Corporate Governance

In order to realize management that is highly satisfactory for its shareholders, customers, employees, and other stakeholders, T&K TOKA aims to establish a management structure that is robust, highly transparent, and capable of responding swiftly and appropriately to changes in the business environment. To this end, we have set improving and enhancing corporate governance as one of our most important management issues, and are promoting initiatives based on the "T&K TOKA Basic Policy on Corporate Governance."

Changes in the Strengthening of Corporate Governance

Changes in the Strengthening of Corporate Governance

Corporate Governance Framework

To improve and enhance corporate governance, we have adopted a "company with an audit and supervisory committee" system. In addition, we have also established a Nomination Advisory Committee and a Remuneration Advisory Committee, in which outside directors serve as the main committee members, in order to enhance transparency and objectivity in the determination of director nominations and remuneration, which are the pillars of corporate governance.

Board of Directors

The Board of Directors consists of 10 directors, five of whom are outside directors, in order to enhance transparency and fairness in management. The Board of Directors is chaired by the Representative Director of the Company, and deliberates and makes decisions on important matters related to business execution. As a general rule, the Board of Directors meets once per month.

Nomination Advisory Committee

The Nomination Advisory Committee considers the appointment and dismissal of directors, and makes recommendations to the Board of Directors.

Remuneration Advisory Committee

The Remuneration Advisory Committee reviews policies regarding remuneration and so on for directors, as well as the details of remuneration and so on for each director, and makes recommendations to the Board of Directors.

Audit and Supervisory Committee

The Audit and Supervisory Committee consists of four outside directors, and reports, discusses, and makes decisions on important matters.

Management Committee (Department Liaison Meeting)

The Management Committee (Department Liaison Meeting) deliberates on important issues related to management strategies and the growth strategies of each department. Among the proposals that are submitted to the Management Committee (Department Liaison Meeting), those deemed necessary are deliberated by the Board of Directors.

Corporate Governance Framework Diagram (As of June 19, 2020)

Framework as of Fiscal Year Ended March 2020

Nomination Advisory Committee Chair: Takatoshi Kida
Nomination Advisory Committee Members: Yoshikatsu Masuda, Satoshi Noguchi
Remuneration Advisory Committee Chair: Kenji Otaka
Remuneration Advisory Committee Members: Yoshikatsu Masuda, Koichi Hanabusa
Audit and Supervisory Committee Chair: Kenji Otaka
Audit and Supervisory Committee Members: Takatoshi Kida, Satoshi Noguchi, Koichi Hanabusa

Corporate governance system diagram

Status of Outside Officers

Position Name Reason for appointment Attendance at Board of Directors meetings and Audit and Supervisory Committee meetings
Director Kota Isogai Mr. Kota Isogai works for Dalton Advisory KK, a subsidiary of Dalton Investments LLC, which is an investment management firm based in California, USA, and one of our shareholders. Since the acceptance of an Outside Director from Dalton Investments Group, which shares the benefits of increased corporate value as a shareholder of the Company, is expected to further strengthen the corporate governance framework of the Company, he has been appointed as an Outside Director. Attendance at Board of Directors meetings: 11/11
(Appointed on June 20, 2019)
Director
(Audit and Supervisory Committee Member)
Takatoshi Kida Mr. Takatoshi Kida has served as an Outside Director of the Company since June 2014, and has contributed to the enhancement of our corporate value by ensuring transparency and soundness in management, as his professional knowledge and experience as a lawyer, and his management-independent perspective have been utilized to supervise the management of the Company and strengthen corporate governance. Although he has no experience of being involved in company management other than by serving as an Outside Director in the past, Mr. Kida is expected to continue to strengthen the supervisory functions of the Board of Directors, in view of his past achievements. Accordingly, he has been reappointed as an Outside Director who is an Audit and Supervisory Committee Member. Attendance at Board of Directors meetings: 15/15
Attendance at Audit and Supervisory Committee meetings: 17/17
Director
(Audit and Supervisory Committee Member)
Kenji Otaka Mr. Kenji Otaka has served as an Outside Director of the Company since June 2015, and has contributed to the enhancement of our corporate value through supervision of the management of the Company from an independent standpoint, and also reflecting his global perspectives in the management of the Company, based on his wealth of experience and high level of insight gained as a manager of group companies of a large international corporation. In view of such achievements, Mr. Otaka is expected to continue to strengthen the functions of the Board of Directors. Accordingly, he has been reappointed as an Outside Director who is an Audit and Supervisory Committee Member. Attendance at Board of Directors meetings: 15/15
Attendance at Audit and Supervisory Committee meetings: 17/17
Director
(Audit and Supervisory Committee Member)
Satoshi Noguchi Mr. Satoshi Noguchi has been involved in the financial field for many years, through periods of economic and financial turbulence. He has contributed to the enhancement of our corporate value by ensuring transparency and soundness in management, as his wealth of knowledge and experience as a person involved in the financial industry and a manager has been utilized to strengthen the management supervision and decision-making functions of the Company. In view of such achievements, Mr. Noguchi is expected to continue to strengthen the functions of the Board of Directors. Accordingly, he has been reappointed as an Outside Director who is an Audit and Supervisory Committee Member. Attendance at Board of Directors meetings: 15/15
Attendance at Audit and Supervisory Committee meetings: 17/17
Director
(Audit and Supervisory Committee Member)
Koichi Hanabusa As a certified public accountant, Mr. Koichi Hanabusa possesses a wealth of experience and expertise in corporate accounting and so on. Although he has no previous experience of being involved in company management, Mr. Hanabusa is expected to strengthen the supervisory and decision-making functions of the Board of Directors, through utilization of the experience and knowledge he has gained thus far in the management, auditing, and supervision of the Company. Accordingly, he has been newly appointed as an Outside Director who is an Audit and Supervisory Committee Member. Attendance at Board of Directors meetings: 10/10
Attendance at Audit and Supervisory Committee meetings: 11/11
(Appointed on July 1, 2019)

Evaluation of the Effectiveness of the Board of Directors

Since fiscal year 2016, we have been conducting self-evaluations and analyses of the effectiveness of the Board of Directors, with the aim of enhancing the functions of the Board of Directors and increasing our corporate value. The following methods were used for self-evaluations and analyses in fiscal year 2019.

  1. 1.Analysis and Evaluation Methods

    We conducted a questionnaire targeting all 10 Directors who are members of the Board of Directors. To ensure anonymity, questionnaires were returned directly to an external organization.
    The main items in the questionnaire were as follows:

    1. (1)Composition of the Board of Directors
    2. (2)Operation of the Board of Directors
    3. (3)Board of Director discussions
    4. (4)Monitoring functions of the Board of Directors
    5. (5)Performance of Internal Directors
    6. (6)Performance of Outside Directors
    7. (7)Support systems for Directors
    8. (8)Initiatives by Directors
  2. 2.Summary of Analysis and Evaluation Results

    Based on a report of the aggregated results received from the external organization, an analysis, discussion, and evaluation were conducted at the regular Board of Directors meeting held in March 2020. A summary of the results is as follows.
    The number of Board of Directors meetings held, time used for deliberations, and the number and details of agenda items were appropriate. Moreover, the increase in the number of Outside Directors has brought a variety of perspectives, which have contributed to the vitalization of the discussions at the Board of Directors. We are confident that the effectiveness of the Board of Directors as a whole is ensured, as it was determined that the overall operation of the Board of Directors was conducted properly. On the other hand, we recognize that some issues remain, such as enhancing discussions from the perspective of the shareholders, reviewing the process for formulating management and growth strategies, and appropriately supervising a succession plan for the top manager.

  3. 3.Future Actions

    Going forward, the Board of Directors will consider and implement measures to address the issues identified by the evaluation of its effectiveness, thereby enhancing the functions of the Board of Directors and strengthening its management structure.

Officer Remuneration

Remuneration for Directors (excluding Audit and Supervisory Committee Members) is deliberated by the Remuneration Advisory Committee in a fair and transparent manner, and is determined by the Board of Directors within the total amount of remuneration resolved at the General Shareholders Meeting. The amount of remuneration is set by striking a balance between providing long-term profits to the shareholders while maximizing our corporate value, and increasing motivation. Outside Directors who serve as Audit and Supervisory Committee Members receive only basic remuneration.
In addition, we provide restricted stock as performance-based remuneration to Directors, for the purpose of providing an incentive to increase corporate value, as well as sharing value with our shareholders, who are our stakeholders. However, no provision of such remuneration was made in fiscal year 2019.

Position Total amount of remuneration, etc.
(million yen)
Total amount of remuneration, etc.,
by type (million yen)
Number of recipients
(persons)
Fixed remuneration Performance-based remuneration Stock options
Directors
(excluding Audit and Supervisory Committee Members and Outside Directors)
153 131 - 21 5
Audit and Supervisory Committee Members
(excluding Outside Directors)
- - - - -
Outside Officers 26 26 - - 6

Status of Audits

Status of Audits by Audit and Supervisory Committee

The Audit and Supervisory Committee conducts planned and comprehensive audits for all operations of the Company and its subsidiaries. As a general rule, the Committee meets once per month, based on the Audit and Supervisory Committee Regulations. In addition, it holds extraordinary meetings, as necessary. The Committee maintains close cooperation with the Internal Audit Office and the accounting auditor, and exchanges necessary information and opinions with them in a timely manner.

Status of Internal Audits

The Internal Audit Office consists of one manager and one member, and conducts internal audits systematically, in accordance with the Internal Audit Regulations. Regarding internal control, the Internal Audit Office and each committee maintain close cooperation to implement planned internal audits.

Status of Accounting Audits

Regarding accounting audits, we have entered into an audit agreement with Ernst & Young ShinNihon LLC, and undergo accounting audits under the Companies Act and the Financial Instruments and Exchange Act. In addition, the department in charge of accounting holds discussions with the accounting auditor as necessary, and strives to improve transparency and accuracy in accounting.

Sustainability

pagetop