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Corporate Governance
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Basic Concept
From the perspective of achieving sustainable growth and increasing long-term corporate value, we believe that the essence of corporate governance is to ensure transparency and fairness in decision-making, to make full and effective use of our management resources, and to increase management vitality through prompt and accurate decision-making. We will work to enhance our corporate governance in accordance with the following basic principles.
- ・We respect the rights of shareholders and ensure equality.
- ・We will consider the interests of each stakeholder and cooperate appropriately.
- ・We will disclose company information appropriately and ensure transparency.
- ・We will establish a self-discipline mechanism to ensure the effectiveness of Director' supervisory function over business execution.
- ・We will engage in constructive dialogue with shareholders whose investment policies are in line with the medium- to long-term interests of shareholders.
For more details, please see the Corporate Governance page in the IR information section (basic policy, progress, promotion system).
IR Information > Corporate Governance
Our approach to the composition of the Board Director
We believe that a board Director should consist of no more than 15 members (including no more than 5 Director who are Audit and Supervisory Committee Member) in order for constructive and effective discussions to take place. We appoint Director who are well-versed in each of our business areas, as well as managers or those with management experience in other companies. We also strive to appoint Director who are Audit and Supervisory Committee Member in an appropriate balance, including lawyers, certified public accountants, tax accountants, and other professionals who are well-versed in the various specialized fields necessary for overseeing management.
board Director
President and Chief Executive Officer, consists of six internal Director (including one Director who is also Audit and Supervisory Committee Member) and four Outside Director (including three Director who are also Audit and Supervisory Committee Member), and meets, in principle, once a month. Outside Director Director with broad perspectives and specialized knowledge make swift and accurate decisions as members of the Board Director.
Regarding business operations, President and Chief Executive Officer, as the highest-ranking officer responsible for business execution, oversees the company's operations based on the management policies decided by the Board Director. In addition, some Director are also responsible for business execution, and information on the status of their operations is shared as appropriate at business execution meetings and other forums.
On the other hand, in order to receive appropriate opinions and advice on management from an objective standpoint, we have appointed four Outside Director to improve the transparency and objectivity of our management.
| Number of events held / attendance rate for fiscal year 2025 (January 2026) | 15 times / 99.3% |
|---|---|
| Main items for discussion/reporting | - Composition and operation of the Board Director Management strategy and business strategy • Corporate ethics and risk management - Performance monitoring and evaluation/compensation of management ・Dialogue, collaboration, and reflection with shareholders, etc. |
Nomination and Compensation Advisory Committee
To strengthen the independence, objectivity, and accountability of the Board of Director' functions regarding the nomination and compensation of Director, we have established a voluntary Nomination and Compensation Advisory Committee as an advisory body to the Board of Director. The committee is chaired by a full-time Audit and Supervisory Committee Member member and consists of five Director: one internal Director and four Outside Director. The Nomination and Compensation Advisory Committee performs the functions of both the Nomination Committee and the Compensation Committee, and considers matters related to the appointment and dismissal of Director, as well as policies regarding Director compensation and the details of individual compensation, and submits opinions and advice to the Board Director.
| Number of events held / attendance rate for fiscal year 2025 (January 2026) | 4 times / 100% |
|---|---|
| Main items for discussion/reporting | - Fixed compensation level for Director (excluding Director who are Audit and Supervisory Committee Member) - Appropriateness of the calculation method for bonuses of Director (excluding Director who are Audit and Supervisory Committee Member), the level of the total bonus amount, the appropriateness of the valuation that forms the basis for the individual bonus allocation amounts, and the appropriateness of the individual allocation amounts. - Appropriateness of performance-linked coefficients used in stock-based compensation plans and the target values of those performance indicators. - Exchange of opinions on succession plans, etc. |
Audit and Supervisory Committee Member
Audit and Supervisory Committee Member is chaired by a full-time Audit and Supervisory Committee Member member and consists of four Director: one internal Director and three Outside Director. It meets, in principle, once a month.
| Number of events held / attendance rate for fiscal year 2025 (January 2026) | 14 times / 100% |
|---|---|
| Key audit items | 1. Legal compliance 2. Prevention of individual risks 3. Status of development and operation of the internal control system |
Evaluation of the effectiveness of the board Director
Evaluation method
To enhance transparency and objectivity in management and strengthen our competitiveness as a company, we are promoting initiatives to improve the effectiveness of our Board Director. As one of these initiatives, we conduct an annual evaluation of the effectiveness of our Board of Director by a third-party organization.
| method | Survey conducted by a third-party organization |
|---|---|
| Evaluation items | - Composition and operation of the Board Director Management strategy and business strategy • Corporate ethics and risk management - Performance monitoring and evaluation/compensation of management ・Dialogue and collaboration with shareholders, etc. |
| Implementation period | Every January |
Executive compensation
Basic Policy
The compensation of Director is primarily aimed at motivating them to improve the performance and increase the corporate value of our group, and is paid in an amount commensurate with their performance, taking into account the standards of other companies.
The compensation for Director (excluding Outside Director and Director who are Audit and Supervisory Committee Member) consists of fixed compensation and variable compensation (short-term incentives (bonuses) and medium- to long-term incentives (stock compensation)), as they are responsible for improving performance in each fiscal year and enhancing corporate value in the medium to long term.
Outside Director and Director who are members of Audit and Supervisory Committee Member are paid only a fixed salary because they are in a position independent of business execution.
Determination policy regarding individual compensation, etc.
The fixed compensation for Director (excluding Outside Director and Director who are Audit and Supervisory Committee Member) is determined by the Board of Directors in accordance with each Director 's position (expected role and responsibilities), taking into account standards at other companies, and based on the opinions and advice of the Nomination and Compensation Advisory Committee, which is composed of a majority of independent Outside Director Director, as well as the opinions of Audit and Supervisory Committee Member, if any.
In addition, a fixed salary is the base compensation, with additional allowances such as a "representative authority allowance" and a "chairman of the board of Director allowance."
The fixed compensation for Outside Director (excluding Director who are Audit and Supervisory Committee Member) is determined by the Audit and Supervisory Committee Member in accordance with their expected roles and responsibilities, taking into account standards at other companies, and based on the opinions and advice of the Nomination and Compensation Advisory Committee, which is composed of a majority of independent Outside Director, as well as the opinions of the Audit and Director Committee, if any. The fixed compensation for Director who are Audit and Supervisory Committee Member is determined within the limits set by the General Meeting of Shareholders, taking into account the company's performance and profitability.
Policy for determining performance-linked compensation, etc.
The total amount of performance-linked compensation (bonuses) for Director (excluding Outside Director and Director who are Audit and Supervisory Committee Member) is within the range of the amount obtained by subtracting the base salary already paid from Director compensation limit decided at the general shareholders' meeting, and is no more than 3% of the net income attributable to parent company shareholders. It is also subject to change depending on the degree of achievement of targets for four indicators that are considered important for short-term performance evaluation: consolidated order volume, consolidated operating profit, consolidated operating profit margin, and net income attributable to parent Outside Director shareholders. The Board Director makes its decision based on the opinions and advice of the Nomination and Compensation Advisory Committee, which is composed of a majority of independent outside directors, and the opinions of Audit and Supervisory Committee Member if any.
Regarding the distribution of bonuses to each Director (excluding Outside Director and Director who are Audit and Supervisory Committee Member), the directors evaluate each individual's contribution to performance, the degree to which policies have been achieved (*), etc., and then make a decision based on the distribution rate derived from the evaluation, taking into account the opinions and advice of the Nomination and Compensation Advisory Committee, which is composed of a majority of independent Outside Director, and, if any, the opinions of the Audit and Director Audit and Supervisory Committee Member.
*Financial and non-financial targets for the medium-term management plan (January 2025 to January 2027)
●Financial target KPI
Consolidated net sales: 107 billion yen, consolidated operating profit margin: 7.5%, consolidated ROE: 14.7%, consolidated dividend payout ratio: 50% or more
●Non-financial target KPI
- Job satisfaction (Engagement score: higher than the previous year; Optimization of working hours: increased number of employees meeting internal standards compared to the previous year)
- Establishment of production system (Achievement rate for new development with partner companies: 100%)
• Sustainability (EcoVadis rating: Silver rank achieved, percentage of female managers: over 15%)
- Climate change response (40% reduction in Scope 1 and 2 greenhouse gas emissions compared to FY2021 levels)
And, measures based on strategy (https://www.tanseisha.co.jp/ir/plan)
Internal Control
Basic Concept
Based on the "Basic Policy on the Development of an Internal Control System(PDF)," which was resolved at Director meeting held on May 12, 2006, and reviewed at Director meeting held on April 26, 2016, our company has established and operates an internal control system. Under the "Tanseisha Group Code of Conduct" and the "Basic Compliance Regulations," which prohibit corrupt practices including bribery and corruption, we are working to promote compliance within our company and group companies, with Director in charge of Management Administration serving as the management officer. Details of the 11 basic policies regarding the structure of the internal control system are described in the Corporate Governance Report.
Audit system and status
Our company has established an Audit Office (with 4 full-time staff) that reports directly to President and Chief Executive Officer as our internal audit department. Based on the internal audit plan formulated at the beginning of the fiscal year, the Audit Office conducts audits of the performance of business activities and evaluates the development and operation of internal controls over financial reporting from an independent standpoint. To ensure the effectiveness of internal audits, the Audit Office regularly reports directly to President and Chief Executive Officer, as well as to the Board Director and Audit and Supervisory Committee Member, on the status of its activities, including audit results. Furthermore, the Audit Office strives to conduct efficient internal audits by sharing information and exchanging opinions with Audit and Supervisory Committee Member and the external auditors, and by maintaining close cooperation.
Director who are Audit and Supervisory Committee Member attend Board Director meetings to monitor the execution of duties by Director, and also conduct audits based on audit reports from the accounting auditor and the internal audit department. In addition, Director who are full-time Audit and Supervisory Committee Member, taking into account their characteristics as full-time employees, actively gather information and strive to conduct efficient audits by attending important meetings such as management meetings, reviewing important approval documents, and receiving status reports from each department and group company.
Communication with stakeholders
Developing a multi-stakeholder policy
Based on the idea that it is important to collaboratively create value with a wide range of stakeholders, including employees, business partners, customers, creditors, and local communities, we have formulated a Multi-Stakeholder Policy that outlines how we should interact with employees and business partners in particular.
Details | Multi-stakeholder policy
Dialogue with employees
Based on the labor agreement, we hold monthly management conferences with the employee union to promote mutual understanding, communication, and adjustment of opinions. We also hold monthly working hours setting improvement committees to discuss matters related to working hours. We are also working to increase opportunities for employees to seek advice, such as adding a question to the "Harassment Survey Questionnaire" and "Managerial Evaluation Questionnaire" to ask whether they would like to consult with the Human Resources Department. Furthermore, we regularly conduct employee awareness surveys and use the results to create a better company and workplace.
Dialogue with investors
We place great importance on dialogue with investors, and in addition to individual meetings, we regularly hold earnings briefings for institutional investors and company briefings for individual investors. For Q&A sessions at these briefings, please refer to our IR information. It is available on this page.
Basic Policy for Dialogue with Shareholders and Investors
We have appointed Director in charge of investor relations and established an investor relations department to respond to requests for dialogue from shareholders within a reasonable scope. We have established the following policy for promoting constructive dialogue with shareholders.
- Designation of Director in Charge
To facilitate constructive dialogue with shareholders, we have appointed an IR Director to oversee the matters described in items 2 through 5 below (currently, Director in charge of Management Administration). - Strategies for collaborating with internal departments to support dialogue
Director in charge of IR oversees departments related to IR activities and holds meetings with each department approximately once a week to share information and promote inter-departmental collaboration. - Initiatives to enhance means of dialogue other than individual consultations
At a minimum, we will hold two earnings briefings per year and one briefing per year for individual investors. - Measures for providing feedback on opinions and other information gathered through dialogue with shareholders.
Director in charge of IR regularly compiles opinions and other information gathered through dialogue with shareholders and provides feedback to senior management at Director and management meetings. - Strategies for managing insider information during dialogues
In our dialogue with shareholders, we will not only comply with relevant laws and regulations regarding the handling of undisclosed material information, but will also strive to manage information in accordance with internal regulations aimed at preventing insider trading.
Contents of dialogues with shareholders and investors and the status of feedback to the Director meeting
We hold dialogues regarding short-term and medium-term business outlooks, return policies, etc., and report opinions and questions from shareholders and others gathered at quarterly IR meetings to the Board Director, which then reflect them in management plans, etc.
Main dialogue achievements for fiscal year 2025 (January 2026)
We held two earnings briefings per year, one briefing for individual investors per year, and conducted 114 individual investor relations meetings.
Main person in charge of dialogue with shareholders
[Information Session] President and Chief Executive Officer and Director in Charge of IR
[Individual Meeting] Director in charge of IR and IR staff