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Corporate Governance

IDEC Corporate Governance Policy

The basis of the IDEC Group’s corporate governance is to ensure management transparency and effectiveness for the sake of shareholders and other stakeholders. For this reason, we assign outside directors and separate the management supervisory function from the executive function so as to always maintain a high priority on transparency and effectiveness.
Guided by these principles, we formulated and issued the IDEC Corporate Governance Policy to improve our corporate value in line with “The IDEC Way.” We are taking action under this policy to further strengthen our governance practices so that we can govern our company more effectively.

■ Corporate Governance Policy

Report on Corporate Governance

■ Corporate Governance Report (Last update: June 26, 2024)

Corporate Governance System

■ Policy and procedure for director appointment and dismissal

The process of selecting candidates for directorships is based on a skills matrix outlining the expected skills and other requirements. The Nominating Committee recommends candidates to the Board of Directors on the basis of the skills matrix review, and the nominations are made part of the agenda of the General Meeting of Shareholders through voting at a Board of Directors attended by a majority of independent outside directors.

Directors who are deemed to no longer possess the expected skills and qualities of their position are considered for dismissal. Also, if a director is found to have violated laws, regulations, the articles of incorporation, or otherwise be unfit for the discharge of their duties, the Board of Directors, acting on a report by the Nominating Committee, votes on whether to include a proposal for the director’s dismissal in the General Meeting of Shareholders agenda. This vote must be made at a meeting attended by a majority of independent outside directors.

■Directors & Executive Officers

Evolution of governance

The IDEC Group has separated the business executive function and the supervisory function of the management in order to realize efficient corporate management, and has proactively appointed outside directors since early on. The IDEC Corporate Governance Policy was established to set forth and communicate our views on governance and our operating policy in FY2017. We transformed into a Company with an Audit & Supervisory Committee in FY2019, established a voluntary Nominating Committee in FY2022, and a Remuneration Committee in FY2023.
We have ensured that outside directors constitute the majority of all directors since FY2017. The Board of Directors is a diverse body made up of men and women with different backgrounds and areas of expertise.
Additionally, we introduced a performance-based stock-based compensation (performance share units) and restricted stock (restricted stocks) executive compensation in an effort to review the compensation scheme in FY2024.

Internal Control System

In order to ensure the credibility of the financial reporting of the IDEC Group, we have prepared relevant regulations and have established appropriate systems in accordance with the internal control evaluation criteria for financial reporting. The Internal Control Policy on Financial Reporting is established to clarify the overall Group’s promotion structure, and to establish a framework for continuous self-inspection at each division and group company and for independent monitoring by the Internal Auditing Department.

Nominating Committee and Remuneration Committee

The Company established the Nominating Committee and Remuneration Committee in 2021 and 2022 respectively, and operates them as non-statutory advisory bodies to the Board of Directors. The Nominating Committee considers and deliberates over the nomination of candidates for director, plans to cultivate candidates for the next-generation of top management and succession plans, while the Remuneration Committee considers and deliberates matters related to the remuneration system and regulations, and makes remuneration decisions in accordance with the system. Both committees report to the Board of Directors. The members of each committee comprise directors selected by the Board of Directors, a majority of whom are outside directors, and include the Chairman of the Board of Directors as an inside director.

Succession plan

The voluntary Nominating Committee established in 2021 discussed the selection of next-generation executive candidates and how to train them, and then developed and launched a succession plan for cultivating next-generation executive leadership.

The committee promoted the development program among the selected next-generation executive candidates, arranged outside training, 1-on-1 action learning provided by outside directors, lectures on specialized topics and other activities, and provided opportunities for candidates to deepen their contact with current directors and executive officers while gaining hands-on experience with actual management issues through attendance at each Top Management Meeting and Board of Directors. While candidate directors for the next fiscal year were chosen from among the next-generation executive candidates in June 2023, the newly appointed directors will continue with the development program including executive coaching following their appointment, and the Nominating Committee will request appropriate reports on the status of their development, which it will use to offer opinions on the development plan.

Remuneration Policy for Directors

Proactive Engagement by Outside Directors

Outside directors play a professional and independent role in various ways. At the Board of Directors, they express candid opinions based on their high level of expertise and management experience, and participate in the discussion from an independent standpoint. They are also actively involved in the growth of the Company’s business, including the holding of individual sessions with a responsible department or departments concerning a business issue or subject, and lectures and interviews in the curriculum for next-generation training.
With the objective of enhancing communication among outside directors’ exchange session have been held since FY2019. In FY2022, outside directors deepened examination of medium- to long-term strategic policies of the IDEC Group through active discussions and exchange of views.

■Outside Director Activities

Efforts to Evaluate Effectiveness

In order to improve the effectiveness of the Board of Directors, an evaluation of all directors except the CEO has been conducted using a questionnaire method every year since FY2016. A third-party organization has conducted the questionnaire survey and analyzed the responses since FY2022.
The results of their evaluation are reported to the Board of Directors, whose members share the issues identified and continuously strive to make improvements.

■Results of effectiveness evaluation in FY2024

In terms of items such as strengthening ESG initiatives, the remuneration system, and succession planning, evaluations improved since FY2023. The overall evaluation was generally positive, and the Board of Directors was evaluated as functioning effectively. Based on the evaluation results, we recognized the following issues, and are engaged in efforts to improve upon them.

Outline of the effectiveness evaluation in FY2024

Target members	All directors except the CEO
Evaluation method	Anonymous 5-point questionnaire
Number of questions	40
Survey period	February 2024
Response status	All targets answered
Questionnaire evaluation items	・Roles and responsibilities of the Board of Directors ・Size and composition of the Board of Directors ・Deliberation and management at the Board of Directors ・Succession plan ・Design and operation of organizations such as the Board of Directors ・Relationship and dialogue with shareholders