Corporate Governance

Our corporate governance vision

The Company’s corporate philosophy is “Loved by citizens, working for citizens,” and it derives its name from this. The Company works to contribute to society and increase its corporate value through sustainable corporate activities, in harmony with the local community and the global environment. To continue to promote its aims, the Company believes that it is important to secure transparency in management and monitor many fields of management. Accordingly, the Company is striving to expand and improve its corporate governance.

Corporate Governance Report(PDF:172KB)

System for corporate governance

The Company establishes the corporate governance system described below based on the judgment that it can ensure the proper and efficient execution of duties together with management transparency, while also enabling extensive management oversight.

1.Organs and organizations

  
Organs and Organization Name Members Supplementary Explanation
The Board of Directors 8 Directors(Full-time)
2 Outside Directors
The Board of Directors of the Company consists of eight (8) Directors who control the Group and execute business in major operations and two (2) Outside Directors who check and monitor business management by making the most of their extensive experience and broad insights as managers from an independent position.
The Board of Directors makes decisions about the performance of business and supervises these performances. Management of business operations is carried out by the Representative Director, the Directors in charge of operations and the Operating Officers. The Board of Directors meetings were held seventeen (17) times during the fiscal year under review, and all Directors and all Audit & Supervisory Board Members attended approximately 82% or more of the Board of Directors meetings held during the fiscal year under review during the term of their office.
The Audit & Supervisory Board 1 Audit & Supervisory Board Member
2 Outside Audit & Supervisory Board Members
Each Audit & Supervisory Board Member conducts strict audits on the Directors’ performance of their duties, in accordance with the audit policy and audit program stipulated by the Audit & Supervisory Board, by attending the Board of Directors meetings, the Management Committee meetings, division meetings, or other such meetings; receiving from the Directors and other officers reports on the status of the performance of their duties; reviewing important written decisions and other documents; and investigating the business and financial status of the Company. The Company also receives a financial audit report from Nihombashi Corporation, which is an Independent Auditor. The Company conducts effective audits on itself and its subsidiaries in collaboration with the Independent Auditor, and is working on the further expansion and improvement of corporate governance. Audit & Supervisory Board meetings were held thirteen (13) times during the fiscal year under review, and all Audit & Supervisory Board Members attended approximately 85% or more of the Audit & Supervisory Board meetings held during the fiscal year under review during the term of their office.
Management Committee meetings Directors(Full-time)
Audit & Supervisory Board Members
The Company holds Management Committee meetings that are attended by the full-time Directors and full-time Audit & Supervisory Board Members to maintain prompt business judgment and management transparency. Matters to be resolved at the Board of Directors meetings and other important managerial issues are fully discussed and deliberated in advance at these meetings.
Independent Auditors 4 certified public accountants With respect to the financial audits, the certified public accountants who independently audited the Company are Mr. Masahiko Kinoshita, Mr. Akira Ogura and Mr. Hidekazu Takahashi, associates of Nihombashi Corporation. In addition, four (4) certified public accountants, eleven (11) successful candidates who have passed the Certified Public Accountants Examination, etc. assisted in the audit of the Company. The Company ensures fairness and independence while it is audited by the Independent Auditors. Whether to reappoint the Independent Auditors is deliberated and decided by the Audit & Supervisory Board. If the Board of Directors does not approve the reappointment of the Independent Auditors, such proposal will be deliberated on at the Ordinary General Meeting of Shareholders pursuant to the Companies Act.
Nominating Committee The Chairperson : Outside Director
Member composition : 3 or more Directors
The main duties of the Nominating Committee include discussions on matters concerning the appointment or removal of the Representative Director, the President and CEO, and the Chairman of the Board of Directors, and proposals of such matters to the Board of Directors.
Committees is composed of three (3) or more Directors who are appointed by a resolution of the Board of Directors, the majority of which are Outside Directors and which shall include at least one (1) Representative Director. The Chairperson of each of the Committees shall be an Outside Director, and shall be elected by mutual election of the members of the Committees.
Compensation Committee The Chairperson : Outside Director
Member composition : 3 or more Directors
The main duties of the Compensation Committee include discussions on matters concerning the policies and standards of the compensation to be received by Directors, and the provision of advice concerning the same to the Board of Directors.
Committees is composed of three (3) or more Directors who are appointed by a resolution of the Board of Directors, the majority of which are Outside Directors and which shall include at least one (1) Representative Director. The Chairperson of each of the Committees shall be an Outside Director, and shall be elected by mutual election of the members of the Committees.
Internal Audit Dept. 4 Dept. members The Company has established the Internal Audit Department and conducts audits in accordance with an annual audit program to confirm that the business execution of the Company and its subsidiaries is appropriate and reasonable.
The auditing organizations, the internal audit division, and the internal control division closely communicate with each other.

Officer Lists

2.Relationship with outside officers

The Citizen Group has no special interest with Outside Directors, Mr. Masaaki Komatsu and Mr. Fumiaki Terasaka, and Outside Audit & Supervisory Board Members, Mr. Haruhisa Shiraishi and Ms. Toshiko Kuboki.

(Criteria on Independence of Outside Officers)

The Company deems that an Outside Director or Outside Audit & Supervisory Board Member of the Company (“Outside Officer”) or a candidate for Outside Officer possesses independence such that the interests of the Outside Officer or candidate for Outside Officer are unlikely to have conflict with the interests of general shareholders if, after the Company investigates to practically possible and reasonable extent, one or more of the following criteria do not apply with respect to the said individual.

(1) A party who is now or was previously an officer (excluding the Company’s Outside Director or Outside Audit & Supervisory Board Member) or an employee of the Citizen Group (the “Citizen Group” refers to the group of companies made up of the Company and its subsidiaries; hereinafter the same).
(2) A party whose major business partner is the Company (Note 1) or an executive of such party (“executive” refers to an executive as defined in Article 2, paragraph 3, item 6 of the Enforcement Regulations of the Companies Act (Order of the Ministry of Justice No. 12 of 2006); hereinafter, the same).
(3) A major business partner of the Company (Note 2) or an executive of such party.
(4) A consultant, accounting professional, or legal professional who receives cash or other financial benefits of 10 million yen or higher as payment from the Citizen Group for reasons other than Director’s or Audit & Supervisory Board Member’s remuneration (if the party receiving such financial benefits is an incorporated entity, association or other organization, then a person belonging to such organization).
(5) A party receiving donations of cash or other financial benefits of 10 million yen or higher from the Citizen Group (if the party receiving such donation is an incorporated entity, association or other organization, then a person belonging to such organization).
(6) A party directly or indirectly holding 10% or more of the total number of voting rights held by the Company’s shareholders or an executive of such party.
(7) In the case that an officer or employee of the Citizen Group is serving as an outside officer at another company, an officer or employee of the company other than the aforementioned outside officer.
(8) A person to whom any of the criteria (2) through (7) applied in the most recent fiscal year or the past three fiscal years of the Company.
(9) A spouse or relative within the second degree of kinship of a person to whom any of the criteria (1) through (8) applies.

Notes:
1. “Party whose major business partner is the Company” refers to a party whose sales to the Citizen Group makes up 2% or more of the consolidated net sales of the party’s group (“group” refers to the group of companies made up of the party, its parent, and its subsidiaries; hereinafter the same).
2. “Major business partner of the Company” refers to a party whose group provides the Citizen Group with sales amounting to 2% or more of the consolidated net sales of the Company.

3.Directors’ and Audit & Supervisory Board Members’ Compensation

(Note)
1. The above amount of the bonuses (81 million yen) for Directors (excluding Outside Directors) is the amount to be paid after the conclusion of the 133rd Ordinary General Meeting of Shareholders scheduled to be held on June 27, 2018.
2. The maximum allowance for the total amount of compensation, etc. for Directors (excluding Outside Directors) was set at 270 million yen per year (inclusive of bonuses, etc.) at the 122nd Ordinary General Meeting of Shareholders held on June 26, 2007. Prior to the resolution, employee salaries (including bonuses) for employees who also serve as Directors used to be paid in addition to the compensation, etc. for Directors. However, after the resolution, compensation for the performance of the duties of Directors is consolidated into the above compensation, etc. for Directors, and will be paid within the above maximum allowance.
3. The maximum allowance for the total amount of compensation, etc. for Outside Directors was set at 30 million yen per year at the 122nd Ordinary General Meeting of Shareholders held on June 26, 2007. No bonuses will be paid to Outside Directors.
4. The maximum allowance for the total amount of compensation, etc. for Audit & Supervisory Board Members was set at 80 million yen per year at the 122nd Ordinary General Meeting of Shareholders held on June 26, 2007. No bonuses will be paid to Audit & Supervisory Board Members.
5. At the 133rd Ordinary General Meeting of Shareholders held on June 27, 2018, the introduction of the performance-linked stock and share-based compensation system for Directors (other than Outside Directors and those who do not reside in Japan) was approved. Under this plan, a trust will be created for a period of three consecutive fiscal years (the initial period starting from the fiscal year ending March 31, 2019 shall be one (1) fiscal year), and the shares of the Company will be issued to the Directors (other than Outside Directors and those who do not reside in Japan) through the said trust. The limit of the maximum amount to be contributed to the trust is set at three hundred (300) million yen for a period of three fiscal years (and one hundred (100) million yen for the initial period starting from the fiscal year ending March 31, 2019 (for one (1) fiscal year)).

4.Implementation of Measures for Shareholders and Other Stakeholders

  
Category Measures Supplementary Explanation
the General Shareholder Meetings and Voting Rights Early Notification of General Shareholder Meeting Since 2006, the Company has endeavored to issue a notice at least three (3) weeks prior to the date of the General Meeting of Shareholders .
Since 2016, the Company has made the notice available electronically upon passing the resolution for convening the General Meeting of Shareholders at the meeting of the Board of Directors until the issue of the convocation notice.
Scheduling AGMs Avoiding the Peak Day Since 2006, the Company has endeavored to hold the meeting at least one (1) business day before the peak day.
Allowing Electronic Exercise of Voting Rights The Company has adopted the online exercise of voting rights via personal computer or mobile phone.
Participation in Electronic Voting Platform Since 2007, the Company has participated in the platform for the electronic exercise of voting rights for institutional investors.
Providing Convocation Notice in English The convocation notice is made available in English.
Other The convocation notice is made available on the Company’s homepage.
IR Regular Investor Briefings for Individual Investors The Company strengthens IR for individual investors, including holding investor briefings for individual investors.
Regular Investor Briefings for Analysts and Institutional Investors The representative provides briefings on the financial results for the second quarter and the full year. The officer in charge of IR provides briefings on the financial results for the first and third quarters.
Posting of IR Materials on Website The Company makes available a summary of accounts, financial results briefing materials, questions and answers at the briefings, the securities reports, the quarterly reports, annual reports and other documents.
Establishment of Department and/or Manager in Charge of IR The Company has established the office for public relations and IR and assigned three employees to it.
Respect for Stakeholders Stipulation of Internal Rules for Respecting the Position of Stakeholders The Company stipulates in the Citizen Group Code of Conduct that the positions of the stakeholders shall be respected.
Implementation of Environmental Activities, CSR Activities etc. The Company prepares an annual CSR report that includes a report on environmental activities and activities that contribute to society. This report is made widely available through the Company’s website and other channels.
Development of Policies on Information Provision to Stakeholders The Company intends to improve the CSR initiatives through communication with all stakeholders. The Citizen Group Code of Conduct provides that “corporate information shall be disclosed actively and fairly and managed appropriately.”
Other The Company aims to create an environment that is easy to work in for all the employees, regardless of their attributes. To promote the active participation of women, the Company has formed a diversity project team. The Company also gives support to all employees so that they can show their ability to the fullest by encouraging tailored communication with them including regular meetings with employees who are raising a child or caring for a family member.
The ratio of female managers at major Group companies is posted at Citizen Group CSR Data.

5.Adoption of Anti-Takeover Measures

The Company considers that if a large number of the share certificates of the Company are purchased by anyone, whether to accept this or not should ultimately be left to the judgment of the shareholders of the Company. For this judgment, it will be essential to provide sufficient information to the shareholders. Accordingly, the Company introduced rules to impose the following requirements on parties who intend to purchase share certificates of the Company that would give a certain shareholder group a shareholding of not less than 20%: (i) to provide necessary and sufficient information to the Board of Directors of the Company in advance; and (ii) to commence the purchase of a large number of the share certificates of the Company after the expiry of a certain period of evaluation by the Board of Directors of the Company. The Board of Directors of the Company established an independent committee as an organ to properly apply the said rules and prevent arbitrary judgment by the Board of Directors. The current independent committee consists of two (2) Outside Directors and one (1) Outside Audit & Supervisory Board Member, all of whom have a high degree of independence.
If these rules are not observed, the Company may take countermeasures to protect the interests of the shareholders as a whole.
For details about the anti-takeover measures, refer to the convocation notice for the 131st Ordinary General Meeting of Shareholders.

NOTICE OF THE 131st ORDINARY GENERAL MEETING OF SHAREHOLDERS (PDF:1,171KB)

Policy for cross-shareholdings & Standard for voting cross-shareholdings

1.Policy for cross-shareholdings

The Company will have cross-shareholdings if it judges, after comprehensive consideration, that they will contribute to maintaining and strengthening the business relations of the Citizen Group in the medium to long term as well as the smooth management of the business operations of the Company and the development of the business. The basic policy for the verification of individual cross-shareholdings is that their rationality and necessity will be examined at a meeting of the Board of Directors each year in light of relationships between business partners and the Group and the possibility of mutually enhancing the corporate value and that the scale of shareholdings will be reduced if the significance of continuing to hold the shares has diluted.

2.Standard for voting cross-shareholdings

With respect to the standards for the exercise of the voting rights, the Company will make a judgement on the exercise of the voting rights according to the standard of the contribution to the business of the Group in the medium to long term.

Stock Holding (As of March 31, 2018)

1.Of all stocks held, the number of issues of stocks acquired for purposes other than genuine investment and the total amount of such investments on the balance sheet

38 issues  JPY39,105 Million

2.Categories, main issues, number, amount on the balance sheet, and investment purpose of stocks acquired purposes other than genuine investment

Management Policy
Message from President & CEO
Fundamental Management Policy / Mid-term Management Strategy
Business and Other Risks
Corporate Governance
ESG Initiatives at CITIZEN

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