Corporate Governance

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.

Model of 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 other matters 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 Annual Meeting of Shareholders in 2009. These countermeasures have been extended with shareholder approval and were extended again through 2018 at the 2015 Annual Meeting of Shareholders.

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 8 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.

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 16 executive officers, 6 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 worksites, 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 Hideo Yamada
Attendance Attended 17 of 17 Directors’ meetings held during the fiscal year
Reasons for Appointment

Mr. Yamada has a wealth of experience and knowledge as a lawyer, and also has experience at other companies both as an external director and an external corporate auditor. The purpose of electing him as an external director of the Company is to enhance the transparency and objectivity of management and strengthen the oversight of the Board of Directors.

Reasons for Appointment

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.
Name Kazunari Uchida
Attendance Mr. Uchida was elected at Lion Corporation’s Annual Meeting of Shareholders for the fiscal year ended December 31, 2015, held on March 30, 2016.
Reasons for Appointment

Mr. Uchida has a distinguished career as the representative for Japan of a management consulting group as well as experience as an external director and external auditor for other companies. The purpose of electing him as an external director of the Company is to make use of his expert knowledge and experience in the Company’s management and so that he may help reflect the strengthening of the oversight functions of the Board of Directors in management.

Reasons for Appointment

Mr. Uchida 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 Noboru Kojima
Attendance Attended 13 of the 13 Directors’ meetings and 11 of the 11 meetings of the Board of Corporate Auditors held during the fiscal year
Reasons for Appointment

Mr. Kojima is a Certified Public Accountant and Certified Tax Accountant and has in-depth knowledge of accounting and tax matters. He also has experience as external corporate auditor for other companies, and Lion would like to have access to his knowledge and experience to strengthen its accounting functions.

Reasons for Appointment

Mr. Kojima 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 Corporate Auditor.
Name Hideo Higashi
Attendance Attended 13 of the 13 Directors’ meetings and 11 of the 11 meetings of the Board of Corporate Auditors held during the fiscal year
Reasons for Appointment

Mr. Higashi has expert knowledge of tax and financial matters and experience in key positions in government agencies. Accordingly, Lion would like to draw on his knowledge and experience to strengthen its accounting functions.

Reasons for Appointment

Mr. Higashi 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 Corporate 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, based on the reports of 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 (FY2015)
Directors (External Directors) 10 (2) ¥501 million (¥24 million)
Auditors (External Auditors) 8 (4) ¥76 million (¥24 million)
Total 18 (6) ¥578 million (¥48 million)

The above figures include the fixed portion of the compensation of four auditors (including two External Corporate Auditors) who resigned at the conclusion of the Annual Meeting of Shareholders held on March 27, 2015.

Messages from the External Corporate Auditors

External Corporate Auditor (Certified Public Accountant, Certified Tax Accountant)
Noboru Kojima

The function of the corporate auditors is to confirm that the directors are performing their duties without acting illegally or engaging in extremely inappropriate behavior. I am drawing on my many years of experience as auditor and advisor to corporate managements in the capacity of certified public accountant, and fulfilling my duties as an external auditor from a third-party perspective. Fortunately, prior to becoming an external auditor at Lion, I had experience as auditor at two listed companies. By comparing my experience as auditor at other companies, I am able to perform a more in-depth auditing function at Lion.

Lion, with its over 120 years of history, has developed a corporate culture characterized by a free and open atmosphere that enables individual employees to demonstrate their capabilities to the fullest extent. This means that it is easy to communicate freely, and, from an organizational perspective, the directives issued by top management are transmitted clearly to all staff members. Moreover, the information of individual employees can be relayed to top management easily, creating the feeling that Lion has an open and responsive organization. From the auditors’ perspective, Lion’s organization is one where there is a high level of compliance with laws and regulations. I believe that the role I would like to play, while drawing on these good points of Lion’s culture, is to instill a spirit of accurate governance that takes account of the long-term perspective.

External Corporate Auditor (Certified Tax Accountant)
Hideo Higashi

In Japan, there is a general consensus that companies are public institutions and, therefore, do not belong just to the shareholders. Amid this environment, the corporate philosophy of Lion Corporation holds that companies should work for the well-being not only of the shareholders but also other stakeholders who support the Company, including customers, business partners, and employees, while also contributing to society as a whole. With this philosophy, Lion has earned the strong trust of many people and has come to be a corporation that is highly evaluated.

In my former position in the field of national taxation, I was able to observe many companies. In addition, in my current position as a certified tax accountant, I have many opportunities to work with corporations. Different companies have differing corporate cultures, but, as the economy continues to globalize, companies share the same stance in endeavoring to strengthen corporate governance and compliance with the aim of fulfilling their social responsibilities.

Last year, revisions of Japan’s Companies Act came into effect aimed at strengthening corporate governance, focusing especially on the oversight of corporate directors. As a consequence, I think the roles of the corporate auditors have grown in importance. As an external corporate auditor, I am in the position to audit, fairly and justly, the company directors in the conduct of their management duties from an independent perspective. I, therefore, want to carry out my duties and contribute thereby to increasing Lion’s shareholder value and corporate value.

Directors, Corporate Auditors, and Executive Officers

As of March 30, 2016

Representative Director and President ITSUO HAMA Chairman of the Board, Chief Executive Officer

Representative Director, Senior Executive Director, Executive Officer YUJI WATARI Responsible for Corporate Ethics, Purchasing Headquarters, Production Headquarters, Logistics Planning and Development, Business Coordination Center, and Production Engineering Research Center

Executive Director, Executive Officer MASAZUMI KIKUKAWA Responsible for Health and Home Care Products Division, Health and Home Care Products Sales Division, Gift and Channel-Specific Products Division, Direct Marketing Division, Responsible for Advertising, Behavioral Science Research, and Distribution Policy Department

Director, Executive Officer KENJIRO KOBAYASHI Responsible for Secretary, Corporate Brand Promotion Office, System, General Affairs, Corporate Communication Center, CSR Promotion Department

Director, Executive Officer TOSHIO KAKUI Responsible for Research and Development Headquarters, Overall Chemicals Businesses, Overall International Businesses, International Division and Intellectual Property Department

Director, Executive Officer TAKEO SAKAKIBARA Responsible for Risk Management, Corporate Planning Department, Finance, Consumer Service Center, Pharmaceutical Affairs and Quality Assurance Department, Legal Department

External Director HIDEO YAMADA (Attorney at Law)

External Director KAZUNARI UCHIDA (University professor)

The notification of the nomination of Mr. Hideo Yamada and Mr. Kazunari Uchida as independent directors has been sent to the Tokyo Stock Exchange.

Standing Corporate Auditor YASUTARO NAKAGAWA

Standing Corporate Auditor JUNKO NISHIYAMA

External Corporate Auditor NOBORU KOJIMA (Certified Public Accountant, Certified Tax Accountant)

External Corporate Auditor HIDEO HIGASHI (Certified Tax Accountant)

The notification of the nomination of Mr. Noboru Kojima and Mr. Hideo Higashi as independent directors has been sent to the Tokyo Stock Exchange.

Substitute Corporate Auditor TAKAO YAMAGUCHI (Certified Public Accountant, Certified Tax Accountant)

Executive Officers SHU KAWAZOE President of Lion Hygiene Co., Ltd.

KOHEI MIYAUCHI Executive General Manager of Purchasing Headquarters

TOMOMICHI OKANO Executive General Manager of Research and Development Headquarters

 HIROYUKI CHIBA President and Executive General Manager of Lion Specialty Chemicals Co., Ltd.

RYUJI NAKAZAWA Executive General Manager of Gift and Channel-Specific Products Division

  YUTAKA SHINOHARA Executive General Manager of Production Headquarters

YUGO KUME Executive General Manager of Health and Home Care Products Division

FUMITOMO NORITAKE Executive General Manager of Direct Marketing Division and Manager of Direct Marketing Division Sales Promotion Department

MASAHARU MIKUNI Executive General Manager of Health and Home Care Products Sales Division

HITOSHI SUZUKI Executive General Manager of International Division and Director of the Oleochemicals Business Development Office of the International Division and Manager of New Area Preparations Office