Corporate Governance

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Basic views on Corporate Governance

The Company views Corporate Governance as a base for all business in the Keikyu Group and as a concept that forms the basis of management.
As a corporate entity responsible for a service that is a lifeline for many, the Company group (the “Group”) works to ensure the highest level of safety in all aspects of its business, while seeking appropriate cooperation with stakeholders such as customers, shareholders, investors, local communities, suppliers, employees, and society as a whole, as well as working in harmony with the environment. These measures are aimed at achieving sustainable growth and at raising corporate value over the medium- to long-term, in pursuit of which goals the Group implements initiatives to strengthen corporate governance on a continuous basis, aiming for establishing a highly transparent and objective corporate governance system, based on the Group Philosophy (business principles and code of conduct) Basic Policies on Sustainability and the Long-Term Vision.
For details regarding compliance with the Corporate Governance Code, please refer to “Corporate Governance Reports” below.

Evaluation of the Effectiveness of the Board of Directors

Evaluation Summary

To enhance the effectiveness of the Board of Directors, all officers participate in an annual evaluation of the Board. The results of the evaluation are utilized in deliberations on issues and in the administration of the Board. Further, to elicit frank opinions from those surveyed, since fiscal 2018 an external organization has been commissioned to collect and tabulate the survey results. In addition, the analysis and evaluation of the effectiveness of the Board as a whole is disclosed in the Corporate Governance Report.

Main Evaluation Items

  • Composition of the Board
  • Administration of the Board
  • Deliberations at Board meetings
  • Monitoring function of the Board
  • Support system for directors and Audit & Supervisory Board members
  • Training
  • Initiatives of the Board

Results of FY2021 effectiveness evaluation and initiatives, etc.

In FY2021, the Company conducted initiatives throughout the year as a response to the following issues recognized through the FY2020 effectiveness evaluation. As a result, the evaluation and judgment determined that all issues had been improved through appropriate action and that effectiveness was assured.

  • Enhance discussion on management plans, management risks and ESG.
  • Active involvement in formulating and implementing the successor-development plan for CEO.
  • Enhance monitoring function through construction and operation of internal control system.

Aside from the above issues, the narrowing down of the number of examination items (to ensure adequate time for review) was raised as an issue, and a review was conducted on the meeting agenda item criteria, criteria for resubmission and on the method of operating the meeting body. Going forward, we will strive to further enhance discussions at the Board of Directors meetings by thoroughly carrying out these reviewed matters and improving them as appropriate through the process of operating them.

Tasks Going Forward

As a result of the fiscal 2021 effectiveness evaluation, the following tasks were newly recognized.

  • Enhance discussions on personnel strategies and intellectual property strategies.
  • Enhance discussions on promotion of DX (digital transformation).
  • Enhance discussions on ESG (focusing on further relating it to business strategies).

In FY2022, we will strive to maintain and improve the effectiveness of the Board of Directors by continually carrying out initiatives to respond to the aforementioned issues.

President Succession Plan

Successor Development Policy and Selection Process

With the aim of ensuring that the Group sustains growth and enhances corporate value over the medium to long term, successors to the position of president are developed and appointed in a planned manner. To further systematize this planning, a president succession plan is formulated. In formulating the plan, a series of deliberations are conducted by the Nomination and Remuneration Advisory Committee, which is chaired by an independent outside director and in which independent outside directors constitute a majority. In fiscal 2021, the qualities of an ideal president were clarified, and the management process was revised with a view to further improving the transparency and objectivity of successor nomination. Going forward, management of the succession plan will continue based on the Nomination and Remuneration Advisory Committee’s monitoring of the progress in successor development and based on supervision conducted by the Board of Directors.

Qualities Required of the President

To ensure that the appointment of the president is properly conducted through a transparent and fair process, the Group defines the ideal president and, under the categories of personal qualities and skill set, clarifies the attributes sought. We enhance the personal qualities and skill set required of the president by clarifying development tasks for each candidate, conducting job rotations, and providing education and training that enables candidates to acquire the knowledge needed by executives. In accordance with changes in the business environment, we will continue revising the personal qualities and skill set we seek in our president.

Officer Training

The Company conducts training that enhances the skills that officers need to perform their roles and duties. Through officer training that takes into account the business environment and external affairs, the Company strengthens the business management capabilities of directors and executive officers. In fiscal 2021, officer training focused on the Task Force on Climate-related Financial Disclosures. In addition, Audit & Supervisory Board members acquire the knowledge required to fulfill the responsibilities of their positions by actively participating in external training events and studying diligently. Additionally, when outside directors and outside Audit & Supervisory Board members assume office, measures are taken to deepen their understanding of the Group, including the provision of summary information on the Group—which covers its businesses, finances, and organization—and tours of Group facilities as necessary.

Skills Matrix

In light of its medium- to long-term management strategy and management issues, the Company has set out the skills (knowledge, experience, and capabilities) required for the effective functioning of Directors and Audit & Supervisory Board Members. Inside directors are required to have skills related to business and administrative divisions and a deep understanding of the Company’s business. In addition, outside directors are expected to have expertise, extensive experience, and a broad range of knowledge that can be utilized in the supervision of business execution. Audit & Supervisory Board Members are required to have expertise, extensive experience and a broad knowledge for conducting audits of management. The skills of Directors and Audit & Supervisory Board Members are as follows.

Reasons for selection of the skills that comprise the Skills Matrix are as follows.

Skills Reasons for selection
Corporate management To appropriately fulfill management supervisory roles and to respond to sudden changes in the business environment based on experience in the business management of the Company, major Group companies, and outside companies
Sustainability/
Business strategy
To formulate and advance strategies that contribute to the sustained growth of the Group and the enhancement of corporate value over the medium to long term
Finance/Accounting To ensure the appropriateness and accuracy of financial reporting, to maintain financial soundness, and to formulate and advance financial strategies that realize development projects around Shinagawa Station and other large-scale growth investments
Governance/Legal affairs/
Risk management
To build a corporate structure that is resilient to risk by possessing a knowledge of governance as the foundations of business management while accurately identifying management risks and taking appropriate countermeasures
Human resource development/
Organizational strategy
To transform into a team of professionals that welcomes diverse values and workstyles and promptly creates new value that aligns with changes in the business environment
Sales/Marketing To become a corporate group that is the preferred choice of customers through increased efforts to meet emerging demand and through the creation of high-value-added services that target latent demand
ICT/Digital Transformation To improve services by utilizing data and to realize low-cost operations and advance business co-creation inside and outside the Group by actively using digital technologies
Transportation To ensure core businesses provide and sustain services that both meet public needs and realize profitability and that reflect policies on timetables, fares, and low-cost operations and to develop a mobility platform that provides comfortable, seamless mobility services
Real estate/
Lifestyle services
To form a community creation platform that creates flows of people and goods and to realize synergy benefits with the mobility platform through continued promotion of town development that establishes virtuous cycles among the Group’s businesses

In Relation to Outside Officers

[Reasons for nominating for Outside Director]

The reasons for appointing each outside officer are as follows.

Outside Director Mr. Yoshinori Terajima

Mr. Yoshinori Terajima has once served as an executive of a major life insurance company, and obtained abundant experiences and broad insights relating to fund management and investment projects. He has been serving as Outside Director of the Company since June 2018. The Company considers that he has properly performed his duties in supervising business execution, etc. of the Company and hence, appointed him as an Outside Director.

Outside Director Ms. Tamaki Kakizaki

Ms. Tamaki Kakizaki is a university professor specilized in the field of internal controls and internal audit, and an outside officer of an airport terminal building operation company, etc. She was an outside officer of a major pharmaceutical company, and obtained abundant experience and broad insight in these areas. The Company considers that she has properly performed her duties as Outside Director of the Company since June 2020 and hense, appointed her as an Outside Director.

Outside Director Ms. Sawako Nohara

Ms. Nohara has abundant experience and broad insight as manager of a company related to business and marketing strategies in the IT business, as an outside officer of a major pharmaceutical company, etc. and as an expert member of government committees, and hence, the Company expects her to play a role in leveraging her experience and insight in her duties in supervising business execution, etc. of the Company. The Company considers that she has properly performed her duties as Outside Director of the Company since June 2021 and hence, appointed her again as an Outside Director.

Outside Standing Audit & Supervisory Board Member Mr. Osamu Harada

Mr. Harada has once served as Standing Audit & Supervisory Board Member of a major financial institution, and as the president of a monetary claim management and collection company, obtaining abundant experience and broad insight in these areas. Therefore, the Company appointed him as an Outside Audit & Supervisory Board Member, expecting him to conduct audit duties for the Company by leveraging his expertise and experience.

  • *Osamu Harada is a newly appointed Director at the 101th Annual General Meeting of Shareholders held on June 29, 2022.

Outside Audit & Supervisory Board Member Mr. Takashi Suetsuna

Mr. Takashi Suetsuna has once served as Chief of Kanagawa Prefectural Police Headquarters and Deputy Superintendent General of the Tokyo Metropolitan Police Department, and as a former outside officer of a major general trading company, etc. has abundant experience and broad insights. He has been serving as Outside Audit & Supervisory Board Member of the Company since June 2016. The Company considers that he has properly performed his duties in auditing business management of the Company and hence, appointed him as an Outside Audit & Supervisory Board Member.

Outside Audit & Supervisory Board Member Mr. Osamu Sudoh

Mr. Sudoh has high expertise in corporate legal affairs as an attorney at law. He serves as an outside officer of a major logistics company, etc., and has served as a former outside officer of a total entertainment company. He therefore has obtained abundant experiences and broad insight into these areas. He serves as Outside Audit & Supervisory Board Member of the Company since June 2016. The Company considers that he has properly performed his duties in auditing business management and hence, appointed him as an Audit & Supervisory Board Member.

[Independence of Outside Officers]

The Company designates Outside Officers as independent officers in accordance with the “Independence Criteria for Outside Officers.”

Remuneration Plan for Officers ※As of March 2023

Basic policy for determining the amount of remuneration, etc. and its calculation method

As a corporate entity that pillars the people living along its railway lines, the Group’s highest priority is ensuring safety and security, and in order to further develop the areas along the railway lines, the Group companies work in cooperation with each other to generate synergies, a characteristic feature of the Group. In addition to taking into account the above, the Company’s remuneration for officers emphasizes not only short-term operating performance, but also contributions to raising corporate value and operating performance over the medium to long term, as well as having values in common with those of shareholders. When determining remuneration, employee salaries, trends at other companies, survey data from external research organizations and other factors are taken into account.

Composition of remuneration

The remuneration for Directors and Executive Officers is approved by the Board of Directors upon consultation with the Nomination and Remuneration Advisory Committee, the majority of whose members are Independent Outside Directors.

Type of remuneration Officers eligible for payment Description
Fixed remuneration Directors A fixed amount is paid based on the Director Remuneration and Executive Officer Remuneration Rules (hereinafter the “Rules”) determined by the Board of Directors. For the Chairman of the Board, the Chairman Remuneration is added to the fixed remuneration.
Executive Officers An amount determined by position is paid based on the Rules.
Representative director remuneration Chairman, Representative Director A fixed amount is paid based on the Rules.
Representative Directors other than Chairman A fixed amount and performance-linked remuneration are paid based on the Rules.
Bonus Executive Officers To raise the incentive to improve operating performance, a benchmark amount determined by position is set as a guideline as consideration for the execution of duties during the fiscal year, and an amount taking into account operating performance, etc. is paid based on the Rules.
Stock remuneration Internal Directors Executive Officers The Company’s shares and an amount of money equivalent to the market value of the Company’s shares (hereinafter the “Company’s Shares, etc.”) are provided based on the Rules. The Company grants points to each officer based on the Officer Stock Benefit Regulations established by the Board of Directors, and the Company’s Shares, etc. according to the number of granted points are provided, in principle, when the officer retires.

(Note) In addition to the above remuneration, the Company obtains executive accident insurance to insure all of the Directors and Executive Officers, and pays a fixed amount for the insurance premiums every month.

Policy for determining the amount of individual remuneration

1. Fixed remuneration and representative director remuneration (fixed remuneration)

Type of remuneration Officers eligible for payment Method for determining remuneration Timing of payment
Fixed remuneration Directors Determined based on a comprehensive consideration of societal standards, management duties, etc. Every month
Executive Officers Determined based on a comprehensive consideration of societal standards, management duties, balance with employee salaries, etc. Every month
Representative director remuneration (fixed remuneration) Chairman, Representative Director Determined based on a comprehensive consideration of societal standards, responsibilities as Representative Director, specialized role in supervising business execution as Chairman, etc. Every month
Representative Directors other than Chairman Determined based on a comprehensive consideration of societal standards, responsibilities as Representative Director, management duties, etc. Every month

2. Representative director remuneration (performance-linked remuneration) and bonus

(1) Types, etc

Type of remuneration Officers eligible for payment Method for determining remuneration Timing of payment
Representative director remuneration (performance-linked remuneration) Representative Directors other than Chairman Determined based on a combined quantitative and qualitative evaluation and an evaluation of operating performance. After annual general meeting of shareholders
Bonus Executive Officers Determined based on a combined quantitative and qualitative evaluation and an evaluation of operating performance. After annual general meeting of shareholders

(2) Evaluation items

In order to reflect both quantitative and qualitative evaluations in representative director remuneration (performance-linked remuneration) and bonuses, the remuneration and bonus amounts are each adjusted within a range of ±30% from the benchmark amounts based on the ratings obtained from the following evaluations. In addition, depending on business performance and other factors, the amounts may be reduced by more than 30%.

Evaluation items
Quantitative evaluation Conversion of the level of achievement of the business plan for the financial result figures of the fiscal year, into points for evaluation
(Indicators used)
  • Profit attributable to owners of parent, which is the source of dividends for shareholders
  • Consolidated net interest-bearing debt, which is an indicator for maintaining a sound financial condition
  • Consolidated net interest-bearing debt/EBITDA ratio, which takes operating cash flow into account
Qualitative evaluation
  • Level of contribution to raising the future corporate value of the entire Group
  • Impact of extraordinary factors on operating performance
  • Evaluation of the Company’s operating performance by external organizations
  • Evaluation of safety with respect to scandals, accidents, etc. that could have an impact on the entire Group

(3) Evaluation proportion

(i) Representative director remuneration (performance-linked remuneration)
The evaluation for performance-linked remuneration for Representative Directors other than Chairman is comprised of only the portion that evaluates consolidated financial results.
(ii) Bonus
The benchmark amounts for the Executive Officer bonuses determined based on the Rules are divided as follows, and the evaluation of operating performance is conducted separately for a portion based on consolidated financial results and for a portion based on execution of duties of Senior General Managers, Vice Senior General Managers, Office Managers, General Managers and officers of Group companies. Although the evaluation for the President consists solely of the portion based on consolidated financial results, the weight given to the portion based on execution of duties for Vice President and other officers is increased in stages and established in consideration of the responsibilities and division of duties or the amount of work performed for the Company.
(iii) Evaluation percentages by position
Evaluation category
Portion based on consolidated financial results Portion based on execution of duties
President and Executive Officer 100%
Vice President and Executive Officer 70% 30%
Senior Managing Executive Officer 60% 40%
Managing Executive Officer 50% 50%
Executive Officer 40% 60%

3. Stock remuneration

Officers eligible for payment Method for determining remuneration Timing of payment
Internal Directors Executive Officers The Company grants points to each officer based on the Officer Stock Benefit Regulations established by the Board of Directors, and the Company’s Shares, etc. according to the number of granted points are provided, in principle, when the officer retires. Each point granted to the Directors, etc. is converted into one common share of the Company at the time of the provision of the Company’s Shares, etc. (If a share split, allotment of shares without contribution, consolidation of shares, etc. of the Company’s shares is conducted, reasonable adjustments in accordance with the ratio of the share split, etc. will be made to the maximum number of points, and the number of points that have been granted or the conversion rate.) Points are granted march 31 of each year held each year
The Company’s Shares, etc. are provided at the time of retirement from office in principle

Provision percentages (annual and benchmark amounts)

Fixed remuneration Performance-linked remuneration and bonus Stock remuneration
Chairman, Representative Director 87% 13%
President, Representative Director 37% 49% 14%
Representative Directors other than the above (Note) 45% 44% 11%
Internal Directors other than Representative Directors (Note) 54% 29% 17%
Outside Directors 100%
Executive Officers (not concurrently serving as Directors) (Note) 48% 36% 16%

(Note) The percentages for each position are the average percentages.

Matters related to the determination of amounts of remuneration, etc. for individual Directors and Executive Officers

Of the remuneration amounts for individual Directors and Executive Officers, the specific amounts of ① representative director remuneration (performance-linked remuneration) are determined within the range approved by a resolution at a General Meeting of Shareholders by the President, Representative Director as delegated by a resolution of the Board of Directors. In addition, the specific amounts of ② Executive Officer bonuses are determined by the President, Representative Director as delegated by a resolution of the Board of Directors. The content of that authority is the authority to determine the details of individual remuneration, etc. The Board of Directors delegates the determination of remuneration to the President, Representative Director because the Board of Directors has determined that the President, Representative Director is the most suitable for determining remuneration, etc. comprehensively, taking into consideration the business environment surrounding the Group and the business situation, etc. of the Group. To ensure that the President, Representative Director uses the delegated authority properly, the Board of Directors submits the proposal to and receives a report from the Nomination and Remuneration Advisory Committee, and the President, Representative Director who received the above-mentioned authority shall make decisions in accordance with the contents of that report.

Within the remuneration amounts for individual Directors and Executive Officers, the amounts of ③ fixed remuneration for Directors and Executive Officers, ④ representative director remuneration (fixed remuneration) and ⑤ points granted for stock remuneration of internal Directors and Executive Officers (the number of the Company’s shares, etc. provided upon retirement) are determined within the ranges approved by a resolution at a General Meeting of Shareholders based on a resolution of the Board of Directors after the Nomination and Remuneration Advisory Committee deliberates the proposal and submits a report.

FY2021 amount of remuneration for Directors, Audit & Supervisory Board Members and Executive Officers

Category Total amount of remuneration (Millions of yen) Total amount of remuneration by type (Millions of yen)
Fixed remuneration for Directors and Audit & Supervisory Board Members Representative authority remuneration
Fixed remuneration Performance-linked remuneration
Directors (of whom Outside Directors) ② 219
(27)
81
(27)
7
(None)
10
(None)
Audit & Supervisory Board Members (of whom Outside Audit & Supervisory Board Members) 69
(43)
69
(43)
None None
Executive Officers (not serving as Directors) 102 None None None
Category Total amount of remuneration by type (Millions of yen) Number of eligible officers (Persons)
Remuneration for Executive Officers Stock remuneration
Fixed remuneration Bonus
Directors (of whom Outside Directors) 48
(None)
44
(None)
27
(None)
13
(3)
Audit & Supervisory Board Members (of whom Outside Audit & Supervisory Board Members) None None None 4
(3)
Executive Officers (not serving as Directors) 49 38 14 7

Cross-Shareholdings

Policy on Cross-shareholdings

The Company’s policy is to maintain cross-shareholdings if there is a meaningful argument to be made with regard to business cooperation, the building and strengthening of collaborative relationships, and the Company’s business strategy that such cross-shareholdings contribute to sustained growth of the business and the raising of corporate value over the medium to long term. If the meaning of holding a stock diminishes, the relevant cross-shareholding will be gradually reduced.
In accordance with the aforementioned policy, at a Board of Directors meeting held in April 2022, a policy was determined to reduce the amount of cross-shareholdings (including deemed cross-shareholdings) to not more than 20% of consolidated net assets by the end of FY2023, the final year of the Medium-Term Business Plan.
At a meeting of the Board of Directors held in May 2022, the Company comprehensively reviewed the rationality of its cross-shareholdings as of March 31, 2022, from both quantitative and qualitative perspectives, based on such factors as dividend amounts, business transactions, business alliances, cooperative relationships, and management strategy.
Note that if there is an offer to sell the Company’s shares from a company with which the Company has cross-shareholdings, the Company will not take action to hinder such sale, such as by suggesting a decrease in transactions with that company.

Status of Cross-shareholdings

FY2020 FY2021
Number of issues Listed 36 27
Not listed 44 44
Total 80 71
Total carrying amount
(Millions of yen)
Listed 42,213 34,457
Not listed 4,622 4,726
Total 46,836 39,184

Policy on Exercising Voting Rights Regarding Cross-shareholdings

It is the Company’s policy that it shall exercise its voting rights with regard to cross-shareholdings having first considered, based on internal standards, the business situation of each company, whether there has been major misconduct, and, if necessary, having engaged in dialogue with the issuing company. The details of the proposals are then scrutinized to ascertain whether they contribute to raising the corporate value and shareholder value of the Company over the medium- to long-term, before a comprehensive judgment is formed on their compatibility with the purpose of cross-shareholding.