Corporate Governance

Basic Policy

KITZ’s corporate philosophy is pursuing the sustainable improvement of its corporate value by providing creative and high-quality products and services. As a company having social responsibility, the Company works to achieve management in consideration of its shareholders and all other stakeholders.

To enhance business efficiency and compliance, the Company works to achieve management that is prompt, efficient, sound and transparent. To this end, the Company takes steps to enhance its corporate governance.

Board of Directors, Directors

KITZ’s Board of Directors assumes fiduciary responsibility to shareholders and discusses and makes decisions on major management issues, including management policy, medium-to long-term management plans and business plans for each fiscal year, aiming to achieve the sustainable growth of the KITZ Group and a medium-to long-term improvement in its corporate value. The Board of Directors supervises business execution and is responsible for building the entire Group’s internal control system.

The Board of Directors consists of six members: four Executive Directors and two Outside Directors. In principle, a meeting of the Board of Directors is held every month, where the members discuss issues prescribed in the Rules of the Board of Directors and make resolutions. The members conduct vigorous discussions on other important management issues as well. To facilitate decision-making and clarify executive responsibilities, the term of office of the Directors is one year.

The Outside Directors have a great deal of experience in corporate management and a broad range of knowledge. They participate in the Board of Directors’ business decisions. They provide appropriate advice for the Company’s business judgments and supervise the execution of operations.

From May 2016, the Board of Directors conducted a survey of Directors and Audit & Supervisory Board Members on the effectiveness of the Board of Directors and is discussing issues to improve the effectiveness based on the results of the survey.

Audit & Supervisory Board and Its Members

KITZ’s Audit & Supervisory Board supervises the process of the Directors’ decision-making and the performance of their duties in accordance with the Audit & Supervisory Board Members’ auditing standards and auditing plans created by the Audit & Supervisory Board, under laws and regulations, the Articles of Incorporation, and internal regulations. The board receives quarterly reports from the Accounting Auditor about the results of accounting audits and exchanges opinions with the Accounting Auditor.

The Audit & Supervisory Board Members attend the meetings of the Board of Directors and monitor and examine the status of the Board of Directors’ decision-making and respective Director’s performance of their obligation to supervise. They attend also other important meetings and visit offices and subsidiaries to carry out audits. They supervise the Directors’ performance of their duties by obtaining information from the Directors, Executive Officers and employees.

The Audit & Supervisory Board consists of four Audit & Supervisory Board Members: two full-time members and two outside members. In principle, a meeting of the Audit & Supervisory Board is held every month.

The Outside Audit & Supervisory Board Members have a great deal of experience in corporate management and a broad range of knowledge. They carry out audits from a neutral and objective perspective to enhance the soundness of management. At least one Audit & Supervisory Board Member who has strong expertise about finance and accounting is to be appointed.

To support the Audit & Supervisory Board Members’ performance of their duties, the Audit & Supervisory Board has established The Auditors Board Office, whose full-time staff gather information and conduct surveys in accordance with the directions of the Audit & Supervisory Board Members and cooperate with the Accounting Auditor and the Internal Audit Office.

Management Conference, Executive Officers

In principle, KITZ holds a meeting of the Management Conference consisting of Executive Officers (including Executive Directors) every month to determine policies on major management issues through strategic and multilateral discussions. KITZ is reviewing its standards for proposals to the Board of Directors and is transferring authority to the Executive Officers so that the Board of Directors can focus on the discussion of major issues relating to general management, including management policy and business plans.

Appointments of Directors, Audit & Supervisory Board Members and Executive Officers

A meeting is held at the request of the representative director to discuss candidates for Directors and Audit & Supervisory Board Members in consideration of their ability, knowledge, experience, expertise, achievements and fairness, and the Board of Directors determines candidates. If Audit & Supervisory Board Member candidates are appointed, the Audit & Supervisory Board needs to discuss and agree on them.

The representative director nominates Executive Officer candidates in consideration of their ability, knowledge, experience, expertise, achievements and fairness, and the Board of Directors appoints Executive Officers.

Independence of Outside Officers

KITZ’s Outside Directors and Outside Audit & Supervisory Board Members all satisfy the independence criteria prescribed by the Tokyo Stock Exchange. The Company registers its independent officers with the Tokyo Stock Exchange.

Remunerations to Directors and Executive Officers

A meeting is held to discuss remuneration to Executive Directors and Executive Officers at the request of the representative director, and the Board of Directors determines remuneration.

The remuneration consists of monthly remuneration and bonuses. Bonuses shall be paid if certain conditions prescribed in internal regulations are met and reasonable profits are earned. The source of remuneration is around 1% of net income attributable to owners of the parent.

In July 2016, the Company introduced a performance-based stock compensation plan, where shares in the Company are granted as part of monthly remuneration and bonuses in accordance with the performance level in each term, to make the correlation between remunerations and the stock value clearer and raise awareness of contributions to an improvement in results in the medium to long term and an increase in its corporate value.

Internal Control System

Basic Policy

KITZ believes that building an appropriate internal control system is the basic condition for meeting the expectations and trust of its shareholders and all the other stakeholders and the important responsibility of the Board of Directors. Under the basic policy on the building of the internal control system that has been established by the Board of Directors, the entire Group works to develop and operate the internal control system.

Development and Operation of Internal Controls

To improve the transparency of financial standing and management under the Financial Instruments and Exchange Act, KITZ and the Group companies have each division to inspect internal controls and conduct internal audits about the status of the building of an internal control system to establish and operate internal controls.



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