Corporate Governance

Basic Approach

The Group believes that it wants to become a corporate group that continues to support the intellectual activities of customers through our products and services, expressing this as "KOKUYO aims to be a Life & Work Style Company that contributes to society by realizing an 'improvement in the Quality of Life' of customers to enhance the way they work, learn, and live, by providing value that enhance their creativity through our products and services.
Kokuyo Group believes that the securing management efficiency, transparency, and fairness are important elements in order to realize the continuous and long-term increase in corporate value. We will engage in efforts to continuously enhance these elements in constructing and operating our management system
Over the years, we have reached some important milestones in corporate governance. In 2011, we welcomed company outsiders onto our Board of Directors and voluntarily established the Nominating & Compensation Committee in order to separate business execution from supervision of management. In 2015, we achieved a successful CEO succession. In 2020, the Board of Directors started being chaired by an independent director. Of the three systems of corporate governance in Japan, we have adopted that of a “company with three designated committees.” We adopted this system because it is effective for supervising management, clarifying where responsibility lies in each layer of management, facilitating efficient business operations, and making management more transparent and impartial. By improving these aspects of corporate governance, we can achieve the standard of corporate governance our stakeholders rightfully expect.

Corporate Governance System

Under our present system of corporate governance (company with three designated committees), corporate governance is maintained by the Board of Directors and by three designated committees: the Nomination Committee, Remuneration Committee, and Audit Committee. On each of these governance bodies, the majority of members are independent directors. We recognize that we can only command trust among our stakeholders with a robust system of oversight, clearly delineated roles and responsibilities among the layers of management, efficient business operations, and transparent and impartial processes.

1. Board of Directors

The Board of Directors has nine members, six of whom are independent directors. One of these independent directors serves as the board’s chair. All directors serve one-year renewable terms. This setup helps ensure a dynamic board, capable of responding swiftly to changing business conditions.

The Board of Directors holds regular monthly meetings, as well as ad-hoc meetings when necessary.

The board’s role of supervising management is separated from its role of executing the company’s business. With this separation, the board can both devote sufficient time to discussing matters of strategic importance (such as making decisions about the company’s policies and business strategies) and focus on supervising the management.

2. Nomination Committee

The Nomination Committee has five members, four of whom are independent directors. The committee is chaired by one of these independent directors. The committee decides on proposals to make at a shareholders’ meeting for appointing or dismissing a director. It also considers proposals to make to the Board of Directors for appointing or dismissing shikko-yaku executive officers (shikko-yaku is a legal title describing an executive who bears fiduciary duties) or shikko-yaku-in executive officers (shikko-yaku-in is a non-legal title describing an executive who bears no fiduciary duties) or for appointing or removing a representative executive officer and CEO. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

3. Audit Committee

The Audit Committee has three members. Two of the members are independent directors. The third member is a full-time non-executive director who does not qualify as an independent director. This third member chairs the committee. The committee audits the execution of the company’s business by shikko-yaku (executives who bear fiduciary duties) and by executive directors, prepares audit reports, and decides on proposals for appointing or dismissing (or not reappointing) an accounting auditor. To ensure that audits are effective, the members regularly liaise with the heads of Kokuyo’s business units and corporate divisions and coordinate closely with their counterparts in Kokuyo’s Internal Audit Division and in key Kokuyo subsidiaries. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

4. Remuneration Committee

The Remuneration Committee has three members, all of whom are independent directors. One of the members chairs the committee. The committee designs the remuneration system for directors, shikko-yaku (executives who bear fiduciary duties), and shikko-yaku-in (executives who bear no fiduciary duties), and sets the remuneration amounts to be paid to each recipient. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

5. Internal Audit Division

The Internal Audi Division audits Kokuyo and its associates. It uses a dual reporting structure in which it reports both to the person serving as representative executive officer and CEO and to members of the Audit Committee.
The division staff attend regular meetings with Audit Committee members and the accounting auditor to share opinions, share information, and enable close coordination in auditing. They also liaise regularly with their counterparts in Kokuyo subsidiaries.