Corporate Governance
Basic Approach
Rather than simply pursuing profit, Takara Leben strongly believes that it must comply with laws and corporate ethics and carry out its duties as a responsible member of society.
While maintaining close relationships with customers, shareholders, and employees—our core stakeholders—we continuously consider how we can deliver further satisfaction. In addition, we believe that reflecting the feedback received from various other stakeholders in our business while responding in ways that keep in mind what our company should achieve, and for whom, will lead to sound and efficient business management as a going concern.
Furthermore, by not limiting ourselves to a systematic check and balance function but, rather, by rooting ourselves in indexes and systems, we will ensure that the check and balance across the entire company will function in sync with each person’s awareness.
Corporate Governance System
In addition to prudent and swift decision-making by the Board of Directors, Takara Leben has built a system to ensure management proprieties, such as appropriate mutual supervision by directors of the state of business execution as well as audit and supervision by auditors of directors’ state of business execution. We have also introduced an executive officer system to clarify the management supervisory roles of directors and the business execution responsibilities of executive officers.
Corporate Governance System Trends
There are 12 directors, four of whom are independent outside directors with diverse backgrounds. The term of office of directors expires at the conclusion of the annual general meeting of shareholders relating to the last fiscal year ending within one year of their election. In fiscal year 2021, the Board of Directors held 21 meetings.
The Company has three corporate auditors, three of whom are independent outside corporate auditors, and has established a system that enables it to adequately fulfill its management oversight function from the outside. The Board of Corporate Auditors held 14 meetings in fiscal year 2021.
| FY | Form of Organization | Total Number of Directors | Number of Outside Directors | Total Number of Auditors | Number of Outside Auditors |
|---|---|---|---|---|---|
| FY2016 | Company with Audit & Supervisory Board | 10 | 2 | 3 | 3 |
| FY2017 | Company with Audit & Supervisory Board | 10 | 3 | 3 | 3 |
| FY2018 | Company with Audit & Supervisory Board | 11 | 3 | 3 | 3 |
| FY2019 | Company with Audit & Supervisory Board | 13 | 3 | 3 | 3 |
| FY2020 | Company with Audit & Supervisory Board | 13 | 4 | 3 | 3 |
| FY2021 | Company with Audit & Supervisory Board | 12 | 4 | 3 | 3 |
| FY2022 | Company with Audit & Supervisory Board | 12 | 4 | 3 | 3 |
Board of Directors
Takara Leben has appointed 12 directors, four of whom are outside directors. All four outside directors have been designated as independent officers. In addition to carrying out prudent and swift decision-making, directors mutually supervise the status of business execution at Board of Directors’ meetings, which, in principle, are held once a month, and also at extraordinary board meetings which are held on an as-required basis.
Auditors are always in attendance at the Board of Directors’ meetings and state their opinions as necessary. At the same time, auditors work closely with outside directors and, as necessary, audit and oversee the running of the Board of Directors’ meetings and the status of business execution. Also in attendance at the Board of Directors’ meetings are executive officers, the head of the Internal Audit Office, and the heads of other departments who have received requests from the Board of Directors based on internal regulations and who express their opinions on each issue or reporting matter.
The Takara Leben Executive Committee, which deliberates on management issues, and the Sales Conference, which discusses the progress of sales, both meet once a month. In addition to sharing the achievement status of management targets at these and other meetings, the Company gleans information on problem areas and issues in the form of performance reports from each department and deliberates important matters relating to overall management. The content of those reports is raised at the Board of Directors’ meetings on an as-required basis.
Evaluating the Effectiveness of the Board of Directors
With respect to the effectiveness of the Board of Directors as a whole in fiscal year 2021, an anonymous questionnaire was sent to all directors and auditors, including outside directors, with the assistance of an outside consulting organization, and, based on the responses to the questionnaire, the Board of Directors analyzed and evaluated its own effectiveness. The questionnaire generally revealed a positive evaluation, confirming that the effectiveness of the Board of Directors has been secured. In addition, improvements have been made in such areas as “diversity in the composition of the Board of Directors” and “provision of information necessary for discussion,” which were identified as issues in the previous year’s evaluation of the effectiveness of the Board of Directors. Future issues identified include enhancing discussions on management strategy, including the Group-wide crisis management system and investment in human capital, as well as reflecting the opinions of shareholders and other investors. We will continue to fully examine the issues identified and make ongoing efforts to enhance the functions of the Board of Directors.
Executive Remuneration
Directors’ remuneration is determined on the basis of the degree of each director’s contribution to business expansion and improvement in corporate value towards sustainable growth. The limit of the annual amount of remuneration is deemed to be ¥600 million (not including, however, the employee portion of the salary), and the limitation of the special stock option remuneration to ¥600 million annually is decided by a resolution at the Ordinary General Meeting of Shareholders. Auditors’ remuneration is limited to an annual amount of ¥60 million or less.
Audit & Supervisory Board
As a check and balance system on decision-making, all three auditors of Takara Leben are outside corporate auditors. Each auditor has the requisite background, experience, and mettle to objectively carry out assessments and verifications.
Besides audits for Takara Leben, the auditors are involved in audits of our Group companies, such as attending their board meetings and interviewing their directors, maintaining firm relationships with these companies. Furthermore, the auditors and the accounting auditor work to further improve the effectiveness and efficiency of audits by understanding and adjusting each other’s annual schedules, going together to events such as ground inspections and checks on show rooms, and exchanging information as appropriate.
Takara Leben has also established guidelines on internal audits and established an Internal Audit Office as an independent organization reporting directly to the representative director to enhance and strengthen internal audits. In the proposal and execution of the internal audit plan, the office coordinates the schedules of auditors and the accounting auditor and adjusts the scopes of audits to seek the efficient operation of various functions. Auditors accompany and witness operation audits conducted by the Internal Audit Office and work on building an effective and efficient audit system by means such as verifying the scope of the audit and collecting opinions as appropriate.
Nomination and Remuneration Committees
We have established the Nominating Committee and the Compensation Committee as voluntary advisory bodies to the Board of Directors for the purpose of enhancing objectivity and transparency in the decision-making process regarding personnel matters and compensation of directors, etc. and further improving and strengthening the corporate governance system by ensuring appropriate opportunities for involvement and advice by outside directors. Each committee consists of three or more directors selected by resolution of the Board of Directors, at least half of whom are independent outside directors. The chairperson of each committee is selected by a resolution of the Board of Directors. In addition, each committee deliberates and reports mainly on the matters listed below, based on the advice of the directors.
Nomination Committee
- (1) Matters relating to the nomination of candidate directors, executive officers, and others;
- (2) Matters relating to the nomination and succession of the representative director;
- (3) Matters relating to basic policies and criteria on the nomination of directors and others; and
- (4) Other matters referred to the Nomination Committee by the Board of Directors.
Remuneration Committee
- (1) Matters relating to the remuneration of directors and executive officers;
- (2) Matters relating to basic policies and criteria on the remuneration of directors and others; and
- (3) Other matters referred to the Remuneration Committee by the Board of Directors.
Message from an Outside Director
Director (Outside)Kenji Kawada
We interviewed Kenji Kawada, who has served as an outside director of Takara Leben since 2017, about how he regards the new Medium-Term Management Plan, initiatives to enhance the governance system, and the roles of directors.
With his many years of involvement in the management of financial and business firms, Mr. Kawada has a wealth of experience in business management and governance system building, including his appointment as Representative Director and President of Resona holdings in 2003, where he led the effort to become the first financial institution in the banking industry to make the shift to a Company with three Committees system.
Excerpted from the Annual Report 2021