In order to achieve sustainable growth and increase corporate value, KITZ will strengthen corporate governance to meet the expectations and trust of stakeholders.

Basic Policy and Structure

KITZ's corporate philosophy is "To contribute to global prosperity, KITZ is dedicated to continually enriching our corporate value by offering originality and quality in all products and services." We are working on initiatives with respect to management taking our shareholders and all other stakeholders into consideration.

We are also committed to realizing company management that is prompt, efficient, sound and transparent and strengthening compliance.

KITZ has adopted the structure of a company with an Audit & Supervisory Board, which concentrates the authority of responsibility deliberating on and deciding important management matters, and supervising business execution, with the Board of Directors. This also enables Audit & Supervisory Board members and the board itself to engage in highly effective supervision of the Board of Directors from an independent and objective standpoint. The company has also adopted an executive officer system to facilitate swift decision-making concerning business execution.

Board of Directors / Audit & Supervisory Board Members (as of December 2020)

In the fiscal year ended December 2020, the percentage of outside directors and female directors serving on the Board of Directors was increased.

Number of Outside Directors and Auditors

Number of Outside Directors and Auditors

Number of Female Officers

Number of Female Officers

Overview of the Company's corporate governance structure

Overview of the Company's corporate governance structure

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Nomination Committee and Executive Compensation Committee

As shown below, KITZ has established the Nomination Committee and Executive Compensation Committee as advisory bodies to the Board of Directors.

Nomination Committee and Executive Compensation Committee

Chairperson: Outside Director Kazuyuki Matsumoto
Members: Outside Director Minoru Amoh
  Outside Director Yutaka Fujiwara
  Outside Director Yukino Kikuma
  Executive Chairman Yasuyuki Hotta

Evaluation of the Effectiveness of the Board of Directors

To improve the effectiveness of corporate governance and the functions of the Board of Directors, a questionnaire survey on the effectiveness of the Board of Directors is conducted among directors and auditors each year.

In the questionnaire survey conducted in February 2021, management strategy, constitution of the Board of Directors, appointment and compensation for directors, roles expected for outside directors, vitalization of discussion at Board meetings and response to shareholders and other stakeholders were asked. The result of the self-evaluation says that the effectiveness of the Board of Directors is ensured in general.

Constructive feedback was also obtained regarding plans to cultivate candidates for next-generation management members and about institutional design, including points for improvement. The Board of Directors will take up these issues for discussion in the future in an effort to ensure greater effectiveness.

Matrix and History of Corporate Governance

Matrix and History of Corporate Governance

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Executive Compensation System

Process for determining compensation

The Board of Directors determines compensation of directors in response to deliberations and proposals through the Executive Compensation Committee, after obtaining approval on cap amounts at the general meeting of shareholders.

Structure of compensation

Base compensation
Base compensation is the fixed compensation determined based on the position of each director and is paid as monthly compensation.

Bonuses
The bonus system is linked to business results. An amount equivalent to 1% of net income attributable to owners of the parent is paid as a bonus.

For the amounts paid to each director with the exception of outside directors, criteria are set and the amounts are calculated for each position.

Stock-based compensation
With the aim of improving business performance in the medium to long term and raising awareness of contributions to enhancing corporate value, a stock-based compensation system has been established to issue company shares or pay the cash equivalent value of company shares based on the positions of directors and the degree to which business performance targets have been met.

Amounts of executive compensation

The amounts of executive compensation for the fiscal year ended December 2020 are as follows.

Total amounts of compensation for directors and Audit & Supervisory Board members concerning the fiscal year under review

Classification Base compensation Bonuses* Stock-based compensation* Total
Number of eligible officers (persons) Amount (millions of yen) Amount (millions of yen) Amount (millions of yen) Amount (millions of yen)
Board of Directors
(excluding outside directors)
4 72 19 17 108
Audit & Supervisory Board members
(excluding outside directors)
2 32 32
Outside officers 7 51 51
Total 13 155 19 17 192

* The amount recorded is the provision of accrued bonuses for directors and allowance for stock benefit for directors and operating officers in the fiscal year under review (nine months).

Sale and Reduction of Cross-Shareholdings

Based on its Policy for Cross-Shareholdings, KITZ has adopted a policy of not holding shares for the purpose of forming a stable shareholder base, except for the purpose of maintaining good relationships with business partners.

Each year we review cross-shareholdings, and we pursue the sale of any shares it is deemed we have no significant reasons for holding.

Shares sold or reduced (fiscal year ended December 2020)

  Number of stocks Total sales price associated with
the reduction in shares (million yen)
Unlisted stocks
Stocks other than unlisted stocks 7 208

Executive Officer and the Management Conference

KITZ has introduced an executive officer system to ensure that the decisions made by the Board of Directors are carried out in a prompt and effective manner. The Management Conference comprising all executive officers convenes monthly to deliberate over and decide on important matters, and to engage in open discussion about key management issues.

Audit & Supervisory Board

As an independent organization entrusted by shareholders to ensure the sound and sustained growth of the company and to establish a corporate governance system that is worthy of society's trust, Audit & Supervisory Board members are aware that they are expected to take useful action to ensure that decisions are taken by directors in a fair and impartial manner. Audit & Supervisory Board members also make judgments on the appropriateness of the methods employed and results of audits, including operational audits related to the duties performed by directors, audits of legality and audits of financial statements conducted by accounting auditors. Audit & Supervisory Board members also attend meetings of the Board of Directors to express their opinions as necessary.

Audit & Supervisory Board members conduct audits in accordance with the standards and auditing plans. The board also monitors the performance of duties by directors by attending important meetings and exercising its investigative powers, such as visiting offices and subsidiaries, and evaluates the fulfillment of legal obligations such as the duty of care of a good manager.

Internal Audits

The Internal Audit Office conducts operating audits and internal control audits. These are designed to confirm the presence of internal control functions, monitor the status of internal controls and verify the appropriateness of business processes. The results of the audits are communicated to the president, Audit & Supervisory Board members and related departments. Follow-ups on corrective action are conducted, carefully examined by the Internal Control Committee and reported to the Board of Directors as necessary. Additionally, audits of the important risks facing subsidiaries are also conducted. To clarify, avoid and mitigate risks, KITZ supports Group companies for operational improvements and legal compliance systems.

Thorough Implementation of Compliance Management and Whistle-blowing System

For a company to develop on a constant basis, KITZ believes that managing the company based on compliance is a fundamental and essential condition. In the corporate philosophy "KITZ' Statement of Corporate Mission," "Do it True" is placed on the top of the Action Guide.

To put this belief into practice, in 2002 the Company established the C&C (Crisis and Compliance) Control Committee headed by the president in all Group companies. The Committee works to prevent risks in corporate management from occurring and to thoroughly ensure crisis response and compliance-oriented management.

Additionally, to seek inside information that cannot be obtained through an ordinary internal control system or compliance system, KITZ has established and operates a whistle- blower hotline. Whistle-blower information received by KITZ or through the "compliance helpline" set up at its corporate lawyer's office is investigated and dealt with promptly and appropriately, while strictly protecting the confidentiality of whistle-blowers.

Fostering an Awareness of Compliance

To put compliance-oriented management into practice, KITZ has created a Compliance Program Guidebook and educational materials on various legal matters. These materials describe information on the importance of compliance-oriented management, its basic policy, the code of conduct on corporate ethics, the whistle-blower hotline, education and disciplinary action for violators. Guidebooks are distributed to directors and employees. In addition, the Company plans educational seminars each year and endeavors to foster a culture of compliance, improve knowledge and raise awareness.

Moreover, to monitor the extent to which compliance-oriented management has taken root and visualize potential compliance risks, compliance questionnaires are conducted for employees. The identified risks are prioritized and subjected to measures such as business process improvements and educational activities.

Risk Management

The risk evaluation system of the KITZ Group is based on the basic policies and evaluation standards for risk assessment formulated by the C&C Control Committee. In light of the results of risk assessments conducted by each organization, the Management Conference identifies important and major risks and formulates measures.

Based on reports by the Management Conference, the Board of Directors makes final decisions concerning major risks and their countermeasures at the KITZ Group.

Initiatives from FY2020

In FY2020, the KITZ Group rebuilt its risk management system, re-identifying risks associated with its business activities (all 128 items), quantitatively determining the importance of risks based on the two axes of risk frequency and impact on management, and specifying important risks and major risks. Based on those results, we plan to develop measures to avoid, transfer or mitigate risks focusing on important risks.

From FY2021, the Legal, Intellectual Property and Risk Management Center was newly established to develop a system to promote stronger risk management.

Risk Management Implementation Flow

Risk Management Structure

Risk Analysis and Evaluation

The risk assessment standards score evaluation items to determine the frequency and impact of risks (extent of personal damage, physical damage, compensation for damages, profit-loss, loss of credit and environmental damage). On a four-quadrant risk map scale, it is determined as to which is zone each risk falls under, whether the high-damage/high-frequency, low-damage/high-frequency, high-damage/low-frequency or low-damage/ low-frequency zone. Based on the results, important risks and major risks are classified. Next, based on the importance of each risk, the company will choose the policies for responding to each risk, namely which risks to avoid, transfer, mitigate or retain, and each responsible executive officer implements the required measures.

Risk map scale


Corporate Governance