The Morinaga Group will enhance its corporate governance with the aim of maximizing corporate value and achieving enduring corporate growth based on the basic policies of improving the health and efficiency of management, ensuring the reliability of its financial position, providing timely and appropriate disclosure of information, complying with laws and regulations, and strengthening the trust and relationships with all stakeholders.
Morinaga’s “Rules on Decision-Making Criteria” states clear definitions of authority and responsibility for respective decision-making units, including the Board of Directors, Business Execution Meetings, Directors, Executive Officers, and General Managers of individual divisions and departments.
The Board of Directors deliberately makes decisions on statutory matters and the execution of important business based on the business judgment principle and supervises the execution of business. The Board consists of eleven Directors, out of which four are Outside Directors, eight are male, and three are female Directors.
Business Execution Meetings, which is mainly comprised of Directors,Senior Operating Officer and Standing Statutory Auditors, deliberates and makes decisions on important management themes and other matters for which authority is delegated by the Board of Directors. To ensure the effectiveness and efficiency of deliberations at the Board of Directors and Business Execution Meetings, sufficient prior discussions are made at various committees that serve as advisory bodies for the Boards. These committees include the IR Committee, which is concerned with information disclosure, and the Officer Appointment and Remuneration Advisory Committee, a forum to discuss matters concerning Directors’ personnel and remuneration matters.
With the aim of increasing the agility to respond to the changing business environment and accelerating the decision-making process, Morinaga has adopted an executive officer system. With this move, the Company delegated authority and responsibility for executing regular business relating to the implementation of strategies to Executive Officers, ensuring efficient management and a clarification of responsibilities for business execution.
We have four Statutory Auditors, including three Outside Statutory Auditors. One of these three Outside Statutory Auditors is a Standing Statutory Auditor, and three of Statutory Auditors are male and one is female. In accordance with the Guidelines for Auditors, Statutory Auditors audit the Directors’ performance of their duties based on the Rules on Statutory Auditors’ Audit. Standing Statutory Auditors hold regular meetings with the Representative Director and attend Board of Directors, Business Execution Meetings of the Board of Directors and other important gatherings to audit the Directors’ performance of their duties. Audit Division, which is responsible for carrying out internal audit, directly reports to the President. Composed of six members, the Division audits all divisions (including subsidiaries) in a planned manner, and exchanges opinions with the divisions jointly with Standing Statutory Auditors. To ensure close cooperation, opinion exchange sessions are held regularly and as needed basis between all Statutory Auditors and the Accounting Auditor, as well as between Standing Statutory Auditors and the General Manager of the Audit Division. The General Manager of the Audit Division and the Standing Statutory Auditors attend the meetings of the Internal Control Steering Committee, which is composed of members selected from major divisions and departments, and exchange opinions with the Committee members on a regular basis. Furthermore, the Audit Division enhances the effectiveness of internal audits by reporting directly not only to Representative Director, but also to the Board of Directors and the Board of Statutory Auditors, as necessary and appropriate. Morinaga appointed Deloitte Touche Tohmatsu LLC as its accounting auditor.
We have created skills matrices for the core skills of each director and statutory auditor, as well as the knowledge, experience, abilities, etc. required of the Board of Directors as a whole in order for us to put our corporate philosophy into practice and achieve the aims of our business plans.
An overview of the Executive Appointment Policy is as follows.
The Company shall determine that Outside Directors, Outside Statutory Auditors, and candidates thereof are independent provided that they do not fall under any of the following categories.
In FY2023/3, the Board of Directors discussed the following matters as main topics.
| Topics | |
|---|---|
| Management strategy and sustainability-related |
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| Governance-related |
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| Compliance and risk management-related |
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| Finance, investment, and loan-related |
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The Company’s Executive Remuneration Basic Policy is as follows.
At the 169th Annual General Meeting of Shareholders held on June 29, 2017, the maximum amount of remuneration for Directors was resolved to be 500 million yen per annum (including 40 million yen per annum for Outside Directors and excluding the employee salaries of Directors who concurrently serve as employees). (The number of Directors immediately following the conclusion of the said General Meeting of Shareholders was 11, including two Outside Directors.) In addition, at the 175th Annual General Meeting of Shareholders held on June 29, 2023, it was resolved to increase the number of Outside Directors in order to strengthen corporate governance. It was also resolved to increase the maximum amount of remuneration for Outside Directors to 80 million yen per annum in consideration of the expansion in the roles and responsibilities expected of the Outside Directors. (The number of Outside Directors immediately following the conclusion of the said General Meeting of Shareholders was 4)
Moreover, separately from the said monetary remuneration, at the 170th Annual General Meeting of Shareholders held on June 28, 2018, the introduction of a performance-linked stock compensation plan using a trust for Directors (excluding Outside Directors and non-residents of Japan) was approved. The maximum amount of cash to be contributed by the Company to the trust for each target period covering three fiscal years was resolved to be \180 million in total, and the maximum number of points to be awarded as stock compensation was resolved to be 15,000 points for one fiscal year. The number of Directors (excluding Outside Directors and non-residents of Japan) at the conclusion of the said General Meeting of Shareholders was 8.
The maximum amount of remuneration for Statutory Auditors was resolved at the 169th Annual General Meeting of Shareholders held on June 29, 2017 to be \80 million per annum. The number of Statutory Auditors at the conclusion of the said General Meeting of Shareholders was 4.
At the meeting of the Board of Directors held on March 23, 2023, it was resolved to delegate to the Officer Appointment and Remuneration Advisory Committee, which consists of all the Company’s Outside Directors and the President, the authority to determine details of remuneration for individual Directors. The reason for the delegation is to ensure objectivity and fairness in determining the amount of remuneration for individual Directors. The Officer Appointment and Remuneration Advisory Committee makes its determination after deliberating the proposal on the amount of remuneration for individual Directors prepared by the President, including performance evaluations, and reports the determination process to the Board of Directors.
Regarding stock compensation, which is non-monetary compensation, its maximum amount is the amount resolved at the General Meeting of Shareholders, separately from monetary remuneration. The Company awards a certain number of points to Directors (excluding Outside Directors and non-residents of Japan) in accordance with the provision of the “Share Delivery Rules” following consultation with the Officer Appointment and Remuneration Advisory Committee and receiving its recommendations.
The Company will place particular emphasis in working on:
Based on this effectiveness evaluation of the Board of Directors, we will further improve the effectiveness of the Board of Directors of the Company, and further strengthen corporate governance, including by taking the necessary initiatives to improve the above issues.
The Morinaga Group is committed to maximizing corporate value and achieving an enduring corporate growth by strengthening our internal control system, increasing the management efficiency, operating its business properly, and ensuring effective supervisory and audit practices. To ensure appropriate execution of duties, the Board of Directors endeavors to establish an effective internal control system as well as a system of compliance to legal requirements and internal rules including the Articles of Incorporation, while Statutory Auditors are responsible for auditing the effectiveness and functionality of such systems. In addition, Morinaga and its subsidiaries home and abroad have introduced a helpline to collect a wide range of information about compliance issues take appropriate measures against them.