Corporate Organizational Structure

The Company has adopted a Company with Audit & Supervisory Committee structure to achieve the following: enhancement of supervisory function through possession of voting rights at the meeting of the Board by Audit & Supervisory Committee members, improvement of soundness and transparency of management by increasing ratio of outside directors, and acceleration of management decision making by having options to delegate the authorities for the business execution. The Company takes measures such as appointment of independent outside directors and introduction of an operating officer system as well as cooperation among the Audit & Supervisory Committee, Internal Auditing Department and Accounting Auditor. The Company believes the management monitoring functions work sufficiently.
 

The corporate organizational structure is as follows:

The Audit & Supervisory Committee consists of three directors, including two outside directors and one full-time member. Each Audit & Supervisory Committee member conducts audit activities in accordance with the audit policy, audit plan, and division of duties which were formulated by the Audit & Supervisory Committee. Each Audit & Supervisory Committee member attends the important meetings such as the Management Council. Each Audit & Supervisory Committee member audits the performance of the directors' duties by investigating the conduct of business operations and status of assets at the Company’s main offices through office visits or web meetings as well as by investigating reports on audit results from the Internal Auditing Department. The Audit & Supervisory Committee cooperates with the Accounting Auditor and the Internal Auditing Department. The full-time member of the Audit & Supervisory Committee has many years of experience in finance and accounting departments and possesses a considerable degree of knowledge about finance and accounting.

The Company has appointed Crowe Toyo & Co. as an Accounting Auditor. The continuous audit period is forty eight years. Engagement partners of the firm are Ms. Yuko Suzuki and Mr. Takashi Miura. Ten certified public accountants and six other persons in the firm assist the auditing of the Company.

The Audit & Supervisory Committee cooperates closely with the Accounting Auditor by receiving explanation of auditing plans and quarterly audit results, exchanging opinions, and attending audits for main offices and subsidiaries in Japan and overseas conducted by the Accounting Auditor. The Audit & Supervisory Committee also shared information and exchanged opinions with the Accounting Auditors in the process of selecting the Company’s key audit matters (KAM).

The Audit & Supervisory Committee meets regularly with the Internal Auditing Department (eleven full-time members) to exchange information and enhance cooperation. The Internal Auditing Department conducts audits of business operations and evaluates the effectiveness of internal control over financial reporting. In conducting audits of business operations, the Internal Auditing Department regularly verifies and evaluates the status of compliance, as well as appropriateness and effectiveness of business operations at the Company and its subsidiaries. The Internal Auditing Department also provides advice, suggestions, and recommendations for improvement to the audited departments as necessary. In the event of fraud or errors, the Internal Auditing Department identifies the causes and the current situations, as well as verifying and evaluatings management systems to support the development of a structure to prevent recurrence. The Internal Auditing Department reports the internal audit results to the Representative Director/President and the Audit & Supervisory Committee each time an internal audit is conducted. Internal audit results and the progress of improvements are reported to the Board of Directors every quarter. In addition, the full-time Audit & Supervisory Committee member participates in meetings of the Internal Audit Department to strengthen cooperation in day-to-day operations.

Meetings of the Management Council, at which directors, management operating officers, and operating officers attend, are held once or twice a month in order to undertake the management activities based on the policy approved by the Board as well as aiming at prompt decision making and flexible business operation. The Company has introduced an operating officer system that provides a clear segregation between managerial decision making and supervisory functions on the one hand and the execution of operations on the other, and there are sixteen management operating officers and operating officers (including two female operating officers) who are not serving concurrently as directors.

The Company has established a Nomination & Remuneration Committee voluntarily which has equivalent function to a Nomination Committee and a Remuneration Committee. The purpose of the Committee is to ensure a higher level of fairness, objectivity, and transparency in the decision-making process for the nomination and remuneration of the management in order to contribute to the sustainable development, and the improvement of profitability and productivity of the Company in the mid- to long-term. Currently, committee members consist of three members: Mr. Shigeru Kawatsuhara, Mr. Kazuo Shimizu, and Ms. Ikumi Sato. Mr. Shigeru Kawatsuhara is the committee chair. The committee chair of the Nomination & Remuneration Committee is to be elected from among independent outside directors, and the majority of committee members are to be independent outside directors. The Committee Secretariat is the Human Resources Department.
The Nomination & Remuneration Committee deliberates the proposal of the candidates, the remuneration of directors and the succession plan in response to requests from the Board, and submits the proposals to the Board. The roles and responsibilities of the Committee are as follows:

In response to requests from the Board of Directors, the Nomination & Remuneration Committee deliberates on and submits to the Board of Directors proposals concerning the appointment and dismissal of directors, the appointment and dismissal of the Chief Executive Officer, and the selection and dismissal of the representative directors. It also deliberates on the policy for the appointment and dismissal of operating officers and confirms the procedures for the appointment and dismissal of each candidate for operating officer.

In response to requests from the Board of Directors, the Nomination & Remuneration Committee deliberates on and proposes to the Board of Directors policies and detailed recommendations for determining the amounts and calculation methods of remuneration for directors. It also deliberates on the policies for determining the amount and calculation methods of remuneration for operating officers and confirms the procedures to be followed in determining remuneration for operating officers.

The Nomination & Remuneration Committee deliberates on the policies and details of fostering successors to the Chief Executive Officer and other executives, and submits the proposals to the Board.
 

In FY2023, the Nomination & Remuneration Committee was held thirteen times and the attendance rate of all members (Mr. Shigeru Kawatsuhara, Ms. Kanako Muraoka, and Mr. Kazuo Shimizu) was 100%.