In principle, the committee chair is an outside director, selected from among its members, and the committee has at least one full-time Audit Committee member and at least one Audit Committee member who has expert knowledge of finance and accounting. As of July 2021, there are five members on the committee, four of whom are outside directors.

Business Execution Framework

In the Company, Executive Officers make executive decisions on matters delegated by the Board of Directors and execute business under the overall supervision of the Group CEO and the Group COO. To improve corporate value across the entire group, the Company has built a matrix-style management system comprising vertical and horizontal axes. On the vertical axis, Business CEOs, who are heads of business segments, are delegated substantial authority to allow them to perform swift decision-making and business execution. On the horizontal axis, Group CxOs, who are the highest authority in their respective functional areas, oversee their area of responsibility on a Group-wide basis to ensure decision-making that is best for the Group and exercise functions laterally across the Group.
In addition, the Company has established Global ExCo as an advisory body to the Group CEO and the highest executive committee to discuss themes that significantly impact group-wide management strategy and business executive policy. Further, it also established the Managerial Administrative Committee (MAC) as an advisory body to the Group COO to discuss important matters related to the execution of business strategy and managerial administrative matters of the Company and Group Companies.

Business Owner System

As the chief executives of each business segment, Business CEOs are responsible for advancing plans for the entirety of their respective business segments while also helping build “A Theme Park for Security, Health & Wellbeing,” in order to contribute to the realization of the Group Management Philosophy and Group management plans. Accordingly, Business CEOs are endowed with significant authority related to areas such as business strategy formulation, investment decision-making, and human resource assignment as required to accomplish those objectives.
Since the introduction of the Business Owner system in April 2016, Business CEOs have been leading their business segments in implementing dynamic growth strategies and in taking flexible and responsive action to address issues through swift decision-making and business execution.

Group Chief Officer (CxO) System

Group CxOs oversee the group-wide operation of each functional area as a head of each function in the Group. In this capacity, they exercise their functions in the Group’s best interests, acting laterally across the Group based on the Group’s strategies and on their roles, functions, and responsibilities.
The Group CxO system was introduced in April 2017 to serve as a framework designed to promote strong, mission-driven leadership. The roles and functions as well as the skills and experience required of each Group Chief Officer are defined in the Group’s function portfolio. The roles and functions of Group Chief Officers as well as the number of officers and the fields for which officer positions exist are not set, but will rather be flexibly revised as the operating environment of the Group or the management issues it faces change.

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