Corporate Governance

June 21, 2021

Basic Philosophy

The Group believes that the fundamentals of corporate governance are to achieve thorough legal compliance, to increase management transparency and promote corporate ethics, and to make prompt decisions and effectively execute operations. By enhancing and reinforcing corporate governance, we aim to further increase our corporate value and joint profits with shareholders.

Corporate Governance System

  1. Corporate Governance System

    The Company has selected the Company with Audit & Supervisory Committee system described in the Companies Act of Japan for its organizational structure. The Company has placed directors that are also Audit & Supervisory Committee members with voting rights on its Board of Directors in order to strengthen the Board’s supervisory function, with a view to stepping up corporate governance and to streamlining management even further. The Company has appointed 12 directors, of whom three are Audit & Supervisory Committee members and five are outside directors.

    Held once a month to make important decisions with regard to management, Board of Directors’ meetings are also held on an ad hoc basis as necessary to strive for rapid decision making. Primarily comprising executive officers (including directors serving concurrently) responsible for the execution of business, management meetings are also held once a month and endeavor to streamline business operations through the sharing of information among all business divisions.

    The Audit & Supervisory Committee meets once a month and conducts monitoring audits that focus on matters reported from the Audit Office, which is the Company’s internal audit division. In addition to performing audits covering the appropriateness and legality of the execution of directors’ duties, each and every Audit & Supervisory Committee member also plays a role in supervising the execution of the directors’ duties through the exercise of the voting rights on the Board of Directors.

    Corporate Governance Organization Chart

    ・ Evaluation of Board of Directors’ effectiveness

    In April 2021, the Company conducted an evaluation of the effectiveness of the Board of Directors. Details are as follows.

    (Overview)

    All directors filled out a questionnaire and open-ended questions, in order to evaluate the effectiveness of the Board of Directors at LINTEC. This time, based on discussions, the questionnaire asked for the opinions of directors on subjects related to the Company’s corporate governance that have not been taken up for evaluation by external entities. The representative director analyzed, evaluated and identified issues in the responses, selecting the items that management should prioritize this fiscal year. One such issue entailed increasing the involvement of outside directors in corporate governance and management policy (sustainability management). Through this process, the Company’s independent outside directors arrived at a final evaluation on the effectiveness of the Board of Directors. They found that the questions and methods followed a logical process, and by examining measures for the next fiscal year based on the responses, stated that it is possible to improve the functionality of the Board of Directors further, and that the selection of issues to tackle this year followed a logical and appropriate process. By continuing these efforts, they were of the opinion that it is possible to further enhance the functions of the Board of Directors. Based on this evaluation, we will take steps to maintain an environment that facilitates continued improvement in the effectiveness of the Board of Directors.

    ・ Director Training Policies

    1. New director training
      After assuming their position, new directors are provided training from outside institutions to endow them with the legal, accounting, and other knowledge necessary to management.
    2. Regular training
      Once or twice a year, directors undergo training on contemporary issues from lawyers or other outside lecturers. These training sessions serve as opportunities to hone the sense of judgment that is crucial to members of the Board of Directors.
    3. Special training
      When necessary, directors participate in seminars at the Company’s expense to acquire the specialized insight required to perform their duties.
  2. Internal Control System

    The following is an explanation of the internal control system to ensure that the execution of directors’ duties is in compliance with laws and regulations as well as the Articles of Incorporation, and the system to ensure the appropriateness of the execution of other business.

    ・ System to ensure that the execution of the duties of directors and employees is in compliance with laws and regulations as well as the Articles of Incorporation

    To ensure that the execution of the duties of directors and employees is in compliance with laws and regulations as well as the Articles of Incorporation and that a sense of ethics is maintained, the Company established its motto of “Sincerity and Creativity,” on which its Code of Conduct was based. To ensure the effectiveness of the compliance system with regard to laws and regulations as well as the Articles of Incorporation, the Audit Office—an organization under the president’s direct supervision—investigates and verifies, by means of audits based on the Internal Audit Regulations, whether all of the Company’s operations are being appropriately and reasonably implemented and pursuant to laws, the Articles of Incorporation, and internal rules and regulations. The results of those audits are regularly reported to the Board of Directors.

    ・ System for storing and managing information related to the execution of directors’ duties

    Documents are stored and managed in accordance with rules determined for each document type, including those documents stipulated by law.

    ・ Regulations and other systems pertaining to management of risks of loss

    By promoting the issuance of manuals by division and facilitating their thorough use, the Company makes preemptive efforts to reduce or avoid risk. In the case of specific risks, the Company promotes reviews of and improvements to response measures as risks arise. For emergency situations, such as the occurrence of a disaster, the Company has established the LINTEC Group Crisis Management Regulations, in addition to a BCMS, which is based on these regulations. These are separate from risk management initiatives conducted through normal operations, and we strive to ensure that a crisis management organization can be quickly established in the event of an emergency.

    ・ System to ensure that the execution of the duties of directors is efficiently conducted

    In addition to setting out the duties for which directors are responsible for and that correspond to the allocation of roles of each organization, based on the Regulations on the Division of Duties, the Company works to separate management from execution and accelerate decision making by the introduction of an executive officer system. Moreover, the Company reviews internal organizations as necessary to be able to respond to environmental changes and works to maintain efficiency in the execution of the duties of directors by such means as the setting up of cross-organizational committees on an as-required basis.

    ・ System to ensure the appropriateness of business in the corporate group comprising the Company and its subsidiaries

    Based on the Affiliate Company Operational Regulations, the Company works to maintain the appropriateness of its operations as a group entity by having each of its principal business divisions control the operations of Group companies. Based on the Affiliate Company Operational Regulations, the Company works to maintain a system for receiving corporate performance, risk, and other important reports from each Group company regularly or on an as-required basis. Providing business management and support from the appropriate division as necessary, the Company promotes management efficiency in each company. To ensure that Group companies are in compliance with laws and regulations as well as the Articles of Incorporation, audits are conducted by each company’s internal audit system and by the Company’s Audit Office.

    ・ Matters relating to the employees who are tasked to assist the duties of the Audit & Supervisory Committee, matters relating to the independence of said employees from directors, and matters relating to ensuring the effectiveness of Audit & Supervisory Committee instructions with respect to said employees

    To further raise the effectiveness of Audit & Supervisory Committee audits and maintain a system to carry out audit duties more smoothly, the Company has established the Audit & Supervisory Committee secretariat, which supports and takes on Audit & Supervisory Committee duties. It is assumed that the Audit & Supervisory Committee’s consent has to be obtained for transfers of personnel to the Audit & Supervisory Committee secretariat staff, personnel evaluations, and disciplinary action. The instructions and orders given to Audit & Supervisory Committee secretariat staff are also deemed to be given by directors serving as Audit & Supervisory Committee members. With regard to said instructions and orders received from Audit & Supervisory Committee members, with the exception of those instructions and orders that are not necessary for the duties of Audit & Supervisory Committee members, it is assumed that Audit & Supervisory Committee secretariat staff do not receive instructions and orders from directors or other employees.

    ・ System relating to the reporting of cases to the Audit & Supervisory Committee and system for ensuring that the submitting of such reports is not seen as reason enough for the person who submitted them to be subjected to disadvantageous treatment

    With regard to cases that are likely to significantly damage the Company or a Group company, such as violations of laws or regulations, all Group directors and employees are to report such cases to the Company’s Audit & Supervisory Committee. In addition, it is deemed that the Audit & Supervisory Committee will be able to directly demand business-related reports for all Group directors and employees. Under the Company’s Internal Reporting System Operation Regulations and its Global Internal Reporting System Regulations, the Company has established a helpline that can be used by all Group directors and employees and endeavors to maintain a system to ensure that the submitting of such reports is not seen as reason enough for the person who submitted said notification or report to be subjected to disadvantageous treatment. In the event of an internal notification via the helpline, this will be reported to the Audit & Supervisory Committee.

    ・ Matters concerning policy relating to the handling of costs or liabilities arising from the execution of duties of Audit & Supervisory Committee members

    When an Audit & Supervisory Committee member invoices the Company for the prepayment or redemption of expenses incurred for the execution of their duties, said costs or liabilities will be promptly handled following discussions in the department responsible, with the exception of cases in which said costs have been recognized as being not necessary for the execution of said Audit & Supervisory Committee member’s duties. In addition, should Audit & Supervisory Committee members deem that independent outside experts (such as lawyers, certified public accountants, etc.) are necessary as advisers to the Audit & Supervisory Committee, the Company will bear those costs, with the exception of cases in which said costs have been recognized as being not necessary for the execution of said Audit & Supervisory Committee’s duties.

    ・ Other systems for ensuring that the Audit & Supervisory Committee carries out audits effectively

    With a view to ensuring a system so that Company information reaches the Audit & Supervisory Committee unhindered, the Company works to maintain an environment in which information is received not only from directors (excluding directors serving as Audit & Supervisory Committee members) and from employees but also from independent auditors, corporate lawyers, tax accountants, and other specialists. The Company has a system in place to ensure regular meetings with representative directors and venues for important discussions, such as management and strategy meetings, for Audit & Supervisory Committee members to attend and state opinions.

  3. Basic Policies and Systems for Preventing Relationships with Antisocial Forces

    The Company stands in firm opposition to all antisocial forces and organizations that threaten to disrupt the order and safety of civil society while practicing a strict policy of non-association with such entities. We have made this commitment clearly apparent in the LINTEC Compliance Guideline and are taking steps to ensure thorough awareness with this regard among all directors and employees.

    We reject any illegitimate requests from antisocial forces and organizations and maintain close collaborative relationships with the police, centers for the removal of criminal organizations, lawyers, and other specialists to combat such requests. Should we be approached by antisocial forces or organizations, we will closely coordinate with such institutions, organizations, lawyers, or other specialists to furnish a quick, organization-wide response.

  4. Risk Management System

    The Company has established the LINTEC Group Crisis Management Regulations as well as a risk management system for minimizing the possible impact and damage to corporate value if a major problem arises. It has also implemented and oversees the Information Security Management Rules and the Trade Secret Management Rules for the preservation and management of information. There are also Companywide risk assessments centered on the Corporate Risk Management Committee.

  5. Limited Liability Contracts

    In accordance with Article 427, Paragraph 1 of the Companies Act, the Company has entered into a contract with each of its non-executive directors—outside directors Akira Sebe, Akiko Okushima, Shigeru Sugimoto, Satoshi Ohoka, and Kanako Osawa—that limits liability for compensation for damages under Article 423, Paragraph 1 of the Companies Act. Based on this contract, liability for compensation for damages is limited to ¥10 million or the minimum liability amount stipulated by law, whichever is greater.

  6. Content of General Liability Insurance Policies for Directors

    The Company has taken out general liability insurance policies for its directors based on Article 430 (3)-1 of the Companies Act. This insurance covers any legal compensation for damages and legal costs in the event that the insured person engages in behavior that is subject to damage claims during the term of insurance coverage. However, if the insured person illegally receives profits or benefits, conducts criminal acts, fraud, or deception, or violates other laws and regulations, the insurance policies will not provide any compensation for damages.
    The persons insured under the insurance policies are directors, auditors, and executive officers of the Company and its subsidiaries, and persons in similar positions as defined by the laws and regulations of the countries where subsidiaries have been established. For all insured persons, the Company pays the full amount of the insurance premium.

  7. Number of Members of the Board of Directors

    The Company's Articles of Incorporation state that the number of members of the Board of Directors (excluding Audit & Supervisory Committee members) shall be 12 or fewer and that the number of directors who are Audit & Supervisory Committee members shall be 4 or fewer.

  8. Requirements for Appointment of Directors

    The Company's Articles of Incorporation state that resolutions to appoint directors may be adopted by a majority of the voting rights of the shareholders in attendance if those shareholders hold one-third or more of the voting rights of the shareholders who can exercise their voting rights.

  9. General Meeting of Shareholders Resolution Matters that may be Resolved by the Board of Directors

    To support rapid responses to changes in the management environment and flexible execution of various management measures, in regard to matters stipulated in each item of Article 459, Paragraph 1 of the Companies Act, such as dividends from surplus, etc., excluding cases in which there are special legal stipulations, the Articles of Incorporation state that these matters may be decided by resolution of the Board of Directors.

  10. Special Resolution Requirements for General Meeting of Shareholders

    With the objective of enabling the smooth operation of General Meeting of Shareholders, the Company's Articles of Incorporation state that in regard to special resolution requirements for shareholders' meetings, as stipulated in Article 309, Paragraph 2 of the Companies Act, such resolutions may be adopted by at least two-thirds of the voting rights of the shareholders in attendance if those shareholders hold one-third or more of the voting rights of the shareholders who can exercise their voting rights.

Status of Outside Directors

  1. Outside Directors

    The Company has appointed five outside directors— Akira Sebe, Akiko Okushima, Shigeru Sugimoto, Satoshi Ohoka, and Kanako Osawa. Two of these outside directors—Satoshi Ohoka and Kanako Osawa—are Audit & Supervisory Committee members.

    Name Human, Financial, and Business Relationships and Other Shared Interests between the Outside Directors and the Company Reason for Appointment
    Akira Sebe There are no particular shared interests between the Company and Akira Sebe but Nippon Paper Industries Co., Ltd., where he serves as an executive officer, is a major trading partner of the Company, which purchased ¥1,733 million worth of raw materials from and sold ¥114 million worth of products to Nippon Paper (both results from the fiscal year ended March 31, 2021). In addition, Nippon Paper is a major shareholder in the Company; its holding amounted to 21,737,792 shares (30.06% of the total number of Company shares outstanding, excluding treasury stock) on March 31, 2021. By utilizing knowledge and experience from his directorship experience at Nippon Paper Industries Co., Ltd., and his many years of business experience in this company’s materials department, Akira Sebe is able to strengthen the Company’s Board of Directors’ supervisory function. Therefore, he has been appointed as an outside director.
    Akiko Okushima There are no particular shared interests between the Company and Akiko Okushima. By utilizing her extensive knowledge in the field of marketing, and her know-how and experience gained through many years of work in a different industry from that of the Company as Representative Director and President, Akiko Okushima is able to strengthen the Company’s Board of Directors’ supervisory function. Therefore, she has been appointed as an outside director. She is a member of the Corporate Governance Committee, an advisory body to the Board of Directors. The Company has designated her She is also designated as an independent officer based on the criteria stipulated by the Tokyo Stock Exchange, Inc. (TSE).
    Shigeru Sugimoto There are no particular shared interests between the Company and Shigeru Sugimoto. By utilizing his abundant business experience as an outside director and auditor in a sector different from the Company, even managing his own company, as well as his practical experience, broad knowledge, and advanced expert insight as a Certified Public Accountant, Registered Real Estate Appraiser, and Certified Tax Accountant, Shigeru Sugimoto is able to strengthen the audit and supervisory functions of the Company’s Board of Directors. Therefore, he has been appointed as an outside director. He is a member of the Corporate Governance Committee, an advisory body to the Board of Directors. The Company has designated him as an independent officer based on the criteria stipulated by the TSE.
    Satoshi Ohoka There are no particular shared interests between the Company and Satoshi Ohoka. By utilizing his long years of policy-based finance experience, his rich international experience, his specialist academic experience, and his knowledge and experience gained as an outside director in industries different to that of the Company, Satoshi Ohoka is able to strengthen the audit and supervisory functions of the Company’s Board of Directors. Therefore, he has been appointed as a director serving as an Audit & Supervisory Committee member. He is a member of the Corporate Governance Committee, an advisory body to the Board of Directors. The Company has designated himHe is also designated as an independent officer based on the criteria stipulated by the TSE.
    Kanako Osawa There are no particular shared interests between the Company and Kanako Osawa. By utilizing her specialist expertise and extensive knowledge gained as an attorney, along with the knowledge and experience gained through her career in corporate legal affairs both at home and abroad, Kanako Osawa is able to strengthen the audit and supervisory functions of the Company’s Board of Directors. Therefore, she has been appointed as a director serving as an Audit & Supervisory Committee member. She is a member of the Corporate Governance Committee, an advisory body to the Board of Directors. The Company has designated her She is also designated as an independent officer based on the criteria stipulated by the TSE.
  2. The Company’s Basic Way of Thinking with Regard to the Independence of Outside Directors

    The Company does not have its own set standards and policies with regard to the independence of outside directors and refers instead to the standards stipulated by the TSE. Since appointment is based on a request from the Company, we recognize that independence from management is to be ensured.

  3. Status of Outside Directors’ Supervision

    In addition to attending Board of Directors’ meetings and making necessary and effective remarks as appropriate during agenda deliberations, outside directors attend meetings of the Internal Control Committee and oversee directors in the execution of their duties.

Status of Audits

  1. Status of Audit & Supervisory Committee Audits

    The Company’s Audit & Supervisory Committee comprises three directors serving as Audit & Supervisory Committee members, of whom two are outside directors. 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 attends management and other meetings, obtains the information needed for the audits, attends Board of Directors’ meetings as a director, and supervises the directors in the execution of their duties by stating opinions and participating in resolutions through their voting rights. Audit & Supervisory Committee member Hiroshi Okada has considerable knowledge of finance and accounting, having gained many years of experience in his roles at the Company’s administrative and audit divisions. In the fiscal year under review, the Audit & Supervisory Committee met, in principle, one time per month. The attendance of each Audit & Supervisory Committee member is as follows.

    Name Total Number of meetings Number of meetings attended
    Hiroshi Okada 13 13
    Satoshi Ohoka 13 13
    Kanako Osawa 13 13

    The principal matters audited by the Audit & Supervisory Committee include the following: (1) in regard to the performance of directors, whether or not there are important cases of wrongdoing or violations of laws, regulations, or the Articles of Incorporation; (2) whether or not the details of the Board of Directors’ discussions regarding the internal control system, and the status of the establishment/operation of the internal control system, are reasonable; (3) whether or not the business reports, settlement related documents, etc., are in accordance with laws, regulations and the Articles of Incorporation and accurately show the Company’s circumstances; (4) whether or not the independent auditor’s audit methods and results are reasonable; and (5) whether or not a system to secure the proper execution of the duties of the independent auditor has been established. At the end of the period, the committee prepares an audit report that describes the audit methods and details as well as the audit results.

    In addition, the activities of the full-time Audit & Supervisory Committee member include conducting Audit & Supervisory Committee audits of the head office, work sites, subsidiaries, etc., which are implemented in combination with the Audit Office’s internal audits; holding liaison meetings with the auditors of domestic and overseas subsidiaries; and sharing this information at meetings of the Audit & Supervisory Committee.

  2. Status of Internal Audits

    The Company has established the Audit Office as an internal auditing unit. The Audit Office regularly implements internal audits of divisions, work sites, plants, and affiliated subsidiaries in addition to verifying that operational execution processes and results comply with the law and internal regulations. The Audit Office has the central role in audits in such areas as quality and the environment, which are implemented in collaboration with the supervising division. The Audit Office provides advance notice to the Audit & Supervisory Committee of a summary of internal auditing plans and audit items, and after internal audits are completed, reports all of the audit results and assessments to the Audit & Supervisory Committee. In addition, the full-time Audit & Supervisory Committee member and the general manager of the Audit Office hold monthly liaison meetings to exchange opinions and information. Periodically sharing information with the independent auditor, the group works to enhance the effectiveness of three-way audits by coordinating closely with the Audit & Supervisory Committee, independent auditors, and internal audit division.

  3. Status of Accounting Audits

    ・ Name of audit firm

    Ernst & Young ShinNihon LLC

    ・ Continuous period for which the independent auditor has performed audits

    Since 1981

    ・ Certified public accountants who executed the audit

    Designated limited liability partner Koichi Taniguchi
    Designated limited liability partner Tsuyoshi Kawamura

    ・ Composition of the group of assistants involved with the audit

    In regard to the composition of the group of the assistants involved with the audit, there were 9 certified public accountants and 33 people who have passed accountant examinations.

    ・ Selection policy and reason for selection of audit firm

    Each period, the Audit & Supervisory Committee conducts an evaluation in accordance with the standards for evaluation and selection of the independent auditor. The independent auditor is selected based on a comprehensive assessment of the independent auditor's independence, internal control system, audit plans, audit methods and results, and the status of execution of audit duties.

    The Audit & Supervisory Committee may dismiss the independent auditor in any of the cases stipulated in Article 340, Paragraph 1 of the Companies Act, based on the agreement of all Audit & Supervisory Committee members. In that event, an Audit & Supervisory Committee member selected by the Audit & Supervisory Committee will provide a report of the dismissal and the reason for the dismissal at the first General Meeting of Shareholders convened after the dismissal.

    In addition, in the event that the Audit & Supervisory Committee, with consideration for the status of the implementation of the independent auditor's duties, the Company's audit system, etc., determines that it is necessary to change the independent auditor, then the Audit & Supervisory Committee may decide the details of a proposal to the General Meeting of Shareholders concerning the dismissal or non-reappointment of the independent auditor.

    ・ Evaluation of audit firm by the Audit & Supervisory Committee

    In accordance with the standards for evaluation and selection of the independent auditor, the Audit & Supervisory Committee will conduct evaluations from the perspective of the audit firm's quality control; audit team; audit compensation, etc.; communications with the Audit & Supervisory Committee; relationship with senior executives, etc.; Group audits, and misconduct risk.

  4. Details of Audit Remuneration, Etc.

    ・ Remuneration of the independent auditor, etc.

    Category Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021
    Remuneration for audit services (Millions of yen) Remuneration for non-audit services (Millions of yen) Remuneration for audit services (Millions of yen) Remuneration for non-audit services (Millions of yen)
    LINTEC 88 0 90 0
    Consolidated subsidiaries - - - -
    Total 88 0 90 0

    * The non-audit services provided to the Company in the previous fiscal year and the fiscal year under review were officer training.

    ・ Remuneration to the same network (Ernst & Young) as the independent auditor, etc. (excluding remuneration of the independent auditor, etc.)

    Category Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021
    Remuneration for audit services (Millions of yen) Remuneration for non-audit services (Millions of yen) Remuneration for audit services (Millions of yen) Remuneration for non-audit services (Millions of yen)
    LINTEC - - - 1
    Consolidated subsidiaries 34 16 36 19
    Total 34 16 36 21

    * The non-audit services provided to consolidated subsidiaries in the previous fiscal year and the fiscal year under review were tax-related advisory services, etc.

    ・ Details of remuneration for other material audit services

    Not applicable

    ・ Policy for determination of audit remuneration

    In regard to audit remuneration for the Company's independent auditor, etc., an amount estimated from the number of planned audit days, etc., is decided with the approval of the Company's Audit & Supervisory Committee.

    ・ Reason for agreement to the independent auditor's remuneration, etc., by the Audit & Supervisory Committee

    The reason the Company's Audit & Supervisory Committee agreed to the remuneration, etc., for the independent auditor proposed by the Board of Directors, pursuant to Article 399, Paragraph 1 and Paragraph 3 of the Companies Act, is that the Audit & Supervisory Committee judged it to be appropriate following necessary verification by the Audit & Supervisory Committee of the details of the independent auditor's audit plan, the status of execution of the accounting audits, and the basis for the calculation of the audit remuneration.

Remuneration of Corporate Officers

  1. Policy Regarding Decisions on Amounts of Director Remuneration

    ・ Remuneration of directors (excluding outside directors and Audit & Supervisory Committee members)

    The Company has a basic policy of using appropriate levels of remuneration and calculation methods for directors based on rank and responsibilities, within the limits decided at the General Meeting of Shareholders. Remuneration for directors (excluding outside directors and members of the Audit & Supervisory Committee) consists of fixed compensation (basic remuneration), performance-linked remuneration (bonuses) as short-term incentives that reflect consolidated business results, and non-cash compensation (restricted stock) as long-term incentives to contribute to increasing the Company’s stock price and corporate value. Basic remuneration is 70% of total compensation, followed by bonuses at 20% and restricted stock at 10%. To increase the objectivity and transparency of evaluating and determining the remuneration of directors (excluding outside directors and members of the Audit & Supervisory Committee), the Corporate Governance Committee, on which independent outside directors form a majority, provides advice and suggestions as an advisory body to the Board of Directors. This policy was decided by the Board of Directors after its fairness was ascertained by the Corporate Governance Committee.

    1. Basic remuneration
      • ・ Fixed amounts paid based on rank
      • ・ The total amount paid does not exceed ¥420 million (includes up to ¥30 million for outside directors who are not members of the Audit & Supervisory Committee)
    2. Bonuses
      • ・ Short-term incentives (remuneration linked to business performance) paid in amounts adjusted based on consolidated business results, the total amount paid not exceeding ¥150 million
        • (a) The representative director and directors who are also business execution officers are eligible for bonuses.
        • (b) The bonus amount is calculated as follows:
          Rank-based standard amount × multiplier (%) based on consolidated performance evaluation
        • (c) The multiplier (%) based on consolidated performance evaluation is calculated as follows:
          • 1. Consolidated performance evaluation indicators are consolidated net sales and consolidated operating income
          • 2. Regarding the above indicators,
            • (i) Ratio of results for the fiscal year in review versus externally disclosed targets at the outset of the fiscal year (consolidated earnings forecasts denoted in Consolidated Financial Results)
            • (ii) Ratio of average performance during period applicable to time of service within the lpast three years until the fiscal year in review, to average performance over the three years preceding the previous fiscal year
              The multiplier is decided based on the result of combining the aforementioned (i) and (ii) at a 60:40 ratio.
    3. Restricted stocks
      • ・ Long-term incentives to contribute to increasing the Company’s corporate value and share price provided by the allotment of restricted stocks
      • ・ The total amount paid does not exceed ¥60 million

    The total amount of basic remuneration has been approved by the 127th Annual General Meeting of Shareholders held on June 21, 2021, and totals for bonuses and restricted stock were approved at the 124th Annual General Meeting of Shareholders held on June 21, 2018.

    The Corporate Governance Committee, with a majority of independent outside directors as majority of members, is an advisory body that provides advice and makes suggestions for the Board of Directors on matters regarding evaluations and decisions on remuneration for directors (excluding outside directors and Audit & Supervisory Committee members), with the aim of improving objectivity and transparency.

    ・ Remuneration of outside directors (excluding Audit & Supervisory Committee members)

    This is decided by the Board of Directors in accordance with the Company’s internal rules on director remuneration and within totals approved at the General Meeting of Shareholders.
    ・Payment of fixed remuneration each month
    ・Total amount does not not to exceed ¥30 million

    ・ Remuneration of directors (Audit & Supervisory Committee members)

    This is decided through deliberations by the Audit & Supervisory Committee members, in accordance with the Company’s internal rules on director remuneration and within totals approved at the General Meeting of Shareholders.
    ・Payment of fixed remuneration each month
    ・Total amount not todoes not exceed ¥60 million

  2. Total Remuneration by Corporate Officer Type
    • Slide to view.
    Corporate officer type Total
    remuneration
    (Millions of yen)
    Total remuneration by type
    (Millions of yen)
    Number of
    people
    receiving
    remuneration
    Basic
    remuneration
    Bonuses Restricted
    stocks
    Directors
    (excluding Audit & Supervisory Committee members and outside directors)
    295 215 53 25 10
    Directors
    (Audit & Supervisory Committee members)
    (excluding outside directors)
    21 21 - - 1
    Outside officers 31 31 - - 6

Policy on Holdings of Capital Tie-Up Shares

The 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 only acquires such shares when increasing trust and coordination with the business partner is judged as an effective means of mutually raising corporate value. These holdings are reviewed based on this perspective when necessary, and consideration is given to reducing them. 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.

Stockholdings

  1. Criteria for and Approach to the Classification of Investment Shares

    The Company classifies investment stocks held with the objective of receiving profits through stock price fluctuations or stock-related dividends as stocks held for pure investment purposes, and other stocks as investment stocks held for purposes other than pure investment (Capital Tie-Up Shares).

  2. Stocks Held for Purposes other than Pure Investment

    ・ Number of issues and amount recorded on balance sheet

    Number of issues (issues) Total amount recorded on balance sheet (Millions of yen)
    Unlisted shares 16 110
    Shares other than unlisted shares 23 1,790

    ・ Information related to number of shares, amount recorded on balance sheet, etc., for specified investment shares and deemed shareholdings, by issue (top 10 issues)

    Issue Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Purpose of holding, quantitative effects of holding, and reasons for increase in the number of shares Whether or not investee holds shares of the Company
    Number of shares (shares) Number of shares (shares)
    Amount recorded on balance sheet (Millions of yen) Amount recorded on balance sheet (Millions of yen)
    Toray Industries, Inc. 1,160,000 1,160,000 To maintain and strengthen business relationships Yes
    826 544
    Fujipream Corporation 936,000 936,000 Same as above No
    376 184
    IMURA ENVELOPE CO., INC. 200,000 200,000 Same as above Yes
    197 111
    Mitsubishi UFJ Financial Group, Inc. 159,710 159,710 Same as above Yes
    94 64
    KING JIM CO., LTD. 76,630 76,630 Same as above Yes
    72 63
    ASAHI PRINTING CO., LTD. 38,054 34,009 Same as above*1 No
    35 31
    Arisawa Mfg. Co., Ltd. 35,431 35,431 Same as above No
    35 28
    OZU CORPORATION 16,978 16,553 Same as above*1 No
    34 28
    Mizuho Financial Group, Inc.*3 20,695 206,950 Same as above Yes
    33 25
    Canon Marketing Japan Inc. 6,938 6,938 Same as above No
    17 14

    *1 The reason for the increase in the number of shares was to further strengthen sales transaction relationships.
    *2 The reason for the increase in the number of shares was the acquisition of shares through the company’s stock ownership association.
    *3 Mizuho Financial Group, Inc., conducted a 10-for-1 stock merger on October 1, 2020

Takeover Defense Measures

The Company has not introduced takeover defense measures. However in regard to persons who are engaging in or aim to engage in a large-scale purchase of the Company's stock, the Company will act from the perspective of securing its corporate value and the common interests of its shareholders. From that perspective, the Company will request that persons who are engaging in or aim to engage in a large-scale purchase provide necessary and sufficient information to allow the shareholders to appropriately determine the pros and cons of the large-scale purchase in accordance with relevant laws and regulations. At the same time, the Company will disclose the opinions of the Board of Directors and endeavor to secure necessary time and information for the shareholders to consider such large-scale purchase. Further, if it is rationally judged that there is a risk of damage to the Company’s corporate value and the common interests of shareholders unless timely defensive measures are implemented to address a large-scale purchase, the Company will endeavor to secure its corporate value and the common interests of its shareholders, as an obvious obligation of the Board of Directors entrusted with management of the Company by its shareholders, by promptly deciding the content of the concrete measures deemed most appropriate at the time in accordance with the relevant laws and regulations and executing such measures.

Shareholder Interactions

The Company seeks to engage in constructive interactions with shareholders and other investors that contribute to sustainable growth and medium- to long-term improvements in corporate value. The Company has established an investor relations (IR) activity system and advances proactive initiatives based on the following policies to facilitate this endeavor.

  1. The officer responsible for IR implements and oversees the Company’s various IR activities, including individual meetings with shareholders and investors. In regard to responses to requests for individual meetings, members of senior management or directors will meet with shareholders or investors requesting meetings based, whenever appropriate, on the desires and interests of the requester.
  2. The Public Relations Office, Finance & Accounting Dep., General Affairs & Legal Dep., and Corporate Strategic Office will play a central role in advancing the Company’s various IR activities. Relevant divisions pursue close coordination with these offices and departments, exchanging information on a daily basis and meeting with members of senior management as appropriate to share necessary information.
  3. In addition to individual meetings, the Company’s IR activities include regular briefings on financial results and medium-term business plans, visits to overseas investors, participation in IR conferences at which overseas investors gather, facility tours, business explanatory forums, and Company briefings for individual investors. We seek to expand the range of information provided to domestic and overseas shareholders and other investors by publishing shareholder newsletters and integrated reports and posting information in the IR section of our corporate website. At the same time, we collect feedback from a wide range of shareholders and other investors through surveys that are attached to shareholder newsletters and made available on the IR website.
  4. Opinions and concerns of shareholders and other investors solicited through IR activities are relayed to management by the relevant divisions via quarterly business reports at the Board of Directors’ meetings or reported appropriately to management on an as-required basis.
  5. In interactions with shareholders and other investors, we practice stringent management of information in accordance with the internal Insider Trading Prevention Regulations to ensure that insider information is not disclosed. In addition, the Company’s disclosure policy stipulates that we will observe a quiet period that begins approximately one month prior to the announcement of quarterly financial results to avoid leaks of financial results and to maintain fairness. During this period, we will not answer questions or make comments on our financial results and forecasts.