(Note) This document has been translated from the Japanese original for reference purposes only. Where there are any discrepancies between the Japanese original and the translated document, the original Japanese document shall prevail.
Corporate Governance Report
SBI Holdings, Inc.
Last Update: Dec. 22, 2021
SBI Holdings, Inc.
Yoshitaka Kitao, Representative Director, President & CEO
Contact: Corporate Communications Dept.
Securities Code: 8473
The corporate governance of SBI Holdings, Inc. (hereinafter "SBI Holdings" or the "Company") is described below.
Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
1. Basic Views
A company's stakeholders consist of customers, shareholders, and employees as well as consumers, business partners, and local communities at large. The SBI Group recognizes its sociality as an element that constitutes society and undertakes business operations entirely from a customer perspective, based on its fundamental "Customer-centric Principle," with a view to contributing to the maintenance and development of society through businesses while responding to requests from a wide range of stakeholders. The Group considers that gaining social trust is essential in each process of the businesses it conducts. Accordingly, with also a view to establishing an appropriate corporate governance structure that contributes to the improvement of corporate value, it strives to maintain an organizational structure that responds rapidly to any change in the transparency/fairness of decision-making processes and business environments.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code] Updated
This report is posted pursuant to the Corporate Governance Code revised in June 2021.
[Supplementary Principle 3.1.3 Activities for Sustainability] (Disclosure of information about the impact of climate change in Supplementary Principle 3.1.3) The Company recognizes that environmental issues including risks associated with climate change are an important social issue and will continue to consider its policy for environmental activities and way to disclose information.
[Disclosure Based on the Principles of the Corporate Governance Code] Updated
[Principle 1.4 Cross-Shareholdings]
Strategic shareholding policy
When engaging in business alliances or cooperation that contribute to the SBI Group's business development and enhancement of the Company's corporate value, the Company may acquire and hold shares of business partners with a view to earning profits through their future sale if it is rational to do so for reasons such as prospective enhancement of the corporate value of business partners. The Board of Directors individually examines the objective and rationale for those listed shares that are held from a strategic reason, on an annual basis. Specifically, the Board of Directors conducts assessments from qualitative perspectives,
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such as whether or not the holding of shares contributes to the maintenance and strengthening of the relationship with the relevant parties, and quantitative perspectives, such as whether or not dividends or earnings from transactions related to the relevant parties are in line with the Company's capital cost. If it decides that there is no rationale in such holding after a comprehensive examination, the Company, in principle, starts to sell such shares that are held.
In a certain case where the Company's shares are held by a strategic shareholder, it will not engage in economically unreasonable transactions that are detrimental to the joint corporate and shareholder interests with the relevant company. If the relevant shareholder of strategic holdings indicates an intention to sell such holdings, the Company takes appropriate measures, instead of preventing the sale of such holdings by indicating the possibility of reducing transactions and other means.
Policy on exercise of voting rights
The Company exercises voting rights after confirming that the content of proposals submitted to General Meetings of Shareholders does not damage the SBI Group's corporate value and taking into consideration the circumstances of investee companies.
The Company does not hold any strategic shareholdings as of the end of March 2021.
[Principle 1.7 Related Party Transactions]
When the Company engages in a transaction with a principal shareholder (a shareholder holding 10% or more of voting rights) or when the Company engages in a transaction with a Director of the Company, approval of the Board of Directors shall be required.
Apart from the above, when the Company or a subsidiary of the Company engages in a transaction with a related party, the Board of Directors shall appropriately monitor the details of the transaction.
[Supplementary Principle 2.4.1 Ensuring Diversity in the Recruitment, etc. of Core Human Resources]
The Company believes that people are the sources of creativity and the major cause of differentiation that forms competitiveness. It provides open employment opportunities as a "comprehensive corporate group" that achieves innovation without being restricted by conventional ideas. The Company respects human rights and is developing an environment that allows diverse human resources to maximize their abilities and motivate one another to encourage personal growth, irrespective of gender, educational background, nationality, race, disability, sexual orientation, gender identity, and other attributes.
The Company also fosters human resources who will achieve personal growth and pass on the Company's unique corporate culture. It achieves sound employee motivation through fair and rewarding evaluation and employee treatment systems and an extensive system of education. In 2018, the Company introduced an advanced specialist system that would allow treatment that differs from the conventional frameworks of salaries and working patterns, based on the idea that securing human resources in charge of operations requiring high specialization would become even more necessary.
Numerical targets for ensuring diversity
The Company believes that maintaining diversity is essential to achieving its new medium-term vision and has set a female manager ratio of at least 20% and a foreign-national employee ratio of at least 40% as targets to consistently strive aim to achieve until 2025. The Company will continue to steadily work towards these targets and raise and maintain the current ratios (26.9% and 43.1%, respectively, as of September 30, 2021).
Status of ensuing diversity (as of March 31, 2021)
[global, consolidated] ratio of female executive officers: 12.6%; ratio of foreign-national employees: 43.0%
[domestic, consolidated] ratio of female managers: 16.0%
[the Company, non-consolidated] ratio of female managers: 24.6%; ratio of foreign-national managers to all
managers: 12.3%; ratio of managers who were mid-career recruits to all mid-career recruits: 84.4%
See the following website for information about the Company's human resource development.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The Company is not engaged in the operation of a corporate pension and has introduced and operates a defined contribution pension plan only but, considering that operation of the defined contribution pension plan has a significant impact on employees' asset formation, the Company makes a multifaceted judgment on the selection of the operational institution and also seeks appropriate operation of the plan through the provision of training on plan operation to employees and supervision of the operational management organization.
[Principle 3.1 Full Disclosure]
Company objectives (e.g., business principles), management strategies and management plans
Please refer to the Company's Management Philosophy, corporate vision and business strategies posted on the Company's website, respectively.
Basic views and principles on corporate governance
Please refer to the Company's Corporate Governance Principles posted on its website. https://www.sbigroup.co.jp/english/sustainability/governance/policy.html
The Board of Directors' policies and procedures for determining the compensation of Directors Compensation for Directors (excluding Outside Directors) consists of basic compensation, which is fixed compensation, as well as bonuses based on business results, etc. and restricted stock units (RSUs), a stock compensation plan. The Board of Directors determines the amounts to be paid after receiving feedback from the Management Advisory Committee, taking into consideration a range of factors such as the details of duties and the level of responsibility, authority and contribution, within the range of the total compensation amount approved at the General Meeting of Shareholders.
As for the compensation for Outside Directors, it consists of basic compensation, which is fixed compensation, as well as bonuses based on business results, etc., and the Board of Directors also determines the amounts to be paid within the range of the total compensation amount approved at the General Meeting of Shareholders. However, if the Board of Directors leaves the decision for either case to the Representative Director, the Representative Director makes such decision.
In terms of the policies for determining the compensation of Executives and Directors, please refer to "II-1 Organizational Composition and Operation, [Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" of this report.
The Board of Directors' policies and procedures for the appointment of the candidates for Directors and Statutory Auditors
[Nomination of Director Candidates]
To determine Director candidates, the Representative Director selects individuals that he/she considers to be qualified based on the performance of their duties. Meanwhile, the Board of Directors designates Director candidates after consulting with the Management Advisory Committee regarding whether or not such candidates satisfy the qualities and abilities required for Directors or management personnel and appoints them as Directors through the resolution of the General Meeting of Shareholders.
With respect to the designation of Director candidates, attention shall be paid to securing a reasonable number of members to convene meetings flexibly and conduct discussions actively. In addition, the matters listed below shall be considered while simultaneously considering the balance between knowledge, experience, capabilities and roles that are expected of Directors, regardless of their nationality, race or gender.
Director candidates are determined by considering the following two requirements;
Director candidates recognize their fiduciary duty to shareholders and have qualities that enable them to appropriately perform their duties with the care of a prudent manager and loyalty toward the Company.
Director candidates possess sufficient professional knowledge and a wealth of experience in management or management supervision and are able to engage in appropriate decision-making to contribute to enhancing the Company's corporate value.
Candidates for Independent Outside Directors are expected to have sufficient insights to supervise management from a third-party perspective, extensive job experience, high-level expertise in areas such as company management, financing, accounting and laws, or knowledge and experience of the Company's business areas.
If Independent Outside Director candidates concurrently hold positions as officers of other companies, it shall be possible for them to appropriately fulfill the abovementioned role in the Company.
Director candidates the Company plans to appoint as management executives are expected to be able to contribute to the enhancement of the Company's corporate value utilizing their knowledge and experience of the SBI Group as a whole or the SBI Group's important businesses.
[Nomination of Statutory Auditors Candidates]
To determine Statutory Auditor candidates, the Representative Director selects individuals that he/she considers to be qualified based on the performance of their duties. Meanwhile, the Board of Directors designates Statutory Auditor candidates with the consent of the Board of Statutory Auditors following the consultation with the Management Advisory Committee regarding whether or not such candidates satisfy the qualities and abilities required for Statutory Auditors, and appoints them as Statutory Auditors through the resolution of the General Meeting of Shareholders.
At the time of determining Statutory Auditor candidates, the Board of Directors nominates candidates considering the following matters, having taken into account that at least one person with sufficient knowledge of finance and accounting be appointed.
Statutory Auditor candidates who are capable of making appropriate decisions from an independent and objective standpoint in accordance with their fiduciary duty to shareholders.
Statutory Auditor candidates who endeavor to maintain an independent stance, always maintain a fair and unbiased attitude, and are able to act on the basis of their own convictions.
Statutory Auditor candidates who have a wealth of knowledge and experience of financing, accounting and law, or have extensive accomplishments in professional fields necessary for performing the audit function.
Explanations on the election, dismissal and the appointment of each candidate for Director and Statutory Auditor
It is disclosed in the convocation notice for the 23rd Ordinary General Meeting of Shareholders. Please refer to "Convocation Notice for the 23rd Ordinary General Meeting of Shareholders" posted on the Company's website. http://www.sbigroup.co.jp/english/investors/share/pdf/23th_convocation_notice_en.pdf
[Supplementary Principle 3.1.3 Activities for Sustainability, etc.]
The Company strives to contribute to the development and maintenance of society based on its unchanging concept since its founding, namely that a company is a constituent of society and is able to continue to exist only because it belongs to society. The underlying aspiration is to make our society fair, comfortable, environmentally friendly, and safe, rather than simply seeking profit. With this aspiration, the Company will strive to achieve both the creation of sustainable society and an increase in corporate value by commercializing appropriate activities in light of social justice and actively engaging in direct social contribution, thereby facilitating solution of social issues.
The Company will establish its Basic Sustainability Principles in December 2021 and appropriately respond to and help solve social issues based on this policy in the future.
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Investment in human capital and intellectual capital
In addition to on-the-job training (OJT) on specialized knowledge in various fields held at each company in the SBI Group, SBI Graduate School established in 2008 with full support of the SBI Group is used to provide training. Promotion to a senior managerial position requires the completion of the SBI Group Senior Manager Training Program. A corporate dispatch system is available to employees who wish to learn business administration more broadly, and as of March 31, 2021, 132 employees were using this system to earn a Master's degree in business administration. See Supplementary Principle 2.4.1 for the information about the Company's idea of human resources.
In terms of intellectual capital, the Company supports the growth of companies that possess innovative technologies and findings through investment in ventures and other projects. In addition to the introduction of such innovative technologies, the company is contributing to the development of new industries and social technological innovation by providing new financial services using innovative technologies and through cross-industrial expansion of technologies outside the Company. To secure human resources for advanced information technology, the Company develops its own data scientists and plans also to acquire human resources through M&As.
Please see the following websites for the information about the Company's idea of sustainability.
[Supplementary Principles 4.1.1 Scope and Content of the Matters Delegated to the Management]
The Board of Directors makes decisions on matters stipulated by laws and regulations and matters stipulated as important matters and, to rapidly and flexibly respond to changes in the business environment, delegates business execution authority for other matters to authorized persons designated by the Representative Director in accordance with rules for delegation of authority decided by the Board of Directors.
[Principle 4.8 Effective Use of Independent Directors]
The Company is working on strengthening the supervisory functions of the Board of Directors while increasing management transparency from an outside perspective through the use of multiple Independent Outside Directors.
The Company currently appoints seven Independent Outside Directors, who meet the independence criteria established by the Company, with a view to secure over one-third of the total number of Directors as Independent Outside Directors. Furthermore, the Company established the Management Advisory Committee, a voluntary advisory organization for the Board of Directors, in which the majority of the committee members are the abovementioned Independent Outside Directors.
The Committee is operated for the purpose of being properly involved with the function of the Board of Directors and the deliberation processes thereof related to the designation of candidates for Directors and Statutory Auditors, the appointment/dismissal of management executives, compensation for Directors, as well as the development of the next generation of management executives. In doing so, the Committee increases the objectivity and transparency of the decisions the Board of Directors makes, and further enhance the Company's corporate governance system.
In the meantime, Independent Outside Directors engage in proper and active discussions at meetings of the Board of Directors and seek to exchange information and share recognition based on an objective standpoint at such meetings that are held periodically to execute the duties properly from an independent standpoint.
[Principle 4.9 Independence Standards and Qualification for Independent Directors]
Please refer to SBI Holdings' Independence Criteria for Outside Directors in the Company's Corporate Governance Principles posted on its website. https://www.sbigroup.co.jp/english/sustainability/governance/policy.html#_2
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