Governance

Corporate Governance

Corporate Governance System

To promote sustainable growth and medium- to long-term improvements to our corporate value, we position swift decision-making, the proper performance of duties, and strengthening our management oversight functions as core issues for the Company. To ensure appropriate responses to these issues, we are strengthening the Board of Directors’ oversight functions. To accelerate and optimize business execution based on appropriate supervision by the Board of Directors, with a resolution passed on June 27, 2019 at the General Meeting of Shareholders, we switched from a company with an Audit & Supervisory Board to a company with an Audit & Supervisory Committee structure. The total number of directors increased from seven to eight, and the percentage of outside directors from 28.6% to 37.5%.

Board of Directors

The Board of Directors is chaired by the President & CEO, and is comprised of the eight members including three outside directors.

  • Five directors (excluding directors serving as Audit & Supervisory Committee members and of whom, one is an outside director)
  • Three directors serving as Audit & Supervisory Committee members (of whom, two are outside directors)

The term for directors (excluding directors serving as Audit & Supervisory Committee members) shall be one year in order to clarify management responsibilities and enable them to respond to rapid changes in operating environments.

The Board of Directors is responsible for the function of decision-making and overseeing business execution by management. The Board discusses and makes decisions on important management matters specified in laws and regulations, the Articles of Incorporation, and the Rules on the Board of Directors. To increase efficiency and agility in the execution of business, the Board of Directors delegates executive authority to executive officers on matters that do not meet the standards set for referral to the Board of Directors in laws and regulations, the Articles of Incorporation, and the Rules on the Board of Directors.

Audit & Supervisory Committee

The Audit & Supervisory Committee is comprised of three directors who are Audit & Supervisory Committee members. An inside director shall serve as committee chair and two outside directors are committee members.

In order to ensure the soundness and transparency of business management, Audit & Supervisory Committee members attend Board of Directors’ meetings and other important meetings and committee meetings and voice their opinions, as necessary, to ensure appropriate decision-making.
Audit & Supervisory Committee members also exercise strict oversight by meeting regularly to communicate with the President & CEO of the Company, soliciting information and reports from directors (excluding directors who are Audit & Supervisory Committee members) and others, and reading the documentation for resolutions on important matters.

Nomination and Compensation Committees

We have established voluntary Nomination and Compensation committees as advisory bodies under the Board of Directors to increase the transparency and appropriateness of the processes for nominating directors and determining their compensation.
When requested by the Board of Directors, the Nomination Committee submits proposals to the Board of Directors concerning the agenda for the General Meeting of Shareholders such as the appointment and dismissal of directors and recommendations on selection standards for director candidates.
When requested by the Board of Directors, the Compensation Committee deliberates on and submits proposals to the Board of Directors concerning the agenda for the General Meeting of Shareholders such as compensation for directors and recommendations on such matters as policies related to the director compensation system and its framework.

Executive Officer System and Executive Officers

Executive officers are delegated certain authority to execute business according to the policies established by and under the supervision of the Board of Directors. Matters important to the execution of business are discussed at committee meetings that are attended by relevant executive officers and directors.
Executive officer candidates are nominated based on competence and performance history and are selected by the Board of Directors from among elite human resources capable of contributing to the further growth of consolidated operations. The term for executive officers shall be one year.

Composition of the Board of Directors

We believe that it is necessary for the Board of Directors to be comprised of members with diverse perspectives, experience, and skills in order to ensure effective management and oversight functions. As such, in addition to inside directors who are familiar with the Company’s business, our Board of Directors is comprised of outside directors possessing broad knowledge and extensive experience in corporate management, science, administration, finance and accounting, law, and other fields. Outside directors bring in external perspectives and increase management transparency. The Company also appoints outside directors to further strengthen the oversight function regarding the execution of business. They are experts who can provide opinions and advice from a wide variety of perspectives, including that of stakeholders, and are invited to Board of Directors’ meetings and other meetings.
The three outside directors comment and state their opinions as necessary to ensure adequate and appropriate decision making by the Board of Directors.

Positions and Responsibilities of Directors

Position Name Nomination
Committee
Compensation
Committee
Attendance at
Board of Directors’
meetings
Years of service as director
(or Audit & Supervisory
Board member)
President & CEO KASHIO Kazuhiro 14/15 (93%) 9
Director and Executive Officer YAMAGISHI Toshiyuki   15/15 (100%) 7
Director and Executive Officer TAKANO Shin   15/15 (100%) 5
Director and Executive Officer KASHIO Tetsuo     11/11 (100%) 1
Director (Outside) OZAKI Motoki   9/11 (82%) 1
Director and Full-Time
Audit & Supervisory
Committee Member
UCHIYAMA Tomoyuki     15/15*1 (100%) 3*2
Director and Audit &
Supervisory Committee
Member (Outside)
CHIBA Michiko 15/15*1 (100%) 2*2
Director and Audit &
Supervisory Committee
Member (Outside)
ABE Hirotomo   11/11 (100%) 1

   : Outside Director ●: Committee Chair ○: Committee Member

  • *1 Including attending four times as Audit & Supervisory Board member.
  • *2 Years of service as Audit & Supervisory Board member and director of the Company. Appointed as director in June 2019.

Directors’ Training

Based on the belief that directors must continue to advance their skills and knowledge to sufficiently fulfill their roles, we actively promote self-improvement by directors. The Company continuously offers the support, including the provision of information, opportunities, and cost reimbursements, necessary for self-improvement. We continuously offer information to promote a better understanding of our business operations, particularly for outside directors. This includes planning and providing opportunities, both at the time of appointment and throughout the term of their appointment, to participate in important internal meetings, tour domestic and overseas plants and offices, and attend internal research seminars.
Directors who are members of the Audit & Supervisory Committee are provided opportunities for skills improvement necessary for their roles and responsibilities through information provision by the Japan Audit & Supervisory Board Members Association and participation in seminars.

Outside Directors

Outside directors are appointed in order to enhance corporate transparency by incorporating external perspectives into management and further strengthening oversight of operations. The Company appoints experts who are able to provide opinions and advice from stakeholder and other diverse perspectives to the Board of Directors meetings and other meetings.

The three outside directors make suggestions as needed to ensure the validity and appropriateness of decision-making by the Board.

Reason for Appointment as an Outside Director

OZAKI Motoki Independent
Director
Nomination Committee Chair Mr. Ozaki was appointed for his numerous years of management experience at major corporations and to utilize his objective perspective based on his vast experience and knowledge in overall Company management.
CHIBA Michiko Independent
Director
Audit & Supervisory Committee member
Nomination Committee member
Compensation Committee member
Ms. Chiba possesses expertise in finance and accounting and extensive auditing experience as a certified public accountant. Ms. Chiba was appointed to provide audits and oversight of general management at the Company as an outside director from a fair and neutral position as a highly professional and objective third party.
ABE Hirotomo Independent
Director
Audit & Supervisory Committee member
Compensation Committee Chair
Mr. Abe possesses rich experience from working overseas for a sogo shosha (general trading company) and special knowledge based on his research and work in the legal field as a graduate school professor. He was appointed to provide audits and oversight of general management at the Company as an
outside director from a fair and neutral position as a highly professional and objective third party.

Diagram of Corporate Governance System

Figure: Diagram of Corporate Governance System

Internal Auditing

The Internal Audit Department consists of four auditors who audit the status of organizational management based on common Group standards and work to strengthen internal controls. Dedicated staff have been allocated to directors who are members of the Audit & Supervisory Committee (including outside directors) to assist them in their work and they exchange information on a daily basis and hold regular quarterly meetings. They also plan internal audits, provide a summary report based on the items audited after internal audits have been conducted, and work together to improve the efficiency and effectiveness of the audit function. The results of internal audits are reported to directors (excluding directors who are members of the Audit & Supervisory Committee).

Analysis and Evaluation of Board of Directors’ Effectiveness

With an awareness of the changes in the roles expected of the Board of Directors, we evaluate the effectiveness of the Board of Directors and conduct reviews aimed at strengthening organizational and operational governance.
In fiscal year ended March 2019, we conducted interviews of outside directors regarding points of improvement related to the role, function, and implementation of the Board of Directors’ meetings. From these interviews, we received opinions such as the need to review standards for meeting agendas, and to enhance meeting materials.
We are working to address these opinions. In fiscal year ended March 2020, we conducted a survey of directors (including Audit & Supervisory Committee members) and received opinions such as the need to propose agenda items earlier and discuss them from a more strategic and long-term standpoint. Based on these opinions, we will work on further increasing the effectiveness of the Board and making continuous improvements.

Director Compensation

To ensure the sustainable growth of the Company, our basic policy for director compensation is to offer incentives that ensure competitive compensation levels while promoting a healthy entrepreneurial spirit. In principle, this policy applies regardless of position. Compensation is comprised of fixed compensation (monthly) and performance-linked compensation (bonuses and stock compensation), but in principle, to place greater emphasis on performance-linked compensation, the percentages are 60% and 40%, respectively. This percentage may be adjusted based on individual role. Performance-linked compensation is comprised of bonuses (short-term performance incentive) and stock compensation (medium- to long-term performance incentive). Of the aforementioned performance-linked compensation, bonus levels are set based primarily on net sales and operating profit for the fiscal year because we believe that these best reflect the results of management efforts to improve business performance. Specifically, they are based on performance relative to net sales and operating profit goals and actual figures. Business conditions and other qualitative factors are also reflected in bonus amounts. A restricted stock compensation plan has been introduced since fiscal year ended March 2020 to provide incentives for continuously improving the corporate value of the Company and to promote further value sharing with shareholders.
The process for determining compensation is for the structure and general framework to be deliberated on at meetings of the Compensation Committee chaired by an outside director after benchmarking with competitors for each position and the results to be submitted to the Board of Directors. The Board of Directors reviews the report to make their decision.

Director Compensation Composition

Figure: Director Compensation Composition

FYE 3/2020 Compensation

Executive category Total compensation
amount
Total amount by compensation type Number of
applicable
executives
Directors
(Excluding Audit & Supervisory Committee members and outside directors)
317 million yen Fixed compensation 74 million yen 7
Performance-linked compensation
Bonuses
Restricted stock compensation
14 million yen
28 million yen
Special reward for service 200 million yen
Audit & Supervisory Committee members
(Excluding outside directors)
11 million yen Fixed compensation 11 million yen 1
Audit & Supervisory Board members
(Excluding outside Audit & Supervisory Board members)
3 million yen Fixed compensation 3 million yen 1
Outside directors 32 million yen Fixed compensation 32 million yen 7
Notes:
  1. Amounts paid to directors do not include employee wages paid to directors with managerial duties.
  2. At the 63rd General Meeting of Shareholders held on June 27, 2019, a resolution was passed setting the maximum compensation amount for directors (excluding Audit & Supervisory Committee members) at less than a total of 400 million yen per year (less than 30 million yen per year for outside directors). This does not include employee wages paid to directors with managerial duties. At the same meeting, within the above maximum compensation amount for directors (excluding Audit & Supervisory Committee members and outside directors), the maximum amount for restricted stock compensation was set at less than 100 million yen per year (and a maximum of 80,000 shares).
  3. At the 63rd General Meeting of Shareholders held on June 27, 2019, a resolution was passed setting the maximum compensation amount for directors (Audit & Supervisory Committee members) at a total of less than 70 million yen per year.
  4. At the 51st General Meeting of Shareholders held on June 28, 2007, a resolution was passed setting the maximum compensation amount for Audit & Supervisory Board members at a total of less than 70 million yen per year for four members. However, this does not include the provision for retirement benefits for directors (and other officers).
  5. As of June 27, 2019, we switched from a company with an Audit and Supervisory Board to a company with an Audit & Supervisory Committee structure.
  6. Based on the resolution at the 63rd General Meeting of Shareholders, the late KASHIO Kazuo, former representative director, was offered a special reward for service of 200 million yen.

Takeover Defense Measures

Takeover defense measures have not been established.

Dialogues with Shareholders

We recognize that it is crucial to build a long-term, trust-based relationship with our shareholders and investors through proactive dialogue, so we have a dedicated executive officer responsible for IR activities under the direction of our President & CEO.
Our internal structure promotes a common awareness of the importance of dialogue with shareholders. We collaborate on IR activities by gathering and accumulating necessary information from the networks linking relevant departments. Directors or executive officers directly engage in IR activities as necessary depending on theme and content. In addition to sharing opinions received through shareholder interactions with the Board of Directors, we also share information at executive officer meetings as necessary to reflect those opinions in measures aimed at increasing corporate value.
To ensure the management of insider information during IR activities, we have outlined rules concerning the handling of important undisclosed information and work to ensure strict implementation of those rules. Part of our response measures includes requiring that meetings are attended by multiple people.
In addition to communication through individual meetings, other measures for IR management include holding quarterly earnings briefings for institutional investors and securities analysts where the President & CEO or executive officer responsible for IR provides a summary of financial results, introduces earnings forecasts, and explains operations. To promote further understanding of our Company, we are enhancing external communications by listing various IR information on our website and have established a help desk for receiving inquiries from shareholders.

Basic Views on Internal Control System and Progress on System Development

The Casio Group has established the Charter of Creativity for Casio, Casio Common Commitment and Casio Code of Conduct based on the corporate creed of “Creativity and Contribution.” The following systems have been implemented to ensure proper business operation.

  1. System to ensure that performance of duties by directors and employees of the Company and group companies comply with the Articles of Incorporation and relevant laws and regulations
    1. Based on laws, the Articles of Incorporation, and rules for the Board of Directors, the Board of Directors decides important issues relating to legal requirements and management of the Company and group companies, and prevents violations of the law or the Articles of Incorporation by monitoring the performance of duties by the directors.
    2. In order to comply with relevant laws and regulations regarding the performance of duties, specific documents such as policies and rules are prepared. Awareness of these are promoted throughout the Company and each group company after various committees, such as the Internal Control Committee, have examined and deliberated on them.
    3. The Whistleblower Hotline has been established with internal and external channels and operates as the point of contact for inquiries and reporting on problems related to legal violations and other compliance matters. The Company ensures that whistleblowers are not penalized.
    4. The Company and group companies are not involved with antisocial forces, which pose a threat to social order and public safety, in any way, and the entire organization is resolute in refusing any improper demands.
    5. The validity and operational adequacy of the above-mentioned rules are improved through internal audits and continual review, in order to prevent any misconduct.
  2. System for retaining and managing information relating to performance of duties by directors and employees of the Company and group companies

    Each department retains and manages information relating to the performance of duties by the directors and employees concerned, based on the Document Management Rules and other rules.

  3. Risk management rules and other systems at the Company and group companies
    1. The Company and group companies have a system to manage risks that can have a significant impact on management. The system is promoted in a unified way by the relevant departments and the Secretariat for the Internal Control Committee, based on the Risk Management Rules.
    2. Fundamental Policies on Product Safety and an implementation system have been established with an understanding that maintaining customer confidence in product safety is an important management issue.
  4. System to ensure the efficient performance of duties by directors and employees of the Company and group companies
    1. Board of Directors meetings are held to discuss important management issues facing the Company and group companies and make decisions swiftly and in a reasonable manner. Such meetings are held at least once a month in principle.
    2. The Company’s executive officers, directors (including Audit & Supervisory Committee Members) attend meetings of the executive officers to discuss and decide on the execution of important business matters. They ensure group-wide coordination and smooth implementation of measures.
    3. Detailed execution procedures are outlined in the Executive Decision Making Authority Rules and the Group Company Decision Making Authority Rules.
    4. Group companies have created a system for performance of duties based on consolidated management plans, the Group Company Decision Making Authority Rules, and various basic group policies.
  5. System to ensure proper operations at the Company and group companies
    1. To ensure proper operations, the Company and group companies have various rules based on the Charter of Creativity for Casio, Casio Common Commitment, and Casio Code of Conduct.
    2. The Company assigns certain directors or executive officers based on a system under which directors and officers are responsible for specific group companies. The relevant directors and executive officers perform group company management through a system that requires reporting to and approval by the Company, in accordance with the Group Company Decision Making Authority Rules. They also perform monitoring as necessary.
    3. The Company and the group companies have built a system to ensure the adequacy and reliability of financial reporting. After internal controls related to business flow and financial reporting are inspected, they are documented and evaluated, and revised to improve them.
  6. System for employees that assist Audit & Supervisory Committee in the performance of their duties, and the independence of those employees from the directors (excluding directors who are Audit & Supervisory Committee Members)
    1. Employees are appointed to assist Audit & Supervisory Committee in their duties.
    2. Matters concerning the appointment, transfer, evaluation or discipline of employees who assist Audit & Supervisory Committee require prior consent from the Audit & Supervisory Committee.
  7. System for the Company’s directors and employees and group companies’ directors, auditors, and employees to report to the Audit & Supervisory Committee; other systems for reporting to the Audit & Supervisory Committee; and systems to ensure that audits by the Audit & Supervisory Committee are performed effectively
    1. Whenever something that is likely to cause significant damage to the Company or group companies, facts pertaining violation of the law or the Articles of Incorporation, or facts pertaining to illegal conduct of business are discovered, the Company’s directors and employees must immediately report it to the Audit & Supervisory Committee.
    2. Whenever something that likely to cause significant damage to the Company or group companies, facts pertaining to a violation of the law or the Articles of Incorporation, or facts pertaining to illegal conduct of business are discovered, the directors, auditors and employees of a group company must immediately report it to the Company officer in charge of the group company, and that officer must immediately report it to the Audit & Supervisory Committee.
    3. Whenever a group company’s directors, auditors and employees determine that a management action or guidance from the Company may violate the law, or may present a compliance issue, they must report it to the Audit & Supervisory Board Members.
    4. The Company’s directors and employees and the directors, auditors and employees of group companies will provide reports and information in response to requests from Audit & Supervisory Committee.
    5. The Company’s Internal Audit Department periodically reports the results of audits of the Company and group companies to the Audit & Supervisory Committee.
    6. The Whistleblower Hotline Secretariat reports the status of whistleblower reports and measures taken to the Audit & Supervisory Committee.
    7. The Company and group companies ensure that people who have made a report to the Audit & Supervisory Committee are not penalized.
    8. The Company promptly processes any requests it receives for the prepayment or reimbursement of expenses arising from the performance of duties by the Audit & Supervisory Committee.
    9. Audit & Supervisory Committee Members may attend any important internal meeting of the Company.
    10. Important ringi approval documents of the Company and group companies are reported to the Audit & Supervisory Committee after approval.

Corporate Governance Report