Investor Relations

Corporate Governance

Basic Views on Corporate Governance

The Company promotes efforts on corporate governance with the intention to contribute to sustainable corporate growth and enhancement of corporate value over the medium to long term of the Group.
In combination with measures to build excellent relationships with customers, employees, shareholders, business partners and local communities—our stakeholders—the Group is overhauling its corporate governance structure. This entails the establishment and strengthening of legal frameworks for the general meeting of shareholders, the Board of Directors, the Board of Corporate Auditors and the independent auditor, etc. To ensure fulfilment of the Company’s social responsibilities, we are also working to increase the transparency of our corporate activities and ensure thorough compliance in our management, while taking measures to create and deliver value in various forms for all stakeholders associated with the Group.
Aiming to become a corporate Group that is deeply trusted by all of its various stakeholders, the Group takes a range of ongoing measures including speeding up management decision-making, strengthening management oversight mechanisms and enhancing internal control systems.

Corporate Governance System

Corporate Governance

Management Oversight Structure

Board of Directors

Roles and responsibilities of the Board of Directors

Based on its obligations of stewardship and accountability to the shareholders, the Board of Directors of the Company formulates and carries out medium-to-long-term planning, establishes internal control and risk management systems, and is engaged in other initiatives with the aim of furthering the sustainable growth of the Group and medium-to-long-term corporate value, earnings potential and capital efficiency.
To further raise corporate governance standards, the Board of Directors has set up the Nomination and Remuneration Committee chaired by an Outside Director, as an advisory organ of the Board of Directors.
This Committee duly and highly effectively oversees the Board of Directors and management team.

Structure of the Board of Directors

For the purposes of achieving sustainable growth for the Group and medium-to-long-term improvement in corporate value we believe the Board of Directors must not only oversee the conduct of business operations, but also to provide supervision and advice even on matters such as the appropriateness of decision-making on management, which requires multiple diverse Outside Directors. As of June 18, 2018, the Company has 9 Directors, of whom 4 are Outside Directors. With the aid of the Company’s first female officer, the Board of Directors is working to further reinforce its diverse range of expertise, with members having experience and specialist knowledge in many different fields.

Advisory Body to the Board of Directors Nomination and Remuneration Committee

Having adopted the format of company with board of company auditors, the Company has set up a Nomination and Remuneration Committee of which over half the members are Outside Directors, and which deliberates matters related to the nomination of senior management and all other officers and their remuneration. Additionally, in regard to succession planning, every year the Nomination and Remuneration Committee confirms and shares information regarding the terms of office of senior management and their successors, thereby creating an environment that allows changes in senior management to be made according to the judgment of Outside Directors. The Committee comprises 4 Outside Directors and 1 Representative Director, with an Outside Director as chair. The Nomination and Remuneration Committee has met over 110 times in the 10 years since the Company was established, and contributes significantly to ensuring the transparency and fairness of the Board of Directors as a key element of the corporate governance of the Company.

Corporate Auditors and the Board of Corporate Auditors

Corporate Auditors act as independent bodies that audit the execution of the Directors’ professional duties to ensure the corporation’s healthy and sustainable growth and contribute to the establishment of a corporate governance system that meets society’s trust. Additionally, they regularly exchange opinions with Representative Directors and the Accounting Auditor and share information with the Internal Audit Division regarding results of internal audits in order to secure effective performance of audits.
The Board of Corporate Auditors consists of 3 Outside Corporate Auditors and 2 full-time Corporate Auditors and meets once a month as a rule and acts according to the audit plan as it receives reports from each Corporate Auditor on important auditing-related matters. Discussions are held and/or resolutions are made as necessary.

Business Execution Structure

The Company employs an executive officer system in order to realize agile business execution, and a significant portion of authority is transferred to the Executive Officers.

Chief Officer Committee

The Chief Officer Committee is convened by the President and CEO and consists of Directors, Executive Officers and employees of the Company and each Group company approved by the Board of Directors, as well as those nominated or approved by the chair. It is a body to decide and deliberate on matters of importance related to the Group’s business execution equivalent to the agendas of the Board of Directors in a timely and agile manner.

Directors and Corporate Auditors

Policy for Nomination and Selection

In addition to ensuring that the process of nominating and selecting candidates for Director and Corporate Auditor adheres to laws and regulations, account is taken of breadth of knowledge, ethical standards, and depth of experience.

Procedures Related to the Above Policy

Discussions are held regarding candidates for Director and Corporate Auditor by the Nomination and Remuneration Committee, chaired by an Outside Director, and reports are submitted to the Board of Directors.

Overview of Independence Standards for Designation of Independent Directors and Independent Auditors

The Company has compiled its proprietary “Independence Standards for Independent Directors and Independent Auditors of Isetan Mitsukoshi Holdings Ltd.,” for assessing independence when designating Outside Directors and Outside Corporate Auditors as Independent Directors and Independent Auditors.
Outside officers who do not come under any of the following categories may be nominated as Independent Directors or Independent Auditors.

  • 1. Business executives of the Group
  • 2. A person for whom the Group is a major business partner, or an executive director, executive or manager thereof
  • 3. A major business partner of the Group, or an executive director, executive, manager or other employee thereof
  • 4. An executive officer of a financial institution which has trading relations with the Group
  • 5. A consultant or accounting or legal expert who has received financial or other economic benefits from the Group exceeding a certain sum, other than remuneration of Directors or Corporate Auditors
  • 6. A shareholder or an executive officer thereof who holds at least 5% of the total issued shares of the Company
  • 7. Any person who has come under categories 1 to 5 above in the last three years
  • 8. Spouses or relatives within the second degree of kinship of anybody coming under categories 1 to 5 above

A “major business partner” in 2 and 3 above means “any business partner for whom the annual transaction amount with the Company, on a consolidated basis, exceeds 1% of the total annual transaction amount of either party, over the preceding 3 years, even if this occurs on only one occasion,” and a “certain sum” in 5 above means “a sum of at least 10 million yen in any of the preceding 3 fiscal years.”

However, we recruit candidates for outside officers based not only on independence criteria but also according to requirements for outside officers provided under the Companies Act and the following nomination policy.

Outside Directors

We select Outside Directors from different fields and industries, with an emphasis on diversity of opinion, to ensure account is taken of a wide range of opinions from objective and specialist perspectives, and ensure well-balanced management.
In that regard, recruitment focuses mainly on candidates with practical business-world experience, to ensure not only that Outside Directors can supervise the execution of business operations, but also provide supervision and advice on the appropriateness of decision-making on management itself.

Outside Corporate Auditors

We select Outside Corporate Auditors from different fields and industries, to ensure that audits are carried out from a neutral and objective standpoint.
In that regard, recruitment focuses mainly on candidates with a wealth of knowledge and experience in relevant fields, so as to ensure that the audits of Outside Corporate Auditors identify potential legal and accounting issues existing in the processes and contents of management decision-making.

Policy for Determining Compensation for Directors and Corporate Auditors

Basic Policies
  • 1. Promotion of mutual sharing of interests of shareholders and executives
  • 2. Expansion of incentive effects to improve financial results and shareholder value (does not include Outside Directors)
  • 3. When targets are met, ensuring there is no shortfall in compensation level compared with competitor companies (does not include Outside Directors)
  • 4. Ensuring objectivity and transparency in methods of evaluation and determining compensation
Determination and Evaluation of Compensation Policy

The policy is deliberated upon by the Nomination and Remuneration Committee (comprising 4 Outside Directors and 1 Representative Director for a total of 5 members) chaired by Outside Director Mr. Katsunori Nagayasu, and reported to the Board of Directors.

Specific Elements of the Compensation System for Directors and Corporate Auditors
  • Monthly fixed basic compensation
  • As a periodic incentive, payment of an annual performance-linked bonus
    (The baseline is six months’ pay, and the payout total varies from 0% to 200% depending on the progress of individual Directors in meeting their targets. *Does not include Outside Directors)
  • Stock options, which are linked to corporate value as a medium- to long-term incentive
    (This incentive entails assignment of stock acquisition rights equivalent to 50% of the annual basic compensation. *Does not include Outside Directors)

Furthermore, compensation for Corporate Auditors consists only of “basic compensation” that is provided on a monthly basis.

Basic Policy for Internal Control Systems

The Group is putting into practice the following basic policy for internal control systems to ensure the compliance of its business operations as part of its attempts to conduct healthy and transparent group management and maximize corporate value through efforts that realize the Group Vision.

Corporate Governance Report

Corporate Governance(PDF:693KB)pdf

Corporate Governance Guidelines(PDF:167KB)pdf

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