Corporate Governance

Corporate Governance Report (Japanese version only)

Fundamental Approach

We believe that strengthening corporate governance is the basis for a trusting relationship with stakeholders. In addition to raising the awareness of our employees through our corporate philosophy, based on our mission and responsibilities to wider society, we are also working to ensure transparency and soundness of management and speed up our decision-making process, such as through the improvement of auditing functions, and to actively disclose information in an appropriate manner.

Efforts toward Corporate Value Enhancement

ガバナンスの充実と資本効率の改善に関する各年度ごとのマイルストーン
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Corporate Governance Structure

With the approval at the 14th Ordinary General Meeting of Shareholders held on June 29, 2023, VITAL KSK Holdings transitioned to a Company with Audit & Supervisory Committee model.

The Board of Directors consists of fourteen members, two of whom are women. In addition, five are outside directors with extensive experience and knowledge and deep insights into corporate governance from their perspectives as a business manager, academic experts, lawyers, and certified public accountants. By receiving highly meaningful recommendations and advice on the management of the Group, we ensure transparency and soundness of management, and have established a system to monitor and supervise the execution of duties by directors.

We have also held Advisory Meetings to deliberate and advise the Board of Directors on matters such as the nomination and remuneration of directors, as well as overall corporate governance.

The Audit & Supervisory Committee consists of three members, two of whom are outside directors who perform accurate auditing and supervision functions from their respective professional standpoints and perspectives as a lawyer and certified public accountants. As of the July 2023 meeting of the Board of Directors, we have introduced a discussion time on various management issues to stimulate discussions at Board meetings. In the future we will incorporate external evaluations into our evaluations of the effectiveness of the Board of Directors, and we will continue working to enhance our corporate governance system.

Corporate Governance Chart

Board of Directors

The VITAL KSK Holdings Board of Directors is responsible for the Group’s executive management functions. It is composed of up to 12 directors as stipulated in the Articles of Incorporation (excluding directors who are Audit & Supervisory Committee members) and no more than five directors who are Audit & Supervisory Committee members. Membership is essentially determined to give the Company the effective management system required of a holding company, the appropriate number of members required to ensure substantive discussions at Board of Directors meetings, and the abilities, knowledge, and experience required for the actualization of the Group’s corporate philosophy and management strategy. As a general rule, meetings of the Board of Directors are held once a month, and separate meetings are held as necessary to decide upon matters dictated by laws and/or regulations and important matters relating to management, and to supervise the state of execution of business.

Key matters discussed in fiscal 2023

  • Appointment of representative directors and directors with titles
  • Determination of remuneration for directors
  • Approval of conflicts of interest and competing transactions by directors
  • Discussions and policy decisions to implement management with an awareness of cost of capital and stock price
  • Formulation of management plans
  • Investment decisions for growth
  • Approval of financial statements
  • Dividend Payments
  • Convocation of General Meeting of Shareholders
  • Report state of execution of duties

Nomination and Compensation Advisory Committee

In July 2024, we established the voluntary Nomination & Compensation Advisory Committee, as an independent advisory committee to replace the Advisory Meeting. Matters concerning the appointment of director candidates and compensation for directors are determined by consultation with the Committee (consisting of five outside directors and three representative voters) to obtain appropriate advice before resolution by the Board of Directors.

Key matters discussed at Advisory Meetings in fiscal 2023

  • Policies and procedures for the appointment and dismissal of senior management and directors
  • Performance assessment and personnel management for senior management
  • Policies and procedures for the compensation of senior management
  • Assessment and analysis of the effectiveness of the Board of Directors
  • Policy on corporate governance structure including the Company’s institutional design

Attendance (FY2023)

* Includes the number of times attended as an Audit & Supervisory Board Member.
Name Attendance at meetings of
the Board of Directors
Attendance at meetings of
the Advisory Meeting
Taisuke Murai 13/13 1/1
Soichiro Okamoto 13/13 1/1
Takeshi Ichijo 13/13 1/1
Toshiyuki Iguchi 13/13
Mitsunao Suzuki 10/10
Koichiro Suzuki 10/10
Isao Kita 10/10
Shutaro Matsui 12/13
Kieko Onoki 9/10 1/1
Jun Katsura 10/10 1/1
Masami Tsugita 9/10 1/1
Hirofumi Jinen* 13/13
Seiya Takahashi* 13/13 1/1
Tsuyoshi Nishitani* 13/13 1/1

Audit & Supervisory Committee

Until the Group’s transition to a Company with Audit & Supervisory Committee system in June 2023, the Audit & Supervisory Board met mainly to verify quarterly and yearly financial results, receive reports from the Internal Audit Division on all aspects of the execution of business, and verify and evaluate that the execution of business throughout the Group was being conducted appropriately and efficiently, based on the annual audit plan.

Even since the transition to a Company with an Audit & Supervisory Committee system, we ensure transparency and soundness of management through auditing and supervision by the appropriate operation of the Audit & Supervisory Committee. To ensure thorough compliance with laws and regulations, the Group has also established a Compliance Statement, as a code of conduct for all officers and employees.

Key matters shared and discussed in fiscal 2023

  • Audit policies, audit plans, and division of duties
  • Evaluation of accounting auditor
  • Review of Audit & Supervisory Committee audit standards
  • Status of audits at each Group company

Overview of activities

Director
  • Attendance at meetings of the Board of Directors
  • Meetings with the representative director
Execution of business
  • Viewing and checking important documents
Internal audits
  • Audit plans and reports of findings from auditing divisions
  • Meetings with internal control divisions
Accounting audits
  • Three-party audit meetings
  • Explanation of audit plans, quarterly review reports, and audit result reports from the accounting auditor
  • Accounting auditor evaluations

Attendance at meetings of the Audit & Supervisory Committee (FY2023)

Name Attendance at meetings of the Audit & Supervisory Board and Audit & Supervisory Committee
Hirofumi Jinen 13/13
Seiya Takahashi 13/13
Tsuyoshi Nishitani 13/13

Evaluation of the effectiveness of the Board of Directors

To verify that the functions expected of the Board of Directors are being fulfilled appropriately and improve upon them, we conduct an annual evaluation of the Board’s effectiveness.

In addition to this, to verify the effectiveness of the system in a neutral and objective manner, we request an evaluation from a third-party assessment body at regular intervals (around once every three years).

The analysis and evaluation of the effectiveness of meetings of the Board of Directors held from April 2023 through March 2024 was conducted by a third-party assessment body.

A questionnaire-based survey of all directors was conducted regarding the state of execution and supervision, and the Board’s effectiveness was evaluated and analyzed based on the results.

Overview of evaluation

Subject to evaluation Meetings of the Board of Directors held from April 2023 through March 2024 (13 meetings)
Assessors Directors (14 including Audit & Supervisory Committee members)
Evaluation method Questionnaire-based survey by a third-party assessment body
Major evaluation items General state of the Board of Directors, composition of the Board of Directors, operation of the Board of Directors, discussions at Board meetings, the monitoring function of the Board of Directors, the performance of internal directors (excluding Audit & Supervisory Committee members), the performance of outside directors (including Audit & Supervisory Committee members), and the support system and training for Directors (including Audit & Supervisory Committee members)

The main issues identified in the results of this evaluation and measures taken to address them were as follows.

Issues Response
Allocation of time for resolutions and reports (time should be allocated for deliberations) We will seek to improve the efficiency of content and methods of reporting (e.g., devising explanatory materials), secure time for deliberation on matters for resolution, and secure many opportunities for discussion on key management issues other than those for resolution.
Securing time for consideration in advance In particular, we will expedite the timing of the distribution of materials relating to matters for resolution in advance, and establish a system to ensure that necessary information can be accessed prior to deliberation by the Board of Directors, such as by providing opportunities for outside directors to attend meetings of the Management Committee (a meeting body that discusses management-related issues before they are submitted to the Board of Directors) and important meetings at Group operating companies.
Securing opportunities for communication outside of Board meetings We will create opportunities for Board members to deepen their understanding of the Group’s business, such as by arranging tours of operating companies’ sales sites and logistics centers.

In addition, the following points were found to have improved in comparison with the time of the previous effectiveness evaluation conducted in April 2023.

  1. The introduction of a discussion time after the conclusion of deliberations and reporting Board meetings has deepened understanding of the industry environment, systems, and businesses to which the Company belongs, leading to more active discussions.
  2. The participation of highly specialized outside directors with expertise in various fields has led to the diversification of the Board’s membership, and stimulated more active discussions through the expression of diverse opinions.
  3. Discussions on indicators such as PBR, ROI, and ROE are also taking place. The contents of interviews with investors are also being shared, and there are opportunities for Board members to understand the thoughts and intentions of investors.