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Home > Investor Relations > Management Information > Corporate Governance

Corporate Governance

Basic Governance Approach

With the goal of attaining sustained growth and enhancement of corporate value over the medium-to-long term, and in light of the purport and spirit of the "Corporate Governance Code" set forth in the Listing Rules of the Tokyo Stock Exchange, the Sapporo Group has enacted a "Basic Policy on Corporate Governance" for the purpose of specifying its thinking and operational policy regarding corporate governance.
The Sapporo Group regards strengthening and enhancing corporate governance as one of its top management priorities. The Group is working to clarify supervisory, business execution and auditing functions throughout the Group under the holding company framework. The Group is also working to strengthen management supervisory functions to increase management transparency and achieve management goals. To this end, the Group employs the following governance system.

Board of Directors

The Board of Directors performs a supervisory role and makes decisions on statutory matters and important matters relating to business execution stipulated by the Board's regulations. The Board of Directors also elects and supervises the business execution of the Representative Director, the President, the Group operating officers, and other key personnel.

[About Independent Outside Directors]

Three of the 9 members of the Board of Directors are Independent outside directors. All three have submitted notification to the Tokyo Stock Exchange of their independent director status as stipulated by the exchange regulations, and are expected to objectively advise and supervise the management team from a neutral standpoint. The Independent outside directors offered advice and suggestions regarding the screening and selection of agenda items from their independent and objective standpoint at the 12 meetings of the Board of Directors held in 2016.

Group Operating Officers

The President controls business execution across the entire group based on the resolutions of the Board of Directors. The group operating officers, under the direct authority of the President control business execution in the main business segments.

Audits by the Audit & Supervisory Board Members

Sapporo Holdings Ltd. uses the Audit & Supervisory Board Member system, in which Audit & Supervisory Board Members, who are completely independent from the Board of Directors, audit the job performance of directors from an independent standpoint. The company has therefore established an Audit & Supervisory Board. In accordance with audit policy and allocated auditing duties decided by the Audit & Supervisory Board, each Audit & Supervisory Board Member important meetings such as the Board of Directors meeting and the Management Council, reads over requests for approval, audits subsidiaries, and performs other related duties. The Audit & Supervisory Board Members also receive an explanation of the audit plan from the independent auditors and the independent auditors' report.
This system allows proper auditing of the execution of duties by directors.

[About Independent Outside Audit & Supervisory Board Members]

Sapporo Holdings has four Audit & Supervisory Board Members, two of whom are Independent outside Audit & Supervisory Board Members. Both Independent outside Audit & Supervisory Board Members have submitted notification to the Tokyo Stock Exchange of their independent auditor status as stipulated by the exchange regulations, and are expected to audit the duties executed by the directors from an objective and neutral standpoint. At the 12 meetings of the Board of Directors held in 2016, the Independent outside Audit & Supervisory Board Members offered input where fitting to preserve the propriety and appropriateness of decisions by the directors. Similarly, the Independent outside Audit & Supervisory Board Members provided input where needed on the screening and selection of agenda items and other matters at the 12 meetings of the Audit & Supervisory Board held during the year.

Nominating and Compensation Committees

Although Sapporo Holdings uses the Audit & Supervisory Board Member system, it has also established a Nominating Committee and a Compensation Committee , as the Board's advisory bodies, with the goals of increasing transparency with respect to the nomination and remuneration of directors and preserving a sound management structure. The one internal and three outside directors form the core membership of both committees. The committee chair is selected by the outside directors.

Compensation for Directors and Audit & Supervisory Board Members

Compensation for directors is decided within remuneration limits set by the Annual Meeting of Shareholders. Compensation consists of a base salary for each director, determined by the duties performed, and that may, based on predetermined criteria, be adjusted in line with job performance in the previous fiscal year. Compensation for Audit & Supervisory Board Members is also decided within remuneration limits set by the Annual Meeting of Shareholders, and consists of a base salary for each Audit & Supervisory Board Member calculated in accordance with standards decided by the Audit & Supervisory Board.
No bonuses for directors or Audit & Supervisory Board Members were paid in 2016, nor were any retirement benefits or stock options.
Compensation amounts in 2016 were as follows.

Executive classification Total amount of compensation
(¥ Million)
Total compensation by type
(¥ Million)
Number of eligible directors and Audit & Supervisory Board Members
Base salary Bonuses Retirement benefits
Directors (Excluding Independent outside directors) 134 134 - - 8
Independent Outside directors 25 25 - - 3
Audit & Supervisory Board Members (Excluding Independent outside Audit & Supervisory Board Members) 32 32 - - 3
Independent Outside Audit & Supervisory Board Members 16 16 - - 2
Total 208 208 - - 16

Notes:

  1. 1.Compensation of ¥19 million was paid by consolidated subsidiaries to 3 directors (excluding Independent outside directors).
  2. 2.Salary of ¥31 million was paid to 4 director (excluding Independent outside directors), separately from the base salary for directors shown in the above table. This amount corresponds to the portion of salary for key personnel paid to this individual, who concurrently serves as key personnel and director.
  3. 3.The total amount of Directors' remunerations is¥500 million (including¥50 million for independent outside directors) per year according to the resolution passed at the 93rd Ordinary General Meeting of Shareholders held on March 30, 2017 (however, excluding compensation from consolidated subsidiaries and the portion of salary paid as salary for key personnel).
  4. 4.The total amount of Audit & Supervisory Board members' remunerations is¥84 million per year according to the resolution passed at the 83rd Ordinary General Meeting of Shareholders held on March 29, 2007.
  5. 5.The Company abolished its retirement benefit system plan for directors and Audit & Supervisory Board Members at the close of the 80th Annual Meeting of Shareholders held on March 30, 2004.

In addition to the abovementioned payment amounts, Sapporo Holdings has introduced a performance-linked, stock-based compensation system (Board Benefit Trust, or BBT) for directors (excluding outside directors), and contributed ¥445 million (over three business years) in accordance with the officer stock benefit rules stipulated by the system. The system is separate from the abovementioned directors compensation, in accordance with a resolution of the 92nd Ordinary General Meeting of Shareholders held on March 30, 2016. The system applies to group operating officers of the Company, including directors (excluding outside directors), and some of the directors of the Company's subsidiaries, with the total number of these as of December 31, 2016 being 27 persons.

Internal Audits

Under instructions from the Representative Director,Sapporo Holdings has established a Group Audit Department as an internal auditing organization independent of the executive chain of command. The Group Audit Department performs internal audits across the entire Group, including operating companies and their subsidiaries. The Group Audit Department and the Audit & Supervisory Board Members meet regularly to exchange views on the results of the internal audits, the status of internal control and other related matters. The internal audit report of the Group Audit Department is read by the Audit & Supervisory Board Members as part of the information that they share.

Upgrading the Internal Control System

In order to ensure thorough implementation of the basic policies decided by the Board of Directors and carry out ongoing development and strengthening of systems across the entire Group, the Board of Directors takes responsibility for appointing directors with specific responsibilities and promoting specific measures. Moreover, the Guidelines on the Construction of Internal Control Systems at Sapporo Group have been enacted in order to set out specific matters in relation to internal control systems at the Group, and these guidelines are used to confirm the level of progress being made in individual measures and to promote collaboration.

Risk Management

The Group manages risks relating to Sapporo Holdings and its subsidiaries and prepares crisis management measures. To achieve a more robust risk management structure for the entire Group the Company has formulated basic policies and management systems for Group risk management, as well as crisis management regulations. Specifically, Sapporo Holdings and its subsidiaries upgrade and develop systems for managing risks associated with important decisions made during business execution or risks inherent to it, and systems for managing crisis situations that may arise. These efforts are governed by the basic policies for the development of internal control systems.

Compliance

The Group has set out the Sapporo Group Code of Business Conduct to provide a solid set of ethical guidelines for the conduct of all executives and employees. The Group CSR Promotion Committee has created a Group-wide compliance system and established a Whistle-Blower's Hotline and Helpline to help with prevention and early detection of misconduct. In addition, the Group Audit Department, which is an internal auditing body that is independent of the executive chain of command, audits the general business operations of Sapporo Holdings and its subsidiaries to ensure compliance with laws and regulations, the Company's Articles of Incorporation and internal rules.

*This English translation is an abridged version of the original contents of the Annual Securities Report in Japanese. In the event of any discrepancy, the Japanese version prevails.