The following is an unofficial English translation of the Japanese original text of the Corporate Governance Report of DeNA Co., Ltd., which has been submitted to the Tokyo Stock Exchange. DeNA Co., Ltd. provides this translation for reference and convenience purposes only and without any warranty as to its accuracy or otherwise. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.
The following is an overview of corporate governance at DeNA Co., Ltd. (the "Company" or "DeNA").
Basic Approach to Corporate Governance, Capital Structure, Corporate Profile and
Other Basic Information
1. Basic Approach
The DeNA Group mission is "We delight people beyond their wildest dreams." Included in this mission is the goal of the Group to bring delight and joy to each and every customer, beyond their imagination, and create a world where people's individuality can shine.
The DeNA Group will embody its mission through appropriate dialogue and cooperation with a variety of stakeholders including customers, partners, employees, shareholders, and regional society. The DeNA Group will continue to establish and enhance effective corporate governance and aim to continuously maximize its corporate value.
[Reasons for Not Implementing Certain Principles of Corporate Governance Code]
This Report is based on the code following the June 2021 revisions.
• Establishing and Disclosing Business Strategy and Business Plan
The DeNA Group regards continuing growth of its corporate value to be an important management priority, and views such indicators as revenue, operating profit, and EPS, etc. to be important management indicators. The Group engages in a variety of business aiming to entertain and enrich lives, and to serve and make the world a better place, with initiatives in line with each business characteristics and phases.
At present, the Company's business is focused a range of internet services. As the market conditions and business environment for these services change extremely rapidly, forecasting market changes in the medium- to-long term is difficult. The Company therefore does not set specific target dates or numerical targets for the above indicators, but instead provides updates on material business matters and developments at its annual shareholders' meetings and in its quarterly financial announcement. In addition, with respect to matters that affect growth in the Company's corporate value over the medium term, it provides details and disclosure in various IR materials as necessary. For more details, please refer to the IR Library section of the Company's website for investor relations (https://dena.com/intl/investors/).
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DeNA Co., Ltd.
Corporate Governance Report
[Disclosure Based on Principles of Corporate Governance Code] [Updated]
• Shareholdings for Policy Purposes
The Company's internal rules require Board of Directors approval or report to the Board in the event the Company acquires shares or other equity interests in another company in excess of a specified amount or voting percentage. In addition, when the Company considers investing in the share or other equity interests of another company for policy purposes (to build, strengthen or maintain business relations), it considers the factors below. If such shareholdings are not determined to be meaningful, the Company will not invest.
business synergy with such other company (the "investment target") and whether the investment will lead to an increase in the Company's corporate value over the medium term;
whether the investment would adversely affect the financial health of the Company; and
whether the amount of the investment and its shareholding percentage exceed a level that is reasonably necessary.
In the case of any such investment, the Board of Directors, with consideration for the factors above, reviews the appropriateness of the investment objective and the benefits & risks versus the capital costs, among other measures, for such investment at least annually. If said review finds that the investment is not justified, the Company considers reducing it. The Board of Directors has confirmed the appropriateness of each investment individually after such review.
With respect to exercising voting rights arising from such investment, the Company's internal rules require approval of the corporate department and comprehensive review (in light of the above factors) of the business and financial condition of the investment target from the standpoint of increasing the Company's corporate value over the medium term.
• Related Party Transactions
Pursuant to applicable law and the Company's internal rules, the Company requires approval of its Board of Directors in the case of transactions involving conflict of interest of any director. Transactions with major shareholders must be reported to the Board.
Transactions with related parties require review by the corporate department on the appropriateness of each transaction (including from a legal and tax standpoint) and depending on the amount and nature of such transactions, approval from the appropriate authorized persons. Related party transactions that are material require approval of the Board of Directors. The corporate department reviews the status of each related party transaction at least annually and provides a report to the Company's corporate auditors and external auditor.
(Supplementary Principle 2.4.1)
• Ensuring Diversity in Promotion of Core Human Resources
(Approach to Securing Diversity, Human Resource Development, and Establishing Internal Environment) The Company vision states in part that "Each of us harnesses our individual strengths to make our unique business succeed." The Company value includes "Providing Growth Opportunities" in the DeNA Promise, which is our social promise, and "Respect Diversity" in DeNA Quality, which is the cornerstone for employee decision-making to provide Delight.
Under the Company basic approach, securing diversity is necessary to provide Delight to society and continuously raise corporate value. Diversity means that each individual brings their own unique strengths and diverse view on matters to the organization from their background, experience, skills, and personality. While the Company acknowledges that gender, nationality, hiring channel, and other characteristics are related to such diversity, these characteristics are used as one alternative metric.
(Objectives and Status of Securing Diversity)
On the basis of the above approach, the Company does not only prioritize quantitative measures such as the number of employees with a particular gender, nationality, hiring channel, or other characteristic information. The Company aims to create a situation where all diverse employees feel they can be successful regardless of their individual characteristics and perform to the fullest to provide Delight.
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As a part of this effort, the Company conducted a survey to analyze if Company regular employees felt that their gender, nationality, hiring channel, or other characteristic information caused difficulty in being promoted to important positions or achieving success. This survey was titled "Survey on Environment for Diverse Personnel Success," and conducted from September to October 2021.
Of the respondents (702 of 1,346 Company regular employees), the percentage of those with a particular characteristic that perceived difficulty in achieving success due to the relevant characteristic were as follows.
Women: 20.6% (36 of 175), foreign nationals: 22.2% (8 of 36), mid-career hires: 15.4% (85 of 553)
Based on the above results, the Company aims to lower the percentage of employees who feel there is difficulty in achieving success in all of the question items and establish an environment and promote various initiatives so that diverse employees can succeed.
The percentage of women, foreign nationals, and mid-career hires in management positions in the Company, and the percentage of local hires in management in Group offices abroad is as follows (as of March 31, 2021).
Local hires in management in offices abroad: 91.8%
The percentage of women in Company management positions has been in a rising trend, and was 3.4% as of March 31, 2017.
The survey results summary may be found in Attachment 2 of this Report, titled "Results Summary of the Survey on Environment for Diverse Personnel Success" and the percentage of employees in Company management positions who are women, foreign nationals, and mid-career hires made be found on the Company website (https://csr.dena.com/employees/hrdata/) (Japanese only).
(Use of Mid-Career Hires)
The Company approach is to have employees with diverse backgrounds, experience, and skills bring their differing strengths and diverse views to the organization, and from the time of the Company's founding to the present the Company has grown its businesses by using mid-career hires to the maximum.
One example is how 12 of the 18 (66.7%) Company executive officers (including managing executive officers) are mid-career hires (as of the date of this Report), and 87.4% of the management overall are mid- career hires (as of March 31, 2021).
The Company also welcomes back those employees who departed the Company, gained broad experience at other companies, including starting their own company, and who wish to rejoin the Company to make use of their abilities. Among the Company's executive officers and in other management positions there are multiple people who departed the company and later rejoined.
(Human Resource Development and Internal Environment Establishment to Secure Diversity)
The Company has various measures to realize an environment where diverse employees can be successful. For details, refer to "III. Implementation of Measures Related to Shareholders and Other Stakeholders - 3. Measures that Consider the Interests of Stakeholders - Other" in this Report.
For details on initiatives related to securing core human resources with diverse business experience, refer to "(Supplemental Principle 3.1.3) Initiatives Related to Sustainability, Etc. - Investment in Human Capital" in this Report.
• Roles of Corporate Pension Funds as Asset Owners
The corporate pension fund of which the Company is a member has built a structure where the office duties, asset management duties, financial validation & record management duties, and other major pension duties are entrusted to different actors. These different actors act to check each other, and in this way, operational management is conducted appropriately on the basis of fiduciary responsibility and specialist insight, and in so doing has formed stable assets for employees. The persons in charge of handling corporate pension fund matters in the Company attend seminars and pursue other ways to increase their specialist knowledge.
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DeNA Co., Ltd.
Corporate Governance Report
• Full Disclosure
Corporate Mission, Corporate Strategy and Management Plan The DeNA Group's mission and vision are as follows.
We delight people beyond their wildest dreams.
We will be the world's premier provider of internet and AI technology to delight people everywhere. We seek to entertain and enrich lives, and to serve and make the world a better place.
Each of us harnesses our individual strengths to make our unique business succeed.
At present, the Company's business is focused on mobile games and a range of other internet services. As the markets conditions and business environment for these services change extremely rapidly, the Company is required flexibly to adapt itself to such changes. The Company provides updates on material business matters and developments at its annual shareholders' meetings, quarterly financial announcement and other relevant occasions. In addition, with respect to matters that affect growth in the Company's corporate value over the medium term, it provides details and disclosure in various IR materials as necessary. For more details, please refer to the IR Library section of the Company's website for investor relations (https://dena.com/intl/investors/).
Basic Approach and Guidelines on Corporate Governance
• Basic Approach
Please see Paragraph I-1 (Basic Approach) above.
• Basic Guidelines
Based on its basic approach to corporate governance described above, the Company has implemented the following measures:
in order to promote fairness in management, the Company's Board of Directors takes into account a range of views provided by multiple independent outside directors;
in order to facilitate timely decision-making by each business unit, the Company has proactively delegated appropriate decision-making authority to executive officers and heads of business units;
in order to promote transparency, the Company proactively provides appropriate disclosure of information;
the Company follows the Group Code of Conduct and fulfills its responsibilities to stakeholders; and
the Company officers and employees commit to abiding by the Company values, including DeNA Promise (our social promise) and to DeNA Quality (one team in pursuit of delight) to endeavor to bring to life the mission and vision.
Commitment to Product & Service Quality
Cooperation & Prosperity for All
Acting with Transparency
Providing Growth Opportunities
More information about the DeNA Promise and DeNA Quality are available in Attachment 1 "DeNA Group
Mission, Vision, and Value" of this Report.
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The Company will continue to pursue the full implementation of the above measures in order to ensure the effectiveness and enhancement of the Company's corporate governance system.
(3) Policies and Procedures in Determining the Remuneration of Senior Management and Directors
The Company compensates its directors in part on the basis of the Company's performance, so that each director is appropriately motivated to contribute to the overall performance of the Company and increase in its corporate value. This system also helps to raise each such director's awareness of shareholder-oriented management. However, outside directors are exempted from this compensation system. For details of such director compensation system please refer to "II. Business Management Organization and Other Corporate Governance Systems Regarding Decision-Making, Execution of Business, and Oversight in Management - 1. Organizational Composition and Operation - [Incentives] and [Director's Compensation]" in this Report.
The Company has established a compensation system wherein a part of the compensation of management, including executive officers, is based on the Company's performance.
The Company has established a Compensation Committee (a voluntary advisory body for the Board of Directors) to gain appropriate involvement and advice from the outside directors and ensure accountability, and thus the Company ensures management transparency and objectivity in the compensation of directors and executive officers, an important matter for the monitoring function of Board of Directors.
The Compensation Committee is made up of a majority of independent outside directors to enhance the independence and objectivity, and the chairman is selected from among the independent outside directors.
The Compensation Committee makes the initial proposal regarding the compensation structure and individual compensation for directors. The Compensation Committee also provides recommendations on advice for the compensation structure for executive officers, the incentive plan and evaluation standards, etc. The Board of Directors passes a resolution regarding compensation after sufficiently considering the recommendations. For details of the procedures determining individual compensation for directors, please refer to "II. Business Management Organization and Other Corporate Governance Systems Regarding Decision-Making, Execution of Business, and Oversight in Management - 1. Organizational Composition and Operation - [Disclosure of Policy for Determining Amounts and Calculation Method of Compensation]" in this Report.
Board Policies and Procedures in the Appointment & Dismissal of the Senior Management and the Nomination of Director and Corporate Auditor Candidates
• Policies for the Appointment and Nomination of Senior Management
The Company believes that candidates for director and corporate auditor, positions important for Company management, at a minimum must have the sophistication and qualification to satisfy and promote the following objectives:
continuous increase in the Company's corporate value;
ensuring transparency and fairness in the Company's management; and
establishing and maintaining a system of compliance.
In addition to the above, and consistent with the criteria below for the composition of the Board of Directors and Board of Corporate Auditors, candidates for director and corporate auditor must be persons of excellence with sound judgment and insight, and individual characteristics such as gender and age are not considered.
[Board of Directors]
For more details on the approach for the composition of the Board of Directors, refer to "I. Basic Approach to Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information - 1. Basic Approach - [Disclosure Based on Principles of Corporate Governance Code] - (Supplemental Principle 4.11.1) Balance between Knowledge, Experience and Skills of the Board of Directors; Diversity and Appropriate Board Size."
[Board of Corporate Auditors]
in addition to persons with a wide range of considerable management experience, corporate auditors should include persons with background and insight in legal, finance and labor matters; and
at least one corporate auditor should have considerable experience in finance and accounting.
DeNA Co., Ltd.
Corporate Governance Report
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