Corporate Governance

• Corporate Governance Overview
• Board of Directors
• Internal Control

Corporate Governance Overview

Policies and Fundamental Approach to Corporate Governance

The ID&E Group’s fundamental approach to enhancing the Group's corporate value is to perform comprehensive corporate governance by strengthening oversight of management organizations, ensuring management transparency, and maintaining a structure facilitating the swift execution of business.
Our Board of Directors has established the Basic Corporate Governance Policy which addresses the Basic Idea for Corporate Governance (Chapter 1), Securing Shareholders’ Rights and Equality (Chapter 2), Appropriate Cooperation with Non-Shareholder Stakeholders (Chapter 3), Appropriate Information Disclosure and Ensuring Transparency (Chapter 4), Responsibilities of the Board of Directors, etc. (Chapter 5), and Dialogue with Shareholders (Chapter 6).

• Basic Corporate Governance Policy (306KB)
• Corporate Governance Report (372KB)

Main Initiatives for Strengthening Corporate Governance

Board of Directors

Diversity of directors

Functions of the Board of Directors

The Board of Directors makes decisions on important matters and supervises the performance of the directors in accordance with the Regulations of the Board of Directors. The Board of Directors comprises 11 directors, three of whom are external directors. In addition, four auditors, including two external auditors, attend Board meetings.
The Board of Directors recognises that its basic responsibility is to formulate medium- and long-term strategies, supervise management and improve profitability, capital efficiency, etc., in order to achieve sustainable growth and increase corporate value over the medium and long term, based on its fiduciary responsibility and accountability to shareholders.
In order to further strengthen the corporate governance system, increase the soundness and transparency of the Board of Directors from a standpoint independent of management, and receive useful suggestions from an international perspective and a female perspective, the 76th General Meeting of Shareholders held on 29 September 2020 appointed one more female external director. The Board of Directors is composed of women who have a wide range of knowledge and experience. The Board of Directors is committed to fulfilling its responsibilities through rapid decision-making and full discussion, while maintaining an overall balance of knowledge and experience.

Basic policy on the composition of the Board of Directors

In order to fulfil its responsibilities effectively, the Board of Directors is made up of members who are judged to be the best, taking into consideration an appropriate overall balance in light of the Company's business environment, based on the principle that each person has the personality, insight, experience, knowledge and ability to make comprehensive decisions from a broad perspective.
Although there are currently no foreign directors, we ensure diversity in the composition of the Board of Directors by appointing directors with a variety of backgrounds, including global experience.

Officer Skills

Policies and Procedures for the Election and Dismissal of Directors and Executive Officers

Each term, the Nomination Committee discusses and decides on the election of directors to be put to the General Meeting of Shareholders (General Meeting of Shareholders proposal), including whether or not they should be reappointed. The Nomination Committee also discusses and decides on the election of executive directors (proposal for the General Meeting of Shareholders), including whether or not they should be reappointed. The Board of Directors then discusses and makes the final decision.

Internal Control

Description of Compensation System for Directors

(1) Matters relating to the policy for determining the content of remuneration, etc. for individual directors

The Company consulted the Nomination and Remuneration Advisory Committee, which is an advisory body to the Board of Directors and whose main members are independent external directors, on the system, content and level of remuneration, etc. of directors.
(Furthermore, the Company consulted the Advisory Committee on Nomination and Remuneration on the above matters and, based on the results of the consultation, the Board of Directors resolved at its meeting on 17 January 2022 to revise the policy for determining the content of remuneration etc. for each individual director and the following is the revised content).

(i) Basic policy

The Company's basic policy is that the remuneration of the Company's directors should be linked to shareholder interests in order to fully function as an incentive to sustainably increase corporate value, and that the remuneration of individual directors should be set at an appropriate level based on their respective responsibilities when determining their remuneration.

(ii) Remuneration system.

The remuneration of directors other than outside directors comprises basic remuneration (monthly fixed remuneration), performance-linked remuneration (bonus) and non-monetary remuneration (restricted transferable share remuneration).
The standard composition of remuneration for directors is generally 64% basic remuneration (monthly fixed remuneration), 22% performance-linked remuneration (bonus) and 14% non-monetary remuneration (restricted transferable share remuneration).
Remuneration for external directors consists solely of basic remuneration (monthly fixed remuneration), part of which is used to acquire shares in the Company under the executive shareholding plan.
These remuneration systems are reviewed as necessary by the Nomination and Remuneration Advisory Committee.
Remuneration for auditors is determined by the General Meeting of Shareholders, and individual remuneration is determined by consultation with the auditors. The remuneration of the auditors is a basic remuneration (monthly fixed remuneration), part of which may be used to acquire shares in the Company under the Directors' Shareholding Plan.
(Prior to the revision of the 'Policy for determining the content of remuneration for individual directors', the standard composition of remuneration for directors was generally 67% 'basic remuneration (monthly fixed remuneration)', 19% 'performance-linked remuneration (bonus)' and 14% 'non-monetary remuneration (restricted stock compensation)').

(2) Matters relating to performance-linked remuneration

The Company's performance-linked remuneration is positioned as an incentive for short-term performance improvement, and sales revenue and profit attributable to owners of the parent company for each financial year are selected as appropriate performance evaluation indicators, with the cash remuneration reflecting these.
Specifically, a standard amount is determined according to the percentage of achievement of the planned figures for revenue from sales and profit attributable to owners of the parent company as bonus payment criteria, and is paid as a bonus within the annual limit on directors' remuneration approved by the General Meeting of Shareholders after the President and Representative Director evaluates the degree of achievement of each director and his or her contribution to the company, The bonus is paid every year at a certain time after the end of the relevant financial year.
For the year ended 30 June 2022, the bonus payment basis is set at revenue of JPY 131,000 million and profit for the year attributable to owners of the parent company of JPY 4,700 million, which amounted to JPY 130,674 million and JPY 6,579 million respectively.
(Note that prior to the revision of the Policy for Determining the Content of Individual Remuneration of Directors, only the profit for the year attributable to owners of the parent company for each financial year was selected as the performance indicator for performance-linked remuneration.)

(3) Details of non-monetary remuneration

The Company's non-pecuniary remuneration is restricted share remuneration with the aim of sharing the benefits and risks of share price fluctuations with shareholders and motivating them to contribute more than ever before to share price increases and to enhance corporate value.
Within the scope of the total amount of monetary compensation claims to be paid as restricted share remuneration, which is approved separately from the annual limit on directors' remuneration at the General Meeting of Shareholders, restricted transferable shares are allocated every year at a certain time by having the monetary compensation claims paid to each director in accordance with pre-determined criteria for each position, and by having them contributed in kind. The restricted transfer period is three years from the date of allotment.
In the year ended 29 June 2022, a total of 11,746 ordinary shares were allocated to eight directors (excluding outside directors) in accordance with a resolution of the Board of Directors' meeting held on 29 September 2021.

(4) Matters relating to delegation in determining the details of remuneration for each individual director

In the Company, based on the delegation by resolution of the Board of Directors, the President and Representative Director (Mr Hiroaki Shinya, President and Representative Director for the year ending 30 June 2022) determines the amount of each Director's basic remuneration and the specific details of the allocation of bonuses as performance-linked remuneration based on each Director's performance achievement, contribution to the Company, etc. The details are determined.
The reason for delegating these powers to the President and Representative Director is that he is able to determine the amount of remuneration for each Director comprehensively, based on an accurate understanding of the business environment and the Company's management situation, as well as the roles and duties performed by each Director.
The Board of Directors shall consult the Nomination and Remuneration Advisory Committee and obtain its report to ensure that the above powers are properly exercised by the President and Representative Director, and that the President and Representative Director who has been delegated the above must make the above decisions in accordance with the content of such report and in line with the standardised composition ratio of remuneration. The following is a summary of the report.
In determining the content of individual director remuneration, etc., the Nomination and Remuneration Advisory Committee considers the results of a survey of director remuneration levels conducted by a specialist external organisation on a group of major Japanese companies similar in size to the Company, and the President and Representative Director, to whom the delegation is delegated, accurately understands the role of each director and the state of performance of his or her duties. The Board of Directors basically respects the content of this report and considers it to be in line with the decision-making policy.
As for stock compensation as non-monetary compensation, the Board of Directors resolves the number of shares to be allocated to each individual director based on the report of the Advisory Committee on Nomination and Remuneration.

Description of Officer Compensation

Standard Compensation Structure for Director Compensation

Compensation Amounts for Directors and Audit & Supervisory Board Members in FYE June 2022

• *1The amount of bonuses represents the provision for directors' bonuses for the current financial year.
• *2The above-mentioned restricted share remuneration is non-monetary remuneration. Other remuneration is monetary remuneration.