Corporate Governance Structure
- Kirin Holdings has adopted a pure holding company structure as a means of controlling its diverse and global business, which is centered on alcoholic beverages, non-alcoholic beverages, and pharmaceuticals. As a pure holding company, Kirin Holdings takes on the role of devising and implementing the Group's overall strategies, monitoring individual businesses, and creating synergy through coordination across the Kirin Group.
- The Kirin Group's individual companies conduct their business autonomously with a sense of speed, while maintaining close ties to the local customers and other stakeholders. Kirin Holdings grants appropriate authority to match the strategic stages of individual Kirin Group companies and improves governance through the Boards of individual group companies by dispatching directors to those companies. Directors or Executive Officers of Kirin Holdings serve concurrently as directors at the main companies in the Kirin Group.
- Kirin Holdings has adopted a Company with Audit & Supervisory Board system, and aims to maintain and improve on a highly transparent governance system for its stakeholders. The Board, which includes a number of Outside Directors, works closely with the Audit & Supervisory Board, which also includes a number of Outside Audit & Supervisory Board Members, and makes effective use of the statutory and other auditing function to take final decisions on important matters. At the same time, the Board endeavors to reinforce the monitoring function on management. Kirin Holdings has introduced an executive officer based system in order to implement strategies for each of its businesses and functions in an agile fashion and clarify executive responsibilities.
The Board of Directors
- The Board takes decisions on legal matters and on the execution of the Kirin Group's important operations, which include long-term management plans, mid-term management plans and yearly business plans across the Kirin Group and at key Group companies. The Board is also responsible for monitoring the directors' execution of their professional duties, and for developing appropriate internal control systems across the Kirin Group.
- Taking into account the knowledge, experience, skills and discernment that are necessary for turning the 2027 Vision into a reality, the Board shall be composed of the appropriate number of members, ensuring overall balance and diversity. In addition, in order to build a highly transparent governance system and ensure the effectiveness of objective management supervision, the majority of currently appointed directors are independent non-executive directors.
- Regarding the twelve Group companies: Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, Mercian Corporation, Lion Pty Ltd, Myanmar Brewery Limited, Coca-Cola Beverages Northeast, Inc., Kyowa Kirin Co., Ltd., Kyowa Hakko Bio Co., Ltd., San Miguel Brewery Inc., and China Resources Kirin Beverages (Greater China) Company, Limited, Thorne Research Inc. and FANCL Corporation, the Directors of the Board or Executive Officers of the Company are appointed as Directors of the Board (including Non-executive Directors) of each company and supervise the performance of duties in order to strengthen governance of the Group overall. Concerning Kyowa Kirin Co., Ltd., because it is a listed subsidiary, while working to secure appropriate effectiveness through the implementation of the corporate governance code, efforts are being made to ensure the independence of executive management as a listed company, as well as autonomous corporate activities based on independence and agility. At the same time, the Company is striving to maximize profits for all shareholders and sustainably expand corporate value.
- Kirin Holdings has twelve (12) Directors, of whom seven (7) are Non-Executive Directors as of April, 2020, and one of the Non-Executive Directors serve as Chairman of the Board.
- The Board of Directors meeting is held regularly once a month, and is held as needed.
Frequency and Attendance rate of the Board of Directors Meeting
|Number of Meetings Held||16||15||15||15||14|
|Attendance rate regarding Non-Executive Directors||97％||93％||95％||91％||98％|
|Attendance rate regarding Audit & Supervisory Board members||100％||98％||100％||98％||100％|
Evaluation of the Board of Director’s Effectiveness
- The Board of Directors effectiveness evaluations conducted in fiscal 2016 defined the Board’s two primary functions as making important corporate decisions and providing supervisory oversight. We continue to conduct regular evaluations of Board operations and meeting content to both ensure those functions are being fulfilled and to continually improve its efficiency by identifying points to make the meetings more effective in the next fiscal year.
- In fiscal 2020, the Board of Directors focused on further strengthening its supervisory function, which was identified as a point requiring improvement in the previous-year evaluation. Due to the COVID-19 pandemic, the Board is allocating additional time in each meeting to discuss risk management.
Fiscal 2020 discussion points
- Discuss the composition and operation of the Board of Directors for providing specialized and objective oversight and advising in the Heath Science and other business domains
- Discuss the degree of familiarity and penetration of sound corporate ethics among employees, including understanding of the Group Philosophy System and corporate ethics
- Discuss risk management pertaining to the globalization and increasing complexity of risk
- Discuss issues from the perspective of non-financial targets (the CSV Commitment), including environmental, social, and governance (ESG)
- Discuss specific function strategies needed to execute the overall medium- and long-term strategy to raise corporate value considering market and competitor trends
Fiscal 2020 evaluations
The Board of Directors discussed and evaluated the survey responses and the current status of improvement efforts based on questionnaires incorporating the observations of third-party advisors and additional interviews. The observations and evaluation results were as follows.
(1) Composition and operation of the Board of Directors
(2) Strategy formulation, execution, and monitoring
(3) Oversight of risk and crisis management
(4) Oversight of decision-making, such as in business acquisitions and withdrawals
(5) Oversight of executive compensation and successor development plans
(6) Depths of awareness and oversight of sound corporate ethics
(7) General oversight of disclosure to stakeholders
(8) Overall effectiveness
As a whole, the Board of Directors is effective and functioning properly.
Points receiving positive evaluations
- The diversified Board of Directors enhances the effectiveness of important decision-making and provides multiple perspectives
- The independent non-executive director majority has broadened the Board’s range of expertise and strengthened the supervisory function over business execution
- The Company has established a strong monitoring system to reinforce its status as a company with an Audit & Supervisory Board
- Board of Directors discussion content is to the point and thorough
- Discussion of the business portfolio covers various angles for generating sustaining growth
- Discussion centered on topics that management should focus on, enabling deep discussion of management issues
- The Board of Directors is operating properly, and steps are being taken to further improve its functionality
- Functionality has been vastly improved in agenda setting, time allocation, and opportunities to share information
- The amount of reports and open discussions about issues that are not part of the meetings is gradually increasing, and the deeper understanding of the business and strategies is improving the quality of the discussions
Points to improve in fiscal 2021
Management has specified four points for improvement in fiscal 2021 based on the opinions and areas for improvement indicated in the evaluations in fiscal 2020 and with a view for the changing business environment.
The Company continually seeks to maintain and improve the effectiveness of the Board of Directors in accordance with the agenda set by Independent Non-executive Director and Chairman of the Board Masakatsu Mori and by providing more opportunities to share information and engage in open discussions.
Main discussion points for fiscal 2021
- Specific function strategies needed to execute the overall strategy considering market and competitor trends
- The degree of familiarity and penetration of sound corporate ethics among employees, including understanding of the Group Philosophy System and corporate ethics
- Risk management pertaining to the globalization and increasing complexity of risk
- Issues from the perspective of non-financial targets (the CSV Commitment), including environmental, social, and governance (ESG)
Audit & Supervisory Board
- In keeping with its fiduciary responsibility toward shareholders, the Audit & Supervisory Board ensures the integrity of management with an eye to the Kirin Group's sustainable growth and the improvement of corporate value over the medium to long term, and acts to ensure in the common interests of the shareholders.
- The Audit & Supervisory Board makes use of the ability of the Standing Audit & Supervisory Board Members to gather information within the Kirin Group and the independence of Audit & Supervisory Board Members. The Audit & Supervisory Board also develops a system to ensure that the audits carried out by each Audit & Supervisory Board Members are effective.
- In order to intensify the provision of information to Non-Executive Directors, the Audit & Supervisory Board exchanges opinions with Non-Executive Directors, and provide them with information obtained in the course of auditing.
- As of April, 2021, Kirin Holdings has five (5) Audit & Supervisory Board Members, of whom two (2) are Standing Audit & Supervisory Board Members, and three (3) are Audit & Supervisory Board Members.
Frequency and Attendance rate of the Audit & Supervisory Board Meeting
|Number of the Meeting held||17||16||16||16||16|
|Attendance rate regarding Audit & Supervisory Board members||100％||98％||100％||98％||100％|
Kirin Holdings has adopted an audit system consisting of two (2) Standing Audit & Supervisory Board Members and three (3) Audit & Supervisory Board Members. Each Audit & Supervisory Board Member attends various internal important meetings, including the Board of Directors in accordance with the audit policy and audit plans which are defined by the Audit & Supervisory Board. For Group companies, the Auditors are assigned either full-time or part-time according to the scale of the company. The Auditors of Group companies coordinate closely with the Audit & Supervisory Board Members of Kirin Holdings to enhance the effectiveness of auditing.
- The Members of Internal Audit Department are concurrently responsible for conducting internal audits at Group companies, independently from the auditor’s audit, with regards to the Group’s significant risks and internal controls. The Internal Audit Department practically and efficiently conducts auditing for the Group overall, and by sharing the audit results of, and mutually supplementing the work of, the internal audit and the audit by the Audit & Supervisory Board. The Internal Audit Department Members coordinate with the Audit & Supervisory Board Members in setting and implementing auditing plans, coordinate with the full-time auditors of the key Group companies, and concurrently perform the role of part-time auditors in the Group companies, etc.
- The Internal Audit Department, the Audit & Supervisory Board Members and an Independent Accounting Auditor also strive for mutual cooperation where they exchange information and opinions and consult each other as necessary. The Internal Audit Department and the Audit & Supervisory Board Members regularly exchange information and opinions with internal control-related departments, and the Accounting Auditor also conducts hearings with internal control-related departments as necessary, both thus implementing effective audits.
Relationship with the Independent Accounting Auditor and Internal Audit Department
- The Audit & Supervisory Board develops a system capable of conducting thorough and appropriate auditing in coordination with the Independent Accounting Auditors and the Internal Audit Department.
- The Audit & Supervisory Board verifies the independence and specialization of the Independent Accounting Auditors upon establishing evaluation criteria. The Audit & Supervisory Board holds regular interviews with the Independent Accounting Auditors, and requires the Independent Accounting Auditors to explain whether they are observing the necessary quality management criteria for carrying out accounting audits in an appropriate fashion.
Internal Control System
Kirin Holdings draws up a basic policy for the internal control system in order to ensure the appropriateness of the Kirin Group's operations, develop an appropriate system for ensuring optimal compliance, risk management and financial reporting within the Group, and monitor the state of its implementation.
Group company governance and performance assessment
- Kirin Holdings formulates and promotes Group strategy, monitors all Group businesses, and creates synergies across the Group. Each Kirin Group company is located close to its customers and stakeholders and administers its operations autonomously and speedily with full authority to make business execution decisions tailored to their specific strategies. Kirin Holdings seats a director on each company’s Board of Directors to help maintain a high level of corporate governance.
- The indicators used to evaluate the performances of Group companies are the quantitative targets of return on assets (ROA), which is directly linked to return on invested capital (ROIC), and earnings before income tax (EBIT), which directly affect guidance for the growth rate of normalized operating profit.
Nomination & Remuneration Advisory Committee
- The Nomination & Remuneration Advisory Committee has been set up to deal with the nomination and remuneration of Directors, Executive Officers and Audit & Supervisory Board Members.
- As an advisory body to the Board, the Committee discusses the following matters from an objective and fair perspective, and report to the Board of Directors. The matters that are discussed and reported on include the nomination and remuneration of directors, executive officers, Audit & Supervisory Board Members, and succession plan regarding the President & Chief Executive Officer.
- The Nomination and Remuneration Advisory Committee shall, based on the delegation of the Board of Directors, determine the evaluation indices and targets for the individual performance evaluation, the evaluation results in accordance with the degree of achievement of those indices and targets, and the individual payment rates for the individual performance evaluation with respect to bonuses for the Company's directors (excluding non-executive directors) and executive officers.
- The Committee is composed of five (5) Directors, consisting of two (2) Internal Directors and three (3) Non-Executive Directors, The committee chairperson is appointed out of the non-executive directors. The term of office is one (1) year.
- The members of the committee in 2021 are as follows:
Non-executive directors: Ms. Chieko Matsuda (Chairperson), Mr. Hiroyuki Yanagi, Ms. Noriko Shiono
Internal directors: Mr. Yoshinori Isozaki, Mr. Toshiya Miyoshi
Frequency and Attendance rate of the Nomination & Remuneration Advisory Committee
|Number of the Committee held||6||7||11||12||13|
|Attendance rate regarding the Committee members||97％||97％||97％||93％||100％|
The following bodies have been established as other advisory bodies to the President.
1. Group Executive Committee
The Group Executive Committee assists the president & CEO in decision-making on matters related to strategies and investments that will have a significant impact on the Kirin Group.
2. Group CSV Committee
The Group CSV Committee deliberates the planning of Group CSV policies and strategies and monitors the progress status of CSV initiatives. The committee presents proposals and reports as necessary to the Group Executive Committee and the Board of Directors, which are reflected in the Group's overall strategy.
3. Group Risk and Compliance Committee
The Group Risk and Compliance Committee promotes and supervises risk management and the steadfast execution of compliance. The committee ensures the proper activation of response systems for crisis situations, such as by supporting information sharing and responses among Group companies in Japan and overseas.
4. The Group Information Disclosure Committee
The Group Information Disclosure Committee decides relating to information disclosure to stakeholders and investors, and improves management transparency through the promotion of timely, fair and impartial disclosure. The Director in charge of finance is appointed as the committee chair. The heads of the department in charge attend the committee, and the standing audit & supervisory board members and the head of internal audit department serve as observers.