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Corporate Governance

Basic Policy on Corporate Governance

The Group aims to enhance the adequacy and effectiveness of management and optimize its corporate value by engaging in “speedy management,” which purports to revitalize the management of organization and enable prompt decision-making. The Group positions the Three Responsibilities (for our customers, for our employees and their families, and for society) of a corporate citizen as the pillars of its business activities. These responsibilities form the basis of the Group philosophy “Through food, we aim to be a good corporate citizen, connecting and collaborating with people to create smiles in their lives.”
To properly respond to the dramatic changes taking place in the management environment, the Group has been striving through corporate management based on its philosophy to improve its transparency and its role in society, while ensuring accountability and developing a corporate governance system to ensure thorough compliance.

The Company made Ichibanya Co., Ltd. a consolidated subsidiary in December 2015. Ichibanya Co., Ltd. is a listed company, and the Company undertakes the operation of that company’s internal control system with due respect.

Corporate Governance Report

Corporate Governance Report

Corporate Governance System

System for execution of operations

As a Company with an Audit & Supervisory Committee, the Company monitors, supervises, and audits the execution of duties by Directors and the legality and validity of resolutions by the Board of Directors via the Audit & Supervisory Committee and five Directors who are Audit & Supervisory Committee Members (of whom four are Outside Directors).

The Board of Directors consists of twelve Directors (of whom four are Outside Directors), makes decisions on the execution of important operations of the Group, and monitors and supervises the execution of operations by other Directors and Group companies.

As voluntary advisory bodies to the Board of Directors, the Company has also established the Nomination Advisory Committee and the Compensation Advisory Committee, to ensure objectivity and transparency in the election and dismissal of Directors and in the decision process for compensation. Independent Outside Directors account for a majority of the members of each of these committees, which are chaired by an Independent Outside Director.

The Audit & Supervisory Committee has the authority to give instructions to the Auditing Division, which is responsible for conducting audits of operations and implementing internal controls in respect of financial reporting, and works closely with them to confirm how the audits are conducted and how the internal control system is evaluated and regularly exchanges opinion and conducts investigation and issues specific instructions. The committee also audits the execution of duties by Directors in an organized way in cooperation with the Accounting Auditor, and, upon necessity, corporate attorneys.

Accounting audit is performed by Deloitte Touche Tohmatsu LLC. We have an audit agreement with this firm to perform audits under the Companies Act and those under the Financial Instruments and Exchange Act.

Board of Directors

Chair of the Board of Directors President Hiroshi Urakami
Directors who are not Audit & Supervisory Committee Members Directors who are Audit & Supervisory Committee Members
Standing Audit & Supervisory Board Member Not more than 10 Not more than 8
Number of Directors 7 5
Term of Office of Director 1 year 2 years
Number of Outside Directors(Number of Independent Directors) - 4(4)
Number of female Directors - 2
Ratio of female Directors 16.7%

Compensation Advisory Committee

Purpose Ensure objectivity and transparency in decisions concerning the compensation system and the amounts of compensation, etc. for Directors
Chairperson Independent Outside Director
Number of Committee Members 6 Directors (of whom four are Outside Directors)
Held Three times a year in principle

Nomination Advisory Committee

Purpose Ensure objectivity and transparency in the decision process, such as the election and dismissal of Directors
Chairperson Independent Outside Director
Number of Committee Members 6 Directors (of whom four are Outside Directors)
Held Twice a year in principle

Diagram of corporate governance system (as of July 2024)

Diagram of corporate governance system

The number of each meeting and attendance rate of Directors (results of FY2024)

For new Directors, the number of meetings and attendance rate after being appointed are listed.

Name Board of Directors meetings (14 meetings) Audit & Supervisory Committee (12 meetings) Compensation Advisory Committee (4 meetings) Nomination Advisory Committee (3 meetings)
Hiroshi Urakami 100% (14/14 meetings) - 100% (4/4 meetings) 100% (3/3 meetings)
Yoshiyuki Osawa 100% (14/14 meetings) - 100% (4/4 meetings) 100% (3/3 meetings)
Kotaro Kawasaki 100% (14/14 meetings) - - -
Yoshiyuki Miyaoku 100% (14/14 meetings) - - -
Tatsumi Yamaguchi 100% (14/14 meetings) - - -
Atsushi Sakuma 100% (14/14 meetings) - - -
Yuichi Okamoto 100% (10/10 meetings) - - -
Tsuneo Kubota 100% (14/14 meetings) 100% (12/12 meetings) - -
Atsuko Okajima 100% (14/14 meetings) 100% (12/12 meetings) 100% (4/4 meetings) 100% (3/3 meetings)
Fukuichi Sekine 100% (14/14 meetings) 100% (12/12 meetings) 100% (4/4 meetings) 100% (3/3 meetings)
Yasuyuki Kawasaki 100% (10/10 meetings) 100% (9/9 meetings) 100% (2/2 meetings) 100% (2/2 meetings)
Miwa Yamada - - - -

Election/dismissal of management executives and policy and procedures for nomination of candidates for Directors

With regard to the election of management executives and the nomination of candidates for Directors, suitable personnel according to the election criteria provided below shall be proposed to the Board of Directors upon deliberations by the Nomination Advisory Committee, resolved as the candidates, and then brought to the General Meeting of Shareholders for discussions.

Directors
(excluding Directors who are Audit & Supervisory Committee Members)
・Persons who have courage to stay committed to the Group’s philosophy and mission statement
・ Persons who have the knowledge, experience and ability to engage in management
・ Persons who aim to enhance the corporate value, and who have the driving force to achieve performance targets
・ Persons with an excellent human nature appropriate for a Director of the Company
Directors who are Audit & Supervisory Committee Members ・ Persons who possess the ability to carry out an audit based on extensive experience and insight
・ Persons with an excellent human nature appropriate for an Audit & Supervisory Committee Member of the Company

Personnel who are to serve as Directors in the future receive practical OJT mainly through gaining experience as directors of business companies as well as OFF-JT mainly through executive development programs and internal training, as part of the Company’s efforts to nurture successors. If the Board of Directors determines that a management executive is not consistent with the election criteria, dismissal will be resolved by the Board of Directors and presented to the Shareholders’ Meeting for discussion.

Skills Matrix

The skills of the Board of Directors are identified as skills that should provide the functions necessary for corporate management as the House Foods Group. In addition, the Board of Directors is to be composed of persons of diverse expertise and various experiences, regardless of age or gender, and is to be of a size that ensures flexible decision-making and mutual supervision.

Name Position Expertise and experience required for a Director in supervision and execution
Corporate Management Personnel affairs and Diversity Finance and Accounting Legal affairs, Compliance and Risk Public relations, investor relations Sustainability R&D and intellectual property Global Business Digital Technology and DX Quality Assurance Production and Procurement Sales, Marketing and Advertisement Management of other companies
1 Hiroshi Urakami Hiroshi Urakami Representative Director & President
2 Yoshiyuki Osawa Yoshiyuki Osawa Representative Director & Senior Managing Director
3 Kotaro Kawasaki Kotaro Kawasaki Senior Managing Director
4 Yoshiyuki Miyaoku Yoshiyuki Miyaoku Director
5 Tatsumi Yamaguchi Tatsumi Yamaguchi Director
6 Atsushi Sakuma Atsushi Sakuma Director
7 Yuichi Okamoto Yuichi Okamoto Director
8 Tsuneo Kubota Tsuneo Kubota Director (Audit & Supervisory Committee member; full time)
9 Atsuko Okajima Atsuko Okajima Director (Audit & Supervisory Committee member; outside)
10 Fukuichi Sekine Fukuichi Sekine Director (Audit & Supervisory Committee member; outside)
11 Yasuyuki Kawasaki Yasuyuki Kawasaki Director (Audit & Supervisory Committee member; outside)
12 Miwa Yamada Miwa Yamada Director (Audit & Supervisory Committee member; outside)

Executives

Evaluations of the effectiveness of the Board of Directors

The Company holds regular meetings of the Board of Directors every month except August, as well as meetings to approve financial results, and extraordinary meetings as necessary to make prompt decisions regarding the execution of important business. Outside Directors directly receive explanations of important issues subject to resolutions of the Board of Directors from relevant reporting divisions, administrative organizations, etc. to facilitate their proactive sharing of opinions at meetings of the Board of Directors. Under our performance evaluation system, we conduct self-evaluations and multifaceted evaluations for each Director (excluding Directors who are Audit & Supervisory Committee Members).
The Company has been evaluating the effectiveness of the Board of Directors since FY2022, and it works to improve issues and enhance strengths based on the results of evaluations.
Around December every year, all 12 Directors (including four Outside Directors) in principle answer questionnaires (questions with a four-level rating scale plus an open-ended evaluation section) to enable them to reflect on the activities of the Board of Directors over the past year and themselves identify points that need improvement.
Questions are independently created and the points evaluated mainly include (i) the status of deliberations of matters to be resolved by the Board of Directors, (ii) the status of the implementation of matters to be reported to the Board of Directors (iii) the status of the Board of Directors' functions and operations and (iv) the status of collaborations with the Audit & Supervisory Committee, Nomination Advisory Committee and Compensation Advisory Committee.
A cycle is implemented whereby the results of questionnaires compiled by the administrative office, the General Affairs Division are used to identify future themes for improvements. These themes are determined by confirming each officer's quantitative evaluations and responses to open-ended questions. Then, discussions are held at the Board of Directors meetings, and specific actions are implemented in the next fiscal year.
In addition, the implemented improvement measures are appropriately evaluated to continuously enhance the effectiveness of these measures.
<Improvement measures for FY2024 based on the results of the evaluation of effectiveness implemented in FY2023>
  • 1) Review and expansion of the regular reporting agenda
    The Company reviewed its current regular reporting agenda to ensure that the Board of Directors can handle the optimized agenda throughout the year. Starting in FY2024, "responsibilities for employees and their families" and "responsibilities to society" have been added as additional regular reporting agenda items with the goal of helping the Board of Directors more strongly promote the medium-term plan. This initiative was positively evaluated in the evaluation of effectiveness implemented in FY2024, and reviews to optimize the frequency and timing of each report, including other agenda items, are also appropriately conducted.
  • 2) Expansion of opportunities for Outside Directors to understand the Company's business
    In addition to periodic on-site inspection visits to the business sites of group companies and factories, inspection visits to research sections were conducted in FY2024, with the aim of increasing Outside Directors' understanding of the Company's business and to further energize discussions at meetings of the Board of Directors. This initiative was evaluated in the evaluation of effectiveness implemented in FY2024, and initiatives to further increase Outside Directors' understanding of the Company's business will be continuously implemented through various opportunities in the future.
  • 3) Enhancement of study meetings for officers
    Three study meetings for officers were held in FY2024 as opportunities for Directors to acquire necessary knowledge.
<Continuous initiatives for improvement>
  • 1) Energizing deliberations on matters to be resolved by the Board of Directors
    In FY2023, the Company began using Board of Directors' Reports which compile a summary of reports and the opinions of inside Directors who are on the Management Committee into one document with the goal of facilitating active discussions at meetings of the Board of Directors. This initiative has been continuously evaluated in the evaluation of effectiveness, and efforts to continuously improve are being made to more clearly show the content of resolutions and facilitate effective deliberations based on the results of the evaluation of effectiveness implemented in FY2024.
  • 2) Review of the operation of regular report agenda
    Since FY2024, the Company has been working to review its agenda for reports on the status of businesses and the content of the Executive Summaries which are created every six months and the operations for them. These initiatives were recognized to a certain degree in the evaluation of effectiveness implemented in FY2024, and the Company is working to improve and enhance the content of the report materials by sharing an understanding of the issues regarding each agenda item with the relevant divisions.
<Overview of the results of the evaluation of the effectiveness of the Board of Directors in FY2024>
It was found that the functions and operations of the Board of Directors remain adequate, and the Board's effectiveness, including its cooperation with the Audit & Supervisory Committee, Nomination Advisory Committee and Compensation Advisory Committee. In addition, the content of improvement initiatives implemented based on the results of the previous year was evaluated highly, and improvements from the previous year's score were seen on fourteen of the questions common to the previous year.
At the same time, it was found that there is still room for improvement in the operation of the Board of Directors, and we are continuing to consider improvement initiatives.
As described above, the Company strives to further improve the effectiveness of its Board of Directors and further enhance corporate governance through a cycle of strengthening the operation of the Board of Directors in line with the issues identified and implementing improvements. We believe that the effectiveness of the Board of Directors is being ensured in this way.

Executives’ Compensation

Basic design

As our basic policy, the compensation system and the amounts of compensation, etc. for Directors (excluding Directors who are Audit & Supervisory Committee Members) are based on the following points: “it gives motivation for the enhancement of corporate value and sustainable growth, and for achieving the Medium-Term Business Plan in order to realize the Group’s Philosophy,” “it is commensurate with the role and responsibilities of the position held, in light of the size of the company and its social responsibilities,” and “objectivity and transparency are ensured in the decision process of compensation.” They are determined by the Board of Directors after deliberations of the Compensation Advisory Committee.

The compensation system and the amounts of compensation, etc. for the Directors who are Audit & Supervisory Committee Members are deliberated by the Compensation Advisory Committee at the request of the Audit & Supervisory Committee, and after the deliberation results are reported to the Audit & Supervisory Committee, determined by consultation among the Directors who are Audit & Supervisory Committee Members.

Composition of compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members)

Compensation type Evaluation indicators, method of payment, etc. Percentage of compensation Performance-linked
Fixed compensation Add compensation according to the role to the compensation level determined by position, and pay as monthly compensation 60%
Short-term incentives Single-year performance-linked compensation Evaluation of company performance Based on the indicator determined by the Board of Directors, evaluate the degree of achievement of the relevant indicator for the Group or the operating company each Director is responsible for on a single fiscal-year basis, and pay as bonuses according to the results of the evaluation 25%
Evaluation of individual performance Define the degree of achievement of targets set by each Director as an evaluation indicator, and pay as bonuses according to the degree of achievement
Medium- to long-term incentives Advance-issue-type restricted stock compensation Pay for the purpose of motivation for the continuous improvement of corporate value and further encouraging value sharing with shareholders of the Company 10%
Performance-linked, restricted stock compensation In addition to the above, pay for the purpose of better incentivizing to Executive Directors to achieve the medium-term business plans
(adopt non-financial indicators prescribed in medium-term business plans as evaluation indicators for the stock compensation)
5%

Compensation for Directors who are Audit & Supervisory Committee Members consists of only fixed compensation.

<Outline of the linkage with performance for Directors (excluding Directors who are Audit & Supervisory Committee Members)>

  • Short-term incentives:
    • Overall management as a member of the Board of Directors is evaluated mainly based on the Company’s performance (financial indicators), and results of management execution within each area of responsibility are evaluated mainly based on individual performance, and vary within the range of 70%–130% based on two evaluation indicators. (In the event that performance fluctuates significantly, the details are deliberated by the Compensation Advisory Committee, and short-term incentives vary within the range of 0–150%.)
    • Formula:
    • Standard amount by position ×(1+Company performance evaluation coefficient *1+Individual performance evaluation coefficient *1)
    • *1:Varies from -15% to +15% depending on performance
    • [Indicator of evaluation of the Company’s performance in relation to bonus]
    • Bonus for final year of medium-term business plan: Respective status of progress in achieving EBITDA and ROIC
    • Bonus in relation to business years other than the above: Status of progress in achieving EBITDA
  • Medium- to long-term incentives:
    • Vary within the range of 10%–190% based on evaluation indicators (non-financial indicators) listed in the medium-term business goals.
    • Formula:
    • Standard amount by position ×(1+”Social” coefficient*2+”employees and their families” coefficient*2)
    • *2:Varies from -45% to +45% depending on performance

Approach toward keeping the parent company and its subsidiary listed

The Company has Ichibanya Co., Ltd. (hereinafter "Ichibanya") as a listed subsidiary.
The business of Ichibanya and each of the Group's businesses compliment each other, having strong linkages in the value chain, and the Company pursues maximum synergies on a groupwide basis whilst also exercising supervision as the parent company, including dispatching directors of the Company as part-time directors of Ichibanya, ensuring that the business results of Ichibanya are routinely reported at the Company's Management Committee meetings and Board of Directors meetings, and making the approval or disapproval of proposals to be put before Ichibanya's General Meeting of Shareholders a matter for resolution by the Company's Management Committee. At the same time, the Company respects the independent decisions made by Ichibanya's management on the execution of day-to-day operations given that Ichibanya's business model is very different from that of the Group's core business. Further, Ichibanya is a company with an Audit & Supervisory Committee and makes decisions on important transactions with the Group based on the views of the Audit & Supervisory Committee, thus preventing any unfair disadvantage to other shareholders (besides the Company).

The Company and the subsidiary whose business models are different strengthen collaboration and promote cooperation themes together while respecting each other’s uniqueness, thereby enabling three parties including franchise owners who are engaged in the management of stores to enjoy benefits together. In this way, the Company believes that it will contribute to bringing benefits also to other shareholders of the subsidiary. Therefore, the Company’s policy is to keep both itself and the subsidiary listed while ensuring the effectiveness of the corporate governance system of the subsidiary.

Basic Policy on Internal Control System

The Group sees the internal control system as a framework for enhancement of the corporate governance structure and realization and achievement of its corporate philosophy and management targets and the Group implements initiatives intended to lead to improvement in corporate value and sustainable development through the establishment and accurate and effective operation of the internal control structure.

Governance data is available in the link below.