Corporate Governance

Basic Concept

The Shimamura Group believes that the basics of our business come from dealing fairly and equitably with various stakeholders such as employees, customers, business partners, shareholders, and society.
We recognize that further strengthening the confidence and trust from stakeholders surrounding our business is necessary for business continuity and growth. Furthermore, for that purpose, we recognize the importance of enhancing corporate governance.
Moreover, in order to further increase management efficiency and profitability by developing and expanding the unique business model that we have built in the retail industry, we believe that directors who possess highly-specialized business and operational knowledge should decide on financial and business policies at the Shimamura Group while complying with laws, regulations and the Articles of Incorporation, heighten corporate value and contribute to the common interests of all stakeholders.

Corporate Governance System
(as of May 16, 2022)

Overview

Organizational Form Company with the Audit & Supervisory Board
Chairman of the Board of Directors Makoto Suzuki, President and CEO
Number of Directors 8 (including 3 outside Directors and 1 female Director)
Number of Members on Audit & Supervisory Board 4 (including 2 outside Audit & Supervisory Board members)
Number of Members on Nomination & Remuneration Committee 5 Directors (including 3 outside Directors and 1 female director)
Number of Members on Management Plan Formulation Committee 8 Directors (including 3 outside Directors and 1 female Director)
Frequency of the Board of Directors Meetings At least once per month
Frequency of Group Management Meetings* Once per week
Frequency of Audit & Supervisory Board Meetings At least once per month
Independent Officers 3 outside Directors and 2 outside Audit & Supervisory Board members
Accounting Auditor KPMG AZSA LLC
  • *Group management meetings are held by executive officers to improve management efficiency and operation speed.

System Diagram

Information on Each Organization

Board of Directors
The Board of Directors consists of a total of 8 members: 5 inside Directors (4 of whom concurrently serving as executive officers) and 3 outside Directors (independent officers). In order to ensure accurate and prompt management decisions and transparency, a total of 17 meetings were held in FY2021. In principle, at least one meeting was held per month.
Group Management Meeting
In principle, executive officers hold group management meetings once per week. A total of 49 meetings were held in FY2021. The purpose of these meetings is to improve management efficiency and operation speed. The management meeting is chaired by the President and CEO, and is composed of inside Directors and executive officers.
Audit & Supervisory Board
The Audit & Supervisory Board consists of two inside Audit & Supervisory Board members (one standing Audit & Supervisory Board member) and two outside Audit & Supervisory Board members (independent officers). The board holds meetings at least once a month.
Nomination & Remuneration Committee (voluntary committee serving as an advisory body to the Board of Directors)
The Nomination & Remuneration Committee is composed of members selected by a resolution of the Board of Directors (total of 5 members: President, 1 Director, and 3 outside Directors). In order to strengthen the fairness, transparency, and objectiveness of procedures related to the nomination & remuneration of officers, a total of 4 meetings were held in FY2021. In principle, at least twice per year.
Management Plan Formulation Committee (voluntary committee serving as an advisory body to the Board of Directors)
The Management Plan Formulation Committee is composed of members selected by a resolution of the Board of Directors (total of 8 members, all of whom are Directors). In order to invigorate discussions related to the formulation of Medium-Term Management Plans and annual management plans, and to enhance the appropriateness, transparency, and objectiveness of the procedures, a total of 3 meetings were held in FY2021. In principle, at least twice per year.

Maintenance of Internal Controls System

At the same time as being a sincere and good company for our stakeholders, the Shimamura Group has defined Internal Controls Regulations for establishing a system to realize the four purposes defined in the Financial Instruments and Exchange Act, and to maintain an organizational system for continuous improvement.

See details of Internal Control

Criteria for Nominating Officers

Criteria for Nominating Director Candidates

Candidates for members of the Board of Directors of the Shimamura Group are those who satisfy the following criteria and are deemed as possessing the knowledge, ability, and experience for contributing to the realization of our philosophy as members of the Board of Directors. After deliberation by the Nomination & Remuneration Committee, nominations will be made in accordance with a resolution of the Board of Directors.
Furthermore, at least three candidates for outside Directors will be nominated from among candidates who satisfy the requirements for outside Directors as defined in the Companies Act, and who satisfy criteria (5) as listed below in place of criteria (4).

  1. Possess the strong will and high ability necessary to execute the duties of a Director.
  2. Possess the appropriate personality and insight as a Director of the Shimamura Group.
  3. Be capable of securing the time and effort necessary to properly fulfill the roles and responsibilities required of a Director of the Shimamura Group.
  4. Possess the knowledge, ability, and extensive experience for contributing to the formulation and execution of the Group's management strategy based on a deep understanding of the Group's business and management environment.
  5. Possess a high level of expertise or abundant experience in corporate management, academics, financial accounting, law and other fields. Recognized as being capable of executing duties from an independent and objective point of view.
Criteria for Nominating Audit & Supervisory Board Member Candidates

Candidates for members of the Audit & Supervisory Board of the Shimamura Group are those who satisfy the following criteria and are deemed as being able to contribute to the realization of our philosophy through the execution of their duties as members of the Audit & Supervisory Board. After receiving agreement from the Audit & Supervisory Board, nominations will be made in accordance with a resolution of the Board of Directors.
Furthermore, more than half of the candidates for outside Audit & Supervisory Board members will be nominated from among candidates who satisfy the requirements for outside Audit & Supervisory Board members as defined in the Companies Act, and who satisfy criteria (5) as listed below in place of criteria (4).

  1. Possess the strong will and high ability necessary to execute the duties of an Audit & Supervisory Board member.
  2. Possess the appropriate personality and insight as an Audit & Supervisory Board member of the Shimamura Group.
  3. Be capable of securing the time and effort necessary to properly fulfill the roles and responsibilities required of an Audit & Supervisory Board member of the Shimamura Group.
  4. Possess the knowledge, ability, and experience for auditing in the Group based on a deep understanding of the Group's business and management environment.
  5. Possess a high level of expertise or abundant experience in corporate management, academics, financial accounting, law and other fields.
Criteria for Determining the Independence of Outside Directors and Outside Audit & Supervisory Board Members

The Group recognizes the independence of persons to whom none of the following items apply.

  1. A person who is currently an executive of the Group or its subsidiaries, or had been an executive during the past ten years ("executive" as defined in Article 2, Paragraph 3, Item 6 of the Regulation for Enforcement of the Companies Act. The same applies in the following criteria).
  2. A person for whom the Group is a main business partner, or an executive at a company for whom the Group is a main business partner. (Note)
  3. Main business partners of the Group, or executives at main business partners of the Group. (Note)
  4. In addition to officer remuneration from the Shimamura Group, a consultant, accounting expert, or legal expert who has received money or other property of 10 million yen or more in that person's most recent business year. (If the party who has obtained the money or other property is a corporation or organization, a person who belongs to the corporation/organization which obtains more than 2% of its net sales or total income from the Shimamura Group.)
  5. A person to whom any of the items from 2) to 4) above has applied in the past 3 years.
  6. A person who substantially holds 10% or more of the voting rights of the Group, or an executive at a company which holds 10% or more of the voting rights.
  7. Spouse and relatives within the second degree of kinship to persons listed in any of the items from 1) to 6) above.

(Note) "Main business partners" are those whose transaction amount in the most recent business year accounts for 2% or more of the annual sales of the Group or the business partner.

Skills to Expect from the Board of Directors

Name Company
Management
Product,
Marketing
DX, IT Finance,
Accounting
Legal,
Compliance,
Risk
management
Human
resources
ESG
Makoto Suzuki
Iichiro Takahashi
Tsuyoki Saito
Takashi Nakahira
Hidejiro Fujiwara
Tamae Matsui
Yutaka Suzuki
Teiichi Murokubo

Status of Outside Officers
(as of May 16, 2022)

Position Name Role Main Background
Director Tamae Matsui Possesses extensive experience and insight in the fields of personnel policy, employee welfare, and social/environmental sustainability in the retail industry. Provides advice and recommendations based on that experience from an independent perspective outside of the Shimamura Group.
Member of the Nomination & Remuneration Committee and the Management Plan Formulation Committee.
Seiyu GK
Executive SVP
Director Yutaka Suzuki Possesses extensive experience and deep insight as a corporate manager. Provides useful advice and recommendations for Group management from an independent perspective outside of the Shimamura Group.
Member of the Nomination & Remuneration Committee and the Management Plan Formulation Committee.
Kewpie Corporation
President and CEO
Director Teiichi Murokubo In addition to the deep knowledge relating to finance and accounting based on experience over many years in financial institutions, he has held positions such as Executive Director of Saitama Association of corporate Executives and has extensive insight into corporate management. Accordingly, we have appointed him as an outside executive because we have judged that he can provide advice and proposals based on that experience from an independent perspective outside our company.
Member of the Nomination & Remuneration Committee and the Management Plan Formulation Committee.
Served as Branch Manager and Department Head at Saitama Resona Bank, Limited
Executive Director of Saitama Association of corporate Executives
Auditor Shigehisa Horinokita Possesses expertise in corporate finance as a CPA. Provides advice and recommendations regarding the strengthening of the Group audit system based on his experience and insight from an independent perspective outside of the Shimamura Group. KPMG AZSA LLC
Representative Employee
Auditor Tetsuya Omi From a wide range of perspectives (mainly in the logistics industry), provides recommendations on ensuring the validity and appropriateness of decision-making by the Board of Directors. Takihyo Co., Ltd.
Executive officer
  • *All Five outside officers have been notified to the Tokyo Stock Exchange as independent officers.

Message from Outside Directors

  • Tamae Matsui

    Outside DirectorTamae Matsui

    I think that outside directors have a difficult role. There is no point to our existence if we cannot contribute to continuing sustainable development of the company without involvement in the execution of management. I attend meetings of the Board of Directors while always remaining aware that it is necessary to have an objective perspective at the same time as having an awareness of a party involved. I have an especially strong interest in governance from my long experience in personnel and sustainability departments. The essence of what makes a "good company" as found in the philosophy of the company is at the core of management. I also think it is the basis of governance. I will continue to develop Shimamura further while taking advantage of its unchanging fortes.

  • Yutaka Suzuki

    Outside DirectorYutaka Suzuki

    We are currently in progress on our Medium-Term Management Plan of "Reborn." Literally, this contains our determination to be born again anew. At present, the President and other employees are resolved to take powerful steps forward. However, we must continue to refine this theme further in the future with a perspective of what should be reborn and for what purpose. For example, good new wisdom seems to come to mind if we think of management as a way to somehow reach our targets all together instead of simply meaning "control." Let's create a "good company" that is trusted by employees and our many stakeholders and that meets their expectations under the banner of this "Reborn." I will do my best as one member to achieve this proper management.

  • Teiichi Murokubo

    Outside DirectorTeiichi Murokubo

    I have been newly appointed as an outside director. I will take advantage of what I have learned and experienced in financial institutions and economic groups in order to make proposals in the corporate management, finance and accounting, and ESG fields from a neutral standpoint as to business execution. The pandemic, geopolitical risks and other factors have made the future uncertain. Against this background, I think what is sought in us now is to be sensitive to changes, to see the true essence and to have the courage to make changes. I will continue to contribute to the sustainable growth of the company and an improvement in our corporate value by considering management strategies from diverse perspectives over the mid- to long-term while valuing communication with our stakeholders.

Officer Remuneration

Basic Policy of Officer Remuneration
  1. Remuneration shall emphasize the link between business performance and medium- to long-term corporate value, and that value shall be shared with shareholders.
  2. The level should be appropriate for the roles and responsibilities of officers.
  3. We will ensure fairness, transparency, and objectivity through deliberation by the Nomination & Remuneration Committee, the majority of which is composed of outside Directors.
Officer Remuneration System and Remuneration Determination Procedures
Officer remuneration is composed of three types: Basic remuneration, which is a fixed remuneration, bonuses as short-term incentive remuneration (executive officers), and stock compensation as medium- to long-term incentive remuneration (executive officers; scheduled to be introduced this fiscal year).
Director Remuneration
Only the basic remuneration is paid. Within the total amount approved at the general meeting of shareholders, the President shall draft an appropriate standard, and a final decision is made by the Board of Directors after deliberation by the Nomination & Remuneration Committee.
*The maximum amount of remuneration for Directors shall be 400 million yen per year (per a resolution passed at the 62nd Ordinary General Meeting of Shareholders held on May 14, 2015).
Remuneration for Audit & Supervisory Board Members
Only the basic remuneration is paid. Within the total amount approved at the general meeting of shareholders, a final decision is made based on deliberation by Audit & Supervisory Board members per valid criteria.
*The maximum amount of remuneration for Audit & Supervisory Board members shall be 94 million yen per year (per a resolution passed at the 55th Ordinary General Meeting of Shareholders held on May 16, 2008).
Executive Officer Remuneration
In addition to the basic remuneration, executive officer remuneration consists of performance-linked bonuses based on company performance for each business year and performance-based stock compensation (introduce in FY2021). The total amount of payment and the amount of payment for each individual are drafted by the President in accordance with the Executive Officer Regulations. A final decision is made by the Board of Directors after deliberation by the Nomination & Remuneration Committee.
The newly introduced performance-based stock compensation is by having executive officers own shares of the Group, we seek to clarify the system for linking the remuneration of executive officers and the stock value. We also strive to achieve sustainable growth and to increase corporate value in the medium- to long-term by further promoting the sharing of value with shareholders.
In addition, the Group's directors basically serve concurrently as executive officers.
Compensation configuration ratio
Basic remuneration (fixed) Incentive remuneration
Bonus Stock compensation
Director who concurrently serves as executive officer 81% 13% 6%
Outside Directors / Senior Advisor 100%
Executive Officers 77% 16% 7%

Evaluating the Effectiveness of the Board of Directors

The Group conducts a questionnaire-based survey of Directors and Audit & Supervisory Board members once per year in order to evaluate the effectiveness of the Board of Directors.
The Secretariat of the Board of Directors reports the analysis results of the survey to the Board of Directors. Then, after deliberating on issues and countermeasures, efforts are made to improve the effectiveness of the Board of Directors by making the necessary improvements.

[Implementation content]
Evaluation target: Board of Directors meetings held in FY2020 (March 2020 to February 2021) (total of 17 meetings)
Evaluator: 7 Directors and 4 Audit & Supervisory Board members (11 in total)
Implementation period: March 2021
[Evaluation process]
  1. The President and the Secretariat (Planning Section) of the Board of Directors prepare a questionnaire on the effectiveness of the Board of Directors.
    (Main items on the questionnaire)
    1. 1) Composition of the Board of Directors
    2. 2) Operation of the Board of Directors
    3. 3) Agenda of the Board of Directors
    4. 4) Systems for supporting the Board of Directors
  2. Questionnaires collected from Directors (7) and Audit & Supervisory Board members (4)
  3. Aggregation and analysis of survey results by the Secretariat of the Board of Directors; reporting of results to the Board of Directors
  4. Deliberation by the Board of Directors
[Measures to improve effectiveness]
Issue 1.
There is a shortage of Directors with finance and accounting skills among the skills possessed by the Board of Directors.
[Countermeasures]
The Nomination & Remuneration Committee held deliberations about the composition of the Board of Directors. Upon that, it made a proposal to the Board of Directors to increase the number of internal Directors by one and the number of outside Directors by one. Of these, it nominated a candidate with finance and accounting skills for the position of outside Director. (To be appointed at the General Meeting of Shareholders to be held on May 13, 2022)
Issue 2.
More time should be spared for deliberations about mid- to long-term management strategies.
[Countermeasures]
Considering the need for more deliberations, the Management Plan Formulation Committee has been holding such about future management strategies since FY2021. Moreover, the Management Plan Formulation Committee newly started deliberations toward the formulation of a long-term management plan (about 10 years).
Issue 3.
Time is not enough for executive officers to propose strategies and a course of action to Directors.
[Countermeasures]
Executive officers make reports at the meetings of the Board of Directors since FY2021. Moreover in FY2022, started make reports at the Management Plan Formulation Committee.

Cross-Shareholding
(as of February 20, 2022)

The Group engages in cross-shareholding at the discretion of the Board of Directors when there is a need for business alliances, building and maintaining business relationships with important business partners, or other business activities aimed at sustainable growth.
For individual instances of cross-shareholding, the Board of Directors conducts an annual review for the rationality and economic rationality of the purpose of cross-shareholding. This review includes confirming the purpose of holding, transaction status, latest business results, and future transaction prospects, as well as consideration for selling when the purpose of holding no longer exists.

Number of Stock Names Amount listed on Balance Sheet
Listed stocks 4 stock names 543 million yen
Unlisted stocks None -