In order to meet the expectations and trust of all stakeholders including shareholders and continuously improve corporate value, MonotaRO (hereinafter “the Company”) aims for agility and efficiency while maintaining soundness and transparency of management. We believe that it is important to carry out Corporate Governance as a mechanism to support such corporate activities of the Company and to promote agility and efficiency while maintaining soundness and transparency of management. From this point of view, we strive to strengthen and enhance Corporate Governance.
2. Corporate Governance System
The Company considers that the separation of management supervision and business execution is an important element that constitutes the core of corporate governance and has therefore adopted a company with the nominating committee. etc.
(1) Management oversight function
Board of Directors
The Board of Directors holds regular meetings at least nine times a year, not only making decisions on legal matters but also supervising important management policies, strategies that lead to sustainable growth and improvement of corporate value, and business execution.
The function and structure of each committee are as follows.
||This is an organization that decides on the contents of the proposal regarding the appointment and dismissal of Directors to be submitted to the General Meeting of Shareholders, and this committee consists of three directors, including two independent outside directors.
||This is an organization that conducts audits of the business execution of Directors and Executive Officers for the validity, legality, and appropriateness, and decides on the content of the proposals regarding the appointment and dismissal of accounting auditors to be submitted to the General Meeting of Shareholders. The committee meetings are held at least nine times a year. The committee consists of three independent outside directors, including one certified public accountant and one lawyer.
||This is an organization that determines compensation for each individual after formulating guidelines regarding compensation for Directors and Executive Officers, and is composed of three directors, including two independent outside directors.
(2) Business Execution Function
Chief Executive Officer, Executive Officer, Department General Manager
The Company has appointed one Representative Executive Officer and President from Executive Officers. The Representative Executive Officer represents the Company as the Chief Executive Officer, and executes the business delegated based on the resolution of the Board of Directors. The President and Chief Executive Officer is obliged to report and explain the statuses of business execution and monthly settlement to the Board of Directors once a month. The head of each department in charge of each department assists the President and Chief Executive Officer and is responsible for business executions, and the principal persons are appointed by the Board of Directors to be the Executive Officers
Board of Executive Officers/ Board of Department General Managers
As a general rule, once a week held are Board of Department General Manager meeting consisting of department heads (the main persons are appointed as Executive Officers). In the Board of Department General Managers, the status of business execution are shared and business issues are discussed and resolved. In addition, the important issues to be submitted to the Board of Directors are discussed in advance in the Board of Department General Managers. The Board of Department General Manager is held as a Board of Executive Officers depending on the content of discussions and resolutions.
3. Compensation for Director and Executive Officer
Compensation for Executive Officers
The structures of compensations for Executive Officers are as followings and set to the level of the Company's business performance based upon the compensations of executives of other companies in the same and other industries.
||A fixed amount reward (revised every year according to the degree of contribution to the business)
||Achievement incentive-type bonus based upon fiscal year performance and degree of contribution to the business
|Restricted stock compensation
||Mid- to long-term incentive-type compensation for sharing profits with shareholders
Compensation for Directors
The compensation for Directors who also serve as Executive Officers is as described in "Compensation for Executive Officers" above. Regarding the compensation for Directors who do not also serve as Executive Officers, only fixed compensation (monthly salary) is paid in order to maintain independence for monitoring management separately from business execution.
Procedure for Determining Compensation
In the Company, the Compensation Committee formulates guidelines for executive compensation and determines compensation for each individual. Also, in order to ensure the transparency and fairness of decision making, in accordance with the rules of the Compensation Committee of the Company, the director herself or himself does not participate in the resolution regarding the compensation of the Director herself or himself, who is a member of the Compensation Committee.
4. Appointments of Directors, Audit Committee Members and Executive Officers
The Company's Board of Directors, a majority of which consists of independent outside Directors, monitors and supervises the execution of duties by Executive Officers from an independent and objective standpoint in order to sustain growth and improvement of corporate value over the mid to long term for fulfilling the duties and accountability to shareholders. In order to fulfill the responsibilities, the Nomination Committee will appoint a person with a high level of expertise and experience from a wide range of occupations as a candidate for Director and ensure a system that enables a multifaceted and insightful discussion. The independence is determined based on the Company's standards prepared based upon the independence standards established by the Tokyo Stock Exchange.
Audit Committee Member
From the perspective of fiduciary duty to shareholders, it is believed that the biggest role of the Audit Committee is to perform a check function at the appropriate time when the management makes management decisions that may damage the corporate value. The Audit Committee members, therefore, are appointed by a resolution of the Board of Directors, and the member of the Committee should have specialized knowledge and experience in finance, accounting, law, etc. and who has a strong will to meet the commitment to the shareholders.
Executive Officers of the Company are responsible for business execution based upon the authority entrusted to the Officers by the Board of Directors. In order to fulfill the responsibility, the persons who have specialized business experience in each field related to the Company’s business as well as executive ability and leadership are appointed as Executive Officers.
5. Internal Control
As an organization that responds to the “Internal Control Reporting System” under the Financial Instruments and Exchange Act, we have established “Internal Control Office” under the direct control of the President and Chief Executive Officer to build and evaluate internal controls. In addition, based upon the Companies Act, the Board of Directors resolves “Basic Policy regarding the System (Internal Control System) for Ensuring the Appropriateness of Business” and, in accordance with the Basic Policy, maintains the Company’s various regulations and risk management.