- Basic Policy
- Management Structure
- Outside Directors and Outside Audit & Supervisory Board Members
- Supporting Structure of Audit & Supervisory Board Members
- Policies for Determining Remuneration
- Establishment and Implementation of Internal Control System
- Constructive Dialogue with Shareholders
- Corporate Governance Report
Obayashi believes that transparency and sound management, along with a strong corporate governance framework, are critical to maintaining society's trust.
We enhance corporate governance also to achieve sustainable growth and greater corporate value over the medium- to long-term.
Specific initiatives include transparent, fair, rapid, and resolute decision-making. Such decision-making is always based on the principles of Japan's Corporate Governance Code set out by the Tokyo Stock Exchange.
Obayashi has a General Meeting of Shareholders, Board of Directors, Audit & Supervisory Board, independent auditor, and other statutory bodies. Additionally, we have established systems for making management decisions and conducting appropriate audits.
We practice precise and swift decision-making through our executive officer system and Management Meeting. The latter is composed of members appointed from among the directors and executive officers.
Board of Directors
The Board of Directors consists of up to 15 directors, who are responsible for management decision-making and business execution. They also supervise the execution of duties by other directors, executive officers, and employees. The tenure for directors is one year, which enables us to respond dynamically to changes in the business environment. It also clarifies management responsibilities for each business year.
The effectiveness of the Board of Directors as a whole is subject to analysis and evaluation. These are based on the assessments and opinions of individual directors and Audit & Supervisory Board members. The process takes place under the advice of an external legal office. Based on evaluation results, we judge the Board of Directors to be effective. We will improve the status and operating methods of the Board of Directors as needed. Any improvements will be based on the opinions of the directors and the Audit & Supervisory Board members.
Audit & Supervisory Board
The Audit & Supervisory Board is comprised of up to five members, a majority of which must be outside members. Audit & Supervisory Board members serve four-year terms. Each Audit and Supervisory Board member maintains independence from directors in accordance with the Obayashi Audit Guidelines for Audit & Supervisory Board Members. They supervise the performance of duties by directors by performing audits to ensure that directors, executive officers, and employees are conducting business in compliance with the law and the Articles of Incorporation. Audit & Supervisory Board members also perform accounting audits to ensure the company financial statements are appropriate. When the company selects an independent auditor, the Audit & Supervisory Board verifies whether the independent auditor's work performance, audit structure, independence, and expertise are appropriate.
The Management Meeting is composed of members appointed from among the directors and executive officers. It is held to report, discuss, instruct, and resolve on important management matters and ensure precise and swift decision-making.
Executive officers receive authority from the Board of Directors to execute business operations. By concentrating on their executive duties, the executive officers achieve efficient business execution.
Executive Officers' Meeting
The Executive Officers' Meeting is comprised of directors and executive officers. The meeting is held to convey management strategies and report on the status of business execution.
Recommendation Committee and Remuneration Committee
The Recommendation Committee and Remuneration Committee are both chaired by outside director and majority of both committee's members are outside directors. The Remuneration Committee deliberates on remuneration for these persons. The results are submitted to the Board of Directors. This is intended to clarify the selection and remuneration decision processes, while ensuring transparency and objectivity. Committee members of the Recommendation Committee and Remuneration Committee attended 100% of committee meetings in FY 2017.
Overview of the Corporate Governance Structure (As of June 26, 2018)
Main Recent Initiatives to Enhance Corporate Governance
Outside Directors and Outside Audit & Supervisory Board Members
We have appointed three outside directors and three outside Audit & Supervisory Board members. Outside directors provide advice on improving management efficiency and supervise all aspects of management from an independent position. Outside Audit and Supervisory Board members are responsible for ensuring effective corporate governance by conducting third-party checks independent of management. Our standards for appointing outside directors and outside Audit & Supervisory Board members, including standards regarding independence, are as follows:
Requirements for Selection as an Outside Director/Audit & Supervisory Board Member Candidate
- 1 The outside director/Audit & Supervisory Board member candidate ("Candidate") must have capabilities, knowledge, experience, and character suitable for such position at the Corporation. The Candidate must be able to provide directions and opinions to the Corporation's management from an independent and impartial standpoint.
- 2 The Candidate must not be a former director, Audit & Supervisory Board member, or employee of the Corporation or any of its associated companies.
- 3 The Candidate must not currently belong, and must not have belonged in the past, to an Accounting Auditor, law office, or main bank with which the Corporation currently has a contract.
- 4 The Candidate must not currently be, and must not have been in the past, a major shareholder with an ownership stake of 10% or more. The Candidate must not currently belong, and must not have belonged in the past, to an entity that is a major shareholder.
- 5 The Candidate must not currently belong, and must not have belonged in the past, to an entity that has a business relationship with the Corporation in which the annual amount of transactions has exceeded 2% of the net sales of both the Corporation and such entity during the last three fiscal years.
- 6 The Candidate must not currently work, and must not have worked in the past, as an executive at a non-profit organization to which the Corporation has made an annual donation exceeding 20 million yen during the last three fiscal years.
- 7 If the Candidate does not meet the requirements in 3. through 6., at least five years must have passed since the candidate left the relevant entity.
- 8 The Candidate must meet the requirements for an independent director/auditor pursuant to the provisions of the Tokyo Stock Exchange's Securities Listing Regulations.
Audit & Supervisory Board Members' Cooperation with Independent Auditor, and Support System
The Audit & Supervisory Board members and independent auditor each conduct audits from their independent standpoints. Audit & Supervisory Board members receive reports and briefings as required from the independent auditor. The two parties also cooperate to raise the effectiveness of audits by sharing information and opinions. Meanwhile, the Business Administration Department is Obayashi's internal audit arm. It is responsible for all audits conducted separately from the Audit & Supervisory Board members and independent auditor. Such audits are performed according to Obayashi's Internal Audit Regulations. The purpose of these audits is to monitor the effectiveness of internal control and the execution of duties by each Company department. The Audit & Supervisory Board members and Business Administration Department also share information and opinions to raise the effectiveness of audits.
Policies for Determining Remuneration
The basic policy on remuneration for each director and executive officer is to determine the amount of basic remuneration and stock remuneration for each fiscal year in accordance with actual contribution to earnings. The purpose is to secure outstanding human resources and provide incentive to each director and executive officer to improve earnings and enhance corporate value.
For basic remuneration, the Board of Directors has set a remuneration table in accordance with title and earnings contribution ranking. At the end of each business term, the Remuneration Committee, which chairman and its majority of the members are outside directors, appraises how much individual directors and executive officers contributed to earnings. This determines their remuneration for the next fiscal year. Such remuneration is capped at 60 million yen per month in keeping with a resolution made at the 101st Ordinary General Meeting of Shareholders on June 29, 2005.
Stock remuneration was introduced from the FY2016.3. With it, the goal is to incentivize contributions to increasing earnings mainly over the medium- to long-term. The system distributes Obayashi shares to directors and executive officers (except for outside directors and persons residing outside Japan) based on the degree of achievement of earnings targets for each business term. The standard for distributing shares is determined in advance by the Board of Directors after deliberation by the Remuneration Committee.
The basic policy on Audit & Supervisory Board member remuneration is to set an amount required to secure outstanding personnel. The ultimate aim thereby is to ensure that corporate governance functions effectively.
Remuneration standards are established in advance through discussions by Audit & Supervisory Board members. They are based on such factors as whether the member is full-time or part-time. Remuneration for each member is determined in line with those standards, capped at 10 million yen per month in keeping with a resolution made at the 101st Ordinary General Meeting of Shareholders on June 29, 2005.
Establishment and Implementation of Internal Control System
We have established and implemented an internal control system per the Companies Act and Ordinance for Enforcement of the Companies Act. The purpose of the system is to ensure appropriate business operations throughout the Group.
Constructive Dialogue with Shareholders
We consider the General Meeting of Shareholders to be an important forum for dialogue with shareholders. At the meeting, the president's business report and explanations, Q&A sessions with directors, and so on enable constructive shareholder dialogue. We also hold financial results briefings for second-quarter and annual financial results. Results briefings for the first- and third-quarter results are by conference call. Other opportunities include construction site tours, participation in securities companies' investment conferences, small meetings, and other such activities.
Corporate Governance Report
In accordance with the Japanese Corporate Governance Code set forth by the Tokyo Stock Exchange, Obayashi submits Corporate Governance Report.
Obayashi Corporate Governance Report (Tokyo Stock Exchange) (Available only in Japanese) (291.0KB)
Last updated in June 26, 2019