Governance
Policy on Governance Initiatives
The basic philosophy of the Company and its consolidated subsidiaries and affiliates (the “SANKYO Group”) is to fulfill its mission, namely, to contribute to the sound development of pachinko and pachislot, which are popular leisure activities in Japan, and to the quality of life in society at large as a leading company in the pachinko and pachislot industry. The SANKYO Group’s stakeholders include shareholders, pachinko parlors, which are the Group’s customers, pachinko players, suppliers, local communities, and employees. One of the most important management tasks is to maintain good relations with each of these stakeholders, and the Company recognizes this task as a basic component of corporate governance.
Corporate Governance System
The Company transitioned from a company with a Board of Corporate Auditors to a company with an Audit and Supervisory Committee following the resolution of the 59th Ordinary General Meeting of Shareholders held on June 27, 2024.
By making this transition, the Company aims to further strengthen the audit and supervisory functions of the Board of Directors and enhance governance. Additionally, by enabling swift decision-making and business execution through the delegation of authority, the Company seeks to improve the fairness, transparency, and efficiency of management, thereby continuously enhancing corporate value.
■Corporate Governance System
Board of Directors
The Board of Directors consists of four Directors (excluding Directors who are Audit and Supervisory Committee Members) and five Directors who are Audit and Supervisory Committee Members (including three Outside Director, Audit and Supervisory Committee Member). In addition to regular meetings of the Board of Directors to make important management decisions and supervise the business execution of Directors, extraordinary meetings of the Board of Directors are held as necessary for prompt decision-making. In fiscal 2023 these meetings were held 17 times.
Audit and Supervisory Committee
The Audit and Supervisory Committee is composed of five Directors who are Audit and Supervisory Committee Members, including three Outside Directors. The Committee supervises and audits the legality and appropriateness of the Directors’ execution of duties in accordance with the Rules of the Audit and Supervisory Committee and works closely with the Internal Audit Office, the internal audit department.
Management Committee
The Management Committee, composed of Directors (excluding Directors who are Audit and Supervisory Committee Members) and executive officers, meets regularly every month to make swift and accurate decisions regarding matters to be resolved by the Board of Directors in advance, management strategy matters, and overall supervision of compliance and risk management, and to instruct the Company divisions and the Group companies to execute business.
Nomination and Remuneration Committee
In January 2024, the Company established a voluntary Nomination and Remuneration Committee, with a majority of its members being independent Outside Directors, to ensure objectivity, transparency, and fairness in the evaluation and decision-making processes regarding the nomination and remuneration of Directors, and to further enhance the corporate governance system through appropriate involvement of independent Outside Directors.
Upon consultation or delegation from the Board of Directors, the Nomination and Remuneration Committee deliberates on matters related to the nomination of Directors, as well as the appointment, dismissal, and remuneration of senior management, and provides reports or makes decisions on matters delegated by the Board of Directors.
Information Security Committee
In April 2023, the Company established the Information Security Committee, chaired by the General Manager of the Information Systems Division, with department heads serving as information security management officers. The committee evaluates the effectiveness and risks of internal systems and IT infrastructure from a company-wide perspective.
Sustainability Committee
In April 2024, the Company established the Sustainability Committee to address not only the Group’s ESG issues but also all other challenges related to sustainability.
Chaired by the Representative Director, President and composed of the General Managers from each division, the Sustainability Committee sets the sustainability policies and goals for the entire Group. It also forms cross-departmental project teams to tackle specific issues and promotes a management cycle of planning, execution, verification, and adjustment. Important matters are reported by the Sustainability Committee to the Board of Directors and the Management Committee, where response policies and action plans are deliberated, supervised, and directed.
Internal AuditsInternal Audits
SANKYO has established the Internal Audit Office (three persons) as the internal audit department, and conducts audits of the Company and the Group focusing on compliance with laws and regulations and ensuring appropriateness of business processes based on the audit plan. Through on-site audits and off-site audits, potential risks are identified, and if there is a problem with the audited division, improvement is urged, and the results and status of improvement are periodically reported to the President & CEO & COO and the Audit and Supervisory Committee.
Reasons for Appointment of Director
The directors and the reasons for their selection are as follows:
■Directors (excluding Directors who are Audit and Supervisory Committee Members)
| Name |
Attendance at meetings of the Board of Directors |
Reasons of Appointment |
|---|---|---|
| Hideyuki Busujima |
100％ （17/17） |
Ever since his appointment as Representative Director, President & CEO of the Company in 1996, Mr. Hideyuki Busujima has concentrated resources on the pachinko and pachislot machines businesses and contributed to the Company’s development. As well as leading development, manufacturing, and sales of innovative models that set the pace in the industry, he launched the strategy to expand SANKYO as a group and established the foundation for the current three-brand structure. From 2008, as Representative Director, Chairman of the Board & CEO, he demonstrated his leadership for maintaining the Company’s position as an industry leader and establishing a stable financial and management foundation despite the industry’s challenging operating environment, and strove to enhance shareholder value. Having assumed the office of Director & Chairman in April 2022, he is supervising management based on a wealth of experience and knowledge of management. The Company expects that his continuous performance of duties will contribute to sustainable enhancement of the Group’s corporate value. Therefore, the Company has appointed Mr. Busujima as a candidate for Director. |
| Akihiko Ishihara |
100％ （17/17） |
Since he joined the Company, Mr. Akihiko Ishihara has cultivated a wealth of business experience through his engagement in sales planning, administration, and corporate planning. He has been involved in wide-ranging aspects of the Group’s management, including his service as Representative Director of SANKYO EXCEL CO., LTD., a consolidated subsidiary of the Company that plays a role in manufacturing, for five years from 2015, and has been striving to enhance corporate value. He assumed the office of Representative Director, President & Chief Operating Officer (COO) in June 2021. Having assumed the office of Representative Director, President & Chief Executive Officer (CEO) in April 2022, he is leading management, including implementation of a business strategy to increase market share and promotion of organizational reform. The Company expects that his continuous performance of duties will contribute to sustainable enhancement of the Group’s corporate value. Therefore, the Company has appointed Mr. Ishihara as a candidate for Director. |
| Toshio Ogura |
- |
Mr. Toshio Ogura had been responsible for the Company’s intellectual property strategy as the Head of Intellectual Property Division for many years and helped the Company to secure a solid position in the intellectual property field of the industry. Since his appointment as Deputy Head of Product Management Division in January 2019 and as Head of Product Management Division in April 2022, he has been leading the Company’s business divisions, with successful results such as having expanded market share. The Company expects that his involvement in management based on deep insight and a wealth of experience will contribute to sustainable enhancement of the Group’s corporate value. Therefore, the Company has appointed Mr. Ogura as a candidate for Director. |
| Junko Tsuruoka |
- |
Ms. Junko Tsuruoka has long been serving as secretary to the Company’s top executives. With expertise in corporate management, business, and organizational management, she has been supporting the Group’s business operations and growth. The Company expects that her involvement in management based on deep insight and a wealth of experience will contribute to sustainable enhancement of the Group’s corporate value, including diversity of the Board of Directors. Therefore, the Company has appointed Ms. Tsuruoka as a candidate for Director. |
■Directors who are Audit and Supervisory Committee Members
| Name |
Attendance at meetings of the Board of Directors |
Attendance at meetings of the Board of Statutory Auditors |
Reasons of Appointment |
|---|---|---|---|
| Yoko Igarashi |
100％ （13/13） |
100％ （4/4） |
Having served as the head of the Company’s administrative division and as an Operating Officer and as Standing Statutory Auditor, Ms. Yoko Igarashi is well versed in the Group’s organizations and operations and has profound insight. The Company believes that by utilizing her expertise, she can appropriately perform her duties as an Audit and Supervisory Committee Member. Therefore, the Company has appointed Ms. Igarashi as a candidate for Director who is an Audit and Supervisory Committee Member. |
| Toshiaki Ishiyama |
100％ （17/17） |
100％ （5/5） |
Mr. Toshiaki Ishiyama has a wealth of practical experience as a Certified Tax Accountant and specialized knowledge of tax affairs and accounting. The Company believes that by utilizing his expertise, he can fulfill his role as an Audit and Supervisory Committee Member from a professional standpoint. Therefore, the Company has appointed Mr. Ishiyama as a candidate for Director who is an Audit and Supervisory Committee Member. |
| Taro Kitani |
94％ （16/17） |
- |
Mr. Taro Kitani is well versed in corporate legal affairs as an attorney at law and has sufficient insight into corporate governance. He has been stating objective and fair opinions at meetings of the Board of Directors from a third-party perspective, considering the achievement of both economic performance and social performance. He is overseeing the Company’s management appropriately and is contributing to strengthening of the Company’s corporate governance. Although Mr. Kitani has never been directly involved in corporate management, for the reasons stated above, the Company believes that he will continue to be able to adequately perform decision-making on important matters of the Company’s management and oversight of business execution as an Outside Director, Audit and Supervisory Committee Member. He also meets the standards for Independent Directors defined by Tokyo Stock Exchange, Inc. and is unlikely to cause conflict of interest with general shareholders. Therefore, the Company has appointed Mr. Kitani as a candidate for Outside Director, Audit and Supervisory Committee Member. |
| Hiroyuki Yamasaki |
94％ （16/17） |
- |
Mr. Hiroyuki Yamasaki has a wealth of professional knowledge on finance and accounting cultivated through his career as a certified public accountant. He also has many years of experience in conducting accounting audits of companies at audit firms. He is providing advice and suggestions on overall management from an independent, objective standpoint based on his expertise, including experience as a manager of a listed company, and is contributing to strengthening the effectiveness of the decision-making function and the oversight function of the Company’s Board of Directors. For the reasons stated above, the Company believes that he will continue to be able to adequately perform decision-making on important matters of the Company’s management and oversight of business execution as an Outside Director, Audit and Supervisory Committee Member. He also meets the standards for Independent Directors defined by Tokyo Stock Exchange, Inc. and is unlikely to cause conflict of interest with general shareholders. Therefore, the Company has appointed Mr. Hiroyuki Yamasaki as a candidate for Outside Director, Audit and Supervisory Committee Member. |
| Takashi Miura |
- |
- |
Mr. Takashi Miura has a wealth of experience and deep insight gained through his long years of service as a corporate manager. He is expected to provide advice and suggestions on overall management from an independent, objective standpoint based on his experience and to contribute to strengthening the effectiveness of the decision-making function and the oversight function of the Board of Directors. For the reasons stated above, the Company believes that he will be able to adequately perform decision-making on important matters of the Company’s management and oversight of business execution as an Outside Director, Audit and Supervisory Committee Member. He also meets the standards for Independent Directors defined by Tokyo Stock Exchange, Inc. and is unlikely to cause conflict of interest with general shareholders. Therefore, the Company has appointed Mr. Miura as a candidate for Outside Director, Audit and Supervisory Committee Member. |
Notes: Attendance at meetings of the Board of Directors and meetings of the Board of Statutory Auditors indicated for Ms. Yoko Igarashi pertains to the meetings of the Board of Directors and the Board of Statutory Auditors held following her assumption of office as Statutory Auditor on June 29, 2023.
Skills Matrix
Remuneration of Officers
Basic Policy
The Company’s system for remuneration, etc. of Directors (excluding Directors who are audit and supervisory committee members and Outside Directors) is designed to enhance linkage with shareholders’ interests in order to function effectively as an incentive for Directors to achieve sustainable and stable enhancement of the Company’s performance and corporate value. To determine remuneration of individual Directors, the Company’s basic policy is to ensure that the level of remuneration reflects the responsibilities, performance, the degree of contribution, and other factors. Directors’ remuneration consists of basic compensation, which is fixed compensation, performance- l inked compensat ion as bonuses, and performance-linked stock compensation. As for remuneration of Outside Directors, only basic compensation is paid in view of their duties. As for remuneration of Directors who are audit and supervisory committee members, it consists of basic compensation and bonuses as fixed compensation not linked to performance.
Basic Compensation
The basic compensation is fixed compensation: monthly salaries in the same amounts are paid at the end of each month. Basic compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors) is determined by the Board of Directors upon the deliberation of the Nomination and Remuneration Committee, a majority of whose members consists of Independent Outside Directors. Basic compensation for Directors who are Audit and Supervisory Committee Members is determined upon consultation by Directors.
Performance-Linked Compensation and Non-Monetary Compensation, Etc.
Performance-linked compensation (bonus) shall be paid on the bonus payment date in July. Amounts of performancelinked compensation shall be determined by the Board of Directors within a range of 0% to 150% of the standard amount, without exceeding the maximum amount of compensation determined by resolution of the General Meeting of Shareholders, based on the degree of achievement of consolidated operating income for the previous fiscal year, while also considering the business environment and other factors in the current fiscal year. The amount of bonus for executive officers is also determined within the range of 0% to 150% of the standard amount. Bonuses for Operating Officers are also linked to business performance in the same manner as those for Directors. As for remuneration of Directors who are Audit and Supervisory Committee Members (excluding Outside Directors), it consists of basic compensation and bonuses as fixed compensation not linked to performance.
Non-monetary compensation, etc. is performance-linked stock compensation. The purpose is to clarify the linkage between compensation of Directors of the Company and the Company’s performance and stock value, enhance their motivation toward contributing to improvement of the medto long-term performance and increasing corporate value, by sharing them with the shareholders not only the benefits of a rise in stock price but also the risk of a fall in stock price. The ratio of the fixed portion to the performance-linked portion is 1:4. Performance-linked stock compensation is granted at approximately the same time each year as points, without exceeding the maximum amount determined by resolution of the General Meeting of Shareholders, based on the degree of achievement of consolidated operating income for the previous fiscal year. Performance-linked stock compensation is also granted to Operating Officers in a manner similar to that for Directors. Performance-linked compensation and non-monetary compensation, etc. shall be determined based on the calculation method determined by the Board of Directors, provided the Board of Directors will determine them by taking into account opinions and advice from the Nomination and Remuneration Committee or opinions, etc. of the Audit and Supervisory Committee, if available.
The amounts of performance-linked compensation (bonus) and non-monetary compensation, etc. (performance- linked stock compensation) vary depending on the achievement of consolidated operating income for each fiscal year, which the Company considers important as profit from its core business, and changes in stock value. Therefore, the proportions of remuneration change, however, basic compensation, performance-linked compensation (bonus), and non-monetary compensation, etc. (performance-linked stock compensation) are determined such that the ratio is approximately 5:3:2, when performance-linked compensation is paid in standard amounts.
■Total Amount of Remuneration by Officer Category, Total Amount of Remuneration by Type, and Number of Applicable Officers in the Fiscal Year Ended March 31, 2024
| Officer category |
Total amount of remuneration, etc. (millions of yen) |
Total amount of remuneration, etc., by type (millions of yen) |
Number of applicable officers |
||
|---|---|---|---|---|---|
| Fixed compensation |
Performance-Linked Compensation |
Non-monetary compensation |
|||
| Director (excluding Outside Directors) |
768 |
253 |
252 |
262 |
3 |
| Statutory Auditor (excluding Outside Statutory Auditors) |
37 |
37 |
- |
- |
3 |
| Outside Director / Outside Statutory Auditor |
11 |
11 |
- |
- |
4 |
Note: Amount of performance-linked stock compensation is amounts recorded as expenses in the fiscal year ended March 31, 2024 for performance-linked stock compensation of three directors (excluding Outside Directors).
Evaluating the Effectiveness of the Board of Directors
The Company carries outan evaluation of the Board of Directors once a year based on a questionnaire to gather the opinions from Directors on “operation of the Board of Directors meetings” and “effectiveness of the Board of Directors.”
Upon aggregating and analyzing the results of the questionnaire, the Company assesses that the Board of Directors has sufficiently high effectiveness.
Internal Control System
The SANKYO Group has established a basic policy on constructing and operating an internal control system by resolution at the Board of Directors, in order to realize its basic stance toward corporate governance,namely, “to maintain good relations with each of these stakeholders, including shareholders, pachinko parlors, which are the Group’s customers, pachinko players, suppliers, local communities, and employees.” The basicpolicy is established with close attention paid to the viewpoints of shareholders among Group stakeholders by emphasizing the construction and maintenance of “reliable financial reporting,” “effectiveness and efficiency of business,” and the “compliance system.”
The Group operates in an environment which is conducive to nurturing the perception of legal compliance, because the development, manufacturing, and sale of game machines, the key businesses of the Group since its foundation, require permissions and approvals as preconditions pursuant to laws and regulations such as the “Act on Control and Improvement of Amusement and Entertainment Business.”
1．System to ensure that the execution of duties by Directors and employees complies with laws and regulations and the Articles of Incorporation
The SANKYO Group shall supervise corporate ethics and overall compliance and formulate policies and measures at a “Management Committee” consisting of Directors (excluding Directors who are Audit and Supervisory Committee Members) and operating officers of the Company. In addition, the Company seeks to improve transparency and ensure objectivity of management by appointing multiple Independent Directors.
The Internal Audit Office of the Company (hereinafter, the “Internal Audit Office”) audits the Group’s status of compliance with laws and regulations and internal rules by conducting regular internal audits. The Internal Audit Office shall report the results of audits to the President of the Company and promptly formulate measures for compliance or assist improvement if any problems are detected. In addition, the Group distributes slogans on the execution of operations to all of its officers and employees, in order to spread awareness of the importance of compliance and the specific code of daily conduct, while providing guidance and supplementary training mainly at outside educational institutions, etc., as necessary. The SANKYO Group adopts a resolute stand against anti-social forces and bodies, works in close cooperation with the police and other relevant organizations, and always strives to take sensible actions so as to not take part in anti-social acts, with common sense and a sense of justice in mind.
2． System to store and manage information on the execution of duties by Directors and employees
The Company shall manage information on the execution of duties and store and manage related documents, etc. in accordance with laws and regulations and internal rules. The Company shall continue to monitor and guide the status of storage and management of information mainly through internal audits, etc. by the Internal Audit Office. In addition, the Company shall promptly disclose the stored information as necessary in cooperation with a person responsible for handling information for timely disclosure.
3． Rules and other systems pertaining to management over risks of loss
The “Management Committee” shall supervise overall risks in relation to the business operations of the Company and set forth a policy on specific responses upon the occurrence of significant crises and a policy on the risk management system. In addition, the Internal Audit Office and “Sustainability Committee”, etc. shall abstract potential risks of the SANKYO Group, deliberate on measures to mitigate risks, and revise internal rules, etc. as necessary, so as to enable the response system to take root in the Group. With respect to risk management in ordinary business operations, each division of the Group shall take control in accordance with internal rules and the status of compliance shall be monitored and supervised through internal audits by the Internal Audit Office.
4． System to ensure the efficient execution of duties by Directors
In addition to ordinary meetings of its Board of Directors, the Company shall hold extraordinary meetings of its Board of Directors for swift decision-making as necessary, in order to make important management decisions and oversee the execution of operations by Directors (excluding Directors who are Audit and Supervisory Committee Members).
The Company has introduced an operating officer system to strengthen management decision-making functions and oversight functions by the Board of Directors. In addition, the “Management Committee” shall be periodically held each month to make detailed preliminary deliberations on matters to be resolved at the Board of Directors meeting, and shall make swift and accurate decisions on matters relating to management strategies, etc. Furthermore, for the flexible promotion of Group business, the Company has established several committees for specific objectives, such as the “Product Committee” to discuss the development of new products and the “Sales Strategy Committee” to decide sales policy, and thereby clarifies the responsibilities and roles regarding the execution of duties by Directors under the division of duties.
5． System for ensuring appropriate business operations within the Group
Each company of the SANKYO Group shall periodically report management conditions, etc. to the Accounting Division of the Company each month. Fairness and efficiency, as well as the status of compliance, etc., of each group company shall be monitored through internal audits by the Internal Audit Office. In addition, with regard to the dissemination of compliance, the Company shall establish a system under which the Company not only gives daily guidance by distributing and posting slogans on the execution of operations, but also offers opportunities to participate in the Company’s training as necessary. With regard to the management of each group company, the Company shall receive reports on important matters at the “Management Committee” and discuss them in advance, while respecting its autonomy.
6． System for ensuring reliability of financial reporting
The Company and each major company of the SANKYO Group shall formulate the “Basic Policy for Internal Control” in order to ensure the appropriateness of documents related to financial accounting as set forth in the Financial Instruments and Exchange Act and other information, and establish and operate a system under which internal control over financial reporting is implemented on a company-wide level and operational process level in accordance with the Policy.
7．Matters related to the employees if Audit and Supervisory Committee request for employees assisting with their duties
The Company may establish a Secretariat of Audit and Supervisory Committee to assist Audit and Supervisory Committee Members’ duties, assign employees as full-time staff or staff serving concurrently at other departments as necessary, and decide upon personnel affairs thereof after consulting in advance by and between the Directors (excluding Directors who are Audit and Supervisory Committee Members) and Audit and Supervisory Committee Members.
8．Matters to ensure the independence of employees assisting with the Audit and Supervisory Committee’duties from the Directors (excluding Directors who are Audit and Supervisory Committee Members), and the effectiveness of instructions to the employees
If the Company assigns full-time staff at the Secretariat of Audit and Supervisory Committee, such staff shall be under the command and control of Audit and Supervisory Committee Members. Any concurrent service of the staff at another department or his/her performance evaluations or personnel changes shall be decided with approval from Audit and Supervisory Committee Members in advance.
9．System for reporting by Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees to the Audit and Supervisory Committee and other reporting to the Audit and Supervisory Committee, and systems to ensure that persons who report to the Audit and Supervisory Committee are not treated disadvantageously because of their reporting
The Company shall maintain a system under which the Audit and Supervisory Committee shall request the Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees, etc. of the SANKYO Group to report or explain facts as necessary to fully monitor the status of execution of duties and compliance by Directors.
In addition, to grasp the process of important decision-making and the status of execution of operations, Audit and Supervisory Committee Members may attend the Board of Directors meetings and other important meetings of the Company and receive reports about important information of the Group, as well as inspect major approval documents and others concerning the execution of operations, and request Directors (excluding Directors who are Audit and Supervisory Committee Members), etc. to report or explain the facts. If Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees, etc. of the SANKYO Group discover a fact likely to significantly damage the Group, they shall report the fact to - 20 - a department in charge, etc. or the Audit and Supervisory Committee Members of the Company, pursuant to laws and regulations, etc.
Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees, etc. of the Group who have reported to Audit and Supervisory Committee Members shall not be treated disadvantageously in any way whatsoever as a consequence of such reporting, and the Company shall seek the thorough elimination of such disadvantageous treatment.
10．Matters related to procedures for the advance payment or redemption of expenses arising from the execution of duties by Audit and Supervisory Committee Members and other policies for handling of expenses or liabilities arising from the execution of their duties
Expenses arising from the execution of duties by Audit and Supervisory Committee Members shall be borne by the Company upon request by the Audit and Supervisory Committee Member unless the Company proves that the expenses or liabilities relating to such request are not required for the execution of duties by the Audit and Supervisory Committee Member. In addition, if an Audit and Supervisory Committee Member requests the Company to make an advance payment of such expenses, the Company will comply with the request.
11．Other systems for ensuring effective audits by Audit and Supervisory Committee
The Internal Audit Office shall regularly report to the Audit and Supervisory Committee on the implementation status of internal audits, and exchange opinions.In addition, Audit and Supervisory Committee Members may request attorneys at law or other professionals to give advice, etc. on audit operations as necessary.
Whistleblowing System
The Company has established a system for appropriate handling of consultations with and reports from employees and other workers concerning organizational or individual violations of laws and regulations, etc. The Company aims at early detection and correction of misconduct, etc. thereby enhancing compliance management. For this purpose, the Company has established a whistleblowing system.
Information Security
The Company has established the Information Security Committee to promote information security measures. Under the supervision of the Chief Information Security Officer, who also serves as the chairperson of the committee, the committee monitors the status of information security measures, formulates and reviews guidelines, and shares information. To ensure and maintain the confidentiality, integrity, and availability of the information the Company holds as well as the environment in which it is managed, the Company has established the Information Security Policy and the Information Security Management Regulations and systematically manages information, conducting periodic audits to verify compliance with the policy.