Our Corporate Governance Policy

We believe that to increase corporate value and achieve sustainable growth, it is essential to continue to ensure managerial transparency and strengthen supervisory functions regarding the execution of business affairs. This is our basic policy on corporate governance and we will strive to improve our organization and business systems in accordance with this policy.

Corporate Governance Structure

As of March 30, 2023

Board of Directors

The Board of Directors makes decisions on important management affairs of our Group and supervises the execution of business affairs. As of March 30, 2023, the Board of Directors consists of eight members(including two representaetive directors, three inside directors, three outside directors). The Board of Directors is presided over by the Chairman of the Board. To achieve clarity of management responsibility and develop a flexible management system capable of responding to changes in the business environment, the term of Directors is set at one year. Regular Board of Directors meetings are held monthly, and extraordinary Board of Directors meetings are held when necessary. In addition, at the budget meeting held once a year, the Board of Directors monitors management by hearing explanations directly from the respective executive officers about the business outcomes of the current fiscal year and the budget of the next fiscal year.

List of Directors

Board of Corporate Auditors

We adopt a corporate auditor system. As of March 30, 2023, the Board of Corporate Auditors consists of four Corporate Auditors, two of whom are outside Corporate Auditors. Corporate Auditors conduct audits of the Directors’ execution of their duties through assessing business affairs and corporate assets and setting important audit issues according to auditing policies, plans, and assignment of duties established by the Board of Corporate Auditors. They also participate in Board of Directors meetings. Meetings of the Board of Corporate Auditors are held monthly in principle, and Corporate Auditors share information and exchange opinions at these meetings. Corporate Auditors endeavor to improve the effectiveness of their audits by deepening their understanding about the Company’s business operations. For this purpose, the Corporate Auditors take various measures, such as attending the annual budget meeting and periodically questioning Directors and Executive Officers about their duties and handling of business affairs.

List of Corporate Auditors

Nomination and Remuneration Advisory Committee

As part of our efforts to strengthen our corporate governance, the Company established the Nomination and Remuneration Advisory Committee to ensure transparency and objectivity in the appointment and dismissal of representative directors and in the process of determining director remuneration. The Committee deliberates on the appropriateness of matters related to the appointment and dismissal of representative directors; remuneration policies and systems for directors; the amount of remuneration determined for directors; and reports its conclusions to the Board of Directors.
The Committee comprises Chairman of the Board ,CEO and three outside directors Its membership is shown below.

Management Committee

The Management Committee deliberates on our Company’s important managerial affairs and draws up detailed action plans regarding the decisions made at the Board of Directors meetings. Management Committee meetings are held twice a month and when deemed necessary. As of March 30, 2023, the Management Committee comprises five inside directors (two of whom are representative directors) and five senior vice presidents.

Executive Officers

We adopt an executive officer system to promote faster decision making, ensure managerial transparency, and enhance the execution of business affairs. As of March 30, 2023, there are seventeen Executive Officers (three of whom are Directors). The President is responsible for execution of duties and the other Executive Officers execute the duties assigned to them by the President. Each Executive Officer serves for a term of one year.

List of Executive Officers

Outside Directors and Corporate Auditors

As of March 30, 2023, there are three outside Directors and two outside Corporate Auditors within the Company. Outside Directors make up over one-third of all Directors.In order to strengthen the management supervisory capabilities of the Board of Directors and other corporate administrative bodies by ensuring that they receive informed and objective advice, our outside director appointments include: a science expert who is specialized and highly experienced in the field of agricultural sciences; an economist with expertise and a robust background in corporate governance and organizational management; and a corporate management expert with many years of first-hand knowledge and experience in the world of corporate management.Outside Corporate Auditors consist of one certified accountant and tax accountant and one attorney at law, who are both independent from the Company and are highly experienced in their respective fields. They proactively perform their auditing duties and reinforce supervisory functions.
When hiring outside Directors and Corporate Auditors, we base our selection on whether candidates satisfy requirements set for independent directors/corporate auditors in accordance with the independence standards set by the Tokyo Stock Exchange and the “independence standards for Outside Officers” established by the Company.
At the same time, we also take into account the importance of avoiding any risks or conflicts of interest with our general shareholders. We have registered all our outside executives as independent directors/ corporate auditors with the Tokyo Stock Exchange.

Independence standards for Outside OfficersPDF: 86KB

Analysis and Evaluation of the Effectiveness of the Board of Directors

All of our directors respond to an annual questionnaire to investigate the effectiveness of the Board of Directors. The questionnaire focuses on (1) the Board of Directors in general, (2) the running of Board of Directors meetings, and (3) outside directors.

Questions and opinions from the fiscal 2021 questionnaire

（１）Whether the Board of Directors deliberated sufficiently in their meetings on corporate strategy and other matters related to the overall direction of the company

• Corporate strategy was explained in regard to each business separately, but not sufficiently in regard to the overall direction of the company.
• While all matters that required deliberation had been put on the agenda, because the large number of matters to discuss was from the most recent and short-term issues, a little more time was needed for the discussion of strategic issues from a medium- and long-term perspective.

（２）Whether the inside directors were aware of the difference between their role in executing their own duties and their role as a director and could express an opinion in discussions outside of their immediate purview, and could contribute to improving the quality of deliberations and decision-making by the Board of Directors

• Although it is probably due to the fact that discussion is already exhausted in the Management Committee, they wanted inside directors to take a more proactive stance in discussing matters in Board of Directors meetings. While efforts to improve in these areas are ongoing, with regard to 2. in particular, inside directors are taking a more proactive stance in discussions at Board of Directors meetings.

From the fiscal 2022 questionnaire, regarding the size of the Board of Directors, some were of the opinion that the current size is the minimum acceptable size, while others were of the opinion that it should be smaller.

Also, in response to the question of “Whether the inside directors were aware of the difference between their role in executing their own duties and their role as a director, could express an opinion in discussions outside of their immediate purview, and could contribute to improving the quality of deliberations and decision-making by the Board of Directors,” some felt that, although inside directors were participating in decision-making, they were not quite contributing to improving the quality of decision-making.
Based on the results of the questionnaire, we have determined that the Board of Directors is viable and that its effective functioning has been ensured. However, we will strive to enhance deliberations at Board of Directors meetings by making improvements based on evaluation results and will continue to evaluate its effectiveness.

Skill Matrix of Directors

For the corporation to be able to respond flexibly to a changing climate and business conditions, and to improve corporate value over the medium and long term, we consider it necessary for directors to have specialized skills in a range of areas related to management.

Note: The table above does not indicate all of the expertise possessed by each director.

Policy on Deciding Directors’ and Corporate Auditors’ Remuneration

Our executive compensation for directors (excluding outside directors) comprises a monthly retainer, bonuses, and grants of restricted shares; for outside directors and corporate auditors, remuneration is limited to a monthly retainer.
The total monthly remuneration for directors is within the scope determined by the General Meeting of Shareholders, and the total amount of the bonus payment is determined at the General Meeting of Shareholders after deliberation by the Nomination and Remuneration Advisory Committee subject to the approval of the Board of Directors. The amounts of the monthly retainer and bonus for each individual director are commensurate with those of other companies and are aligned with our business performance (in the case of internal directors only), the economic environment, and objective market research data on remuneration provided by outside specialized agencies. The duties, responsibilities, and achievements of individual directors are also taken into account. The decision is made after comprehensive consideration of the above and is commensurate with what is offered by other companies. The specifics are deliberated on and decided by the Nomination and Remuneration Advisory Committee, which is chaired by an outside director and the majority of whose members are outside directors. Unless an equal number of Committee members differ in opinion, the decisions of the Committee are deemed to have been adopted by the Board of Directors. Grants of restricted shares are determined by the Board of Directors after consideration of individual duties and responsibilities as well as the share price after deliberation by the Nomination and Remuneration Advisory Committee and are within the scope of the total amount determined by the General Meeting of Shareholders.
The ratio of the monthly retainer, which is a fixed amount of remuneration, to the bonus and grants of restricted shares, which are variable amounts of remuneration, is generally 6:4 (fixed:variable) on a periodic payment basis.
Remuneration for corporate auditors is determined after consultation with the auditors within the scope of the total amount determined by the General Meeting of Shareholders after reference to what is offered by other companies as determined by surveys conducted by external specialized agencies.

Internal Control

Our internal control system is based on Japan’s Companies Act and utilizes basic policies decided upon by the Board of Directors in order to build a system that ensures proper business operations. In addition, we have in place an internal control reporting system, which is based on the Financial Instruments and Exchange Act and which facilitates the development and operation of a system for ensuring proper financial reporting. The condition of financial reporting-related internal controls is assessed by the internal control division (Auditing Division), which is under the direct control of the president.
In the Internal Control Report released in March 2023, our financial reporting-related internal controls for fiscal 2022 were assessed as “effective.” A report by an outside auditing company also assessed the controls as being appropriate in all key aspects.

Internal Control