TAKARATOMY

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Sustainability Initiatives | Corporate Governance

Board Director Appointment & Remuneration

Reasons for Appointing Individual Directors

We recognize the importance of securing diverse perspectives in corporate management in order to promote the development and globalization of our business and ensure appropriate supervision and auditing, and strive to appoint a diverse group of executives accordingly. Please see our Board Member Profiles (In Japanese) for a brief account of their professional experience. We also publish Interviews with Outside Directors that explains the activities of our diversity-driven directors in a more relaxed style for all stakeholders to read. We plan to conduct interviews in the fall with the new outside directors who were appointed on June 26, 2020.

Outside directors

Name Important concurrent positions Reason for appointment
Shigeyuki MitoReappointed /
Independent director
Partner Attorney, TMI Associates
Outside Corporate Auditor of Broccoli Co., Ltd.
Director of Shonan Bellmare Co., Ltd.
Outside director of Yoshimoto Kogyo Co., Ltd.
Outside director of Faith, Inc.
Shigeyuki Mito has been appointed as an independent director because we expect him to apply the superior expertise and rich experience as an attorney. He has been selected as an independent director because his credentials were not considered to cause any conflict of interest with general shareholders within the context of the independence standards determined by the Tokyo Stock Exchange.
Mariko MimuraReappointed /
Independent director
Of Counsel, Nishimura & Asahi
Outside director of TANAKA Holdings Co., Ltd.
Mariko Mimura has been appointed as an independent director because we expect her to apply the rich knowledge and experience as an attorney and company manager. She has been selected as an independent director because her credentials were not considered to cause any conflict of interest with general shareholders within the context of the independence standards determined by the Tokyo Stock Exchange.
Fumitoshi SatoReappointed /
Independent director
Audit & supervisory board member (outside) of Azbil Corporation Fumitoshi Sato has been appointed as an independent director because we expect him to apply the rich knowledge and experience in finance and as a company manager. He has been selected as an independent director because his credentials were not considered to cause any conflict of interest with general shareholders within the context of the independence standards determined by the Tokyo Stock Exchange.
Shinichi TonomuraNewly appointed /
Independent director
Representative Director and President of Capgemini Shinichi Tonomura has been selected as an independent director because we expect him to apply the rich knowledge and experience in business operations and as a company manager. He has been selected as an independent director because his credentials were not considered to cause any conflict of interest with general shareholders within the context of the independence standards determined by the Tokyo Stock Exchange.
Miwako IyokuNewly appointed /
Independent director
Director, TEPCO Life Service, inc.
Outside director of Yamano Holdings Corporation
Miwako Iyoku has been selected as an independent director because we expect her to apply the rich knowledge and experience as an internal entrepreneur and company manager. She has been selected as an independent director because her credentials were not considered to cause any conflict of interest with general shareholders within the context of the independence standards determined by the Tokyo Stock Exchange.
Reiko YasueNewly appointed /
Independent appointed
Representative Director, President and Executive Officer of Cybernet Systems Co., Ltd. Reiko Yasue has been appointed as an independent director because we expect her to apply the rich knowledge and experience in international business and as a company manager. She has been selected as an independent director because her credentials were not considered to cause any conflict of interest with general shareholders within the context of the independence standards determined by the Tokyo Stock Exchange.

Directors

Name Position Reason for appointment
Kantaro Tomiyama Representative Director, Chairman & CEO Based on his long and rich experience as a representative director, Kantaro Tomiyama amply fulfills his duties in terms of determining significant management issues and supervising business execution. He has been appointed because he is considered able to successfully promote and supervise TOMY Group management.
Kazuhiro Kojima Representative Director, President & COO Kazuhiro Kojima has applied his rich experience as a Japanese investment fund manager and TOMY manager to raising our corporate value by establishing a Group management structure, strengthening our financial base, and promoting human resource strategy. He has been appointed because, based on his superior expertise and experience, he is considered able to successfully drive overall TOMY Group management.
Takashi Konosu Board Director, Executive Vice Preside Takashi Konosu has applied his ample experience in toy and toy-related business execution and his broad knowledge and experience as the president of a TOMY subsidiary in Japan to raising corporate value by strengthening our core toy operation and expanding our toy-related businesses. He has been appointed because he is considered able to successfully apply his rich experience and knowledge to driving the Group management.
Hiroya Kutsuzawa Senior Managing Director & CFO Hiroya Kutsuzawa has excelled in administrative operations as the CFO and the head of corporate administrations. He has been appointed because he is considered able to successfully apply his rich knowledge and expertise to help drive Group management.
Akio Tomiyama Board Director,
Senior Executive Officer
Akio Tomiyama has used his experience gained as chief strategy officer (CSO) at an international TOMY subsidiary to strengthen corporate strategy throughout the Group. He has been appointed because he is considered able to successfully apply his rich knowledge and expertise to help drive Group management.

Appointment / Dismissal of Senior Management and Nomination of Candidates for Officers by the Board of Directors

Qualification for Directors and Procedures for Nominating Directors

(i) The General Meeting of Shareholders appoints more than one person with excellent personality, insight and skills, extensive experience and high standards of ethics as the Company’s director from inside and outside the Company.

(ii) The Company has established the Board Director Nominating Committee, composed of Outside Officers, as an advisory body to the Board of Directors. The committee provides proposals and counsel about policy on the content of assessment and appointment of each director.

(iii) All directors of the Company are subject to appointment by the General Meeting of Shareholders every year. Any candidate for new director is resolved by the Board of Directors after a fair and transparent examination by the Board Director Nominating Committee and discussed at the General Meeting of Shareholders.

(iv) The Company nominates those who sympathize with the Company’s founding philosophy and corporate mission as the Company’s directors since they are expected to understand the Company’s business clearly.

(v) In the case where any director committed fraud or a serious violation of law in the performance of his/her duties or where it is found that any director has difficulty in performing his/her duties in an appropriate manner, reasons for his/her dismissal are first explained at a meeting of the Board Director Nominating Committee. Then, after deliberating and hearing suggestion the Board of Directors makes a decision and refer it to the General Meeting of Shareholders for approval.

Qualification for Auditors and Procedures for Nominating Auditors

(i) The General Meeting of Shareholders appoints more than one person with excellent audit-related experience and superior specialist knowledge as Company auditors from inside and outside the Company.

(ii) Proposed nomination of prospective auditor candidates is first agreed by the Audit & Supervisory Board, and then determined by the Board of Directors and referred to the General Meeting of Shareholders.

Remuneration

Basic Policy on Director Remuneration

TOMY closely links its director remuneration to corporate performance and growth of medium-to-long-term corporate value so the value generated can be shared with shareholders. Our Remuneration Committee, which was established as an advisory function for the Board of Directors, deliberates on Directors' remuneration. The Committee consists of five members and is chaired by an outside director. With the exception of the one internal director responsible for corporate governance, all the other four members are independent outside directors and Audit & Supervisory Board members. In this way, we ensure an objective and transparent approach to determining director remuneration.

Maximum Remuneration

The maximum amount of annual director compensation is approved by the General Meetings of Shareholders. The maximum amount allocated for annual director compensation was approved up to 400 million yen by the Ordinary General Meeting of Shareholders held on June 27, 2006, and additional annual remuneration from stock options granted to directors (excluding outside directors) was capped at 200 million yen by the Ordinary General Meeting of Shareholders held on June 24, 2015. The maximum annual amount allocated for compensation for Audit & Supervisory Board members was approved up to 70 million yen by the Ordinary General Meeting of Shareholders held on June 27, 2006.

Director Compensation Components and Benchmarks

TOMY director compensation comprises both fixed and performance-linked components. The performance-linked element includes a sliding cash bonus incentive based on short-term company results and a sliding share-based incentive (stock options) for internal directors only which is linked to medium-to-long-term company performance. Before deciding the level of compensation for our directors based on the deliberations of the Remuneration Committee, we objectively compare our approach to determining compensation totals and how they link to corporate performance with data on director compensation compiled by independent research agencies. Note that we decided to abolish cash bonuses for Audit & Supervisory Board members and outside directors in June 2020.

Calculating Performance-linked Director Compensation

The cash bonus incentive linked to short-term corporate performance is based on the net profit attributable to owners of the parent company for relevant period in the consolidated income statement. We decided the net profit attributable to owners of the parent company was an appropriate reference because it encourages each director to focus on dividends paid to shareholders from corporate profits. Similarly, we consider consolidated ordinary profit to be an important evaluation indicator of consolidated management. The total amount of the cash bonus fluctuates depending on the level of achievement, so it is calculated by multiplying the net profit attributable to owners of the parent company for the relevant period by a fixed rate and by the growth rate of consolidated ordinary profit.
For fiscal 2019, we set the growth target for consolidated ordinary profit (which is used as an evaluation indicator for calculating the cash bonus) at 100%, and actually achieved 71%.
The share-based incentive linked to medium-to-long-term corporate performance is designed based on the stock option compensation system with an exercise price of one yen. The cash equivalent value of stock options is pre-determined based on director position.

Total compensation for each director category, total compensation by type, and number of applicable directors (in the fiscal year ended March 31, 2020)

Director category Total compensation
(millions of yen)
Total compensation by type (millions of yen) No. of applicable
directors/members
(persons)
Fixed
compensation
Stock
options
Performance-linked
compensation
Retirement
benefits
Directors
(excluding outside directors)
167 117 24 25 - 4
Audit & Supervisory Board members
(excluding outside members)
16 15 0 - - 1
Outside directors 59 59 - - - 7

Determining Director Compensation

To ensure objectivity and transparency in determining director compensation, the Remuneration Committee deliberates issues based on the basic policy explained above, and submits its findings to the Board of Directors. For fiscal 2019, the Committee met twice to debate issues surrounding director compensation and reported its recommendations to the Board. Based on the Committee’s findings, the Board submits a proposal for approval at the Ordinary General Meeting of Shareholders regarding the total amount to be allocated for the cash bonus portion of performance-linked director compensation. Note that, on stock options, we have decided not to award any further share-based incentives while our share-based incentive system is under review.