Updated in September 2017
Basic Policy and Organization
In accordance with our corporate philosophy of "appreciation," "nature" and "corporate openness," we aim to achieve sustainable growth and improve the mid- to long-term value of the company. We acknowledge corporate governance to be a critical management issue toward these objectives.
Our company considers further strengthening of "autonomy" complemented by "heteronomous" to be the fundamentals of our corporate governance. We will ensure objectivity and transparency, forming a basis by designing our own concept of corporate governance adapted to the present day, while incorporating diverse outside viewpoints by working to attract more "Kagome Fan Shareholders" and leveraging the function of external directors among other things.
We aim to deliver a high degree of accountability and achieve true "corporate openness" in our interactions with stakeholders, while employing the unique attributes and originality of Kagome.
In March 2016, we transitioned to a corporate structure with an audit and supervisory committee. This transition separates executive functions from supervisory functions, which helps clarify business responsibility and speed up decision making and execution of operations. Upon this transition, the main duties of the Board of Directors at our company are to decide our management strategy and policies, and monitor their implementation. In order to separate execution from supervision, the chairman of the Board of Directors is designated as the
Chairman of the Board of Directors meeting, and three or more external directors who satisfy the Standards for Judging the Independence of Independent External Directors set out by our company are appointed. This is boosting our effectiveness with improved, enhanced advisory and supervisory functions.
The audit and supervisory committee sets a policy of having one or more standing audit and supervisory committee members, and uses internal control systems to audit the legality and appropriateness of the operations implemented by the directors.
Nomination and remuneration of directors are deliberated by the Remuneration and Nomination Advisory Committee, in which independent external directors account for one half or more of its members. The results of the deliberation are advised to the Board of Directors, who then determines the nomination and remuneration of directors, thereby enhancing fairness and appropriateness.
Under our executive officer system, we are using set criteria to delegate implementation responsibilities and authority to our departments.
In addition, we have established the Meeting of Executive Officers in order to convey and make known the Board of Directors' resolutions and reported matters as well as to facilitate communication and coordination among executive officers. Furthermore, the Management Meetings have been established under the leadership of the president to ensure business is executed agilely and through mutual coordination. Deliberations in the Management Meetings enable appropriate risk taking and also produce clear allocations of responsibilities, while enabling us to make decisions in an expedient manner.
Standards for Judging the Independence of Independent External Directors of the Company
The Company deems an external director to have sufficient independence in the event that he/she meets the Standards for Judging Independence as described below.
- 1) A person who is not or was not in the past a director, audit & supervisory board member (excluding outside officer), executive officer or employee of the Kagome Group
- 2) A person who is not or has not been a major shareholder of the Kagome Group in the past five business years (pertains to a shareholder who holds 10% or more of the total voting rights of the shares of the Kagome Group), or a person who is not director, corporate auditor, executive, executive officer or employee of an entity for which the Kagome Group is a major shareholder
- 3) A person who is not director, corporate auditor (excluding outside officer), executive, executive officer or employee of a major business partner of the Kagome Group (pertains to a business partner whose amount of transactions with the Kagome Group is 2% or more of the consolidated net sales of the Kagome Group in any of the past three business years)
- 4) A person who is not director, corporate auditor (excluding outside officer), executive, executive officer or employee of an entity for which the Kagome Group is a major business partner (pertains to a business partner whose amount of transactions with the Kagome Group accounts for 2% or more of the consolidated net sales of the business partner in any of the past three business years)
- 5) A person who is not officer or employee of corporations or organizations that receive a large amount of donations* from the Kagome Group
* An average of 10 million yen or more annually in the past three business years, or an amount that is 2% or more of net sales or total revenue of the recipient
- 6) A person who is not director, corporate auditor (excluding outside officer), executive, executive officer or employee of a corporation which mutually exchanges directors, corporate auditors or executive officers with the Kagome Group
- 7) A person who has not been representative partner, partner or employee of the accounting auditor of the Kagome Group in any of the past five years
- 8) A person who is not an attorney-at-law, a certified public accountant, a certified tax accountant, consultant or other professional who receives a large amount of remuneration* from the Kagome Group, other than compensation as an officer.
* On the average in the past three business years, 10 million yen or more in the case of an individual and 2% or more of consolidated net sales in the case of a corporation
- 9) A person who is not the spouse, a relative within the second degree of kinship or a relative living together of any person described in 1) through 8) above
- 10) A person whose total term of tenure as external director is within eight years
Status of Cooperation between the Audit and Supervisory Committee, Accounting Auditor, and Internal Audit Departments
We have concluded an audit contract with Nagoya Audit Corporation, which submits yearly accounting audit plans to us and reports the results of the accounting audits to us. In addition, the members of our audit and supervisory committee witness accounting audits conducted by the accounting auditor. They also exchange information and opinions with the accounting auditor and internal audit departments on a regular basis and cooperate closely with each other in other ways. Internal audits of our company are aimed at helping rationalize our management and improve our business efficiency by checking whether the operational activities at each business site are managed appropriately and efficiently in compliance with laws, rules, regulations, our management policy, and our management plan. The Internal Audit Department serves as a department under the direct control of the president and the secretariat to the audit and supervisory committee. It monitors the reliability of financial reporting and regularly conducts direct audits of the implementation of operations by each department of the Group in its efforts to strengthen the governance of the Group. Problems found in audits are reported to the audit and supervisory committee and the president in a timely manner to take the necessary measures or make improvements.
Policy on Determining Remuneration Amounts and Calculation Methods
Our company's director remunerations, etc. comprise basic compensation, bonus linked to business performance and (cash) stock options. The proportions of each of the above remunerations are determined based on the positions of directors. Basic compensation is a fixed-amount compensation which is determined based on the importance of roles played by directors. Both bonus and stock option are determined based on consolidated profit indicators as company-wide business performance and contributions made by the individual director. Stock options are incentives for medium-term and multiple-year management and are designed to be exercisable based on consolidated profit indicators after certain period of time from the time of allotment as exercise conditions. Accordingly, exercisable number of these stock options is determined according to the degree of attainment. Compensation to director, audit and supervisory committee members and external directors each comprise basic compensation.
In fiscal 2014, the Remuneration Committee, as an advisory body to the Board of Directors in which external directors account for one half or more of its members, was established in order to enhance transparency and objectivity in determining director compensation, etc. In fiscal 2016, the same committee was given functions as an advisory body concerning nomination of directors, and was then reorganized to become the current Remuneration and Nomination Advisory Committee.
|Fiscal year in which the committee was convened||Matters deliberated|
|2016||The first committee||?Determination of the amount of director bonus for fiscal 2015|
|The second committee||?Transition to Remuneration and Nomination Advisory Committee
?Succession plan for fiscal 2016
?Director compensation for fiscal 2016
?Compensation to overseas CEO
|The third committee||?Market data on director compensation for fiscal 2016
?Estimates of variable compensation expected for fiscal
|The fourth committee||?Report of results of executive assessment for executives and CS as well as 360-degree survey|
|2017||The first committee||?Determination of the amount of director bonus for fiscal 2016
?New appointment and reappointment of directors in fiscal 2017
|The second committee||?Members of Remuneration and Nomination Advisory Committee in fiscal 2017
?Director compensation for fiscal 2017
?Business performance indicators for fiscal 2017
|Category of directors||Total amount of compensation, etc.
|Total amount of compensation, etc. by type (million yen)||Number of eligible directors (persons)|
|Basic remuneration||Stock options||Bonus|
(excluding audit and supervisory committee members)*
(audit and supervisory committee members)*
* Excluding external directors
Our company transitioned to a corporate structure with an audit and supervisory committee as of March 25, 2016.