Corporate Governance

Basic Views on Corporate Governance

As a corporate group that powers “continuous advancement” in consumer life and business, our Corporate Principles aim to create four types of value: “Value for Customers,” “Value for Society,” “Value for Shareholders” and “Value for Employees” by providing various products and services relating to not only the energy business, including natural gas, electricity and LPG, but also its peripheral services and non-energy businesses, such as urban development, materials and information businesses.

Under this Corporate Principles, the Company and its affiliates(the “Group”) will respond appropriately to the exercising of shareholder rights, and work toward maintaining and increasing a sense of trust by dialogue and cooperation with its stakeholders. In addition, the Group will continue to enhance and strengthen corporate governance in order to respond quickly and appropriately to changes in the business environment surrounding the Group, make transparent, fair and decisive decisions, and execute business efficiently and appropriately.

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 decision-making, and implement efficient and appropriate actions.

1 Board of Directors, Directors of the Company

The Board of Directors consists of 10 Directors (including four outside Directors). Its mission is to formulate the Board of Directors Regulations and standards for voting on resolutions in the Board of Directors, make swift and appropriate decisions about important matters that affect the whole Group including subsidiaries and to enhance supervisory capabilities. The Articles of Incorporation stipulate that there shall be no more than 15 Directors. They also direct that appointment of Directors is to take place with a quorum of shareholders possessing at least one-third of shareholder voting rights and by a majority of voting rights held by shareholders present, and that no cumulative voting may be used for appointing Directors. 12 Board of Directors meetings were held in the fiscal year ended March 31, 2021. Meetings discussed the Group’s management plans, the establishment of important organizations, important human resources matters, execution of important investments and agreements greater than a certain amount, and operational status reports etc. from executive Directors. The rate of attendance at meetings was 100%.

2 Executive Officers

The Company has adopted an executive officer system (Executive Officers consist of Executive President, Executive Vice Presidents, Senior Executive Officers, and Executive Officers), 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.

3 Executive Board

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 Executive President, Executive Vice President, Senior Executive Officer, Head of Corporate Headquarters, and Head of Business Unit (including the President of Network Company). In principle, the Executive Board is held three times per year as “ESG Council,” which deliberates on activity plans for reports on activities related to promotion of ESG management.

4 Audit & Supervisory Board, Audit & Supervisory Board Members

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.

5 Auditing Department

The Company established the Auditing Department as a internal audit division. 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.

6 Advisory Committee

The Advisory Committee consists of all the outside Directors (four), the President and, if necessary, a person appointed by the President (the President may appoint up to one person from among the other Representative Directors). From the perspective of ensuring objectivity and transparency in the decisionmaking process, the Advisory Committee deliberates on matters related to the election of candidates for Directors and Audit & Supervisory Board Members, matters related to the selection and dismissal of Representative Directors and other Executive Directors, and matters related to the remuneration of Directors. The committee chairperson is appointed by the committee members.

7 ESG Committee

The Company has established the ESG Committee to coordinate and advance group-wide ESG management, which is chaired by the Head of ESG Promotion, who is the Officer in charge of overseeing the promotion of Group’s ESG management, and is composed of the General Managers, etc. of relevant divisions. The ESG Committee promotes activities relating to the Group's sustainability, including the environment, compliance, social contribution, respect for human rights, and risk management.

8 Cyber Security Committee

The Company has established the Cyber Security Committee to reinforce the cyber security measures of the Group, which is chaired by the Officer in charge of the Information/Communication Systems Department, and is composed of the General Managers, etc. of relevant divisions.

9 DX Committee

In April 2021, the Company established the DX Committee chaired by the President of the Corporate Planning Headquarters and consisting of the General Managers of relevant divisions, etc. The Committee promotes DX (Digital Transformation: a business transformation by utilizing digital technology) for the entire group while coordinating the alignment with business, IT, and financial strategies across the organization.

10 Investment Evaluation Committee

The Committee is chaired by the President of the Corporate Planning Headquarters and composed of the General Managers of relevant divisions, etc. It examines risk and return and assesses investments in excess of a certain amount, and it reports findings to the Executive Board to help make appropriate investment decisions.

■ Corporate Governance Organization Chart
(as of June 25, 2021)

Corporate Governance Organization Chart (as of June 25, 2021)
  • *1 Board of Directors: 10 Directors (6 Internal Directors and 4 Outside Directors)
  • *2 Advisory Committee: 4 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 Officers (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, taking into consideration the evaluation by an external specialist institution, the Board of Directors Secretariat conducted questionnaires and interviews with all Directors and Audit & Supervisory Board Members individually on questions such as matters regarding the operation of the Board of Directors and the Advisory Committee, whether information provision to outside officers were immediate and sufficient, and whether the opinions received from outside officers during evaluation last year (e.g., measures to deepen understanding of proposals at meetings of the Board of Directors, such as the provision of information related to the results of investments and financial strategies) have been addressed, and in light of the results thereof, held discussions with 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.

Directors and Audit & Supervisory Board Members Remuneration

1. Decision Policies on Content of Remuneration, etc. for Each Individual Director

The Company has established a policy on determining the content of remuneration, etc. for each individual Director (hereinafter the “Policy on Determining Remuneration”) as prescribed by the resolution of the Board of Directors after deliberation at a voluntarily appointed advisory committee made up of a majority of the Outside Directors. This policy is summarized as follows.

The system of paying retirement benefits to Directors has been abolished.

<Policy on Determining Remuneration>

  • (a) Basic Approach
    Remuneration for Directors shall be provided in a remuneration system designed to raise motivation for Directors to achieve sustainable growth and mid- to long-term increase in corporate value. Remuneration for Directors other than Outside Directors shall consist of basic remuneration as fixed remuneration, performance-linked remuneration and stock-based remuneration, and remuneration for outside Directors shall only consist of basic remuneration as fixed remuneration, as they have a standpoint independent of business execution.
    Remuneration for Directors shall be determined within the total amount of remuneration approved at the Annual Meeting of Shareholders, after deliberation at a voluntarily appointed advisory committee made up of a majority of the Outside Directors, from the perspective of ensuring objectivity and seeking transparency in the decision-making process.
  • (b) Basic Remuneration
    Basic remuneration shall be monetary remuneration paid on a monthly basis. The amount shall be determined in accordance with the rules prescribed by the resolution of the Board of Directors, while considering such factors as each Director’s position and responsibilities, public standards, and other factors.
  • (c) Performance-linked Remuneration
    Performance-linked remuneration shall be monetary remuneration paid on a monthly basis. The amount shall be determined using the profit attributable to owners of parent for the past three years and the coefficient of ESG indicators achievement in the previous year* as the main indicators to encourage contribution to short-term and mid- to long-term increases in corporate value.
  • (d) Stock-based Remuneration
    Restricted stock shall be granted at a certain time every year for the purpose of strengthening the linkage between remuneration and mid- to long-term increase in corporate value and further promoting sharing of value with the shareholders. The number of shares to be granted shall be determined with consideration for the positions and responsibilities of each Director and stock prices, etc.
  • (e) Ratio by Type of Remuneration
    For Directors other than Outside Directors, the standard ratio of basic remuneration, performance-linked remuneration, and stock-based remuneration should be 5:4:1. Remuneration for Outside Directors shall fully consist of basic remuneration.
  • (f) Procedures for Determining Remuneration
    The content of remuneration for each individual Director shall be made in accordance with the rules prescribed by the resolution of the Board of Directors, and, after deliberation at the voluntarily appointed advisory committee, shall be determined by the resolution of the Board of Directors. However, the content of monetary remuneration may be determined by the Representative Director and President based on delegation of authority by the resolution of the Board of Directors.
  • * The change to add the underlined part was resolved at the Board of Directors meeting held on December 23, 2021. The system will be applied to compensation from July 2023 onwards, which is paid based on FY2023.3 results.

2. Resolution of the Annual Meeting of Shareholders on Remuneration, etc. of Directors

The amount of remuneration for Directors was approved at the 203rd Annual Meeting of Shareholders held on June 25, 2021 to be up to 57 million yen per month for monetary remuneration and up to 72 million yen per year for stock-based remuneration. The number of Directors at the end of said Annual Meeting of Shareholders was ten.

3. Delegation of Decision of Content of Remuneration, etc. for Each Individual Director

The amount, timing and method of remuneration payment for each Director is determined by Representative Director and President (Takehiro Honjo until December 2020 and Masataka Fujiwara from January 2021) based on delegation of authority by a resolution of the Board of Directors. The Company has delegated the above authority to the Representative Director and President, as the position is considered to be the best suited to determine the contents of remuneration, taking into account the status of the execution of duties by each Executive Director while maintaining a comprehensive view of the Company’s performance.

In addition, to ensure that the authority of the Representative Director and President is exercised appropriately, the delegation of authority is conducted so that the remuneration amount, etc. for each individual Director is determined in accordance with the Policy on Determining Remuneration and the rules prescribed by the resolution of the Board of Directors, while considering such factors as each Director’s position and responsibilities, public standards, and the Company’s business performance, after deliberation at a voluntarily appointed advisory committee made up of a majority of the Outside Directors. As the amount of remuneration, etc. for each individual Director is determined through such a procedure, the Board of Directors has judged that the content of remuneration, etc. for each individual Director for the fiscal year under review is in line with the Policy on Determining Remuneration.

4. Resolution of the Annual Meeting of Shareholders and Decision on Remuneration, etc. for Audit & Supervisory Board Members

The amount of remuneration for Audit & Supervisory Board Members was approved at the 176th Annual Meeting of Shareholders held on June 29, 1994 to be up to 14 million yen per month. The number of Audit & Supervisory Board Members at the end of said Annual Meeting of Shareholders was five.

The amount of remuneration for each Audit & Supervisory Board Member shall be determined through discussions among Audit & Supervisory Board Members within this amount, and consisting only of fixed remuneration because they are assigned the role of auditing the execution of duties by Directors from a standpoint independent of the performance of the Company’s businesses, and taking into consideration the position, etc. of each Audit & Supervisory Board Member.

The system of paying retirement benefits to Audit & Supervisory Board Members has been abolished.

5. Details of Activities of the Board of Directors and Advisory Committee in the Process for Determining the Amount of Remuneration, etc., for Officers During the Fiscal Year Under Review

With regard to matters related to the remuneration of officers, at meetings held in May 2020, December 2020, and February 2021, the Advisory Committee deliberated matters such as the appropriateness of performance-linked remuneration calculation methods, the payment coefficient, and remuneration levels, which were then decided by the Representative Director and President as mentioned above.

■ Profit Attributable to Owners of Parent (Consolidated Profit) for the Last Three Years

Term 200th 201st 202nd
Fiscal year FY2018.3 FY2019.3 FY2020.3
Profit attributable to owners of parent million yen Plan 42,500 46,500 55,000
Results 37,724 33,601 41,788

■ Total Amount of Remuneration by Officer Classification and by Type of Remuneration, and Number of Eligible Officers

Classification Total amount of remuneration
(million yen)
Total amount of remuneration by type of remuneration Number of payees
Fixed
(million yen)
Performance-linked
(million yen)
Directors (excluding outside directors) 386 235 150 10
Audit & Supervisory Board Members
(excluding outside members)
69 69 - 3
Outside directors 29 29 - 3
Outside Audit & Supervisory Board Members 32 32 - 3
  • Note: The four inside directors and one Audit & Supervisory Board member who resigned at the time of the conclusion of the 202nd General Meeting of Shareholders held on June 26, 2020 are counted in the number of directors and in terms of the amount of remuneration shown above.
  • ・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, career, or age, 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, corporate management, financial accounting, marketing, legal affairs and risk management, etc. and those for outside directors and Audit & Supervisory Board members as having not only independence that enables objective judgment but also extensive knowledge, wealth of experience, great expertise in their specified field, etc. As such, the Board of Directors as a whole has a well-balanced composition. 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.)

■ The skills of Board of Directors (Skills Matrix)

Name Position Fields of Expertise and Experience
Corporate
Management
Marketing Technology
/R&D
DX * Global
Management
ESG Finance /
Accounting
Legal /
Risk
Management
Human
Resources
Development
Takehiro
Honjo
Chairman and Director
Masataka
Fujiwara
Representative Director and President
Tadashi
Miyagawa
Representative Director
Takeshi
Matsui
Representative Director
Takayuki
Tasaka
Representative Director
Fumitoshi
Takeguchi
Director
Hideo
Miyahara
Outside Director
Kazutoshi
Murao
Outside Director
Tatsuo
Kijima
Outside Director
Yumiko
Sato
Outside Director

* DX stands for digital transformation.


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