Management Policy Corporate Governance
Basic Views on Corporate Governance
Basic Policy Regarding Corporate Governance
MARUBUN recognizes the enhancement of corporate governance as an important management issue, and strives for transparency, fairness and efficiency in its management practices, to meet the expectations of its shareholders, business partners, employees, and other stakeholders, and to increase its corporate value.
Our Corporate Governance Guidelines
Based on the above policy, we have formulated and apply “MARUBUN Corporation Corporate Governance Guidelines,” to provide for a basic framework and policy regarding corporate governance, and to achieve sustainable growth and increase corporate value through the practice of corporate governance. Japan’s Corporate Governance Code is a guideline summarizing the nature of corporate governance for listed companies in the form of principles.
MARUBUN discloses information about matters required to be disclosed in accordance with this Code as follows.
Corporate Governance Report
Action to Implement Management that is Conscious of Cost of Capital and Stock Price
Disclosure based on the Corporate Governance Code
Japan’s Corporate Governance Code is a guideline summarizing the nature of corporate governance for listed companies in the form of principles. MARUBUN discloses information about matters required to be disclosed in accordance with this Code as follows.
Corporate Governance Structure
Outline of Corporate Governance Structure
| Type of system | Company with Audit and Supervisory Committee |
|---|---|
| Number of directors (Of which, number of outside directors) |
9（4） |
| The term of office of directors (excluding those serving as audit and supervisory committee member) |
1 year |
| The term of office of audit and supervisory committee member |
2 years |
| Adoption of an Executive Officer System | Yes |
| Voluntary committees | Management Committee, Nomination and Compensation Committee, Internal Control Committee, Sustainability Committee |
| Independent external auditor | Ernst & Young ShinNihon LLC |
Overview of the Corporate Governance System
MARUBUN has adopted the “Company with Audit and Supervisory Committee” as its corporate structure to strengthen management supervision and oversight functions, and has established a structure that enables speedy decision-making through the separation of management oversight and business execution.
Calibration of each committee and meeting body and its purpose and role
| Board of directors | The Board of Directors consists of nine directors, including four Audit and Supervisory committee members who are also outside directors. The Board of Directors meets once a month in principle and as needed to discuss and make decisions on important management matters stipulated by laws, regulations, the Articles of Incorporation, and the Board of Directors Regulations, as well as to supervise the execution of business operations. |
|---|---|
| Audit and Supervisory Committee | The Audit and Supervisory Committee consists of four Audit and Supervisory Committee members who are also outside directors. In principle, the Audit and Supervisory Committee meets at least once every three months and as needed, and is responsible for auditing the execution of duties by directors, auditing financial statements, and preparing audit reports, etc. In accordance with the audit policy and audit plan determined by the Audit and Supervisory Committee, audits are conducted in cooperation with the internal audit division, accounting auditors, etc. |
| Nomination and Compensation Committee | The Nomination and Compensation Committee consists of four Audit Committee members who are outside directors. In principle, the committee meets once a year and as necessary to ensure transparency and fairness in the appointment and dismissal of directors, including from the perspective of diversity and skills, succession planning, and the framework for the total amount, compensation structure, and calculation method of director compensation. |
| Management Committee | The Management Committee consists of the President and five other executive directors. In principle, it meets once a month and as needed to consider basic management policies, management plans, and other important management matters, as well as to deliberate in advance on matters to be resolved at the Board of Directors meetings. |
| Internal Control Committee | The Internal Control Committee consists of five executive directors and five heads of divisions involved in internal control. In principle, the committee meets once every two months and as needed to monitor the development and operation of the internal control system. The Audit and Supervisory Committee is regularly informed of the status of the internal control system by the General Manager of the Audit Office, who is a member of the Internal Control Committee, through the Director of the Audit and Supervisory Committee Secretariat. |
| Sustainability Committee | The Sustainability Committee consists of five executive directors and four heads of divisions involved in sustainability activities. In principle, the committee meets once every six months, and as needed, to set policies and targets for sustainability activities and monitor their operation. |
Attendance
（Board of directors）
The Board of Directors met 13 times in fiscal year 2022. The attendance of each director is as follows.
|
Official position |
Name |
Attendance |
|---|---|---|
|
Chief Executive Officer |
Toru Iino |
100％ （13times／13times） |
|
Senior Executive Vice President |
Kazuaki Iwamoto |
92％ （12times／13times） |
|
Senior Vice President |
Satoshi Fujino |
100％ （13times／13times） |
|
Vice President |
Hiroshi Imamura |
100％ （13times／13times） |
|
Yuzo Nakada |
100％ （10times／10times） |
|
|
Hiroshi Horikoshi |
100％ （13times／13times） |
|
|
Outside Director, |
Koji Kakinuma |
100％ （13times／13times） |
|
Yoshisaburo Mogi |
92％ （12times／13times） |
|
|
Yasuhiko Watanabe |
100％ （13times／13times） |
※ The number of meetings of the Board of Directors held since Mr. Yuzo Nakada assumed office as Director was 10.
（Audit and Supervisory Committee）
The Audit and Supervisory Committee held six meetings in fiscal year 2022. The attendance of each Audit Committee member is as follows.
|
Official position |
Name |
Attendance |
|---|---|---|
|
Outside Director, |
Yasuhiko Watanabe |
100％ （6times／6times） |
|
Yoshisaburo Mogi |
100％ （6times／6times） |
|
|
Koji Kakinuma |
100％ （6times／6times） |
（Nomination and Compensation Committee）
The Nominating and Remuneration Committee met five times in fiscal year 2022. The attendance of each committee member is as follows.
|
Official position |
Name |
Attendance |
|---|---|---|
|
Outside Director, |
Yasuhiko Watanabe |
100％ （5times／5times） |
|
Yoshisaburo Mogi |
100％ （5times／5times） |
|
|
Koji Kakinuma |
100％ （5times／5times） |
Policy and procedure for nomination, election and dismissal of Directors
Basic policies and procedures
The Company selects Director candidates who will contribute to the sustainable growth of the Company and the enhancement of its corporate value in the medium and long term under the selection criteria set out by the Board of Directors, comprehensively considering their personality, insight, capabilities, experience, track record and other factors. If a Director materially breaches laws, regulations or the Article of Incorporation or if it becomes clear that a Director does not meet the selection criteria, the Company shall consider dismissing them.
The Board of Directors shall propose to the General Meeting of Shareholders the election or dismissal of Directors after receiving advice and consent from the Nomination and Compensation Committee.Directors Skill Matrix
Reason for Appointment as Directors
Please see below for the reasons for the appointment of directors.
Criteria for independence of Outside Directors
The Company has established the criteria for independence under Article 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange to ensure the independence of the Outside Directors. If the Outside Directors meet the criteria, the Company will deem them independent of the Company.
(Criteria for independence)
1.An Outside Director has not been an executive of the Company or its subsidiaries (hereinafter the “Group”) in the past ten years
2.None of the following items apply to the Outside Director within the past three years:
(i) Engaged in operations of a company that deals with the Group and accounts for more than 2% of the Company’s annual consolidated sales
(ii) Been an executive of a company that deals with the Group and whose annual sales to the Group account for more than 2% of the company’s annual consolidated sales
(iii) Been an executive of a financial institution from which the Group borrows an amount of money that is more than 2% of the Company’s consolidated total assets at the end of the latest fiscal year
(iv) Been a professional, such as a lawyer, certified public accountant, tax accountant or consultant, who receives more than 10 million yen annually in cash or other property other than officers’ remuneration from the Group
(v) Been a major shareholder of the Company (holding 10% or more of the total voting rights) or an executive of a major shareholder
(vi) Been an executive of an organization that has received a donation of more than 10 million yen annually from the Group
(vii) Been an executive of a company that exchanges officers with the Group
(viii) Been the spouse or a relative within the second degree of kinship of a person who is described in any of the items (i) to (vii) (limited to executive directors, executive officers, corporate officers or executives at the level of department head or higher)
3.In the past five years, the Outside Director has not been the spouse or a relative within the second degree of kinship of a person who has been an executive director, a corporate officer or an executive at the level of department head or higher.
Evaluation of effectiveness of the Board of Directors
The Company’s Board of Directors evaluates its effectiveness annually to fulfill its roles and responsibilities. The goals of evaluating effectiveness are to identify issues and points for improvement and to improve the effectiveness of the Board of Directors.
The following is a summary of the evaluation of the effectiveness of the Board of Directors in FY2022.
(1) Evaluation items and process
To evaluate the effectiveness of the Board of Directors, the Company asked all Directors a set of questions covering the following aspects: (i) the size and composition of the board, (ii) the management of the board, (iii) board support systems, (iv) the roles and responsibilities of the Directors and (v) the management of the Nomination and Compensation Committee. The Company requested that the Directors complete a self-evaluation form, rating themselves on a five-level scale and providing comments, to quantitatively and qualitatively assess the Board of Directors. The Board of Directors discussed the aggregated results and analyses.
(2) Results of evaluation
The survey results indicate that the Directors give high marks overall to the effectiveness of the Board of Directors, and the Company has concluded that the Board of Directors is performing well overall and is effective. Scores are high, particularly for the size and composition of the Board of Directors, the frequency of meetings, the annual schedule, the sharing of agenda items beforehand, regular reports on sustainability and risk management and the exchange of information between Outside Directors. The Company has concluded that the Board of Directors works properly in these areas.
The Company has identified the need to improve discussions about the medium-term business plan and follow-up actions. To meet this need, the Company will listen to each Director’s opinions and encourage active discussion at meetings of the Board of Directors.
Remunerations for Directors
Basic policy on remuneration for Directors and procedures for determining remuneration
The contents and amounts of the remuneration paid to the Directors (excluding Directors who are members of the Audit & Supervisory Committee) shall be proportionate to their job responsibilities and roles as executive directors. The remuneration shall also motivate them to increase corporate value and results in the short, medium and long term. The amounts of the remuneration for the Directors shall be determined based on their job positions and descriptions as well as their expected contributions, the consolidated results for a certain period and other relevant factors. These amounts shall be set within the limit specified by the resolution of the General Meeting of Shareholders. The Board of Directors shall determine the total amount of remuneration, the structure of remuneration, and the framework for calculations. The decision shall be made based on the advice received from the Nomination and Compensation Committee, which is composed of Outside Directors, and subject to the committee’s approval.
The CEO and Representative Director of the Company are responsible for determining the remuneration of individual Directors (excluding Directors who are members of the Audit & Supervisory Committee). The Board of Directors has delegated this duty to the CEO. Before making a decision, the CEO shall receive advice and consent from the Nomination and Compensation Committee. The reason this duty has been delegated to the CEO and Representative Director is that we believe the CEO can most appropriately evaluate each Director’s duties and determine their remuneration in consideration of the Group’s overall financial results and other facts. The Board of Directors shall determine the number of shares allocated to each Director as restricted stock-based compensation.
The Audit & Supervisory Committee shall discuss and determine remuneration for the Directors who are members of the Audit & Supervisory Committee in light of their independence and impartiality. Their job descriptions and other relevant factors are taken into consideration. Remuneration shall be within the limit specified at the General Meeting of Shareholders.
Remuneration system
Remuneration for the Company’s officers is based on their job positions, specifically their roles, authorities and responsibilities.
Remuneration for Directors (excluding Directors who are members of the Audit & Supervisory Committee) is comprised of fixed remuneration (base pay and position-based pay) and performance-linked remuneration (performance-based pay and restricted stock-based compensation). Directors who are members of the Audit & Supervisory Committee only receive fixed remuneration (base pay).
Base pay is the basic remuneration determined by position, with officers holding the same position receiving the same base pay, which shall be revised according to trends in the prices of goods. Position-based pay received by each officer shall be based on the duties assigned to them. Performance-based pay is calculated using the results of the Company in the previous fiscal year and coefficients determined by officer type.
The Company has introduced restricted stock-based compensation for officers to share with shareholders the advantages and risks of changes in the stock price and increase their motivation to contribute to raising the stock price and enhancing corporate value. The Company shall grant part of the performance-based compensation calculated using the existing calculation method as stock compensation. The Company shall grant monetary claims to eligible Directors to grant restricted stock-based compensation. The eligible Directors shall make in-kind contributions of all the monetary claims and in return receive common shares of the Company. The eligible Directors may not transfer, create a security interest on, or otherwise dispose of the common stock during a specified period. The Company shall acquire the shares without consideration under certain circumstances.
The percentage of Directors’ total remuneration that is performance-based compensation varies according to the results of the Company. The Company uses consolidated ordinary income, which reflects foreign exchange gains and losses, as an indicator in the calculation of performance-based compensation because foreign currencies account for a large percentage of the Company’s transactions.
The target for consolidated ordinary income, the calculation basis for performance-based compensation, in the fiscal year ended March 31, 2022 was 3,000 million yen. Actual consolidated ordinary income was 4,106 million yen.
Resolution of the General Meeting of Shareholders on remuneration for officers and others
The 68th General Meeting of Shareholders held on June 26, 2015 resolved to grant remuneration of 400 million yen or less annually to Directors (excluding Directors who are members of the Audit & Supervisory Committee) (this remuneration does not include their salaries as employees; the number of Directors set out in the Articles of Incorporation is ten or fewer, and the number as of the date of submission of the securities report was five).
At the 76th General Meeting of Shareholders held on June 28, 2023, the Company resolved to introduce a restricted stock-based compensation plan and grant monetary claims of 50 million yen or less annually to grant restricted stock-based compensation to Directors (excluding Directors who are members of the Audit & Supervisory Committee and Outside Directors) within the above limit. The resolution also stipulates that the total annual number of common shares of the Company that are issued or disposed of shall be a maximum of 100,000.
The Company’s 68th General Meeting of Shareholders held on June 26, 2015 adopted a resolution to set the limit of remuneration for Directors who are members of the Audit & Supervisory Committee at 100 million yen per year (the number of Directors who are members of the Audit & Supervisory Committee set out in the Articles of Incorporation is five or fewer, and the number as of the date of submission of the securities report was four).
Activities conducted by the Nomination and Compensation Committee and the Board of Directors in the process of deciding the amount of officers' remuneration and other matters
Activities conducted by the Nomination and Compensation Committee and the Board of Directors in the process of deciding the amount of officers’ remuneration, among other matters, for the current fiscal year are as follows.
(Nomination and Compensation Committee)
The Nomination and Compensation Committee held five meetings in the current fiscal year. It was requested that the committee discuss the structure of the remuneration for Directors, the allocation of remuneration to individual Directors and the introduction of a stock-based compensation plan for executive directors and provided advice.
(Board of Directors)
At a meeting held on June 28, 2023, the Board of Directors adopted a resolution about the remuneration for Directors (excluding Directors who are members of the Audit & Supervisory Committee) for the current fiscal year.
Basic Views on Internal Control System
MARUBUN CORPORATION (“the Company”) has formulated and applies its “Basic Policy on Establishing Internal Control Systems,” as follows.