- Analysis and Assessment of the Effectiveness of the Entire Board of Directors
- Efforts to Strengthen the Functions of Audit & Supervisory Board Members
Basic Views on Corporate Governance
To implement measures envisaged under the Long-Term Management Vision 2030 and the Medium-Term Management Plan 2020, both formulated in March 2017 and together called “Going Forward Beyond Borders,” Osaka Gas will ensure transparency, fairness and boldness in decision making, and execute its assigned business duties efficiently and adequately, based on the Daigas Group CSR Charter, a set of guiding principles for employees, and specific standards for actions— the Daigas Group Code of Conduct and the Daigas Group Environmental Activities Policy. By doing so, the Company aims to attain sustainable growth and enhance its corporate value on a medium- and long-term basis. We will further raise the CSR level of the Group by responding appropriately to the exercise of shareholder rights and working to maintain and improve trust through dialogue and collaboration with stakeholders. We will continue to enhance and strengthen corporate governance with the aim of global standard management that takes ESG (environment, society, and governance) into consideration.
System and Efforts Aimed at Enhancing Corporate Governance
The Company has selected to be a company with Audit & Supervisory Board and conducted the introduction of an executive officer system, appointment of multiple Outside Directors, and establishment of voluntary advisory committees corresponding to appointment of Directors and Audit & Supervisory Board Members and Director remuneration. The Company considers its current governance system best suited in order for responding swiftly to changes in the business environment, ensuring transparency, fairness and boldness in decisionmaking, and implement efficient and appropriate actions. In addition, by reducing the number of Directors to nine in June 2020 and thereby increasing the composing ratio of Outside Directors to one-third, the Company will seek to further improve the mobility and efficiency of decision-making and execution of business in management, and further strengthen the supervisory role of the Board of Directors.
Board of Directors, Directors of the Company（1）
The Board of Directors consists of nine Directors (including three Outside Directors). Its mission is to make swift and appropriate decisions about important matters that affect the whole Group including subsidiaries and to enhance supervisory capabilities. To attain sustainable growth and improve medium and long-term corporate value for the Group, candidates for Directors are in principle selected from a diverse group of people without regard to sex or nationality, etc., taking their knowledge, experiences, abilities, and personalities etc. into account.
Based on this, when selecting, the Company takes into consideration expertise in managing the Group’s energy business and other businesses for internal Director candidates and the individual’s independent-mindedness for making objective judgments, and whether they have wide-ranging knowledge, wealth of experience, and expertise in their specialized fields for Outside Director candidates. The Board of Directors met a total of 13 times in the fiscal year ended March 31, 2020, and had an attendance rate of 98.2%. There were active discussions on our group's management plan, establishment of important organizations, important personnel affairs, conclusion of important investments and contracts in excess of a certain amount, and reports by executive directors on the status of business execution.
The Company has adopted an executive officer system, which enables the Directors of the Company to focus on making business decision and monitoring and supervisory functions, and worked toward strengthening the business efficiency and the supervisory functions by vitalizing the Board of Directors. Executive Officers perform duties determined by the Board of Directors, and some Representative Directors and Directors concurrently serve as Executive Officers to make management decision-making more accurate and efficient.
The Company examines basic management policies and important management issues at the Executive Board and fully deliberates the foregoing before decision-making. In accordance with internal regulations, the Executive Board consists of the President, Executive Vice President, Senior Executive Officer, Head of Corporate Headquarters, and Head of Business Unit. In principle, the Executive Board is held three times per year as “ESG Council,” which deliberate and supervise CSR activity plans and its execution.
Audit & Supervisory Board, Audit & Supervisory Board Members（4）
The Audit & Supervisory Board consists of five Audit & Supervisory Board Members, of whom three are Outside Auditors and each Audit & Supervisory Board Member monitors the execution of work duties by the Directors.
Office of Audit & Supervisory Board with a dedicated full-time staff which is not under the direct control of the Executive Directors has been established to support the Audit & Supervisory Board Members’ auditing work and thus improve the auditing system.
The Company has established the Auditing Department as a section in charge of internal auditing affairs. Based on a yearly auditing plan, it evaluates, from independent and neutral viewpoints, the adequacy of business activities in light of in-house standards, their efficiency, and the appropriateness of various systems and standards adopted by the Company. In addition to giving recommendations and conducting follow-ups that lead to business improvements in the organizations subject to audit, the department summarizes the issues and reports its results to the Executive Board. The Auditing Department is subject to periodical evaluation from an outside party to maintain and improve its auditing abilities.
To maintain objectivity and achieve transparency in the decision-making process, matters relating to appointment of Director and Audit & Supervisory Board Member candidates, appointment and dismissal of Representative Director and other Executive Directors, and matters relating to Directors’ remuneration are deliberated at an advisory committee of which a majority is Outside Directors before decision is made by President Takehiro Honjo pursuant to delegation by a resolution of the Board of Directors. The committee is comprised of inside and outside members, with outside committee members being all of the Outside Directors (all three members satisfy the standards for determining independence specified by the Company). The inside committee members are the President and if necessary, persons appointed by the President (the President may appoint up to one member who is a Representative Director). The committee chairperson is appointed by the committee members.
The Company has established the ESG Committee to coordinate and advance group-wide CSR activities, which is chaired by the Head of ESG Promotion, who is the Representative Director / Executive Vise President in charge of overseeing the Group’s CSR activities, and is composed of the General Managers of relevant divisions. The ESG Committee promotes environment, compliance, social contribution, human rights, employment, information security, risk management and other aspects of the Group’s CSR activities.
Cyber Security Committee（8）
In August 2019, to reinforce the cyber security measures of the Group, we set up the Cyber Security Committee which is chaired by the officer in charge of the Information / Communication Systems Department, and is composed of the General Managers of relevant divisions.
Investment Evaluation Committee（9）
The Company has established the Investment Evaluation Committee, which is chaired by the Head of the Corporate Planning Headquarters and composed of the General Managers of relevant divisions. The committee examines risk and return and makes an evaluation on investments exceeding a certain amount, and it reports findings to the Executive Board and assists appropriate investment decisions.
■Corporate Governance Organization Chart (as of June 26, 2020)
- *1 Board of Directors
9 Directors (6 internal Directors and 3 Outside Directors)
- *2 Advisory Committee
3 Outside Directors, Representative Director and President and a person appointed by the President (up to one member who is a Representative Director)
- *3 Audit & Supervisory Board
5 Audit & Supervisory Board Members (2 full-time Audit & Supervisory Board Members, 3 Outside Audit & Supervisory Board Members)
- *4 Executive Board
1 Executive President, 3 Executive Vice Presidents and 6 Senior Executive Of cers (★In principle, it is held three times per year as “ESG Council.”)
Analysis and Evaluation of Effectiveness of the Board of Directors as a Whole
Each fiscal year, the Company analyzes and evaluates the effectiveness of the Board of Directors, centering on outside officers (Outside Directors and Outside Audit & Supervisory Board Members).
Specifically, the Board of Directors Secretariat conducted questionnaires and interviews with all Directors and Audit & Supervisory Board Members individually on questions such as whether the operation and information provision of the Board of Directors were appropriate and sufficient, and whether the opinions received from outside officers during evaluation last year (e.g., enhancement of discussion relating to important management themes including business plans and continued provision of information for deeper understanding of Board of Directors resolutions) have been addressed, and in light of the results thereof, held discussions with all outside officers, and made its evaluations, which confirmed that such matters have been appropriately addressed.
Furthermore, as a result of the outside officers reporting the results of these evaluations to the Board of Directors and holding relevant discussions in turn, the Company has confirmed that the Board of Directors conducts lively exchanges of questions and answers based on necessary and sufficient information, including materials provided in advance and other explanations, and sufficiently ensures that it is operating in an effective manner.
The Company will take into consideration the opinions of outside officers, and take initiative to enhance discussions by further increasing the provision of information on important management challenges of the Group, etc., and otherwise further enhance the effectiveness of the Board of Director going forward.
Efforts to Strengthen the Functions of Audit & Supervisory Board Members
As part of our efforts to strengthen the functions of auditors, we appoint three Audit & Supervisory Board members from outside our Group to audit directors’ execution of their duties from an independent viewpoint. They meet on a regular basis to discuss annual audit plans and audit reports and exchange information as needed to enhance the effectiveness and quality of auditing activities. We have also established the Office of Audit & Supervisory Board, which is composed of full-time staff operating outside the executive directors’ chain of command. The Office is designed to support Audit & Supervisory Board members’ auditing work and thus enhance their auditing function.
The Auditing Department, Audit & Supervisory Board members, and accounts auditors exchange information as needed on such occasions as regular meetings about annual audit plans and audit reports in order to facilitate mutual collaboration and enhance the effectiveness and quality of audits. In addition, the general manager of the Auditing Department, outside Audit & Supervisory Board members, and outside directors exchange information about the status of internal controls and risk management.
Policy about the Determination of Directors’ Remuneration
To ensure objectivity and transparency in decision-making, the amount of remuneration for each director is determined by Representative Director and President Takehiro Hanjo based on delegation of authority by a resolution of the Board of Directors after deliberation by a voluntarily appointed Advisory Committee made up of a majority of outside directors within the scope of the amount (a total of up to 63 million yen per month for 27 directors [not including the employee salaries paid to employees-directors]) approved at the Annual Meeting of Shareholders on June 28, 1990. The determination is made in accordance with the rules prescribed by a resolution of the Board of Directors and in consideration of each director’s position and responsibilities, the public standards, and other factors. To enhance directors’ motivation to achieve sustainable growth and increase medium- to long-term corporate value, about 40% of the total remuneration amount is linked to the Company’s business performance. The main indicator used to determine the amount of the portion linked to the Company’s business performance is the profit attributable to owners of parent for the past three years (consolidated profit), with the aim of raising the Company’s short- and medium- to long-term stock value.
The projected and actual amounts of the consolidated profit are shown in the table below. To deliberate on remuneration for this term, eight members (including six outside directors) of the voluntarily appointed Advisory Committee met in May 2019 in compliance with the rules prescribed by a resolution of the Board of Directors. The Committee deliberated on the method of calculating the amount of the portion linked to the Company’s business performance, the payment coefficient, the appropriateness of the remuneration level, and other matters. Based on the deliberations, the representative director and president determined the remuneration amounts, as mentioned above. The overall amount of remuneration for outside directors is fixed because they are in a position independent of the execution of the Company’s business. In addition, directors (excluding outside directors) purchase the Company’s shares through an officers’ shareholding association, to which they contribute a certain amount of money from their monthly remuneration.
The Advisory Committee comprises outside and inside members. From February 2020, all outside directors serve as outside members of the Advisory Committee, while the President and one member appointed by the President according to necessity constitute inside members of the Committee. (The President can appoint up to one member from among other representative directors.) The chairperson of the Committee is elected from among the Committee members.
The above-mentioned policy about the determination of remuneration and other matters has been formulated by the representative director and president within the scope of resolutions adopted by the Board of Directors and the results of deliberations by the voluntarily appointed Advisory Committee.
The amount of remuneration for each Audit & Supervisory Board member is determined through discussions among Audit & Supervisory Board members in consideration of the position, etc. of each Audit & Supervisory Board member within the scope of the amount (a total of up to 14 million yen for five Audit & Supervisory Board members) approved at the Annual Meeting of Shareholders on June 29, 1994. The overall amount of remuneration for Audit & Supervisory Board members is fixed because they are in a position independent of the execution of the Company’s business.
The system of paying retirement bonuses to directors and Audit & Supervisory Board members has been abolished.
■Profit Attributable to Owners of Parent (Consolidated Profit) for the Last Three Years
|Profit attributable to
owners of parent
■Total Amount of Remuneration by Officer Classification and by Type of Remuneration, and Number of Eligible Officers
|Classification||Total amount of
|Total amount of remuneration by type of remuneration||Number of payees|
|Directors (excluding outside directors)||513||308||205||11|
Audit & Supervisory Board Members
(excluding outside members)
|Outside Audit & Supervisory Board Members||32||32||-||3|
- Note: The number of persons and amounts include one internal director, one outside director, and one Internal Audit & Supervisory Board member who retired as of the close of the Company’s 201st General Meeting of Shareholders held on June 20, 2019, and one outside director who retired in February 2020.
- ・The total amount of remuneration for each officer is not stated as there is no officer with a total amount of consolidated remuneration of 100 million yen or more.
- ・There are no employees concurrently serving as officers.
Policy about the selection of candidates for officers and the appointment and dismissal of representative and other executive directors
To ensure its sustainable growth and increase its medium- to long-term corporate value, the Daigas Group has adopted a basic policy of appointing diverse talent as directors and Audit & Supervisory Board members in full consideration of their knowledge, experience, ability, personality, etc. regardless of gender, nationality, etc.
Moreover, we have defined the basic qualifications for inside directors and Audit & Supervisory Board members as having great expertise in our Group’s businesses, including the energy business, and in corporate management and those for outside directors and Audit & Supervisory Board members as having not only independence that enables objective judgment but also extensive knowledge, vast experience, great expertise in their specified field, etc. In addition, we have long since defined the term of a director as one year in order to respond flexibly to changes in our business environment and clarify management responsibility.
Based on the above-mentioned policy, decisions on the selection of candidates for directors and Audit & Supervisory Board members and the appointment and dismissal of representative and other executive directors are made based on deliberations by a voluntarily appointed Advisory Committee made up of a majority of outside directors in order to ensure objectivity and transparency in decision-making. (The system of the voluntarily appointed Advisory Committee is the same as that of the Advisory Committee deliberating on remuneration.)