Corporate Governance Policy
The Shiseido Group including the Company has established “BEAUTY INNOVATIONS FOR A BETTER WORLD” as OUR MISSION in its Corporate Philosophy THE SHISEIDO PHILOSOPHY, and defines the corporate governance as our “platform to realize sustainable growth through fulfilling OUR MISSION”.
The Company is committed to maintaining and improving management transparency, fairness and speed, by putting into practice and reinforcing the corporate governance, and strives to maximize medium- and long-term corporate and shareholder value through dialogues with all stakeholders, “employees”, “consumers”, “business partners”, “shareholders”, and “society and the Earth”. In addition, while fulfilling social responsibilities, the Company aims to achieve optimized distribution of values to respective stakeholders.
Corporate Governance System
Business Management and Execution Structure as of January 1, 2023:
Reasons for Adopting the Current Framework
The Company has adopted the framework of a company with an audit & supervisory board system, which exercises dual checking functions whereby business execution is supervised by the Board of Directors and audited for legality and appropriateness by the Audit & Supervisory Board. In order to maintain and improve management transparency, fairness, and speed as per the basic policy on corporate governance, the Company has reinforced the supervisory function of its Board of Directors by incorporating outstanding features of a company with a nominating committee, etc. and a company with an audit and supervisory committee.
Based on the Shiseido Group’s matrix-type organizational system with brand categories and six regions combined, the Company as the global headquarters is responsible for supervising the overall Group and providing necessary support, while many of the responsibilities and authorities are delegated to the respective regional headquarters of Japan, China, Asia Pacific, the Americas, EMEA, and Travel Retail. We held repeated discussions with regard to an ideal corporate governance system under this matrix organization, including the composition and operation of the Board of Directors. As a result, the Board of Directors concluded that adopting the monitoring board-type system would be appropriate to ensure sufficient and effective supervisory functions over the Shiseido Group overall. Therefore, we resolved on the monitoring board-type corporate governance framework while leveraging the advantages of a company with an audit & supervisory board system.
Diversity of Directors and Audit & Supervisory Board Members
The Company believes that its Board of Directors should be composed of directors with various viewpoints and backgrounds in addition to diverse and sophisticated skills, required for effective supervision over the execution of business as well as decision-making on critical matters. Furthermore, the Company believes that its Audit & Supervisory Board members should have the same degree of diversity and expertise as directors, as they have a duty to attend meetings of the Board of Directors and state opinions as necessary.
When selecting candidates, we place importance on ensuring diversity, taking into account not only gender equality, but also other attributes such as age, nationality, personality, and insights and experiences in various fields related to management. In addition, the Company has set a certain maximum term of office for external directors and external Audit & Supervisory Board members in order to reflect their independent views to the management of the Company, and allows a handover period from long-serving external directors and Audit & Supervisory Board members to newly appointed ones to ensure appropriate transition.
Remuneration
The Company regards the directors and executive officers remuneration policy as an important matter for corporate governance. For this reason, in accordance with our basic philosophy for remuneration, the directors and executive officers remuneration policy is deliberated in the Nomination & Remuneration Advisory Committee chaired by an external director, incorporating objective points of view, and the outcome is reported to the Board of Directors for the resolution.
The remuneration of the directors and executive officers of the Company comprises “basic remuneration” as fixed remuneration as well as “annual incentive” and “long-term incentive-type remuneration” as performance-linked remuneration, and the Company sets remuneration levels by benchmarking peer companies in the same business industry or in the similar business size inside or outside Japan and by taking the Company’s financial condition into consideration. External directors and Audit & Supervisory Board members receive only basic remuneration, as variable remuneration such as performance-linked remuneration is inconsistent with their supervisory roles independent from business execution.
Succession Plan for CEO
The Company considers that the selection of successor candidates for the CEO and the development of the succession plan requires the cooperation of the incumbent and the Nomination & Remuneration Advisory Committee. The CEO and the Nomination & Remuneration Advisory Committee formulate the succession plan based on the Company’s business environment upon sufficient discussions regarding the qualities required of a CEO from a medium-to-long-term perspective and policies for the selection of a successor and his or her training, etc. The progress of the formulated succession plan is regularly reported to the Nomination & Remuneration Advisory Committee, which monitors its status of implementation.
Regarding selection of specific candidates for the CEO, the Nomination & Remuneration Advisory Committee receives full reports from the CEO on the specific nomination for successor from various perspectives. The Nomination & Remuneration Advisory Committee members themselves meet and exchange opinions with candidates, evaluating them from an independent perspective as well as the Company’s management issues. Since the Nomination & Remuneration Advisory Committee performs certain important functions of the Board of Directors, the Board respects the committee’s judgement. Furthermore, when actually selecting the CEO’s successor, the Nomination & Remuneration Advisory Committee deliberates fully on matters such as the final candidate and their selection process, prior to reporting its opinion. The Board of Directors accords this report the utmost respect in passing a resolution regarding the selection.
The Company formulated and launched the framework of the five-year succession plan for the current CEO in 2019, selected the successor over the first three years in accordance with the framework, and announced the successor in November 2022. The Company will continue to proceed with the succession plan while monitoring by external directors and external Audit & Supervisory Board members so that the post of CEO can be assumed smoothly by the successor.
