2. Board of Directors, Audit & Supervisory Board, independent auditors


4.    Board of Director

4.1   Roles and responsibilities

Directors (Board) determine important matters, which have a material effect on the Company’s management, oversee business execution, as their important roles, and fulfill their duties.
The Company has established Rules of the Board of Directors. The Rules stipulate matters to be decided by the Board of Directors as matters to be resolved.
The Board of Directors makes judgments and decisions regarding statutory matters that require resolutions of the Board and matters that are deemed appropriate for resolution by the Board of Directors in light of the importance, nature, etc. of such matters.
Moreover, the Board of Directors establishes criteria for decision making for each position in order to allocate authority for matters regarding the execution of duties to each Director, Executive Officer and others, thereby facilitating decision making and pursuing speedy management.  
The Company flexibly reviews the content and scope of the criteria for decision-making authority according to the circumstances of the Company.

4.2   Structure of the Board of Directors.

The composition of the Board shall be balanced as a whole with members who have diverse professional qualities and insight, regardless of their gender and nationality. Moreover, Outside Directors shall be chosen based on requirements such as persons who do not give rise to concern that they are significantly controlled by senior management or that they exert significant control over senior management, who have extensive experience and insight in corporate management to enable them to oversee the execution of duties of Directors, or who excel in special fields and can contribute to the Company’s business management, in principle. Candidates for Directors are determined by the Board of Directors based on recommendations from Nomination and Evaluation Remuneration Committee.  With respect to the size of the Board, a sufficient number of members is retained to enable active debate from various viewpoints, while recommendations from Nomination and Evaluation Remuneration Committee for candidates prevent the Board from becoming excessive in scale.

  • President
    Member of the Board

    Takeshi Natsuno

  • Chief Human Resources Officer(CHRO)
    Chief Literature & Movie Officer(CLMO)
    Member of the Board

    Naohisa Yamashita

  • Chairman of the Board

    Tsuguhiko Kadokawa

  • Vice Chairman of the Board

    Masaki Matsubara

  • Chief Financial Officer(CFO)
    Member of the Board

    Yoichi Yasumoto

  • Member of the Board

    Noriko Kase

  • Member of the Board

    Nobuo Kawakami

  • Member of the Board

    Cindy Chou

  • Member of the Board (Outside Director)

    Hiroo Unoura

  • Member of the Board (Outside Director)

    Tomoyuki Moriizumi

  • Member of the Board (Outside Director)

    Koji Funatsu

  • Member of the Board (Outside Director)

    Ruth Marie Jarman

4.3   Criteria for independence of Directors and Audit & Supervisory Board Members

In addition to the criteria for independence regulated by Tokyo Stock Exchange Inc., the Company has established the following criteria on transaction amounts, etc. between the Company and a counterpart.

The counterpart shall not fall under any of the following:  

  • (i) An entity of which the Group is a major business partner (an entity whose sales to the Group account for 2% or more of the entity’s consolidated sales in any one of the three most recent fiscal years) or a business executor of the entity
  • (ii) A major business partner of the Group (an entity which Group’s sales to that entity account for 2% or more of the Company’s consolidated sales in any one of the three most recent fiscal years) or a business executor of the business partner
  • (iii) A business executor of a financial institution from which the Company has loaned a large sum of money (loans accounting for 2% or more of the Company’s consolidated total assets as of the end of the most recent fiscal year)
  • (iv) An individual who has received 10 million yen or more per year in the form of money or other assets from the Company in the current and the previous three years in addition to officer’s remuneration, and a judicial person (consultant, accounting professional, or legal expert) which has received compensation from the Company accounting for 2% or more of total sales of the said judicial person on average over the past three years (if the person who is given such assets is a judicial person, association or other organization, an individual who is a member thereof)
  • (v) A business executor of an organization to which the Group made a donation exceeding a total sum of the greater of 10 million yen per year or 2% of annual aggregate revenue of the organization in any one of the three most recent fiscal years
  • (vi) A person who is or has been an Accounting Auditor of the Group (for a judicial person, an individual who is or has been in charge of audits of the Group) in the current and the previous three years
  • (vii) A person who owns, directly or indirectly, 10% or more of all voting rights of the Company (for a judicial person, a business executor thereof)

In electing Outside Directors and Outside Audit & Supervisory Board Members, Outside Directors shall be chosen based on requirements such as persons who do not give rise to concern that they are significantly controlled by senior management or that they exert significant control over senior management, who have abundant experience and insight in corporate management to enable them to oversee the execution of duties of Directors, or who excel in special fields and can contribute to the Company’s business management, in principle, while Outside Audit & Supervisory Board Members shall be chosen based on requirements such as persons who do not give rise to concern that they are significantly controlled by the top management or that they exert significant control over the top management and who are accounting or legal professionals with hands-on experience in said fields, in principle.  

4.4   Remuneration

(i) Matters regarding policy on determination of amount of officers’ remuneration, etc. or calculation method thereof

a. Composition of remuneration and persons eligible to receive payment of remuneration
Remuneration of the Company’s Directors (excluding Outside Directors) consists of monetary remuneration comprising (i) fixed remuneration made up of basic remuneration and service remuneration and (ii) performance-based variable remuneration. In addition, the Company has introduced performance-based stock remuneration.
Remuneration of Outside Directors and Audit & Supervisory Board Members consists only of fixed remuneration.

Officer category Monetary remuneration Non-monetary remuneration
Fixed
remuneration
Variable
remuneration
Stock
remuneration
Directors
(excluding Outside Directors)
Outside Director
Audit & Supervisory
Board Members

b. Matters regarding resolutions of General Meeting of Shareholders on remuneration, etc. of Directors and Audit & Supervisory Board Members
It was resolved in the 1st Ordinary General Meeting of Shareholders held on June 23, 2015 that the total amount of annual monetary remuneration for Directors shall be no more than 400 million yen (provided that this amount does not include the salaries as employees). Moreover, it was also resolved in said Meeting that the Company shall contribute cash amounting to a maximum of 1,200 million yen (equivalent to 400 million yen annually) to a trust with a trust period of three years for every three consecutive fiscal years in order for Directors, excluding Outside Directors, to acquire stock-based remuneration.
It was resolved in the 5th Ordinary General Meeting of Shareholders held on June 20, 2019 that the maximum amount of remuneration for Audit & Supervisory Board Members shall be 70 million yen a year.

c. Policy on determination of details of officers’ remuneration, etc.
It was resolved at the meeting of the Board of Directors held on February 25, 2021 that the policy for determining the details of remuneration, etc. for each individual Director be as follows.
Moreover, remuneration, etc. for each individual Director for the current fiscal year has been properly determined by Nomination and Evaluation Remuneration Committee.

A. Basic policy
The Company has adopted a remuneration structure that links remuneration for Directors (excluding Outside Directors) to shareholder interests so that the structure can fully function as an incentive to achieve sustained improvement of corporate value, in accordance with its basic policy that remuneration for individual Directors shall be determined at an appropriate level based on their respective duties.
Specifically, remuneration of the Company’s Directors (excluding Outside Directors) consists of (1) monetary remuneration comprising (i) fixed remuneration made up of basic remuneration and service remuneration and (ii) performance-based variable remuneration, and (2) performance-based stock remuneration which is a non-monetary remuneration. Remuneration of Outside Directors consists only of fixed monetary remuneration.

B. Policy on determination of amount of fixed monetary remuneration for individuals
Fixed remuneration is determined based on the standard amount according to positions and responsibilities of eligible Directors. Fixed remuneration is paid monthly.

C. Policy on determination of details and amount or number of performance-based variable remuneration (monetary remuneration) and calculation method of the amount or number
The base amount of performance-based variable remuneration is set based on fixed remuneration for eligible Directors. They are evaluated based on the Company’s financial results and their individual performance related to their responsibilities. The amount of payment is determined within a range of 20% to 200% of the base amount.
For the evaluation of performance-based variable remuneration, consolidated results, division results and individual qualitative targets according to roles of eligible Directors are weighted to total 100%. Evaluation indicators for performance-based variable remuneration are based on consolidated net sales and consolidated operating profit from a perspective of emphasizing the Group’s growth potential and profitability.
Performance-based variable remuneration is paid with monthly fixed remuneration.

D. Policy on determination of details and amount or number of non-monetary remuneration and calculation method of the amount or number
The Company has adopted a stock-based remuneration plan as non- monetary remuneration, etc.
The stock-based remuneration plan is a performance-based stock remuneration system in which the Company’s shares are acquired through a trust funded by the Company and are delivered to individuals based on the individuals’ performance and contributions to the Company’s financial results for each fiscal year in accordance with the Rules of Stock-Based Remuneration Plan.
Under the stock-based remuneration plan, consolidated operating profit is an indicator for the stock-based remuneration plan and a basic criterion for determining the level of achievement of business results because the Company reviews it as key financial data for achieving a sustained improvement in corporate value.
For stock-based remuneration, the Board of Directors resolves its approval on the base amount for calculating shares to be granted to Directors at its meeting every May. The Nomination and Evaluation Remuneration Committee determines the individual amounts of stock-based remuneration to be granted.
If the granting of stock-based remuneration is determined, shares are delivered once a year after an Ordinary General Meeting of Shareholders.

E. Policy on determination of amount of monetary remuneration, amount of performance-based remuneration, etc. or the ratio of non-monetary remuneration, etc. to individual remuneration, etc. for each Director
The ratio of fixed remuneration to variable remuneration for Directors (excluding Outside Directors) is set as 50%:50%, in principle. The ratio of stock-based remuneration to fixed remuneration is not set.

F. Matters regarding the determination of details of individual remuneration, etc. for Directors
The Board of Directors resolves to entrust the determination of remuneration, etc. for Directors to Nomination and Evaluation Remuneration Committee at a meeting of the Board of Directors to be held after a General Meeting of Shareholders. The Nomination and Evaluation Remuneration Committee consists of all Independent Outside Directors, Representative Directors and Directors with special titles, with an Independent Outside Director assuming the role of chairperson and Independent Outside Directors accounting for the majority of the Committee members. The Committee considers and determines remuneration within the limit of remuneration for Directors, in accordance with the above basic policy.

d. Method of determination of individual remuneration

A. Directors
The Board of Directors entrusts the determination of the amount of all remuneration for each Director to Nomination and Evaluation Remuneration Committee. Please refer to “3.3 Nomination and Evaluation Remuneration Committee” for more details about the Committee.
Individual remuneration, etc. for each Director is determined directly by the Nomination and Evaluation Remuneration Committee in accordance with the basic policy stipulated in “4.4c Policy on determination of details of officers’ remuneration, etc.”

The reason for entrusting the Nomination and Evaluation Remuneration Committee with the determination of the amount of individual remuneration, etc. is because the Board of Directors has concluded that the Committee can determine remuneration from an objective and neutral position, considering that Independent Outside Directors account for the majority of the Committee members and that the Committee is chaired by an Independent Outside Director. Moreover, Rules of Nomination and Evaluation Remuneration Committee have been established to ensure that the Committee properly exercises its authority, and the Committee is administered based on those rules.

B. Audit & Supervisory Board Members
Individual remuneration, etc. for Audit & Supervisory Board Members is determined through discussions among the Members within the limit of remuneration for Audit & Supervisory Board Members, and remuneration for the current fiscal year has been determined accordingly.

(ii) Total amount of remuneration, etc. by officer category and by type of remuneration, etc. and number of eligible officers
Officer category Total amount
of remuneration
(millions of yen)
Total amount by type of remuneration
(millions of yen)
Monetary
remuneration
Non-monetary
remuneration
Number of
eligible
officers
Fixed
remuneration
Variable
remuneration
Stock
remuneration
Directors
(excluding Outside Directors)
345 189 126 30 10
Audit & Supervisory Board Members
(excluding Outside Audit &
Supervisory Board Members)
36 36 2
Outside officers 54 54 8

(Notes)
1. The above numbers include three Directors (of whom one is an Outside Director) and one Audit & Supervisory Board Member (Outside Audit & Supervisory Board Member) who left office at the close of the 6th Ordinary General Meeting of Shareholders held on June 19, 2020.

2. The above amounts indicate the stock-based remuneration for the fiscal year ended March 31, 2020, which was paid in the current fiscal year.  The amount of stock-based remuneration for the fiscal year ended March 31, 2021 has not been included in the amounts of payment presented above as it has not been determined at this time. For accounting purposes, however, provision for stock-based remuneration for officers has been recorded.

3. Included in the basis for calculating the amount paid in the current fiscal year, are consolidated results (fiscal year ended March 31, 2020) that were used as evaluation indicators; consolidated net sales of 204,653 million yen and consolidated operating profit of 8,087 million yen. Further, the degree of achievement for each department was approximately 80% to 120%.

4.5   Abilities and reason for election

Mr. Tsuguhiko Kadokawa has been serving as Chairman of the Board of the Company and Representative Director of subsidiaries of the Company.  He is well versed in the business of the Company and its subsidiaries and has extensive experience and extensive knowledge gained as a corporate manager in the management of the Company and its subsidiaries.

Mr. Masaki Matsubara has been serving as President & Representative Director of the Company and Representative Director of subsidiaries of the Company. He is well versed in the business of the Company and its subsidiaries.
Mr. Takeshi Natsuno serves as Director, Executive Officer and Chief Digital Officer of the Company and Representative Director & President of DWANGO Co., Ltd., which is a subsidiary of the Company.  He has also served as an executive of many companies.  
Mr. Naohisa Yamashita serves as Director, Executive Officer, Chief Human Resources Officer and Chief Literature & Movie Officer of the Company.  He also served as Director of the Company and its subsidiaries and is well versed in the business of the Company and its subsidiaries.

Mr. Yoichi Yasumoto serves as Director, Executive Officer and Chief Financial Officer of the Company. He also served as Director of subsidiaries of the Company and is well versed in the business of the Company and its subsidiaries.

Ms. Noriko Kase has been serveing as Director of the Company. She was also engaged in various fields including book editing and corporate marketing, and now serves as Chief Executive Officer of KADOKAWA ASCII Research Laboratories, Inc.  

Mr. Nobuo Kawakami has been serving as Director of the Company over many years.  He also established DWANGO Co., Ltd., which is a subsidiary of the Company, and served as Representative Director & Chairman of the company for years, and currently serves as Adviser of the company.
Ms. Cindy Chou serves as Chief Executive Officer of J-GUIDE Marketing Co., Ltd., which is a subsidiary of the Company.  She has intricate knowledge of overseas business operations through her experience at overseas companies, including overseas group companies of the Company.

Mr. Hiroo Unoura has abundant expertise and experience as a top management executive active in cutting-edge fields, working on strengthening competitiveness and profitability of the domestic business as well as expanding the global business at NIPPON TELEGRAPH AND TELEPHONE CORPORATION.

Mr. Tomoyuki Moriizumi has been serving as Outside Director of the Company. He is expected to use his abundant experience and extensive knowledge as a corporate manager, in fields such as the cable TV business, in the management of the Company.  In addition, he served as Outside Director of subsidiaries of the Company.  

Mr. Koji Funatsu has been serving as Outside Director of the Company. He is expected to use his expertise in the IT field, as well as abundant experience and extensive knowledge as a corporate manager in the management of the Company. In addition, he served as Outside Director and Audit & Supervisory Board Member of subsidiaries of the Company.  

Ms. Ruth Marie Jarman has been serving as Outside Director of the Company.  She also founded and serves as CEO of Jarman International KK.   She is expected to use her abundant experience and extensive knowledge in global expansion, inbound businesses, and support for women’s activities in the management of the Company.  

4.6   Attendance

  Meetings of the Board of Directors Meetings of the Audit & Supervisory Board
Attendances Attendance rate Attendances Attendance rate
Mr. Takeo Takasu
Member of the Board
(Outside Director)
15 of the 15 meetings 100%
Mr. Tomoyuki Moriizumi
Member of the Board
(Outside Director)
15 of the 15 meetings 100%
Mr. Koji Funatsu
Member of the Board
(Outside Director)
15 of the 15 meetings 100%
Ms. Ruth Marie Jarman
Member of the Board
(Outside Director)
12 of the 12 meetings 100%
Mr. Akira Watanabe
Audit and Supervisory Board Member
(Outside Auditor)
13 of the 15 meetings 87% 14 of the 17 meetings 82%
Ms. Maoko Kikuchi
Audit and Supervisory Board Member
(Outside Auditor)
12 of the 12 meetings 100% 14 of the 14 meetings 100%

4.7   Evaluation of effectiveness

The Company discloses an outline of evaluation of effectiveness of the Board of Directors in corporate governance report every year.
In order to maintain and improve the effectiveness of the Board of Directors, the Company conducted a questionnaire and interviews of the Directors and Audit & Supervisory Board Members and analyzed and evaluated the effectiveness of the Board of Directors at a meeting of the Board of Directors held in April 2021.
In the evaluation of effectiveness, the Board of Directors was evaluated as effective, and all of the internal and external Directors were highly evaluated mainly in the following points: Discussions and decision-making at meetings of the Board of Directors are conducted appropriately based on clearly defined performance indicators; Agenda for meetings of the Board of Directors are selected appropriately; Execution of duties by the top management is evaluated appropriately by Nomination and Evaluation Remuneration Committee, a voluntary committee; and DX is being promoted.  
On the other hand, it was evaluated that there was room for improvement mainly in terms of the clarification of sustainability policy, initiatives for the disclosure of non-financial information, and personnel strategy including the development of human resources and encouragement of diversity.
The Company will stress initiatives to make improvements regarding these issues and continuously enhance effectiveness of the Board of Directors.


5.    Audit & Supervisory Board

5.1   Structure, roles and responsibilities

The Company is a company with an audit & supervisory board, with two Standing Audit & Supervisory Board Members and two Non-Standing Audit & Supervisory Board Members (Outside Audit & Supervisory Board Members). In accordance with the audit policy, audit plans, etc. Audit & Supervisory Board Members attend Board of Directors’ meetings, management meetings and other important meetings, share information and exchange opinions with Outside Directors, and cooperate with the Independent Auditor. Standing Audit & Supervisory Board Members inspect important management documents, etc., hold periodic meetings with Representative Directors, report audit results to and share information and exchange opinions with the Independent Auditors and the internal audit division, conduct audits of the Company’s overseas subsidiaries, concurrently serve as Audit & Supervisory Board Members of major subsidiaries and cooperate with Audit & Supervisory Board Members of the group companies. Mr. Akira Watanabe, a Non-Standing Audit & Supervisory Board Member, provides advice and recommendations regarding compliance with laws and regulations, etc., harnessing his professional viewpoint as an attorney-at-law. Ms. Maoko Kikuchi, a Non-Standing Audit and Supervisory Board Member, provides advice and recommendations regarding legal matters and corporate governance harnessing her professional viewpoint rooted in her experience in corporate legal affairs, at Public Prosecutor’s Office and as an Audit & Supervisory Board Member. All Audit & Supervisory Board Members attend meetings of the Board of Directors and make constructive statements, etc.  Mr. Yasuaki Takayama, a Standing Audit and Supervisory Board Member, is a certified public accountant, and Mr. Akira Watanabe, a Standing Audit and Supervisory Board Member, has a qualification as a certified tax accountant, and both have a considerable degree of knowledge on financial, accounting and tax affairs.

  • Audit & Supervisory Board Member

    Yasuaki Takayama

  • Audit & Supervisory Board Member

    Akira Watanabe

  • Audit & Supervisory Board Member (Outside Auditor)

    Akira Watanabe

  • Audit & Supervisory Board Member (Outside Auditor)

    Maoko Kikuchi

5.2   Abilities and reason for election

Ms. Maoko Kikuchi is qualified as an attorney-at-law of Japan and the State of New York in the U.S. and has a high degree of professionalism in legal matters and corporate governance, based on her experience in corporate legal affairs and working at Public Prosecutor’s Office and the Japan Fair Trade Commission and a Standing Audit & Supervisory Board Member.

Mr. Akira Watanabe has a high degree of professionalism in tax and accounting affairs as a certified tax accountant. In addition, he has experience in serving as Executive Officer at KADOKAWA CORPORATION (present KADOKAWA Future Publishing Co., Ltd.) and is well versed in the business of the Company.

Mr. Yasuaki Takayama, has a high degree of professionalism in financial and accounting affairs as a certified public accountant.  In addition, he has experience in serving as Director at KADOKAWA CORPORATION (present KADOKAWA Future Publishing Co., Ltd.) and is well versed in the business of the Company.

Mr. Akira Watanabe has a high degree of professionalism in legal matters as an attorney-at-law.  In addition, he has experience in serving as Outside Audit and Supervisory Board Member at KADOKAWA CORPORATION (present KADOKAWA Future Publishing Co., Ltd.)   Mr. Hiroaki Sato, a substitute Audit and Supervisory Board Member, has abundant knowledge and a high degree of professionalism which he has built up as an attorney-at-law.

5.3   Attendance

The Company’s Audit and Supervisory Board holds a meeting once a month, in principle, and extraordinary meetings as necessary. In the current fiscal year, the Board held 17 meetings.

Name Number of attendances Attendance rate
Yasuaki Takayama 17 of the 17 meetings 100%
Akira Watanabe 17 of the 17 meetings 100%
Akira Watanabe 14 of the 17 meetings 82%
Maoko Kikuchi 17 of the 17 meetings 100%

(Note)
The number of attendances of Ms. Maoko Kikuchi indicates her attendance at meetings of Audit and Supervisory Board after her appointment as Board Member on June 19, 2020.  


6.    Independent Auditors

6.1   Structure

a. Name of accounting corporation:
Ernst & Young ShinNihon LLC.

b. Length of continuous auditing service:
Since April 1, 2020

c. Certified public accountants who executed the service
Mr. Hirofumi Harashina, Designated Engagement Partner
Mr. Hiroyoshi Konno, Designated Engagement Partner
Mr. Keiichi Wakimoto, Designated Engagement Partner
(Note) The number of years of continuous auditing service is not presented here because it is less than 7 years.

d. Composition of persons who provide assistance for audit work
Persons who provide assistance for the Company’s accounting audit work consists of 20 certified public accountants and 39 other persons.

e. Policy for selecting accounting auditor and reasons for selection
Audit & Supervisory Board selects an Independent Auditor by (1) obtaining from each candidate entity documents that describe an outline of the entity, audit implementation system, etc. and estimated audit fees, (2) receiving information from and exchanging opinions with the business execution division, and (3) collecting and analyzing information through interviews with candidate entities, inquiries, etc. If it is determined that an Independent Auditor is insufficiently qualified for implementation of audits based on the policy for determining the dismissal or non-reappointment of an Independent Auditor, details of the agenda on the dismissal or non-reappointment of an Independent Auditor shall be determined.

f. Evaluation of Independent Auditor by Audit & Supervisory Board Members and the Board as a whole
Audit & Supervisory Board has established criteria for evaluating an Independent Auditor. It receives information from accounting and internal audit divisions and exchange opinions with said divisions. Then, it reviews and comprehensively evaluate the reasonableness of an Independent Auditor in terms of quality management, independence, expertise and handling of matters to be improved.

6.2   Audit fees

a. Audit fees for certified public accountants and others

Classification Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021
Compensation for
audit certification services
(millions of yen)
Compensation for
non-audit services
(millions of yen)
Compensation for
audit certification services
(millions of yen)
Compensation for
non-audit services
(millions of yen)
The Company 94 96
Consolidated subsidiaries 2
Total 96 96

(Fiscal year ended on March 31, 2021)
In addition to the above, the Company paid 1 million yen, when it changed its Independent Auditor, to Deloitte Touche Tohmatsu LLC, its previous Independent Auditor, as compensation for the succession of audit services.

b. Fees (excluding a.) for persons belonging to the same network as the certified public accountants who conducted audits for the Company (Deloitte Touche Tohmatsu Group for the fiscal year ended March 31, 2020 and Ernst & Young ShinNihon LLC for the fiscal year ended March 31, 2021)

Classification Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021
Compensation for
audit certification services
(millions of yen)
Compensation for
non-audit services
(millions of yen)
Compensation for
audit certification services
(millions of yen)
Compensation for
non-audit services
(millions of yen)
The Company
Consolidated subsidiaries 1 3
Total 1 3

(Fiscal year ended on March 31, 2020)
Non-audit services for the Company’s consolidated subsidiaries are advisory services regarding new businesses and business management.

c. Policy for determining audit fees
The Company determines audit fees by taking into account its business scale, characteristics, the number of days spent for audits, etc. and upon obtaining consent of Audit & Supervisory Board.

d. Reason for agreement of Audit & Supervisory Board on audit fees, etc. for Independent Auditor
Audit & Supervisory Board agreed on audit fees, etc. for Independent Auditor based on the review and judgment that audit fees were reasonable, considering the content of audit plan, status of execution of services, basis for calculation of estimated audit fees, etc.