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Corporate Governance

Corporate Governance

Corporate GovernanceCorporate Governance

Public Relations Section, DFF Inc.

Basic Approach

Policy
Basic Approach

Under our corporate mission of “illuminating a more affluent tomorrow” and our corporate philosophy of providing the value “for customer peace of mind and satisfaction,” our group of companies takes the basic stance that we maintain fair and steady business activities with respect for people and the global environment, operate businesses focusing on profit while constantly pursuing new technology and high quality, and endeavor to contribute to prosperity of society. In order to implement this basic stance, we formulated the “Basic Policy to Improve the Governance to Secure Fair Business Practices” at the regular Board of Directors meeting held in May 2006 (this basic policy was later amended at the regular Board of Directors meeting held in May, 2015, to reflect the revision of the Companies Act).
The Company will work to further improve the efficiency and fairness of management by promoting initiatives to enhance corporate governance in accordance with the Corporate Governance Code.

Corporate Governance Structure: Supervision and Management and Internal Control System

Corporate Governance Structure: Supervision and Management and Internal Control System

Outline of Corporate Governance Structure

Form of Organization Company with audit & supervisory board members
Directors Number of directors (outside directors): 9 (2)
Audit & Supervisory Board Members Number of audit & supervisory board members (outside audit & supervisory board members): 4 (2)
Number of Independent Officers 4 (2 outside directors and 2 outside audit & supervisory board members)
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Corporate Governance Structure and Initiatives

Organization and Initiatives

Corporate Governance Structure and Initiatives

Meidensha clearly separates important management decision-making and operational decision-making in the rules of the Board of Directors and the rules of internal approval procedures, and ensures flexible executive functions.
The executive committee, which comprises executive directors and executive officers, has been created for executive decision-making, and decides matters based on the rules of internal approvals, as well as matters for which consultation from a whole company perspective is required.
Furthermore, we have established review meetings as an advisory body that operates separately from the decision-making structure in order to create a system for in-depth discussion and consideration of important management matters.

(1) Features of Institutional Design

① Executive Officer System

Meidensha introduced an executive officer system in June 2003 in order to streamline the Board of Directors so as to “speed up corporate decision-making and enhance its supervisory function.” At the same time, we strengthened the functions of the Board of Directors and separated the “decision-making and supervisory functions” and the “executive functions” that the Board of Directors used to have. The former functions were assigned to the Board of Directors and the latter to the executive directors and executive officers to whom the duties were delegated by the representative directors.
Executive functions for business operations are carried out according to resolutions and decisions of the executive committee, which is a decision-making body for executive functions, and the executive directors and executive officers, who have the authority to carry out executive functions, under the supervision of the Board of Directors. In this way, business operations are executed autonomously, flexibly, and swiftly.
Furthermore, with the Board of Directors having broadly assigned authority to conduct executive functions to the executive officers, directors and executive officers in charge of operations are required to submit status reports on the execution of operations to the Board of Directors at least once every three months in order to ensure that the supervisory function of the Board of Directors properly works.

② Composition of Directors

There are currently nine directors, and we believe that this number is appropriate to ensure thorough consideration to make appropriate and swift decisions to address the drastically changing business environment.
Furthermore, two of the nine directors are outside directors who carry out a supervisory function for execution of operations in order to strengthen corporate governance.
Meidensha’s outside directors satisfy the requirements of independent directors as stipulated in the rules of the Tokyo Stock Exchange.

③ Policy for Appointment of Candidates for Director and Appointment/Dismissal Process

When appointing Meidensha’s directors, it is our basic policy to appoint appropriate personnel that will ensure diversity and balance of the Board of Directors and contribute to increasing Meidensha’s corporate value based on individual directors’ abilities, knowledge, and experience, etc.
The number of directors is a number that we deem appropriate to fully deliberate on the management issues of the Company, with an upper limit of fifteen members.
Based on the above, we conduct a selection of candidates for director that will contribute to the enhancement of the Board of Directors decision-making function and oversight function, by resolution of the Board of Directors, with advice from the Nomination and Remuneration Committee* (voluntary committee), which is chaired by an independent outside director. The candidates are then presented at the General Meeting of Shareholders.
Furthermore, with regard to the dismissal of directors, if it is discovered that a director has breached the law or the Articles of Incorporation, or committed acts that flagrantly breach the director’s selection policy, the Board of Directors will take the necessary steps to dismiss said director with the advice of the Nomination and Remuneration Committee.

*Meidensha established a voluntary Remuneration Committee in December 2017. In December 2018, the Committee took on the functions of a voluntary nomination committee to become the Nomination and Remuneration Committee. The Nomination and Remuneration Committee is chaired by an independent outside director and is comprised of two outside directors, the chairman of the Board of Directors, and the president of the Board of Directors.

(2) Effectiveness Evaluation of the Board of Directors

Meidensha has a mechanism in place to conduct an analysis and evaluation of the effectiveness of the Board of Directors in order to strengthen the supervisory function of the Board of Directors.
With regard to the activities of the Board of Directors in fiscal 2018, all the directors and auditors, including the outside directors and outside audit & supervisory board member s, conducted a self-evaluation of the effectiveness of the Board of Directors, and the following discussions took place at the meeting of the Board of Directors in May 2019.

i. Items Evaluated

Composition and operation (resolution and deliberation methods, etc.) of the Board of Directors, self-evaluations concerning effectiveness of the Board of Directors, other opinions

ii. Outline of Analysis and Evaluation Results

The results of the evaluation of each director and audit & supervisory board member were collected, and after deliberation by the Board of Directors, it was determined that the quality of operation and deliberation is sufficient, sufficient opinions and advice have been received from outside directors and outside audit & supervisory board members, and the effectiveness of the Board of Directors is currently secure.
Also, further revitalization of deliberations of the Board of Directors was confirmed through these evaluations. We will also increase understanding of Meidensha’s business environment and strategy and provide ongoing opportunities for discussion such as through explanations in advance, meetings to exchange opinions, and explanatory programs outside of the initiatives of the Board of Directors referred to below.

Training of Directors and Audit & Supervisory Board Members

Legal training is conducted for officers on an annual basis, for the purpose of improving the effectiveness of the Board of Directors and internal control.
In fiscal 2018, we promoted risk management at each department and conducted training relating to governance, which was conducted by outside lawyers, for our officers, as part of internal control activities conducted at all companies.
The Meiden Group conducted training on the Companies Act for new officers of Meidensha and affiliated companies.

(3) Initiatives to Utilize Outside Directors

Meidensha seeks active participation in management by outside officers, in order to enhance the supervisory function of the Board of Directors. As such, we are conducting the following initiatives to ensure free and active debates.

① Initiatives at the Board of Directors

i. Advance Explanation of Agendas of the Board of Directors

We give explanations in advance so that directors are able to confirm the content of agenda items prior to participating in meetings of the board of directors. Our system allows us to accept questions, etc., relating to the content of agendas in advance and prepare an explanation to be given at the meeting of the Board of Directors, and this revitalizes and enriches deliberations.

ii. Timely and Appropriate Sharing of Information

Besides the agenda for the meeting, Meidensha provides briefings on current topics relating to the company at meetings of the Board of Directors, with the aim of timely and appropriate sharing of information with outside directors, so that they can share the status of the Company in a timely fashion.

② Initiatives Outside of the Board of Directors

i. Introductory Sessions

Primarily for newly appointed outside directors and outside audit & supervisory board members, we provide opportunities for them to understand the Company’s business.
The officers or general managers in charge of each business explain their business and Meidensha’s governance system to the outside officers, answer their questions and exchange opinions with them.

ii. Meeting for Exchange of Opinions

Besides legally-required board meetings, we organize monthly meetings for an exchange of opinions in order to best use the knowledge of the outside directors and outside audit & supervisory board members.
In these meetings, participants vigorously exchange opinions, mainly concerning matters relating to corporate governance and the Company’s management issues and strategy. The meetings also serve as preliminaries to discuss matters prior to passing resolutions at the Board of Directors.

(4) Audit & Supervisory Board Members and the Audit & Supervisory Board

Meidensha is a company with audit & supervisory board members. Each audit & supervisory board member (two of the four audit & supervisory board members are outside audit & supervisory board members) performs his assignment of duties in accordance with the auditing policies and the auditing rules for audit & supervisory board members stipulated by the Audit & Supervisory Board. They communicate with directors, the internal auditing department, and other relevant departments, attend meetings of the Board of Directors and other important meetings, and investigate the business and financial conditions, in order to audit the execution of directors’ duties.
The Company also has Internal Auditors Office to assist the Audit & Supervisory Board under the direct control of the Board.

(5) Internal Auditing System

We have an internal auditing division under the direct control of the President. The Internal Auditing Division conducts internal audits to check the effectiveness and efficiency of business operations, the reliability of financial reporting, the status of compliance with laws and regulations, and the maintenance of assets, covering the Company and all Group companies at home and abroad.
Since fiscal 2016, we have conducted risk management using control self assessment (CSA) at each Meidensha factory and each Japanese subsidiary in order to enhance internal control and increase the efficiency of risk audits at each business unit.
In fiscal 2018, we conducted joint audits with other existing internal business units in the course of overseas internal audits and joint audits with third parties through outside consulting at three locations in China to enhance internal control functions.

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Officers’ Remuneration

Officers’ Remuneration

Directors remuneration policy

i. Level of Remuneration

The level of remuneration of Meidensha’s directors is determined based on external objective remuneration market data, economic conditions, industry trends, and Meidensha’s business circumstances, etc., and it is confirmed by the Nomination and Remuneration Committee referred to above.

ii. Composition of Remuneration

Remuneration of directors is performance-linked annual remuneration, and comprises basic remuneration and incentive remuneration according to each role. Of these types of remuneration, incentive remuneration comprises remuneration that is linked to business performance as a short-term incentive and stock remuneration as a medium to long-term incentive.

Target Proportion of Each Type of Remuneration (if 100% of targets were achieved)

Target Proportion of Each Type of Remuneration (if 100% of targets were achieved)
iii. Incentive Remuneration System

Performance-linked remuneration, which is a short-term incentive, varies from 0 to 140 depending on the degree of achievement of targets, with perfect achievement of targets counting as 100. We use operating income, which is also used for our financial targets in Medium-term Management Plan 2020, as a performance evaluation indicator, and also give consideration to revisions according to operating conditions and changes to the roles of each officer, etc.

Calculation Formula

Calculation Formula

Stock remuneration, which is a medium to long-term incentive, grants shares to the Officers’ Shareholders Association for the purpose of further promoting sharing of profit and loss with shareholders.

iv. Remuneration Determination Procedures

The Nomination and Remuneration Committee confirms and considers the content of the remuneration system and the amount of remuneration from an objective perspective prior to determination by the Board of Directors.

FY2018 Results

Classification Total Amount of Remuneration, etc.
(millions of yen)
Total Amount of Each Type of Remuneration, etc. (millions of yen) Number of People
Basic remuneration Incentive remuneration
Directors
(excluding outside directors)
393 343 50 11
Corporate Auditors
(excluding outside audit & supervisory board members)
44 44 - 3
Outside Officers 20 20 - 4

1. The amount paid to directors includes performance-linked remuneration for fiscal 2018.
2. The amount of remuneration paid to directors that concurrently serve as employees does not include the amount of remuneration paid to them as employees.

Composition of the Nomination and Remuneration Committee

Name Position Chairman
Yuji Hamasaki Representative Director, Chairman  
Takeshi Miida Representative Director, President  
Hiroyuki Takenaka Director (Outside/Independent Officer)
Junji Yasui Board Director (Outside/Independent Officer)  
Public Relations Section, DFF Inc.

Dialogues with Shareholders and Investors

Dialogues with Shareholders and Investors

Basic Approach and IR System

When any shareholders wish a dialogue with the Company that will contribute to medium to long-term improvement of the Company’s corporate value, it is Meidensha’s policy that the Company’s management conducts the dialogue to the extent reasonably possible.
A system is in place where an executive officer is placed in charge of IR matters and an IR-specialist department conducts activities to enhance constructive dialogue with shareholders, including institutional investors and strengthens external communication.

Results Briefings

We hold results briefings twice a year in May and November.
We also commenced briefings for individual investors in fiscal 2018.
We will continue to work to ensure an even fuller disclosure of information through results briefings, individual IR sessions, conferences, the website, and this report, etc., and continue to engage in dialogue with shareholders and investors.

Main IR Activities in Fiscal 2018

Individual Sessions Number
Japanese Investors 78
Foreign Investors 64
Total 142

The materials for the results briefings are available for viewing. Please visit “Fact Sheet for Account Settlement Briefing Session” under “Investors” on the Corporate website.

Fact Sheet for Account Settlement Briefing Session

Public Relations Section, DFF Inc.

Board of Directors & Executive Officers as of July, 2019

Board of Directors & Executive Officers as of July, 2019

代表取締役
取締役会長

代表取締役 取締役会長 浜崎 祐司

浜崎 祐司

[出席状況]
取締役会
100%(13回/13回)

代表取締役
取締役社長

代表取締役 取締役社長 三井田 健

三井田 健

[出席状況]
取締役会
100%(13回/13回)

代表取締役
取締役副社長

代表取締役 取締役副社長 倉元 政道

倉元 政道

[出席状況]
取締役会
100%(13回/13回)


取締役副社長

取締役副社長 森 省輔

森 省輔

(2019年6月新任)

取締役 兼 専務執行役員

取締役 兼 専務執行役員 大橋 延年

大橋 延年

[出席状況]
取締役会
100%(10回/10回)

取締役 兼 専務執行役員 竹川 徳雄

竹川 徳雄

[出席状況]
取締役会
100%(10回/10回)

取締役 兼 専務執行役員 玉木 伸明

玉木 伸明

[出席状況]
取締役会
100%(10回/10回)

社外取締役

常任監査役

社外取締役 竹中 裕之

竹中 裕之

[出席状況]
取締役会
100%(13回/13回)

社外取締役 安井 潤司

安井 潤司

[出席状況]
取締役会
100%(13回/13回)

常任監査役 伊東 竹虎

伊東 竹虎

[出席状況]
取締役会
100%(13回/13回)
監査役会
100%(6回/6回)

常任監査役 加藤 誠治

加藤 誠治

[出席状況]
取締役会
100%(10回/10回)
監査役会
100%(6回/6回)

社外監査役

社外監査役 秦 喜秋

秦 喜秋

[出席状況]
取締役会
100%(13回/13回)
監査役会
100%(6回/6回)

社外監査役 縄田 満児

縄田 満児

[出席状況]
取締役会
92.3%(12回/13回)
監査役会
83.3%(5回/6回)

常務執行役員 五十嵐 和巳
加藤 三千彦
亀山 悟
岩尾 雅之
望月 達樹
安川 国明
鈴木 雅彦
執行役員 古川 和彦
松下 法隆
須藤 勇
井上 晃夫
東家 浩
金田 実
村嶋 久裕
毛綿谷 聡
水谷 典雄
宮澤 秀毅
池森 啓雄
古田 隆
鈴木 岳夫
鈴木 克則

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Public Relations Section, DFF Inc.