Basic Views on Corporate Governance for the Group

Based on our Group mission to sensitize the world to beauty, the POLA ORBIS Group offers a number of brands each with differing properties. We deploy our businesses based on the recognition that our strengths are in our high brand loyalty through direct ties with customers, R&D capabilities in the skincare area through concentration of our resources, and multi-value chain strategy exploiting strong synergistic effects of our brands upon each other. Each operating company under the Group umbrella essentially manages itself autonomously and independently, while POLA ORBIS HOLDINGS, as the holding company, retains management control over each operating company and strives to increase corporate value through ensuring sound management and improved efficiency in Group operations overall.


The POLA ORBIS Group also incorporates compliance into CSR activities, emphasizing compliance as an integral part of business. The POLA ORBIS Group strives to realize sustainable development of the Group through initiatives where the Group, as a good corporate citizen, works to deepen cooperation and establish trustful relationships with various stakeholders, including shareholders and business partners, and fulfills its corporate responsibilities. In addition, the Company has established the POLA ORBIS Group Code of Conduct to cover the various facets of responsible corporate activity, including legal compliance, environmental protection, and shareholder relations, and all executives and other employees pledge to abide by the Code of Conduct.

Corporate Governance Structure

Overview of Key Corporate Governance Structures

  Purpose and Activities Members Meeting Schedule

1. Board of Directors

The Board bears responsibility for achievement of Group business performance and is authorized to supervise subsidiaries and make decisions for the Group on important matters.
The Board of Directors make resolutions and reports regarding important matters related to management, such as results of analysis of differences between budgeted and actual figures for the month, in addition to matters as prescribed in laws, regulations, and the Articles of Association.
8 directors (3 of whom are independent outside directors) At least once a month. In 2020, directors met 20 times

2. Board of Corporate Auditors

Each corporate auditor attends important meetings, such as Group managerial meetings, as well as the General Meetings of Shareholders and Board of Directors meetings, as well as receiving reports from directors, employees, and the accounting auditor, among other activities involved in its supervision of the business execution of directors. 3 corporate auditors (2 of whom are outside corporate auditors) Monthly. In 2020, meetings were held 16 times

3. Group Managerial Meeting

Receives reports from all companies on important matters of the Company and its subsidiaries and discusses their content. Company directors and the full-time corporate auditor as well as subsidiary presidents, directors, and others chosen for membership through resolutions of the Company Board of Directors. Monthly. In 2020, meetings were held 23 times

4. Nomination Advisory Committee (voluntary)

The role of the Nomination Advisory Committee is to ensure objectivity, transparency and effectiveness in decision-making processes, including the nomination of Company directors,appointment of corporate officers and nomination of directors at subsidiaries, by discussing and recommending individuals based on requests from the Board of Directors regarding personnel essential from a management perspective. Outside directors make up the majority of the committee members. The committee chair is an outside director appointed by the Board of Directors. In 2020, meetings were held 4 times

5. Compensation Advisory Committee (voluntary)

The role of the Compensation Advisory Committee is to ensure objectivity, transparency and effectiveness in decision-making processes regarding the system design of the compensation program for Company executives, compensation for Company directors and compensation for directors and corporate officers at subsidiaries of the Company, by discussing and recommending compensation based on requests from the Board of Directors. Outside directors make up the majority of the committee members. The committee chair is an outside director appointed by the Board of Directors. In 2020, meetings were held 6 times

6. Internal audit section

The Internal Audit Office is separated from the business execution line as an organization under the direct jurisdiction of the representative director and president. It strives to realize highly effective internal auditing in order to contribute to the sound and appropriate management of the Company and Group companies. Specifically, through on-site audits of individual companies and sections, it evaluates mainly whether or not systems are in place that are adequately prepared for possible business risks and recommends improvements, as well as cooperating in auditing by the corporate auditors and the accounting auditor, to strive to implement auditing efficiently. - -

The Company’s Stance on Its Response to the Corporate Governance Code

 The Company has, as a holding company, thus far strove to enhance the corporate value of the Group as a whole through management and supervision of group companies so as to ensure soundness of management and enhance efficiency.
 The Board of Directors of the Company would like to take this formulation and application of the Corporate Governance Code as an “opportunity for further evolution” that will allow the Group to reflect on the corporate governance of the Company thus far and to continuously enhance corporate value going forward.
 The Board of Directors of the Company considers it necessary to understand and carry out the objectives as required under the Corporate Governance Code, as well as to continuously evaluate, improve, and develop the Corporate governance of the Company, so that each group company can, in the same way as human beings, grow by becoming independent and autonomous, and by continuously learning, deliberating and improving, while acquiring and exerting the flexibility necessary to accept the diversity from individual personalities, external changes, and heterogeneity.
 The Board of Directors of the Company has formulated the “Basic Policy on Corporate Governance” based on the five fundamental principles specified in the Corporate Governance Code so as to meet the expectations of shareholders and other stakeholders and to fulfill its responsibilities.

Five Fundamental Principles

1.Securing the Rights and Equality of Shareholders

The Company shall respect shareholder rights and develop an environment as well as provide information so that shareholders can exercise their
rights appropriately, and endeavor to secure substantive equality of shareholders.

 

2.Appropriate Cooperation with Stakeholders

The Company shall strive to realize sustainable development of the Group through initiatives where the Group, as a good corporate citizen, works
to deepen cooperation and establish trustful relationships with various stakeholders, including shareholders and business partners, and fulfills its
corporate responsibilities.

 

3.Ensuring Appropriate Information Disclosure and Transparency

The Company shall strive to ensure fairness and transparency in decision-making by disclosing financial information and non-financial
information of the Group in an appropriate and proactive manner in accordance with the disclosure policy separately established, in addition to
carrying out appropriate information disclosure in compliance with relevant laws and regulations.

 

4.Responsibilities of the Board of Directors, etc.

The Company shall strive to ensure the effectiveness and fairness of the Board of Directors so as to fulfill its administrative and supervisory
function over the management of Group companies as a pure holding company in charge of the business administration of multiple subsidiaries.

 

5.Dialogue with Shareholders

The Company shall make efforts to engage in constructive dialogue with stakeholders and enhance the efficiency thereof by proactively
implementing public relations and investor relations activities.

Reference

Basic Policy regarding Executive Compensation

POLA ORBIS HOLDINGS’ executive compensation is set by the Board of Directors, based on discussions and recommendations by the Compensation Advisory Committee, in accordance with following basic policy.

 

1.  Basic Policy

The POLA ORBIS Group considers executive remuneration to be an important means of realizing the sustained growth of the Group and increases in corporate value over the medium to long term. As the Group holding company, the Company makes clear the roles and responsibilities in execution of their individual responsibilities for the Company directors and other executives, whose main duties are to make decisions on Group management as a whole and to supervise business execution, and the directors of subsidiaries to which the Company delegates business execution authority. Executive remuneration is based on the responsibility for business performance and other results in relevant areas of business execution and serves as strong motivation for the achievement of results over not only the short term but the medium and long terms as well. In addition, executive remuneration is oriented toward further sharing of gains with shareholders by making clear its linkage to share prices.

 

2. Compensation Standard

The compensation standard set in light of the scale of individual roles and responsibilities, through consideration of the POLA ORBIS Group's business conditions and competitive strengths in external markets, and comparison with firms in the same industries or of the same size both in Japan and around the world.

 

3. Compensation Structure

The POLA ORBIS Group's executive remuneration (excluding outside directors) consists of a fixed basic component and variable annual bonuses and a performance-linked share-based component. Remuneration for outside directors consists of a fixed basic component and a non-performance-linked share-based component. Remuneration for corporate auditors consists only of a fixed basic component.

Executive Compensation Structure of POLA ORBIS Group 

Note) The ratio of variable compensation with respect to the overall executive compensation shall be set at a level between 40% and 50%, depending on individual executive grade. Regarding the variable compensation, the “annual bonus” and “medium- to long-term incentive” vary respectively in the range from 0% to 200%, with the former depending on the Group’s level of achievement of performance targets in each fiscal year, and the latter depending on POLA ORBIS Group’s level of achievement of performance targets under the medium-term management plan, etc.

4. Process for Determining Executive Compensation

To ensure objectivity and transparency in the executive remuneration decision-making process, the Company has established a remuneration advisory committee where in the majority of the membership consists of outside directors to serve as a voluntary advisory body to the Board of Directors. Decisions on the POLA ORBIS Group's executive remuneration are made by the Board of Directors within the scope of the remuneration limits approved at the General Meeting of Shareholders based on deliberations and reporting by the remuneration advisory committee.

Total, including compensation by executive classification, and total by type of compensation (Fiscal 2020)