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Corporate Governance Report The corporate governance of Recruit Holdings Co., Ltd. (the Company ) is described below. Last Update: June 22, 2016 Masumi Minegishi President, CEO, and Representative Director
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Corporate Governance Report The corporate governance of Recruit Holdings Co., Ltd. (the Company ) is described below. Last Update: June 22, 2016 Masumi Minegishi President, CEO, and Representative Director Recruit Holdings Co., Ltd. Contact: I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information 1. Basic Views [Corporate Governance Code Principle 3-1 (1), (2)] The Company and its subsidiaries (the Group ) has defined its Mission: We are focused on responding to the needs of society by creating new value, thereby contributing to a brighter and more fulfilling world in which all individuals can live life to the fullest and Creation of new value, Contribution to society, and Respect for all individuals as The Recruit Way in the Recruit Group Management Philosophy. Under this management philosophy, the Company emphasizes corporate governance in striving to achieve longterm, stable growth and to continuously increase its corporate value as a business that is viewed as a positive force by users of Recruit products and services, clients, shareholders, employees, business partners, and all other principal stakeholders of the Company. The management strategies and business plans of the Group are posted on the Company s website. Japanese: English: [Reasons for not Complying the Principles of the Corporate Governance Code] The Company complies all the principles of the Corporate Governance Code. [Disclosure Based on the Principles of the Corporate Governance Code] The Company has adopted the following policies based on the five general principles of the Corporate Governance Code. 1. Securing the Rights and Equal Treatment of Shareholders The Company shall take appropriate measures to effectively secure rights to vote at Shareholders Meetings, and other forms of shareholder rights. 2. Appropriate Cooperation with Stakeholders Other Than Shareholders Based on the Recruit Group Management Philosophy, the Company shall strive to achieve long-term, stable growth and continuously increase its corporate value as a business that is viewed as a positive force by users of Recruit products and services, clients, shareholders, employees, business partners, NPOs and NGOs, national and other governmental organizations, local communities and all other principal stakeholders of the Company 3. Ensuring Appropriate Information Disclosure and Transparency In addition to properly engaging in disclosures as required by laws and regulations, the Company will proactively disclose information as called for by the five general principles of Japan s Corporate Governance Code to help secure transparency and fairness in decision-making, and promote effective corporate governance. 4. Responsibilities of the Board of Directors The Board of Directors sets the basic management direction and performs management oversight. In addition to matters subject to exclusive board discretion, as provided in laws and regulations, the Board of Directors also makes executive decisions on matters that could significantly impact management philosophy, corporate governance systems, consolidated results and the reputation of the Group. When the speed of decision-making is a matter of critical concern, executive decision-making authority is vested in the President and Representative Director within certain bounds, and the Board of Directors oversees implementation of the decisions made. Board Directors are elected by the shareholders to be entrusted with management of the Company. In performing their duties, they bear fiduciary responsibility and the duty of diligence, as they contribute to the sustainable growth and an increase in corporate value over the medium to long term. 5. Dialogue with Shareholders [Corporate Governance Code Principle 5-1] To promote dialogue with shareholders, the Company shall have a department dedicated to handling IR work, and an executive assigned to oversee IR. Requests by institutional investors for meetings are accepted within reasonable bounds, and the Company have a system for responding to inquiries by individual shareholders. Of the items which should be disclosed pursuant to the principles of the Corporate Governance Code, details of the following items are given in this Report. Principle 1-4: 2-2 Principle 1-7: 2-2 Principle 3-1: 1-1, 2-1 and 2 Supplementary Principle 4-1-1: 2-2 Principle 4-8: 2-2 Principle 4-9: 2-1 Supplementary Principle : 2-2 Supplementary Principle : 2-1 Supplementary Principle : 2-2 Supplementary Principle : 2-2 Principle 5-1: 1-1, Capital Structure Ratio of Shares Held by Foreigners 10% or more and less than 20% [Status of Major Shareholders] Name or Company Name Number of Shares Held (Shares) Shareholding Ratio (%) TOPPAN PRINTING CO., LTD. 37,700, Dai Nippon Printing Co., Ltd. 35,700, DENTSU INC. 30,000, The Recruit Group Employees Shareholding 23,031, Association NTT DATA Corporation 15,500, JP MORGAN CHASE BANK (Standing Proxy: Settlement & Clearing Services Department of Mizuho Bank, Ltd.) 14,040, Japan Trustee Services Bank, Ltd. (Trust Account) 13,183, Controlling Shareholder (excluding Parent Company) Parent Company None Supplementary Explanation 3. Corporate Attributes Stock Exchange Listings and Market Classification Fiscal Year-End Type of Business Number of Employees (consolidated) as of the End of the Previous Fiscal Year Net Sales (consolidated) in the Previous Fiscal Year Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year First Section, Tokyo Stock Exchange March Services 1,000 or more 1 trillion or more 100 or more and less than Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder 5. Other Special Circumstances Which May Have a Material Impact on Corporate Governance - 3 - II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution and Oversight in Management 1. Items Relating to Organization Structure and Operations, etc. Organization Form Company with Audit & Supervisory Board Members [Board Directors] Number of Board Directors Stipulated in the Articles of Incorporation 11 Term of Office of Board Directors Stipulated in the Articles of Incorporation 1 year Chairman of the Board of Directors President and Representative Director Number of Board Directors 6 Appointment of External Board Directors Appointed Number of External Board Directors 2 Number of External Board Directors Designated as Independent Directors 2 Relationship with the Company (1) Name Attributes Relationship with the Company* a b c d e f g h i j k Shigeo Ohyagi From another company Yasushi Shingai From another company * Selection criteria regarding relationship with the Company * when the director presently falls or has recently fallen under the category; when the director fell under the category in the past * when a close relative of the director presently falls or has recently fallen under the category; when a close relative of the director fell under the category in the past a. A person who executes business of the Company or its subsidiaries b. A person who executes business or non-executive director of a parent company of the Company c. A person who executes business of a fellow subsidiary company of the Company d. A party whose major customer or supplier is the Company or a person who executes business thereof e. Major customer or supplier of the Company or a person who executes business thereof f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director g. Major shareholder of the Company (or a person who executes business of the said major shareholder if the shareholder is a legal entity) h. A person who executes business of a customer or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only) i. A person who executes business of a company, between which and the Company s external directors are mutually appointed (the director himself/herself only) j. A person who executes business of a company or organization that receives a donation from the Company (the director himself/herself only) k. Others - 4 - Relationship with the Company (2) Name Shigeo Ohyagi Yasushi Shingai Designation as Independent Director Supplementary Explanation Relating to These Items [Corporate Governance Code Supplementary Principle ] Mr. Ohyagi serves concurrently as Chairman of the Board of TEIJIN LIMITED, Outside Audit & Supervisory Board Member of JFE Holdings, Inc., and Vice Chairman of KEIZAI DOYUKAI (Japan Association of Corporate Executives). There are business relationships between the Group and TEIJIN LIMITED; however, based on the size and nature of the transactions, it is deemed not to have an impact on the decisionmaking of shareholders and other investors, and therefore, descriptions of such transactions is omitted. [Corporate Governance Code Supplementary Principle ] Mr. Shingai serves concurrently as Representative Director and Executive Deputy President of Japan Tobacco Inc. There are business relationships between the Group and Japan Rationale Supporting the Appointment of External Board Director of the Company (including the rationale for designation as independent director, if applicable) [Corporate Governance Code Principle 3-1 (5)] Mr. Ohyagi has served in various posts at TEIJIN LIMITED, including President and Representative Director and Chairman of the Board, and has been serving as External Board Director of the Company since June He makes statements from a practical perspective as an External Board Director, based on his deep insight cultivated through management of a global manufacturing company. Accordingly, the Company has judged that he is fulfilling an appropriate role by providing advice about overall management and supervising the execution of duties. Therefore, the Company believes that he is the right person for the post of External Board Director. Additionally, as Mr. Ohyagi does not violate both the independence criteria prescribed by the Tokyo Stock Exchange and that of the Company, the Company has judged that he is unlikely to pose any conflicts of interests with general shareholders, and thus has been designated as independent director. [Corporate Governance Code Principle 3-1 (5)] Mr. Shingai has served in various posts at Japan Tobacco Inc. including Representative Director and Executive Deputy President, and has been serving as External Board Director of the Company since June He makes statements from a practical perspective as an External Board Director, based on his deep insight cultivated through the acquisition of foreign corporations, etc Tobacco Inc.; however, based on the size and nature of the transactions, it is deemed not to have an impact on the decisionmaking of shareholders or other investors., and therefore, descriptions of such transactions is omitted. Accordingly, the Company has judged that he is fulfilling an appropriate role by providing advice about overall management and supervising the execution of duties. Therefore, the Company believes that he is the right person for the post of External Board Director. Additionally, as Mr. Shingai does not violate both the independence criteria prescribed by the Tokyo Stock Exchange and that of the Company, the Company has judged that he is unlikely to pose any conflicts of interests with general shareholders, and thus has been designated as independent director. Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee Established Status of the Establishment of a Voluntary Committee, Membership Composition and Attributes of Chairman Voluntary Committee Equivalent to Nomination Committee Voluntary Committee Equivalent to Remuneration Committee Name of Committee Nomination Committee Remuneration Committee All committee members (Number of persons) Full-time members (Number of persons) Internal Board Directors (Number of persons) External Board Directors (Number of persons) Outside Experts (Number of persons) Others (Number of persons) Chairman External Board Director External Board Director Supplementary Explanation Others of the Nomination and Remuneration Committees consists of External Audit & Supervisory Board Members. [Audit & Supervisory Board Members] Establishment of the Audit & Supervisory Board Established Number of Audit & Supervisory Board Members Stipulated in the Articles of Incorporation 5 Number of Audit & Supervisory Board Members 4-6 - Cooperation among Audit & Supervisory Board Members, Accounting Auditors and the Internal Audit Office The Company uses a three-part auditing approach consisting of audits by Audit & Supervisory Board Members, audits by Accounting Auditors, outside firms specializing in such work and internal audits. Audits by Audit & Supervisory Board Members and Accounting Auditors are statutory audits, while internal audits, which are carried out at the direction of management, are discretionary audits aimed mainly at performing independent evaluations of internal control systems and ensuring that proper business practices are followed. Cooperation among the Internal Audit Office, Audit & Supervisory Board Members and Accounting Auditors takes the form of Accounting Auditors and the Internal Audit Office reporting on their respective audit approaches and results before the Audit & Supervisory Board as needed, and the standing members of the Audit & Supervisory Board, in the main, regularly sharing information with the Accounting Auditors and the Internal Audit Office. The Internal Audit Office appropriately presents reports and shares information when requested by an Audit & Supervisory Board Member or the Audit & Supervisory Board, and shares information with the Accounting Auditors. Appointment of External Audit & Supervisory Board Members Number of External Audit & Supervisory Board Members Number of External Audit & Supervisory Board Members Designated as Independent Audit & Supervisory Board Members Appointed 2 1 Relationship with the Company (1) Name Attribute Relationship with the Company* a b c d e f g h i j k l m Hiroki Inoue Lawyer Yasuaki Nishiura Certified Public Accountant * Selection criteria regarding relationship with the Company * when the director presently falls or has recently fallen under the category; when the director fell under the category in the past * when a close relative of the director presently falls or has recently fallen under the category; when a close relative of the director fell under the category in the past a. A person who executes business of the Company or its subsidiary b. Non-executive director or accounting advisor of the Company or its subsidiaries c. A person who executes business or non-executive director of a parent company of the Company d. Audit & supervisory board member of a parent company of the Company e. A person who executes business of a fellow subsidiary company of the Company f. A party whose major customer or supplier is the Company or a person who executes business thereof g. Major customer or supplier of the Company or a person who executes business thereof h. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an audit & supervisory board member i. Major shareholder of the Company (or a person who executes business of the said major shareholder if the shareholder is a legal entity) j. A person who executes business of a customer or supplier company of the Company (which does not correspond to any of f, g, or h) (the audit & supervisory board member himself/herself only) - 7 - k. A person who executes business of a company, between which and the Company s external audit & supervisory board member are mutually appointed (the audit & supervisory board member himself/herself only) l. A person who executes business of a company or organization that receives a donation from the Company (the audit & supervisory board member himself/herself only) m. Others Relationship with the Company (2) Name Hiroki Inoue Yasuaki Nishiura Designation as Independent Audit & Supervisory Board Member Supplementary Explanation Relating to These Items [Corporate Governance Code Supplementary Principle ] Mr. Inoue serves concurrently as Managing Partner of Nagashima Ohno & Tsunematsu. [Corporate Governance Code Supplementary Principle ] Not applicable. Rationale Supporting the Appointment of External Audit & Supervisory Board Member of the Company (including the rationale for designation as independent audit & supervisory board member, if applicable) [Corporate Governance Code Principle 3-1 (5)] Mr. Hiroki Inoue is possessed of legal expertise developed through his many years in professional legal practice, and is very familiar with matters of business administration. In his capacity as an External Audit & Supervisory Board Member, Mr. Inoue is providing input from an objective, neutral perspective and is performing a valuable role in the oversight of the Company s management broadly defined. [Corporate Governance Code Principle 3-1 (5)] Mr. Nishiura has accounting knowledge cultivated as a Certified Public Accountant of the U.S. and experience of supporting numerous Japanese companies in undertaking business expansion in the U.S. as a business advisor, working primarily in Silicon Valley. He makes statements from a neutral and objective perspective as an External Audit & Supervisory Board Member, based on his deep insight and wealth of international experience. Accordingly, the Company has judged that he will fulfill an appropriate role in the supervision of the Company s overall management. Therefore, the Company believes that Mr. Nishiura is the right person to serve as an External Audit & Supervisory Board Member. Additionally, as Mr. Nishiura does not - 8 - violate both the independence criteria prescribed by the Tokyo Stock Exchange and that of the Company, the Company has judged that he is unlikely to pose any conflicts of interests with general shareholders, and thus has been designated as independent audit & supervisory board member. [Independent Directors/Audit & Supervisory Board Members] Number of Independent Directors/Audit & 3 Supervisory Board Members Other Information on Independent Directors/Audit & Supervisory Board Members [Corporate Governance Code Principle 4-9] When selecting independent directors/audit & supervisory board members, the Company s policy is, in principle, to select candidates who meet not only the independence criteria prescribed by financial instruments exchanges, but all the following criteria as well: (1) If the candidate or the corporation for which the candidate executes business is a shareholder of the Company, the share of voting rights held is no more than 10%. (2) In transactions during the most recent fiscal year, sales to the candidate or the corporation to which the candidate belongs amounted to less than 1% of the Company s consolidated net sales. [Incentives] Status of Implementation of Measures to Grant Incentives to Board Directors Introduction of a performance-based incentive plan Supplementary Explanation Relating to These Items The Company, at the 56th Ordinary General Meeting of Shareholders held on June 21, 2016, resolved to introduce a stock incentive plan (hereinafter the Scheme ) as a new incentive plan for its Board Directors (excluding External Board Directors), Corporate Executive Officers and Corporate Professional Officers (hereinafter collectively referred to as Board Directors, etc. ). In our long-term vision, the Group aims to become the top provider in the Personnel segment globally by 2020, and to become the corporate group operating the No. 1 matching platform globally in all of our business domains, inc
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