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 Committee, audits the performance of directors’ duties among others through its Audit & Supervisory Committee, 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. The Committee deliberates on the fairness and appropriateness of the appointment, dismissal, succession planning, and compensation of directors and executive officers, thereby strengthening the corporate governance framework of T&D Holdings and the Group by ensuring the transparency of management and enhancing 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 seven directly owned subsidiaries centered on Taiyo Life, Daido Life, and T&D Financial Life, together with T&D United Capital, T&D Asset Management, Pet & Family Insurance and All Right. 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 |
|---|---|
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Basic Policy on Corporate Governance
The Company has established the Basic Policy on Corporate Governance as a basic approach to corporate governance, intended to pursue T&D Insurance Group’s sustainable growth and improvement of corporate value in the mid-to long-term.
Basic Policy on Corporate Governance(PDF:155KB / 17 pages）
Corporate Governance Report
"Corporate Governance Report" submitted to the stock exchange is posted.
Corporate Governance Report(PDF:697KB / 21 pages）
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 & Supervisory Committee 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 Committee members) of the Company shall be no more than nine and the number of directors who are Audit & Supervisory Committee 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 Committee members) who concurrently serve at the Company and its directly owned subsidiaries as directors. 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 Committee
The Audit & Supervisory Committee 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 Committee
The number of members of the Audit & Supervisory Committee shall be no more than five as stipulated by the Articles of Incorporation. No less than half of Audit & Supervisory Committee members shall be outside members. The Audit & Supervisory Committee members shall include individuals who possess appropriate knowledge of finance and accounting. The Audit & Supervisory Committee shall consist of all of Audit & Supervisory Committee members.
Information Related to the Board of Directors and Audit & Supervisory Committee (Fiscal 2023)
| Number of meetings | Attendance rate | Main members and attendees | |
|---|---|---|---|
| Board of Directors | 17 | 99.0% | Directors |
| Audit & Supervisory Committee | 19 | 100.0% | Audit & Supervisory Committee members |
Attendance of outside directors to the meetings of the Board of Directors and the Audit & Supervisory Committee (Fiscal 2023)
| Name | Attendance | ||
|---|---|---|---|
| Board of Directors | Audit & Supervisory Committee | ||
| Outside directors | NAOKI OHGO | Attended all 17 meetings | ― |
| KENSAKU WATANABE | Attended all 17 meetings | ― | |
| Outside Audit & Supervisory Committee members | SEIJI HIGAKI | Attended all 17 meetings | Attended all 19 meetings |
| SHINNOSUKE YAMADA | Attended all 17 meetings | Attended all 19 meetings | |
| ATSUKO TAISHIDO | Attended 15 out of 17 meetings | Attended all 19 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 Committee Members.
The Company shall appoint candidates for outside director from among individuals who satisfy the following independence criteria:
- (1)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.(2)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.(3)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.(4)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.(5)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 Committee member.
Policies on Determining the Amount of Compensation for Directors and Audit & Supervisory Committee Members and the Method of Calculating the Amount
The policies on determining the amount of compensation for the Company’s directors and Audit & Supervisory Committee Members and the method of calculating the amount shall be as follows.
- The policies on determining the amount of compensation for the Company’s directors and Audit & Supervisory Committee and the method of calculating the amount shall be as follows:
- (1)The compensation system, amount of compensation, etc., for the directors and Audit & Supervisory Committee Members shall be designed to function as a sound incentive to improve the Group’s performance and increase corporate value over the medium and long term.(2)The compensation system for the directors and Audit & Supervisory Committee Members shall comprise monthly compensation and bonuses, as well as trust-type stock compensation (not applicable to non-residents of Japan) using a trust system to grant the Company’s stock, etc. For compensation for directors who are not Audit & Supervisory Committee Members, the Board of Directors shall set the amount of compensation at an appropriate payment ratio for each type of compensation and according to the responsibilities of each position.(3)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 granted. In cases where it is judged that any director has conducted any wrongdoing stipulated by the Company (serious delinquency, illegal conduct, data breach, etc.) before the date that the stock ownership rights are fixed, delivery and payment of stock and cash shall not be carried out. In addition, in cases where any wrongdoing is found after the date that the stock ownership rights are fixed, the Company may request compensation in the amount of the number of shares multiplied by the calculated stock price.
- Compensation for directors who are not Audit & Supervisory Committee Members (excluding part-time directors, including outside directors) shall be as follows:
- (1)The compensation system shall comprise monthly compensation and bonuses, as well as trust-type stock compensation (not applicable to non-residents of Japan) using a trust system to grant the Company’s stocks, etc., of which monthly compensation and bonuses shall vary based on performance, etc.(2)The Board of Directors shall determine the monthly compensation and bonuses of each director upon receiving a report on opinions from discussion by the Nomination and Compensation Committee and based on the report. The monthly compensation and bonuses shall be paid within the annual compensation limit established by resolution of the Shareholders’ Meeting and shall be based on figures calculated in accordance with the compensation table determined by the Board of Directors and a review of individual performance. In regard to trust-type stock compensation, in principle, points will be given annually to directors according to their ranks within the annual compensation limit established by resolution of the Shareholders’ Meeting.(3)The review of individual performance shall be determined by the Board of Directors upon receiving a report on opinions from discussion by the Nomination and Compensation Committee and based on the report. 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.(4)Multiple performance indicators, etc., established based on medium to long term management strategies, shall be used to review the Company’s business performance in the previous criterion. In regard to performance indicators, etc., scores shall be calculated by multiplying factors that are in accordance with the achievement level of each item.(5)In regard to the review of the director’s assigned division in (3) above, scores shall be calculated taking into account each division’s achievement level of the management plans.(6)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. Note that the ratio of the review of the Company’s performance to the performance review of the representative director, etc., shall be 100%.
- Compensation for part-time directors, including outside directors, who are not Audit & Supervisory Committee Members shall be as follows:
- (1)The compensation system shall comprise only monthly (fixed) compensation.(2)The Board of Directors shall determine the monthly compensation of each director. The monthly compensation shall be paid within the annual compensation limit established by resolution of the Shareholders’ Meeting and shall be based on figures calculated in accordance with the compensation table determined by the Board of Directors.
- Compensation for directors who are Audit & Supervisory Committee Members shall be as follows:
- (1)The compensation system shall comprise only monthly (fixed) compensation.(2)Monthly compensation for each director shall be determined through discussions by the directors who are Audit & Supervisory Committee Members, within the annual compensation limit established by resolution of the Shareholders’ Meeting.
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.
Shareholders' Meeting
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.
Cross-shareholdings
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.
To make effective use of capital and improve capital efficiency, we examine propriety of holding strategic shareholdings. The Group’s basic policy is to reduce strategic shareholdings with low return on risk (ROR) to reallocate capital to growth sectors, etc., with high ROR as part of its capital policy, thereby increasing profitability for the entire Group to improve capital efficiency.
Based on this thinking, we have been working to gradually reduce the balance thereof in accordance with our medium-term goal.
We aim to first reduce strategic shareholdings to 20% of consolidated net assets by the end of FY 2023 and then to further reduce them by the end of FY 2025.
We have been reducing the balance through careful dialogue with the issuing companies, and executed approx. \125 billion in reductions (on a book value basis; approx. \240 billion on a market value basis) during FY 2022 (reducing the balance by more than half compared to the end of FY 2020 on a book value basis).
The ratio of strategic shareholdings to net assets at the end of FY 2022 was approx. 23%, indicating steady progress toward our goal of reducing the ratio to below 20%. Excluding the impact of a decrease in net assets due to recording of temporary valuation losses* resulting from higher interest rates in the US at Fortitude, an affiliated company accounted for by the equity method of the Company, the ratio at the end of FY 2022 was approx. 19%.
* Fortitude temporarily recorded a large amount of valuation losses due to higher interest rates in the U.S. for FY2022, since mainly changes in market value on the asset side only are reflected for purposes of U.S. accounting (with the liability side recorded at book value).
However, the economic value of the liability side has also similarly decreased through ALM (A method for the comprehensive management of risks related to assets and liabilities), and thus the losses are not substantial.
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.