Basic Principles Concerning Corporate Governance
Based on the recognition that Yokowo exists today with the support of all stakeholders, including shareholders, customers, suppliers, and local communities, we establish good relationships with stakeholders and aim to maximize our corporate value.
Yokowo believes that strengthening its corporate governance is one of its important management challenges. It has accordingly adopted a corporate management system to ensure management efficiency, transparency, and lawful conduct, and to achieve its management objectives.
Corporate Governance System
Yokowo has adopted an Audit & Supervisory Board system. Our system of corporate governance consists of a Board of Directors that performs management strategic and supervisory functions, an Executive Officer system that fulfills an executive function, and an Audit & Supervisory Board that fulfill management audit functions. Details of our corporate governance organizational system are as follows:
- The Board of Directors’ decision-making function in management strategies and its supervisory function are clearly defined. In addition, the Board of Directors consists of only a limited number of directors, to ensure prompt decision making.
- By adopting both the Executive Officer system and the Department Structure, strategic decision making and operational supervisory functions are clearly separate from the executive function, creating a system for prompt and appropriate execution of operations.
- To strengthen the managerial audit capabilities of the Audit & Supervisory Board, we have appointed Outside Audit & Supervisory Board members with excellent professional expertise and extensive practical experience.
The Board of Directors
Yokowo's Board of Directors consists of a total of five members: two executive directors, namely the Representative Director cum President and Executive Officer and the Director cum Senior Managing Executive Officer, one member namely the Chairman and Director and two part-time Outside Directors, who perform the function of supervision.
The Chairman and Director and Outside Director receive reports on the status of the work they have executed from the Representative Director cum President and Executive Officer and Director cum Senior Managing Executive Officer or other executive officers in charge at regular and ad hoc meetings of the Board of Directors and determine the matters proposed, etc. They also attend operational performance confirmation meetings and business unit meetings, etc. as appropriate, thereby supervising the execution of business activities.
Audit & Supervisory Board Members and Audit & Supervisory Board Meetings
The Audit & Supervisory Board consists of three members, one Full-time Audit & Supervisory Board member and two Part-time Outside Audit & Supervisory Board members. In addition to regular Audit & Supervisory Board meetings, extraordinary meetings are held as required.
The Audit & Supervisory Board members remain in close contact with Internal Audit departments and Accounting Auditors, as follows:
- Collaboration with Accounting Auditor
- KPMG AZSA LLC has been appointed as our Accounting Auditor. The Audit & Supervisory Board members and the Accounting Auditor cooperate in holding discussions on the receipt of the Accounting Auditor's report on audits and reviews on a quarterly basis (at the end of each quarter and at the end of the fiscal year) at meetings of the Audit & Supervisory Board and to conduct audits of each department and subsidiary, including both domestic and overseas companies, with the Accounting Auditor accompanied by the Full-time Audit & Supervisory Board members.
- Collaboration with the section in charge of Internal Audit
- Functioning between the Internal Audit Dept. and the Audit & Supervisory Board members, the Internal Audit Dept. provides appropriate support for the audits conducted by the Audit & Supervisory Board members, and the Audit & Supervisory Board members hold regular meetings with the Internal Audit Dept. to share the necessary information on the improvement of internal control and the status of operation, etc.
- Status of Activities of Outside Audit & Supervisory Board members
- From a professional viewpoint as attorneys and based on extensive knowledge and experience in personnel affairs, general affairs, and other areas, the two Outside Audit & Supervisory Board members give advice and suggestions at meetings of the Board of Directors.
Compensation for Board Members and Audit & Supervisory Board Members
Compensation for the Board members is determined in accordance with internal compensation standards and also by taking into consideration both business results as well as the personal results of individual Board members based on their position, and is then finally viewed from the aspect of appropriateness. However, the total amount for compensation is subject to the approval of a General Shareholders' Meeting.
Compensation for the members of the Audit & Supervisory Board is determined through discussion among the members within the range of the total amount for compensation resolved at General Shareholders’ Meeting.
The amount of compensation for the Board members and Audit & Supervisory Board members for this fiscal year, FY2015, is as follows:
|Five Board members||Total 136 million Japanese yen|
|Three Audit & Supervisory Board members||Total 21 million Japanese yen|
- Payments of bonuses to the Board members are, as a general rule, linked to the results for each business year and require the approval of a General Shareholders' Meeting. Yokowo has no record of paying bonuses to the Directors for the fiscal year ended March 31, 2016. At the 76th Ordinary General Meeting of Shareholders and the meeting of the Board of Directors held on June 27, 2014, it was determined that a total of 300 stock acquisition rights (the number of shares to be delivered upon the exercise of subscription rights to shares is 30,000 shares) was granted to the three Directors, but not the Outside Director, as stock options. The rights were assigned as determined on August 8, 2015. With respect to the retirement compensation for Board members and Audit & Supervisory Board members, it was abolished in June 2006 as it was not linked to the management results.
Internal Control System
Outline of Present Internal Control System
In accordance with the resolution of the Board of Directors titled "Basic Principles for Establishment of an Internal Control System," Yokowo Group continues to establish the system and improve operational framework.
Basic Principles in the Internal Control System
The basic principles in establishing an Internal Control System are as follows:
Internal Control Relating to Financial Statements
Yokowo has adopted the "Internal Control Relating to Financial Statements" set out in the Financial Instruments and Exchange Law since the fiscal year ended March 31, 2009. As a result of improving and executing internal control, we have determined that our internal control relating to financial statements was effective for the fiscal year ended March 31, 2016.
Yokowo also received an audit report from the Accounting Auditors that the report on its internal control was appropriate.
Yokowo has defined risk management policies and risk management guidelines in the Risk Management Rules to facilitate more stable and effective business activities. On this basis, a Risk Management System (RMS) has been established that seeks to identify and analyze the diverse risks of loss and to conduct the necessary preparations, execution, assessment, improvement, and review.
In the operation of the RMS, expert committees, etc. have been established for each major risk item to promote the relevant activities under the CSR Committee, which pursues the fulfillment of corporate social responsibility.
Yokowo has appointed persons responsible for individual organs in order to ensure the appropriateness of storing and managing information. This allows the Company to conduct organizational and systematic storage and management of information and to monitor information storage and management periodically.
Corporate Governance Diagrams
The chart below shows our Corporate Governance and Internal Control Systems as of April 1, 2017.