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Corporate Governance

Corporate Governance Policy

The basis of the IDEC Group’s corporate governance is to ensure management transparency and efficiency for shareholders and other stakeholders. For this reason, we assign outside directors and separate the management supervisory function from the execution function so as to always maintain a high priority on transparency and efficiency. Under this concept, in order to realize the improvement of corporate value based on “The IDEC Way”, which was established in 2019 as a new philosophy toward becoming a truly global company, the IDEC Corporate Governance Policy has been established and published to further strengthen corporate governance.
 

Report on Corporate Governance

Corporate Governance Report (Last update: June 28, 2022)


Corporate Governance System

Evolution of governance

The IDEC Group has separated the business execution function and the supervisory function of the management, in order to realize efficient corporate management, and has proactively appointed outside directors since early on. In 2016, the IDEC Corporate Governance Policy was established to set forth and inform our view on governance and our operating policy. In June 2018, we transformed our status to being a Company with an Audit & Supervisory Committee. In 2022, we have newly appointed outside directors in areas that we believe their contribution was needed, regarding such matters as related to the environment and IT.

Internal Control System

In order to ensure the credibility of the financial reporting of the IDEC Group, we have prepared relevant regulations and have established appropriate systems in accordance with the internal control evaluation criteria for financial reporting. The Internal Control Policy on Financial Reporting is established to clarify the overall Group’s promotion structure, and to establish a framework for continuous self-inspection at each division and group company and for independent monitoring by the Internal Auditing Department.


The Voluntary Nominating Committee and Succession Planning

A voluntary Nominating Committee has been established as an advisory body for the Board of Directors with a majority of members being outside directors since 2021 in order to objectively and independently decide nomination of candidates for directors and a development plan of next-generation executive candidates. In FY2022 the Nominating Committee held one meeting, which was attended by all the members.
When nominating candidates for a director post, the Nominating Committee is responsible for the process of selecting and recommending candidates for decisions by the Board of Directors.
In the development of successors to executives, including representative directors, with the objective to continually produce personnel who contribute to the sustainable and global development of the IDEC Group, candidates attend training in subjects of general management knowledge according to their job level, and are provided with the opportunity to participate in important meetings, including the Top Management Meeting and the Executive Officers’ Meeting. The Nominating Committee receives reports on the progress of development of candidates, and the committee members express their opinions on the development plan and report to the Board of Directors.



Proactive Engagement by Outside Directors

Outside directors play a professional and independent role in various ways. At the Board of Directors, they express candid opinions based on their high level of expertise and management experience, and participate in the discussion from an independent standpoint. They are also actively involved in the growth of the Company’s business, including the holding of individual sessions with a responsible department or departments concerning a business issue or subject, and lectures and interviews in the curriculum for next-generation training.
With the objective of enhancing communication among outside directors’ exchange session have been held since FY2019. In FY2022, outside directors deepened examination of medium- to long-term strategic policies of the IDEC Group through active discussions and exchange of views.



Remuneration Policy for Directors

IDEC’s remuneration system for directors is based on fixed remuneration according to their position and performance-linked remuneration based on the premise of contribution to the Officers’ Shareholding Association, so that the remuneration serves as incentives for achieving sustainable growth and links with shareholder interests. Policy regarding remuneration decisions is set forth below. Independent outside directors, however, have only fixed remuneration because they play a supervisory function from an independent position.
 

Policy on remuneration decisions

The basic remuneration for the Company’s directors is fixed monthly remuneration, which is determined by comprehensively taking into account the position, responsibilities and business performance of the Company.

The performance-linked remuneration is a cash remuneration based on the premise of contribution to the Officers’ Shareholding Association, and uses the consolidated operating income margin for its calculation because the said ratio is a basic indicator of the Group’s earnings status. Comprehensively taking into account the changes in the said indicator for each fiscal year, the total amount is determined, which is then divided by the grant ratio according to the position, resulting in performance-linked remuneration for each director. This performance-linked remuneration is divided into 12 equal parts and paid monthly.

The percentage of performance-linked remuneration is determined roughly within the range of 10% to 20% of the amount of remuneration for representative directors and 5% to 10% of the amount of remuneration for other executive directors.

As for the details of individual remuneration for directors (excluding directors who are members of the Audit & Supervisory Committee), the Audit & Supervisory Committee deliberates whether or not to express its opinion on the remuneration at the General Shareholder Meeting in advance, and not just each director’s position but also the Company’s performance is considered for executive directors, or expertise and management experience in other companies for outside directors, and the Board of Directors, of which the majority is composed of independent outside directors, makes a final decision to leave the matter to the CEO.


 

Efforts to Evaluate Effectiveness

In order to improve the effectiveness of the Board of Directors, an evaluation of all directors except the CEO has been conducted using a questionnaire method every year since FY2016. As the Corporate Governance Code and other governing document require a more sophisticated governance system that takes into account objective evaluation, a questionnaire survey and a third-party organization’s results analysis have been carried out since FY2022. The evaluation results are reported to the Board of Directors, and the issues are shared, and improvements are being made continuously.