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Corporate Governance Supporting Co-Creation Management

Initiatives for Reinforcing Corporate Governance

  • 2007Oct.Adopted a holding company system

    • 2008Jun.Appointed first external director
      Mr. Koichiro Horiuchi has accumulated a wealth of management experience and insight from his long career at FUJI KYUKO CO., LTD., and actively offers opinions and advice from an independent and objective standpoint.

      • Shortened the term of all directors to one year to clarify management responsibilities

    • 2014Jun.Appointed second external director
      Ms. Etsuko Okajima has accumulated a wealth of management experience and insight at ProNova Inc. as well as a deep understanding of diversity issues and actively offers opinions and advice from an independent and objective standpoint.

    • 2015Mar.Redefined roles of the Board of Directors and the Management Committee to separate management decision making and oversight from operational execution
      The Board of Directors was defined as a forum for discussing important issues, and steps were taken to stimulate discussion centered on outside directors in order to enhance the Board's functionality as a venue for creating Groupwide strategies for improving corporate value. The Management Committee was delegated a wider range of decision-making authority from the Board of Directors in order to expedite management decisions.

    •  Apr.Established Criteria for Independence of External Directors and Audit & Supervisory Board Members

    •  Jun.Reduced the number of directors from 10 to 6
      We reduced the number of directors by four to reinforce the supervisory functions of the Board of Directors by making it easier for the opinions of the external directors to be incorporated into management practices.

    •  Aug.Published Japanese-language version of first integrated report, Co-Creation Management Report 2015

      Co-Creation Management Report

    •  Oct.Established dedicated investor relations department
      The IR Department was established with seven members. This organization meets with between 200 and 300 institutional investors in Japan and overseas each year.

    •  Nov.Formulated MARUI GROUP Corporate Governance Guidelines
      The MARUI GROUP Corporate Governance Guidelines codify our stance toward corporate governance and our initiative policies, including those for improving corporate value. For example, it is stated that one-third of directors should be external directors (independent directors), that the Company is to conduct appropriate capital measures based on its business structure, and that the Company will not engage in cross-shareholdings except when necessary.

      MARUI GROUP Corporate Governance GuidelinesPDF

      • Published Japanese-language Co-Creation CSR Report 2015, focusing on our connections with local communities and the greater society

        Co-Creation Sustainability Report

    •  Dec.Held explanatory forum on Co-Creation Management Report 2015
      MARUI GROUP held its first integrated report explanatory forum on Co-Creation Management Report 2015 for institutional investors, analysts, and members of the press to faciliate understanding of the report's contents. In this forum, President Aoi and representatives from each business explained co-creation management policies and examples of specific initiatives.

      Institutional Investor Briefings

    • 2016Mar.–
      May
      Conducted evaluation of the Board of Directors' effectiveness
      All directors and Audit & Supervisory Board members completed a self-evaluation survey of the effectiveness of the Board of Directors. Based on these surveys, it was decided that the Board of Directors was functioning sufficiently. Areas applauded and issues identified included the following.

      Areas Applauded
      – Active discussion centered on external directors appointed by reducing the total number of directors
      – Respect for opinions of external directors
      – Incorporation of perspectives of shareholders, investors, and other stakeholders

      Issues Identified
      – Lack of successor development programs → 1 3
      – Failure to link director compensation to medium-to-long-term performance → 2

    •  May1 Established Nominating and Compensation Committee with external directors as its primary members
      Based on a resolution by the Board of Directors, the Nominating and Compensation Committee must consist of at least three members, two of whom must be outside directors. At a meeting of the Board of Directors held on May 12, 2016, three members were appointed: external directors Koichiro Horiuchi and Etsuko Okajima, and President Hiroshi Aoi. We believe that discussing matters related to the nomination and compensation of directors at a committee with external directors as its primary members will help ensure objectivity and transparency and thereby contribute to the enhancement of our corporate governance system.

    •  Jun.2 Introduced performance-linked, stock-based compensation to serve as a medium-to-long-term incentive for directors and executives of the Company and directors of subsidiaries
      Through the performance-linked, stock-based compensation system, applicable officers receive allocations of Company stock every three years that are adjusted via a coefficient within the range of 0% to 100% based on the KPI defined for that period (ROE, EPS, and ROIC for the first three-year period). The Company has adopted the Board Incentive Plan Trust scheme for this system. Accordingly, director compensation now consists of fixed basic compensation, performance-linked bonuses, and performance-linked, stock-based compensation. In addition, an incentive plan based on the Employee Stock Ownership Plan Trust scheme has been instituted for managers of Group companies to increase their motivation to contribute to medium-to-long-term improvements in performance and corporate value for the Company.

    •  Sep.Published Japanese-language version of Co-Creation Management Report 2016 integrated report; English-language version published in October 2016

      Co-Creation Management Report

    •  Oct.Established ESG Promotion Department
      The ESG Promotion Department coordinates with the IR Department to bolster communication with ESG ratings institutions and enhance the disclosure of ESG information.

    •  Nov.Published Japanese-language version of Co-Creation Sustainability Report 2016, which focused on four core themes; English-language version published in January 2017

      Co-Creation Sustainability Report

    • 2017Feb.Published ESG DATA BOOK

      ESG DATA BOOK

    •  Apr.Changed name of CSR Promotion Department to Sustainability Department
      In November 2016, MARUI GROUP set forth its new goal of achieving sustainability in light of social trends and a standpoint emphasizing environmental, social, and governance (ESG) concerns. In conjunction with this development, the name of the CSR Promotion Department, which was established in 2005, was changed to the Sustainability Department and its mission was redefined as advancing initiatives to transform our main business into a socially contributing undertaking with eyes to the future.

      3 Commencement of future leader development program
      An evaluation of the Board of Directors' effectiveness identified the issue represented by the Company's lack of successor development programs. To address this issue, MARUI GROUP launched the Co-Creation Management Academy management training program to help cultivate future leaders.

      Cultivation of Future Leaders

Co-Creation of Corporate Value with Shareholders and Other Investors

In October 2015, we established the IR Department, a dedicated organization consisting of seven members, who primarily engage in communication with institutional investors. In one year, we met with between 200 and 300 institutional investors, including those overseas. Through our discussions with these investors, we gain valuable insight into matters such as how to view corporate value and balance sheet policies. I feel that this input was effectively utilized in shaping MARUI GROUP's new medium-term management plan, which covers the period leading up to the fiscal year ending March 31, 2021. Corporate value certainly cannot be summed up in a single statement. Nevertheless, it is important for the Company to actively explain its view on corporate value and its efforts for improving this value. This is one of the main reasons we publish co-creation management reports. We also hold annual explanatory forums on these reports to delve into topics that were not completely covered in the report for that year. A number of junior employees from the frontlines of business took the stage at these events, providing energized perspectives of how co-creation efforts are contributing to corporate value or where they find motivation in their own work. Investors in attendance stated that these presentations greatly enhanced their understanding. Our initiatives over the past year bore results as the Securities Analysts Association of Japan identified MARUI GROUP as a company demonstrating a massive improvement in disclosure during the fiscal year ended March 31, 2016, and the Company ranked high in the 2016 and 2017 All-Japan Executive Team Rankings released by U.S. financial industry magazine Institutional Investor. Going forward, we will continue to provide inclusive explanations of our activities to deepen stakeholder understanding.

Hirotsugu Kato

Director and Senior Executive Officer
General Manager, IR Department
and Corporate Planning Division,
ESG Promotion Department
MARUI GROUP CO., LTD.

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