2. Analysis and Evaluations of the Effectiveness of the Board of Directors
In order to strengthen corporate governance for the purpose of contributing to sustainable growth and enhancing corporate value over the medium to long term, the company analyzes and evaluates the effectiveness of the board of directors, recognizes issues that require further deepening and consideration, and works to make improvements with speed. The following is a summary of the improvements that have been made to ensure that independent outside directors are able to maximize their insight from a standpoint independent of management and controlling shareholders.
- Establishment of the Nomination and Compensation Committee (2018)
The majority consists of independent outside directors who advise and report on the nomination, compensation and development of directors.
- Establishment of the Governance Committee (2021)
The Committee, consisting solely of independent outside directors, will clarify the supervisory and check-and-balance functions in important decision-making, and will confirm and report on the reasonableness and appropriateness of related party transactions.
- Establishment of the Management Strategy Advisory Committee (2021)
Utilizing the knowledge of outside directors, the committee discusses in depth the strategies of the medium-term management plan and the company's management issues.
The company will disclose a summary of the evaluation of the effectiveness of the board of directors as follows, and will continue its efforts to improve the effectiveness of the board of directors.
We conducted an evaluation of the effectiveness of the board of directors at Management Strategy Advisory Committee based on the results of the questionnaire, which consisted of both multiple-choice and open-ended answers. We also incorporated the results of an analysis of the answers by a third-party organization. The results of the evaluation were reported to the Governance Committee, which offered an exchange of opinions. Last, the results were verified and discussed at a meeting of the board of directors.
The structure of the questionnaire (major items) is as follows
(1) Roles and functions of the board of directors
(2) Size and composition of the board of directors
(3) Operation of the board of directors
(4) Relationship with audit organization
(5) Relationships with internal and external directors
(6) Relationship with shareholders and investors
(7) ESG or SDGs initiatives
In addition to the above, we also reviewed questions from a new perspective (roles of each committee, etc.), such as efforts to meet the new requirements of the CG Code and issues facing the company, as well as matters noticed by the newly appointed officers after they assumed office.
The board of directors was evaluated as generally effective, with active discussions by directors and corporate auditors with diverse insights and experience, and as a whole, the board of directors functions appropriately.
The evaluation confirmed the direction of agreement on many items, and also indicated that the PDCA cycle is being used to steadily resolve issues. In particular, cooperation with audit organizations and support system for outside directors were highly rated for their effectiveness.
The following points are considered issues that continue to require improvement and enhancement.
- Lack of discussion on medium- and long-term management strategies and management oversight perspectives
- The company will review the authority of business execution to speed up decision-making and train candidates for the next board of directors.
- Improvement of each committee's position and functions, etc.
3. Responding to Challenges
In order to resolve the above issues, the company will establish a system that can promote faster decision-making and clarification of executive responsibility through discussion of medium- and long-term management strategies and management oversight perspectives, which have been ongoing issues in the past, and a review of the authority of business execution. In addition, the board of directors and each committee will consider measures to address the positioning of the Nomination and Compensation Committee and other issues to further enhance the effectiveness of the board of directors.