Basic Policy and Structure
Basic Governance Approach
The Sapporo Group has enacted the Basic Policy on Corporate Governance for the purpose of specifying its thinking and operational policy regarding corporate governance with the goal of attaining sustained growth and enhanced 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.
As part of the policy, the Group's basic philosophy is to regard 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.
Corporate Functions and Internal Control Relationships
*2 Group Sustainability Committee: Chaired by President & CEO
Board of Directors
The Board of Directors performs a supervisory role with regard to Group management.
It makes decisions on statutory matters and important matters related to business execution as stipulated by the Board’s regulations. The Board of Directors also elects and supervises the business execution of the representative director, president, Group operating officers.
【About Independent Outside Directors】
Five of the ten members of the company’s Board of Directors are independent outside directors. All three have submitted notification to the Tokyo Stock Exchange and the Sapporo Securities Exchange of their independent director status, as stipulated by the exchange regulations. The independent outside directors are expected to objectively advise and supervise the management team from a neutral standpoint. At the 13 Board of Directors meetings held in 2021, the independent outside directors gave advice and suggestions regarding various issues that were discussed from an objective viewpoint which was independent from that of the management.
Nominating and Compensation Committees
Although Sapporo Holdings is a Company with an Audit & Supervisory Committee*, it has also established a Nominating Committee and a Compensation Committee with the goals of increasing transparency with respect to the nomination and remuneration of directors, and of preserving a sound management structure. Both committees are comprised of a total of seven members—all independent outside directors (excluding directors who are Audit & Supervisory Committee members), all directors who are Audit & Supervisory Committee members, and the president and representative director—while the chair of each committee is selected from one of the independent outside directors (excluding directors who are Audit & Supervisory Committee members). In fiscal 2021, the Nominating Committee held four meetings and the Compensation Committee held three meetings, both of which were attended 100% of the time.
* The Committee consists of seven members, including all independent outside directors (excluding those who are members of the Audit Committee), all directors who are members of the Audit Committee, and the President (or the Chairman of the Board when the President is selected from among the Group Executive Officers).
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.
Audit & Supervisory Board
Sapporo Holdings uses a Company with an Audit & Supervisory Committee structure, which has the function of auditing and supervising the performance of duties by directors, to increase management transparency and efficiency as well as further enhance corporate governance, and at the same time, further enhance corporate value by enhancing the management oversight function with the aim of achieving management goals.
【About Independent Outside Directors】
Sapporo Holdings’ Audit & Supervisory Committee is comprised of three members (two independent outside directors who are Audit & Supervisory Committee members and one company director who is a full-time Audit & Supervisory Committee member). Each of the two independent outside directors who are Audit & Supervisory Committee members is an independent director as stipulated under the regulations of the Tokyo Stock Exchange and the Sapporo Securities Exchange, and is expected to audit the performance of duties by directors from an objective and neutral standpoint. At the 13 Board of Directors meetings held in 2021, the independent outside director, who is also an Audit Committee member, made appropriate recommendations and advice from the perspective of the legality, appropriateness, and appropriateness of deliberations and decision-making. At the 25 meetings of the Audit Committee, he actively exchanged opinions with other Audit Committee members and made comments as necessary for deliberation of proposals.
| Board of Directors | Audit and Supervisory Committee | Nominating Committee | Compensation Committee | ||
|---|---|---|---|---|---|
| Number of meetings | 13 | 25 | 4 | 5 | |
| Attendance rate | All members | 100% | 100% | 100% | 100% |
| Outside Directors | 100% | 100% | 100% | 100% | |
Standards and Policies Regarding the Independence of Outside Directors
Sapporo Holdings’ Nominating Committee requires that candidates for outside director meet the company’s Standards for Independence for Outside Directors. They are also required to have a strong background, track record, and insight into corporate management or certain specialist fields that will enable them to offer accurate proposals and advice on the company’s management issues. Candidates for Outside Audit & Supervisory Board member are required to meet the company’s Standards for Independence for Outside Directors. For the Standards for Independence for Outside Directors, see the Appendix - Basic Policy on Corporate Governance.
Compensation for Directors
The amount of individual remuneration for each director (excluding directors who are members of the Audit Committee) is determined by the Compensation Committee based on a resolution of the Board of Directors.
The amount of remuneration for each director who is a member of the Audit Committee is determined within the maximum amount of remuneration resolved at the General Meeting of Shareholders and in accordance with the criteria determined by the Audit Committee.
At the Board of Directors meeting held on February 10, 2021, the Board of Directors approved a policy for determining the details of compensation, etc. for each individual director (hereinafter referred to as the "Policy for Determining the Details of Compensation, etc. for Directors"), which was revised at the Board of Directors meeting held on March 30, 2021. A summary of the Policy on Determination of Details of Remuneration, etc., for Directors and Corporate Auditors is as follows.
1. Basic Policy
- The remuneration of the Company's Directors (excluding Directors who are members of the Audit and Supervisory Board, and the same shall apply hereinafter) shall be a combination of cash and stock-based remuneration, and shall be linked to the Company's business performance and medium- to long-term corporate value, with the aim of contributing to the sustainable growth of the Company. The Company's basic policy is to set the remuneration of individual Directors at an appropriate level in consideration of their respective responsibilities.
- Remuneration for executive directors shall consist of cash remuneration and remuneration in the form of the Company's stock.
- Monetary remuneration shall consist of (1) standard remuneration (fixed remuneration) and (2) performance-linked remuneration, within the limit of the maximum amount of remuneration resolved at the General Meeting of Shareholders.
- The company's stock-based remuneration shall be composed of performance-linked stock-based remuneration as a base.
- Outside directors shall be paid only the base remuneration.
2. Base Remuneration
The base remuneration for the Company's Directors shall be a fixed monthly amount in cash. The amount of the base remuneration shall be determined by taking into consideration the position, the world standard, and the Company's business performance, as well as other factors, in a comprehensive manner.
3. Performance-linked Remuneration
Performance-linked remuneration shall be a monetary performance-linked remuneration based on the execution of duties in the previous fiscal year. The amount shall be calculated for each position according to the degree of achievement of the sales revenue and business profit* targets for each fiscal year, and shall be added to the base remuneration and paid monthly, taking into account each director's evaluation.
* Business profit means the profit index calculated by deducting cost of sales and selling, general and administrative expenses from sales revenue (the same shall apply hereinafter).
4. Share-based Compensation
The Company's stock-based compensation shall be performance-linked stock compensation, with points calculated for each position (position) based on the degree of achievement of the sales revenue and business profit targets for each fiscal year, and the number of the Company's shares corresponding to the number of points granted shall be granted to each Director after his/her retirement. Details shall be stipulated in the Directors' Stock Benefit Regulations to be separately stipulated.
5. Percentage Ratio
The approximate ratio of base remuneration, performance-linked remuneration, and treasury stock remuneration shall be 7:2:1 when the degree of achievement of performance targets is the highest.
6. Determination of Remuneration
Decisions on the details of individual remuneration, etc. of Directors shall be delegated to the Compensation Committee.
* Details regarding the Compensation Committee are as described above.
The compensation amounts for fiscal 2021 are outlined below.
| Classification | Payment recipient | Payment amount (Millions of yen) |
|---|---|---|
| Directors (excluding Audit & Supervisory Board Members, including Outside Directors) | 8 (4) | 158 (29) |
| Director (Audit and Supervisory Committee Member, including Outside Director) | 3 (2) | 42 (19) |
| Total (including outside officers) | 11 (8) | 200 (48) |
Note:
1. The remuneration limit for directors (excluding directors who are Audit & Supervisory Committee members) was set to an annual amount of ¥500 million (within \50 million for outside directors, and excluding the employee part of those in employee-directorship positions) in accordance with a resolution of the 96th Ordinary General Meeting of Shareholders held on March 27, 2020.
The limit for directors who are Audit & Supervisory Committee members was set to ¥84 million in accordance with a resolution of the 96th Ordinary General Meeting of Shareholders held on March 27, 2020.
2. 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.
Internal Audits
Under instructions from the president and representative director or the Audit & Supervisory Committee, the Group Audit Department, an internal auditing organization independent of the executive chain of command, audits overall operations of the Company and its subsidiaries with regard to the status of compliance with laws and regulations, the articles of incorporation, and internal regulations. The audit reports are circulated to the president and representative director, Audit & Supervisory Committee, and relevant parties.
Upgrading the Internal Control System
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 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.
For details about the status of our company’s corporate governance, please refer to our annual securities report and the corporate governance report submitted to the Tokyo Stock Exchange and the Sapporo Securities Exchange.
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Basic Policy and Structure
- Risk Management
- Promoting Compliance