Basic Policy on Corporate Governance
The management philosophy of the Company is expressed in its Basic Principle, Vision, Mission and Values:
We are focused on creating new value for our society to continue to a brighter world where all individuals can live life to the fullest.
Follow Your Heart
Opportunities for Life.
Faster, simpler and closer to you.
Wow the World
Bet on Passion
Prioritize Social Value
Guided by this Philosophy, the Board of Directors prioritizes corporate governance policies and practices that are designed to achieve long-term growth, increased corporate and shareholder value, and benefits for all of our stakeholders.
Our stakeholders include individual users and enterprise clients, as well as our shareholders, employees, business partners, and the society and communities in which we operate.
Corporate Governance Overview
The Company's corporate governance structure is a "Company with an Audit & Supervisory Board" as defined under the Companies Act of Japan. In this structure, Audit & Supervisory Board members appointed by shareholders conduct audits of the execution of the duties by Directors as an independent body from the Board of Directors. This is the foundation for the Company's efforts to ensure and improve transparency, soundness and efficiency of management.
Under this structure, the Company has appointed multiple outside Directors of the Board and outside Audit & Supervisory Board members who are highly independent. The Company also has voluntarily established committees to serve as advisory bodies to the Board of Directors: the Nomination, Evaluation, Compensation, Compliance, Risk Management, and Sustainability Committees, etc. To enhance independence, the Nomination, Evaluation, and Compensation Committees are all chaired by Independent Directors of the Board and have a majority of outside members.
Furthermore, the Company has appointed Corporate Executive Officers, and established the Business Strategy Meeting to serve as an advisory body to the CEO in order to enhance the Company's decision-making process and business execution. The Business Strategy Meeting discusses important matters for the Company and the CEO approves the execution of such matters.
The Company has organized management units called Strategic Business Units (SBU). Each SBU has established a managing company called SBU Headquarters, which manages the subsidiaries of each SBU.
After deciding basic management policies and important matters and clarifying the scope of responsibilities, the Board of Directors delegates certain decision-making authority to the Business Strategy Meeting, SBU Headquarters, and other relevant bodies.
Through this arrangement, the Company aims to ensure that our corporate governance mechanisms are functioning sufficiently, both in terms of timely decision-making and effective internal control.
Corporate Governance Structure
The following are the SBU Headquarters as of June 30, 2020:
- HR Technology SBU: RGF OHR USA, Inc.
- Media & Solutions SBU: Recruit Co., Ltd.
- Staffing SBU: RGF Staffing B.V.
Important decisions for the SBUs are made by the Board of Directors of each SBU Headquarters. The majority of the Board of Directors of each SBU Headquarters comprises non-Executive Directors of the Board who are appointed by the Holding Company. Corporate Executive Officers of the Company concurrently serve as CEO of each SBU Headquarters.
Board of Directors
Role of the Board of Directors
The Board of Directors seeks to increase enterprise and shareholder value in the mid- to long-term.The responsibilities of Board of Directors include:
- Setting basic management policies to achieve the Company's strategic objectives
- Conducting oversight of operations and management
- Making decisions that could have a major impact on the Company
- Resolving matters required to be resolved by the Board of Directors as stipulated in relevant laws and regulations
Board of Directors meetings are regularly held once a month in general. The Board of Directors makes decisions on matters which significantly impact the Company's corporate governance and/or the Company's consolidated financial performance, such as investments above a certain threshold and key personnel matters. The Board of Directors delegates authority over other business matters to the Business Strategy Meeting and other decision-making bodies according to their appropriate level of responsibilities.
Criteria for determining organizational decision-making authority are set forth in the rules on decision-making authority. These rules are reviewed annually by the Board of Directors and revised as necessary.
Composition of the Board of Directors
The Board of Directors comprises six Directors, including two Independent Directors as of June 30, 2020.
As a result of its growth, the Company today operates across many business sectors and geographic locations, engages with a broad universe of individual users and enterprise clients, and employs people from diverse backgrounds and ethnicities. The Company recognizes that the Board of Directors should reflect this diversity to ensure that it sustains the high-quality discussions that drive innovation and the long-term success of the Company.
As for the size of the Board of Directors, the Company believes that the Board of Directors should have an appropriate number of members in order to foster high-quality discussions. Under the Company's Articles of Incorporation, the Board of Directors may have a maximum of eleven Directors.
Approach to Selecting Directors of the Board
The approach to selecting candidates for the Directors is to choose qualified personnel from a pool of diverse candidates who can fulfill the duties and responsibilities of the position by considering their skills, leadership, background, judgment, personality, insight, and professional experience. Current Directors who are considered for renomination are evaluated on these criteria as well as their performance on the Board and terms of office.
The Company announced a commitment in May 2019 to nominate at least one woman as a candidate to be a Director of the Board at an Annual Meeting of Shareholders to be held by June 2021.
In keeping with this commitment, the Board of Directors has decided to nominate a woman as a candidate to be proposed at the Annual Meeting of Shareholders held on June 30, 2020, which was resolved.
The Company has a policy that at least a third of the Directors of the Board are independent outside Directors who maintain appropriate distance from management execution. As of June 30, 2020, there are six Directors of the Board, of which two are reported as Independent Directors to the Tokyo Stock Exchange. Outside Directors are selected based on the above criteria as well as their management experience at corporations operating globally and/or publicly listed.
The Company expects Independent Directors to fulfill the following roles:
- To provide the Company with advice based on their management experience in corporations operating globally and/or publicly listed, which are necessary for the Company to further enhance its enterprise value and shareholder value in the mid-to long-term period.
- To play a leading role in matters related to selection and dismissal, evaluation and compensation of Directors of the Board and Corporate Executive Officers as a chair and/or member of the Nomination, Evaluation, and Compensation Committees.
- To oversee decision-making in cases where any potential conflict of interest exists between Directors and the Company. The Board of Directors acts as the decision-making body for such conflicts by ensuring the decision is delivered under the presence of Independent Directors as well as outside Audit & Supervisory Board members.
In order to ensure that Independent Directors fulfill the above roles, the Company takes the following measures:
- To share and discuss the topics discussed during the Compliance Committee and Risk Management Committee with the Board of Directors for the purpose of creating an environment that allows Directors and Corporate Executive Officers to take appropriate risks when making decisions.
- To share and discuss the topics discussed during the Sustainability Committee as well as the voice of our shareholders with the Board of Directors for the purpose of ensuring the discussions at the Board appropriately reflect the diverse perspectives of our stakeholders.
In addition to the above mentioned Independent Directors, the Board appoints one non-Executive Director who does not execute business operations, but who has in-depth knowledge of and experience in the Internet industry.
Audit & Supervisory Board
Role of the Audit & Supervisory Board
The Audit & Supervisory Board is responsible for the following:
- Supervising the activities and performance of each Director of the Board as well as the Board of Directors as a whole, based on the auditing plan.
- Auditing the maintenance and operational status of internal control policies, procedures, and processes, based on the auditing plan.
- Evaluating the appropriateness and performance of the Independent Auditor.
All members of the Audit & Supervisory Board attend the Board of Directors meetings as part of their oversight responsibilities. In addition, one or more standing Audit & Supervisory Board members must attend the Business Strategy Meeting to enhance the oversight function.
The Audit & Supervisory Board meets once a month in general and holds extraordinary meetings as needed.
Composition of the Audit & Supervisory Board
The Audit & Supervisory Board comprises four members, including two outside members as of June 30, 2020. One substitute Audit & Supervisory Board member has been elected, in order to avoid any potential non-compliance with the statutory requirement that more than half of the members of the Audit & Supervisory Board be outside members.
Approach to Selecting Audit & Supervisory Board Members
The approach to selecting candidates for the Audit & Supervisory Board members is to select qualified persons with suitable experience and capabilities and with the necessary knowledge in the areas of finance, accounting, and legal affairs, to fulfill the duties and responsibilities as an Audit & Supervisory Board member. As of June 30, 2020, the Company has two standing Audit & Supervisory Board members who deeply understand the business of the Company, and two outside Audit & Supervisory Board members, one with expertise in legal affairs and one with expertise in finance and accounting.
All the Audit & Supervisory Board members make efforts to continuously expand their knowledge in order to fulfill their audit function in areas such as finance, accounting, and legal affairs through appropriate training courses funded by the Company. For example, the Audit & Supervisory Board members seek to deepen their understanding of the latest accounting standards and important matters for auditing by taking relevant training and seminars offered by the Japan Audit & Supervisory Board Members Association or by outside audit and assurance firms.
Nomination, Evaluation, and Compensation Committees
The Nomination, Evaluation, and Compensation Committees advise the Board of Directors. Each committee has a majority of outside members and is chaired by an outside Director in order to enhance the transparency and objectivity of the decision-making process.
These committees review and consider the nomination, evaluation, and compensation of Directors and Corporate Executive Officers in each fiscal year. Final decisions are made by resolution of the Board of Directors.
The roles of each committee are as follows:
The Committee deliberates and reports to the Board of Directors on the following:
- Nomination, succession and dismissal of the President and CEO
- Appropriateness of the process for nominating and dismissing candidates for Directors of the Board and Corporate Executive Officers.
Succession planning for the President and CEO considers the role's desired skills and qualifications, the Company's strategic outlook and the Board's desired governance structure. The appointment of the President and CEO is approved by the Board of Directors based on the recommendation of the Nomination Committee.
Development plans for successor candidates are formulated based on the expected succession timing of the existing President and CEO and the Committee monitors the progress of these plans.
If the Company should face poor business performance and it is determined that this is the result of inadequate performance of the President and CEO, upon deliberation, the Nomination Committee may report its findings and recommend their dismissal to the Board of Directors.
Regarding the nomination of Directors of the Board and Corporate Executive Officers, discussions are held on the best management structure, taking into account the mid- to long-term governance policy and the timing of planned President and CEO succession. The Committee deliberates on the adequacy of the entire process above including selection of the candidates and resolutions by the Board of Directors.
Directors or Corporate Executive Officers can be dismissed in cases where it is recognized that they have significantly harmed the enterprise value of the Company due to violation of laws and regulations or other similarly significant reasons. In such cases, the Nomination Committee reviews the individual's conduct and makes a recommendation to the Board of Directors.
The Committee deliberates on the performance evaluation structure for Directors of the Board and Corporate Executive Officers as well as each Director's individual performance evaluations.
The Committee deliberates on the compensation structure for Directors of the Board and Corporate Executive Officers as well as each Director's individual compensation.
Business Strategy Meeting and Other Voluntary Committees
An advisory body to the Board of Directors. Chaired by the President and CEO, Representative Director. The Committee deliberates on compliance themes and measures of the Company.
Risk Management Committee
An advisory body to the Board of Directors. Chaired by the Director in charge of the Risk Management Division. The Committee deliberates on key risk themes and measures of the Company.
An advisory body to the Board of Directors. Chaired by the Director in charge of the Corporate Planning Division. The Committee deliberates on strategy formulation and progress towards sustainability goals in order to promote the sustainability agendas of the Company.
Business Strategy Meeting
An advisory body to the CEO and chaired by the CEO. The meeting attendees deliberate on matters mainly relating to investments and personnel for which authority has been delegated by the Board of Directors. The meeting consists of Executive Directors of the Board, Corporate Executive Officers and standing Audit & Supervisory Board members.
Talent Development Committee
An advisory body to the Business Strategy Meeting. With participation by Corporate Executive Officers of the Company, the Committee deliberates on matters concerning the fostering of key talent, including the planning and monitoring of their career development and professional growth.
An advisory body to the Board of Directors and Business Strategy Meeting. The Committee deliberates on the recommended disciplinary action for the Company's personnel including its employees.
Composition of the Board and Committees as of August 31, 2020
|Position||Name and surname||Board of Directors||Audit & Supervisory Board||Business Strategy Meeting||Nomination Committee||Evaluation Committee||Compensation Committee||Compliance Committee||Risk Management Committee||Sustainability Committee|
|Representative Director, President and CEO||Masumi Minegishi|
|Directors of the Board||Hisayuki Idekoba|
|Outside Directors of the Board||Naoki Izumiya|
|Standing Audit & Supervisory Board Members||Yukiko Nagashima||*1|
|Outside Audit & Supervisory Board Members||Yoichiro Ogawa||*1|
|Corporate Executive Officers||Yoshihiro Kitamura|
|Internal Member||Kazuo Tase|
|Outside Expert||Yves Serra|
＝Chair ＝Member ＝Observer
*1 Audit & Supervisory Board members are required to attend the Board of Directors meetings to audit the execution of duties of Directors of the Board under the Companies Act of Japan.
Attendance for FY2019
|Position||Name and surname||Board of Directors||Audit & Supervisory Board||Nomination Committee||Evaluation Committee||Compensation Committee||Compliance Committee||Risk Management Committee||Sustainability Committee|
|Representative Director, President and CEO||Masumi Minegishi||13/13||2/2||2/2||2/2||2/2||1/1*2||2/2|
|Directors of the Board||Shogo Ikeuchi||13/13||2/2||2/2||2/2||2/2||1/1*2|
|Outside Directors of the Board||Naoki Izumiya||13/13||2/2||2/2||2/2|
|Standing Audit & Supervisory Board Members||Yukiko Nagashima||13/13||13/13||2/2||2/2|
|Outside Audit & Supervisory Board Members||Hiroki Inoue||13/13||13/13||2/2||2/2|
|Corporate Executive Officers||Yoshihiro Kitamura||2/2|
|Internal Member||Kazuo Tase||2/2|
|Outside Experts||Aditi Mohapatra||2/2|
*1 A total of eleven meetings of the Board of Directors were held since the person was appointed as Director of the Board at the Annual Meeting of Shareholders held on June 19, 2019.
*2 Only one committee meeting has been held since being added as a member.
Analysis and Evaluation of the Effectiveness of the Board of Directors
Self-evaluation based on the following matters was made for Board of Directors meetings held in the fiscal year ended March 31, 2020.
- Evaluation Scope: The Board of Directors' meetings held from April 2019 to March 2020 (13 meetings in total)
- Evaluation Subjects: Directors of the Board and Audit & Supervisory Board members
- Evaluation Period: Conducted from March to April 2020
- Process: Each Director and each Audit & Supervisory member complete a questionnaire, which consists of questions regarding a total of seven items including the appropriateness of the roles and responsibilities of the Board of Directors, the appropriateness of the organizational structure and composition of the Board of Directors, the appropriateness of the qualities and knowledge of Directors, the effectiveness of deliberations by the Board of Directors, the effectiveness of checks and balances and oversight functions performed by and between Directors who are also Corporate Executive Officers, and the appropriateness of deliberations from the perspective of shareholders, customers, employees, local community, and other stakeholders, as well as open-ended questions. Individual interviews were then conducted, as necessary, based on the aggregate results of replies to a questionnaire survey, consisting of items such as the appropriateness of the roles and responsibilities of the Board of Directors.
Summary of Analysis and Evaluation Results
It was determined that the Board of Directors' meeting is playing an appropriate role and exercising its responsibilities appropriately in both aspects of decision-making and supervision over business execution.
- In its meetings, the Board of Directors sufficiently discusses the management strategy for improving medium- to long-term enterprise value based on the Recruit Group Management Philosophy. Each matter for deliberation is consistent with the above strategy.
- The corporate governance structure, composition of the Board of Directors, and the ability and knowledge of each Board member are all appropriate.
- The agenda for the Board of Directors' meetings is appropriate and free and vigorous deliberations are held.
- The Board of Directors fully implemented suggestions for improvement made in the effectiveness evaluation from the previous fiscal year.
While the effectiveness of the current Board of Directors is highly rated, the Board of Directors confirmed the following matters for discussion.
- As symbolized by the COVID-19 pandemic, the Company is currently put in an uncertain business environment where events that may possibly shatter conventional assumptions occur.
- The Board of Directors shall endeavor to improve corporate value through decision making with greater awareness of appropriate risk assumptions and flexible strategy formulation and execution.
Policy for correspondence to Corporate Governance Code
The Company complies with all of the Principles and Supplementary Principles stipulated in the Corporate Governance Code of Japan. For more information, please refer to the Corporate Governance Report
In this Corporate Governance Report, moreover, in addition to items for which mandatory disclosure is indicated in the Corporate Governance Code, the Board of Directors has stipulated the policy that other principles and supplementary principles relevant to the Company are to be disclosed to the extent possible.