Status of AuditsAt LINTEC, audits are performed by the Audit & Supervisory Committee, which is composed of directors who are Audit & Supervisory Committee members; the Audit Office, which is the Company’s internal audit division; and the independent auditor. While utilizing the internal control system, the Audit & Supervisory Committee cooperates with the Audit Office and the independent auditor, receives the necessary reports, and conducts audits of the directors’ business execution through such methods as exchanges of opinions. Each Audit & Supervisory Committee member supervises the directors in the execution of their duties by stating opinions and partici-pating in resolutions through their voting rights at Board of Directors’ meetings. The Audit Office regularly implements internal audits of divisions, work sites, plants, and affiliated subsidiaries. Accordingly, the Audit Office verifies that operational processes and results comply with the law and internal regulations. The Audit Office provides advance notice to the Audit & Supervisory Committee of a summary of internal auditing plans, audit items, and other details, and after internal audits are completed, reports all of the audit results to the Audit & Supervisory Committee. Ernst & Young ShinNihon LLC, which serves as the independent auditor, conducts audits via two certified public accountants and 37 assistants.1. 10% increase in officer compensation For directors (excluding outside directors and Audit & Supervisory Committee members) and executive officers, the incentive portion of the compensation mix will be increased by allocating an additional 5% to bonuses and an additional 5% to restricted stock compensation, while keeping the basic remuneration unchanged. Outside directors and Audit & Supervisory Committee members, who have previously received only basic remuneration, will now be allocated restricted stock compensation equivalent to 10% of their basic remuneration. This is positioned as an incentive to align their interests with those of shareholders and incentivize contributions to long-term corporate value creation.2. Increase in the incentive portion of the CEO’s compensation mix relative to other directors3. Incorporation of total shareholder return as a financial KPI for bonus evaluation, and introduction of CO2 emissions reduction and the engagement score as non-financial KPIs4. Review and adjustment of executive compensation levels in line with each three-year medium-term business plan, reflecting business performance and KPI progress Risk ManagementTo reinforce its risk management system, in April 2018 the LINTEC Group established the Corporate Risk Management Committee, which comprises executive general managers of each division and general managers of each organization that report directly to the president, and the committee meets regularly. In April 2021, we revamped and strengthened our structure for promoting sustainability activities. We redefined the committee’s purpose as “ascertaining business risks and opportunities, formulating policies to address them, and incorporating them into the organization and verifying them.” The committee evaluates and analyzes various risks, including items related to sustainability, based mainly on the issues recognized by committee members and the results of risks identified annually by managers and others. Results are reported on a quarterly basis to the Sustainability Committee for instructions on actions to be taken. Capital Tie-Up SharesThe Company views the establishment and maintenance of stable, long-term relationships with business partners as a matter of importance. For this reason, shares of business partners are held strategically based on a comprehensive evaluation of factors such as the Company’s business relationship with the partner in question. The Company’s policy is to only acquire such shares when increasing trust and coordination with the business partner is judged as an effective means of mutually raising corporate value. From this perspective, we will review and reduce our holdings as appropriate. Every February or March, the Board of Directors reviews the appropriateness of holding all capital tie-up shares, taking into consideration the necessity of business relationships and other factors for each individual issue. On shareholdings for which the rationale for holding cannot be confirmed, we proceed with actions such as downsizing our holding based on dialogue with the issuing company. In exercising voting rights, in regard to proposals made by business partners, the Company comprehensively considers whether or not a proposal will contribute to improved shareholder value.Unlisted sharesShares other than unlisted shares1122671,720Key Revisions to the Officer Compensation Plan (Effective from the Year Ending March 31, 2026, Onward)Number of Issues of Capital Tie-Up Shares and Amount Recorded on Balance SheetPlease see the investor relations section of our website for further details on corporate governance.www.lintec-global.com/ir/management/governance.htmlNumber of issues (issues)(Millions of yen)Total amount recorded on balance sheet57
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