コーポレート・ガバナンス

Corporate Governance

As of December 31, 2020

In order to improve management transparency and efficiency, Hoshizaki has made seeking to maximize corporate earnings and value from the standpoint of the shareholders and other stakeholders its basic corporate governance policy and objective.

Corporate Governance System

The Company has adopted the governance structure of a Company with an Audit and Supervisory Committee and has set the percentage for outside directors on its Board of Directors at one-third or more.
The Board of Directors meets regularly every month as a management-related decision-making body to formulate management policy and strategy for the entire Group and supervise the execution of its business, and consists of eight directors who are not members of the Audit and Supervisory Committee (including two outside directors) and three directors who are members of the Audit and Supervisory Committee (including two outside directors).In addition, one standing Audit and Supervisory Committee member is selected by resolution of the Audit and Supervisory Committee.Two outside directors with management experience at listed companies are appointed as outside directors who are not members of the Audit and Supervisory Committee, and one lawyer and one certified public accountant are appointed as outside directors who are members of the Audit and Supervisory Committee.
In addition, we are seeking to further enhance corporate governance by using the executive officer system introduced in July 2019 to strengthen the supervisory function of the Board of Directors through a progressive separation of management and supervision from business execution.
The Audit and Supervisory Committee supervises and audits the execution of duties by directors (excluding directors who are Audit and Supervisory Committee members) fairly through the active exchange of opinions between directors with sufficient internal knowledge and outside directors with extensive experience and knowledge from outside the company.
Additionally, Hoshizaki has established a Compliance and Risk Management Committee comprising directors and other relevant personnel to promote risk management to the Group and more sharing of information, as well as to make decisions regarding quick responses to risks and measures to avoid and mitigate their manifestation.

Reason for selecting the corporate governance structure

Hoshizaki has adopted the governance structure of a Company with an Audit and Supervisory Committee in the belief that granting voting rights at the meetings of the Board of Directors to several highly independent outside Directors who are Audit & Supervisory Committee Members will strengthen the supervisory function over the Board of Directors as well as further enhance its corporate governance.

Members of each organization

Title Name Board of Directors Audit & Supervisory Committee Compliance and Risk Management Committee
Chairman & CEO Seishi Sakamoto
Representative Director, President & COO Yasuhiro Kobayashi Chairman Chairman
Outside Director Masanao Tomozoe
Outside Director Masuo Yoshimatsu
Director, Senior Vice President Satoru Maruyama
Director, Senior Vice President Katsuhiro Kurimoto
Director, Senior Vice President Yasushi Ieta
Director, Senior Vice President Kyou Yaguchi
Director, Audit & Supervisory Committee Member Yoshihiko Seko Chairman
Outside Director, Audit & Supervisory Committee Member Shigeru Motomatsu
Outside Director, Audit & Supervisory Committee Member Satoe Tsuge

(Note) ○ indicates membership.

Corporate governance structure

Status of Outside Directors

Hoshizaki appoints corporate managers with abundant experience and deep insight in overall business management as Directors (excluding Directors who are Audit & Supervisory Committee Members), and talent capable of leveraging their perspectives based on their high level of expertise and abundant experience and knowledge as attorney-at-law and certified public accountant, in the company’s audits and monitoring its management from an objective and neutral standpoint as outside Directors who are Audit & Supervisory Committee Members. The outside Directors are independent of the members of management involved in business execution and are designated and notified as independent officers to the Tokyo Stock Exchange and the Nagoya Stock Exchange, as they are deemed to have no risk of conflicts of interest with general shareholders.

Based on the independence criteria of the Tokyo Stock Exchange forming Hoshizaki’s independence criteria, Hoshizaki selects people who are expected to enhance the Board of Directors’ supervisory function and to contribute to lively discussions at the Board as its outside Directors.

The two outside Directors who are Audit & Supervisory Committee Members attend various meetings including those of the Board of Directors, the Audit & Supervisory Committee, and the Compliance and Risk Management Committee. They also share information and coordinate with the standing Audit & Supervisory Committee Member and the internal control divisions, while periodically holding meetings of the Audit & Supervisory Committee with the Internal Audit Office and the Accounting Auditor to enhance mutual cooperation.

Reasons for the Appointment of the Outside Directors
Name Masanao Tomozoe Masuo Yoshimatsu Shigeru Motomatsu Satoe Tsuge
Audit & Supervisory Committee Member    
Independent Officer
Reason for Appointment He has many years of experience as a corporate manager at Toyota Motor Corporation and Central Japan International Airport Co., Ltd. Hoshizaki has appointed him as an outside Director, judging that he can contribute to enhancing corporate governance with his abundant experience and extensive insight in such overall management. He has many years of experience as a corporate manager at Nidec Corporation and SSP CO., LTD. Hoshizaki has appointed him as an outside Director, judging that he can contribute to enhancing corporate governance with his abundant experience and extensive insight in such overall management. He is a qualified attorney-at-law. Hoshizaki has appointed him as an outside Director who is an Audit & Supervisory Committee Member, judging that he can contribute to enhancing corporate governance from an objective stance toward management based on his legal expertise regarding compliance, risk management, and other matters. She is a certified public accountant. Hoshizaki has appointed her as an outside Director who is an Audit & Supervisory Committee Member, judging that she can contribute to enhancing corporate governance from an objective stance toward management based on her knowledge of finance and accounting.

Evaluation of the Effectiveness of the Board of Directors

Hoshizaki gave a 25-question questionnaire to all 11 directors (including four independent outside directors), including those who are members of the Audit and Supervisory Committee, regarding the following six items: "Effectiveness of Discussions and Deliberations," "Effectiveness of Supervisory Functions," "Effectiveness of Leadership," "Effectiveness of Environment Creation," "Effectiveness of Response to Shareholders/Stakeholders," and "Effectiveness of the Composition of the Board of Directors." Based on the results of the questionnaire, the Board of Directors deliberated and determined that overall effectiveness for the Board of Directors meetings held in fiscal 2020 had been ensured.
Moving forward, we will also work on improvements with respect to the issues identified through this effectiveness evaluation.

Status of Audits

Status of audits of the Audit & Supervisory Committee

Hoshizaki is audited via an Audit and Supervisory Committee comprised of three directors who are members of the Audit and Supervisory Committee (two of whom are outside directors).Outside Director Shigeru Motomatsu, who is a member of the Audit and Supervisory Committee, is a qualified attorney-at-law and has a wealth of experience and knowledge in legal affairs.
Outside Director Satoe Tsuge, who is also a member of the Audit and Supervisory Committee, is a certified public accountant and has extensive experience and knowledge in finance and accounting.
The Audit and Supervisory Committee exchanges information and collaborates on compliance and risk management through meetings of the Board of Directors and the Compliance and Risk Management Committee, and exchanges information and collaborates with the Internal Audit Office and the Accounting Auditor as necessary with respect to the results of audits of internal controls concerning financial reporting to ensure and improve the effectiveness of internal controls.
Furthermore, Hoshizaki appoints standing Audit and Supervisory Committee members by resolution of the Audit and Supervisory Committee, and these standing Audit and Supervisory Committee members attend important meetings, receive reports from directors and employees on matters related to the execution of their duties, request explanations as necessary, inspect important approval documents, etc., and investigate the status of operations and assets at the head office and major business locations.
With respect to subsidiaries, in order to prevent the spread of COVID-19, in accordance with national and prefectural government policies and requests, committee members are endeavoring to use information and communications technology and other methods that do not involve direct visits or face-to-face meetings to exchange information and come to mutual understanding with subsidiary directors, corporate auditors and other personnel, but where appropriate, they visit subsidiaries to investigate the actual state of their business and receive business reports.
The following table shows information on Audit and Supervisory Committee meetings held and attendance of individual Audit and Supervisory Committee members during the relevant fiscal year.

Name Number of Times Meeting Held Number of Times Attended
Yoshihiko Seko 17 17
Shigeru Motomatsu 17 17
Satoe Tsuge 17 17

Status of internal audits

Hoshizaki has established an Internal Audit Office as an organization that audits the entire Group and reports directly to the President.

The Internal Audit Office enhances mutual cooperation with the Audit & Supervisory Committee and the Accounting Auditor by exchanging information, as necessary, including regular meetings on the yearly schedule and business reports, in order to ensure and improve the effectiveness of internal controls.

Compensation for Directors

Policy, etc., Relating to Determining the Amount of Remuneration, etc., for Executives or the Methods for its Calculation

Hoshizaki has not established an advisory committee to consider the remuneration, etc., of directors, with remuneration for directors (excluding Audit and Supervisory Committee members) being paid in accordance with the "Internal Rules for Treatment of Directors" and the "Rules for Handling Remuneration by Transfer-Restricted Stock" established by resolution of the Board of Directors.For the relevant fiscal year, Hoshizaki calculated and paid the amount for each director (excluding Audit and Supervisory Committee members) in accordance with those two regulations.
The outline and calculation method for each kind of remuneration set forth in both regulations are as follows.

A. Internal Rules for Treatment of Directors

The internal rules for the treatment of directors stipulate the monthly remuneration for directors (excluding Audit and Supervisory Committee members), which consists of "Basic Remuneration," which is paid uniformly regardless of position, "Position/Role Remuneration," which varies depending on position and achievement of evaluation criteria set at the beginning of the fiscal year, and "Representative Remuneration," which is paid uniformly to representative directors.Outside directors are paid only fixed remuneration in the form of the Basic Remuneration.Position/Role Remuneration involves, in addition to the common evaluation criteria of "Consolidated Operating Profit Targets" from the perspective of aiming for a "Highly Profitable Business Structure," payment of an amount equal to the "Median Payment" set for each position multiplied by the "Performance Fluctuation Rate (upper limit: 150%, lower limit: 50%)" based on a 9-stage final evaluation determined by the President and CEO in accordance with the achievement status for evaluation criteria set for each director in line with his or her responsibilities.The consolidated operating income forecast announced on February 10, 2020 was 26.3 billion yen, while the actual operating income for the year ended December 31, 2020 was 18.4 billion yen.
The total amount of remuneration for directors (excluding Audit and Supervisory Committee members and excluding remuneration by transfer-restricted stock) is set at 500 million yen or less per year by resolution of the 70th Ordinary General Meeting of Shareholders held on March 24, 2016 (the Articles of Incorporation cap the number of directors at 15, and the amount does not include the employee portion of the salaries for directors who also serve as employees).

B. Rules for Handling Remuneration by Transfer-Restricted Stock

With the aim of promoting further sharing of value with our shareholders, Hoshizaki remunerates directors (excluding outside directors and Audit and Supervisory Committee members) with transfer-restricted stock.Remuneration by transfer-restricted stock is paid by resolution of the Board of Directors based on the remuneration plan formulated by the representative directors in accordance with the Rules for Handling Remuneration by Transfer-Restricted Stock.
In consideration of various circumstances, Hoshizaki has made no payment of transfer-restricted stock for FY 2020.
As per the resolution of the 72nd Ordinary General Meeting of Shareholders held on March 28, 2018, remuneration by transfer-restricted stock is limited to an annual amount of up to 150 million yen (for a maximum of 15 directors as per the Articles of Incorporation), with the total number of shares of the company's common stock to be issued or disposed of set to a limit of 15,000 shares per year.
Remuneration for directors who are Audit and Supervisory Committee members consists solely of fixed remuneration determined through consultation among themselves, with the total amount set at a maximum of 100 million yen per year (within the limit of five directors as per the Articles of Incorporation) by resolution of the 70th Ordinary General Meeting of Shareholders held on March 24, 2016.

Total Amount of Remuneration, etc., by Executive Type, Total Amount of Remuneration, etc., by Type, and Number of Eligible Executives

Executive Type Total Amount of Remuneration, etc.
(Millions of Yen)
Total Amount of Remuneration, etc., by Type (Millions of Yen) Number of Eligible Executives (Persons)
Fixed Remuneration Performance-Linked Remuneration Remuneration by Transfer-Restricted Stock Retirement Benefits
Directors (Excluding Audit and Supervisory Committee Members) (Excluding Outside Directors) 266 99 96 - 70 12
Directors (Audit and Supervisory Committee members) (excluding Outside Directors) 11 11 - - - 1
Outside Directors 23 23 - - - 4

(FY2020 Actual)

Dialogue with Shareholders

Hoshizaki is aware of the importance of proactively holding dialogue with its shareholders and investors, so that their opinions and requests are reflected in management, encouraging corporate growth toward achieving sustained growth and the long-term improvement of corporate value.

Basic IR policy and method of disclosure

The Hoshizaki Group engages in IR activities to inform shareholders and investors of information necessary for their investment decisions in a fair and timely manner. The information published by the Hoshizaki Group is disclosed using methods such as registration with TDnet* and posting on the Hoshizaki Group's IR website. We strive for fairness in the information we publish and even also disclose information that does not fall under the Timely Disclosure Rules using appropriate methods aligned with their intent. Furthermore, in light of the increase in the ratio of non-Japanese shareholders, since the second quarter of the scal year ending December 2019, we have been disclosing nancial statements, nancial brieng materials (summarized versions), convocation notices in English and have also created an English-language website.

Communication with institutional and individual investors

The Hoshizaki Group holds semi-annual nancial results briengs to provide an opportunity for institutional investors to hear an explanation of our performance (performance and forecasts) and management strategies directly from the President & CEO.
In addition, management and IR representatives hold telephone conferences (quarterly) and individual meetings, and also attend various briengs organized by securities companies.Due to the spread of COVID-19, from March 2020, nancial results briengs and individual meetings have in principle been held via telephone or the web.

Major IR Activities
Activities 2018 2019 2020
Number of financial results briefings 2 2 2
Number of telephone conferences 1 3 4
Number of institutional investors who took part in individual meetings 106 80 118
Number of foreign institutional investors who took part in individual meetings 112 113 99
Number of conferences, organized by domestic securities companies, attended 2 1 2
Number of briefings for individual investors※ 4 3 0

※In 2020, brie ngs for individual investors were cancelled due to the spread of COVID-19