Corporate Governance
Basic Philosophy
We at the KONOIKE Group believe that meeting our social responsibility is an important part of our mission. We strive to build corporate value as we build relationships of trust with society in the practice of our corporate philosophy and to pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust.
Driven by this philosophy, we use our business activities to build positive relationships with our stakeholders as we engage in responsive, efficient, sound, fair, and transparent business. To this end, we continue to strengthen our supervisory functions and provide timely information disclosure, introducing new measures as necessary.
Composition of the Board of Directors
To distinguish clearly between management oversight anden/sustainability/environment/policy.html business execution, three of the five members of the board of directors are external directors, while two of the four members of the Audit & Supervisory Board are external members. Further, we have filed notice with the Tokyo Stock Exchange for four of these five external officers to be designated as independent directors.In June 2019, we established the Human Resources and Compensation Committee, an elective advisory committee to the Board of directors, and will work toward further reinforcing initiatives in corporate governance.
As of June 23 , 2022
- * The list above does not represent all the knowledge, experience, etc., possessed by directors and members of the Audit & Supervisory Board.
Human Resources and Compensation Committee
Activities in FY3/2022
The committee met a total of 10 times in response to consultations from the board of directors. The committee discussed appointments of directors and executive officers, reporting the discussions to the board of directors. On multiple occasions, the committee also discussed the state of the compensation system for directors and executive officers.
Officer Compensation System
1.Basic Policy
We have established the following basic policy to ensure our officer compensation system supports our Corporate Philosophy (Our Mission), which reads, “We pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust.”
- 1. The director compensation system must contribute to realizing the Corporate Philosophy (Our Mission)
- 2. The director compensation system must aid in recruiting and retaining a talented management team intent on achieving our 2030 Vision
- 3. The director compensation system must encourage a constant spirit of ambition to go beyond expectations
- 4. The director compensation system must be designed to link compensation closely to corporate earnings
- 5. The director compensation system must continue to pay compensation linked to share prices over the medium- to long-term
- 6. The director compensation system must be designed to guarantee fairness and transparency, ensuring that officers are accountable to employees, shareholders, and other stakeholders
2.Determination of Compensation
The board of directors decides the amount of compensation given to each director based on reports from the Human Resources and Compensation Committee. The amount of compensation given to each full-time Audit & Supervisory Board member is decided by discussion among members of the Audit & Supervisory Board. Specific amounts are based on compensation limits approved by the general meeting of shareholders and take into account company earnings, compensation levels at other companies, employee salaries, etc.
| Position | Total Compensation (Millions of Yen) | Total Compensation Amount by Type (Millions of Yen) | Number of Eligible Officers | ||
|---|---|---|---|---|---|
| Basic Compensation | Performance-Linked Compensation (Bonuses) | Non-Monetary Compensation (Restricted Stock) | |||
| Directors | 272 | 152 | 98 | 21 | 8 |
| (External Directors, Included) | (37) | (37) | (ー) | (ー) | (3) |
| Audit & Supervisory Board Members | 66 | 66 | ー | ー | 6 |
| (External Audit & Supervisory Board Members, Included) | (22) | (22) | (ー) | (ー) | (3) |
| Total | 339 | 219 | 98 | 21 | 14 |
| (External Officers, Included) | (59) | (59) | (ー) | (ー) | (6) |
- *1 The above table is inclusive of the amount paid to one director and two Audit & Supervisory Board members (including one external member) who retired at the conclusion of the 81st Annual General Meeting of Shareholders held on June 24, 2021.
- *2 The amount of compensation for directors does not include employee salaries of directors who concurrently serve as employees.
Evaluating the Effectiveness of the Board of Directors
Since FY3/2016, our board of directors has conducted an annual evaluation of the composition and operation of the board, board deliberation content, and support systems. We have worked to strengthen the functions of the board to ensure a sustained increase in corporate value for the KONOIKE Group.
- Evaluation Method
-
Evaluator Self-Evaluation by Board of Directors /
Full-Time Audit & Supervisory Board MembersEvaluation Method Questionnaire Format Response Format Non-Anonymous Evaluation Items Scale Evaluation and Additional Comments on Following Items - ① Composition of the Board of Directors
- ② Operation of the Board of Directors
- ③ Active/Reactive Governance
- ④ The Board of Directors’ Advisory Body (Human Resources and Compensation Committee)
- ⑤ Other Factors
- Evaluation Process
-
- 1. Questionnaire to All Members of Board of Directors and Full-Time Audit & Supervisory Board Members
- 2. Aggregation by the Secretariat
- 3. Self-Evaluation by Board of Directors Based on Questionnaire Results
- 4. Exploration Based on Evaluation Results
Overview of FY3/2022 Evaluation Results
Evaluations indicated that the composition of the board of directors is appropriate in terms of the overall number of directors and the balance between the number of internal and external directors. Evaluations improved regarding the operation of the board of directors due to partial revision of the content and volume of materials and to securing time for discussion of important management matters. However, issues requiring improvement were identified, specifically regarding the establishment of a monitoring system for management indicators, including non-financial indicators.
Going Forward
In light of the results above, we are considering improvements to the following items.
- Establishing a monitoring system
- Monitoring in the new medium-term management plan (ongoing verification and discussion of steady implementation)
- Organizing and systematically providing information, etc. necessary for monitoring operational execution
- Continuing annual planning of matters to be discussed
- Enhancing the content of materials for the board of directors
Training Future Leaders
Human resource development is a core component of sustainable growth for the KONOIKE Group. The president, directors (serving concurrently as managing executive officers), and executive general managers (executive officer level) meet once every month at the Executive General Manager Steering Committee to share information about operational execution. Executive general managers, through discourse and discussion with directors, seek to cultivate their perspectives as managers. In addition, as one of a number of initiatives to further enhance the human resources foundation, a forum for deliberation is held as needed. Here, members exchange opinions about strategies, philosophies, and other areas related to the KONOIKE Group, leading to a desire to launch new businesses and expand existing domains. Individuals regarded as next-generation managers, including headquarters office managers and branch managers, build relationships of mutual trust in their daily work. We sponsor internal seminars to bring next-generation managers and above to share our Corporate Philosophy and behavioral guidelines. In this way, we pass on the experience and expertise necessary for management without interruption between generations.
Strategically Held Stocks
1. Basic Policy
Konoike Transport Co., Ltd. holds stock strategically to enhance our corporate value over the medium to long term. We do this by working to sustain and strengthen trade relationships with the customers who are vital to our business, as partnerships are key to Konoike Transport Co., Ltd. business activities across a range of areas. Each year, the board of directors regularly verifies the appropriateness of holdings of individual strategic stocks. The board considers whether the risks and benefits of holding these shares are commensurate with the accompanying cost of capital. If the board determines that holding a stock is not rational, the group sells said stock to reduce strategic holdings.
2. Standards for the Exercise of Voting Rights
Konoike Transport Co., Ltd. do not make uniform decisions on policies when exercising voting rights for strategically held stocks. Rather, we consider and decide each case separately from perspectives that include sustained growth and improvement in medium- to long-term value of the company in question. We never approve resolutions that would be harmful to shareholder value.
