Corporate Governance

Maintaining a Sound Management System that Wins the Lasting Trust of Society

Basic Approach

Lion's top priorities for corporate governance are to increase management transparency, accelerate supervision and decision making, and ensure compliance. By strengthening and enhancing its corporate governance system, Lion aims to increase its corporate value.

Corporate Governance System

To evaluate our management objectively from the standpoint of social acceptability, including social responsibilities to be fulfilled by the Company and stakeholders' trust, the Management Evaluation Committee composed of knowledgeable persons from outside the Company was formed in October 2003 to ensure that evaluations and opinions of the Committee members regarding Lion's corporate governance system, directions of business and product development, and CSR will be available to Lion management for their decision making. In March 2004, Lion introduced its Executive Officer system and reduced the number of directors to strengthen its business execution functions and give greater flexibility to the Board of Directors to perform its functions. In March 2006, Lion appointed two external directors to further enhance the supervisory functions of the Board of Directors. In December 2006, to increase the objectivity and transparency of compensation for directors and others, Lion formed its Compensation Advisory Committee consisting of two external directors and two external corporate auditors. Regular meetings are held between the Representative Directors and all external directors and auditors to exchange information and, thereby, enhance the supervision and monitoring of management. In January 2013, the Lion Corporation Standards Regarding the Independence of External Directors/Corporate Auditors were instituted to clarify that only persons who have no conflicts of interest with Lion and who can remain independent from the Company will be appointed as external directors and external auditors.

Please note that countermeasures for large purchases of the Company's shares (takeover defense measures) were adopted with the approval of the Shareholders' Meeting in 2009. These countermeasures have been extended with shareholder approval and were extended again through 2018 at the 2015 ordinary shareholders' meeting.

Model of Corporate Governance System

System Chart

Board of Directors

Lion's Board of Directors has the responsibility of determining Company-wide objectives and drawing up management plans to attain these objectives. The Board of Directors has 10 members, 2 of whom are external directors. Board of Directors' meetings are held regularly once a month, with extraordinary meetings convened as necessary. Responsibilities of the Board of Directors include making decisions on key management matters and supervising the conduct of duties by directors and executive officers. The term of office of directors is one year.

To enhance objectivity and transparency, compensation paid to directors is determined by the Board of Directors based on the recommendations of the Compensation Advisory Committee.

Executive Officer System

Attended by all executive officers, the Executive Committee meets once a month to ensure that the execution of duties is conducted in a timely manner and to strengthen the functions of the Board of Directors. At the same time, the Executive Committee serves to promote expeditious decision making with respect to both fundamental and important matters related to business execution. There are currently 14 executive officers, 7 of whom hold the position of director concurrently. The term of office of executive officers is one year, which is equivalent to the term of office of directors.

Board of Corporate Auditors

In accordance with standards relating to the conduct of audits by corporate auditors and auditing policies established by the Board of Corporate Auditors, corporate auditors attend meetings of the Board of Directors and other important meetings, monitor the execution of the specific duties of the directors, implement on-site audits of Lion's Head Office and major work sites, and conduct audits of subsidiaries and affiliates. In addition, corporate auditors meet twice a year with representative directors to exchange opinions.

Of the four auditors, two are external auditors.

The Board of Corporate Auditors serves as a coordinating entity, undertaking a variety of activities, including the exchange of opinions regarding the audit reports submitted by the independent auditing firm and the Auditing Office, which is in charge of internal auditing.

Management Evaluation Committee

Composed of seven knowledgeable persons from outside the Company, this committee meets twice each year, and it was formed to enable Lion to draw on the evaluations and opinions of its members and reflect these in the management of the Company. Matters addressed by this committee include the corporate governance system, the directions of Lion's business and product development, the approach to corporate social responsibility (CSR), and other issues.

Compensation Advisory Committee

This committee was formed to increase the objectivity and transparency of matters related to executive compensation. This committee consists of two external directors and two external corporate auditors, for a total of four independent officers.

Matters Related to the Selection of External Directors and External Auditors

To contribute to the strengthening of its corporate governance and enhance the supervision and monitoring of management, Lion appoints external officers (two external directors and two external auditors) who have no conflicts of interest with the Company and the Company’s important business partners, and who can remain independent. At present, Lion has four such independent external officers.

External Directors
Name Mitsuaki Shimaguchi
Attendance Attended 17 of 18 Board of Directors' meetings held during the fiscal year
Reasons for Appointment

Mr. Shimaguchi has been active in the field of marketing and has had experience as external director and external auditor in other companies. By appointing him as external director of Lion, we are able to draw on his rich accumulation of knowledge and experience and enhance the supervision of management.

Mr. Shimaguchi meets the qualifications set forth in the Lion Corporation Standards Regarding the Independence of External Directors/Corporate Auditors as well as the criteria for independence of the Tokyo Stock Exchange Co., Inc. (Japan Exchange Group). He is, therefore, judged to be independent, and was duly appointed.

Name Hideo Yamada
Attendance Attended 14 of 18 Directors' meetings held during the fiscal year
Reasons for Appointment

Mr. Yamada, as an attorney at law, has compiled a rich accumulation of knowledge and experience and has had experience as external director and external auditor in other companies. By appointing him as external director of Lion, we are able to increase the transparency and objectivity of management as well as enhance the supervision of the Company's activities.

Mr. Yamada meets the qualifications set forth in the Lion Corporation Standards Regarding the Independence of External Directors/Corporate Auditors as well as the criteria for independence of the Tokyo Stock Exchange Co., Inc. (Japan Exchange Group). He is, therefore, judged to be independent, and was duly appointed.

External Corporate Auditors
Name Hideo Doi
Attendance Attended 18 of the 18 Board of Directors' meetings and 13 of the 13 Board of Auditors' meetings held during the fiscal year
Reasons for Appointment

Mr. Doi has extensive professional knowledge and experience gained as a certified public accountant. By appointing him as external auditor at Lion, we are able to enhance the supervision of management.

Mr. Doi meets the qualifications set forth in the Lion Corporation Standards Regarding the Independence of External Directors/Corporate Auditors as well as the criteria for independence of the Tokyo Stock Exchange Co., Inc. (Japan Exchange Group). He is, therefore, judged to be independent, and was duly appointed as independent external auditor.

Name Sumiaki Nomura
Attendance Attended 17 of the 18 Board of Directors' meetings and 13 of the 13 Board of Auditors' meetings held during the fiscal year
Reasons for Appointment

Mr. Nomura has extensive professional knowledge and experience gained as a certified tax accountant and has had experience as external director in other companies. By appointing him as external auditor at Lion, we are able to enhance the supervision of management.

Mr. Nomura meets the qualifications set forth in the Lion Corporation Standards Regarding the Independence of External Directors/Corporate Auditors as well as the criteria for independence of the Tokyo Stock Exchange Co., Inc. (Japan Exchange Group). He is, therefore, judged to be independent, and was duly appointed as independent external auditor.

Total Compensation of Directors and Auditors

To ensure the objectivity and transparency of the Company's policy regarding compensation paid to directors and auditors, maximum consideration is given to the recommendations made by the Compensation Advisory Committee. Decisions on director compensation and auditor compensation are made by the Board of Directors and the Board of Auditors, respectively.

Corporate Officer Classification Number of Corporate Officers Total Compensation Paid (FY2014)
Directors (External Directors) 10 (2) ¥442 million (¥23 million)
Auditors (External Auditors) 4 (2) ¥76 million (¥23 million)
Total (External Auditors) 14 (4) ¥519 million (¥47 million)