CSR

Corporate Governance / Matters Related to Directors, Auditors and Independent directors / auditors

Matters related to directors, auditors and independent directors / auditors (summary)

(As of June 17, 2021)

Organizational form Company with Auditors

Directors
Number of directors stipulated in articles of incorporation 15 persons
Director's term of office stipulated in articles of incorporation Two years
Chairman of the board of directors President
Number of directors Seven persons
Election of outside directors Appointed
Number of outside directors Two persons
Number of independent directors out of outside directors Two persons
Committee corresponding to nominating committee or compensation committee None

Auditors
Establishment or non-establishment of a board of corporate auditors Established
Number of statutory auditors stipulated in articles of incorporation Four persons
Number of corporate auditors Three persons
Cooperation among auditor, independent auditors, and internal auditing departments Regarding internal audit, internal audit office which reports directly to President and COO, has been established and is conducted by three peoples, including one general manager. Based on the internal audit plan formulated at the beginning of the fiscal year, they regularly evaluates internal controls and conducts internal audits with respect to the overall business activities of us and our subsidiaries. Based on the results, they provides advice and recommendations for operational improvement.
Auditor attends Board of Directors and other important internal meetings to express its views on audits conducted by auditor, and conducts audits through interviews with various divisions and examinations of approval documents, thereby enabling monitoring of the status of director's business execution.
Regarding cooperation between Board of Auditors and the internal audit office, the internal audit office attends monthly meetings of Board of Auditors and mutually evaluates internal controls and reports and exchanges views on the results of audits. In addition, Board of Auditors and the internal audit office hold quarterly meetings to exchange views with the independent auditors, and the independent auditors attend mid-term and year-end audits. In this way, the three parties cooperate with each other to conduct audits.
Election or non-election of outside corporate auditors Appointed
Number of outside corporate auditors Two persons
Number of independent auditors out of outside auditors Two persons

Independent directors / auditors
Number of independent directors / auditors Four persons
Other notes regarding independent directors / auditors We have designated two directors and two auditors who are outside directors / auditors as independent directors / auditors.

Incentives
Implementation of measures on incentive allotment to directors Other
Supplementary information We have introduced a restricted stock compensation plan (the "Plan") under which our directors (excluding outside director and Hidetoshi Yamamoto) allocates shares of our common stock subject to certain restrictions on transfer and the reasons for our free acquisition, etc. to the target director with the aim of enhancing the willingness of the target medium-to-long-term to contribute to the sustainable improvement of business performance and corporate value and to further share value with our shareholders.
Under this system, the number of shares is determined by resolution of Board of Directors after comprehensively taking into account roles and contributions, etc., with respect to the allocation of the benefit obligation.
Under the Plan, the total amount of monetary compensation receivable that can be paid for the allocation of restricted shares is not more than ¥1.1 billion per annum (including ¥50 million per annum for outside director) for director, which has already been approved, and the total number of shares of common stock that we newly issue or dispose of is not more than 314,500 per annum.
Grantees of stock options Employees, Directors of subsidiaries, and employees of subsidiaries
Supplementary information We grant stock options so that talented leaders who are responsible for our new stage of growth can strive for business activities with a strong awareness of contributing to shareholder interests based on a common awareness with our shareholders.

Director's compensation
Disclosure of directors' compensation Disclosure of individual compensation is not made.
Supplementary information Our director compensation consists of monetary remuneration paid monthly as base remuneration and bonuses and non-monetary remuneration granted restricted stock. The percentage of these remuneration is based on a comprehensive ratio setting that takes into account positions, responsibilities, performance and contributions.
<Total amount of remuneration, etc. by director category of the submitting company, total amount of remuneration, etc. by type, and the number of directors subject to the remuneration (FY2020)>
Amount of Compensation by Type (millions of yen)
Director category
Total amount of remuneration, etc. (millions of yen)
Monetary remuneration
Performance-linked remuneration, etc.
Non-monetary Remuneration, etc.
Number of Directors covered (people)
Director
266
198
-
68
6
Outside director
10
10
-
-
2
The above number of directors includes one director who retired at the conclusion of the 32nd Annual General Meeting of Shareholders held on June 17, 2020.
Existence of methods to determine compensation or compensation policies Yes
Disclosure of methods to determine compensation or compensation policies Monetary remuneration (fixed remuneration) out of the remuneration of director is, in principle, revised in June of each year, and determined remuneration is paid every month for 12 equal amounts.
In addition, the Company has adopted Bonuses as performance-linked compensation, which is monetary compensation, and a pre-delivered restricted stock compensation plan (stock-based compensation) as non-monetary compensation.

(Decision process)
Our director compensation is based on a compensation system that takes into account the achievements of the Group in achieving sustainable growth and medium-to-long-term goal of increasing corporate value and shareholder interests. Our policy is to ensure that the amount of individual compensation is commensurate with the job responsibilities and roles of other companies in the same industry and economic and social conditions, as well as the performance, degree of contribution, and responsibilities of each fiscal period. Specifically, it consists of fixed compensation which paid a certain amount of money each month, bonuses which paid money in conjunction with short-term performance, and stock-based compensation, which motivates the Company to continuously improve its medium-to-long-term performance and its corporate value. Decision-making policies are determined by resolution of Board of Directors after consultation with the meeting.

(Performance-linked remuneration, etc.)
To heighten awareness of the need to improve business performance in each fiscal year, we set consolidated operating profit as a single-year performance indicator for director and pay an amount calculated according to the degree of achievement of these targets as bonuses. The reason for choosing operating profit as a performance indicator is because it shows the results of a company's operating activities and we consider it is most important profit which is effected by management's ability.

(Non-monetary remuneration, etc.)
Our director (excluding director Hidetoshi Yamamoto and outside directors, hereinafter referred to as "Target Director") has granted restricted shares to director in order to increase their willingness to contribute to the sustainable improvement of medium-to-long-term business performance and corporate value, and to further share value with shareholders. These restricted shares are allotted to the Company's common shares subject to certain restrictions on transfer and the reasons for free acquisition by the Company.
The number of shares of restricted stock to be delivered will be determined according to the responsibilities of director subject to the grant, and the restricted stock allocation contract will be concluded between us and the grantee.

(Maximum remuneration)
At our 26th Annual General Meeting of Shareholders held on June 18, 2014, the amount of monetary compensation of our directors was resolved to be within ¥1.1 billion per annum (including ¥50 million per outside director). At the conclusion of the meeting, Director had 12 members (including one outside director). In addition, at our 32nd Annual General Meeting of Shareholders held on June 17, 2020, it was resolved that the maximum number of shares of restricted stock to be paid to directors (excluding Outside Directors) shall not exceed 314,500 shares per year, within the aforementioned amount of compensation of directors. The number of director to be granted remuneration for restricted stock at the conclusion of such general meeting of shareholders is five.

Support system for outside directors (outside corporate auditors)
(i) Outside directors
General Affairs Department carries out assistance to the Outside directors.
The department makes Board of Directors convening and advance notification of agenda.
(ii) Auditors
The audit staff assists the work of the auditors.
Information required by the Board of Auditors is collected by the auditors themselves, or by the staff at the direction of the auditors.
The Board of Auditors arbitrarily shares information with the audit office.
The General Affairs Department conducts advance briefings regarding matters to be reported and resolved in Board of Directors as needed.

Retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)
Information on retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)
Names
Job title/position
Responsibilities
Employment terms (Full/part time, with/without compensation, etc.)
Date when former role as president/CEO ended
Term
-
-
-
-
-
-
Number of retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.) 0 people
Others We do not have a system or internal regulations under which president and COO, etc. will assume the positions of advisor or after retirement.

Reasons for Appointing an Outside Director and Outside Auditors
Outside director
Status of Attendance at Meetings of Board of Directors (FY2020)
Shigesato Itoi Mr. Shigesato Itoi, our outside director, has been providing the Company with significant and helpful advice on our creative and management index based on his broad range of achievements, abundant experience and his original ideas as a copy-writer and essayist. The Board of Directors elected him as the outside director, based on its judgment that he would be an appropriate resource for providing the Company with appropriate coaching and supervision on its management and business.
Furthermore, he satisfies the criterion of independence, and was designated as an independent officer after it was judged his appointment would not give rise to conflict of interest with the general shareholders of the Company.

Board of Directors
5/6

Yoriko Aelvoet Ms. Yoriko Aelvoet, our Outside Director, has been involved in the contents business for a considerably long period of time, and has a high level of expertise and knowledge based on her strong managerial accomplishments and abundant experience. The Board of Directors elected her as an Outside Director, expecting that she will provide the Company with further coaching, based on her experience and knowledge, as well as her diverse perspective.
Furthermore, she satisfies the criterion of independence, and was designated as an independent officer after it was judged her appointment would not give rise to conflict of interest with the general shareholders of the Company.
Board of Directors
6/6
Outside auditors
Status of Attendance at Meetings of Board of Directors / Auditors(FY2020)
Kenichi Ikezawa Mr. Kenichi Ikezawa, our Statutory Auditor, has been involved in accounting and finance practices for a considerably long time, and and has sufficient knowledge concerning group internal control backed up by his knowledge and insights, etc. cultivated through his career. The Board of Directors elected him as the Company’s Outside Auditor, considering that he would be able to continue to conduct business audit and accounting audit, as well as provide advice to the management, from an independent standpoint.
Furthermore, he satisfies the criterion of independence, and was designated as an independent officer after it was judged his appointment would not give rise to conflict of interest with the general shareholders of the Company.
Board of Directors
6/6
Board of Auditors
8/8
Yoshika Furuta Mr. Yoshika Furuta, our Outside Auditor, has a depth of experience in national tax practice, and the Board of Directors elected him as the Outside Auditor, considering that he would be able to continue to conduct business audit and accounting audit, as well as provide advice to the management, from an independent standpoint.
Furthermore, he satisfies the criterion of independence, and was designated as an independent officer after it was judged his appointment would not give rise to conflict of interest with the general shareholders of the Company.
Board of Directors
6/6
Board of Auditors
8/8