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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 aims 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 officers, 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.

Overview of Corporate Governance Structure

Board of Directors

 The Company’s Board of Directors consists of seven directors, four of whom are outside directors. This composition was decided upon in consideration of diversity and a balance among the knowledge, experience and capabilities of all directors 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 corporate auditors as well as directors.
 In 2015, the Board of Directors revised its operations to devote more time to strategic discussions through methods including reducing agenda items and using written resolutions. Number of Board of Directors Meetings in 2015: 16

Executive Officers’ Meeting

 To promptly and flexibly carry out planning and execution of Company-wide management policies and strategies, the Company has established the Executive Officers’ Meeting, composed of the president and all executive officers, which is held once a week in principle. Based on the above objective, the Executive Officers’ Meeting conducts adequate reporting, examination and discussion of important matters related to the entire Skylark Group. In 2016, the Executive Officers’ Meeting was renamed the Group Executive Officers’ Meeting to make clear that it is a forum for discussion of business execution for the entire Group. In addition, Group committees composed of members determined by the 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. Number of Executive Officers’ Meetings in 2015: 49

Board of Corporate Auditors and Other Audit Functions

 The Board of Corporate Auditors, which is composed of three corporate auditors, two of whom are outside corporate 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 Corporate Auditors, the corporate auditors ascertain the state of the Company by attending Board of Directors and other important meetings, 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, corporate 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 divisions, the factory, commissaries 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. Number of Board of Corporate Auditors Meetings in 2015: 17

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 Conference, which is composed of compliance officers selected from each Group company, meets at least once every six months to confirm and report 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 Help Line, a contact point to an external specialist company, for the early detection, correction and prevention of recurrence of violations of laws, internal regulations or other rules. The Skylark Group Help Line accepts internal reports from all officers, executives and employees of the Skylark Group in Japan and operates in accordance with internal rules, including reporting monthly to the directors and corporate auditors on the status of its operations. Number of Board of Risk and Compliance Committee Meetings in 2015: 6

Overview of Corporate Governance Structure

Outside Directors and Outside Corporate Auditors

 For prompt management decisions, the number of inside directors is kept small, and the Company has appointed four outside directors and two outside corporate auditors to strengthen the function of supervision of business execution.
 The Company has notified the Tokyo Stock Exchange that two of its outside directors are independent officers. The Company has created a system for fair deliberation by receiving opinions from the independent directors from an impartial and objective standpoint as members of the Nomination Committee and the Compensation Committee, which are advisory committees for nominations and compensation.
 In addition, the Company holds meetings of the Independent Officer Liaison Committee, which is composed of the independent outside directors and outside corporate auditors, to exchange information based on impartial and objective standpoints and to provide information from the Company so that they can contribute actively to discussions of the Board of Directors.

Officer Compensation

Compensation Policy

 The Company’s policy for compensation and other remuneration for directors is designed to contribute to the continuous improvement of operating results and corporate value as well as to share value with shareholders. The compensation system consists broadly of basic compensation (salary and defined contribution pension plan), 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 compensation and other remuneration for directors based on proposals from the Compensation Committee, which is an advisory organization for the Board.
 Currently, there are a total of three members of the Compensation Committee: the president and CEO, who serves as chairman, and the two independent outside directors. From its impartial and objective standpoint, the Compensation Committee deliberates appropriately on compensation and other remuneration for directors. This includes determining individual proposals for basic compensation based on individual performance and capabilities, within the compensation amount limits resolved at the General Meeting of Shareholders, pursuant to officer remuneration rules and the officer remuneration system. The committee also determines individual proposals for year-end bonuses in consideration of the Skylark Group’s operating results and the results of each director’s assigned duties.