Corporate Governance Systems
Basic Approach to Corporate Governance
Resona Holdings, Inc. (hereinafter the “Company”) has established the “Basic Corporate Governance Policy” to clarify its basic approach to and framework and operation policy for corporate governance, with the aim of facilitating the sustained growth and improvement of the corporate value of the Resona Group (hereinafter the “Group”) over the medium and long terms.
Basic Approach to Corporate Governance
The Company, as the holding company of the financial services group, including Resona Bank, Saitama Resona Bank and Kansai Mirai Financial Group, shall maximize the corporate value of the Group.
The Company shall respect all stakeholders, including shareholders, and aim at achieving excellent corporate governance so that the Company can make decisions rapidly and decisively in response to environmental changes, including economic and social changes.
The Company shall establish the “Corporate Mission (Resona Group Management Philosophy),” a general philosophy of management of the Group, and the “Resona Way (Resona Group Code of Conduct),” a specific form of the philosophy, under which the Group shall implement business operations in a concerted manner.
The Company’s Corporate Governance System
Based on the above-mentioned basic approach to corporate governance, the Company shall clearly separate the management supervision function from the business execution function, and adopt the form of “company with a nominating committee, etc.” as a corporate governance system because the Company determines that this system can enhance the supervision and decision-making functions of the Board of Directors.
The Company shall fully utilize external views in its business management and secure transparency and fairness in management by making the Board of Directors, on which highly independent outside directors constitute a majority, and the three committees (the Nominating Committee, the Compensation Committee and the Audit Committee) fulfill their functions.
The Company shall ensure the autonomy of its subsidiaries and instruct the subsidiaries to manage their business activities based on the above-mentioned basic approach to corporate governance so that the Group will grow together with local communities.
Basic Corporate Governance Policy
Group Corporate Governance Framework
Activities at Resona Holdings
Board of Directors
The Board of Directors fully ensures that management engages in substantial discussion in fulfilling its responsibilities of making decisions about important Group management issues and supervising the execution of business activities by executive officers and directors. The Board of Directors consists of eleven directors, six of whom are outside directors, and the numbers of male and female directors are eight and two, respectively. One of the specific features of the Committees Governance Model as a company with a nominating committee, etc. is that while the Board of Directors makes decisions regarding important management issues and supervises the execution of operations, clearly defined roles give executive officers responsibility for the execution of operations, thus strengthening the Board of Directors’ supervisory and decision-making functions. In fiscal 2018, the Board of Directors met 16 times. The presidents of Resona Bank and Saitama Resona Bank became executive officers of Resona Holdings in order to ensure enhanced supervisory functions of the holding company vis-a-vis Resona Bank and Saitama Resona Bank．
The Nominating Committee comprises three committee members, with one member serving as the committee chairman and all of the members being outside directors. The committee makes decisions regarding proposals for the selection and dismissal of directors that are submitted to the shareholders meeting, based on the specific qualities that the Group should seek in its directors as well as the "Standards for Electing Director Candidates" both of which have been discussed and decided at the committee's meetings. This committee met 13 times in fiscal 2018. In June 2007, The Nominating Committee decided to introduce a succession plan that serves as a mechanism to ensure that the most appropriate candidates fill top management roles and responsibilities with the aim of accelerating the Group’s management reform and realizing the enhancement of corporate value on a sustainable basis. The status of the implementation of the succession plan is examined by the Nominating Committee and reported to the Board of Directors.
The Audit Committee comprises three directors, including two outside directors, one of whom serves as the chairman, and another director who serves full time.
In addition to auditing the execution of duties by executive officers and directors, this committee makes decisions regarding proposals for the selection and dismissal of accounting auditors, which are submitted to the General Meeting of Shareholders.
The Company maintains an auditing structure that facilitates frequent and flexible collaboration between the Audit Committee and the Internal Audit Division. Furthermore, the committee works with the Compliance Division, the Risk Management Division, the Finance and Accounting Division, and other divisions to supervise and verify internal control systems and make the necessary responses, urging executive officers and other responsible personnel to make essential improvements. This committee met 13 times in fiscal 2018.
The Compensation Committee comprises three directors, including three outside directors, one of whom chairs the committee. The committee makes decisions regarding policies for compensation and other benefits for individual directors and executive officers as well as the compensation and other benefits for specific individuals. In addition, the committee considers the role a director compensation system should play in enhancing the Group's corporate value. In fiscal 2018, the committee met 5 times. Please note that the committee chose to eliminate the directors’ retirement benefit system in fiscal 2004 and introduced a performance-based compensation system. In addition, in fiscal 2017 the committee adopted a compensation system that grants Performance Share Units. The members of the company’s Compensation Committee are not members of the compensation committees of other companies.
Resona Holdings has set up an Executive Committee as a body to deliberate and report on generally important management items and important matters in the execution of operations to support the decision-making process in the execution of operations. The Executive Committee consists of representative executive officers as well as executive officers and employs serious debate to ensure the transparency of decisions regarding significant management issues. In fiscal 2018, this committee met 43 times.
Internal Auditing Council
As a body to deliberate and report on important matters related to internal audits, Resona Holdings has established an Internal Auditing Council that is independent from the Executive Committee, which serves as a body for the execution of operations. The council is composed of all representative executive officers, the executive officer in charge of the Internal Audit Division, and a general manager of the Internal Audit Division. Contents of deliberations and reports are reported to the Board of Directors and the Audit Committee.
The council met 14 times in fiscal 2018 and, in addition to discussing the internal auditing plan, it reported on the results of internal audits.
Other Matters Related to Corporate Governance
Self-Evaluation of the Board of Directors
The Company’s Board of Directors conducts an annual analysis and evaluation of its effectiveness as a whole based on the opinions of each director with regard to their assessment of the operations and functionality of the Board as well as matters discussed at the Board of Directors meetings.The Board of Directors utilizes the results of the evaluation to make improvements in its operations and to enhance its supervisory and decision-making functions.
The fiscal 2018 self-evaluation concluded that the operations of the Board were "Adequate" and the overall effectiveness of the Board of Directors was confirmed.
In addition, the Board made improvements in comparison with fiscal 2017 with regard to ongoing issues associated with the sufficiency of information being provided to outside directors, agenda items presented at Board meetings, the content of reporting to the Board of Directors and the better utilization of free discussion sessions. However, the Board determined that it needs to make further improvements regarding the clarification of issues to be discussed in light of medium-to-long-term management challenges and maintaining even more effective discussion vis-à-vis the overall strategies for the Resona Group.
The Company’s Board of Directors will address these and other issues while enhancing the content of discussions through the improvement of its operations based on such input as the opinions of individual directors.
Resona Succession Plan
Aiming for sustained improvements in corporate value, the Group introduced a succession plan in June 2007 that serves as a mechanism to ensure the successions of the president and other officers roles and responsibilities at the Company, Resona Bank and Saitama Resona Bank and secure the transparency of the process of selecting and nurturing officers.
The scope of the succession plan covers various candidates, from those who are candidates for the president to those who are new candidates for directorships. The process of selection and nurturing successors is carried out steadily according to a schedule, matching qualified candidates to the appropriate rank. The Company retains the objectivity of this process by drawing on the advice of external consultants. Evaluations of candidates undergoing the process are reported to the Nominating Committee. In addition to receiving reports on candidate evaluations, members of the Nominating Committee come into direct contact with candidates as part of the process, evaluating candidates’ characters from various aspects.
The activities of the Nominating Committee are reported to the Board of Directors, of which outside directors are the majority, and are discussed from diverse perspectives. Through the entire process, which is highly transparent, each potential director’s capabilities and competencies are closely studied and enhanced where appropriate.
In addition, Resona Holdings has set forth seven competencies that define the ideal candidate for the position of director. By ensuring that the directors in the Nominating Committee as well as the other directors share common ideals regarding candidates, the Company clarifies standards for the evaluation and nurturing of successors and thereby aims to realize impartiality during the entire process.
Overview of Compensation Policy for Directors and Executive Officers
The Company’s compensation policy is as follows.
- Remuneration for directors and executive officers is determinedby the Compensation Committee following objective and transparent procedures
- Compensation systems for directors are focused on rewarding the performance of their primary duty of providing sound supervision of executive officers
- Compensation systems for executive officers are designed to maintain and boost their motivation to carry out their business execution duties, with the performance-based variable portion accounting for a significant proportion of their total compensation. In addition, with the aim of promoting the Group’s sustainable growth and strengthening incentive systems for executive officers on a medium-to-long-term basis to enhance its corporate value, the Company has adopted Performance Share Units.
1. Compensation System for Directors
Compensation for directors consists of position-based compensation and a duty-based additional portion in cash. In order to further ensure sound supervision of executive officers, performance-based compensation was abolished as of June 2017.
2. Compensation System for Executive Officers
Compensation for executive officers consists of position-based compensation and performance-based compensation. Performance-based compensation comprises cash compensation determined on the basis of the Company’s annual operating results as well as Performance Share Units, which reflect medium-to-long-term results. In order to maintain and increase motivation to fully carry out business, a significant percentage of compensation is accounted for by performance-based compensation (details follow). Furthermore, the composition of compensation paid to executive officers who take senior positions places a greater emphasis on the performance-based variable portion. Any executive officer holding a concurrent position as director is paid only the amount of compensation due an executive officer.
|Performance-based (Standard amount)
|Performance share units
Management Supervision of Group Companies
Resona Holdings, as the Group holding company, supervises the management of its Group companies, with the objective of raising corporate value. The Company has established a system for managing and controlling Group companies, clearly identifying items for which prior discussion with Resona Holdings is necessary and items that require reporting.