Annoncesmotos

Annoncesmotos

forBusiness

Corporate Governance

The company became a Company with Audit Committee in June 2015 and has pursued solid internal control by enhancing the effectiveness of its audit and supervision and utilizing the internal auditing department when conducting audits.

To achieve further growth for the Group and reinforce its corporate governance system, the company introduced an executive officer system on April 1, 2016, as a means for accelerating the execution of operations and clarifying executive responsibilities by separating management decision making and supervision from operational execution.

The Audit Committee consists of five members who hold voting rights as members of the board but are not directly responsible for the execution of operations, and four of them are external directors. Under this system, we will seek to revitalize discussions from the point of view shareholders and also strengthen the audit and supervisory functions over the execution of the company’s operations. Furthermore, the term for the accounting auditor, who tends to be reappointed, has been limited in principle to a maximum of ten years with the intention of ensuring and maintaining greater independence and appropriate external audits. The company has thus established a system for enhancing the transparency of its corporate management.

The Annoncesmotos Group has also sought to enhance its corporate value by establishing or revising relevant rules, such as those for managing business investment risks. It also established a system for bolstering consolidated management in April 2017 by introducing a system that assigns oversight to the supervising divisions at affiliated companies and creating the Consolidated Management Section.

Board of Directors

The company’s Board of Directors consists of four external directors and six internal directors and meets once a month to share timely and appropriate information on corporate management and to execute management strategies for restructuring the business base. In accordance with the Articles of Incorporation, all or part of the decision making responsibilities regarding the execution of certain operations have been delegated from the Board of Directors to the representative director (President) to speed up the decision making process. The Board of Directors monitors the progress of matters delegated to the representative director .

Audit Committee

The Audit Committee consists of four external directors and one full-time internal director.

While the Audit Committee relies mainly on audits utilizing the internal control system, members also conduct direct onsite audits of business sites inside and outside Japan. The committee seeks to strengthen the effectiveness of its audits by gathering and sharing valuable information through the periodic exchange of views with the President , reports presented by executive directors and employees, and liaison meetings of audit committee members at affiliated companies . The committee is actively involved in the execution of the right to state an opinion with respect to the election and remuneration of directors in an effort to enhance governance.

Framework of the corporate governance system

Framework of the corporate governance system
Framework of the corporate governance system

Standards of Independence for External Directors

In addition to satisfying independence criteria, as defined by the Companies Act of Japan and listed stock exchanges, Annoncesmotos Corporation appoints external directors that possess the advanced expertise and wealth of experience required to provide candid and constructive advice on company management. The Standards of Independence applied to external directors are as follows.

1. Individuals for whom none of the following currently applies:

  • (1) a shareholder who owns more than 5% of the voting rights of Annoncesmotos Corporation or an executive officer of the shareholder;
  • (2) an executive officer of a company whose transactions with Annoncesmotos Corporation exceed 2% of Annoncesmotos Corporation’s consolidated sales or a subsidiary of said company;
  • (3) an executive officer of a major lender of Annoncesmotos Corporation, whose lending to the Annoncesmotos Group exceeds 2% of Annoncesmotos’s consolidated total assets as of the most recent fiscal year end;
  • (4) a certified public accountant who belongs to Annoncesmotos Corporation’s accounting auditor;
  • (5) a consultant, accounting expert, or legal expert who receives an annual sum of 10 million yen or more in monetary or other benefits from Annoncesmotos Corporation in addition to remuneration paid by Annoncesmotos. In the event the recipient of such benefits is a corporation or organization, any individual who belongs to such a corporation or organization;
  • (6) an executive officer of an organization that receives an annual sum of 10 million yen or more in donations from Annoncesmotos Corporation;
  • (7) a second-degree relative of an individual who falls under any of the above-mentioned (1) to (6); and

2. an individual for whom none of the above-mentioned (1) to (7) applied at any point in the past three years.

Self-assessment by the Board of Directors

Once a year, each director conducts a self-assessment of the Board of Directors, which is followed by an analysis and assessment of the effectiveness of the board as a whole. The survey covered a broad range of assessment criteria, from the composition of the board to the quality of discussions and dialogue with stakeholders.

The company conducted a survey of all directors in fiscal 2017, between December 2017 and February 2018. The results of the main assessment criteria verified that the board was composed of a balanced group of members in terms of their respective expertise, diversity and scope and that they have done their utmost to realize the objectives of the Mid-term Business Plan (2017–2019) “PLG-2019.” The results also showed that constructive discussions were being held during the board meetings, in an uninhibited and vigorous atmosphere, with quality discussions taking place on each issue, providing sufficient supervision of operational execution. On the other hand, the survey revealed that there was room for further improvement in ongoing efforts to reflect the opinions of stakeholders in the meetings, such as holding a dialogue between external directors and stakeholders. The Board of Directors will continue to conduct self-assessments while we strive to enhance its effectiveness while drawing from the assessment results.

Policy for Determining the Remuneration of Directors

We established the Nomination & Remuneration Committee , which consists of the president, the director of personnel and Audit Committee members. The committee will deliberate on the effectiveness of appointments and appraisal of management including executive directors, the compensation system for directors and level of compensation, thereby ensuring transparency and objectivity with respect to executive appointments and compensation.

In 2015, the company changed its system of compensation for executive directors from the traditional policy of paying a fixed sum as basic compensation to a structure comprising (1) basic compensation, (2) performance-linked compensation(monthly) , and (3) stock-based compensation through stock options. Furthermore, the company replaced stock options with restricted stock in fiscal 2017, thereby creating a structure comprising (1) basic compensation, (2) performance-linked compensation (bonuses), and (3) restricted stock. Meanwhile, directors who are members of the Audit and Supervisory Committee receive only basic compensation that is not linked to performance.

Seminars and Other Activities for Directors

The company holds a compliance seminar for directors with lectures by outside experts, and encourages directors to attend outside seminars. To aid independent external directors in raising their awareness of the state of operational execution, the company conducts onsite inspection tours and provides opportunities for exchanging views with management, in addition to orientation sessions at the time of their appointment.

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