The status and policy of the Company’s measures concerning the main principles of the Corporate Governance Code are as follows.
[Principle 1.4 Policy for Cross-Shareholdings]
ⅰ：Policy regarding shares as cross-shareholdings
The Company will hold cross shareholdings in cases where it judges that they will contribute to maintaining and increasing the Group’s corporate value from a perspective of importance to the medium- and long-term business strategy, reinforcing relationships with business partners, and maintaining a stable fund procurement environment.
Furthermore, in addition to verifying the appropriateness of each individual shareholding in light of the purpose of said holding, the Company will regularly conduct quantitative verification of matters such as the benefits, risks and capital cost of the holding, and report the results to the Board of Directors.
Stocks whose holding is deemed to have little meaning or effect will be sold as appropriate, giving due regard to share prices, market trends, and other information for consideration.
ⅱ：Policy regarding exercise of voting rights
The Company shall exercise its voting rights related to cross-held shares on all proposals for voting after individually judging factors such as whether the proposal will contribute to increasing the Group’s shareholder value, and whether it is appropriate in light of the purpose of shareholding of the Company.
[Principle 1.7 Related Party Transactions]
All transactions with related parties, including officers and major shareholders, are carried out after the required decision has been made through a process of deliberation from specialist perspectives such as finance, accounting, taxation, and law, following the Company’s internal regulations in accordance with the scale and importance of the transaction. Transactions with a conflict of interest for Directors must be approved by the Board of Directors based on laws and regulations, and the Board of Directors Regulations (excluding, however, cases where the transaction is an ordinary transaction as a general consumer, including purchasing over-the-counter goods, where the interests of the Company or the common interests of its shareholders are not harmed).
When such a transaction has occurred, details are disclosed in the Annual Securities Report in accordance with laws and regulations.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The Company accepts employees only from Group companies, and these employees are subject to the retirement benefit plans of the Company they originally joined. Additionally, the retirement benefit plans of each Group company consist primarily of defined contribution pension plans and lump-sum payments.
Therefore, the corporate pension funds have limitations as asset owners.
With defined contribution pension plans, the Company confirms operations through selection of fund managers and investment products as well as provision of educational opportunities for employees regarding asset management and explanations at the time of joining the Company. Furthermore, the corporate pension funds conduct proper operation as asset owners by entrusting management to institutions that comply with the stewardship code, while appointing highly experienced managers to be in charge of the operation.
[Principle 3.1 Full Disclosure]
ⅰ：Management philosophy, management strategy, and management plan
The Group has formulated and announced in May 2021 its long-term vision “GROUP VISION 2030” with fiscal 2030 as the target year.
In the “GROUP VISION 2030,” three principles that the Group has cherished to date, namely, its founding spirit “Challenge-oriented DNA,” the ideal vision “Create value for the future,” and its pledge to society, that is, enhancing corporate value by increasing the levels of satisfaction of all of its stakeholders, were reorganized as the group philosophy. In addition, we newly positioned “future society” as one of the stakeholders surrounding the Group, in addition to customers and local communities, thereby explicitly expressed our commitment to aiming for sustainable growth together with the society.
To realize our ideal vision, the Group extracted themes to work on for value creation (materialities). We will promote a long-term management policy comprising the Group policy, the business policy and priority strategies which were developed based on materialities. Details can be found on the Company’s website under the “Message from the President.”
Message from the President (English): https://www.tokyu-fudosan-hd.co.jp/english/about/message/
Group Philosophy (Japanese): https://www.tokyu.co.jp/company/about/
For details on GROUP VISION 2030: Please refer to the following for the Long-Term Vision "GROUP VISION 2030" with the target year of 2030 disclosed in May 2021, please visit the following URL.
GROUP VISION 2030 (English): https://www.tokyu-fudosan-hd.co.jp/english/ir/mgtpolicy/plan/
In addition, the Company issues “Integrated Reports” in an effort to facilitate the understanding by stakeholders of the overall picture of the Group’s progress and creation of value in its business activities.
Integrated Report (English):https://www.tokyu-fudosan-hd.co.jp/english/ir/library/annualreport/
ⅱ：Basic views on corporate governance
For information about the Group’s basic views on corporate governance, please refer to “I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information, 1. Basic Views.”
ⅲ：Policies and procedures in determining the remuneration of the senior management and Directors
Remuneration, etc. for Directors and Audit & Supervisory Board Members in the Current Fiscal Year
1) Matters relating to Policy for Determining Remuneration, etc. for Individual Directors
The Company decides its policy for determining remuneration, etc. for individual Directors (hereinafter, “the Policy”) at a meeting of the Board of Directors after the deliberation at the Nomination and Remuneration Committee, a voluntary advisory committee to the Board of Directors. The outline of the Policy is as follows.
We have two basic policies in the determination of remuneration. The first is to maintain a level that is able to acquire and retain talented human resources and incentivize them to perform their duties, and the second is to have in place a system and structure that encourage their sense of contribution to increasing corporate value and shareholder value over the medium and long term.
Levels for remuneration for individual executive Directors are determined based on fixed differences in positions and on the basis of the level of remuneration for the President and Representative Director, with reference to the objective data of remuneration surveys by external research organizations. The level of remuneration for the President and Representative Director (monetary compensation plus stock-based compensation), which serves as the basis, is set around 0.1% of the operating profit for the previous consolidated fiscal year, in principle, which is adjusted by factoring in extraordinary income and losses and levels of remuneration at industry peers, among other factors.
The system of remuneration consists of monthly remuneration, bonuses and stock-based compensation. Monthly remuneration (basic remuneration paid monthly) is a consideration for the day-to-day execution of internal operations, whereas bonuses (performance-based remuneration) comprehensively take into consideration the business results in a single fiscal year and the achievement level of management plans, as well as ESG initiatives. Stock-based compensation (non-monetary compensation, etc.) is designed to have executive Directors share the benefits and risks of stock price fluctuations with shareholders and increase the contribution to the improvement of medium- and long-term earnings performance and corporate value. The composition ratio of monthly remuneration, bonuses and stock-based compensation is set around 6 : 3 : 1. The amount of monthly remuneration is calculated and paid based on this proportion. Bonuses are paid once a year, of which amounts fluctuate between the range of 60% to 140% according to the five-grade evaluation of individual performance. Stock-based compensation is paid at the time of retirement based on the number of points determined and awarded according to positions under the trust-type stock compensation system.
Remuneration for non-executive Directors consists solely of basic remuneration (fixed remuneration) paid monthly, in light of their role of supervising the management of the Company from an independent, objective standpoint. The level of remuneration is set at a level required for inviting human resources sought by the Company, with reference to the objective data of remuneration surveys conducted by external research organizations.
2) Matters relating to Resolution at General Meeting of Shareholders pertaining to Remuneration, etc. for Directors and Audit & Supervisory Board Members
The annual amount of monetary remuneration for Directors was resolved not to exceed ¥600 million (however, not including the employee salaries paid to Directors concurrently serving as employees) at the 1st Ordinary General Meeting of Shareholders held on June 26, 2014. The number of Directors at the closing of said Ordinary General Meeting of Shareholders was nine.
The annual amount of monetary remuneration for Audit & Supervisory Board Members was resolved not to exceed ¥120 million at the 1st Ordinary General Meeting of Shareholders held on June 26, 2014. The number of Audit & Supervisory Board Members at the closing of said Ordinary General Meeting of Shareholders was four.
For the stock-based compensation for Directors, a stock granting trust has been set up for Directors excluding Outside Directors, and Managing Officers with whom the Company has concluded mandate contracts, with a maximum of 170,000 shares granted per year, pursuant to a resolution at the 4th Ordinary General Meeting of Shareholders held on June 28, 2017. The number of Directors who were eligible for the system at the closing of said Ordinary General Meeting of Shareholders was seven.
In addition, the partial amendment and continuation of the stock-based compensation system was resolved at the 8th Ordinary General Meeting of Shareholders held on June 25, 2021. Upon continuation of the stock-based compensation system, a maximum of 130,000 points (1 point equates to 1 share) shall be granted each year to Directors (excluding Outside Directors and non-executive Directors) and Managing Officers with whom the Company has concluded mandate contracts (Managing Officers designated by the Company’s Board of Directors), and the Company’s shares shall, in principle, be granted at the time of retirement. The number of Directors who were eligible for the system at the closing of said Ordinary General Meeting of Shareholders was eight.
(Total Amount of Remuneration, etc. by Category of Officers, Total Amount of Remuneration, etc. by Type, and Number of Officers Receiving Payment)
(Note 1) Stock-based compensation falls under the category of non-monetary compensation, etc.
(Note 2) The number of persons and amounts of remuneration shown above includes one Director who resigned at the closing of 7th Ordinary General Meeting of Shareholders held on June 25, 2020.
(Note 3) Stock-based compensation for fiscal 2020 shall be based on the system resolved at the 4th Ordinary General Meeting of Shareholders, which was held on June 28, 2017.
ⅳ：Policies and procedures in the appointment or dismissal of the senior management and the nomination of candidates for Directors and Audit & Supervisory Board Members
In selecting candidates for Directors, the Board of Directors presupposes that the candidates have appropriate character and knowledge for a Director, as well as no health issues that would impede them from executing their duties. The Company also gives consideration to the overall balance of the Board of Directors in order for it to be a structure that ensures diversity, including in terms of gender and internationality.
As candidates for Directors from within the Company, personnel who have insight and judgment ability with a view to achieving the management indicators and other objectives in the medium- and long-term management plan are nominated.
As candidates for Outside Directors, personnel who have rich experience in their respective fields, including management, legal affairs, financial affairs and accounting, while having sensible and objective viewpoints, and are capable of proposing and discussing issues concerning growth strategies and enhancement of corporate governance from an independent point of view are nominated. In selecting candidates for Outside Directors, it is presupposed that candidates will not concurrently serve as Director, Audit & Supervisory Board Member, or Officer at more than 5 listed companies other than the Company.
In addition, appointment of senior management team members and nomination of candidates for Director are decided every year by meetings of the Board of Directors after consulting with the Nomination and Remuneration Committee, which is a voluntary advisory committee chaired by an Independent Outside Director.
The necessary response with regard to the dismissal of the senior management shall be deliberated and decided by the Board of Directors after consulting with the Nomination and Remuneration Committee in the event of any fraudulent or unjust behavior by the senior management, such as violating the details stipulated in the officers’ regulations, or in the event that it is deemed that the person’s qualifications as senior management are markedly lacking.
As for candidates for Audit & Supervisory Board Members, the Audit & Supervisory Board receives proposals of personnel who have appropriate character for an Audit & Supervisory Board Member, as well as having no health issues that would impede them and the insight required for auditing duties, and after the proposal is consented by the Audit & Supervisory Board, the candidates are nominated by the Board of Directors.
ⅴ：Explanations with respect to the individual appointments, dismissals, and nominations
For the reasons for the nomination of Directors and Audit & Supervisory Board Members, please refer to the “Notice of Convocation of the 8th Ordinary General Meeting of Shareholders.”
Furthermore, it is the Company’s policy to provide necessary explanations with respect to the dismissal of Directors and Audit & Supervisory Board Members.
[Reference] Nomination and Remuneration Committee
The Nomination and Remuneration Committee has been established as an advisory committee to the Board of Directors with the aim to enhance the objectivity and transparency of procedures concerning the nomination of Directors and decision on remuneration thereof. The chairperson is Mr. Makoto Kaiami, an Independent Outside Director. “Matters related to the nomination of candidates for Director and Managing Officers,” “matters related to the remuneration, etc. of Directors and Managing Officers,” etc. are decided by the Board of Directors after consultation with the Nomination and Remuneration Committee. The Nomination and Remuneration Committee is comprised of the following five members, three of whom are Outside Directors. The Company’s internal regulations stipulate that the Chairperson shall be an Independent Outside Director and that the majority of members shall be Independent Outside Directors.
- Independent Outside Director: Makoto Kaiami
- Independent Outside Director: Satoshi Miura
- Independent Outside Director: Tsuguhiko Hoshino
- Chairman and Representative Director: Kiyoshi Kanazashi
- President and Representative Director: Hironori Nishikawa
The number of meetings held in fiscal 2020 was 2, and attendance by members was 100%.
[Supplementary Principle 4.1.1]
The Board of Directors develops internal rules such as the Board of Directors Regulations and the Duty Authority Regulations in addition to the matters stipulated in laws and regulations and the Articles of Incorporation. Based on these, the Board of Directors conducts decision-making on important matters related to the Group’s management, such as the management policies, business plans, and large-scale investment plans.
Authority for execution of business and decisions on such execution for matters other than the important matters listed above is delegated to Group Executive Committee and other subordinate meeting bodies, and officers and so forth in charge of the business operations, while the Board of Directors monitors the status of performance of duties of the meeting bodies and officers and so forth.
[Principle 4.8 Effective Use of Independent Outside Directors]
For the Company’s corporate governance, Independent Outside Directors are to have rich experience in management and a high level of discernment and character and related matters, as well as understanding the Group’s wide-ranging business domain and the value they create. They are to provide advice from a broad, high-level perspective, while appropriately supervising executives from a position that is independent from them. The Company recognizes this as an important duty.
To enable appropriate and flexible decision-making on business activities and supervision of execution, the Company considers it advantageous for the Board of Directors to be composed of Directors from inside the Company, who have specialist capabilities and insight about business fields, management plans, ESG and sustainability, personnel, finance and accounting, and so forth, and Independent Outside Directors, who are able to proactively offer opinions on growth strategies and enhancement of governance and raise concern, from the perspectives of diverse stakeholders and society. The Company considers that a ratio of Independent Outside Directors of one third or more is appropriate, and under the current system the ratio is 40%.
[Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]
The Company deems Outside Directors to be independent when, in addition to meeting the independence standards for independent officers stipulated by the Tokyo Stock Exchange, none of the following have applied for any of the previous three fiscal years.
1) An executive of a business partner to which the Company’s net sales account for 2% or more of the Company’s consolidated net sales
2) An executive of a business partner whose net sales to the Company account for 2% or more of the business partner’s net sales
3) An executive of a lender from which the Company borrows funds that account for 2% or more of the Company’s consolidated total assets
4) An executive of a major shareholder or investor of the Company with an investment ratio of 10% or more
5) A consultant, accounting professional, or legal professional who receives remuneration of more than ¥10 million a year from the Company besides officer remuneration
6) A spouse or relative within two degrees of kinship of the Director, etc. of the Company or a consolidated subsidiary
[Supplementary Principle 4.11.1]
When deciding on candidates for Directors, the Company considers the balance of personnel able to exercise strengths in management in each of the fields within the Group’s wide-ranging business domain and personnel suited for corporate management and so forth, and seeks to secure a balance and diversity of the overall knowledge, experience, and capabilities of the Board of Directors.
For the skill matrix of Directors, please refer to the “Notice of Convocation of the 8th Ordinary General Meeting of Shareholders.”
The Company has appointed 15 Directors from the perspectives of the Group’s wide-ranging business domain and increasing the ratio of Independent Outside Directors.
Selection of senior management team members and selection of candidates for Director are decided every year by meetings of the Board of Directors after consulting with the Nomination and Remuneration Committee chaired by an Independent Outside Director.
[Supplementary Principle 4.11.2]
The notice of convocation of the Ordinary General Meeting of Shareholders for each year lists the status of any significant concurrent positions outside the Company of officers. The notices of convocation of the Ordinary General Meeting of Shareholders can be viewed on the Company’s website.
Relevant information on meeting of shareholders (English):
[Supplementary Principle 4.11.3]
In order to ensure the soundness and transparency of management, the Board of Directors of the Company is working on continuous improvements by evaluating its effectiveness every year based on the opinions, etc. of individual Directors and Audit & Supervisory Board Members, and sharing matters required to further improve effectiveness at meetings of the Board of Directors. In fiscal 2020, we conducted a questionnaire survey of Directors and Audit & Supervisory Board Members for which we utilized an external consultant to design an objective questionnaire and tabulate the results, and obtained third-party evaluations conducted by attorneys at law with no advisory contract with the Company. As a result, we obtained the evaluation that “effectiveness is secured and vigorous efforts are being made toward even better governance.” The Company will continue working to further enhance the effectiveness of the Board of Directors.
[Supplementary Principle 4.14.2]
To promote understanding of the roles and responsibilities required of the Directors and the Audit & Supervisory Board Members, the Company provides opportunities such as external training and seminars for corporate managers so they may acquire necessary knowledge on the Company’s business, finances, organization, compliance, and other matters as well as necessary knowledge related to education that they should receive as Directors and Audit & Supervisory Board Members. Moreover, Outside officers are given clear explanations of the management strategy and business activities as appropriate at the time of and after their appointment in order to promote their understanding of the Group. In addition, once a year, we hold in-house training for officers to improve their insight that will contribute to future management, including laws and regulations and ESG-related matters. In fiscal 2020, we conducted training themed on governance and compliance at enterprises.
[Principle 5.1 Policy for Dialogue with Shareholders]
The Company proactively conducts IR activities to promote constructive dialogue with its shareholders. Please refer to the Company’s IR Policy for details including its initiatives and policies.
IR policy (English): https://www.tokyu-fudosan-hd.co.jp/english/ir/policy/
Sustainability initiatives (English): https://tokyu-fudosan-hd-csr.disclosure.site/en
For further reference, the Company’s website also has information on the Group’s disclosure items and so forth based on the respective principles of the Japan’s Corporate Governance Code.
Corporate Governance Code (English): https://www.tokyu-fudosan-hd.co.jp/english/about/governance/
The Company is working on constructive dialogue with shareholders and investors in order to contribute to sustainable growth and the increase of corporate value over the medium and long term. In addition to individual interviews, the Company is proactively working on dialogue by the President, officers in charge and divisions in charge, including through regular investor briefings for analysts and institutional investors as well as regular investor briefings for individual investors. The Company periodically reports the opinions of shareholders and investors obtained through this dialogue to the Board of Directors, and uses them to improve management.