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Corporate Governance(G)

Makita strives to strengthen and enhance corporate governance in order to increase corporate value and earn the trust of shareholders and other stakeholders.

 

Corporate Governance Compliance Risk Management

Corporate Governance

Basic Philosophy on Corporate Governance

Makita believes that the most important issue is to achieve unending development together with its various stakeholders. In order to achieve this, we have established a management policy/quality policy and are working to strengthen and enhance our corporate governance. From this perspective, we will work to maintain and improve the fairness and transparency of our management by striving to enhance management transparency and management checking functions, as well as proactively and promptly disclosing information.

 

See our Corporate Governance Report here. PDF/359KB

 

Overview of the Corporate Governance Structure

Board of Directors

A regular meeting of the Board of Directors shall be held once a month and extraordinary meetings shall be held whenever necessary. The Board of Directors, as the decision-making body for management, decides on important management matters, including decisions on management policies and business plans, the conclusion of important agreements, and the establishment of subsidiaries in accordance with the Regulations of the Board of Directors, in addition to matters stipulated by laws and regulations and the Articles of Incorporation, and supervises the execution of operations. Outside Directors are appointed from among those who have a wealth of experience and broad insight in corporate management and those who have a wealth of experience and insight in various fields, including finance, accounting and legal affairs. They are responsible for strengthening corporate governance by providing opinions as appropriate from an independent perspective with no risk of conflict of interest with general shareholders. At present, the Board of Directors consists of 15 members, five of whom are Outside Directors with a high degree of independence. In addition, at the conclusion of the 109th Ordinary General Meeting of Shareholders held in June 2021, Makita has transitioned to a Company with an Audit & Supervisory Committee in order to strengthen the supervisory function of the Board of Directors. Moreover, we have established the Nomination and Compensation Committee with Independent Outside Directors as main members in order to ensure objectivity, transparency, and fairness in procedures related to nomination and compensation of Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members), thereby striving to enhance our corporate governance system.


<Diversity of the Board of Directors>

Directors of the Company, regardless of age, gender, or nationality, shall be appointed from among those who can contribute to the enhancement of its corporate value. Currently, Makita has no female Directors. We have appointed Internal Directors (excluding Director who is Audit & Supervisory Committee Member) who have the ability to formulate and execute management strategies based on their own experience and insight, Outside Directors (excluding Directors who are Audit & Supervisory Committee Members) who have a wealth of experience and broad insight in corporate management, and Directors who are Audit & Supervisory Committee Members who have internal and external work experience and a wealth of experience and insight in various fields, including finance, accounting and legal affairs. Moreover, a number of Directors with overseas experience are in office. We, therefore, believe that the Board of Directors as a whole is functioning as an effective organization that ensures an appropriate balance and diversity of knowledge, experience and ability. However, we will positively consider appointing female Directors and increase the number of female workers in management positions who will be candidates for Directors in the future. We also believe that the current Board of Directors is of an appropriate size to enable prompt decision-making.


<Evaluation of Effectiveness of the Board of Directors>

Every year, Makita conducts a self-evaluation of the effectiveness of the Board of Directors by each Director in the form of a questionnaire. As a result of analyzing the effectiveness evaluation for FYE2021, Makita assessed that its Board of Directors is generally functioning appropriately and that the effectiveness of the Board of Directors is ensured in terms of its composition, operation, supervisory function, and response to shareholders and stakeholders.


<Skill Matrix of Directors>

The composition and expertise of the Board of Directors are as follows. Please also see here for the career summaries, etc., of each Director.

Click the image to enlarge

Nomination and Compensation Committee

The Nomination and Compensation Committee consists of at least three Directors, the majority of whom are Independent Outside Directors. The members of the Committee are selected from among the Directors by a resolution of the Board of Directors, and the Chairperson of the Committee is selected from among the Independent Outside Directors by a resolution of the Nomination and Compensation Committee. While including Internal Directors as members of the Committee to make discussions more substantive, Makita has enhanced the independence of the Nomination and Compensation Committee by appointing the Chairperson and a majority of members from among Independent Outside Directors.
The Nomination and Compensation Committee is responsible for the functions of both a nomination committee and a compensation committee. The Nomination and Compensation Committee deliberates and gives advice on the following matters based on the consultation of the Board of Directors: 1) policies concerning the nomination of Representative Directors and Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members); 2) matters concerning the selection of Representative Directors and the selection of Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members); 3) matters concerning the succession plan for the President; and 4) policies concerning decisions on the details of individual compensation for Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members). In addition, based on the delegation of the Board of Directors, the Committee also determines the details of individual compensation for Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members).


The General Affairs Department is in charge of the secretariat, and the members and their attendance in FYE2021 (from December 2020, when the Nomination and Compensation Committee was established, to March 2021) are as follows.


<Chairperson>
Mr. Masahiro Sugino, Outside Director, Attendance: 2 out of 2 meetings


<Members>
Mr. Masahiko Goto, Chairman and Representative Director, Attendance: 2 out of 2 meetings
Mr. Munetoshi Goto, President and Representative Director, Attendance: 2 out of 2 meetings
Mr. Takahiro Iwase, Outside Director, Attendance: ―
Mr. Akira Kodama, Outside Director (Standing Audit & Supervisory Committee Member), Attendance: ―
* Mr. Iwase and Mr. Kodama were appointed as the members on June 25, 2021.
* Attendance of Mr. Akiyoshi Morita, who passed away on April 29, 2021: 2 out of 2 meetings


Audit & Supervisory Committee

A regular meeting of the Audit & Supervisory Committee shall be held once a month and as and when necessary. The Audit & Supervisory Committee audits and supervises the execution of duties by the Directors and investigates the status of business and assets by attending important meetings and hearing reports, in accordance with the established audit policy and allocation of duties. Furthermore, the Audit & Supervisory Committee appropriately exercises its right to express its opinions regarding the nomination and compensation of Directors (excluding Directors who are Audit & Supervisory Committee Members). The Audit & Supervisory Committee consists of four Directors who are Audit & Supervisory Committee Members, including three Independent Outside Directors, and is independent of the management team. In order to strengthen the effectiveness of auditing and supervisory functions, two Standing Audit & Supervisory Committee Members have been selected. An Outside Director who is a Standing Audit & Supervisory Committee Member has many years of experience in financial institutions and expertise in financial matters. Two Outside Directors who are part-time Audit & Supervisory Committee Members have many years of experience and expertise as an attorney at law and a certified public accountant, respectively. Accordingly, Makita believes that they are capable of performing highly specialized auditing work from an independent perspective. In addition, the Audit & Supervisory Committee works to cooperate with the Accounting Auditors and the Internal Audit Division by receiving audit reports and other reports from them, as needed. With the objective of helping audits by the Audit & Supervisory Committee function smoothly, Makita established the Audit & Supervisory Committee Staff Office, whose dedicated staff members support the work of the Committee.

 

Corporate Officers

In accordance with internal regulations, judgments and decisions related to the execution of operations below a certain scale are delegated to the Representative Director and the respective Directors in charge. In addition, Makita has introduced the Corporate Officer System in order to promote swift execution of group strategies and strengthen systems for the execution of operation, thereby striving to make the business operation flexible and efficient. At present, Makita has 19 Corporate Officers, and four of these Corporate Officers are non-Japanese.


Accounting Audits

Makita has appointed KPMG AZSA LLC as its Accounting Auditor. The certified public accountants who performed the accounting audit for Makita in FYE2021 are Mr. Yasuyuki Morimoto and Mr. Masaki Kawaguchi of KPMG AZSA LLC, and the number of years of continuous auditing is seven years or less. The assistants for the audit work are 11 certified public accountants, 1 U.S. certified public accountant, and 18 others.


Click the image to enlarge

Policy and Decision-making Process for the Appointment of Directors

The Board of Directors of Makita strives to have a well-balanced mix of knowledge, experience, and ability as a whole, to achieve both diversity and appropriate size, and to have a ratio of Independent Outside Directors of at least one-third.
We believe that it is necessary to appoint as Internal Directors (excluding Directors who are Audit & Supervisory Committee Members) those who have the ability to formulate and execute management strategies based on their own experience and insight, including a wealth of experience in Makita’s operations, and as Outside Directors (excluding Directors who are Audit & Supervisory Committee Members) those who have a wealth of experience and broad insight in corporate management. We also believe that it is necessary for Directors who are Audit & Supervisory Committee Members to be appointed from among those who have internal and external work experience and a wealth of experience and insight in various fields, including finance, accounting and legal affairs, and that at least one of them is required to have a wealth of experience and insight in finance, accounting and other fields.
Makita has established the Nomination and Compensation Committee for the purpose of ensuring objectivity, transparency, and fairness in procedures related to the nomination and other matters concerning Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members), as well as further enhancing the corporate governance system, by obtaining appropriate involvement and advice from Independent Outside Directors. The Board of Directors consults with the Nomination and Compensation Committee regarding the policy on the nomination of Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members) and matters related to the appointment of Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members), and decides on candidates based on the advice from the Nomination and Compensation Committee. With respect to Directors who are Audit & Supervisory Committee Members, candidates are determined by a resolution of the Board of Directors after obtaining the consent of the Audit & Supervisory Committee.
In the event that a Director (excluding a Director who is an Audit & Supervisory Committee Member) violates the criteria for dismissal set by the Board of Directors, such as an act that is suspected to be unfair, unjust or treacherous, the Board of Directors will consult with the Nomination and Compensation Committee regarding the dismissal of the relevant Director. Based on the advice from the Nomination and Compensation Committee, the Board of Directors will decide to submit a proposal for the dismissal of the relevant Director to the General Meeting of Shareholders.

Outside Director

Position Name Reasons of Appointment Attendance at
Board of Directors’ meetings
(Audit & Supervisory Board meetings)
Outside Director Masahiro
Sugino

Mr. Sugino has participated in the management of LIXIL Group, including INAX, for many years and has a thorough knowledge of corporate management, with which he currently provides useful opinions on the management of Makita from a broad perspective. Makita has judged that he is suitable for the position of Outside Director because we believe that he will be able to utilize his wealth of experience and broad insight for the management of Makita from an independent perspective.
We believe that there is no special interest between him and Makita and that there is no risk of conflict of interest with general shareholders.

12 of 12
meetings

Outside Director Takahiro
Iwase

Mr. Iwase has participated in the management of core companies of the Toyota Group, including TOYOTA MOTOR CORPORATION, for many years and has a thorough knowledge of corporate management. Makita has judged that he is suitable for the position of Outside Director because we believe that he will be able to utilize his wealth of experience and broad insight for the management of Makita from an independent perspective.
We believe that there is no special interest between him and Makita and that there is no risk of conflict of interest with general shareholders.

Outside Director
(Standing Audit & Supervisory Committee Member)
Akira
Kodama

Mr. Kodama has many years of experience at financial institutions and his expertise in accounting and so on, with which he currently provides useful opinions from a professional perspective. Makita has judged that he is suitable for the position of Outside Director who is an Audit & Supervisory Committee Member because we believe that he will be able to utilize his wealth of experience and insight to audit and supervise the management of Makita from an independent perspective.
We believe that there is no special interest between him and Makita and that there is no risk of conflict of interest with general shareholders.

12 of 12
meetings
(15 of 15 meetings)
Outside Director
(Audit & Supervisory Committee Member)
Shoji
Inoue

Mr. Inoue has extensive knowledge and expertise gained through his practice as attorney at law, with which he currently provides useful opinions from a professional perspective. Makita has judged that he is suitable for the position of Outside Director who is an Audit & Supervisory Committee Member because we believe that he will be able to utilize his wealth of experience and insight to audit and supervise the management of Makita from an independent perspective.
We believe that there is no special interest between him and Makita and that there is no risk of conflict of interest with general shareholders.

12 of 12
meetings
(15 of 15 meetings)
Outside Director
(Audit & Supervisory Committee Member)
Koji
Nishikawa

Mr. Nishikawa has extensive knowledge and expertise in corporate accounting audits as a certified public accountant. Makita has judged that he is suitable for the position of Outside Director who is an Audit & Supervisory Committee Member because we believe that he will be able to utilize his wealth of experience and insight to audit and supervise the management of Makita from an independent perspective.
We believe that there is no special interest between him and Makita and that there is no risk of conflict of interest with general shareholders.

Makita provided notice on Mr. Masahiro Sugino, Mr. Takahiro Iwase, Mr. Akira Kodama, Mr. Shoji Inoue, and Mr. Koji Nishikawa to the Tokyo Stock Exchange and Nagoya Stock Exchange as being independent directors appointed Makita, in accordance with the rules and regulations of each exchange.
Attendance at Board of Directors’ meetings and Audit & Supervisory Board meetings is shown for meetings held between April 1, 2020 and March 31, 2021. The attendance by Mr. Mitsuhiko Wakayama, Mr. Akira Kodama, and Mr. Shoji Inoue is for Board of Directors’ meetings and Audit & Supervisory Board meetings attended as Audit & Supervisory Board Members.

Compensation for Directors

Fiscal year ended March 31, 2021 (Unit: Million yen)

At the 109th Ordinary General Meeting of Shareholders held on June 25, 2021, Makita transitioned to a Company with an Audit & Supervisory Committee.
The information above refers to the period prior to the transition to a Company with an Audit & Supervisory Committee.

 

[Compensation for Directors (Excluding Directors Who Are Audit & Supervisory Committee Members)]

The Board of Directors, after consultation with and receiving advice from the Nomination and Compensation Committee, determines the decision-making policy on the details of individual compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members). The compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members) consists of monthly compensation, bonuses and restricted shares compensation, and for the purpose of providing sound incentives for improving the corporate value over the medium- to long-term, Makita appropriately determines the proportion of the monthly compensation, bonuses and restricted shares compensation.


<Monthly Compensation>
The amount of monthly compensation for each Director (excluding Directors who are Audit & Supervisory Committee Members) is determined by the Nomination and Compensation Committee under the authority delegated by a resolution of the Board of Directors, based on performance, positions, increase of employee salary and other factors, within the scope of the maximum amount of compensation resolved by the General Meeting of Shareholders.


<Bonuses>
Bonuses are paid to Directors, excluding Directors who are Audit & Supervisory Committee Members and Outside Directors, and linked to consolidated business result in order to motivate them to improve such business result. For the purpose of management of Makita in a manner favorable to shareholders, just as in the case of dividend payment, bonuses are based on the profit attributable to owners of the parent per share (Basic) after certain adjustments reflecting special circumstances. After consultation with and receiving advice from the Nomination and Compensation Committee, the Board of Directors determines the total amount of bonuses to be paid to Directors based on a certain formula and submits the total amount of bonuses to the General Meeting of Shareholders. The allocation of bonuses to each Director is determined by the Nomination and Compensation Committee under the authority delegated by a resolution of the Board of Directors, based on performance, positions and other factors. Bonuses to Directors are paid at a certain time each year.


<Restricted Shares Compensation>
Restricted shares compensation is introduced to Directors (excluding Directors who are Audit & Supervisory Committee Members and Outside Directors) in order to allow them to share the risks and benefits of stock price fluctuations with shareholders to a greater extent and further enhance their motivation to contribute to improving the stock price and the corporate value of Makita. The allotment of restricted shares to each Director is decided based on position, etc. at the Board of Directors after consultation with and receiving advice from the Nomination and Compensation Committee. Restricted shares are granted at a certain time each year.


[Compensation to Directors Who Are Audit & Supervisory Committee Members]
Full amount of the compensation to Directors who are Audit & Supervisory Committee Members is fixed so that their independence from the management can be secured and the specific amount for each of them is decided through discussions among the Directors who are Audit & Supervisory Committee Members.


Compliance

Basic Approach

Makita holds a philosophy of “striving to exist in harmony with society,” which is a uniform approach affecting our Management Policy / Quality Policy. As such we thoroughly ensure that Directors and employees comply with legal, regulatory, and ethical principles. Makita’s Code of Ethics and Guidelines to the Code of Ethics, which outline the conduct expected of Group Directors and employees, stipulate the importance of ethical conduct, avoiding conflicts of interest, complying with relevant laws and social standards, properly disclosing information, respecting human rights, restricting gifts and incentives, prohibiting bribes, and prohibiting unfair business transactions.
Our Board of Directors constantly monitors important compliance-related matters. It has established the "Code of Ethics" and the "Guideline to the Code of Ethics”, and it revises them when necessary. Additionally, it receives quarterly reports on the occurrence of misconduct, etc.


▶Code of Ethics PDF/113KB

▶Guideline to the Code of Ethics PDF/84KB

Education

All employees, including contract employees and part-time employees, are provided with information and education about the Code of Ethics and the Guidelines to the Code of Ethics once a year, without fail. This applies to overseas subsidiaries, and the entire Group is working to improve compliance.
In Japan, we conduct compliance training to educate employees on the importance of compliance and the content of the Code of Ethics at the time of important milestones, such as when they join Makita or assume the position of supervisor. In FYE2021, a total of 247 employees participated in compliance training.
In addition, in terms of raising awareness of the importance of compliance, we conduct an employee survey on ethical compliance in Japan once a year to confirm the status of the dissemination of the Code of Ethics, etc., and publish the results internally.

Internal Reporting System

In order to minimize, pre-empt, quickly discover and resolve conduct in violation of the Code of Ethics, Makita has established regulations regarding a Corporate Ethics Helpline (Internal Reporting), and we have established an internal hotline as well as an external contact for employees making reports. In our regulations regarding the Corporate Ethics Helpline (Internal Reporting), we have taken thorough measures to protect whistleblowers, including protection based on the legal system of each country, such as the Whistleblower Protection Act, so that they do not incur any disadvantage for reporting to the Corporate Ethics Helpline, and have also established corrective and remedial measures for the unlikely event that whistleblowers suffer unfavorable treatment, except where whistleblowers have knowingly provided false reports. Whistleblowers may also make anonymous reports. If necessary, the content of the reports is also shared within the Company, and steps are taken in order to remedy and prevent recurrence of the matter in question.
We have also established a point of contact on the Company website for receiving feedback and suggestions related to accounting, internal control, and audits.

Status of Internal Audits

As an independent organization in charge of the Group’s internal audits, the Internal Audit Division is staffed by more than 10 personnel and conducts the internal audits necessary to maintain the soundness of Makita’s management. Results of audits are reported to the Audit & Supervisory Committee and to management personnel. Furthermore, we have built a framework for making timely and appropriate revisions when inadequacies in the internal control system are discovered through internal audits.


Risk Management

Makita strives to identify and manage risks with a material impact on business activities, while also pursuing our commitment to being a company that is resilient to crises.
Makita’s Disclosure Committee, which identifies and investigates risks in the Group’s business activities, holds annual meetings. These meetings are attended by representative Directors, Directors in charge, Standing Audit & Supervisory Committee Members,
and General Managers of the Internal Audit Division and respective departments of the Company.
Each Director exercises authority and takes responsibility for implementing the Group-wide risk management framework in his or her own division, and also reports to the Board of Directors when a situation occurs that is material to business management. Also in each division, regulations and guidelines are stipulated and followed in order to carry out risk management necessary for quality control, disaster prevention, capital utilization, and the like.
Amidst concern in recent years over the occurrence of major earthquakes and other natural disasters, Makita recognizes that being able to respond to disasters is a critical issue. Makita has formed a Fire & Disaster Management Committee comprised of directors and the heads of relevant divisions and has formulated disaster prevention regulations with this committee at the center. These disaster prevention regulations and other measures, which are reviewed regularly, define steps for disaster prevention, emergency response measures, and disaster recovery efforts. Similarly, these regulations and measures outline a business continuity plan (BCP) for times of disaster. The target organizations and scope of this plan are also reviewed as necessary.