Corporate governance

Fundamental Approach

PRONEXUS aims to maximize shareholder value and win favorable assessments from both shareholders and clients, leading to lasting development and growth. To make management more efficient and to appropriately and fairly perform our management responsibilities, we continually review and improve the effectiveness of our management system. We strive to achieve timely and accurate disclosure of information on our business, strengthen oversight and check functions relating to our business activities, improve transparency, and thoroughly implement compliance and risk management.

Establishment of Corporate Governance Guidelines

In November 2015, we established the PRONEXUS Corporate Governance Guidelines, which are based on the Corporate Governance Code.
The Guidelines not only show stockholders and other stakeholders our thinking and framework for dealing with corporate governance, they also serve as a code of conduct for our executives and employees. The objective of the Guidelines is to provide PRONEXUS with more comprehensive corporate governance.
The Corporate Governance Code is revised every three years, and PRONEXUS Corporate Governance Guidelines are reviewed from time to time to reflect the purpose of the revisions.

• PRONEXUS Corporate Governance Guidelines (195KB)

Executive Management System

PRONEXUS has established an executive management structure that can make accurate and strategic decisions and improve management efficiency. As the cornerstone of this system, the Board of Directors maintains executive decision-making powers, and manages and closely monitors executive officers' execution of business duties. As of June 28, 2021, PRONEXUS had a total of 9 directors and 24 executive officers, four of whom serve concurrently as directors. Three outside directors have been appointed to monitor the Board of Directors, while three of the four audit & supervisory board members are also outside audit & supervisory board members.

Board of Directors

In consideration of its fiduciary responsibility and accountability to shareholders, the Board of Directors deliberates and makes decisions on important matters relating to PRONEXUS's corporate management and supervises the Company's business and overall management with the aim of increasing corporate value over the medium- to long-term.
The Board of Directors has an appropriately balanced membership to include directors with a deep understanding of PRONEXUS Group's business and diverse insight and expertise on finance and accounting, risk management, legal compliance and other related matters.

Audit & Supervisory Board Members

As an independent organization responsible for the interests of shareholders, the Audit & Supervisory Board supervises the execution of directors' duties with a view to ensuring the sound and sustainable growth of the Company and to maintain a well-functioning corporate governance system that the public can trust.
To enable the Audit & Supervisory Board to effectively fulfill its role and duties, the Board of Directors appoints members who have relevant experience and skills while ensuring that the membership as a whole possesses a suitable balance of expertise in finance, accounting, and law. In principle, the Audit & Supervisory Board must include one member with sufficient knowledge of finance and accounting.

Medium- to Long-Term Management Strategies

The Board of Directors finalizes fiscal year plans and medium-term management plans that provide clear targets to be pursued by the Company as a whole as well as performance goals for each of its divisions, which are under the supervision of an executive officer. The progress made in attaining these goals is periodically reported at meetings of executive officers, and the performance of the executive officers is monitored by the Board of Directors.

Internal Controls

PRONEXUS has established an organization responsible for promoting company-wide compliance. It has created rules and compliance manuals, and it continually trains all employees on compliance matters, based on the PRONEXUS Internal Control System Basic Policy. In accordance with its Risk Management Rules, PRONEXUS supervises and promotes risk management throughout the entire Company and has established a structure whereby each of its business departments performs proper risk management.

Risk and Compliance Management

The Compliance and Quality Management Division and General Affairs Division are charged with supervising and promoting company-wide risk and compliance management.
Insider trading prevention education and compliance training seminars are held twice a year and the comprehension level of participants is tested using e-learning.

Measures for Ensuring Proper Information Disclosure and Transparency

Recognizing the importance of handling important undisclosed information that could potentially influence the decisions of investors, the Company strictly manages such information in accordance with its Disclosure Policy and Investor Relations Policy. Furthermore, to maintain fairness to foreign shareholders, the Company provides English-language versions of its quarterly earnings reports, quarterly financial results briefing documents, and other main documents subject to disclosure rules. In addition, the PRONEXUS Corporate Governance Guidelines have been published on the Company's website.

Remuneration for Directors and Audit & Supervisory Board Members

Each full-time director receives a fixed salary commensurate with his or her responsibilities and title, along with performance-linked compensation corresponding to the Company's financial performance and his or her individual contribution to management. Each outside director receives only a fixed salary to reflect the independent standpoint of this position from the execution of business.
The amount of director remuneration and the basic policy and method for calculating the amount are decided by the Board of Directors within a range approved at a general meeting of shareholders. With respect to the performance-linked compensation, an amount linked to the Company's financial performance is determined based on the achievement of fiscal year targets set in the medium-term management plan for key performance indicators, including operating margin and Profit attributable to owners of parent. The amount linked to the individual contribution to management's performance is determined based on qualitative standards. Specifically, the progress in achieving key measures designated by each director at the beginning of the fiscal year is comprehensively evaluated over the short- and medium-term periods. The specific amount of director remuneration is finalized by the president on behalf of the Board of Directors within a range approved at a general meeting of shareholders.
Each audit & supervisory board member receives only a fixed salary to reflect his or her independent standpoint. The amount of each audit & supervisory board member's salary is decided at meetings of the Audit & Supervisory Board, with consideration given to each member's share of duties and whether he or she serves as an internal or outside auditor on a full-time or part-time basis.
In addition, the Company has set up an executive stock ownership program to allow directors to purchase its shares. By providing remuneration linked to the share price in addition to remuneration linked to the Company's financial results, the program is designed to align the interests of these directors with those of shareholders and to motivate them to raise corporate value over the medium and long terms.

Total Amount of Director Remuneration (FY2020)

Notes:

• 1. The amount of director remuneration does not include the employee salary of directors who also serve as employees.
• 2. At the 60th Ordinary General Meeting of Shareholders held on June 29, 2004, the maximum amount of remuneration for Directors was resolved to be no more than ¥300 million per annum (excluding employees' salaries).
• 3. At the 57th Ordinary General Meeting of Shareholders held on June 28, 2001, the maximum annual amount of remuneration for Audit & Supervisory Board members was resolved to be 50 million yen or less.

Main Activities in FY2020

Attendance at Board of Directors meetings and Audit & Supervisory Board meetings (FY2020)

Mr. Takuya Oshida was newly elected Auditor at the 76th Ordinary General Meeting of Shareholders that was held on June 24, 2020. Accordingly, the stated attendance of meetings for him considers only the Board of Directors meetings and Audit & Supervisory Board meetings held after his assumption (10 times).

Contributions of Outside Directors and Outside Audit & Supervisory Board Members (FY2020)

• In deliberations of the Board of Directors, the three outside directors, Takatsugu Nagatsuma, Ken Shimizu, and Ichiro Sakai, draw on their respective expertise and abundant experience as corporate managers to offer valuable opinions concerning the overall management of the Company.
• Among the three outside Audit & Supervisory Board Members serving on the Audit & Supervisory Board, Kozo Nakagawa offers expert opinions mainly concerning financial affairs and accounting from his professional standpoint as a certified public accountant and licensed tax accountant, Osamu Sudo offers expert opinions mainly concerning compliance with laws and corporate regulations from his professional standpoint as a lawyer, and Takuya Oshida offers expert opinions mainly corporate reorganization and overseas businesses from his professional standpoint as a lowyer.