Corporate Governance

Basic concept for Alfresa Group's corporate governance

As a company conducting business in a field related to life and health, the Group has determined to put the Alfresa Group's Principles into practice and to fulfill our responsibilities to our various stakeholders. The Group believes that the enhancement of corporate governance is fundamental to fulfilling corporate social responsibilities and to enhancing corporate value. Going forward, the Company will continue to promote initiatives in line with the purpose of the Corporate Governance Code, working to further increase corporate value.

From the perspective of achieving sustained growth and long-term enhancement of corporate value, the Group regards the essence of corporate governance as being the assurance of the transparency and fairness of decision-making, the full and effective use of management resources, and the improvement of management vitality by means of rapid and resolute decision-making, and we will work to enhance corporate governance in line with the following basic concept.

  1. To respect shareholders' rights and ensure equality of treatment.
  2. To build good and harmonious relationships with stakeholders including shareholders.
  3. To disclose corporate information appropriately and ensure transparency.
  4. To build a structure that effectively utilizes outside directors and outside Audit & Supervisory Board members, ensuring the effectiveness of the Board of Directors' supervisory function of business execution.
  5. To enhance internal-control systems, including the assurance of the reliability of financial reporting.
  6. To engage in constructive dialogue with shareholders whose investment policies match the medium-to-long-term interests of shareholders.

Establishment of Corporate Governance Guidelines

The Alfresa Group has established Corporate Governance Guidelines as basic principles concerning corporate governance. The purpose of these guidelines is to further enhance corporate value in order for the Group to fulfill its responsibilities to customers, business partners, employees, shareholders, local communities and other stakeholders in a manner characterized by reliability, safety and sincerity by realizing the Alfresa Group's Principles in the form of "Our Philosophy," "Our Vision," and "Our Promises."

Corporate Governance Guidelines(293KB)

Corporate Governance Structure

The Company has adopted the organizational structure of a "company with an Audit & Supervisory Board." The Audit & Supervisory Board and Audit & Supervisory Board members audit directors’ performance of their duties. The Company has also introduced an executive officer system to clarify the division of responsibilities for supervision and business execution. The responsibilities for supervision are assumed by the Board of Directors, and responsibility for business execution is assumed by the executive officers.

Corporate Governance Report(683KB)

as of June 25, 2021

Overview of Board of Directors and Advisory Committees

Name Description
Board of Directors Chaired by the president, the Company’s Board of Director is made up of eleven directors (ten men and one woman, of whom four are outside directors). Meetings are attended by the Audit & Supervisory Board members. Regular meetings are held once per month, in principle, but extraordinary meetings may also be convened as necessary. These meetings are held to approve important matters stipulated by laws and regulations, as well as determine matters pertaining to management, and to supervise directors’ performance of their duties.
Corporate Governance Committee The Corporate Governance Committee is composed of outside directors, outside Audit & Supervisory Board members, standing Audit & Supervisory Board members, representative directors, and the directors who are elected on the basis of resolutions of the Board of Directors. The chairperson is elected mutually from among the independent officers.
The Committee’s purpose is to enhance the transparency and fairness of management and ensure the continual improvement of corporate governance from the standpoint of all stakeholders. It engages in exchanges of opinions from long-term and varied perspectives with regard to corporate governance, visions and strategies encompassing all aspects of corporate management, and matters such as the progress of the midterm management plan, and provides advice and proposals to the Board of Directors.
Nomination and Remuneration Committee for Directors and Executive Officers The Nomination and Remuneration Committee for Directors and Executive Officers is made up of six directors (including four outside directors, of whom one is the chairperson) who are elected on the basis of resolutions of the Board of Directors. The Committee deliberates on election and dismissal with respect to directors and executive officers of the Company and a specified wholly owned subsidiary Alfresa Corporation, remuneration with respect to directors and executive officers of the Company, as well as other important matters related to management.
Business Investment Administration Committee The Business Investment Administration Committee creates opportunities to deliberate on business investment projects submitted by the Company or Group companies that exceed the standard amount and important investment projects that require multifaceted and careful consideration. The Committee also establishes a system to report these results to the Executive Committee or the Board of Directors.
CSR Promotion Committee The CSR Promotion Committee works with Group companies to consider important policies related to CSR for the entire Group in order to contribute to increasing corporate value over the medium to long term, creates opportunities to report and evaluate the CSR activities of the Company and each Group company, and also establishes a system to report these results to the representative directors and the Board of Directors.
Compliance and Risk Management Committee The Compliance and Risk Management Committee formulates compliance and risk management promotion plans, considers important policies regarding compliance and risk management for the entire Group, and creates opportunities to report and evaluate the compliance and risk management activities of the Company and each Group company, and also establishes a system to report as necessary to the representative directors and the Board of Directors. Subcommittees are established and limited to particular business segments, business categories, or type of operations in order to ensure more appropriate and systematic responses to inherent risks in specific, highly specialized businesses, in addition to plenary meetings.

Composition and Overview of Each Meeting Body

Name Description
Executive Committee The Executive Committee is made up of the representative directors, directors, and executive officers nominated by the Company’s Board of Directors. Meetings are attended by Audit & Supervisory Board members. The Committee deliberates and approves matters related to the management of the Company, apart from the matters the Company’s General Meeting of Shareholders and Board of Directors are responsible for approving. Regular meetings are held twice per month, in principle, but extraordinary meetings may also be convened as necessary.
Business Strategy Committee The Business Strategy Committee comprises executive directors and executive officers of the Company, and also appointed officers from the Company and certain Group companies.
Regular meetings are held every month, in principle, but extraordinary meetings may also be convened as necessary.
Group Management Committee The Group Management Committee comprises the directors, and executive officers, and Group company presidents appointed in advance by the chairperson of the Committee.
Regular meetings are held three times a year, in principle, but extraordinary meetings may also be convened as necessary. The Committee’s role is to align the management intentions of Group companies. As such, the Committee discusses the common business issues related to overall Group management.

Outside Directors and Outside Audit & Supervisory Board Members

The Company makes it a basic policy to include more than one independent outside director on the Board of Directors. Outside directors are elected from among candidates that meet not only the outside director requirements stipulated by Japan’s Companies Act but also the Company’s independence standards for outside directors, etc. Outside directors are elected from persons with points of view that are pragmatic, based on extensive corporate management experience, or are objective and professional, based on high-level insight into such areas as social and economic trends. Meanwhile, outside Audit & Supervisory Board members also meet predetermined standards in the same way as outside directors. They are elected mainly from persons who have specialist insight on legal and regulatory compliance or finance and accounting, or extensive corporate management experience and wide-ranging knowledge.

Independence Standards for Outside Directors, etc.

The Company elects candidates for Outside Directors, etc. who have high degree of independence.

  1. Outside Directors, etc. must be financially independent from the Group.
    1. Outside Directors, etc. should not have received compensation (excluding remuneration to Directors, etc. paid by the Company), or monetary consideration/other properties for performed duties, transactions, etc. that exceed a certain amount directly from the Group in the past five years.
      • “Exceed a certain amount” is defined to be the amount of ¥10 million or more received in any one of the past five fiscal years.
    2. Outside Directors, etc. should not have served as Director, Officer, etc. of any one of the following entities in the past five years.
      • Major business clients who account for 2% or more of the consolidated net sales of the Group or the corporate groups, to which the candidate belongs.
      • Entities that have substantial conflicts of interest with the Group, such as the Company’s independent auditing firm, etc.
      • Entities that are the Company’s major shareholders (holding 10% or more of shares issued).
      • Entities of which the Group is the major shareholder (holding 10% or more of shares issued).
  2. Outside Directors, etc. shall not be the close relatives of Directors and Audit & Supervisory Board Members of the Group.
    • “Close relatives” are defines as spouse, blood relatives within third degree of kinship, and relatives living together.
  3. Furthermore, Outside Directors, etc. shall not possess any reason by which they are reasonably deemed ineligible as an independent and neutral officer.
  4. Outside Directors, etc. shall ensure to satisfy the independence and neutrality criteria set forth in this Standards on an ongoing basis even after the appointment as Officer.

Remuneration for Directors and Audit & Supervisory Board Members

Our officers’ remuneration is based on the standard amount for each rank of officer. In setting this standard amount, we use remuneration data from external specialist organizations as well as publicly available information to assess the remuneration level of companies in both the same and other industries.

The composition of remuneration varies for directors in charge of business execution, directors not in charge of business execution (including outside directors), and Audit & Supervisory Board members. Remuneration for directors in charge of business execution consists of basic (fixed) remuneration, performance-linked bonuses based on the achievements of the performance targets in each fiscal year, and stock remuneration (currently stock price-linked remuneration as a substitute), which aims to increase the motivation of directors and other officers to achieve the medium- to long-term performance targets set forth in the 2019–21 Mid-term Management Plan, and to further enhance long-term corporate value.

The Company planned to introduce performance-linked stock remuneration through a system utilizing an officer remuneration Board Incentive Plan trust, but has been unable to set up the officer remuneration BIP trust. For this reason, the Company rolled out stock price-linked remuneration as a substitute plan until the introduction of performance-linked stock remuneration. This stock price-linked remuneration is paid in cash in lieu of stocks based on the same calculation method as performance-linked stock remuneration. Once this situation is resolved, the Company will introduce performance-linked stock remuneration.

  1. Method of Calculating Performance-Linked Remuneration
    • Method of Calculating Bonuses

      In order to ensure our values are aligned with those of shareholders, and to further motivate officers to contribute to corporate performance, bonuses are individually determined in an amount calculated by multiplying the base amount by the bonus composition ratio (20%) within a range from 0% to 200%, in accordance with the degree of achievement against original targets for consolidated operating income margin and profit margin attributable to owners of the parent for each fiscal year.

    • Method of Calculating Stock Compensation

      Stock compensation serves as an incentive to increase corporate value over the long term. The number of our shares to be issued will be determined by annually granting and accumulating the base points calculated according to the amount obtained by multiplying the base amount by the stock compensation composition ratio (10%), and after the conclusion of the mid-term management plan, varying the cumulative value of the base points within the range of 0% to 200% according to the achievement level of the business performance targets in the mid-term management plan. As with bonuses, the performance indicators utilized include the consolidated operating income margin and profit margin attributable to owners of the parent, which have been positioned as KPIs for the mid-term management plan. In doing so, we aim to ensure our values are aligned with those of shareholders and to further motivate officers to contribute to corporate performance.

    • Method of Calculating Stock Price-Linked Compensation

      Stock price-linked compensation is positioned as a substitute until the introduction of stock compensation. During the mid-term management plan, it will be annually granted and accumulated using the same base points as stock compensation. After the conclusion of the mid-term management plan, stock price-linked compensation will be varied by the cumulative value of the base points within the range of 0% to 200% according to the achievement level of the business performance targets in the mid-term management plan, and paid the amount obtained by multiplying the stock price on a reference date set forth in the rules. As with stock compensation, the performance indicators utilized the consolidated operating income margin and profit margin attributable to owners of the parent, which have been positioned as KPIs for the mid-term management plan.

  2. Method of Deciding on Remuneration, etc.
    • Method of Deciding on Remuneration

      The policy for deciding on remuneration (including the remuneration composition and standard amount), the method for calculating remuneration, and total amount of remuneration are deliberated by the Nomination and Remuneration Committee for Directors and Executive Officers, which is a voluntary committee chaired by an outside director and comprising a majority of outside directors. These are proposed to and decided by the Board of Directors. Individual remuneration amounts, etc., for directors is decided based on the deliberations of performance evaluation results by the Nomination and Remuneration Committee for Directors and Executive Officers. Furthermore, individual amounts of remuneration, etc., for Audit & Supervisory Board members are decided through discussion among the Audit & Supervisory Board members.

Investment Securities

  1. Classification Criteria and Approach

    With regard to the classification of investment securities held for purely investment purposes and investment securities held for purposes other than pure investment, those that are held entirely for the purpose of receiving profit from changes in the price of the shares or dividends pertaining to the shares are classed as investment securities held for purely investment purposes.

  2. Policy and Method of Examining the Rationality of Holdings

    The Alfresa Group’s policy on holding investment securities is to hold only shares that align with an important strategic purpose, such as maintaining and developing good business and collaboration relationships, or creating new business opportunities related to realizing a Healthcare Consortium, and to reduce holdings of shares that do not have such important purposes. Based on this policy, each year the Company confirms the significance of holding each investees’ shares, performs a quantitative examination to determine whether the benefits and risks of holding are commensurate with the capital cost as well as a qualitative examination to determine the significance of holding over the medium to long term, and reports the details of examinations to the Directors’ meetings.