The CITIZEN Group endeavors to improve corporate value and contribute to society through sustained activities that are in harmony with the local community and the global environment. This is part of its corporate philosophy, after which the company was named: "Loved by Citizens, Working for Citizens." To continuously further this goal, we strive to reinforce corporate governance in recognition of the importance of ensuring management transparency and supervising management from various angles.
The CITIZEN Group is striving to further enhance its corporate governance to ensure sustainable growth through the achievement of the Group's overall business goals. With the global economy and society changing at an unprecedented rate, CITIZEN WATCH is playing a central role in managing and supervising the entire Group to respond to the various social issues we face.
CITIZEN WATCH has a Board of Directors comprising five directors knowledgeable about its business content and three highly independent outside directors. The Board of Directors makes decisions on the execution of business and oversees the execution of business.
In addition, we have adopted the Board of Corporate Auditors system; the Board of Corporate Auditors consists of three members, including two outside corporate auditors.
We have established the Nominating Committee and the Compensation Committee as voluntary bodies to enhance management transparency.
The main duties of the Nominating Committee are to deliberate and propose to the Board of Directors matters concerning the selection or dismissal of the representative director, the president and CEO, and the chairman of the Board of Directors; to deliberate and report in consultation with the Board of Directors or the president and CEO or other directors concerning the selection or dismissal of officers; and to deliberate and report in consultation with the Board of Directors or the president and CEO or other directors concerning succession planning for the president and CEO and directors.
The Compensation Committee discusses matters related to the policy and the standards for and compensation received by the directors, and its main duty is also to provide advice and counsel to the Board of Directors.
Each committee is composed of three or more directors, who are appointed by a resolution of the Board of Directors. The majority of committee members are outside directors and at least one of them is a representative director. The chairperson of each of the committees is an outside director and is elected by the members of the respective committee.
In accordance with the audit policy and audit plans prescribed by the Audit & Supervisory Board, in carrying out initiatives for the further enhancement of corporate governance, each auditor attends the Board of Directors meetings, Group management meetings, and management meetings, inspects important documents such as authorization documents and reports from the Board of Directors, etc. concerning the execution of duties, and implements rigorous audits on the conduct of affairs by directors through means such as examining business operations and assets. We also receive reports on accounting audits from the accounting auditor, Nihonbashi Audit Corporation, and cooperate with the accounting auditor to efficiently perform audit work and other tasks for CITIZEN WATCH and its subsidiaries.
To ensure the achievement of business goals and the sustainable development of The entire CITIZEN Group, we have formulated the "Group Risk Management Basic Policy," "Group Risk Management Basic Regulations," and "Group Crisis Management Basic Regulations." These measures aim to achieve centralized risk management and prompt responsiveness, thus actively promoting the enhancement of Group governance.
Moreover, we have established committees such as the CITIZEN-SIRT (CITIZEN-Security Incident Response Team) for responding to significant incidents and the Group Quality Compliance Committee for addressing quality-related compliance risks. Through these committee initiatives tailored to our operations, we are actively advancing efforts to strengthen corporate governance and enhance management transparency.
CITIZEN WATCH is committed to ensuring that the Board of Directors effectively fulfills its roles and responsibilities in achieving management strategies, taking into consideration diversity, including gender and internationality. To this end, we have identified essential knowledge, experience, and abilities in areas such as "corporate management/management strategy," "sales/marketing/DX," "R&D/Technology," "finance/accounting," as well as "global business," "HR development/diversity," and "ESG/sustainability," and these are the roles we expect from directors.
The appointment of directors and officers is based on the Companies Act and other laws and regulations, and the individuals selected must possess the requisite character and insight as well as the qualifications for directors and officers.
CITIZEN WATCH conducted an evaluation and analysis of the effectiveness of the Board of Directors to further strengthen its functions. The evaluation results indicated that the Board of Directors is effectively functioning, with a focus on operations, agenda, and structure, and that its effectiveness is ensured.
To evaluate, we conducted a questionnaire for all directors and corporate auditors using an effectiveness evaluation tool provided by an external organization. The questionnaire was based on questions developed by an external organization, and the results were assessed by the Board of Directors.
To analyze and evaluate the effectiveness of the Board of Directors, we conducted a questionnaire regarding the Board of Directors for all directors and corporate auditors, using an effectiveness evaluation tool developed by an external organization. The questionnaire was administered using questions developed by an external organization, and the results of the analysis and evaluation were reviewed by the Board of Directors.
Regarding the results of the questionnaire evaluating the effectiveness of the Board of Directors, each director and each auditor generally gave a high evaluation, confirming that the Board of Directors is functioning effectively. The ratings for each question were as follows.
The materials are sufficient and appropriate, and supplementary explanations are provided orally. Materials are distributed electronically, so that directors can view materials earlier than before to conduct sufficient preliminary studies. Opportunities for discussion is provided in which important matters can be confirmed in advance before the board meeting.
Each director participates in deliberations from a variety of perspectives based on their diverse management experience and knowledge, contributing to the improvement of the quality of deliberations. Progress and analysis of management plans, priority measures, SDGs, ESGs, and other important management topics are discussed comprehensively, and active discussions are held, including objections and risks.
Regarding the promotion of DX, etc., the progress is reported to the members of the Board of Directors as appropriate, and the recognition of issues is shared.
Outside of board meetings, a variety of management information is provided and many opportunities are provided for discussion. There are opportunities for outside directors to interview executives from the management side and executive candidates, and exchange opinions.
Trainings have been provided such as factory tours, various exhibitions, and seminars, however, there was an answer that systematic training opportunities should be provided and that it is necessary to increase the trainings in the future.
Compensation for CITIZEN WATCH directors (excluding outside directors) consists of performance-linked and non-performance-linked compensation, etc. Compensation for outside directors and corporate auditors consists solely of fixed compensation.
CITIZEN WATCH maintains a policy to set officer compensation at a level that facilitates the motivation for performance improvement and securing excellent personnel, taking into account changes in the business environment, external data, industry standards, and management content. Decisions about executive bonuses are determined based on financial benchmarks (such as sales, operating profit) and non-financial benchmarks (world events, disasters, M&A) in addition to this policy.
The purpose of performance-linked stock compensation is to establish a clearer link between director compensation and the stock value of CITIZEN WATCH, enhancing awareness of contributing to medium to long-term performance improvement and increased corporate value. The Company's policy is to determine compensation at a level that makes such objectives possible. Starting from FY2022, ESG-related indicators, such as the CO2 emissions reduction rate and "FTSE Russell ESG Rating Score," have also been added as evaluation metrics. A Mars Clawback Clause has been introduced to request a reduction or return of compensation in the event of misconduct by directors and officers, aiming to prevent improper conduct by directors and officers and curb excessive risk-taking.
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Classification | Number of officers | Total amount of compensation, etc. (million yen) | Amount of fixed compensation out of all compensation, etc. (million yen) | Amount of bonus out of all compensation, etc. (million yen) | Amount of performance-linked stock compensation, etc. (million yen) |
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Directors (of which outside directors) | 10 (4) | 309 (28) | 167 (28) | 99 (-) | 43 (-) |
Audit & Supervisory Board members (of which outside Audit & Supervisory Board members) | 4 (2) | 45 (27) | 45 (27) | - (-) | - (-) |
Total (of which outside officers) | 14 (6) | 355 (55) | 212 (55) | 99 (-) | 43 (-) |
CITIZEN WATCH strives to appoint outside directors or outside corporate auditors who are free from any possibility of conflict of interest with general shareholders, emphasizing their abundant experience and broad insight as management staff or their advanced knowledge and insight in corporate finance, corporate legal affairs, and other areas.
In addition, the knowledge, experience, and abilities required to effectively fulfill the roles and responsibilities of the Board of Directors in achieving management strategies are defined and disclosed in the skills matrix.
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Name | Position | Attendance at Board of Directors meetings | |
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Toshihiko Sato | President & CEO | - | 17 / 17 (100%) |
Toshiyuki Furukawa | Managing Director | In charge of the Corporate Planning Department, Accounting Department, Public Relations & Investor Relations Office, and Information Systems Department | 17 / 17 (100%) |
Yoshitaka Oji | Managing Director | Senior General Manager of Watch Business Division | 17 / 17 (100%) |
Keiichi Nakajima | Director | - | 17 / 17 (100%) |
Yoshiaki Miyamoto | Director | General Manager of General Affairs Division and in charge of Group Risk Management, Personnel Division, CSR Department and Environmental Management Department | 17 / 17 (100%) |
Toshiko Kuboki | Outside Director | - | 17 / 17 (100%) |
Yoshio Osawa | Outside Director | - | 17 / 17 (100%) |
Katsuhiko Yoshida | Outside Director | - | 13 / 13 (100%) |
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Name | Nominating Committee | Compensation Committee | ||
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No. of attendances | Attendance rate (%) | No. of attendances | Attendance rate (%) | |
Toshihiko Sato | 6 | 100 | 8 | 100 |
Fumiaki Terasaka | - | - | 4 | 100 |
Toshiko Kuboki | 6 | 100 | 8 | 100 |
Yoshio Osawa | 6 | 100 | 8 | 100 |
Katsuhiko Yoshida | 6 | 100 | 4 | 100 |
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Name | Corporate Management / Management Strategy | Sales / Marketing / DX | R&D / Technology | Global Business | HR Development / Diversity | Finance / Accounting | ESG / Sustainability |
---|---|---|---|---|---|---|---|
Toshihiko Sato | ● | ● | ● | ||||
Toshiyuki Furukawa | ● | ● | ● | ||||
Yoshitaka Oji | ● | ● | ● | ||||
Keiichi Nakajima | ● | ● | ● | ||||
Yoshiaki Miyamoto | ● | ● | ● | ||||
Toshiko Kuboki | ● | ● | ● | ||||
Yoshio Osawa | ● | ● | ● | ||||
Katsuhiko Yoshida | ● | ● | ● |
The CITIZEN Group has adopted an employee stock ownership program as one of benefits for employees, mainly at Group companies in Japan. This helps employees build assets by making it easy for them to acquire stock in CITIZEN WATCH Co., Ltd. as an easy way to start asset building, by continually making small contributions to the program. Membership in this program also increases employees' sense of involvement in management. The number of members is 2002 (as of March 31, 2023), making it the sixth largest shareholder (shareholding ratio of 1.96%, as of March 31, 2023).