Evaluation of effectiveness
Implementation guidelines for evaluations of the effectiveness
of the Board of Directors during the reporting period
We carry out evaluations of effectiveness on the basis
of Article 31 of our Corporate Governance Guidelines,
which states, “The Board of Directors will, to evaluate its
effectiveness, conduct self-evaluation at the end of each
fiscal year with a focus on whether the execution of duties
by the Board of Directors was performed in accordance with
these Guidelines, and will analyze and evaluate the results.
An outline of the results of the analysis and evaluation will also
be disclosed as appropriate.” We disclose the results in our
Corporate Governance Report.
Initiatives to address issues raised in the 90th term
In our evaluation of our 90th term (FY 2020, ended in March
2021), as a concrete measure in the 91st term (FY 2021,
ended in March 2022) to address issues in the 90th term, we
established the development of an environment for members
of the Board of Directors to hold deeper discussions on key
items, in addition to continuing ongoing measures.
Specific measures given included isolating and clarifying the
deliberation matters attached to the reported matters provided
as the agenda for the Board of Directors, improving the quality
and optimizing the volume of materials presented to the Board
of Directors, increasing opportunities for deliberation in order to
enhance disclosure of non-financial information in light of the ESG
investment trend, and improving Director training opportunities.
As a result, we assessed that active discussions on every project
have increased compared with the previous fiscal year, and that the
Board of Directors’ awareness of its effectiveness has risen.
Results of evaluation of the 91st term
We conducted a questionnaire survey aimed at all directors,
including Audit and Supervisory Committee Members, to evaluate the effectiveness of the Board of Directors in the 91st term.
Preparation, distribution, tabulation, and analysis of the anonymous
response sheets were conducted by the Legal Governance
Affairs Office, which serves as the secretariat for evaluation
of effectiveness. The answer sheet consists of 17 questions
covering areas of the Board of Directors’ composition, operation,
deliberation, support structure, relationships with stakeholders, and
the degree of contribution of individual directors.
At the Board of Directors meeting held in May 2022, the
Chief Legal Governance Officer reported on the aggregation
of responses and the findings of analysis, and members
discussed current circumstances and recognition of issues.
As a result, our Company’s Board of Directors has determined
that the duties of the Board of Directors are being performed
appropriately and that no problem exists in its effectiveness.
Deliberation of management and business strategies was raised
as an issue in the previous year. Our evaluation confirmed a
degree of improvement in this area, recognizing that in the
formulation of TOKYO KEIKI Vision 2030, the Board of Directors
contributed to coordinating the direction for strategy and spent a
large amount of time deliberating with management, with the end
result being the disclosure of TOKYO KEIKI Vision 2030 along
with our medium-term business plan in June 2021. However, we
also affirmed that there was room for improvement in the areas
of the setting of Board of Directors’ deliberation matters, and in
the provision of information related to the same. These issues
were shared with the Board of Directors. Looking ahead, we will
establish a concrete action plan for these issues and reconfirm
progress and results in the next effectiveness evaluation.
The Company will endeavor to further improve the
effectiveness of the Board of Directors by conducting
appropriate evaluations every year, through resolution of
issues recognized in effectiveness evaluations and continuous
review of implementation guidelines for evaluation.
Policy for appointment of directors
Policy for appointing Internal Directors who are not
Audit and Supervisory Committee Members
In accordance with guidelines outlining seven requirements,
the Company appoints Internal Directors who are not Audit
and Supervisory Committee Members from among Executive
Officers and employees, etc. who have the strong will,
abundant experience, high level of insight, and high level of
expertise needed to carry out the duties of a director.
Policy for appointing Internal Directors who are Audit
and Supervisory Committee Members
In accordance with guidelines outlining six requirements,
the Company appoints Internal Directors who are Audit and
Supervisory Committee Members from among current (or
incumbent) Audit and Supervisory Committee Members,
Executive Officers, and employees, etc. who have the strong
will, abundant experience, high level of insight, and high level
of expertise needed to carry out the duties of a director. We
particularly emphasize a deep understanding of matters
such as finance, accounting, and internal control, as well as
sufficient experience and expert knowledge.
Policy for appointment of Outside Directors
In accordance with guidelines outlining seven requirements,
the Company appoints Outside Directors from among
persons who possess abundant experience, a high level of
insight, and a high level of expertise; persons who possess
a practical perspective as an outside company manager or
other position; and persons who possess an objective and
expert perspective based on a high level of knowledge of
global conditions and socio-economic trends.
In order to verify whether the TOKYO KEIKI Group is furnished
with the management capabilities needed to resolve the
Group’s challenges, we have outlined in the following table
the knowledge and expertise (skills) possessed by all of
our Directors in various fields based on two perspectives:
items required for the management of a listed company, and
matters required per our business activities. The determination
of each Director’s skills took into consideration their
accomplishments as Directors and Executive Officers in each
field as well as their past professional experience.
As of June 29, 2022
Note: Directors who possess relevant national qualifications: Motoo UENOYAMA (Small and Medium Enterprises Management
Consultant, Labor and Social Security Attorney)
Compensation system for directors
Amount of compensation by officer category
Notes 1. The total amount of compensation, etc. for Outside Directors is the amount of compensation for Outside Audit and
Supervisory Committee Members.
Compensation for directors who are not Audit and
Supervisory Committee Members is composed of monthly
fixed compensation (basic compensation), performance-linked
compensation, and transfer-restricted stock compensation,
with the aim of reflecting business performance and sharing
the values of shareholders. However, Outside Directors who
are not Audit and Supervisory Committee Members receive
only monthly fixed compensation. For all compensation
amounts, proposals prepared by the Representative Director,
President & CEO are submitted to the Nomination and
Compensation Committee. The Representative Director,
President & CEO then receives a Memorandum on Director
Compensation from the Committee and, based on this, finally
determines and proposes compensation amounts that are
resolved by the Board of Directors.
Compensation for Audit & Supervisory Committee
Members, consisting of only basic compensation in the
form of monthly fixed compensation, is determined through
deliberation by Audit and Supervisory Committee Members
on the basis of members’ roles, duties, and categorization
of standing or non-standing status, within the total amount
determined at the General Meeting of Shareholders.
Monthly fixed compensation
The Representative Director, President & CEO will set a
monthly fixed compensation proposal for each director who
is not an Audit and Supervisory Committee Member, making
reference to necessary information on director compensation
allowing comparison with our Company, obtained through
sources including surveys on trends in director compensation.
After monthly fixed compensation is determined, amounts
may be reduced in consideration of matters including the
Company’s business situation.
The Representative Director, President & CEO will determine
whether performance-linked compensation will be paid,
through discussions with the Representative Director in
accordance with criteria for the payment of performancelinked
compensation as set forth in the Rules for Directors’
Compensation. Criteria for the payment of performance-linked
compensation include positive operating profit, a given level of
profit attributable to owners of parent, payment of dividends
not below initial projections, and ROE that does not fall below
initial projections by a given percentage.
Transfer-restricted stock compensation
The Company sets and pays monetary compensation
credits in an amount equal to an individual’s monthly fixed
compensation converted to a yearly amount, multiplied by a
coefficient based on position. Each eligible director receives an
allocation of transfer-restricted stock through the granting of
all monetary compensation credits as in-kind contribution. The
paid-in amount of the transfer-restricted stock is determined
by the Company’s Board of Directors within an extent that is
not overly advantageous to the receiving directors, based on
the closing price of the Company’s common shares on the
Tokyo Stock Exchange on the business day prior to resolution
by the Board of Directors concerning issuance or disposal of
the stock (or, if no transactions took place on said business
day, the closing price on the most recent trading day).
Similar transfer-restricted stock is also allocated to the
Executive Officers of the Company and Representative
Directors of subsidiaries of the Company.
2. The total amount of compensation, etc. is the amount of monetary compensation credits paid under the transfer-restricted
stock compensation system.
3. The total amount of the above compensation, etc. for Directors does not include amounts equivalent to the employee
salaries of Directors who serve concurrently as employees.