Corporate Governance

Basic approach to corporate governance

Principles of the Corporate Governance Code and RYODEN’s initiatives

• Principles of the Corporate Governance Code and RYODEN’s initiatives ( PDF | 664KB )
• Corporate Governance Report ( PDF | 485KB )

Strengthening corporate governance

Corporate governance system

1. 1Board of Directors(Meetings in FYE2024: 15)

   As the management top decision-making body, the Board of Directors decides on important matters concerning the Company’s execution of business, and supervises the execution of duties by Directors. The Company has introduced an Executive Officer system in order to increase the speed of decision-making, separate oversight functions and execution functions, and to enhance agility of execution, so as to appropriately respond to the business environment in which the Company operates. At the Ordinary General Meeting of Shareholders held on June 25, 2024, we amended our Articles of Incorporation to limit the number of directors (excluding directors who are audit and supervisory committee members) to 10 or less, and the number of directors who are audit and supervisory committee members to four or less. Currently, our Board of Directors consists of six directors (excluding directors who are audit and supervisory committee members) (of which three are outside directors and two are independent outside directors), and three directors who are audit and supervisory committee members (of which two are independent outside directors).

2. 2Nomination & Compensation Advisory Committee(Meetings in FYE2024: 4)

   In order to ensure the fairness, transparency, and objectivity of procedures related to the nomination and compensation of executives, including directors, and to enhance corporate governance, we have established the Nomination and Compensation Advisory Committee as an advisory body to the Board of Directors. The matters to be discussed are as follows:

   1. Nomination-related matters: Criteria for the appointment and dismissal of executives, selection of candidates for executives, etc.

   2. Compensation-related matters: Policies and procedures for determining compensation for executives, matters related to the compensation limit for executives, etc.

   3. Other: Individual evaluation of executives, succession plan for the president, etc.

   The Nomination and Compensation Advisory Committee is made up of a majority of outside directors (excluding directors who are audit and supervisory committee members), and the chairperson is an independent outside director.

3. 3Executive Committee(Meetings in FYE2024: 25)

   We have established a "Management Committee" to discuss important matters related to the agenda of the Board of Directors and the execution of the company's business. Currently, the Board of Directors consists of one President and one Business division executive officer and 11 executive officers.

4. 4Audit & Supervisory Committee

   At the Ordinary General Meeting of Shareholders held on June 25, 2024, a resolution was passed to amend the Articles of Incorporation to transition to a company with an audit and supervisory committee, and the Company is transitioning to a company with an audit and supervisory committee. The Audit and Supervisory Committee of the Company is composed of three directors, of which two (a majority) are outside directors. The Audit and Supervisory Committee makes decisions regarding audit policies, plans, and methods, as well as other important matters related to audits. The Audit and Supervisory Committee audits the execution of the directors' duties in accordance with the Audit and Supervisory Committee Audit Standards established by the Audit and Supervisory Committee.
   In addition, one substitute Audit and Supervisory Committee member (Masato Denawa) has been appointed in case the number of Audit and Supervisory Committee members required by law is insufficient.

Overview of the corporate governance system

Views on the balance of knowledge, experience, and skills, and the diversity and size of the Board of Directors

Skill matrix of the Company’s Board of Directors

Evaluation of the effectiveness of the Board of Directors

Fiscal year 2024 was the final year of our previous medium-term management plan, and also the year in which we were formulating our new medium-term management plan, which will begin in fiscal year 2025.
As such, our Board of Directors conducted a survey of all members of the Board of Directors regarding the reasons (both supervisory and executive) for the failure (prospects) to achieve the KPIs set out in the previous medium-term management plan, what was achieved in the previous medium-term management plan, the vision set out in the next medium-term management plan, what is needed and the challenges (both supervisory and executive) to achieve the KPIs, and the challenges following the transition to a company with an audit and supervisory committee, and held a discussion at a Board of Directors meeting based on the results of the survey.
As a result, while the role of the Board of Directors is to present large-scale strategies such as corporate strategies, create an environment that allows for risk-taking, and provide effective supervision, issues raised on the supervisory side included (1) encouraging executives to revise plans to make them more effective in light of changes in the business environment, (2) the need for more in-depth discussion on the validity of plans and the basis for KPIs, and (3) the lack of in-depth action in areas such as rearranging the business portfolio, making bold business changes, and focusing the reallocation of resources in order to transform into a "business-creating company," which is the vision the Company has set for achieving sustainable growth.
On the other hand, the following were cited as achievements: (1) establishing Purpose, Vision, and Values ​​to set out the path the Company is aiming for, (2) embarking on sustainability management, (3) making significant revisions to the executive compensation system to link it to management strategy, (4) transitioning to a company with an audit and supervisory committee and switching to a monitoring model to strengthen governance, and (5) the start of discussions on medium- to long-term, broad-based themes at the Board of Directors.
Taking into account these issues and future directions, our Board of Directors will further increase its effectiveness and continue to work to improve corporate value.

Status of Outside Directors

• ※1:Attendance status from June 24, 2024 onwards is shown.
• ※2:Attendance status before June 23, 2024 is shown.

Compensation for Directors and Auditors

Basic Policy on Compensation for Directors

• Increases medium- to long-term corporate value in line with the Company’s Management Principle
• Endeavors to share interests in common with shareholders
• Is explainable to stakeholders and determined through a transparent process

Policy for determining directors' compensation

Percentage of each type of compensation

Compensation amounts for Directors and Auditors（FYE:2024）

• ※1The above numbers of directors and amounts of remuneration include remuneration paid to directors before the transition to a company with an audit and supervisory committee, including four directors who retired at the conclusion of the 84th Ordinary General Meeting of Shareholders held on June 25, 2024. However, this does not include one outside director who receives no remuneration.
  Remuneration paid to directors who are audit and supervisory committee members pertains to the period after the transition to a company with an audit and supervisory committee, while remuneration paid to auditors pertains to the period before the transition to a company with an audit and supervisory committee.
• ※2We pay directors (excluding outside directors and directors who are Audit and Supervisory Committee members) performance-linked remuneration (bonuses) that reflect single-year performance indicators. The calculation method is described on page 31, and the above amounts are planned payments to three directors (excluding outside directors and directors who are Audit and Supervisory Committee members). The performance indicators used in the calculation are consolidated operating profit, consolidated ROE, and net income per share (non-consolidated). These indicators were selected to serve as incentives for achieving the management indicators set out in the medium-term management plan and to further clarify the link between director compensation and our corporate value. The actual consolidated operating profit and consolidated ROE figures are described on pages 15 and 16, and the actual net income per share (non-consolidated) was ¥187.01.
• ※3 The calculation method for stock-based compensation stock options (stock acquisition rights) is as follows. The above amount of stock-based compensation stock options is the expense recorded for the fiscal year for stock acquisition rights granted to four directors (outside directors and directors who are audit and supervisory committee members are not eligible for payment).
  - Directors who are allocated stock acquisition rights will be granted compensation equal to the payment amount, and will acquire the stock acquisition rights by offsetting their right to claim compensation against the payment amount for the stock acquisition rights.
  - The type of shares underlying the stock acquisition rights will be the Company's common stock. The number of stock acquisition rights to be allocated will be calculated by dividing the stock option compensation base amount, as determined separately, by the fair value per stock acquisition right (calculated using the Black-Scholes model), and will be decided by resolution of the Board of Directors within a range that does not exceed the total number of stock acquisition rights resolved at the General Meeting of Shareholders.
• ※4The performance indicator used in the calculation of stock-based compensation stock options is net income attributable to owners of the parent company, and the reason for selecting this indicator is to aim to align interests with shareholders. The actual results are as shown on page 21.
• ※5The details of the restricted stock compensation are as set out on page 31, and the amount of the restricted stock compensation mentioned above is the amount recorded as an expense for the fiscal year in question, which was granted as restricted stock to three directors (outside directors and directors who are audit and supervisory committee members are not eligible for payment). The status of the issuance of shares for the fiscal year in question is as set out on page 26, "1. (5) Status of shares issued to company officers as consideration for the performance of duties during the fiscal year in question."

Training for Directors and Auditors