Corporate Governance Business Management System

Matters Pertaining to Composition of Organs and Organizational Operation

Directors

Number of Directors under the Articles of Incorporation 17
Term of Office of Directors under the Articles of Incorporation 1 year
Chairperson of the Meeting of Board of Directors Chairman (except when serving concurrently as President)
Number of Directors 9
Whether or not Outside Directors are elected Elected
Number of Outside Directors 9
Number of Outside Directors who have been appointed as independent officer 7

Reason for Appointing Outside Directors

Mr. Kaoru Seto because we determined that he has broad knowledge of and deep insight into corporate management through his considerable experience as manager of Yamato Holdings Co., Ltd. Based on the above, we determined that he will appropriately supervise the execution of our business.

Mr. Masaya Futamiya has wide-ranging knowledge and impressive insight into corporate management accumulated from his extensive experience as a management member at Sompo Japan Nipponkoa Insurance Inc. Based on the above, we determined that he will appropriately supervise the execution of our business.

Ms. Masako Arakawa has extensive experience and a high degree of expertise gained in her career in the real estate business, as well as her experience as an External Director at a public company and impressive knowledge regarding corporate governance. Based on the above, we determined that she will appropriately supervise the execution of our business.

Ms. Mari Ebisui has cultivated extensive experience and impressive knowledge in accounting based on a global perspective as a Certified Public Accountant in the United States, and also has insight on corporate internal control and business ethics as a Certified Fraud Examiner. Accordingly, the Company believes that she is an appropriate for External Director, and proposes that she be elected.

Ms. Atsumi Harasawa has professional experience and knowledge accumulated as a lawyer, and experience and insight as an external officer of listed companies. Accordingly, the Company believes that she is an appropriate candidate for External Director, and proposes that she be elected.

Mr. Keiichiro Uesugi has experience and insight in management strategy at a major office and precision equipment manufacturer. Accordingly, the Company believes that he is an appropriate candidate for External Director, and proposes that he be elected.

Mr. Koji Nagamine has a wide range of knowledge and insights such as abundant experience and high achievements as a manager of a major banking group, and overseas business strategies related to the financial industry based on them. Accordingly, the Company believes that he is an appropriate candidate for External Director, and proposes that he be elected.

Mr. Kazuhiko Tokumine is a External Director who is an Audit & Supervisory Committee Member because the Company believes that he has experience accumulated over many years as a lawyer, and experience and knowledge as an external officer of a listed company.

Mr. Tokio Kawashima has many years of experience working at a major financial institution, a considerable degree of insight on treasury and accounting, and extensive experience and impressive knowledge accumulated by serving as Full-time Audit & Supervisory Board Member of a listed company. Accordingly, the Company believes that he is an appropriate for External Director who is an Audit & Supervisory.

Audit and Supervisory Committee

Number of members 3
Number of Full-time member 1
Number of Internal director 1
Number of Outside director 2
Chairman (Chair) Internal director
Number of directors and employees who should assist the duties of the Audit and Supervisory Committee Existing

Reason for Appointing Outside Directors

Mr. Kazuhiko Tokumine is a External Director who is an Audit & Supervisory Committee Member because the Company believes that he has experience accumulated over many years as a lawyer, and experience and knowledge as an external officer of a listed company.

Mr. Tokio Kawashima has many years of experience working at a major financial institution, a considerable degree of insight on treasury and accounting, and extensive experience and impressive knowledge accumulated by serving as Full-time Audit & Supervisory Board Member of a listed company. Accordingly, the Company believes that he is an appropriate for External Director who is an Audit & Supervisory.

Independent Officers

Number of independent officers 7

Incentives

State of Measures Concerning Offering of Incentives to Directors Introduction of performance-based remuneration system
  • Remuneration for Directors (excluding External Directors) consists of fixed remuneration, bonus linked to performance in a single fiscal year (short-term incentive) and stock-based remuneration (medium- and long-term incentive).
  • The stock-based remuneration system aims to improve awareness of contributing to an improvement in medium- and long-term results and increases in corporate value. It will do this by further clarifying the connection between remuneration for Directors and share prices of the Company and Directors while sharing the profits and risks caused by share price changes with all shareholders. This system was introduced upon approval at the 43rd Ordinary General Meeting of Shareholders held in June 2019. Due to the transition to a Company with an Audit & Supervisory Committee, a new remuneration limit for Directors in this system was resolved at the 44th Ordinary General Meeting of Shareholders held in June 2020.
  • The system is a stock-based remuneration system in which a trust established by the Company contributing cash (Trust) acquires shares of the Company, and the Company provides the number of shares of the Company equal to the number of points granted to Directors via the Trust. Also, the time at which Directors receive shares of the Company is, in principal, at retirement as Director.

Remuneration of Directors

State of Disclosure (of Individual Remuneration of Directors) We do not disclose individual cases of remuneration.
  • Since we do not have a Director the total amount of whose remuneration, etc. is at least 100 million yen, we do not disclose individual cases of remuneration.
  • For the period ended March 2020, the annual total remunerations, etc. paid to Directors of the Company was 212 million yen.
  • The annual amount of remuneration of Directors of the Company (excluding Directors who are Audit & Supervisory Committee Members) is 280 million yen or less (of which, the annual amount of remuneration of External Directors is 60 million yen or less), which is the upper limit of remuneration resolved at the General Meeting of Shareholders held in June 2020.
  • In addition, the Company contributes a maximum of 300 million yen in total for acquiring shares of the Company that need to be distributed to Directors under the stock-based remuneration system as remunerations for incumbent Directors during the applicable period.
  • The annual amount of remuneration of Directors who are Audit & Supervisory Committee Members is 60 million yen or less, which is the upper limit of remuneration resolved at the General Meeting of Shareholders held in June 2020.
  • The Company does not pay an employee salary to an employee who is concurrently a Director.

General Outline of Corporate Governance System

(1)Execution of business

In addition to statutory bodies such as the General Meeting of Shareholders, the Board of Directors, and the Audit & Supervisory Committee, the Company has established advisory organizations to assist the Board of Directors or the President and Executive Officer in making decisions.

The Board of Directors of the Company is comprised of 14 Directors in total—five full-time Directors (including one Director who is an Audit & Supervisory Committee Member) and nine External Directors (including two Directors who are Audit & Supervisory Committee Members). They discuss and make decisions on important matters regarding management and matters set forth in laws, regulations and the Articles of Incorporation.
The transition to a Company with an Audit & Supervisory Committee has enabled swifter and agiler decision-making by delegating a significant portion of decisions on important business execution to the management team pursuant to the provisions of the Articles of Incorporation.

The Company has adopted an executive officer system, in which the Board of Directors appoints Executive Officers, determines their authorities and responsibilities, and delegates them the authority to execute business in order to speed up the decision-making and business execution process. In the execution of business, the President and Executive Officer supervises the business as the chief operating officer in accordance with the business plan and various measures determined by the Board of Directors. The Management Meeting, which is composed of the President and Executive Officer and Executive Officers who satisfy the prescribed requirements, discusses and makes decisions about important matters concerning business execution. The Board of Directors supervises the state of execution of business by each Executive Officer. It also instructs the President and Executive Officer to establish the internal control system, requests a regular report on the policy for the development and operation thereof and the result of its implementation and attempts to continually strengthen the internal control system.

As an advisory organization for the Board of Directors, the Company established the Nominating and Compensation Committee, which consists of all Independent External Directors. The aim of the Committee is to ensure objectivity, transparency and validity of appointment of Director candidates, appointment and dismissal of the members of the management, establishment and operation of a succession plan for the Chief Executive Officer and decision on Director remuneration.
As other advisory organizations for the President and Executive Officer, the Company established the following committees.

  • Disclosure Committee: aimed at effective and efficient disclosure of the Ricoh Leasing Group’s corporate information
  • ALM Committee: aimed at appropriate management of assets and liabilities for proper risk management and profit maximization
  • Review Committee: aimed at deliberation/determination on review work as well as reporting review-related matters
  • Risk Management Committee: aimed at effective and efficient development and promotion of risk management at the Ricoh Leasing Group
  • Sustainability Committee: aimed at more effective support for the sustainable management of the Ricoh Leasing Group

(2)Audit and supervision

As a result of the transition to a Company with an Audit & Supervisory Committee, Directors who are Audit & Supervisory Committee Members now have voting rights at the Board of Directors, which has further strengthened the supervisory function of the Board of Directors.

The Audit & Supervisory Committee of the Company audits and supervises the decision-making process of the Board of Directors and the business execution by Directors. It does this through exercising its voting rights in meetings of the Board of Directors, exercising its right to give opinions on nomination and remuneration of Directors (excluding Directors who are Audit & Supervisory Committee Members) in the General Meeting of Shareholders, attending important meetings such as meetings of the Board of Directors and the Management Meeting, inspecting important documents, and investigating the state of business and property. The Audit & Supervisory Committee consists of three members, two of whom are highly independent External Directors. It also has one full-time Audit & Supervisory Committee Member who facilitates the audit by the Audit & Supervisory Committee.
In addition, the Representative Director and the Directors who are full-time Audit & Supervisory Committee Members closely exchange opinions about corporate management based on their respective stewardship responsibilities for shareholders. Furthermore, the Company has adopted a system under which Directors and employees report the statutory matters as well as “matters concerning important facts which are in violation of laws, regulations or the Articles of Incorporation, wrongful acts or facts which are likely to significantly damage the Company and its subsidiaries, if such facts are found,” “result of internal audit and subsidiary investigation,” “state of whistle-blowing made by officers and employees of the Company and its subsidiaries under the whistle-blowing system” and “other matters required by an Audit & Supervisory Committee Member to be reported.”

The independent internal audit department has eight staff members who conduct internal audits of the business execution of each business execution department and subsidiary from the perspectives of legal compliance, rationality and efficiency. Audit results are reported to the Representative Director & President and Executive Officer, full-time Audit & Supervisory Committee Members and relevant Officers. When necessary, the audited departments report on their improvement plans and their implementation. The audit results are also reported periodically to the Board of Directors, the Audit & Supervisory Committee and the Corporate Execution Meeting.
The internal audit department conducts internal control assessments, or J-SOX audits, from the perspectives of legal compliance, the effectiveness and efficiency of business, the reliability of financial reporting, and the preservation of assets. The department conducts those assessments from a fair and objective position and provides advice and recommendations for improvement. The Company is maintaining close cooperation with the auditing firm, which is our accounting auditor, by exchanging opinions on the content and results of audits on a regular and irregular basis.

Accounting audits for the Company are conducted by Deloitte Touche Tohmatsu LLC, which has an auditing contract with the Company. The certified public accountants who conducted accounting audits for the Company were Mr. Masato Shoji, Mr. Hiroaki Aoki and Mr. Norihiro Watanabe of Deloitte Touche Tohmatsu LLC. All of them were continuously involved in our audits for one year. There were also assistants, who consisted of 8 certified public accountants and 20 others, involved in the accounting audits.

(3)Nomination and determination of remuneration

The following are the policies and procedures for the Board of Directors of the Company to follow when appointing candidates for Directors (excluding Directors who are Audit & Supervisory Committee Members, hereinafter referred to as “Directors”) and Directors who are Audit & Supervisory Committee Members (hereinafter referred to as “Audit & Supervisory Committee Members”) and appointing and dismissing members of the management.

[Policies and procedures to be followed when appointing candidates for Directors and Audit & Supervisory Committee Members and appointing and dismissing members of the management]

  1. We appoint those who can play a role and fulfil responsibilities that should be played or fulfilled as a Director or Audit & Supervisory Committee Member in an appropriate and rigorous manner.
  2. In electing Directors and Audit & Supervisory Committee Members, we appoint those with 1) a great personality, 2) wide-ranging experience and 3) a field of expertise. Especially for External Directors (including Audit & Supervisory Committee Members), we add the requirements “person who can make decisions from the standpoint of shareholders and society” in addition to the above-mentioned requirements, establish the criteria for judgement of independency and elect those who satisfy such criteria.
  3. Regarding the selection of candidates for directors, the nomination and compensation committee will be deliberated and the candidates for candidates will be decided by the board of directors.
  4. In electing candidates for Audit & Supervisory Committee Members, the Board of Directors determines a proposal for candidates through deliberation at the Nominating and Compensation Committee and with the consent of the Audit & Supervisory Committee.
  5. Members of the management will be appointed from those who have the ability to execute business based on their strong leadership or a great personality to realize the management strategy and business strategy of the Company and the Company Group.
  6. Members of the management are elected by the resolution of the Board of Directors after deliberation of the Nominating and Compensation Committee.
  7. Members of the management are dismissed by the resolution of the Board of Directors after deliberation of the Nominating and Compensation Committee based on the dismissal standards below.
    1. When the member is judged to be unqualified to perform his/her roles and responsibilities
    2. When there was an illegal or fraudulent act in performing his/her duty
    3. When he/she acted to defame the Company
    4. When it is determined to be difficult to perform his/her normal duty due to health reasons and others
    5. When it is determined to be difficult to perform his/her duty as an officer due to other reasons attributable to himself/herself

The Nominating and Compensation Committee has been established to ensure objectivity, transparency and validity of decision on Director remuneration. The Committee is an advisory organization to the Board of Directors and is composed of all the Independent External Directors.
Remuneration for Directors is determined by the Board of Directors based on the results of deliberation by the Committee as to whether or not the remuneration system and remuneration levels for Directors are in line with the policies mentioned above.