- Basic approach to corporate governance
- Establishment of Personnel Compensation Committee
- Appointment of Independent Outside Directors and Female Directors
- Reasons for Selection of Directors and Audit ＆ Supervisory Board Members
- Improving board effectiveness
- Skill Matrix
- Officer compensation
- Organizational Chart
- Personal information protection and cybersecurity
- Whistleblower system
Basic approach to
- (1) At ARUHI, we consider the rights of our shareholders and establish an environment for the appropriate exercise of rights. To drive sustainable growth and enhance our corporate value, we actively engage with our shareholders through general shareholders’ meetings and other opportunities.
- (2) The Board of Directors and other relevant bodies will, based on their fiduciary duties and accountability to our shareholders, show the overall directions, including our strategies, and support appropriate executive risk-taking, while providing highly effective oversight.
- (3) For perpetual enhancement of corporate value, we work with our stakeholders, including customers, employees, shareholders, suppliers, creditors, and local communities, and respect mutual interests and values.
- (4) In addition to our business results and financial status, we proactively disclose non-financial information such as management strategies and issues, risks, and corporate governance, and ensure transparent business management through full disclosure of information.
Establishment of Personnel Compensation Committee
ARUHI has established a Personnel Compensation Committee centered on Outside Directors as an advisory body to the Board of Directors to ensure transparency of personnel and compensation decisions on officers. Members of the committee consist of the Chairman of the Board, Representative Director, President and CEO and three Outside Directors. The chair is selected through mutual discussion by members, and the Chairman of the Board, Representative Director, President and CEO currently serves in this role.
Outside Directors are involved in selecting candidates for Director of the Company, the compensation, etc,. from an independent standpoint.
Appointment of independent outside directors
ARUHI has a governance structure in which executive directors do not account for the majority of the board (3 inside directors, 3 outside directors).
As independent outside directors with extensive experience and knowledge, we appoint business company leaders and corporate governance experts and ensure transparent business operations.
Appointment of Female Directors
In order to ensure diverse perspectives and values two of the six members of ARUHI’s Board of Directors are women (one Internal Director and one Outside Director).
Reasons for Selection of Directors and
Audit ＆ Supervisory Board Members
The reasons for selection of Directors and Audit ＆ Supervisory Board Members are as follows. The Chairman of the Board, Representative Director, President and CEO serves as chair of the Board of Directors in accordance with the ARUHI Articles of Incorporation and a resolution of the Board of Directors.
See the page listing officers for the career histories of Directors and Audit and Supervisory Board Members.
Reasons for Selection of Directors
|Name||Reasons for Selection|
Reasons for SelectionMr. Hiroshi Hamada has led the Company’s Group management since May 2015 and has played an appropriate role in enhancing corporate values, such as in determining important matters and overseeing execution of businesses. Since April 2022 he has served as Chairman of the Board and Representative Director and has supported the new leaders in business execution. Since it is expected that he can further contribute to enhancing the corporate values of the Company in the future, he has been selected as a candidate for Director.
Reasons for SelectionMr. Toshihiko Katsuya has engaged in business management for many years, leveraging his extensive experience and knowledge in financial business. After joining the Company in January 2021, he has played important roles as Representative Director and Executive Vice President from June 2021 and as Representative Director, President, CEO and COO from April 2022, accurately understanding and resolving business issues and leading organizational reform aimed at realizing the management strategy of the Company. Therefore, the Board of Directors has selected him as a candidate for Director.
Reasons for SelectionMs. Yasuko Matsumoto possesses advanced expertise and capability in the fields of finance, accounting and management planning. After joining the Company in July 2018, she was appointed to the position of Executive Corporate Officer, CFO in January 2021 and has played an important role in accurately understanding and resolving business issues and providing finance work supervision aimed at realizing the management strategy of the Company. Therefore, the Company has selected her as a Director.
Reasons for SelectionMs. Tokiko Ide possesses a wealth of experience and knowledge as a management executive and CFO. Especially in the field of finance, she is expected to provide objective and long-term advice and oversight from a specialized perspective regarding the operational execution of the Company.
Reasons for SelectionMr. Toshihiko Hiura possesses a wealth of knowledge as a management executive and management consultant. Especially in the areas of business strategy and technology, he is expected to provide objective and long-term advice and oversight from a specialized perspective regarding the operational execution of the Company.
Reasons for SelectionMr. Hiroyuki Oshida possesses a wealth of experience and knowledge as a management executive and consultant. Especially in the areas of management strategy and mergers and acquisitions including capital tie-ups, he is expected to provide objective and long-term advice and oversight from a specialized perspective regarding the operational execution of the Company.
Reasons for Selection of Audit ＆ Supervisory Board Members
|Name||Reasons for Selection|
Reasons for SelectionMr. Yasuhiro Baba possesses a wealth of knowledge regarding finance, financial affairs and compliance from his diverse experiences including work in the planning department of a major bank, work in the Japanese Ministry of Finance (currently the Ministry of Finance) and work in the compliance departments of securities companies. Also, from his experience as an Audit and Supervisory Board Member at an information systems company, the Company expects him to play an important role in the healthy and appropriate management of the Company. Therefore, the Company has selected him as a new candidate for Outside Audit and Supervisory Board Member.
Reasons for SelectionThe Company believes that Mr. Makoto Imamura is using his specialized knowledge and wide breadth of experiences as an attorney at law to provide objective opinions from a neutral point of view, thereby playing an essential role as an Outside Audit and Supervisory Board Member of the Company. Therefore, the Company has selected him as an Outside Audit and Supervisory Board Member.
Although Mr. Makoto Imamura has not been involved in corporate management other than by serving as an outside corporate officer, the Company has determined that as an attorney at law, his deep knowledge of corporate law enables him to appropriately execute the duties of an Outside Audit and Supervisory Board Member.
Reasons for SelectionMr.Takeshi Nakano has extensive experience and knowledge in law, finance and accounting. Since it is expected that he can provide advice from specialized perspectives, particularly enhancing effectiveness of and strengthening auditing functions, the Company has selected him as an Outside Audit and Supervisory Board Member. Although he has no experience of being involved in corporate management other than by serving as an outside corporate officer, the Company has determined that he is able to appropriately execute the duties of an Outside Audit and Supervisory Board Member, considering the reasons described above.
Reasons for SelectionAs a Certified Public Accountant, Mr. Mitsumasa Ueno has extensive experience and knowledge in finance and accounting. Since it is expected that he can provide advice from specialized points of view, particularly enhancing effectiveness of and strengthening auditing functions, the Company has selected him as an Outside Audit and Supervisory Board Member.
To improve board effectiveness, an integral part of corporate governance, we have evaluation processes in place for identifying challenges and making improvements.
Understand situations around board operation through analyses of board-related documents and hearing from board members
Collect insights from directors, mainly through self-evaluation questionnaires
Identify challenges based on analyses of survey results while also reviewing other companies’ case studies and regulatory reforms
Report the evaluation results and identified challenges to the board and develop action plans for subsequent fiscal years
Implementing action plans
Carry out action plans to improve board operation and strengthen governance
Directors and Audit and Supervisory Board Members after the 7th Annual General Meeting of Shareholders on June 24, 2021
- (Notes) Each individual’s three main skills are indicated in the above table with black dots. This table does not indicate all the skills, abilities, and knowledge of these individuals.
Officer compensation for the fiscal year ended March 2022 was as follows.
|Officer type||Total amount of compensation, etc.
(millions of yen)
|Total amount by type of compensation, etc. (millions of yen)||Number of applicable officers|
|Fixed compensation||Performance-linked compensation||Non-monetary compensation, etc.|
(Excluding Outside Directors)
Audit ＆ Supervisory Board Members
(Excluding Outside Audit ＆ Supervisory Board Members)
|Outside Audit ＆ Supervisory Board Members||42||42||-||-||4|
- * The numbers of applicable officers include one Outside Audit ＆ Supervisory Board Member who retired as of the conclusion of the 7th Annual General Meeting of Shareholders held on June 24, 2021.
- * The performance-linked compensation above is calculated based on the attainment level of quantitative performance measures (operating revenue and income before tax). Operating revenue and income before tax have been selected as quantitative performance measures with an objective to expand business in scale and improve business profitability and efficiency. The performance-linked compensation is finalized after adjustment by President and Representative Director based on quantitative and qualitative contribution of each Director during the current period and review by the Human Resources and Compensation Committee. Performance-linked compensation for the period ended March 2022 is not paid because the performance target of 80% was not reached for the performance measures.
- * Non-monetary compensation above includes employee stock options and restricted stock compensation. Employee stock options are based on the fair value in accounting determined at grant date of stock options provided before the current fiscal year. This is recorded at cost on the straight-line basis over the vesting periods and the amount recorded as an expense during the current fiscal year is mainly associated with stock acquisition rights. Restricted stock compensation is also based on the grant-date fair value and is recorded at cost on the straight-line basis over the vesting periods.
- * The objective of the Company's restricted stock compensation is to incentivize continuous improvement of its corporate value and promote value-sharing with its shareholders. For eligible Directors, on the condition that they remained in a position pre-defined by the Company's Board of Directors throughout a period pre-defined by the Company's Board of Directors, restriction on transfer is released on completion of the restricted period for all allotted shares. The Directors pay all monetary compensation claims provided by the Company as property contributed in kind and receive the common stock of the Company to be issued or disposed of by the Company. Compensation provided to Directors to grant restricted stock compensation is paid in the form of monetary claims. Based on the resolution at the General Meeting of Shareholders held on June 23, 2022, the maximum total amount of compensation payable as restricted stock compensation has been modified to JPY 200 million annually. Specific allocation to Directors will be determined by the Board of Directors. The maximum total number of common shares issued or disposed of by the Company as restricted shares has been modified to 100 thousand shares annually (however, the total number of shares will be adjusted to a reasonable extent in the event of a share split (including gratis allocation of common shares of the Company) or share consolidation, or if any circumstances arise that require adjustment of the total number of common shares of the Company issued or disposed of as restricted shares) as determined at the General Meeting of Shareholders held on June 23, 2022.
ARUHI’s governance structure is as shown below.
It is a governance structure in which Executive Directors do not account for a majority of the Board of Directors (3 internal: 3 outside), and is a structure that enables adequate supervisory functions to be exercised.
Initiatives aimed at the protection of personal information
In recent years, society has shown heightened interest in the importance of protecting personal information due to the use of advanced information, and we believe it is our social responsibility to protect the personal information we receive from all customers including affiliated companies and the personal information of ARUHI employees. ARUHI has established a Personal Information Protection Policy and Basic Rules on Handling of Personal Information in compliance with JIS Q 15001, and is building systems to protect personal information. We will promote the protection of personal information by ensuring officers and employees, etc. are aware of the importance and take action for the protection of personal information.
Basic approach to cybersecurity
ARUHI promotes cybersecurity activities to appropriately maintain the confidentiality (only being able to be accessed by approved personnel), integrity (maintaining it in an accurate and complete state) and availability (being able to be used at any time necessary) of information assets.
We have formulated rules and established systems in accordance with the directions indicated in the Financial Services Agency’s Policies and Cybersecurity Management Guidelines, etc., and periodically evaluate and review these to improve cybersecurity measures.
In the event of a cybersecurity incident, a task force made up of the relevant divisions and headed by the Risk Management Officer is formed under the guidance of the Company’s management, and takes action.
The task force works not only within the Company, but also with relevant external organizations to take swift and appropriate action.
ARUHI implements a variety of cybersecurity measures, and periodically evaluates the current conditions and reviews security measures.
- Technical security measures
ARUHI implements the following technical security measures.
- Measures against unauthorized access
- Access control
- Encryption (communication, data)
- Addressing vulnerabilities
- System monitoring
- In order to detect the occurrence of security incidents and signs of incidents, systems made public on the Internet and internal systems are monitored.
- System audits / vulnerability diagnosis
- ARUHI periodically performs system audits and vulnerability diagnosis of systems made public on the Internet, and checks whether any improvements can be made to security measures.
Implementation of cybersecurity education
ARUHI periodically implements the following training and drills to increase employees’ knowledge of cybersecurity.
- Information security training
- We provide training for learning about information security knowledge and measures, examples of the latest incidents in Japan and overseas, and the Company’s rules.
- Targeted e-mail attack drills
- Training emails simulating a targeted email attack are sent in drills conducted to improve employees’ ability to deal with targeted email attacks.
- Incident response drills
- We conduct incident response drills for learning how to respond in the event of a cybersecurity incident.
ARUHI has established a whistleblower system enabling employees, etc. who learn about a violation or a potential violation of compliance such as a legal violation or fraudulent activities to directly report to a contact able to appropriately respond to the matter outside the normal route (contacting the direct superior or the head of the Compliance Division).
ARUHI has established Whistleblower Rules stating that a persons providing information include all officers and employees (regardless of form of employment, also including former employees) and all employees of agencies (regardless of form of employment, also including former employees). Reports can be made by email or telephone.
In addition, multiple contact points for accepting reports have been established (head of the Internal Audit Department and a contact point for accepting reports through an external attorney), disadvantageous treatment of whistleblowers is prohibited in personnel and all other aspects, and whistleblowers may file reports anonymously.