The Company recognize the importance of strengthening corporate governance in order to ensure the sustainable growth of our group and maximize corporate value for all stakeholders, and the Company will strive to achieve this goal based on the following basic policies.
1. Ensure transparency and soundness by strengthening management oversight functions
2. Establish a prompt decision-making and efficient execution system
3. Clarification of accountability
4. Disclosure of information with emphasis on timeliness, continuity, and fairness
The Company has established the "Meiko Network Japan Group Corporate Governance Guidelines" to clarify the status of its efforts and policies with respect to each principle of the Corporate Governance Code, and to fulfill its fiduciary and explanatory responsibilities.
(Board of Directors)
The Board of Directors serves as the highest decision-making body in management. The Board of Directors makes important decisions on matters stipulated in laws, regulations, and the Articles of Incorporation, as well as management policies, strategies, and management plans, and supervises business execution based on those decisions. The Board of Directors is composed of five directors (excluding directors serving on the Audit and Supervisory Committee) and four Audit and Supervisory Committee members (including four outside directors). In principle, the Board of Directors meets once a month, and extraordinary meetings are held flexibly as necessary.
(The Audit and Supervisory Committee.)
The Company has established the Audit and Supervisory Committee, which is composed of four members of the Audit and Supervisory Committee (one full-time member and three outside directors). The Audit and Supervisory Committee audits the execution of duties by directors from an independent perspective. In principle, the Audit and Supervisory Committee meets once a month, and extraordinary committees are held as necessary. In accordance with the policy established by the Audit and Supervisory Committee, the Audit and Supervisory Committee Members of the Board of Directors shall request reports and investigations required of Directors, etc. who are not Audit and Supervisory Committee Members, and conduct audits and supervision of management in cooperation with the Internal Audit Office, Accounting Auditors, etc.
(Internal Audit Office)
The Company has established the Internal Audit Office, which is independent from business divisions, and the chief of the internal audit one and the two members of the Internal Audit Office conduct business audits based on the Internal Audit Regulations to cover the entire Group. We report the results of audits to the representative directors and the Audit and Supervisory Committee on whether operations are conducted in compliance with laws and regulations and internal regulations and whether operations are conducted in a rational manner. The Representative Director directs the divisions to be audited to take necessary measures, measures, etc. based on the report of the audit results, and reports the results to maintain and improve internal controls. In addition, the Internal Audit Office, the Audit and Supervisory Committee, and the accounting auditor regularly exchange information to conduct audits effectively and efficiently.
(Nomination and Compensation Committee)
In Nov. 2022, companies established the Nomination and Compensation Committee, chaired by the Audit and Supervisory Committee, as an advisory body to the Board of Directors. The Board of Directors consists of five committees: the President and Representative Director, and four members of the Audit and Supervisory Committee. The Board of Directors is composed of a majority of outside directors. The Board of Directors makes recommendations on the appointment and dismissal of directors and executive officers, the determination of compensation, the development of directors and executive officers, and the succession plan after prior deliberation by the Committee. The Board of Directors ensures independence and objectivity and the transparency of the decision-making process.
(Sustainability Committee)
In Nov. 2022, companies established the Sustainability Committee to recognize issues related to sustainability that need to be resolved through our business activities as new revenue opportunities and to accelerate our efforts to realize a sustainable society. This committee, chaired by the president and CEO, is made up of senior management, including outside directors. It determines important issues for realizing sustainability management, including not only contributing to a decarbonised society, but also providing high-quality education, respecting human rights and further penetrating diversity. Based on the Basic Policy on Sustainability, the committee strives to realize both corporate value and improvement in environmental and social value. In addition, we endorse the recommendations of TCFD* (Climate-related Financial Disclosure Task Force) and promote voluntary and proactive information disclosure based on the recommendations in order to examine long-term strategies using scenarios that are consistent with our own business with regard to climate change-related risks and opportunities.
(Risk Management Committee)
The Company has established the Risk Management Committee, which is composed of directors, executive officers, and division heads, in order to properly implement risk management. The committee meets regularly to formulate policies, measures, and annual plans related to risk management, to ascertain the status of risk management, to provide guidance on risk avoidance measures to the divisions in charge of individual risk management, and to provide guidance on business continuity related to the company's main and important businesses and other important operations.
(Compliance Committee)
We have established the Compliance Committee, which is composed of directors, executive officers, and division heads, to strengthen and enhance our compliance system. The committee meets regularly in cooperation with counsel and is responsible for fostering an in-house culture to ensure thorough compliance and promote initiatives, formulating compliance education policies, and discussing measures to be taken in the event of doubts regarding compliance in the execution of business.
The Company has transitioned to a company with an Audit and Supervisory Committee, and have strengthened our auditing and supervisory functions by having Audit and Supervisory Committee members, who are directors, exercise their voting rights at the Board of Directors meetings. At the same time, we have delegated authority from the Board of Directors to the Board of Directors to speed up decision-making and business execution. We have also established a voluntary Nominating and Compensation Committee and a Sustainability Committee to further enhance corporate governance and increase corporate value. We also established the Sustainability Promotion Office to promote our sustainability management.
[Outside directors who are members of the audit committee]
Mr. Hiroshi JINZA Ms. Nanako AONO, Ms. Hitoko KUMAO, and Ms. Kanako IWASE were elected as outside directors who are members of the Audit Committee at the Ordinary General Meeting of Shareholders held on November 17, 2023.
Mr. Hiroshi JINZA has a wealth of experience and knowledge in banking, finance and corporate management gained from his long years of service at financial institutions, etc. In addition, expecting to duly provide effective advice and opinion on important management issues of the Company from a global perspective based on his working experience overseas, the Company has selected that he will be capable of enhancing audit effectiveness in the Company, along with monitoring overall management.
Ms. Nanako AONO has extensive knowledge of finance and accounting as a certified public accountant as well as a wealth of experience and broad knowledge of corporate management.
As such, the Company has selected that she will help ensure management transparency and further strengthen corporate governance.
Ms. Saiko KUMAO has expertise in corporate legal affairs as well as a wealth of business experience from having served in roles in various industries while preparing for her bar exam.
She also has experience as a director who is an audit and supervisory committee member.
The Company has selected that, amid the growing importance of business administration incorporating ESG issues in corporate management, she will be able to ensure management transparency and further strengthen corporate governance while contributing to the operation of the Board of Directors based on her expertise and broad perspective.
Ms. Kanako IWASE has an understanding of and abundant experience in the SDGs and sustainability, which she has gained through providing employment opportunities for refugees living in Japan to support their independence and work experience opportunities for children in foster homes, with the aim to solve social issues through business management.
She also has a point of view with the Company’s vision of “extracting the potential in people.” The Company has selected that she will be able to provide advice and suggestions to the Board of Directors, drawing on her wide-ranging insight as a business manager.
The diagram below shows an overview of our business execution system and management oversight.
1. Method of Determination of Policy on Determination of Remuneration for Individual Directors
Our basic policy is to ensure that the remuneration of our directors' functions sufficiently as an incentive for the sustained improvement of corporate value. When determining the remuneration of individual directors, it is determined by a process that is transparent and objective, and that the remuneration of each director is at an appropriate level based on his or her respective responsibilities.
Remuneration for executive directors consists of base remuneration as fixed remuneration (monthly remuneration) and non-monetary remuneration (stock remuneration). The policy for determining such remuneration is resolved at the Board of Directors meeting held on Oct. 26, 2023. Regarding remuneration, etc. for individual outside directors, non-monetary remuneration (stock remuneration) is not introduced because the remuneration is independent from business execution, and only base remuneration is paid as monthly remuneration.
2. Summary of Details of Decision-Making Policies
(a)Basic Compensation Policy
The total annual remuneration of directors is resolved at the Ordinary General Meeting of Shareholders. Compensation for each director is determined by the Board of Directors after the President and Representative Director prepares a draft and consults with the Nomination and Compensation Committee based on the details of each director's duties and our circumstances.
(b) Policy on Non-Monetary Compensation (Stock Compensation)
Non-monetary compensation for directors (excluding outside directors) consists of a stock compensation plan based on a stock grant trust as a performance-linked compensation (hereinafter referred to as the "Stock Grant Trust Plan") and a restricted stock compensation plan (hereinafter referred to as the "RS Plan").
Among non-monetary remuneration, the stock granting trust system is a stock remuneration system under which shares of the Company are acquired through a trust (hereinafter referred to as the "Trust") using the money contributed by the Company as the source of funds, and in accordance with the executive stock granting regulations stipulated by the Company, shares of the Company and the equivalent amount of money (hereinafter referred to as "our Shares, etc.") converted into shares of the Company's stock at market value are delivered through the Trust. The purpose of this system is to clarify more clearly the linkage between the remuneration of directors and our performance and share value, and to raise the awareness that directors will contribute to the improvement of medium-to long-term performance and the increase of corporate value by sharing the profits and risks of share price fluctuations with shareholders. In principle, the time when directors receive shares of the Company is upon the retirement of directors. The limit amount for the stock issuance trust system is set at 40 thousand points per business year (1 point is 1 stock of our company) for the total amount of points granted to the directors (excluding external directors) during the trust period (the first 4 years) in the 38th Ordinary General Meeting of Shareholders held on Nov. 18, 2022. In terms of the number of allotments related to the stock granting trust system, the President and Representative Director prepares a draft based on the contents of the duties of each director and our circumstances, in accordance with the Regulations Governing the Issuance of Stock to Directors, and the Board of Directors determines the draft after consulting with the Nomination and Compensation Committee.
Among non-monetary compensation, RS Plan concludes a restricted stock allotment agreement between us and directors, pursuant to which restricted stock is allocated. The plan aims to further provide incentives for directors to continuously improve our corporate value by holding shares even during the restricted period, and to further promote value sharing with shareholders. The number of restricted shares to be allocated is determined by the Board of Directors based on the draft prepared by the President and Representative Director and consulted with the Nomination and Compensation Committee at a certain time based on position, performance, contributions, and our situation.
(c) Policy on determining the amount of basic remuneration or the amount of non-monetary remuneration, etc. as a percentage of the amount of remuneration, etc. for each individual director
The percentage of remuneration for each type of director will be determined by the Board of Directors after consulting with the Nomination and Compensation Committee, based on the duty scale of each director and the level of remuneration of companies belonging to industries and types of business that are similar to ours, such as the content of the duties of each director and our situation.
(d)Reasons for the Board of Directors' judgment that the contents of remuneration, etc. for each individual director conform to the said policy.
In determining the details of basic remuneration for individual directors, the Board of Directors determines the basic remuneration based on the basic remuneration policy determined by the Board of Directors. Based on the details of each director's duties and our circumstances, the President and Representative Director prepares a draft, which is decided by the Board of Directors after consulting with the Nomination and Compensation Committee, and is in line with the decision-making policy. Regarding non-monetary remuneration (stock remuneration) for individual directors (excluding outside directors), the Company has confirmed that the methods for determining the content of remuneration, etc. and the determined content of remuneration, etc. are consistent with the relevant decision policy, and that the reports from the Nomination and Compensation Advisory Committee are respected, and the Company has determined that remuneration is in line with the decision policy.
3. Matters concerning resolutions at general meetings of shareholders with regard to remuneration, etc. for directors and auditors
The maximum amount of remuneration for directors is as follows. At the 38th Ordinary General Meeting of Shareholders held on Nov. 18, 2022, the maximum amount of remuneration for directors (excluding directors serving as members of the Audit and Supervisory Committee) was resolved as an annual amount of 300 million yen (including bonuses to directors and employees, but not including salaries for employees) (the number of directors at the conclusion of the General Meeting of Shareholders at the time of identification was 5). In addition, we have introduced a stock-company compensation system for directors (excluding directors serving on the Audit and Supervisory Committee and outside directors).
At the 38th Ordinary General Meeting of Shareholders held on Nov. 18, 2022, the maximum amount of money to be paid to a board member (excluding the members of the Audit and Supervisory Board and the Outside Director) during the trust period (the first 4 years) was 70 million per business year, and the maximum total number of points to be given to a board member (excluding the members of the Audit and Supervisory Board and the Outside Director) was 40 thousand points per business year (1 point per share of our stock). (The number of members of the board member (excluding the members of the Audit and Supervisory Board and the Outside Director) at the end of the General Meeting of Shareholders is 5.) In addition, the upper limit of RS plan was resolved at the 39th Ordinary General Meeting of Shareholders held on Nov. 17, 2023, to be 50 million yen per year, with a total of 70 thousand shares or less (the number of directors (excluding directors serving as Audit and Supervisory Committee members and outside directors) at the conclusion of the Ordinary General Meeting of Shareholders at the time of identification is five persons).
The maximum amount of remuneration for directors who are Audit and Supervisory Committee members is as follows.
At the 38th Ordinary General Meeting of Shareholders held on Nov. 18, 2022, the maximum amount of remuneration for directors who are members of the Audit and Supervisory Committee was resolved to be no more than 50 million yen per year (the number of directors who are members of the Audit and Supervisory Committee at the conclusion of the Ordinary General Meeting of Shareholders at the time of identification was 4).
