Corporate Governance
Fundamental Policy
We at PARCO are to constantly work to strengthen our system of corporate governance, recognizing that in order to enhance corporate value, we must: protect the rights and interests of our shareholders, build smooth relationships with stakeholders other than shareholders, preserve transparency in management, and establish an effective management oversight structure.
Our corporate governance system is to be characterized by a clear distinction between supervision and execution. Here, to assure a high degree of transparency in corporate governance while facilitating decisionmaking and execution, we adopt a corporate managerial structure that includes a Nominating Committee and other such entities.
We at PARCO established Fundamental Policy for Corporate Governance in 2016. This policy formulates our basic way of thinking with regards to corporate governance. That is, it sets down how PARCO believes corporate governance should best be applied to achieve continual growth and a medium-to-long-term enhancement of corporate value under the PARCO Corporate Mission, which calls for the creation and provision of value in a manner that satisfies our customers, tenants, shareholders, and other stakeholders.
Fundamental Policy for Corporate Governance(2018.7.26)
Corporate Governance Report(2018.10.3)
Overview of the PARCO Corporate Governance System
Board of Directors
Composition of the Board of Directors
Selection criteria is disclosed at Fundamental Policy for Corporate Governance.
Committees
Nominating Committee
Audit Committee
Compensation Committee
Executive Officers and the Management Committee
External Accounting Auditor
Message from the Committee Chair
Audit Committee Chair
Nominating Committee Chair
Compensation Committee Chair
Internal controls and risk management system
Our company will work to increase corporate value by establishing a system to assure the suitability of our company and group's operations regarding factors such as the efficiency and effectiveness of these operations, the credibility of our financial reports, the legal compliance of our business activities, and preservation of company assets.
Risk Management System
Compliance system
Internal auditing system
Relations with shareholders and other stakeholders
Ensuring shareholder rights, equality, etc.
Appropriate collaboration with stakeholders other than shareholders
CSR (corporate social responsibility) initiatives
Committee activities are to span the organization, with related efforts covering everything from discussion sessions with PARCO Group Presidents and Executive Officers, to group-wide collaboration drawing together the Diversity Committee, Risk Management Committee, group companies, and PARCO internal departments.
Promoting and ensuring diversity within the organization, including encouraging the active involvement of women
Internal reporting system
Standards and Criteria for Determining the Independence of External Directors
PARCO has created its own standards for determining the independence of External Directors, based on the independence standards of the Tokyo Stock Exchange and the Japan Association of Corporate Directors, which is set forth in the Fundamental Policy on Corporate Governance.
Related Party Transactions
In order to ensure that transactions entered into with related parties are appropriate, PARCO conducts a survey of all officers of PARCO and its subsidiaries regarding whether they have engaged in related party transactions, and on the basis of this submits to the Board of Directors a report on transactions between PARCO and its officers and major shareholders. Any transaction between PARCO and a Director or Executive Officer that gives rise to a conflict of interest is subject to approval by the Board of Directors based on the relevant laws and PARCO’s regulations for Directors.
Evaluation of the Board of Directors
PARCO perform an assessment of the effectiveness of all Directors in the interests of improving the effectiveness of the Board of Directors. The evaluation process, evaluation focus, the findings and the resulting improvements are disclosed below.
（i）Evaluation Process
The Committees Secretariat and Board Secretariat (Corporate Planning Office) conducted surveys and interviews with each individual Director concerning their assessment of the effectiveness of the Board of Directors.
（ii）Focus of evaluation
The evaluation covered the makeup of the Board of Directors, the quality of debate, agenda items, and management and support arrangements. Feedback on the current situation and progress on improvements from the previous year’s evaluations was compiled to inform how the Board of Directors could be made more effective in future.
（iii）Evaluation Results
Evaluations were performed in FY2015 and FY2016, but as FY2017 was the first year of the new Medium-term Business Plan, strategic measures focused on core businesses were implemented, the starting period of Board of Directors meeting was accelerated to ensure that more substantive debate could take place, and plans were implemented to provide additional information to Directors and to strengthen communication with the execution side. As a result, the FY2017 evaluation showed trends of overall improvement. Assessments were made by each Director based on standardized evaluation criteria, and as a Company with Committees, there has been a noticeable a rise in the effectiveness of the Board of Directors.
The measures that received an especially positive assessment were, “Effectiveness of a Company with Committees,” “Contribution to the management of Board of Directors’ discussions and resolutions,” and “Determining the hours and number of meetings for the Board of Directors and establishing a support system for committee Members.”
(iv) Areas in which effectiveness can be improved even further:
1. Improving substantive debate about high priority strategic issues, such as management strategy, financial policy, etc.
2. Improving project planning and making progress on the implementation of the above-mentioned debate.
3. Ensuring opportunities for bilateral communication between Directors and the execution side, and further improving Directors’ understanding of the company.
We conduct an evaluation of the effectiveness of the Board of Directors on an annual basis, believing that by repeating the process of evaluation, analysis, debate, and improvement, the Board of Directors will change, leading to increased effectiveness.
Training Policy for Directors
All newly-appointed Executive Officers, including Internal Directors, are briefed on the roles, obligations and responsibilities of Directors and Executive Officers, the nature of their agreement with PARCO, and related regulations. Compliance training is offered after appointment. Upon joining the Board, External Directors are also given an overview of the company and briefed on its management philosophy, business situation, corporate governance matters and related regulations. Ongoing briefing on PARCO’s business operations, trends in the retail sector, and the business environment in which we are placed is also provided to these External Directors after appointment, along with opportunities to visit stores, in the interest of giving them a better understanding of our company.
Reason for appointment as a Director and main activities of Directors
PARCO ensures that more than half of its Directors are External Directors. By serving on the Board of Directors and Executive Committees, these External Directors work to improve the effectiveness of internal controls by overseeing the execution of duties by Executive Officers and the like.
Director
Kozo Makiyama
Reason for appointment
After serving for many years in the Store Management Operation Divisions, Mr. Makiyama was appointed President and Representative Executive Officer in May 2011. Through his years of service, he has amassed a wealth of experience that broadly covers PARCO’s business operations. As a PARCO Director, he has been actively contributing to discussion and deliberation at Board meetings since May 2008 and he was appointed to supervise operations and provide management oversight based on his experience and track record to date.
Hidekazu Hirano
Reason for appointment
After serving for many years in the Store Management and Corporate Operations Divisions, Mr. Hirano was appointed President and Representative Executive Officer in March 2008, and has served as a Senior Executive Officer since May 2011. Through his years of service, he has amassed a wealth of experience that broadly covers PARCO’s business operations. As a PARCO Director, he has been actively contributing to discussion and deliberation at Board meetings since May 2008 and he was appointed to supervise operations and provide management oversight based on his experience and track record to date.
Yasuyuki Kobayashi
Reason for appointment
Serving as the Representative Director and Senior Managing Executive Officer of J. Front Retailing, Mr. Kobayashi possesses a strong track record and a wealth of experience and insight regarding both management and the retail industry. He was appointed as a Director in order to utilize his business management experience to provide valuable advice that will enable PARCO Executive Officers to execute their duties in an effective and appropriate manner.
Taro Sawada
Reason for appointment
Serving as the Director and Managing Executive Officer of Daimaru Matsuzakaya Department Stores Co. Ltd., Mr. Sawada possesses a strong track record and a wealth of experience and insight regarding both management and the retail industry. We are confident that as a PARCO Director, Mr. Sawada will utilize his business management experience to provide valuable advice that will enable PARCO Executive Officers to execute their duties in an effective and appropriate manner.
External Director
Each of the External Directors was designated as an independent officer because he is in a position to oversee the management of the business and possesses an adequate degree of independence.
Hiroshi Takahashi
Reason for appointment
Mr. Takahashi is a certified public accountant (formerly a Senior Partner at Ernst and Young ShinNihon LLC), and a Representative Director of Pronet Inc. PARCO appointed Mr. Takahashi as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the specialized knowledge, experience, and judgement regarding finance and accounting he has gained over the course of his career.
Main activities (FY 2017)
Attended 13 of 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and provided his specialist perspective as a certified public accountant when needed.
Tomonori Ito
Mr. Ito is a professor at Hitotsubashi University's Graduate School of Business Administration. PARCO appointed Mr. Ito as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience and judgement he has gained over the course of his extensive career, and his experience working both within Japan and overseas.
Main activities (FY 2017)
Attended 11 of 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and provided advice when needed based on a professional point of view as a scholar.
Noriko Nakamura
CEO of Poppins Holdings and the Representative Director and Chairman of Poppins Corporation, and is a member of the Nikkei’s Management Advisory Board. PARCO appointed Ms. Nakamura as an External Director on the expectation that she can perform the function of business oversight and checking on the basis of her knowledge of management, and the experience and judgement from a global perspective gained over the course of her career.
Main activities (FY 2017)
Attended 13 of the 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and Provided her perspective as a vastly experienced business manager when needed.
Tadayuki Seki
Mr. Seki was involved in the management of Itochu Corporation for many years. PARCO appointed Mr. Seki as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience, and global perspective he has gained over the course of his career.
Main activities (FY 2017)
Attended all 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and adviced baced on his perspective as a vastly experienced business manager when needed, and global knowledge and experience.
After serving for many years in the Store Management Operation Divisions, Mr. Makiyama was appointed President and Representative Executive Officer in May 2011. Through his years of service, he has amassed a wealth of experience that broadly covers PARCO’s business operations. As a PARCO Director, he has been actively contributing to discussion and deliberation at Board meetings since May 2008 and he was appointed to supervise operations and provide management oversight based on his experience and track record to date.
After serving for many years in the Store Management and Corporate Operations Divisions, Mr. Hirano was appointed President and Representative Executive Officer in March 2008, and has served as a Senior Executive Officer since May 2011. Through his years of service, he has amassed a wealth of experience that broadly covers PARCO’s business operations. As a PARCO Director, he has been actively contributing to discussion and deliberation at Board meetings since May 2008 and he was appointed to supervise operations and provide management oversight based on his experience and track record to date.
Yasuyuki Kobayashi
Reason for appointment
Serving as the Representative Director and Senior Managing Executive Officer of J. Front Retailing, Mr. Kobayashi possesses a strong track record and a wealth of experience and insight regarding both management and the retail industry. He was appointed as a Director in order to utilize his business management experience to provide valuable advice that will enable PARCO Executive Officers to execute their duties in an effective and appropriate manner.
Taro Sawada
Reason for appointment
Serving as the Director and Managing Executive Officer of Daimaru Matsuzakaya Department Stores Co. Ltd., Mr. Sawada possesses a strong track record and a wealth of experience and insight regarding both management and the retail industry. We are confident that as a PARCO Director, Mr. Sawada will utilize his business management experience to provide valuable advice that will enable PARCO Executive Officers to execute their duties in an effective and appropriate manner.
External Director
Each of the External Directors was designated as an independent officer because he is in a position to oversee the management of the business and possesses an adequate degree of independence.
Hiroshi Takahashi
Reason for appointment
Mr. Takahashi is a certified public accountant (formerly a Senior Partner at Ernst and Young ShinNihon LLC), and a Representative Director of Pronet Inc. PARCO appointed Mr. Takahashi as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the specialized knowledge, experience, and judgement regarding finance and accounting he has gained over the course of his career.
Main activities (FY 2017)
Attended 13 of 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and provided his specialist perspective as a certified public accountant when needed.
Tomonori Ito
Mr. Ito is a professor at Hitotsubashi University's Graduate School of Business Administration. PARCO appointed Mr. Ito as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience and judgement he has gained over the course of his extensive career, and his experience working both within Japan and overseas.
Main activities (FY 2017)
Attended 11 of 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and provided advice when needed based on a professional point of view as a scholar.
Noriko Nakamura
CEO of Poppins Holdings and the Representative Director and Chairman of Poppins Corporation, and is a member of the Nikkei’s Management Advisory Board. PARCO appointed Ms. Nakamura as an External Director on the expectation that she can perform the function of business oversight and checking on the basis of her knowledge of management, and the experience and judgement from a global perspective gained over the course of her career.
Main activities (FY 2017)
Attended 13 of the 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and Provided her perspective as a vastly experienced business manager when needed.
Tadayuki Seki
Mr. Seki was involved in the management of Itochu Corporation for many years. PARCO appointed Mr. Seki as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience, and global perspective he has gained over the course of his career.
Main activities (FY 2017)
Attended all 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and adviced baced on his perspective as a vastly experienced business manager when needed, and global knowledge and experience.
Serving as the Representative Director and Senior Managing Executive Officer of J. Front Retailing, Mr. Kobayashi possesses a strong track record and a wealth of experience and insight regarding both management and the retail industry. He was appointed as a Director in order to utilize his business management experience to provide valuable advice that will enable PARCO Executive Officers to execute their duties in an effective and appropriate manner.
Serving as the Director and Managing Executive Officer of Daimaru Matsuzakaya Department Stores Co. Ltd., Mr. Sawada possesses a strong track record and a wealth of experience and insight regarding both management and the retail industry. We are confident that as a PARCO Director, Mr. Sawada will utilize his business management experience to provide valuable advice that will enable PARCO Executive Officers to execute their duties in an effective and appropriate manner.
External Director
Hiroshi Takahashi
Reason for appointment
Mr. Takahashi is a certified public accountant (formerly a Senior Partner at Ernst and Young ShinNihon LLC), and a Representative Director of Pronet Inc. PARCO appointed Mr. Takahashi as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the specialized knowledge, experience, and judgement regarding finance and accounting he has gained over the course of his career.
Main activities (FY 2017)
Attended 13 of 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and provided his specialist perspective as a certified public accountant when needed.
Tomonori Ito
Mr. Ito is a professor at Hitotsubashi University's Graduate School of Business Administration. PARCO appointed Mr. Ito as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience and judgement he has gained over the course of his extensive career, and his experience working both within Japan and overseas.
Main activities (FY 2017)
Attended 11 of 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and provided advice when needed based on a professional point of view as a scholar.
Noriko Nakamura
CEO of Poppins Holdings and the Representative Director and Chairman of Poppins Corporation, and is a member of the Nikkei’s Management Advisory Board. PARCO appointed Ms. Nakamura as an External Director on the expectation that she can perform the function of business oversight and checking on the basis of her knowledge of management, and the experience and judgement from a global perspective gained over the course of her career.
Main activities (FY 2017)
Attended 13 of the 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and Provided her perspective as a vastly experienced business manager when needed.
Tadayuki Seki
Mr. Seki was involved in the management of Itochu Corporation for many years. PARCO appointed Mr. Seki as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience, and global perspective he has gained over the course of his career.
Main activities (FY 2017)
Attended all 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and adviced baced on his perspective as a vastly experienced business manager when needed, and global knowledge and experience.
Mr. Takahashi is a certified public accountant (formerly a Senior Partner at Ernst and Young ShinNihon LLC), and a Representative Director of Pronet Inc. PARCO appointed Mr. Takahashi as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the specialized knowledge, experience, and judgement regarding finance and accounting he has gained over the course of his career.
Attended 13 of 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and provided his specialist perspective as a certified public accountant when needed.
Attended 11 of 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and provided advice when needed based on a professional point of view as a scholar.
Noriko Nakamura
CEO of Poppins Holdings and the Representative Director and Chairman of Poppins Corporation, and is a member of the Nikkei’s Management Advisory Board. PARCO appointed Ms. Nakamura as an External Director on the expectation that she can perform the function of business oversight and checking on the basis of her knowledge of management, and the experience and judgement from a global perspective gained over the course of her career.
Main activities (FY 2017)
Attended 13 of the 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and Provided her perspective as a vastly experienced business manager when needed.
Tadayuki Seki
Mr. Seki was involved in the management of Itochu Corporation for many years. PARCO appointed Mr. Seki as an External Director on the expectation that he can perform the function of business oversight and checking on the basis of the knowledge, experience, and global perspective he has gained over the course of his career.
Main activities (FY 2017)
Attended all 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and adviced baced on his perspective as a vastly experienced business manager when needed, and global knowledge and experience.
Attended 13 of the 14 Board meetings and 11 of 13 Audit Committee meetings held this fiscal year and Provided her perspective as a vastly experienced business manager when needed.
Attended all 14 Board meetings and all 13 Audit Committee meetings held this fiscal year and adviced baced on his perspective as a vastly experienced business manager when needed, and global knowledge and experience.
Approach to Officer compensation
Under our Nominating Committee managerial structure, a Compensation Committee is to set standards for compensation and determine the compensation of individual Directors and Executive Officers in a fair and impartial manner based on assessment of roles, responsibilities and work results.
Officer compensation in FY 2017
| Position | Individuals paid | Amount paid (Millions of yen) |
|---|---|---|
| Directors（excluding External Directors） | 4 | 25 |
| External Directors | 4 | 31 |
| Executive Officers | 16 | 433 |
| Total | 24 | 489 |
Notes
| 1. | While PARCO officially abolished its retirement bonus system at the end of FY 2004, the payment of retirement bonuses was recorded for Directors and Executive Officers serving prior to this period, and was scheduled to be provided at the time of their retirement. As of the end of FY 2017, unpaid retirement bonuses totaled 5 million yen for Directors and 2 million yen for Executive Officers. |
| 2. | The number of Officers as of the end of the current fiscal year are as follows４Directors (excluding External Directors), ４ External Directors, and 16 Executive Officers, with 2 of the aforementioned serving concurrent roles as both Directors and Executive Officers. |
Standards for Determining Director and Executive Officer Compensation
- Director annual salary will take the form of fixed compensation which, depending on role, will comprise a basic annual salary, a Committee chairman annual salary and/or a Committee member annual salary.
- Executive Officer annual salary will take the form of fixed compensation which, depending on role/position, will comprise of a basic annual salary, performance pay (based on company performance and personal performance) and stock compensation from a stock issuance trust.
- The ratio of Executive Officer basic annual salary, performance pay (standard), and stock compensation is to be based on roles and responsibilities at 40%～50% : 30% (equivalent value) : 20％～30% (equivalent value).
- Executive Officer basic annual salary is to be based on that person's role/position for the current term.
- Executive Officer performance reward is to be determined by distributing a payment pool, linked to company earnings for the previous term, among Directors based on personal performance (0-200% allocation ratio).
- Executive Officer stock compensation is to be based on that person's role/position for the current term.
- For Executive Officers who also serve as Directors, payment is calculated by adding Executive Officer annual compensation to Director annual compensation
Position on shareholdings
PARCO does not generally maintain policy shareholdings, except in cases where it has judged that doing so will help to enhance the value of the company in the mid-to long-term as a result of the maintenance and strengthening of trading relationships and the maintenance and development of business alliances.
Criteria for exercise of voting rights
Voting rights are exercised appropriately, and on the basis of an overall assessment of whether or not the vote in question will contribute to the value of PARCO or the companies in which it invests.
Status of shareholdings
| 1.Investment equities held for purposes other than portfolio investment Number of companies: 6 Total value recorded on balance sheet: 517 million yen |
| 2. PARCO does not maintain any equity holdings solely for the purpose of portfolio investment. |
| 3. PARCO does not have any holdings in investment equities solely for the purpose of portfolio investment |