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Corporate Governance

Basic Views

Basic Views
Z Holdings Corporation (the Company) and its consolidated subsidiaries and affiliates (the Z Holdings Group or the Group) consider good corporate governance to be essential to enhancing corporate value over the medium to long term. For this, as stated in our Charter of Corporate Behavior, the directors, corporate officers, and employees fully understand their required roles, will maintain sound corporate governance and will practice efficient corporate activities in order to retain the trust and understanding of all stakeholders.

Corporate governance system

Z Holdings Corporation regards corporate governance as a vital function in order to “enhance medium- to long-term corporate value” and conducts appropriate and effective corporate management.

Meanwhile, Z Holdings Corporation has converted to a company with an Audit and Supervisory Committee from June 2015, in order to establish both: a structure that encourages “aggressive governance” so that timely business decisions can be made in the Internet industry; and a structure that promotes the aim of the corporate governance code, namely “transparent, fair, timely, and decisive decision making”. Z Holdings Corporation judges the current system to be the best whereby: all of the three Audit and Supervisory Committee members are independent outside directors; and the speedy decision-making and monitoring of management is secured by dividing the roles of decision-making of management matters and supervision of business execution (Board of Directors) from the actual business execution (corporate officers).

Board of Directors

The Board of Directors is responsible for corporate management policies, management strategy, business planning, the acquisition and liquidation of important assets, decision making regarding important organization and personnel matters, and the supervision of the business execution of the Representative Director.
The Board of Directors is constituted by the following members and is chaired by the President and Representative Director. In order to divide the roles of management and supervision, non-executive directors constitute majority of the directors. In nominating the director candidates, the Board of Directors receives the proposals from the Nominating and Remuneration Committee, takes their performance, experience, knowledge, popularity, etc. in and out of this Company into account to resolve the appropriate candidates, and proposes the candidates to the shareholders meeting.

President and Representative Director, President Corporate Officer, CEO (Chief Executive Officer): Kentaro Kawabe
Director, Senior Managing Corporate Officer: Takao Ozawa
Director, Senior Managing Corporate Officer, GCSO (Group Chief Synergy Officer): Taku Oketani
Director: Masayoshi Son
Director: Ken Miyauchi
Director: Kazuhiko Fujihara
Outside Director (Independent Director), Full-time Audit and Supervisory Committee Member: Yoshio Usui
Outside Director (Independent Director), Full-time Audit and Supervisory Committee Member: Hiromi Onitsuka-Baur
Outside Director (Independent Director), Audit and Supervisory Committee Member: Shingo Yoshii

Audit and Supervisory Committee

The Audit and Supervisory Committee is responsible for auditing and supervising the entirety of the company’s business activities, including the appropriateness of policy, planning, and procedures; effective business implementation; and compliance to laws and regulations through the perusal of important final decision documents, etc., the inspection of subsidiary companies, and so on. Furthermore, the Audit and Supervisory Committee receives reports on the auditing methods and results from the account auditors and internal audit methods and results from the division in charge of internal audit. Based on these activities, the Audit and Supervisory Committee regularly presents its opinions as an Audit and Supervisory Committee to the full-time directors who are not Audit and Supervisory Committee members.
The Audit and Supervisory Committee is composed of three members, Yoshio Usumi, Hiromi Onitsuka-Baur and Shingo Yoshii who are all independent outside directors, and is chaired by Yoshio Usumi.
Our nomination standard of Audit and Supervisory Committee members is that the candidates are able to engage in our corporate management utilizing their backgrounds.
The Company adopts the same standards as the independent director’s criteria of the Tokyo Stock Exchange to judge the independent outside directors’ independence from the Company.
Furthermore, in light of the Company’s situation, directors serving on the Audit and Supervisory Committee are nominated based not only on their accounting experience but also on their broad management experience on financial accounting, law, etc. In respect to accounting, the Audit and Supervisory Committee members and the accounting auditors hold meetings, periodically and when necessary, to collaborate on the proper execution of audits.

Nominating and Remuneration Committee

The Company establishes a Nominating and Remuneration Committee as a voluntary committee for the purposes of proposing to the Board of Directors, the nomination of President and Representative Director, directors and others, and deciding the remunerations, etc. of directors (excluding those serving on the Audit and Supervisory Committee).
The Nominating and Remuneration Committee consists of four members, and its chairperson, Yoshio Usui is an independent outside director serving on the Audit and Supervisory Committee. Other members are: Kentaro Kawabe, President and Representative Director; Hiromi Onitsuka-Baur, independent outside director serving on the Audit and Supervisory Committee; and Ken Miyauchi representing non-executive directors who are not independent outside directors.
Based on the Regulation for the Nominating and Remuneration Committee determined by the Board of Directors, the Nominating and Remuneration Committee makes proposals, etc. to the Board of Directors on all matters related to the agenda of the shareholders meeting on the election and dismissal of directors; election and dismissal of the President Representative Director, and CEO; and its succession plan. Furthermore, based on the Regulations of Remunerations for Directors, the Committee determines the amount of remunerations, etc. of the directors (excluding those serving on the Audit and Supervisory Committee) after careful deliberation, taking into consideration the business performance in each quarter, contributions to the business performance, and other factors.

CEO Committee

Important issues requiring deliberation and judgment by the Board of Directors are reviewed in advance by the CEO Committee. Important items related to the Z Holdings Corporation and to group companies are reviewed in the CEO Committee based on internal company regulations.

Internal Audit Office

Reporting directly to the president, the Internal Audit Office oversees the development and implementation of internal audit systems throughout the Z Holdings Group in addition to providing Groupwide systems evaluations and improvement guidance with the goal of ensuring that business operations are appropriate and executed effectively and efficiently. The Internal Audit Office carries out its various audit-related activities in cooperation with audited departments and subsidiaries.

Management team (corporate officers) remit

The Board of Directors of Z Holdings Corporation determines company group business management strategies and planning, and makes all final decisions regarding important business matters. Specifically, items such as mergers and acquisitions, or the acquisition or liquidation of high value assets are within the purview of items to be resolved during Board of Directors meetings. Decisions regarding other individual business matters are, as a rule, to be handled by the management staff in accordance with the Regulations of the Board of Directors Meetings.

Effectiveness of Board of Directors

Z Holdings Corporation conducts interviews with directors serving on the Audit and Supervisory Board, etc. once a year on a regular basis, in order to analyze and evaluate the effectiveness of the Board of Directors. The effectiveness of the Board of Directors was referred to the Board of Directors again this year. As a result, it was confirmed that effectiveness of the Board is generally secured. Highly evaluated were the increase in the proportion of outside directors in this fiscal year, and the outside directors’ fulfillment of their expected roles in large-scale deals, etc. Although some improvements in explaining materials beforehand were seen in the issue pointed out in the previous year, namely the timing of distributing the board of directors meeting materials, we would like to continue to make improvements.

Board policies and procedures in the appointment and dismissal of the senior management and the nomination of director candidates

The suitable person for director candidate is nominated by the Board of Directors. The criteria which are taken into consideration include performance, experience, knowledge, popularity, etc. in the Company or in other companies. If a director, etc. falls under the reasons for dismissal as prescribed in the internal regulations, the Board of Directors can resolve the dismissal of the director, etc. in question. The Nominating and Remuneration Committee comprised of the President and Representative Director; non-executive directors who are not independent outside directors; and independent outside directors, will discuss and propose the nomination of director candidates and dismissal of directors, etc. to the Board of Directors. Especially in the nomination process, the Nominating and Remuneration Committee pays heed to prevent membership from gravitating towards all members having similar characteristics, in order to preserve diversity within the Board of Directors.

Nomination of directors and Audit and Supervisory Committee members

Kentaro Kawabe
Since joining the Company in 2000, Kentaro Kawabe served with distinction for 19 years in important positions of the Company including manager of the Company’s core services such as Yahoo! JAPAN News and Chief Operating Officer (COO), contributing to the growth of the Company. The Company has renominated him as a director candidate so that he can lead the growth of the Company even further.

Takao Ozawa
Since joining the Company in 2012, Takao Ozawa has grown the commerce business of the Z Holdings Group with strong leadership, such as in promoting the “e-commerce revolution”. The Company has renominated him for as a director candidate so that he can lead the growth of the Company even further, based on his expertise in the Internet business and commerce fields as well as abundant experience in corporate management and broad knowledge of the creation of new businesses as an entrepreneur.

Taku Oketani
Taku Oketani is Senior Vice President of SoftBank Corp., which is closely involved in the business operations of the Z Holdings Group, and has deep insight and broad knowledge in the commerce and marketing fields. Amid intensified competition in the commerce and payment service areas, the Company has renominated him as a director candidate to obtain valuable advice on business operations so as to further strengthen business synergies between the Z Holdings Group and SoftBank Corp.

Masayoshi Son
Masayoshi Son has a great deal of experience and extensive knowledge as an executive manager. The Company has renominated him as a director candidate of the Company so that his suggestions and advice as a pioneer can be utilized for the management of the Z Holdings Group.

Ken Miyauchi
Ken Miyauchi is the Chief Executive Officer of SoftBank Corp., which is closely involved in the business operations of the Company, and has a wealth of management experience in the mobile phone business. In order to receive his valuable advice about the business operations of the Group, the Company has renominated him as a director candidate of the Company.

Kazuhiko Fujihara
Kazuhiko Fujihara is Board Director, Executive Vice President & CFO of SoftBank Corp., which is closely involved in the business operations of the Company. The Company has renominated him as a director candidate to receive management consultation and valuable advice on finance and accounting as well as on business operation in general, based on his years of experience in the corporate planning and finance divisions at SoftBank Corp.

Yoshio Usumi
Yoshio Usumi has many years of business execution experience and track record in corporate administration. The Company has nominated him for director candidate serving on the Audit and Supervisory Committee of the Company in June 2019, based on his abundant knowledge and track record in corporate management and corporate governance as well as deep insight in the IT business.

Hiromi Onitsuka-Baur
Hiromi Onitsuka-Baur has a wealth of knowledge and experience in business management, and has served with distinction for three years since her assumption of office as an outside auditor of the Company in June 2012 and five years as an outside director (independent director) and full time Audit and Supervisory Committee member since her assumption of office in June 2015. The company has renominated her as a director candidate of the Company serving on the Audit and Supervisory Committee because she has contributed to the strengthening of corporate governance and to the improvement of the corporate auditing system.

Shingo Yoshii
Shingo Yoshii has a wealth of knowledge and experience in business management. He has a great deal of insight regarding corporate governance, and has served with distinction for seven years since his assumption of office as an outside auditor of the Company in June 2008 and five years as an outside director (independent director) and full time Audit and Supervisory Committee member since his assumption of office in June 2015. The Company has renominated him as a director candidate serving on the Audit and Supervisory Committee because he has contributed to the strengthening of corporate governance and to the improvement of the corporate auditing system.

Director and senior management remuneration

In regards to the handling of remuneration and other economic benefits paid to the directors (excluding those serving on the Audit and Supervisory Committee) as consideration for the execution of their duties (“Remuneration, Etc.”), the specifics of Remunerations, etc. shall be determined through a resolution by the Nominating and Remunerations Committee. This is stipulated in the Regulations of Remunerations for Directors (“Regulations”) resolved by the Board of Directors. The Regulations also prescribe matters related to the Nominating and Remunerations Committee (members, chairperson, authority, method of resolution, operation, etc.), and according to the Regulations, the Nominating and Remunerations Committee determines the specifics of the directors’ Remunerations, Etc., through the discussions and resolution by the members. However, details of restricted stock compensation (issuance price, number of shares to be granted, and other details such as allotment agreement, etc.) shall be decided by the resolution of the Board of Directors based on the amount of claims of Remunerations, Etc. determined by the Nominating and Remunerations Committee.
In the process of deciding the directors’ Remunerations, Etc. for fiscal 2019, the Nominating and Remunerations Committee convened twice to discuss and resolve the amount of directors’ fixed remuneration and performance-based remuneration for fiscal 2019, and the decision policy on the directors’ remuneration for fiscal 2020 (indices and goals for the performance-based remunerations, etc.). However, details of restricted stock compensation (issuance price, number of shares to be granted, and other details such as allotment agreement, etc.) were decided by the resolution of the Board of Directors based on the amount of claims of Remunerations, Etc. determined by the Nominating and Remunerations Committee.
The date and details of resolutions by the shareholders meeting on the Remunerations, Etc. of the Company’s directors are as follows. Please note that the number of the Company’s directors shall not be more than nine (out of which the number of directors serving on the Audit and Supervisory Committee shall not be more than three) as stipulated in our Articles of Incorporation.

June 18, 2015
・The amount of remuneration to be paid to directors (excluding those serving on the Audit and Supervisory Committee) shall be within JPY 1 billion per year (out of which remuneration amount for outside directors shall be within JPY 200 million per year).
・The amount of remuneration to be paid to directors serving on the Audit and Supervisory Committee shall be within JPY 200 million per year.

June 20, 2017
・The total amount of monetary compensation to be paid to the directors (excluding those serving on the Audit and Supervisory Committee and outside directors), for the purpose of in-kind contribution for acquiring restricted stocks shall be within JPY 400 million per year; and the maximum number of Company’s common shares to be issued/disposed as consideration for the monetary compensation shall be 800,000 shares per year.

The Remuneration, Etc. paid to the Company’s directors is composed of base remuneration and performance-based remuneration*, and the basic policy on the proportion of the two remunerations is such that the portion of the performance-based remuneration exceeds the portion of base remuneration. However, if a director concurrently serves in another company and receives director remuneration from that company, based on the details of the remuneration and responsibilities the director has in the Company, the Company may not pay Remuneration, Etc., or if the Company pays remuneration, the portion of the performance-based remuneration may not exceed that of base remuneration, or the Company may not pay the performance-based remuneration.

*Base remuneration and performance-based remuneration
Remuneration is classified into the following three types and the amount of remuneration is determined by adjusting its proportion according to the type of remuneration based on the roles and responsibilities of the position.

1. Base remuneration
2. Short-term performance-based remuneration
Remuneration for the purpose of enhancing commitment toward the achievement of budgets for the fiscal year under review.
As indices related to performance-based remuneration, we adopt operating income as the major index to measure the Company’s profitability. In light of our business strategies, we also adopt several KPIs from our management indices. Management indices refer to the goals related to our management policy, management environment, and issues that need to be resolved, etc. Moreover, we conduct a comprehensive evaluation by taking into consideration any negative evaluations given when risks occur, for the purpose of enhancing commitment from a risk management point of view.
The Nominating and Remuneration Committee resolves the amount of performance-based remunerations through discussions, by taking operating income into account as the most important factor. Other factors such as the directors’ contribution to various KPIs and the difference of these KPIs compared to the previous term are also comprehensively taken into account.
3. Medium- to long-term performance-based remuneration
Since fiscal 2017, we have provided incentives with the aim of achieving sustainable improvements in corporate value, and have adopted a restricted stock compensation plan with the purpose of further promoting shared value with shareholders.
In addition, should there be a serious accounting fraud or significant losses in the Company, the Company shall notify the eligible directors in writing that the Company shall acquire the shares without consideration, and as of the time when this notification has arrived, the Company shall automatically acquire all or part of the shares according to the responsibility of the director.

Director remuneration for fiscal 2019

Number Total remuneration

(millions of yen)

Breakdown of total
remuneration(millions of yen)
Base

salary

Stock

options

Bonuses Restricted

stocks

Directors (excluding Audit and Supervisory Committee members) 3 374 137 154 83
(Of which for outside directors) (-) (-) (-) (-) (-) (-)
Directors (Audit and Supervisory Committee members) 3 74 62 11
(Of which for outside directors) (3) (74) (62) (-) (11) (-)
Total 6 449 199 165 83
(Of which for outside directors) (3) (74) (62) (-) (11) (-)

  • Directors (excluding Audit and Supervisory Committee members)
    • Number : 3
    • Total remuneration : 374
    • Base salary : 137
    • Stock options : -
    • Bonuses : 154
    • Restricted stocks : 83
  • (Of which for outside directors)
    • Number : (-)
    • Total remuneration : (-)
    • Base salary : (-)
    • Stock options : (-)
    • Bonuses : (-)
    • Restricted stocks : (-)
  • Directors (Audit and Supervisory Committee members)
    • Number : 3
    • Total remuneration : 74
    • Base salary : 62
    • Stock options : -
    • Bonuses : 11
    • Restricted stocks : -
  • (Of which for outside directors)
    • Number : (3)
    • Total remuneration : (74)
    • Base salary : (62)
    • Stock options : (-)
    • Bonuses : (11)
    • Restricted stocks : (-)
  • Total
    • Number : 6
    • Total remuneration : 449
    • Base salary : 199
    • Stock options : -
    • Bonuses : 165
    • Restricted stocks : 83
  • (Of which for outside directors)
    • Number : (3)
    • Total remuneration : (74)
    • Base salary : (62)
    • Stock options : (-)
    • Bonuses : (11)
    • Restricted stocks : (-)

  • *1 The amount of restricted stocks remuneration is the amount of restricted stock remuneration recorded in this fiscal year.
  • *2 There are no director remunerations, etc. received by the outside directors from the Company’s parent company or the subsidiaries of the said parent company other than those prescribed above in this fiscal year.
  • *3 Out of the directors, no director remuneration, etc. is paid to Masayoshi Son, Ken Miyauchi, Kazuhiko Fujihara and Taku Oketani.
  • *4 The figure above includes the remuneration for one director (excluding those serving on the Audit and Supervisory Committee) who resigned on June 18, 2019.

Fortifying internal control

In accordance with the Basic Policy for Internal Control established by the Board of Directors, the Company strives to ensure the appropriateness of all business activities and continuously makes improvements with the goal of creating a more effective system of internal control. One of the key objectives of internal control is to enhance the effectiveness and efficiency of business operations, and the Company therefore prioritizes operational systematization, automation, and integration in support of ongoing improvements.

Please refer to our website for detailed information about the Company’s internal control efforts.

Policy on measures to protect minority shareholders in conducting transactions with controlling shareholder

The parent company of Z Holdings Corporation is the SoftBank Group Corp., SoftBank Group Japan Corporation, SoftBank Corp., and Shiodome Z Holdings GK. Z Holdings Corporation has enacted “Regulations for Appropriate Business Transactions and Practices by Z Holdings Corporation, its Parent Company, Subsidiaries, and Affiliates”. In accordance with these regulations, Z Holdings Corporation strives to maintain its commitment to fair and proper transactions by expressly forbidding clearly advantageous or disadvantageous transactions with its parent company, etc. which are judged by comparing transactions with a third party or with other similar transactions, and performing of transactions for the purpose of shifting profits, losses, or risks.

Measures concerning shareholders and other stakeholders

The Company makes various efforts to vitalize shareholders meetings and to facilitate shareholders’ exercise of voting rights. For example, the Company has since its founding held its annual general meeting of shareholders on a day when other major companies are not holding meetings. In addition, we promptly post notices of our annual general meeting of shareholders on the Company’s Investor Relations website in both Japanese and English before mailing out notices to all shareholders. Appealingly designed and printed in full color, the notices in addition contain supplementary non-financial information to broaden shareholders’ knowledge of our business operations. Moreover, to ensure that a maximum number of shareholders are able to exercise their voting rights, we permit individual investors to vote online and also offer a dedicated Internet voting platform for institutional investors.

Investor relations activities

To promote good investor relations (IR), Z Holdings Corporation abides by the Financial Instruments and Exchange Law and the general guidelines set forth by the Tokyo Stock Exchange, Inc. through timely, accurate, and fair disclosure of information. We have adopted the following policies in order to engage in constructive dialogue with our shareholders:

(1) Appointment of managers or directors to oversee the dialogue with shareholders
The President and Representative Director supervises the dialogue with shareholders and investors, and the Group Chief Financial Officer (GCFO) is placed in charge of the disclosure of information.

(2) Measures to ensure positive cooperation between internal divisions such as investor relations, corporate planning, general affairs, corporate finance, accounting and legal affairs with the aim of supporting dialogue
An internal IR division, which specializes in supporting dialogue, is established. In the course of completing its tasks, the IR division coordinates not only with the financial affairs, accounting, and legal affairs divisions, but also with divisions that develop business, to create documents suitable for release and help realize constructive dialogue with shareholders and investors.

(3) Measures to promote opportunities for dialogue aside from individual meetings (e.g., general investor meetings and other IR activities)
For securities companies and investors, Z Holdings Corporation holds Investors Meetings, in which details of financial statements and business activities are explained. Leveraging live streaming, on-demand videos and teleconference systems, etc., we proactively share information about our business. Individual interviews and teleconferences are also held for securities companies and institutional investors, in which the President and Representative Director or the management speak proactively about the growth strategies and share operational information about the Z Holdings Group.
For IR targeting foreign investors, Z Holdings Corporation creates the majority of the above disclosure publications in English. In addition, we visit our overseas investors hosting “Overseas Roadshows”, primarily in North America, the UK, and Asia, in which we gain the opportunity to directly engage in dialogues with our foreign investors. In regards to IR publications, from immediately after our initial public offering in 1997, we have continued to publish a detailed overview of our financial and business operations as a quarterly financial report to ensure timely disclosure. In addition, along with these reports, we summarize and disclose information on potential risks to the Company. Current publications, as well as an archive of all past ones, are published on the Company website.
Opinions and proposals from shareholders and investors comprehended through dialogues with them are summarized in a report and submitted to the directors, management and related internal divisions as feedback, or, in urgent cases, are communicated to the related parties immediately.
In keeping with the company’s “Regulations on the Prevention of Insider Trading”, material facts which have not yet been officially announced are thoroughly managed and appropriately handled. Regarding information on our business results, in order to prevent leaks in information and preserve impartiality, we have instated a quiet period. During this period, company representatives will refrain from answering any questions or providing any comments related to the business results.

(4) Measures to appropriately and effectively relay shareholder views and concerns learned through dialogue to the senior management and the Board
Opinions and proposals from shareholders and investors are summarized in a report and submitted to the directors, management and related internal divisions, or, in urgent cases, are communicated to the related parties immediately.

(5) Measures to control insider information when engaging in dialogue
In keeping with the “Regulations on the Prevention of Insider Trading”, material facts which have not yet been officially announced are thoroughly controlled and appropriately handled. In order to prevent leaks in information and preserve impartiality, we have instated a quiet period regarding information on our business results. During this period, company representatives will refrain from answering any questions or providing any comments related to the business results.

Anti-takeover measures

A small group of major shareholders account for a significant portion of the Company’s ownership. Because the risk of a hostile takeover bid is considered to be low, the Company has not formulated takeover-related measures. Recognizing this matter as a potentially significant management issue, however, the Company intends to consider the necessity for and content of effective measures.