Basic Approach to Corporate Governance
The Company aims to achieve sustained growth and improvement of corporate value over the medium- to long-term by continuing to strengthen corporate governance, as described below.
- The Company shall respect the rights of shareholders and strive to develop a conducive environment for shareholders to appropriately exercise those rights. Efforts shall also be made to ensure the effective equality of all shareholders.
- The Company shall strive to foster a sound corporate culture and work environment by appropriately collaborating with a variety of stakeholders, including customers, shareholders, employees, insurance agents, business partners and local communities.
- The Company shall strive to increase the transparency of management through appropriate and timely disclosure of corporate information, including financial information and non-financial information regarding management strategies, management priorities and other matters.
- The Company shall strive to ensure the effectiveness of the Board of Directors' oversight function over the execution of business as the holding company responsible for the business execution management function of each Group company.
- The Company shall engage in constructive dialogue with stakeholders in order to contribute to sustainable growth and the enhancement of corporate value over the medium- to long-term.
Corporate Governance System
The Company makes decisions on important business matters and oversees the execution of business through its Board of Directors. At the same time, the Company, as a company with an Audit & Supervisory Board, audits the performance of directors’ duties among others through its Audit & Supervisory Board, which is independent of the Board of Directors.
In addition, the Company has introduced an executive officer system for the purpose of bolstering its business execution capabilities. By clearly delineating responsibilities for oversight and execution, the Company strengthens the governance function of the Board of Directors.
The Company has also established a Nomination and Compensation Committee as an advisory body to the Board of Directors. It discusses the fairness and appropriateness of the appointment and dismissal of and compensation for directors and Audit & Supervisory Board members, among other related issues, and ensures the transparency of management and enhances accountability.
Furthermore, the Group has put in place an Executive Committee as a body to discuss and resolve important matters concerning the business of the Company and the management of businesses of the Group. Along with this body is a Group Management Committee which was established by the Company as a body to deliberate matters concerning the Group’s growth strategies, etc. and related important matters from a Group-wide perspective to sustainably enhance the corporate value of the Group.
Promoting Group Management
The Company, as a holding company, fulfills the roles of deciding on the Group's strategy, appropriately allocating the Group's business resources and formulating capital strategies. Along with this, the Company strives to establish a Group business management system through such means as rigorously enforcing Group-wide risk-return management by accurately grasping the business risks borne by its six directly owned subsidiaries centered on Taiyo Life, Daido Life, and T&D Financial Life, together with T&D United Capital, T&D Asset Management and Pet & Family Insurance. The directly owned subsidiaries, with their own unique business strategies, aim to expand the Group's corporate value by maximizing their uniqueness and specialization through determining marketing strategies and operating businesses in line with their strengths.
The roles of the holding company and the directly owned subsidiaries are shown in the chart below.
By clarifying the respective roles and authorities of the Company and its directly owned subsidiaries, the Group is promoting group management characterized by flexibility and cohesiveness.
|Roles of Holding Company||Roles of Direct Subsidiaries|
Basic Policy on Corporate Governance
The Company values the purport of the Japan's Corporate Governance Code (the "Code"), which has been applied to listed companies, and has accepted all the principles of the Code while establishing the Basic Policy on Corporate Governance as initiatives in response to the major principles.
Roles and Responsibilities of the Board of Directors, etc.
Roles of the Board of Directors
The Board of Directors shall make decisions on important business matters and oversee the execution of business in accordance with laws and ordinances, the Articles of Incorporation, and the Company’s relevant rules.
Owing to our transition to a company with an Audit and Supervisory Board and in accordance with the provisions of the Articles of Incorporation, decisions on some important business executions are delegated from the Board of Directors to the directors themselves pursuant to a resolution of the Board of Directors. This separates management oversight from business execution, thereby further strengthening the management functions (deciding on management policies and overall strategy) and oversight functions of the Board of Directors. It also drives improvement in the flexibility and efficiency of business execution.
Composition of the Board of Directors
The number of directors (excluding directors who are Audit & Supervisory Board members) of the Company shall be no more than nine and the number of directors who are Audit & Supervisory Board members shall be no more than five, as stipulated by the Articles of Incorporation. The Board of Directors is made up of individuals representing a balance of knowledge, experience and skills, and having diverse backgrounds as befitting the expansive range of business domains in the life insurance business which is the core business of the Group. Moreover, the Company appoints two or more directors (excluding directors who are Audit & Supervisory Board members) who concurrently serve at the Company and its directly owned subsidiaries, including the presidents of the three life insurance companies. This shall be done from the standpoint of facilitating adequate communication and rapid decision-making within the Group, along with bolstering Group-wide governance. Furthermore, the Company appoints five outside directors to appropriately reflect the opinions of individuals with extensive experience and knowledge in their capacity as outside corporate managers, legal experts, accounting specialists and so forth in the Group’s management policies and development of internal controls and other systems as well as in the oversight of the execution of business.
Roles of the Audit & Supervisory Board
The Audit & Supervisory Board of the Company carries out its roles and responsibilities by auditing the performance of duties by directors and attending to other matters as an independent function mandated by shareholders, based on laws and ordinances, the Articles of Incorporation and the Company’s relevant rules.
Composition of the Audit & Supervisory Board
The number of members of the Audit & Supervisory Board shall be no more than five as stipulated by the Articles of Incorporation. No less than half of Audit & Supervisory Board members shall be outside members. The Audit & Supervisory Board members shall include individuals who possess appropriate knowledge of finance and accounting. The Audit & Supervisory Board shall consist of all of Audit & Supervisory Board members.
Information Related to the Board of Directors and Audit & Supervisory Board (Fiscal 2020)
|Number of meetings||Attendance rate||Main members and attendees|
|Board of Directors||16||98.7%||Directors|
|Audit & Supervisory Board||14||100.0%||Audit & Supervisory Board members|
Attendance of outside directors and outside Audit & Supervisory Board members to the meetings of the Board of Directors and the Audit & Supervisory Board (Fiscal 2020)
|Board of Directors||Audit & Supervisory Board|
|Outside directors||NAOKI OHGO||Attended 16 out of 15 meetings||―|
|KENSAKU WATANABE||Attended all 13 meetings||―|
|Outside Audit & Supervisory Board members||HARUKA MATSUYAMA||Attended 16 out of 15 meetings||Attended all 14 meetings|
|SEIJI HIGAKI||Attended all 16 meetings||Attended all 14 meetings|
|SHINNOSUKE YAMADA||Attended all 13 meetings||Attended all 14 meetings|
Appointment of Directors
The Board of Directors shall discuss the appointment of candidates for directors in the Nomination and Compensation Committee, and shall appoint individuals that satisfy, in principle, the following criteria:
- The candidate possesses the knowledge and experience needed to accurately, impartially and efficiently manage business as well as possessing a sufficient degree of public trust.
- In addition to the requirements set forth in the previous criterion, candidates for outside director must satisfy the independence criteria established by the Company and the Tokyo Stock Exchange, and must be recognized as being free from the risk of any conflicts with the common interests of shareholders.
Performance Review of Board of Directors
In order to ensure the overall effectiveness of the Board of Directors, the Board of Directors shall conduct an annual performance review of the Board of Directors as a whole, based on the self-evaluations of individual directors. The performance review shall examine whether or not the Board of Directors is functioning appropriately and producing results, and how the Board of Directors is contributing to increasing the Company's corporate value over the medium and long term.
Independence Criteria for Independent Outside Directors and Audit & Supervisory Board Members
The Company selects candidates for outside directors from among individuals who satisfy the following independence criteria:
- The candidate is not currently, nor has been in the past 10 years, a person who executes the business of the Company or its subsidiaries.
- The candidate is not currently, nor has recently been, a person/entity for which the Company is a major client or a person who executes business for such client, nor a major client of the Company or a person who executes business for such client.
- The candidate is not currently, nor has recently been, a consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/auditor compensation from the Company.
- The candidate is not currently, nor has recently been, a relative of a person who executes business of the Company or its subsidiary, or a relative of persons described in 2. or 3. above.
- In addition to the above, there must be no doubt about the independence of the candidate in terms of fulfilling his or her duties as an independent outside director or Audit & Supervisory Board member.
Policies on Determining the Method of Calculating the Amount of Compensation for Directors and Audit & Supervisory Board Members
The policies on determining the amount of compensation for directors and Audit & Supervisory Board members and the method of calculating the amount thereof shall be as follows:
- The system of compensation for directors and Audit & Supervisory Board members shall be designed so that the compensation system, amount of compensation and other related matters function as a sound incentive for the directors and Audit & Supervisory Board members to contribute to improving business performance and increasing corporate value of the Group over the medium-to-long term. Compensation, etc. for directors (excluding outside directors and other part-time directors and directors who are Audit & Supervisory Board members) shall be comprised of monthly compensation and bonuses which differ according to their roles and business performance, as well as trust-type stock compensation (excluding non-residents in Japan) in the form of issuing shares of the Company or such like using the trust mechanism.
- The payment ratio, etc. shall be adequately set by the type of compensation, etc. so that compensation, etc. for directors function as a sound incentive.
- The amount of compensation shall be set according to the duties and responsibilities of each position and a mechanism shall be in place under which the monthly compensation and bonuses are linked with business performance, etc. and fluctuate accordingly.
- Compensation, etc. for part-time directors, including outside directors, and directors who are Audit & Supervisory Board members shall be comprised of monthly (fixed) compensation.
- The monthly compensation and bonuses of each director shall be determined by the director and President upon consultation with the representative directors, after obtaining resolution of the Board of Directors. The monthly compensation and bonuses shall be paid within the annual compensation limit established by the resolution of the Shareholders' Meeting, and calculated in accordance with the compensation table determined by the Board of Directors and based on a review of individual performance.
The review of individual performance of each director shall be determined by the director and President upon consultation with the representative directors and discussion by the Nomination and Compensation Committee. It shall be in accordance with the review standard determined by the Board of Directors and conducted based on the review of the Company’s business performance and the review of the director’s assigned division.
- Multiple performance indicators, etc., established and based on medium to long term management strategies, shall be used as indicators to review the Company’s business performance in order to demonstrate clearly that the performance review shall be in accordance with the Company’s performance achievement level. In regard to performance indicators, etc., scores shall be calculated by multiplying factors that are in accordance with the achievement level of each item.
In regard to the review of the director’s assigned division, scores shall be calculated with consideration to each division’s achievement level of the management plans, etc.
In addition to the above, the scores for the review of the Company’s business performance and the review of the director’s assigned division shall be the weighted average based on the performance review ratio stipulated in accordance with the responsibilities of each position. The ratio of the review of the Company’s business performance to the performance review of representative director, etc., shall be 100%.
- In regard to trust-type stock compensation, in principle, points will be given annually to directors (excluding part-time directors, such as outside directors, directors who are Audit & Supervisory Board members, and non-residents in Japan) according to their ranks, which shall be within the annual compensation limit established by the resolution of the Shareholders’ Meeting.
- Monthly compensation for each director who is an Audit & Supervisory Board member shall be determined through discussions by directors who are Audit & Supervisory Board members, and shall be within the annual compensation limit established by the resolution of the Shareholders' Meeting.
- Cash shall be paid monthly for monthly compensation and annually for bonuses. In regard to trust-type stock compensation, stock and cash will be delivered and paid at the time of resignation based on the accumulated points.
In cases where it is judged that any director has conducted any wrongdoings stipulated by the Company (serious delinquency, illegal conduct, data breach, etc.) before the date that the stock ownership rights is fixed, delivery and payment of stock and cash shall not be realized. In addition, in cases where any wrongdoings were found after the date that the stock ownership rights is fixed, the Company may request for compensation in the amount of the calculated number of stock and the calculated stock price multiplied.
Ensuring Shareholder Rights and Equality, and Engaging in Dialogue with Shareholders and Other Stakeholders
Ensuring Shareholder Rights and Equality
The Company shall work to develop a conducive environment for shareholders to appropriately exercise their rights in order to effectively ensure the rights and the equality of all shareholders.
Recognizing that the Shareholders' Meeting is the highest decision-making body of the Company, and that it provides a crucial forum for engaging in constructive dialogue with shareholders, the Company shall strive to develop an adequate environment from the shareholders' perspective to ensure that shareholders' views are reflected appropriately in management.
Dialogue with Shareholders and Other Stakeholders
The Company's organizational development and policies regarding the initiative to promote dialogue with shareholders and other stakeholders are as follows:
- The Company shall emphasize constructive dialogue with shareholders and other stakeholders as it strives to increase their understanding of its management policies through dialogue. At the same time, information and other feedback obtained through this dialogue shall be reported regularly to management. In this way, the Company shall strive to drive the sustained growth of the Group as a whole and increase its corporate value over the medium and long term.
- To engage in dialogue with shareholders and other stakeholders, the Company shall nominate the executive officer in charge of the Group Planning Department as the Investor Relations (IR) Officer and the executive officer in charge of the General Affairs Department as the Shareholder Relations (SR) Officer.
- In providing information about the business environment, business strategies and financial conditions, and operating performance of the Group as a whole, in addition to statutory disclosures, the Company shall strive to enhance the disclosure of information by conducting IR and SR activities and providing audio and video streaming, along with making other content available via its corporate website.
- When disclosing the information described in Item 3. above, the Company shall strive to enhance the disclosed information by encouraging close coordination between various related departments, such as the IR and SR departments, and various Group companies.
- In order to prevent the unauthorized disclosure of financial information while preparations for announcements of financial results are being made, the Company shall set a “Silent Period” in its IR and SR activities in its "IR Policy". In doing so, the Company shall strive to ensure fairness in all of its IR and SR activities.
The Group's way of thinking regarding the policies and the exercise of the voting rights for cross-holdings of listed stocks are as follows:
- The purpose of holding cross-shareholdings of listed stocks shall be to maintain and expand long-term, stable business relationships, to maintain and strengthen business partnerships, and to reap medium-to long-term benefits by an increase in equity value and by receiving dividends and so forth.
- Every year, the boards of directors of the Company and its Group companies that hold cross-shareholdings shall verify the propriety of holding individual cross-shareholdings by concretely examining the adequacy of the holdings, whether the benefits and risks commensurate with the capital cost,and other factors.
- If the continued holding of individual cross-shareholdings were deemed inadequate as a result of verifying the propriety of the holding,such cross-shareholdings shall be subject to sales and the cross-shareholdings shall be reduced.
- The Group shall disclose its details of the verification of above 2 and 3annually.
- The Group believes that the appropriate exercise of the voting rights of cross-shareholdings will encourage the establishment of sound corporate governance systems and sustained growth at counterparty companies. At the same time, the Group believes that the appropriate exercise of these voting rights is a crucial means of helping to bolster shareholder interests. Accordingly, the Group shall exercise the voting rights of its cross-shareholdings.
- In the course of exercising voting rights as stipulated in the preceding item, the Company shall strive to share a common awareness with the counterparty company by engaging in dialogue and other forms of communication from a medium- to long-term perspective, while respecting the counterparty company's management decisions, rather than making judgments based on formal standards. In cases where it is judged that shareholder interests could be impaired, the Company shall express its position through the appropriate exercise of its voting rights.
As of the end of March, 2020, the results of the verification described above 4 are as follows:
- The board of directors of T&D Holdings and those of Group companies which have strategic shareholdings engage in specific study, on an annual basis, whether the benefits of the shareholdings are proportionate to the capital cost, and other issues, concerning each individual strategic shareholding, to validate the appropriateness of such holdings.
- In fiscal 2019, we sold or partially sold our holdings of 21 stocks, on the basis of validation findings. We will continue to consider the sale of strategic shareholdings held by the Group which the board of directors deems lacking in significance.
Disclosure of Information
Disclosing Information and Ensuring Transparency
- The Company shall strive to provide easy-to-understand disclosure based on its core disclosure principles of timeliness, fairness and accuracy in order to maintain and reinforce trust among all of its stakeholders and to increase the level of transparency in its corporate governance.
- The Company shall disclose statutory information stipulated in the Insurance Business Act, the Financial Instruments and Exchange Act, and other related laws and ordinances, and in the rules of the Tokyo Stock Exchange. The Company shall also disclose information it deems to be important for its stakeholders, taking into account the business environment, economic conditions, and industry trends.
- The Company shall strive to disclose information to as many people as possible using various media.
- The Company shall establish Disclosure Rules that set forth the purpose, basic policy, system, activities and other aspects of disclosure, and shall proactively strive to provide disclosure based on those rules.