Measures to Strengthen the Effectiveness of Corporate Governance
The Company conducts an annual evaluation on the effectiveness of the Board of Directors, and strives to continuously enhance the functions and effectiveness of the Board of Directors. We work on the improvement measures for issues identified by the evaluation, and confirm the status of improvement during the evaluation of the Board of Directors in the following fiscal year, while at the same time continuing to confirm the evaluation of the current issues.
Evaluation Process
Starting from the fiscal year ended March 31, 2022, we have changed to a method of analyzing and/or evaluating the effectiveness of the Board of Directors using a third-party evaluation design (including, among other things, preparation, analysis, and comparison with other companies of questionnaire survey, identifying issues, drafting action plans).
With the aim of further improving the effectiveness of the Board of Directors from the viewpoints of “enhancing trust from stakeholders (creating social value)” and “improving organizational performance (enhancing corporate value)”, we conduct a questionnaire survey for all Directors and Audit & Supervisory Board Members, and conduct interviews of External Directors and External Audit & Supervisory Board Members through a thirdparty organization to gain a deeper understanding of their responses and awareness of the issues raised in their comments. We compile improvement measures based on the analysis of such responses and issues. The improvement measures are discussed at the Independent External Auditors & Directors Meeting and recommendations are provided to the Board of Directors.
The evaluation items of the questionnaire survey are as follows:
a. roles and/or responsibilities of the Board of Directors
b. structure of the Board of Directors
c. quality of discussions (agendas, content of materials, etc.)
d. constructive dialogues with stakeholders
The analysis and/or evaluation based on the questionnaire survey and interviews using the third-party evaluation design is conducted every other year. During the interval year, we focus on initiatives to improve the issues identified from the questionnaire survey, while at the same time conducting evaluation through monitoring and sharing opinions at the Independent External Auditors & Directors Meeting.
Evaluation Results of Effectiveness and Progress on Initiatives for Improvement
As a result of the analyzing the responses to the questionnaire survey conducted during the fiscal year ended March 31, 2022, each evaluation item received a score higher than the standard score and we received an evaluation from a third-party vendor to the effect that our Board of Directors is generally functioning properly and its effectiveness can be confirmed.
Assessments of the Effectiveness of the Board of Directors and Improvement Measures
Evaluation Result (Issues and Concerns) | Progress/Plan of Initiatives for Improvement | |
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Fiscal Year ended March 31 2022 |
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Fiscal Year ended March 31 2023 |
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Our plan is to further strengthen the supervisory and/or advisory functions of our Board of Directors by further utilizing the knowledge of External Directors, while continuing to implement the initiatives described above. |
Revisions in Wacoal’s Corporate Governance System
1977 | Wacoal issues ADRs*(American Depositary Receipts) |
Wacoal becomes the eighth Japanese company to issue ADRs. Upon issuance, the SEC (U.S. Securities and Exchange Commission) requires consolidated financial statements and accounting reports in accordance with U.S. GAAP. |
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2002 | Introduction of the corporate officer system → Number of directors: 13 → 9 |
In June 2002, the Company employs a corporate officer system in order to delegate authority and clarify responsibility more appropriately and efficiently. At the same time, the number of directors is reduced. |
2005 | Establishment of a pure holding company | The Company transfers to a pure holding company system to facilitate decision-making on Groupwide strategy, to optimize the allocation of resources, and to clarify the responsibilities and authority of operating companies so that they can execute operations flexibly. |
Appointment of outside officers | To promote the fairness and independence of the Board of Directors and the Audit & Supervisory Board, the Group increases the number of outside directors by two members and the number of outside Audit & Supervisory Board members by one member. | |
2007 | Establishment of the Executive Compensation Advisory Committee → Number of committee members (including outside directors): 4 |
Regarding the appointment, promotion, and remuneration of the directors and executive officers, the Executive Compensation Advisory Committee, chaired by the director of the Administrative Department, is established with outside directors included as members. |
2010 | Registration of all outside officers with the Tokyo Stock Exchange as independent officers → Number of independent officers registered: 6 |
All outside directors and outside Audit & Supervisory Board members are registered with the Tokyo Stock Exchange as independent officers. |
2015 | Establishment of the Independent Outside Officers Meeting | The Independent Outside Officers Meeting is established with the intention of sharing information about improving corporate governance, meetings of the Board of Directors, internal audits, etc. The committee includes independent outside officers. |
2018 | Establishment of the Executive Compensation Advisory Committee and the Executive Nomination Advisory Committee | The Executive Compensation Advisory Committee, which was established in 2007, becomes the Executive Compensation Advisory Committee and the Executive Nomination Advisory Committee. |
2021 | Introduction of Compensation Framework in the Form of Restricted Stock | We have introduced a restricted stock compensation plan for Directors (excluding outside directors)and discontinue the share-based stock options, for further sharing of price fluctuation risk with our shareholders and increasing incentives to contribute to the improvement of share price and corporate value. |
2022 | Revised the ratio of base compensation and stock compensation | Compensation of Officers consists of "base compensation," "performance-based bonuses," and "Transfer-restricted stock compensation. Revised the ratios of stock compensation to basic compensation so that stock compensation accounts for a larger percentage of the compensation of officers as they rise in rank. |
* In 2013, Wacoal stopped listing ADRs on the U.S. NASDAQ market and de-registered with the SEC.