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Corporate Governance

Basic Approach to Corporate Governance

Under its corporate philosophy of “Creating Richness with Value to Society,” the Skylark Group operates approximately 3,000 outlets, mainly table service restaurants, patronized by a cumulative total of approximately 400 million customers annually. The Group’s mission is to contribute to society by offering great-tasting food at affordable prices with good service in its clean restaurants to as many people as possible. Skylark Co., Ltd. (the “Company”) considers continuously enhancing its corporate value by contributing to society through this food-related business to be its most important management task. The Company aims to operate a corporate group trusted not only by its customers, but by all of its stakeholders, including its shareholders, business partners, local communities and employees.
To achieve these objectives, the Company has enacted the Skylark Group Charter of Corporate Behavior and shares it among all executives and employees, observes laws and international rules and their spirit, and strives to behave with a social conscience. The Company also works to enhance corporate governance by implementing various initiatives to ensure management soundness, effectiveness and transparency.

Basic Corporate Governance Policy

  • (1)Respect the rights of shareholders and ensure equality.
  • (2)Consider the interests of stakeholders, including shareholders, and cooperate appropriately with them.
  • (3)Appropriately disclose Company information and ensure transparency.
  • (4)Ensure the effectiveness of supervisory functions for business execution through the Board of Directors.
  • (5)Conduct constructive dialogue with shareholders under an investment policy that matches their medium-lo-long-term interests.

Main Initiatives to Strengthen Corporate Governance

July 2014 Appointed 1 Independent Outside Director and 2
Outside Auditors
October 2014 Listed on the First Section of the Tokyo Stock
Exchange
2014 – 2015 Conducted workshops for all executives about preventing insider trading and dealing with the Corporate Governance Code (4 workshops)
January 2016 Transitioned to a holding company structure
March 2016 Increased the number of independent outside directors to 2, and turned more than half of directors into outside directors
April 2016
  • Two directors who form the majority of each of the voluntary Remuneration Committee and Nominating Committee members (three directors each) shall be Independent Outside Directors.
  • Established the Independent Executives' Liaison Committee,
  • Established Internal Helpline externally
May 2016 Formulated Basic Corporate Governance Policy
March 2017 Increased the number of outside auditors with expertise in finance and accounting by one, and turned the Board of Auditors into a four-member structure (of which three are outside auditors)

Overview of Corporate Governance Structure

Board of Directors

The Company’s Board of Directors consists of eight directors, four of whom are outside directors. This composition was decided in consideration of diversity and a balance among the knowledge, experience and capabilities of Board of Directors as a whole necessary for the ongoing growth and medium- to long-term enhancement of corporate value of the Skylark Group. As the Company’s highest decision-making body for management and execution of business, the Board of Directors meets at least once a month in principle, and meetings are attended by auditors as well as directors.

Board of Directors Meetings in 2016
Held 13 times

Group Executive Officer’s Meeting

To promptly and flexibly carry out planning and execution of Company-wide management policies and strategies, the Company has established the Group Executive Officers’ Meeting, composed of the President and CEO and all executive officers, which is held once a week in principle. Based on the above objective, the Group Executive Officers’ Meeting conducts adequate reporting, examination and discussion of important matters related to the entire Skylark Group.
In addition, Group Committees composed of members determined by the Group Executive Officers’ Meeting (the Personnel and System Committee and the Policy and Investment Committee) meet once a month to report on, examine and discuss important matters, the personnel system, policy and other matters related to the entire Skylark Group.

Group Executive Officers’ Meetings in 2016
Held 43 times

Audit by Auditors and Other Audit Functions

The Board of Auditors, which is composed of four auditors, three of whom are outside auditors, meets once a month in principle to supervise and provide a check on management and business execution. Based on auditing policies, plans and standards determined by the Board of Auditors, auditors attend Board of Directors Meetings and other important meetings. At the same time, they ascertain the state of the Company by examining business conditions and other methods to audit that business activities are being conducted in conformance with laws, internal regulations and other rules. In addition, auditors cooperate with the Audit Group and the accounting auditor through regular discussions and other means to ensure an efficient and effective auditing system. The Audit Group, which is an internal audit organization, has been established as a division under the direct control of the President and CEO to ensure its organizational independence. Based on internal rules and annual plans, it conducts operating audits of the head office, factories and restaurants to identify problem areas, suggest improvements and issue citations, among other activities. Accounting audits are conducted by Deloitte Touche Tohmatsu LLC, which was selected at the General Meeting of Shareholders.

Board of Auditors Meetings in 2016
Held 16 times

Other Committees

The Company’s Risk and Compliance Committee, which is composed of the President and CEO and all executive officers, meets at least once a year to deliberate on important matters related to the Skylark Group’s compliance and to determine basic policies. After such determination by the Risk and Compliance Committee, the Group Compliance Committee, which is composed of compliance officers selected from each Group company, meets at least once every six months. It confirms and reports on matters including the status of compliance promotion in each Group company, measures to prevent violations, and investigations and remedial actions in the event a violation occurs. In addition, the Skylark Group has established the Skylark Group Helpline [contact for whistle-blowers], a contact point to an external specialty company for the early detection, correction and prevention of recurrence of violations of laws, internal regulations or other rules. The Skylark Group Helpline accepts internal reports from all executives and regular employees of the Skylark Group in Japan and operates in accordance with internal rules, including reporting to the directors and auditors on the status of its operations

Risk and Compliance Committee Meetings in 2016
Held 5 times

Overview of Corporate Governance Structure

Outside Directors and Outside Auditors

For prompt management decisions, the number of internal directors is kept small, and the Company has appointed four outside directors and three outside auditors with high levels of experience and knowledge of management to strengthen the function of business execution oversight.
The Company has notified the Tokyo Stock Exchange that two of its outside directors are independent executives.
The Company has created a system for fair deliberation by accepting opinions from two independent outside directors from an independent and objective standpoint as members of the Nominating Committee and the Remuneration Committee, which are the advisory committees for nomination and remuneration.

Composition of Directors and Auditors (as of April 2017)

  Total Nominating
Committee
Remuneration
Committee
Independent
Executives’ Liaison Committee
Internal Directors 4 1 (Chairperson) 1 (Chairperson) -
Outside Directors 2 - - -
Independent
Outside Directors
2 2 2 2
(of which one is Chairperson)
Full-time Auditors 1 - - -
Outside Auditors 3 - - 3

Support System for Outside Directors and Outside Auditors

The General Affairs Group of the Company is primarily responsible for the support of Outside Auditors and Outside Directors, providing them with report materials and prior explanations of agenda items for the Board of Directors Meeting. In addition, the Company holds meetings of the Independent Executives’ Liaison Committee, which is composed of the independent outside directors and outside auditors, exchanges information based on an independent and objective standpoint, and provides information from the Company in order to encourage discussion at the Board of Directors meeting.

Appointment of Executive Management and Nomination of Candidates for Directors and Auditors

Policy on Appointment of Executive Management and Nomination of Candidates for Directors and Auditors

To respond to the rapidly changing restaurant market, we nominate directors and auditors with diverse knowledge and capability, regardless of whether they are from inside or outside the Company. For internal director candidates, after considering the balance between their knowledge and experience in family restaurant management, financial strategy, and marketing strategy, we nominate those who can contribute to society through the restaurant business and demonstrate leadership to continuously raise corporate value. For outside director candidates, we appoint those who have extensive management experience in various companies including in the restaurant industry. For auditor candidates, we appoint people who can properly audit directors’ execution of business based on their knowledge of corporate management and their knowledge and experience in accounting, finance, law, and risk management.

Procedures for the Appointment of Executive Management and Nomination of Director and Auditor Candidates

When nominating director and auditor candidates, the Nominating Committee deliberates from the stand- point of maximizing the corporate value of the Skylark Group and makes a proposal to the Board of Directors.

Training Policy for Directors and Auditors

The Company provides the necessary training and information so that directors and auditors can properly fulfill their roles and responsibilities. As a part of that, at least once a year, we hold lectures and training by experts in law, corporate governance and other subjects for directors and auditors. So far, we have conducted workshops on branding and the prevention of insider trading.

Board Members’ Remuneration

Remuneration Policy

The Company’s policy for remuneration and other compensations for directors is designed to contribute to the continuous improvement of operating results/corporate value and the sharing of value with shareholders.
The remuneration system consists broadly of basic compensation, a year-end bonus and an incentive program, and is operated so that each director’s performance and capabilities are reflected.
Year-end bonuses are determined in consideration of the Skylark Group’s operating results and the results of each director’s assigned duties, using net income, EBITDA and other indicators. The incentive program has been established to function as a healthy incentive for continuing growth by setting compensation and Company stock-based remuneration linked to medium- to long-term operating results.

Decision Process

The Board of Directors determines remuneration and other compensation for directors based on proposals from the Remuneration Committee, which is an advisory organization of the said Board.
From its independent and objective standpoint, the Remuneration Committee decides on individual proposals for basic remuneration based on individual performance and capabilities, within the remuneration amount limits resolved at the General Meeting of Shareholders and pursuant to the Remuneration Regulations for Board Members and the remuneration system for board members. The Committee also decides on individual proposals for year-end bonuses considering the Skylark Group’s operating results and the results of each director’s assigned duties.