Corporate Governance

Basic Concept

ZOZO Group have the basic policy of management for continuous improvement of corporate value and establish better relationships with all stakeholders including shareholders by constantly focus on integrity, transparency, efficiency and promptness of corporate management. In order to realize this, we are enhancing the corporate governance centered on the Board of Directors and audit committees.
Please refer to the following materials for our initiatives in the Corporate Governance Code (Updated on June 25, 2021).
The Corporate Governance Code

As for the corporate governance report, please refer to the following link.
Corporate governance report (Japanese only)

Matters Concerning the Executive, Audit and Oversight, Nomination, Compensation and Other Functions

Board of Directors

Our Board of Directors makes decisions on important management matters related to the execution of business, supervises the execution of duties by directors, and strives to ensure the transparency of decision-making, efficiency, and fairness. The total number of directors is eight (including three outside directors). As a rule, the Board meets on a monthly basis and an extraordinary board as needed. The board's implementation status was 27 times in the fiscal year ended March 2020 and 26 times in the fiscal year ended March 2021. Based on the provisions of Paragraph 1 of Article 427 of the Companies Act, the Company has entered into an agreement with the three outside directors to limit their liabilities for compensation for damages under Paragraph 1 of Article 423 of the Companies Act to the extent provided by laws and regulations in the event they are in good faith and are not grossly negligent. To enhance business execution and supervisory systems, the Company has established the Nomination and Compensation Advisory Committee, which is an advisory body to the Board of Directors and is chaired by an independent outside director. The purpose is to strengthen the independence, objectivity, and accountability of the functions of the Board of Directors relating to the nomination of directors, compensation, etc.

Number of attendance​s/attendan​ce​ rate for the year ended March 31, 2021

Title Name Number of Times Attended
(Times)
Attendance Rate
(%)
Representative Director, President and CEO of ZOZO Corporation SAWADA Kotaro 26 100
Director, Executive Vice President & CFO YANAGISAWA Koji 26 100
Director, COO HIROSE Fuminori
Director KAWABE Kentaro 24 92
Director OZAWA Takao 18(Out of 18 times since assuming the position of director) 100
External Director ONO Koji 25 96
External Director HOTTA Kazunori 24 92
External Director SAITO Taro 18(out of 18 times since assuming the position of outside director) 100
External Statutory Auditor IGARASHI Hiroko 26 100
External Statutory Auditor MOTAI Junichi 26 100
External Statutory Auditor UTSUNOMIYA Junko 26 100

※ Independent Directors and Audit & Supervisory Board Members in accordance with the provisions of the Tokyo Stock Exchange

Board of Corporate Auditors, Corporate Auditors

We are a company with an Audit & Supervisory Board in accordance with the Companies Act. The Board of Directors monitors the operation of the Board of Directors and conducts audits of day-to-day activities, including the execution of duties by directors. The number of Audit & Supervisory Board members is three. All Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members are attorneys and certified public accountants, who use their respective experience and achievements to monitor management. In principle, the Board of Auditors meets once a month, and the status of implementation was 19 times in the fiscal year ended March 2020 and 18 times in the fiscal year ended March 2021. In addition to attending the General Meeting of Shareholders and the Board of Directors and exercising legal rights, such as receiving reports from directors, executive officers, employees, and accounting auditors, the Audit & Supervisory Board members attend meetings of the Executive Committee and the Compliance Committee, etc., which are important committees, conduct audits by interviews with each department, and conduct on-site inspections of subsidiaries. The Audit & Supervisory Board members provide opinions that contribute to improving the soundness of our management in the course of daily audit operations. In addition, the Company actively exchanges opinions with accounting auditors, the Internal Audit Office and directors of subsidiaries, and information with SoftBank Group Auditors, our parent company, and others, to conduct effective and efficient auditing operations. In accordance with the provisions of Paragraph 1 of Article 427 of the Corporate Law, each Corporate Auditor has entered into an agreement to limit liability for compensation for damages under Paragraph 1 of Article 423 of the Corporate Law to the amount stipulated by law in the event that such auditor is in good faith and is not grossly negligent.

Title Name Number of Times Attended
(Times)
Attendance Rate
(%)
External Statutory Auditor IGARASHI Hiroko 18 100
External Statutory Auditor MOTAI Junichi 18 100
External Statutory Auditor UTSUNOMIYA Junko 18 100

※ Independent Directors and Audit & Supervisory Board Members in accordance with the provisions of the Tokyo Stock Exchange

Executive Committee

As directors and executive officers, as well as observers, the Executive Committee is composed of outside directors, general managers of divisions, full-time corporate auditors, representative directors of subsidiaries, and persons in charge of matters to be discussed as necessary. In principle, the Executive Committee meets twice a month. The Executive Committee makes resolutions, deliberations, and reports based on the decision-making authority standards. The Executive Committee also collects and analyzes business reports in accordance with the Company's management policies and important information on these matters, shares information among departments, and conducts business plans, as well as matters to be discussed across the organization in terms of policies related to the overall business and issues faced by each business division. These meetings are implemented to contribute to decision-making by the representative directors and decision-makers based on the decision-making authority standards.

Nomination and Compensation Advisory Committee

We have established the Nomination and Compensation Advisory Committee as a voluntary committee for the purpose of expressing opinions to the Board of Directors on the nomination and compensation of directors. The Nomination and Compensation Advisory Committee consists of five members: all independent outside directors, one dispatched director from the parent company, and one executive director. The committee is chaired by an outside director. In accordance with the Nomination and Compensation Advisory Committee Regulations established by the Board of Directors, the Nomination and Compensation Advisory Committee presents its opinions to the Board of Directors on all other matters related to the appointment and dismissal of directors, the election and dismissal of the president, CEO and representative director, succession plans for the president and CEO, and deliberations based on the performance of each fiscal year and the contribution to this performance, etc.

The Nomination and Compensation Advisory Committee consists of the following:

ONO Koji External Director (Chairperson)
HOTTA Kazunori External Director
SAITO Taro External Director
SAWADA Kotaro Representative Director, President & CEO
KAWABE Kentaro Director (Non-Executive)

[Nomination and Compensation Advisory Committee]
(1)Status of Activities
In the year ended March 31, 2021, six meetings were held and all members of each committee attended.

(2)Major Deliberations
・Determination of Nomination Criteria and Evaluation Methods for Executive Directors
・Conducting interviews with executive directors and nominees for directors
・Review and finalization of evaluation feedback content for all directors, etc.
・Determination of proposals for submission of reports to the Board of Directors with respect to candidates for Directors
・Examination of management structure in line with FY21's business strategy
・Considering the establishment of KPIs for short-term incentive compensation for FY21 executive directors

Title Name Number of Times Attended
(Times)
Attendance Rate
(%)
President and CEO SAWADA Kotaro 7 100
Director KAWABE Kentaro 7 100
External Director ONO Koji 7 100
External Director HOTTA Kazunori 7 100
External Director SAITO Taro 7 100

※ Independent Directors and Audit & Supervisory Board Members in accordance with the provisions of the Tokyo Stock Exchange

Inter-Group Trading Review Committee

From the viewpoint of ensuring fairness in transactions conducted by our group in consideration of the interests of minority shareholders, the purpose is to deliberate and examine important conflict of interest transactions between controlling shareholders and minority shareholders.

The Inter-Group Trading Review Committee is organized by our independent directors.

ONO Koji External Director
HOTTA Kazunori External Director
SAITO Taro External Director
IGARASHI Hiroko External Statutory Auditor
MOTAI Junichi External Statutory Auditor
UTSUNOMIYA Junko External Statutory Auditor

(1)Our Organizational Position
The Committee is positioned as an advisory body to the Board of Directors.

(2)Function
The Committee deliberates and examines important conflict of interest transactions, and decides the opinions of the Inter-Group Transaction Review Committee regarding whether important conflict of interest transactions are not disadvantageous to our minority shareholders, and provides advice and recommendations to our Board of Directors with the reasons.

Internal Audit Office

The Internal Audit Office, in collaboration with the corporate auditors and the independent auditors, strives to improve the effectiveness and efficiency of internal controls, compliance, etc. by conducting hearings and on-site surveys of each business division in accordance with the annual internal audit plan.

Auditing Firms, etc.

a. Name of the auditing corporation
  Deloitte Touche Tohmatsu Limited.
b. Certified Public Accountants leading the independent financial audit
  HIROSE Tsutomu
  AWASHIMA Kunikazu
c. Assistant Organization in Audit Activities
  Audit assistants engaged in accounting audits are nine certified public
  accountants and 12 others.

Directors' Compensation

Introduction of a Performance-Linked Remuneration System

The Nomination and Compensation Advisory Committee, which is an advisory body to the Board of Directors and is composed mainly of outside directors, has been considering reviewing the compensation system for directors. Based on the results of the deliberations and their reports, we have decided to revise the compensation system for the executive directors of the Company to pay for their efforts to achieve short-term and medium-to long-term performance and increase corporate value based on our management strategy, and for their achievements, with the aim of encouraging the sustainable, medium-to long-term improvement of corporate value and functioning as a sound incentive. Specifically, it consists of fixed compensation and performance-based compensation. Fixed compensation consists of only cash and performance-based compensation consists of two types of compensation: cash bonuses and stock-based compensation. With regard to the percentage of each remuneration, the percentage of performance-linked remuneration exceeds the percentage of fixed remuneration, and the percentage of performance-linked remuneration that is cash bonuses and stock-based remuneration is set at half.

Compensation

・Total remuneration paid to directors (of which, outside directors) 279 million yen (18 million yen)
・Total amount by type of remuneration, etc.

Basic remuneration Fixed remuneration 171 million yen (18 million yen)
Performance-linked compensation Stock options △ 0
Bonus 81 million yen (-)
Non-monetary compensation Restricted stock 28 million yen (-)

・Number of eligible directors: 6 (including 3 outside directors)
・As of the end of the fiscal year under review, there were eight directors (of whom three were outside directors). The reason for the difference in the number of directors is that there are two non-compensated directors.
・Stock options are due to waiver of rights of eligible persons to be allocated.
・Bonuses are the amount of provision for accrued bonuses to directors and corporate auditors for the current fiscal year. Details of performance indicators selected as the basis for calculating bonus amounts are merchandise transaction value and consolidated operating income. The reason we selected these performance indicators was that we emphasize merchandise transaction volumes and consolidated operating income as indicators of the growth and profitability of our Group's businesses.
・Performance-linked restricted stock awards are granted to directors as non-monetary compensation.

Policy for Determining Remuneration Amounts and Calculation Method

The Nomination and Compensation Advisory Committee Rules stipulate processes regarding decisions regarding specific procedures in determining compensation for executive directors. After deliberation by the Nomination and Remuneration Advisory Committee, individual remuneration amounts are determined by resolution of the Board of Directors after comprehensive consideration of business performance, management content, economic conditions, and other factors based on the Committee's report. The Company's policy is to pay only fixed remuneration to outside directors. In addition, directors have no retirement benefit plans. (excluding those for which payment was decided prior to the abolition of the system) With respect to the share remuneration, in the case where the director subject to the restriction on transfer resigns his or her position as a director prior to the expiration of the restriction on transfer in the share allotment agreement concluded with the director subject to the payment, if it is found appropriate for us to find certain grounds, such as a provision to the effect that in the event that the director subject to the payment resigns his or her position as a director for a reason other than the reason deemed justifiable by the board of directors, or in the event that a certain cause of misconduct, etc. arises, we will necessarily acquire the allotted shares in whole or in part without consideration, or in the case that there is a mistake in the figures that serve as the basis for calculating the cancellation ratio of the restriction on transfer, the director subject to the payment shall establish a clause to require us to return all or a part of the shares subject to the restriction on transfer or money, etc. equivalent thereto without consideration.

Reasons for Election of Directors and Corporate Auditors

SAWADA Kotaro

Since joining the Company, SAWADA Kotaro have served as a representative director of a subsidiary and have been in charge of important business execution, management decision-making and supervision as a manager of the Marketing Division. Since September 2019, he has served as our representative and has sought to make swift and flexible decisions in business operations. He continues to be appointed as a director because he is qualified for the future growth of our Group and the realization of our corporate philosophy.

YANAGISAWA Koji

YANAGISAWA Koji has been strengthening the management foundation of the entire company by overseeing overall business management, including accounting, finance, investor relations, and legal affairs, as well as corporate governance and M&A. In addition, as a director and executive vice president, he continues to execute duties as a member of the Board of Directors and is expected to continue to execute duties from a wide range of perspectives. Accordingly, he has been elected as a director.

HIROSE Fuminori

Since joining the company, HIROSE Fuminori has served in a broad range of experiences and knowledge as General Manager of the Internal Audit Office, Executive Officer, General Manager of the Corporate Administration Division, and Executive Officer, General Manager of the EC Business Division, and has contributed to our growth. He was appointed as a director of the Company because it can be expected to contribute to enhancing the corporate value of the Company.

KAWABE Kentaro

KAWABE Kentaro has a wealth of experience and broad insight cultivated in the Internet services industry as a manager, and was appointed as a director of the Company to utilize this knowledge in the management of the Group.

OZAWA Takao

OZAWA Takao has a wealth of experience and broad insight cultivated in the Internet services industry as a manager, and was appointed as a director of the Company to utilize this knowledge in the management of the Group.

ONO Koji

ONO Koji monitors the management of the Company and strengthens corporate governance based on the wealth of experience and broad knowledge and perspectives cultivated through art direction centered on the fashion industry and branding activities for companies and products. In addition, the Company has determined that he is a person who has no personal, capital or business relationship with the Company and has no other interests, and is capable of fulfilling his duties as an outside director from an independent and objective standpoint. Therefore, the Company designates him as an independent director of the Company.

HOTTA Kazunori

HOTTA Kazunori contributes to the enhancement of corporate governance by having the Company supervise the management of the Company based on his abundant experience and broad insight accumulated in the wedding industry and the hotel industry, as well as providing advice to the Company's overall management. He also appointed an independent director because he judged that there was no risk of conflict of interest with general shareholders because he did not fall under any of the items a to l above.

SAITO Taro

SAITO Taro has extensive experience and broad insight into branding and communication design, and I would like to receive advice from a high perspective on the Group's branding strategy. In addition, the Company has determined that he is a person who has no personal, capital or business relationship with the Company and has no other interests, and is capable of fulfilling his duties as an outside director from an independent and objective standpoint. Therefore, the Company designates him as an independent director of the Company.

IGARASHI Hiroko

IGARASHI Hiroko has been qualified as a certified public accountant and has been involved in the duties of an accounting group manager at other companies. Accordingly, the Company has determined that she possesses considerable knowledge of finance and accounting and is able to properly perform such duties in the Company's audits. She also appointed an independent director because she judged that there was no risk of conflict of interest with general shareholders.

MOTAI Junichi

MOTAI Junichi has considerable knowledge of finance and accounting as an accountant and certified public tax accountant. Based on his deep insight and abundant experience as an expert, he conducts appropriate audits of our business execution from a neutral and fair standpoint. He also appointed an independent director because he judged that there was no risk of conflict of interest with general shareholders.

UTSUNOMIYA Junko

UTSUNOMIYA Junko has a considerable level of expertise as an attorney and in corporate legal affairs, so the Company determined she is able to conduct appropriate audits. She also appointed an independent director because he judged that there was no risk of conflict of interest with general shareholders.

Directors’ skills matrix

The knowledge and experience that directors are expected in responding to current or future management issues against the business environment at the company are as follows.

Name Title Important knowledge and experience for Decision-making and Monitoring of the Board of Directors Important knowledge and experience in Responding to Current and Future Management Issues
Corporate Management・
Management Strategy
Finance・M&A Treasury・Accounting Organization・Human Resources ESG・Sustainability Corporate Governance Compliance・Risk Management Brand Strategy・Creative Strategy (IT・Digital)Technology Same Business・Same Industry SupplyChain Global Management・Business Imagination and Creation (※)
SAWADA Kotaro Representative Director, President & CEO
YANAGISAWA Koji Director, Executive Vice President & CFO
HIROSE Fuminori Director, COO
KAWABE Kentaro Director
OZAWA Takao Director
ONO Koji External Director
HOTTA Kazunori External Director
SAITO Taro External Director

※ ”Imagination and Creation” is translation of our original Japanese word “SOZO.” It stands for the ability to create new value, cultural values, and all types of excitement and surprise. In addition, this table does not represent all the knowledge and experience possessed by each director.