The DOWA Group and its constituent companies meet a broad range of social needs, based on the Group’s Corporate Mission: Contribute to creating an affluent, recycling oriented society through our business activities worldwide. As the Group contributes to society, strengthening corporate governance is one of its priorities, so it is making Groupwide efforts to establish effective internal control systems that are appropriately composed and managed, based on the DOWA Group’s Corporate Mission, Vision, Values, and Code of Conduct.
The Company employs a holding company structure that enables it to have a deeper grasp of customer needs at the ground level of the market and enables swift decisions to be made with authority. This structure also allows us to separate our core businesses into subsidiaries, which in turn facilitates more flexible and bolder management in accordance with the characteristics of each core business and to allocate management resources to Group companies in an optimal manner, thereby working to maximize corporate value by realizing the sustainable growth of the Group.
The Company has also established an Audit and Supervisory Board and appoints outside directors to ensure sound management.
DOWA is a Company with an Audit and Supervisory Board. Moreover, the Company uses a system of operating officers and a holding company structure that separates core businesses as subsidiaries in order to expedite decision-making and improve management efficiency. In addition, the maximum number of directors has been set at 13 to further improve the supervisory function of the Board of Directors. Management responsibilities are clearly preserved by keeping the term of office of directors at one year.
As of June 25, 2021, there were nine directors (including three outside directors). The Board of Directors meets once every month, in principle.
There are also nine executive officers (none of whom are also directors), and a Committee of Operating Officers meets once every month, in principle, to enable directors to share information regarding the status of the execution of business. We also have an Audit and Supervisory Board comprising four Audit and Supervisory Board members (including three outside Audit and Supervisory Board members), each of whom audits the directors’ execution of business and reports their findings at the meetings of the Audit and Supervisory Board which are held once every month, in principle, ensuring the effectiveness and efficiency of audits.
| Board of Directors and Audit & Supervisory Board | Other | |
|---|---|---|
| Fiscal 2000 | Introduced executive officer system | |
| Fiscal 2003 | Reduced number of Board members from 20 to 15, shortened directors’ terms of office from two years to one | |
| Fiscal 2006 | Reduced number of Board members from 15 to 13 | Moved to a holding company structure |
| Fiscal 2007 | Appointed one outside director | |
| Fiscal 2009 | Abolished hostile takeover defense measure | |
| Fiscal 2015 | Appointed one female outside director, updated governance structure to include two outside directors | Revised internal control systems |
| Fiscal 2017 | Introduced evaluation of Board of Directors’ effectiveness | |
| Fiscal 2018 | Verified decisions to continue or discontinue cross-shareholdings at Board meeting | |
| Fiscal 2019 | Established Nominating Committee | |
| Fiscal 2020 | Conducted an evaluation of Board effectiveness utilizing an external organization | Established Internal Audit department |
| Fiscal 2021 | Appointed one outside director, updated governance structure to include three outside directors |
The Board of Directors consists of nine directors (eight men and one woman), including three outside directors, and its meetings are attended by four Audit and Supervisory Board members, three of whom are outside Audit & Supervisory Board members.
We believe that meetings of the Board of Directors feature a lively exchange of opinions during deliberations on each proposal, and we believe that, regarding the supervision of the execution of business, that the decision-making and supervision that are conducted are effective. In addition, outside directors and outside Audit and Supervisory Board members also contribute by meeting regularly to exchange opinions.
The Company evaluates itself and analyzes the effectiveness of the Board of Directors with the aim of improving the functionality of the Board and, by extension, increasing corporate value.
The Board of Directors will continue to work toward enhancing its functionality by thoroughly considering and executing responses to the issues identified by this evaluation of its effectiveness.
There are four members of the Audit and Supervisory Board, and they are also considered corporate auditors. One of the members has accounting and financial knowledge from working in the banking industry. In accordance with the audit policies and audit plans for the term stipulated by the Audit and Supervisory Board, its members attend Board of Directors meetings and other important meetings and audit the directors’ execution of their duties, by reviewing status reports on the tasks of directors and other activities. They also monitor the independence of the independent accounting auditors and work with them to explain the audit plans of the independent accounting auditor and report the findings of audits.
| Name | Position | Date of Appointment | Important Positions Held Concurrently at Other Organizations | |
|---|---|---|---|---|
| KINOSHITA Hiroshi | Corporate Auditor (Full-Time) |
– | June 2020 | – |
| FUKUZAWA Hajime | Corporate Auditor (Full-Time) |
Independent Officer | June 2021 | – |
| TAKEDA Jin | Outside Corporate Auditor (Part-Time) |
Independent Officer | June 2011 | Attorney, Audit & Supervisory Board member of Japan Aviation Electronics Industry, Ltd. |
| EGAWA Shigeru | Outside Corporate Auditor (Part-Time) |
Independent Officer | June2019 | Audit & Supervisory Board member of Fujita Kanko Inc. |
By appointing executive officers, the Company separates executive functions from the duties of the Board of Directors. Regarding matters other than the important business activities decided by the Board of Directors, following the consideration of transaction size and other factors, authority is delegated to executive officers concurrently serving as presidents of the operating companies.
The directors and executive officers will hold meetings of the Management and Executive Committee to enable executive officers to share information regarding the status of the execution of business. Also, items important for the management of the Group are discussed by the Committee of the Operating Officers and then presented to the Board of Directors.
Remuneration for directors comprises fixed basic remuneration and performance-based remuneration. The composition of remuneration has been designed with input from the Remuneration Committee and is based on objective factors such as the Group’s consolidated performance, shareholder dividends, and remuneration levels outside the Company. As the outside directors perform supervisory roles from an independent and objective standpoint, they are not remunerated based on individual performance. The remuneration of Audit & Supervisory Board members is limited to basic remuneration as their duties are independent of the execution of business and it is determined through the deliberation of the Audit & Supervisory Board members within the limits approved by the General Meeting of Shareholders.
The Remuneration Committee meets once a year and the majority of its members are from outside the Company, who serve as outside directors or outside experts. Basic remuneration for directors is fixed remuneration paid monthly according to each director’s position and results, and it is determined after a comprehensive examination that considers Company performance, remuneration levels at other companies, and employee salary levels. Performance-based remuneration is an annual cash bonus paid at a fixed time that reflects individual performance. The amount is determined based on net income attributable to owners of parent and dividends distributed to shareholders. These criteria have been highlighted as indicators for calculating performance-based remuneration in order to link Company profits to remuneration, thereby increasing directors’ motivation to contribute to business growth, and to promote the growth of the value shared with shareholders. The Remuneration Committee examines the ratio of fixed basic remuneration to performance-based remuneration for each director using companies of a similar scale as well as companies in related industries and with analogous business formats as benchmarks. The president and representative director is given the authority to determine the remuneration of individual directors by the Board of Directors and does so while adhering to findings presented by the Remuneration Committee and staying within the ratio proposed therein. When determining the specific remuneration for each director, the Remuneration Committee conducts a multifaceted examination, which includes a check for consistency with the policy for determining remuneration set by the Board. The president and representative director makes their decision following the committee’s calculation process. This authority is delegated to the president and representative director due to their oversight of business operations in their role as representative director, which facilitates appropriate decision-making. The Board of Directors has determined that the remuneration for each individual is in line with the policy for determining remuneration due to the aforementioned involvement of the Remuneration Committee.
An upper limit for total director remuneration of ¥570 million was set at the General Meeting of Shareholders held on June 24, 2016. In addition, an upper limit for the remuneration of Audit and Supervisory Board members of ¥100 million was set at the General Meeting of Shareholders held on June 28, 2006.
The Company’s cross-shareholdings serve as a means to maintain and strengthen ties with business partners and form solid trust-based relationships with the companies whose stock we hold, which in turn leads to increased corporate value.
Regarding the continued holding of each of the major shareholdings the Company holds, the Company comprehensively evaluates the worthwhileness of continued possession based on whether each shareholding fulfills its intended purpose and whether the benefits and risks of holding the stock are commensurate with the capital cost. The substance of these judgments is routinely examined by the Board of Directors. If it is determined that continued possession of a cross-shareholding will not improve corporate value, the Company will gradually sell off the shareholding, taking market impact into consideration.
When voting rights are exercised to approve or reject a proposal related to a cross-shareholding, a determination is made after considering all the pros and cons, such as whether the decision to conduct a cross shareholding will improve the corporate value of the issuing company and whether it will improve the corporate value of the Company.
In accordance with the DOWA Group’s Corporate Mission, Vision, Values, and Code of Conduct, the Company and Group companies have made a collective effort to design and operate effective and efficient internal controls to contribute to society, maximize corporate value, and carry out the responsibilities of management entrusted to us by our shareholders. At the same time, laws are being revised and the public’s general stance toward compliance is hardening, so we expect even stronger demands to be placed on the Group going forward. In response, the Company has adopted a holding company structure. While this raises the level of specialization of each business group and the speed at which policies can be executed, it also carries the risk that internal control systems will become localized and overall governance will suffer. As a result, at the DOWA Group, basic policies and internal control systems are shared among Group companies. Additionally, individual companies can utilize their own unique characteristics for specific activities in order to develop an effective and efficient internal control system suited to our holding company structure. Moreover, internal control systems must continuously be revised in line with changes in business activities and the social environment, so we are working to further strengthen these systems.