- Basic Views
- Initiatives to Strengthen Corporate Governance
- Evaluation of effectiveness of the Board of Directors
- About Outside Officers
- Policy on Compensation of officers and Compensation System for officers
- Internal Audit and Audit by Audit & Supervisory Board Members
- Status of Improvement and Operation of the Internal Control Systems
-
Policy on Governance related to Listed Subsidiaries
(Protection of Rights of Minority Shareholders)
Basic Views
Corporate Governance
As a bank that owns and operates an ATM network that manages deposits from a large number of customers and has a nature similar to that of public infrastructure, the Bank recognizes that ensuring disciplined corporate management is vital in responding to social trust and seeks to ensure effective corporate governance. This is achieved by maintaining and improving corporate governance and compliance systems to ensure transparent, fair and swift managerial decision making; clarifying the roles and responsibilities of executives and employees; strengthening management oversight functions; and ensuring equitable operations. The Bank adopts the organizational form of a Company with Audit & Supervisory Board. At the Board of Directors, the Bank ensures effective corporate governance through decision making by Directors with executive authority over operations who are well versed in the Bank’s operations and Outside Directors who have considerable experience and insight in their areas of expertise as well as through audits by the Audit & Supervisory Board Members.
■ Corporate Governance Guidelines
In order to put the Basic Policy on Corporate Governance into practice, we have established the Corporate Governance Guidelines to clarify what we should do specifically and to fulfill our accountability to shareholders.
■ Corporate Governance Report
We submit a Report on Corporate Governance describing our corporate governance system to the Tokyo Stock Exchange and post it on our website.
Corporate Governance System Overview
■ Independence of Officers
■ Main Items and Descriptions
■ Corporate Governance Structure
- ①Board of Directors
-
The Bank’s Board of Directors has consisted of eight Directors, including five Independent Outside Directors. The Board of Directors meets, in principle, once a month to decide the Bank’s basic management policies and important operational issues and to supervise the execution of duties by Directors with executive authority over operations and Executive Officers.
- Major agendas
-
- ・Business strategy based on the Medium-term Management Plan
- ・Situation and future plans of overseas businesses
- ・Initiatives for promoting sustainability (including endorsement of TCFD)
- ・Capital increase for subsidiaries and other investments in business
- ②Nomination & Compensation Committee
- As an advisory body to the Board of Directors, the Bank has established the Nomination & Compensation Committee, chaired by an Independent Outside Director in order to supplement functions of the Board of Directors. The committee is delegated by the Board of Directors to recommend candidates for Director to be put on the agenda at a General Meeting of Shareholders, to recommend candidates for Executive Officer to be put on the agenda at a Board of Directors meeting, and to supervise a plan on successors to the position of Director, etc.
- ③Audit & Supervisory Board
- The Bank’s Audit & Supervisory Board has consisted of four Audit & Supervisory Board Members, including two Independent Outside Audit &Supervisory Board Members. The Audit & Supervisory Board meets, in principle, at least once a month to receive reports regarding important auditing-related issues and deliberate and make decisions thereof. The Audit & Supervisory Board convenes with Representative Directors, the Internal Audit Division and the Accounting Auditor on a regular basis to exchange opinions and make requests as necessary on issues to be addressed by the Bank, the status of improvements to the Audit & Supervisory Board Members’ auditing environment and important auditing-related issues.
- ④Executive Committee
- In principle, the Executive Committee meets on a weekly basis to deliberate the execution of important operations, including business plans; acquisition and disposal of assets; credit provision-related issues; borrowing of money and payment of expenses; credit management issues; rewards and sanctions for employees; issues related to employees’ working conditions and benefits; the establishment, change and abolition of the organization; and the formation, revision and elimination of rules and regulations, in addition to conferring on issues to be deliberated at the Board of Directors meetings in advance. The Bank has adopted an executive officer system, and the Executive Committee comprises Executive Officers and others nominated by the Board of Directors.
Initiatives to Strengthen Corporate Governance
For the sustainable growth and the improvement of corporate value, the Bank has positioned strengthening governance as a key management issue. In FY2021, amid the significant changes in environments surrounding companies, we put emphasis on further increasing effectiveness of the Board of Directors in order to carry out the growth strategies toward the realization of the Purpose, and promote sustainability management centering on resolution of social issues. As a place for more strategic discussion, which we regarded as an issue, “Officers Discussion” is periodically held to conduct discussion under themes which would contribute to management. In FY2022, with a new Outside Director added, we will enhance independence of the Board of Directors, and strive to make governance more effective with the Board of Directors composed of diverse members.
Major initiatives
- 1.Expanded diversity of members of the Board of Directors by adding one Outside Director with global experience in order to incorporate an outside perspective in management.
- 2.To further revitalize discussion from a new perspective in the Nomination & Compensation Committee, reappointed Outside Directors as new committee members.
- 3.Strived to eliminate asymmetric information by expanding the scope of personnel to explain operations at the Board of Directors so that personnel closer to a site can explain. At the same time, provided opportunities to directly talk with personnel to be future executives.
Evaluation of effectiveness of the Board of Directors
The Seven Bank has annually conducted “evaluation of effectiveness of the Board of Directors” since FY2015. In FY2021, a questionnaire survey was conducted for Directors and Audit & Supervisory Board Members in relation to evaluation, etc. for items measured at a fixed point such as operation of the Board of Directors, prior explanations, and contents of deliberations, as well as improved items for a single year. The results were reported to and deliberated at the Board of Directors.
Results of the evaluation for FY2021
The Bank’s Board of Directors continues to be operated appropriately under a well-balanced structure featuring diverse knowledge and expertise. And it was confirmed that the Board of Directors has been fulfilling both its decision-making and supervisory functions as all Directors share its roles and responsibilities, while incorporating the perspective of Independent Outside Directors, thereby ensuring its effectiveness. Details of initiatives for specific issues are as follows.
Issues in FY2020 | Details of initiatives in FY2021 |
---|---|
Advance preparation | To deepen understanding and encourage more active discussion, early provided information to participants in a Board of Directors meeting, and enhanced contents. |
Themes for discussion at the Board of Directors, etc. | With regard to setting of a theme for discussion which had been recognized as an issue, conducted discussion under themes which are helpful to management and coincide with the trends, in addition to discussions on business strategies. As a place for discussion, held “Officer Discussion” on a regular basis. |
Provision of information on assigned operations and exchange sessions with executive personnel | Facilitated further understanding about business contents by expanding the scope that previously included only Executive Officers to general managers and presidents of subsidiaries. Also, revitalized the Board of Directors by providing opportunities to talk with a wide range of executive personnel. |
Priority matters for FY2022
-
①Advance governance in the Seven Bank Group
Consider issues with which Seven Bank’s Board of Directors should be involved -
②Continue and enhance strategic discussion, etc
Set appropriate themes for discussion at the Board of Directors, etc. -
③Continue to make executive personnel explain operations
Provide information on the Bank’s operations, and provide opportunities for exchange between Outside Officers and executive personnel
About Outside Officers
Independence Standards for Outside officers
The Bank’s Independence Standards for Outside officers are as follows:
- (1)Is not a person with executive authority over operations of the Bank’s parent company or fellow subsidiary (or has been in such position in the past; hereinafter, the same applies to each item);
- (2)Is not a person for which the Bank is a major business partner or a person with executive authority over such entity’s operations, or a major business partner of the Bank or a person with executive authority over such entity’s operations;
- (3)Is not a consultant, an accounting professional, a legal professional or a person belonging to an organization that receives a significant amount of monetary compensation from the Bank, other than officers’ compensation;
- (4)Is not a major shareholder of the Bank or a person with executive authority over operations of such shareholder; or
- (5)Is not a close relative of a person that falls under any of the above or a relative by blood or marriage within the second degree to a person with executive authority over operations of the Bank.
Reasons for Appointment of Outside Officers
Name | Reasons for Appointment | |
---|---|---|
Outside Directors | Makoto Kigawa | Mr. Makoto Kigawa’s experience and insight in corporate management at YAMATO HOLDINGS CO., LTD., etc., have genuinely contributed to the Bank’s management. |
Toshihiko Itami | Mr. Toshihiko Itami’s insight in corporate legal affairs, nurtured for many years in his career as a prosecutor, has genuinely contributed to the Bank’s management. | |
Koichi Fukuo | Mr. Koichi Fukuo’s experience and insight as a manager at Honda Motor Co., Ltd., etc., have genuinely contributed to the Bank’s management. | |
Yukiko Kuroda | Ms. Yukiko Kuroda’s experience as a corporate manager and insight related to developing human resources who can handle global business have genuinely contributed to the Bank’s management. | |
Etsuhiro Takato | The Bank can expect Mr. Etsuhiro Takato’s experience and insight in corporate management, marketing, and global duties at Ajinomoto Co., Inc. to contribute to the Bank’s management | |
Outside Audit & Supervisory Board Members | Hideaki Terashima | Mr. Hideaki Terashima’s broad insight into corporate legal affairs, nurtured in his career as an attorney-at-law, has contributed to audits of the Bank’s management. |
Yukie Toge | Ms. Yukie Toge’s expertise as a certified public accountant, deep insight as an accounting and systems-related consultant, and experience as a corporate manager has contributed to audits of the Bank’s management. |
Support Systems/Training Policies for Outside Officer
- 1.Provide necessary and sufficient internal systems for enabling Directors and Audit & Supervisory Board Members to fulfill their roles and responsibilities in an effective manner.
- 2.Provide Directors and Audit & Supervisory Board Members with necessary opportunities to enable them to fulfill their roles, such as by providing the information and knowledge relating to the business activities that would be necessary to supervise corporate management when they take office and continually thereafter.
- 3.Build systems for sharing a sufficient amount of the Bank’s internal information with Outside Directors and Outside Audit & Supervisory Board Members (hereinafter referred to as “Outside Officers”).
- 4.Encourage Outside Officers to deepen their understanding of the Bank’s management policy and corporate culture, while providing information on the Bank’s business environment and other issues on a continuous basis.
- 5.Maintain and improve the environment for Outside Officers to mutually share information and exchange ideas, such as by holding periodic meetings with Executive Officers and/or other Non-Executive Officers.
- 6.Bear the expenses for Outside Officers to fulfill their roles
Roles and expertise of Directors and Audit & Supervisory Board Members
We believe that the role of Directors and Audit & Supervisory Board Members is to realize appropriate business management by supervising and auditing business execution while fully understanding the social responsibilities and mission of the banking business. In order to properly fulfill this role, we utilize the skill matrix when appointing Directors and Audit & Supervisory Board Members, and aim for a well-balanced composition of members with diverse skills and expertise.
Position | Name | Corporate Management |
Sales and Marketing |
Product Development & IT |
Global | Human Resources & Labor |
Financial Affairs and Finance |
Legal Affairs & Risk Management |
---|---|---|---|---|---|---|---|---|
Outside Directors(Independent Officer) | Makoto Kigawa | 〇 | 〇 | 〇 | 〇 | |||
Outside Directors(Independent Officer) | Toshihiko Itami | 〇 | 〇 | |||||
Outside Directors(Independent Officer) | Koichi Fukuo | 〇 | 〇 | 〇 | 〇 | |||
Outside Directors(Independent Officer) | Yukiko Kuroda | 〇 | 〇 | 〇 | ||||
Outside Directors(Independent Officer) | Etsuhiro Takato | 〇 | 〇 | 〇 | ||||
Director | Katsuhiro Goto | 〇 | 〇 | 〇 | ||||
Chairman and Representative Director | Yasuaki Funatake | 〇 | 〇 | 〇 | 〇 | |||
President and Representative Director | Masaaki Matsuhashi | 〇 | 〇 | 〇 |
Outside Audit & Supervisory Board Member (Independent Officer) | Hideaki Terashima | 〇 | 〇 | |||||
---|---|---|---|---|---|---|---|---|
Outside Audit & Supervisory Board Member (Independent Officer) | Yukie Toge | 〇 | 〇 | |||||
Full-time Audit & Supervisory Board Member | Kazuhiko Ishiguro | 〇 | 〇 | |||||
Full-time Audit & Supervisory Board Member | Ryoji Sakai | 〇 | 〇 | 〇 |
Policy on Compensation of officers and Compensation System for officers
Seven Bank’s “Policy on Compensation of Officers and Compensation System for Officers” were, excluding compensation for Audit & Supervisory Board Members, proposed to the Board of Directors by the Nomination & Compensation Committee, and determined with a resolution of the Board of Directors as follows:
1 Basic Policy on Compensation of Officers
The Bank decides compensation of officers based on the following points.
- (1)Ensuring a compensation system to promote sustainable improvement of corporate value with emphasis placed on the link to business performance
- (2)Ensuring compensation systems and compensation levels with their responsibilities to secure highly capable human resources who lead and take responsibility for, in an appropriate manner, the supervision and execution of operations
- (3)Ensuring a compensation system based on an objective and transparent process, and that is fair and equitable
2 Method for Determining Compensation, etc. for Individual Officers in the Fiscal Year under Review
The Bank has established a Nomination & Compensation Committee, comprising a total of four members made up of two independent Outside Directors and two Representative Directors, chaired by an Independent Outside Director, as an advisory body to the Board of Directors. The Nomination & Compensation Committee proposes specific amounts of compensation, etc. to be granted to Directors within the range of the total amount approved at the General Meeting of Shareholders, for determination by resolution of the Board of Directors. From the perspective of understanding the process of discussion, Audit & Supervisory Board Members may participate as observers who do not possess voting rights, when a Nomination & Compensation Committee meeting is held. The procedure is stipulated in the Regulations for Officers, which is modified, amended, or abolished by a resolution of the Board of Directors upon discussion with the Audit & Supervisory Board Members. Compensation, etc. for Audit & Supervisory Board Members is determined upon discussion by the Audit & Supervisory Board Members within the range of the total amount approved at the General Meeting of Shareholders.
3 Compensation Structure
The Bank’s compensation structure for officers comprises “basic compensation” as fixed compensation and “bonuses” and “performance-based stock compensation” as variable compensation, which are applied as follows.
Fixed compensation | Variable compensation | ||
---|---|---|---|
(a)Basic compensation | (b)Bonuses | (C)Performance-based stock compensation | |
Directors with executive autlority over operations | ● | ● | ● |
Non-executive Directors | ● | ー | ー |
Audit & Supervisory Board Members | ● | ー | ー |
Each plan is positioned as follows.
(a)Basic compensation | Compensation aiming to encourage steady execution of duties commensurate with job rank |
---|---|
(b)Bonuses | Short-term incentives aiming to steadily achieve performance targets (milestones) for each fiscal year for the medium-to long-term improvement of corporate value |
(C)Performance-based stock compensation | Medium-to long-term incentives for the medium-to long-term improvement of corporate value, aligning interests with shareholders |
The ratio of each plan has been decided as described on the following page after deliberation by the Nomination & Compensation Committee chaired by an independent Outside Director. Factors taken into account included a balance between fixed compensation and variable compensation, a balance between cash remuneration and stock compensation, and a balance between bonuses and stock compensation, which are incentives to execute management with a well-balanced perspective in both the short term and the medium to long term.
In addition, non-executive Directors and Audit & Supervisory Board Members receive only fixed compensation, as their role is to supervise the Bank’s management from an objective and independent standpoint
4 Compensation Level
Excluding compensation for Audit & Supervisory Board Members, to provide a competitive compensation level and thereby secure highly capable human resources, the Bank’s compensation level for officers has been determined by a resolution of the Board of Directors based on the proposal made by the Nomination & Compensation Committee. The deliberation has been based on the analysis and comparison of data on the compensation levels of a group of companies of the same size and operating in the same industry as the Bank, which has been drawn from a larger body of objective data on compensation levels provided by an outside professional organization.
5 Details of Variable Compensation
- ・Bonuses
- Bonuses, which are provided as short-term incentives, will be determined by multiplying the standard amount of compensation for each job rank by performance-linked factors corresponding to the achievement of consolidated performance targets for the previous fiscal year.
- ・Performance-based stock compensation
- Performance-based stock compensation, which is provided as a medium- to long-term incentive, is composed of a “fixed portion,” which grants fixed points for each job rank, and a “performance-based portion,” which grants a varying number of points determined by job rank and performance. For each portion, points are granted and accumulate every year of the term of office of the relevant officer, and a number of the Bank’s shares corresponding to the amount of accumulated points will be delivered to the officer upon retirement. The number of points (i.e., the number of shares to be delivered) to be provided in the performance-based portion will be determined by multiplying the number of points for each rank by performance-linked factors according to the achievement level of consolidated performance targets.
Plan | Indicators and evaluation method | |
---|---|---|
Bonuses |
|
|
Performance- based stock compensation | Fixed portion | ー |
Performance- based portion |
|
Targets and Results of Evaluation Indicators Fiscal year under review
from April 1, 2021 to March 31, 2022
Evaluation indicators | Target value (Millions of yen) | Result (Millions of yen) | Degree of target achievement (%) |
---|---|---|---|
Consolidated ordinary income | 137,600 | 136,667 | 99.3 |
Consolidated ordinary profit | 28,300 | 28,255 | 99.8 |
Internal Audit and Audit by Audit & Supervisory Board Members
① Cooperation between Audit & Supervisory Board Members and the Accounting Auditor
Audit & Supervisory Board Members and the Accounting Auditor hold regular meetings to exchange opinions and promote mutual cooperation, based on the audit contract with KPMG AZSA LLC. Audit & Supervisory Board Members perform audits on the execution of duties by Directors by attending the Board of Directors meetings or other means. In addition to conducting their own operational and accounting audits, Audit & Supervisory Board Members receive reports on results of external audits by the Accounting Auditor, and check the appropriateness thereof. Members from the Internal Audit Division are also present when receiving accounting audit reports from the Accounting Auditor, in an effort to facilitate close cooperation.
② Cooperation between the Audit & Supervisory Board Members and Internal Audit Division
The Bank has in place the Internal Audit Division, which is independent of the Bank’s other divisions engaging in business operations and directly reports to the President and Representative Director. The Internal Audit Division annually sets a basic policy for internal auditing plans and priority issues to be addressed, which are to be approved by the Board of Directors. Individual internal auditing plans are formulated by the General Manager of the Internal Audit Division, and approval of these plans is obtained from the President and Representative Director, who is the officer in charge of the Internal Audit Division.
Individual internal audits are conducted by investigating and evaluating the appropriateness and effectiveness of internal management systems as a whole based on the following items to discover problems, if any, and suggest how to address them. The results of these audits are reported to the President and Representative Director, the Executive Committee and the Audit & Supervisory Board Members.
- AStatus of business plans
- BCompliance system and compliance status
- CAppropriateness and effectiveness of internal controls over financial reporting
- DSystems for and the current status of customer management, including customer protection
- ESystems for and the current status of risk management
- FInternal management systems at each operational department and appropriateness and effectiveness thereof
Internal audits are conducted on all the Bank’s divisions and systems, including those of its subsidiaries. Audits are also conducted on the operations of the Bank’s major outsourcing contractors regarding the status of management by its relevant internal divisions, as well as on the outsourcing contractors themselves, within the scope agreed with them.
Audit &Supervisory Board Members receive periodic reports from the Internal Audit Division on its audit plans and results, and request investigations as necessary to ensure that the audit results of the Internal Audit Division are effectively utilized for internal control system audits by Audit & Supervisory Board Members. In addition, Audit & Supervisory Board Members receive reports on the status of improvement of internal control systems regularly or as necessary from the divisions in charge of internal control functions, and ask for detailed explanations as necessary.
Status of Improvement and Operation of the Internal Control Systems
Concerning the system upgrades stipulated in Article 362, Paragraph 4, Item 6 of the Companies Act, the Board of Directors made a resolution on May 8, 2006, on matters to be implemented by the Bank. Progress of the details of this resolution is reviewed each fiscal year. In line with this resolution, Seven Bank strives for good corporate governance and internal control, while ensuring appropriateness in the Seven Bank Group’s operations.
Policy on Governance related to Listed Subsidiaries
(Protection of Rights of Minority Shareholders)
Guidelines on Measures to Protect Minority Shareholders in Conducting Transactions with a Controlling Shareholder
Seven & i Holdings Co., Ltd. is the Bank’s parent company, indirectly holding 46.27% of its voting rights, and therefore falls under the category of controlling shareholder stipulated in the Timely Disclosure Rules. When conducting transactions, etc., with the parent company, the Bank will comply with the arm’s-length rule under the Banking Law, which is a rule established to prevent the soundness of the Bank’s management from being compromised through conflict-of-interest transactions. The Bank fully confirms the necessity for such transactions and that the conditions of such transactions do not differ significantly from conditions of usual transactions with third parties.
Relationship with Parent Company, Seven & i Holdings Co., Ltd.
The Bank believes that in order to achieve sound and sustainable growth, it is essential to engage in business development (innovation) by integrating collaboration with various partners to an advanced degree based on our credibility and transparency of management as a corporate entity. Furthermore, we recognize that listing on the market is one of the most effective ways to ensure the Bank’s credibility and transparency of management. As an independently listed company, the Bank independently and autonomously deliberates and determines our own business strategies, personnel policies, capital policies, etc., as we engage in our own operating activities. In addition, in order to ensure the necessary independence from our parent company, we have established the Nomination & Compensation Committee chaired by an Independent Outside Director as an advisory body to the Board of Directors. This Committee deliberates on matters concerning recommendations of candidates for Director and Executive Officer, thereby ensuring independence from our parent company in the appointment of top management. The Bank has also appointed Independent Outside Directors and Independent Outside Audit & Supervisory Board Members, who provide supervision to ensure that no conflict of interest arises between our parent company and shareholders other than the parent company. The Bank does not have any agreements concluded regarding group management with the parent company. In addition, to comply with the disclosure obligations, etc. of the parent company, the Bank has established the Guidelines for Reporting of Material Facts with the parent company and reports to the parent company accordingly. These reports are limited to matters that impact the parent company’s timely disclosure, materially impact the parent company’s consolidated financial statements, and may potentially impair the credibility of the Seven & i Group.
The parent company’s approach and policy regarding group management are as follows: “Although the Company owns the listed subsidiary, Seven Bank, Ltd., from the standpoint of respecting the independence of Seven Bank, Ltd., we value the management decisions of the said listed subsidiary, and respect the independent and autonomous deliberation and determination of its business strategies, personnel policies, capital policies, etc., as it engages in its own operating activities.” (Excerpt from “Seven & i Management Report” issued by Seven & i Holdings Co., Ltd.; January 12, 2022 edition)
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