Corporate Governance

Basic Policies on Corporate Governance

The ACOM Group, guided by its lifelong “circle of trust” spirit, maintains an ongoing corporate commitment to respecting other people, putting the customer first, and conducting creative and innovative management. Based on this commitment, we are seeking to deepen mutual trust between our stakeholders and ourselves and thus progress in partnership with society.

In order to meet the expectations of stakeholders and build stronger trust, we will strengthen corporate governance as a key management priority. To this end, we will take steps to enhance the soundness, transparency, and efficiency of our operations and achieve sustained increases in our shareholder value.

We recognize that effective internal control systems are essential to creating an appropriate corporate governance framework. Based on this recognition, we are encouraging all members of our organization to join forces in building internal control systems and assuring their effectiveness, under the leadership of the President & CEO. At the same time, we are constantly evaluating, verifying, and improving the effectiveness of internal control mechanisms already in place.

Approaches to the Corporate Governance Code

Following are the principles of corporate governance code ACOM does not comply and reasons thereof.

[Supplementary Principle 4.2.1]
ACOM has performance-linked compensation system based on single year performance in place for compensation for directors (excluding directors serving as members of Audit & Supervisory Committee).
ACOM will continue reviewing medium- to long-term performance-linked compensation system with aim of making compensation for directors effective and sound incentive for sustainable growth of the Company.
[Supplementary Principle 4.10.1]
ACOM has Appointment and Remuneration Committee in place as optional committee in charge of appointment of and compensation for senior management and directors. The structure of appointment and remuneration committee is as follows:
  • The Number of Inside Directors and Independent Outside Directors
    • Board of Directors: 7 inside directors and 2 independent outside directors
    • Appointment and Remuneration Committee: 4 inside directors and 2 independent outside directors
  • The Number of Directors not Serving as Members of Audit & Supervisory Committee and Those Serving as Members of Audit & Supervisory Committee
    • Board of Directors: 6 directors who are not members of the committee and 3 directors who are members of the committee
    • Appointment and Remuneration Committee: 3 directors who are not members of the committee and 3 directors who are members of the committee
Independent outside directors do not constitute the majority of Appointment and Remuneration Committee, however, the Company ensures their appropriate involvement and receives their suitable advice upon consideration of appointment and compensation.
[Principle 4.11]
There are no female directors or foreigner directors at the Company at this point. However, the Company is willing to nominate any individual who meet criterion in appointment policy as candidate, regardless of one’s gender and nationality.
[Principle 5.2]
ACOM has formulated a new profit plan based on its capital expenses. Consequently, it has set new basic policy on capital as “for increasing return to shareholders while placing top priority on optimizing shareholders’ equity.” Additionally, it has set ROE target of 12% or more.
The Company will announce specific policy on distribution of management resources as soon as its shareholders’ equity reaches appropriate level.

ACOM complies with remaining principles of corporate governance code. Please find details in our
“Corporate Governance Report.” PDF Icon

Corporate Governance and Internal Control System Structure (As of June 23, 2021)

Corporate Governance and Internal Control System Structure Scale up

An overview of corporate governance structure and reasons for employing said structure

The Company is a company with an Audit & Supervisory Committee and aims to enable swift decision-making and enhance the Board of Directors’ supervisory functions by significantly delegating decision-making on material business executions to directors from the Board of Directors. The Board of Directors, in turn, performs thorough monitoring and other measures on delegated matters.

The Company aims to improve the transparency and objectivity of its management by having an Audit & Supervisory Committee composed mainly of outside directors conduct audit and supervisory functions.

The organs installed by the Company are as follows:

Board of Directors

The Board of Directors of the Company consists of nine members: President & CEO Masataka Kinoshita who chairs the Board, Directors Shigeyoshi Kinoshita, Hiroshi Naruse, Tomomi Uchida, Takashi Kiribuchi and Masakazu Oosawa, and Members of Audit & Supervisory Committee Masahide Ishikawa (Outside Director), Kazuo Fukumoto and Takuji Akiyama (Outside Director).

The Board deliberates and decides important business management matters, such as management strategies and business planning, and basic policies for building corporate governance and internal control systems, while ensuring objective and rational judgment. Furthermore, the Board delegates decision-making on matters related to the execution of business operations other than matters to be resolved at the Board of Directors to President and Director, and monitors and supervises the execution of duties by thorough monitoring and other measures on delegated matters.

It meets at least once every quarter, in principle, and more as deemed necessary.

Audit & Supervisory Committee

The Audit & Supervisory Committee consists of three members: Masahide Ishikawa (Outside Director) who chairs the committee, Kazuo Fukumoto and Takuji Akiyama (Outside Director).

It meets regularly to receive reports concerning important audit-related matters, hold discussions, and pass resolutions.

Committees

  1. Appointment and Remuneration Committee

    The Appointment and Remuneration Committee consists of six members: President & CEO Masataka Kinoshita who chairs the committee, Representative Directors Shigeyoshi Kinoshita and Hiroshi Naruse, and Members of Audit & Supervisory Committee Masahide Ishikawa (Outside Director), Kazuo Fukumoto and Takuji Akiyama (Outside Director).

    The Appointment and Remuneration Committee reviews and proposes the appointment of candidates and remuneration for Directors (excluding those serving as Audit & Supervisory Committee Members) for resolution at the Board of Directors Meeting. The Committee also checks management and the status of training for candidates for management and provides an overview of the same to the Board of Directors.

    The Appointment and Remuneration Committee meets three times a year, in principle, and more as deemed necessary.

  2. Compliance Committee

    The Compliance Committee consists of seven members: an expert from outside the Company Tatsuzo Honma who chairs the committee, experts from outside the Company Tan Mitchell and Yasunari Takaura, Outside Director Masahide Ishikawa (Members of Audit & Supervisory Committee) and Representative Directors Shigeyoshi Kinoshita, Hiroshi Naruse and Masataka Kinoshita. The Committee discusses and, as necessary, makes recommendations to the Board of Directors about the following compliance-related matters.

    • Items relating to formulation, revision or abolishment of the ACOM Group Code of Ethics and Code of Conduct;
    • Important items related to establishment and operation of compliance systems;
    • Items relating to formulation of basic plans;
    • Items relating to the correction of major violations, actions for improvement and recurrence prevention measures; and
    • Important items related to other compliance issues.

    The Compliance Committee meets six times a year, in principle, and more as deemed necessary.

  3. Financial Information Disclosure Committee

    The Financial Information Disclosure Committee consists of eleven members: an executive officer who concurrently serve as director in charge of Treasury Department Tomoo Shikanoya who chairs the committee, executive officers who concurrently serve as directors in charge of the relevant departments, Tomomi Uchida, Masatoshi Nabeoka, Takashi Kiribuchi, and chief general managers in charge of the relevant departments, Akifumi Kinoshita, Hiroko Shioiri, Masamitsu Iwamura, Kazuki Morishita, Masahiko Machida, Takashi Okamoto and Daishi Haraguchi.

    In the presence of Members of Audit & Supervisory Committee, the Committee deliberates in advance the items related to the improvement of the financial disclosure system and the financial information to be disclosed for resolution at the Board of Directors Meeting, in order for the disclosure of the financial information and internal control of financial reports to be made in accordance with the relevant laws in a timely and in an appropriate manner.

    The Financial Information Disclosure Committee meets at least once every quarter, in principle, and more as deemed necessary.

  4. Corporate Risk Committee

    The Corporate Risk Committee consists of seven members: Deputy Chairman Hiroshi Naruse who chairs the committee, Representative Directors Shigeyoshi Kinoshita and Masataka Kinoshita, and Members of Audit & Supervisory Committee Masahide Ishikawa (Outside Director), Kazuo Fukumoto and Takuji Akiyama (Outside Director), and an executive officer who concurrently serve as director in charge of Corporate Risk Management Department Masatoshi Nabeoka.

    The Corporate Risk Committee discusses important items related to risk management and makes proposals and reports to the Board of Directors as deemed necessary. The Committee also monitors the status of risk management and other matters and reports the results to the Board of Directors.

    The Corporate Risk Committee meets at least once every quarter, in principle, and more as deemed necessary.

Executive Officers’ Meeting

The Executive Officers’ Meeting consists of eleven members: President & CEO Masataka Kinoshita who chairs the committee, Representative Directors Shigeyoshi Kinoshita and Hiroshi Naruse, executive officers who serve concurrently as directors Tomomi Uchida, Takashi Kiribuchi, Masaru Kuroda, Michihito Onodera, Tomoo Shikanoya, Masashi Yoshiba, Yuji Kinoshita and Masatoshi Nabeoka.

In the presence of Members of Audit & Supervisory Committee, the Executive Officers’ Meeting discusses and makes decisions related to the execution of important business operations delegated by the Board of Directors to the President and Director, and deliberates management policies and management plans in advance for resolution at the Board of Directors Meeting in accordance with basic policies determined by the Board of Directors.

The Executive Officers’ Meeting assembles three times a month, in principle, and more as deemed necessary.

Appointment of Outside Directors and Reason Thereof

The Company has two Outside Directors. Their relationships with the Company are as shown in the chart below.

With respect to the standards for selecting candidates for independent outside directors, the Company places emphasis on how the candidates satisfy the standards regarding the independency of independent directors stipulated by the Tokyo Stock Exchange and whether or not the candidates have extensive experience, deep insight, and advanced expertise.

Name of Outside Director Relations with the Company
Masahide Ishikawa
  • Mr. Masahide Ishikawa is an Outside Director as stipulated under Article 2, Paragraph 15 of the Company Law.
  • He has a wealth of knowledge and experience acquired in the finance industry over many years, and accomplishments as a corporate manager. He has also served as Vice Chairman of the Japan Investment Advisers Association twice, and thus has wide-ranging insight. Therefore, the Company believes that he can supervise and provide appropriate advice for the management of the Company from an external viewpoint based on his knowledge and experience. Upon his election, he is expected to play the role as an Outside Director to provide advice on management policies and improvements to be made from a standpoint of accelerating sustainable growth and striving towards enhancement of medium- to long-term corporate value based on his insight, and to supervise the management from an independent viewpoint through the appointment and dismissal of its members and other important decision-making at the Board of Directors meetings.
  • As he meets all requirements for “Independence Standards for Outside Directors” the Company has formulated, he has been designated as an independent director.
Takuji Akiyama
  • Mr. Takuji Akiyama is an Outside Director as stipulated under Article 2, Paragraph 15 of the Company Law.
  • He is expected to supervise and audit the management of the Company from a neutral and objective viewpoint based on his advanced expertise and abundant experience gained in finance and accounting audits through his career as a certified public accountant over many years. Although he has not been directly involved in corporate management other than as an outside company auditor, it is anticipated that he will perform his duties as an Outside Director appropriately for the aforementioned reasons.
  • Upon his election, he is expected to play the role as an Outside Director to provide advice on management policies and improvements to be made from a standpoint of accelerating sustainable growth and striving towards enhancement of medium- to long-term corporate value based on his insight, and to supervise the management from an independent viewpoint through the appointment and dismissal of its members and other important decision-making at the Board of Directors meetings.
  • As he meets all requirements for “Independence Standards for Outside Directors” the Company has formulated, he has been designated as an independent director.

Evaluation on Effectiveness of the Board of Directors(As of May 26, 2021)

The Company distributes surveys regarding the effectiveness of the Board to all directors every year. The Company conducts analysis and evaluation on effectiveness of the Board based on the results of surveys.

The Company conducted abovementioned analysis and evaluation this fiscal year. Consequently, the Company confirmed that the Board fulfills each and all of its function in formulation of management strategies and targets, settling management challenges, supervision on risk managements and business executors. Thus, the Company concluded that its current Board functions properly and its effectiveness is ensured.

Moreover, the Company assessed that it has made certain level of advancements on further deepening of awareness on external opinions, activation of discussions held at the Board and sophisticating matters reported to the Board, which were issues recognized in previous fiscal year.

Meanwhile, the Company recognized that current issues to be addressed include: reorganization of the Board agenda and further sophistication of reference material used at the Board. Therefore, the Company strives for improvement on these issues.

While the company will operate the Board of Directors in manners as described below, the Company will sustain periodic analysis and evaluation on effectiveness of the Board and continue its efforts to ensure enhanced effectiveness of the Board.

  1. The Board will decide material business management matters, such as management strategies and business plans, and also will determine basic policies for building corporate governance and internal control systems. The Board will monitor and supervise the execution of duties.
  2. Material subjects will be exhaustively selected as agendas based on regulations for matters to be resolved at the Board, provided in rules of the Board of Directors. The Board will discuss such selected material in timely and appropriate manner.
  3. The Company will distribute materials to be used at the Board prior to the meeting to make it efficient and vigorous. Prior explanations will be given when deemed necessary.
  4. The Board will receive periodic reports on business managements, etc. and supervises business execution.

Compensation to Directors and Company Auditors

  1. Matters concerning the policy for the decision on the amounts of compensation to Directors and Company Auditors or the calculation method thereof
    The Board of Directors determined a policy concerning the decision on the details of individual compensation payable to Directors (excluding Directors serving as Audit & Supervisory Committee Members). In summary, compensation payable to Directors (excluding Directors serving as Audit & Supervisory Committee Members) is designed to sufficiently function as an incentive to aim for sustainable increase in corporate value by benchmarking the compensation levels of peer companies in related industries and segments with similar business scale. Compensation to each Director is to be payable in cash. Compensation to full-time Directors (excluding Directors serving as Audit & Supervisory Committee Members) consists of basic compensation and performance-linked compensation, while compensation to part-time Directors consists of basic compensation only. Basic compensation is fixed compensation to be paid once monthly, and performance-linked compensation is variable compensation to be paid once yearly according to business results.
    The Company determines the amount of basic compensation payable to Directors (excluding Directors serving as Audit & Supervisory Committee Members) at the Board of Directors after the Appointment and Remuneration Committee deliberates and proposes the respective amounts to be paid according to the position and other factors, in consideration of the compensation levels at other companies, the business results of the Company, the levels of employees’ salaries and other factors. The Company determines the amount of performance-linked compensation payable to Directors (excluding Directors serving as Audit & Supervisory Committee Members) at the Board of Directors after the Appointment and Remuneration Committee calculates the basic source of distribution using “Profit attributable to owners of parent” as an indicator, and deliberates and proposes the respective amounts to be paid according to the positions, individual evaluations and other factors.
    The target percentage of performance-linked compensation out of total compensation is approximately 20% (assuming a standard amount of performance-linked compensation). The reason for the selection of this indicator (“Profit attributable to owners of parent”) for performance-linked compensation payable to full-time Directors (excluding Directors serving as Audit & Supervisory Committee Members) was to establish an objective and transparent compensation system for full-time Directors (excluding Directors serving as Audit & Supervisory Committee Members) by firstly linking it to single-year performance, in light of the situation where dividends were not distributed continuously until the interim dividend for the fiscal year ended March 31, 2018. The amount of performance-linked compensation is decided by a method whereby the Appointment and Remuneration Committee first determines a range of profit, which becomes a standard for basic source of distribution, by taking into consideration special factors such as future increases in tax burden and extraordinary income or loss, and the Board of Directors determines a specific amount of performance-linked compensation by multiplying the basic source of distribution by a ratio corresponding to the ratio of distribution for each title and individual evaluation of Directors.
    While target figures for the indicator for performance-linked compensation have not been determined for the current fiscal year, the actual figure of the basic source of distribution amounted to 45 million yen, with the standard range of profit from 70,000 million yen to less than 80,000 million yen.
    Other details of the compensation payable to Directors are deliberated and proposed by the Appointment and Remuneration Committee and thereupon determined by the Board of Directors. The amount of compensation payable to Audit & Supervisory Committee Members is determined through consultation among Audit & Supervisory Committee Members in consideration of their duties and responsibilities.
    At the 40th Ordinary General Meeting of Shareholders held on June 22, 2017, it was resolved that compensation payable to Directors (excluding Directors serving as Audit & Supervisory Committee Members) per year shall be no more than 400 million yen (excluding the portion of employee’s salary payable to Directors who concurrently serve as employees). The number of Directors (excluding Directors serving as Audit & Supervisory Committee Members) as of the conclusion of the above Ordinary General Meeting of Shareholders was six. In addition, at the same Ordinary General Meeting of Shareholders, it was resolved that compensation payable to Directors serving as Audit & Supervisory Committee Members per year shall be no more than 100 million yen. The number of Directors serving as Audit & Supervisory Committee Members as of the conclusion of the above Ordinary General Meeting of Shareholders was four.
    The details of the individual compensation payable to each Director for the fiscal year under review were determined by the Board of Directors within the compensation limit approved by the general meeting of shareholders respecting the proposal from the Appointment and Remuneration Committee submitted upon deliberation based on the Director’s position, evaluation, and other factors. Therefore, the Company believes that the details are in line with the Policy.
  2. Total amount of compensations by categories for the Filing Company, total amount of compensations by type, and the number of paid officers
    Category Total amount
    (Millions of yen)
    Total amount of compensations by type (Millions of yen) Number of persons
    Fixed compensation Performance-linked compensation Retirement benefits
    Directors
    (excluding
    Audit &
    Supervisory
    Committee
    Members
    and
    Outside
    Directors)
    187 148 39 - 7
    Audit
    and
    Supervisory
    Committee
    Members
    (excluding
    Outside
    Directors)
    20 20 - - 1
    Outside
    Directors
    and
    Outside
    Company
    Auditors
    37 37 - - 2
    Total 245 205 39 - 10

    (Notes)

    1. There are no employee-directors.

    2. "Number of persons" represents the cumulative number of directors who received compensation during the current fiscal year.

  3. Total amount of consolidated compensations by Filing Company's officers.
    This is omitted as none of officers of the Filing Company received aggregated consolidated compensations of 100 million yen and above.

Status of securities held by the Company

  1. Criteria and basic stance of classification of investment securities
    For classification between investment securities held for pure investment purposes and investment securities held for other than pure investment purposes, the Company does not hold any investment securities held for other than pure investment purposes and does not have a plan to hold them in the future.
  2. Investment securities held for other than pure investment purposes
    Not applicable
  3. Investment securities held for pure investment purposes
    Category Fiscal Year Ended March 2021 Fiscal Year Ended March 2020
    Number of names
    (Name)
    Value in balance sheet
    (Millions of yen)
    Number of names
    (Name)
    Value in balance sheet
    (Millions of yen)
    Non-listed
    Securities
    18 817 19 817
    Securities
    other than
    the above
    2 0 2 0
    Category Fiscal Year Ended March 2021 (Millions of yen)
    Total dividend received Total gain or loss on sale Total valuation gain or loss
    Non-listed
    securities
    25 - (Note)
    Securities
    other than
    the above
    - 28 0

    (Note) “Total valuation gain or loss” is not shown for non-listed securities, since they have no market value and it is considered extremely difficult to obtain the value of such securities.

  4. Investment securities, of which holding purpose has been changed from pure investment to other than pure investment
    Not applicable
  5. Investment securities, of which holding purpose has been changed from other than pure investment to pure investment
    Not applicable

Promoting Prompt and Accurate Fair Disclosure

ACOM endeavors to maintain and improve transparency of management for the benefit of stakeholders through accurate and prompt disclosure of various management information. Concurrently, ACOM concentrates on diverse investor relations activities both in domestic and overseas. These consist of, but not limited to: earnings release conferences for investors and institutional analysts; individual interviews; conference calls, and overseas IR roadshow.

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