The Shiseido Group including the Company has established “BEAUTY INNOVATIONS FOR A BETTER WORLD” as OUR MISSION in its Corporate Philosophy THE SHISEIDO PHILOSOPHY, and defines the corporate governance as our “platform to realize sustainable growth through fulfilling OUR MISSION”.
We began full-fledged initiatives toward strengthening corporate governance in 2001. Our continuous reforms to date can be divided into three stages.
The first stage initiated a corporate governance reform. Initiatives to separate the functions of management supervision and execution included the introduction of the corporate officer system. At the second stage, we implemented various initiatives to create the framework of our corporate governance such as the establishment of the Nomination & Remuneration Advisory Committee (formerly, “the Nomination Advisory Committee”) and the appointment of external directors. In this way, we have set out objective quantitative and pro forma standards. We enhanced the quality of corporate governance by rigorously employing this framework and actively disclosing the outcomes. We have now entered the third stage, in which we are targeting corporate governance that furthers sustainable growth. We aim to achieve “tense collaboration” by balancing management oversight and supervision with the broad authority vested in the CEO, which he or she needs in order to exercise ultimate leadership in Shiseido’s global management.
This tense collaboration does not excessively limit or decrease the CEO’s authority, but rather, given the broad authority vested in the CEO, establishes a process of regular evaluation of the CEO and management execution by the Board of Directors and other supervisory organs, to whom the CEO is fully accountable. This process also involves regular CEO evaluations by the Nomination & Remuneration Advisory Committee.
Of ten directors, five members(50%) are highly independent external directors who meet the “Criteria for Independence of external directors and Audit & Supervisory Board members” of the Company. The other five directors who serve concurrently as executive officers include one with career background in management outside the Shiseido Group, one with career background in head of finance outside the Shiseido Group, and three with career background in the Shiseido Group. The directors include three females (30%).
Of five Audit & Supervisory Board members, three members (60%) are highly independent external Audit & Supervisory Board members, and two are full-time members with career background in the Shiseido Group. The members include three females (60%).
Of the total 15 directors and Audit & Supervisory Board members, eight members (53%) are highly independent external directors or external Audit & Supervisory Board members, and six members are female (40%).
In order to clarify the status of competitive dealings by the Company’s directors and audit & supervisory board members, and to enhance the independence of its external directors and audit & supervisory board members, the Company has set forth the following criteria regarding “important concurrent positions” assumed by its directors and audit & supervisory board members, and describes the status of the concurrent positions assumed by its directors and audit & supervisory board members in the Business Report based thereon.
Composed of ten members including five external directors, structured to be small for quick decision-making.
The Board of Directors meets approximately once a month to discuss all significant matters.
In 2022, 13 meetings* were held with an average participation rate of 100% by both internal and external directors.
■Basic policy
The Company evaluates the effectiveness of the Board of Directors with the purpose of identifying issues and points to be improved of the Board of Directors, etc. and evolving the Board of Directors into a more effective one.
The Company conducts annual questionnaire surveys and interviews with all directors and Audit & Supervisory Board members to evaluate and analyze the Board of Directors, and the Nomination & Remuneration Advisory Committee. The secretariat of the Board of Directors summarizes, analyses, and identifies issues.
The identified issues and opinions are reported to the Board of Directors, and necessary measures are taken.
In addition, third-party organizations regularly check and evaluate the effectiveness of these assessments to ensure transparency and objectivity.
■Implementation of the Fiscal 2022 Evaluation
We conducted the “Fiscal 2022 Effectiveness Evaluation of the Board of Directors” for the evaluation period between the previous year's general meeting of shareholders and this year's general meeting of shareholders.
The survey focused on the composition aspects such as the diversity of members of the Board of Directors, as well as deliberations and discussion aspects including agenda setting and content of materials and its explanation, operational aspects such as prior distribution of materials and the provision of prior briefings on the agenda, communication aspects such as demonstrating capabilities expected as roles of board members and strengthening of cooperation with Audit & Supervisory Board members and executive officers, and how our governance should be.
As a result, although we recognized the effectiveness of the Board of Directors has been ensured, there were opinions and recommendations for further improvement of the effectiveness.
Specifically, lively discussions with enriched diversity of the members of the Board of Directors and prior distribution of materials and briefings at appropriate timing were highly appreciated. On the other hand, we recognize the necessity for more strategic agenda setting to concentrate on discussions on important issues, status updates on the progress of strategy (medium-term strategy and plan), further improvement for prior briefings, materials, and additional information sharing to external directors.
In light of these results, we will continue to make efforts to strengthen the effectiveness of the Board of Directors by setting agenda strategically, preparing easy-to-understand materials which clarifies issues and points, and increasing opportunities for external directors to promote further understanding of the company. In particular, we focus on setting agenda items and enhancing discussions in order to fulfill the roles and responsibilities of the Board of Directors properly.
The measures we have taken so far and the opinions and future efforts to evaluate and improve these efforts in fiscal 2022 are as follows.
The Nomination & Remuneration Advisory Committee makes reports to the Board of Directors on matters including the selection of candidates for directors, Audit & Supervisory Board members, and executive officers, promotion and demotion of directors and executive officers, and the remuneration policy for directors and executive officers as well as the details of remuneration payment based on the evaluation of their performance.
5 external directors (one of whom is chairman) and the CEO are members.
In fiscal 2022, 10 meetings were held. The committee discussed bonuses for directors and corporate officers for fiscal 2021, as well as the remuneration policy for directors and corporate officers, and remuneration for said individuals for fiscal 2022, and discussed and reported the selection of candidates for directors and Audit & Supervisory Board members, appointments of executive officers, etc.
In our corporate governance, there is a need to appropriately concentrate authority in the CEO while maintaining a strong supervisory function to counterbalance that authority.
Accordingly, the Company has established the CEO Review Meeting as a special deliberation body for the Nomination & Remuneration Advisory Committee to comprehensively oversees CEO by discussing and considering matters relating to the CEO, including performance evaluation that includes a personal evaluation of the CEO, and confirms the appropriateness of the CEO’s remuneration. To emphasize its independence from the CEO and the CEO’s business execution framework, the CEO Review Meeting consists solely of external directors and external Audit & Supervisory Board members.
The committee met once in fiscal 2022.
Our Audit & Supervisory Board consists of five members, two full-time Audit & Supervisory Board members and three external Audit & Supervisory Board members.
The Audit & Supervisory Board receives reports on important matters related to audits, holds discussions, and makes resolutions pursuant to the provisions of laws and regulations, the Articles of Incorporation, and the Rules of the Audit & Supervisory Board.
In fiscal 2022, the Audit & Supervisory Board meetings were held 13 times, and the attendance rate of Audit & Supervisory Board members was 100%.
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