DAIKEN

Corporate Governance

  1. Basic Approacharrow
  2. Key Initiatives for the Reinforcement of Corporate Governancearrow
  3. Quick Reference of Corporate Governance Organizationarrow
  4. Corporate Governance Frameworkarrow
  5. Assessment Results for the Effectiveness of the Boardarrow
  6. Outside Directors and Audit & Supervisory Board Membersarrow
  7. Executive Remunerationarrow

1:Basic Approach

In pursuit of optimal corporate governance that will result in sustainable improvements in ourcorporate value

Under the Group Corporate Philosophy, the Daiken Group is committed to sustainable improvements in corporate value for all shareholders and stakeholders. In order to achieve efficient, sound, and transparent management, we take the basic approach that always seeks to optimize corporate governance, and we constantly work to improve it. Based on the Basic Policy on Corporate Governance established in 2015, we are making constant improvements to respond to the ever-changing business environment surrounding the group in the ceaseless pursuit of the optimal corporate governance system.

2:Key Initiatives for the Reinforcement of Corporate Governance

2002 Made the shift to the chief executive officer system.
2003 The Compliance Committee was established.
2008 Reorganized to the Risk & Compliance Management Committee for reinforcement.
2010 Reduced the number of directors from 11 to 9.
2011 Outside directors are selected.
2012 The term for directors was reduced from two years to one year.
2015 Outside directors increased from one to two.
The Basic Policy on Corporate Governance was established.
The Nomination and Remuneration Committee and the Corporate Governance Committee were established.
2016 The effectiveness evaluation of the Board was started.
2018 A female outside Audit & Supervisory Board Member was selected.

3:Quick Reference of Corporate Governance Organization

Main items Details
Design of the organization Company with board of company audit & supervisory board members
No. of Director(outside directors) 9(2)
No. of Audit & Supervisory Board Members
(outside Audit & Supervisory Board Members)
4(2)
Number of the board convened(fiscal 2018) 12 times
(Average attendance rate of outside directors) (95%)
(Average attendance rate of outside Audit & Supervisory Board Members) (100%)
Number of audit & supervisory board convened (fiscal 2018) 13 times
(Average attendance rate of outside Audit & Supervisory Board Members) (100%)
The term for directors 1 year
The executive officer system Adopted
Voluntary committee of the Board
  • Nomination and Remuneration Committee: Deliberate on human affairs and the remuneration of directors and executive officers
  • Corporate Governance Committee: Evaluate the effectiveness of the Board and deliberate the matters related to establishment of the governance system
Auditors Gyosei & Co.

4:Corporate Governance Framework

Corporate Governance Framework

5:Assessment Results for the Effectiveness of the Board

To increase the effectiveness of the Board and to improve corporate value, the Daiken Group implemented the analysis and assessment of the effectiveness of the Board in March 2018.

Assessment procedure The questionnaire about the effectiveness of the Board was distributed to nine directors(including two outside directors)and four auditors(including two outside auditors), and the responses were collected. The responses of directors and audit & supervisory board members were analyzed by the Board, and future issues were discussed.
Also, the evaluation results were discussed by the corporate governance committee where the majority of members are outside directors and audit & supervisory board members.
Large categories of the questionnaire
  • Roles and responsibilities of the Board
  • The composition of the Board
  • Deliberation of the Board
  • System for promoting dialog with shareholders
  • Overall governance system
A summary of the analysis and assessment results The results confirmed that each director and audit & supervisory board member of the Board are committed to presenting and deliberating their opinions actively while ensuring fairness and transparency from diverse perspectives and four independent outside directors. The Board maintains the effectiveness of important decision-making in management and supervision of business execution thoroughly. In particular, regarding decision-making of important matters, including acquisitions, the independent outside directors and audit & supervisory board members were provided with opportunities where information was given to help them to understand effects, risks, and issues, and the discussions were carried out several times by the Board. Thus, they were effectively involved in the decision-making process. At the same time, future issues were found, such as involvement of the PDCA process in management strategies, including a medium-term management plan, improvement in the quality of discussions at the Board, and discussions about how the Board should be in the future.
Future issues and response based on the analysis and evaluation results Based on the analysis and evaluation results, we particularly focus on and work toward the following issues.
  • Among the PDCA process in the management strategies, strengthen the involvement of the Board particularly regarding CA processes(analysis, sorting out issues and implementing measures, implementing improvement measures)
  • Review the approving authority, delegate part of resolution matters concerning decision-making to the management, and improve the supervising function of the Board
  • Improve the system to promote constructive dialog and provide useful information with stakeholders including shareholders

6:Outside Directors and Audit & Supervisory Board Members

Outside Director

Name Reason for selection Attendance
The Board Audit & Supervisory Board
Koji
Mizuno
He actively provides advice and suggestions supported by the high expertise as a professor and contributes to securing appropriate decisions by the Board. Also, his affluent knowledge about corporate management is considered essential for the improvement of governance of the company. 12/12
(100%)
-
Kiyoshi
Furube
He has been involved in the management of TOTO as a director for a long period of time and actively provides advice and suggestions based on his rich experience. Also, his affluent experience and wide range of knowledge about corporate management is considered to contribute to improving our corporate value. We have concluded the comprehensive business alliance with TOTO and have a business relationship with TOTO including sales; however, it is general business for both companies. 8/9
(88%)
-
Name Koji Mizuno
Reason for selection He actively provides advice and suggestions supported by the high expertise as a professor and contributes to securing appropriate decisions by the Board. Also, his affluent knowledge about corporate management is considered essential for the improvement of governance of the company.
Attendance(The Board) 12/12(100%)
Attendance(Audit & Supervisory Board) -
Name Kiyoshi Furube
Reason for selection He has been involved in the management of TOTO as a director for a long period of time and actively provides advice and suggestions based on his rich experience. Also, his affluent experience and wide range of knowledge about corporate management is considered to contribute to improving our corporate value. We have concluded the comprehensive business alliance with TOTO and have a business relationship with TOTO including sales; however, it is general business for both companies.
Attendance(The Board) 8/9(88%)
Attendance(Audit & Supervisory Board) -

Outside Audit & Supervisory Board Member

Name Reason for selection Attendance
The Board Audit & Supervisory Board
Akio
Hasunuma
He is considered to use his rich experience and wide range of knowledge from a long career as a chief executive officer in the audits of the company. We have concluded a comprehensive business alliance with TOTO, and have business relationship with TOTO including sale; however, it is general business for both companies. 12/12
(100%)
13/13
(100%)
Masafumi
Inoue
He is considered to use his high expertise as a professor, experience and wide range of knowledge as an examiner of the Cabinet Office and a research officer of the Ministry of Education, Culture, Sports, Science and Technology in the audits of our company. 12/12
(100%)
13/13
(100%)
Name Akio Hasunuma
Reason for selection He is considered to use his rich experience and wide range of knowledge from a long career as a chief executive officer in the audits of the company. We have concluded a comprehensive business alliance with TOTO, and have business relationship with TOTO including sale; however, it is general business for both companies.
Attendance(The Board) 12/12(100%)
Attendance(Audit & Supervisory Board) 13/13(100%)
Name Masafumi Inoue
Reason for selection He is considered to use his high expertise as a professor, experience and wide range of knowledge as an examiner of the Cabinet Office and a research officer of the Ministry of Education, Culture, Sports, Science and Technology in the audits of our company.
Attendance(The Board) 12/12(100%)
Attendance(Audit & Supervisory Board) 13/13(100%)

* All outside directors and audit & supervisory board members have no conflicts of interest with our general shareholders with regard to personal relationships, capital relationships, business relationships, and other interests with us, and they meet the Judgment Criteria for Independence as stipulated by Daiken.

7:Executive Remuneration

We revised the remuneration policy in June 2018 so that shareholders and investors can further understand executive remuneration.

Policy of Executive Remuneration

Procedure

Regarding executive remuneration, the total frame of remuneration is determined at the general shareholders’ meeting. The executive remuneration is composed of mission remuneration as determined by the post, performance remuneration as determined by the performance of the company and the achievement and results made in the responsible area, and stock-based compensation. The detailed regulations of the procedure related to the remuneration are stipulated by the Board.
The remuneration of executive officers consists of mission remuneration as determined by the post, performance remuneration as determined by the performance of the company and the achievement and results made in the responsible area, and stock-based compensation.
Regarding the remuneration of directors and executive officers, the proposal for consideration made by the representative board is deliberated and recommend by the nomination and remuneration committee comprising a majority of independent directors, and the remuneration is decided based on the results.

Composition

In order to link the company’s performance with the executive remuneration, we set up the performance remuneration that reflects the performance of a sole financial year and stock-based compensation that reflects the medium- to long-term performance and improvement in corporate value. Also, regarding mission remuneration, the breakdown(representative compensation, supervisor compensation, and executive compensation)is provided for each post to clarify the background of the amount.

Composition