Corporate Governance

  1. Basic Policies for Corporate Governance
  2. Basic Corporate Governance System
  3. Support system for Outside Directors
  4. Internal Control System
  5. Policy and Status Concerning Executive Officer Remuneration
  6. Reflecting the Opinions of Stakeholders

Yamaha Corporation and our Group companies have issued the Yamaha Philosophy and our Promises to Stakeholders, which outline our commitment to ensuring strong profitability while upholding our social responsibilities as a company, and thereby to achieving sustainable growth and improving corporate value over the medium- to long-term. We carry out transparent, high-quality business management based on the basic policies indicated below.

Basic policies for corporate governance

  • From a shareholder’s perspective, ensure the rights and equal treatment of shareholders
  • Taking into consideration our relationships with all stakeholders, proactively fulfill the Company’s social responsibilities
  • Ensure that information is disclosed appropriately and the management is transparent
  • By separating the oversight and executive functions and strengthening the oversight function, ensure that the Board of Directors is highly effective while at the same time executing decisions appropriately and with a sense of urgency
  • Proactively engage in dialogue with shareholders

In addition, on our website we have posted our Corporate Governance Guidelines」, which contain these basic philosophies.

Yamaha Corporation made the transition to a Company with Three Committees (Nominating, Audit, and Compensation) from June 22, 2017, with the objectives of making a clear separation between the oversight and the execution in management, thereby enhancing the oversight function of the Board of Directors and speeding up the execution of business.
Regarding the composition of the Board of Directors, the Company has appointed a Board with two thirds (2/3) of the members from outside with a diversity of backgrounds and specialties, including persons with management experience in other industries. Also, by forming a Nominating Committee, Audit Committee, and Compensation Committee with a majority of Outside Directors, as obligated by law, the Company can execute its oversight function with transparency and objectivity. The Audit Committee, which replaces the Board of Corporate Auditors, will strengthen the oversight function through audit by implementing validity checks in addition to conventional legal checks, in cooperation with the Internal Audit Division.
Also, as an official function under the Companies Act, the Executive Officer position has been newly established. Persons in this role bear direct responsibility to shareholders and they have been delegated major authority from the Board of Directors. By having the Executive Officers functioning as important decision-makers in the execution of business, the Company aims to speed up the execution of business.
By implementing the abovementioned measures to strengthen the oversight functions and speed up the execution, the Company endeavors to further strengthen corporate governance and increase corporate value on a sustainable basis.

Corporate Governance Structure (As of June 23 ,2017)

[ image ] Corporate Governance Structure (As of June 23 ,2017)
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Governance Organization Personnel
(Yamaha Corporation, as of June 23, 2017)
  Male Female
Directors Total 8 1
Outside Directors 5 1
Executive Officers Total 7 0
President and Representative Executive Officer 1 0
Managing Executive Officer 2 0
Operating Officers Total 10 0
Nominating Committee Members Total 4 0
Outside Directors 3 0
Audit Committee Members Total 3 1
Outside Directors 2 1
Compensation Committee Members Total 4 0
Outside Directors 3 0
Governance Organization Personnel, by Nationality
(Yamaha Corporation, as of June 23, 2017)
  Japan Overseas
Directors Total 9 0
Outside Directors 6 0
Executive Officers Total 7 0
President and Representative Executive Officer 1 0
Managing Executive Officers 2 0
Operating Officers 9 1

Board of Directors

The Board Meeting held monthly (in principle).
The makeup of the Board of Directors is diverse and comprises persons with expertise and experience who have the necessary insight, high ethical values, sense of fairness, and integrity.
Regarding the composition of the Board of Directors, the Company has appointed a Board with two thirds (2/3) of the members from outside with a diversity of backgrounds and specialties, including persons with management experience in other industries. Also, by forming a Nominating Committee, Audit Committee, and Compensation Committee, with a majority of Outside Directors, as obligated by law, the Company can execute its oversight function with transparency and objectivity.
The Board of Directors oversees the conduct of duties by the Executive Officers and the Directors, and makes decisions on important matters that are specified in laws and regulations, the Articles of Incorporation, and Regulations of the Board of Directors, including basic management policy. The Board of Directors shall have the number of people that allows the Board of Directors to perform its functions effectively and efficiently.
The number of Directors of the Company is nine (9) as of June 23, 2017 (six (6) of them are Outside Directors).
In keeping with its fiduciary duties, the Directors act to ensure the Company’s sustainable growth and enhance its enterprise value over the medium- to long-term, taking into consideration the relationships with all stakeholders.
Directors understand relevant laws and regulations and the Company’s Articles of Incorporation and gather sufficient information in order to proactively express their opinions and engage in constructive discussions at the Board of Directors’ meetings as elsewhere.

Nominating Committee

The Nominating Committee has four (4) members (including three (3) Outside Directors) as of June 23, 2017. A majority of the members are Outside Directors, and both committee members and the chair are appointed by the Board of Directors.
The Nominating Committee decides on the content of the proposals to be submitted to the General Shareholders’ Meeting for selection/dismissal of Directors and the content of proposals submitted to the Board of Directors for selection/dismissal of Executive Officers and Operating Officers. The Nominating Committee also implements the succession plan for the Chief Executive Officer and other officers through activities to develop human resources that can assume the positions of Director, Executive Officer, and Operating Officer.

Audit Committee

The Audit Committee has four (4) members (including three (3) Outside Directors) as of June 23, 2017. A majority of the members are Outside Directors, and both committee members and the chair are appointed by the Board of Directors.
The chair shall be an Independent Outside Director. The Audit Committee stands in for the Board of Auditors, either working in collaboration with the Internal Auditing Division or conducting audits directly on its own initiative, and audits the structure and operation of the internal control systems of the Company and other Group companies. Based on audit results, the Audit Committee conducts audits to determine the legality and appropriateness of the conduct of duties by the Executive Officers and Directors.
When deemed necessary, members of the Audit Committee report to or express their opinions to the Board of Directors, or may issue cease and desist orders to Executive Officers and/or Directors. In addition, the Audit Committee may decide on proposals to be considered in the General Shareholders’ Meeting, including the selection/dismissal of the accounting auditor.
The Audit Committee shall select full-time member to increase the effectiveness of internal information gathering. In addition, an Audit Committee’s Office will be established as a specialized organizational unit that reports directly to the Audit Committee to assist the committee members in the performance of their work. To secure independence from the Executive Officers and other persons engaged in the conduct of business, personnel evaluations, changes in personnel assignments, and rewards/disciplinary punishments of the staff of the Audit Committee’s Office will require the approval of the Audit Committee.
For matters where it is necessary to undertake auditing of the conduct of duties by the Executive Officers and Directors, the Audit Committee will make arrangements to ensure that sufficient and appropriate audits can be conducted, including collaboration and sharing information with the Accounting Auditor and the Internal Auditing Division, and engage in activities to increase auditing quality and realize the efficiency of auditing.
Internal Auditing Division must report on the results of their auditing activities themselves to the Audit Committee periodically and at other times when appropriate, and any time when there are requests for such reports from the Audit Committee.
The Audit Committee shall be able, when necessary, to give instructions regarding audits to the Internal Auditing Division.
In cases where audit -related instructions given by the Audit Committee conflict with those given by the President and Representative Executive Officer, the instructions of the Audit Committee will take precedence.
When the manager of the Internal Auditing Division is going to be reassigned, the opinions of the Audit Committee shall be heard in advance.

Compensation Committee

The Compensation Committee has four (4) members (including three (3) Outside Directors) as of June 23, 2017. A majority of the members are Outside Directors, and both committee members and the Committee Chairman are appointed by the Board of Directors.
The Compensation Committee establishes policies regarding the setting of compensation for Directors, Executive Officers, and Operating Officers and, based on these policies, sets the compensation of such officers individually.

Executive Officers

As an official function under the Companies Act, the Executive Officer position has been newly established. Persons in this role bear direct responsibility to shareholders.
There are seven (7) Executive Officers as of June 23, 2017. The Executive Officers shall be responsible for the execution of business and will make important decisions from a Companywide perspective on matters related to the conduct of business that have been delegated to them by the Board of Directors and will be subject to the oversight of the Board of Directors.
A member of the Executive Officers, the Representative Executive Officer will represent the Company and, with supreme duties for matters of the Company, will be in overall charge of business under the basic policies set by the Board of Directors.
Managing Executive Officers and Executive Officers will provide assistance to the Representative Executive Officer and will have the position and duties corresponding to general managers in charge of core divisions.

Operating Officers

The Operating Officers will execute the business activities they are responsible for from a Companywide perspective based on the important decisions related to conduct of business by the Board of Directors or the Executive Officers, under the oversight of the Executive Officers.
Operating Officers will be heads of core divisions of the organization and/or be officers responsible for major Group companies.
As of June 23, 2017, the Company has 10 Operating Officers.

Process and Standards for Selecting Directors and Other Personnel

Regarding the selection of candidates for Director, the Nominating Committee selects candidates based on basic personal qualities and capabilities, competency, experience and record of achievements that are required of internal directors and outside directors as defined by their respective roles, and then decides on the content of selection proposals to be submitted to the General Shareholders’ Meeting.
Regarding the selection of members and the chairs of the Nominating Committee, Audit Committee, and Compensation Committee, the Nominating Committee select candidates based on personal qualities and capabilities as defined by the roles of the committee. The Nominating Committee then decides on the content of selection proposals to be submitted to the Board of Directors. Note that for the selection of candidates for members and the chair of the Audit Committee, the Nominating Committee gathers opinions from the Audit Committee in advance.
For Executive Officers, the Nominating Committees selects candidates based on basic personal qualities and capabilities, competency, experience, and record of achievements that are required of Executive Officers as defined by their respective roles, and then decides on the content of selection proposals to be submitted to the Board of Directors.
For Operating Officers, the Nominating Committee selects candidates based on personal qualities and capabilities they are required to play as defined by their respective roles, and then decides on the content of selection proposals to be submitted to the Board of Directors.

Reason for Appointment of Outside Directors and Auditors
Title Name Reason for appointment
Director Hiroyuki Yanagi
  • He is a person of desirable personality and has considerable insight as a director.
  • He has served as Representative Director of Yamaha Motor Co., Ltd.
  • He can be expected to oversee and provide advice on the Company’s management for improving the Company’s brand value.
Director Shigeru Nosaka
  • He is a person of desirable personality and has considerable insight as a director.
  • He has vast experience in running businesses in other industries.
  • He can be expected to oversee and provide appropriate advice from an objective viewpoint.
Director Masatoshi Ito
  • He is a person of desirable personality and has considerable insight as a director.
  • He has vast experience in running businesses in other industries.
  • He can be expected to oversee and provide appropriate advice from an objective viewpoint.
Director Junya Hakoda
  • He is a person of desirable personality and has considerable insight as a director.
  • He is a certified public accountant and is acquainted with finance and accounting.
  • He can be expected to oversee and provide appropriate advice from an objective viewpoint.
Director Yoshimi Nakajima
  • She is a person of desirable personality and has considerable insight as a director.
  • She has vast experience in running businesses in other industries.
  • She can be expected to oversee and provide appropriate advice from an objective viewpoint.
Director Taku Fukui
  • He is a person of desirable personality and has considerable insight as a director.
  • He is an Attorney at law and is acquainted with laws and regulations.
  • He can be expected to oversee and provide appropriate advice from an objective viewpoint.
  • *Yamaha has registered five Outside Directors — Shigeru Nosaka, Masatoshi Ito, Junya Hakoda, Yoshimi Nakajima, and Taku Fukui — as independent directors pursuant to Tokyo Stock Exchange provisions (as of June 23, 2017).
Major Activities by Outside Directors and Outside Auditors in the Year Ending March 31, 2016
  Board of Directors Board of Auditors
Total meetings held 13 15
Outside Director
Hiroyuki Yanagi
Attended 12 -
Attendance rate* 92.3% -
Outside Director
Shigeru Nosaka
Attended 13 -
Attendance rate* 100% -
Outside Director
Masatoshi Ito
Attended 8
Attendance rate* 80%
Outside Auditor
Hirohiko Ikeda
Attended 13 15
Attendance rate* 100% 100%
Outside Auditor
Junya Hakota
Attended 13 14
Attendance rate* 100% 93.3%
  • *The attendance rate denominator is the total number of meetings held during each person's term of service

Providing Information to Outside Directors

In principle, management meetings are held monthly with the aim of sharing important management matters with all directors so that they better understand the performance of the company. In addition, directors and corporate auditors receive individual explanations regarding the agenda of the Board of Directors and other reported matters where necessary.

Regular Meetings Among Outside Directors

The Outside Directors regularly hold meetings for only the Outside Directors for the purpose of exchanging views based on an objective perspective and developing a shared awareness of issues.
They also regularly hold meetings to exchange ideas with the President and Representative Executive Officer.

Based on the Companies Act and Ordinances for the Implementation of the Companies Act, Yamaha Corporation has put in place systems to secure the proper conduct of its business activities (hereinafter, Internal Control Systems). The aims of these systems are conducting business efficiently, securing the reliability of reporting, securing strict compliance with laws and regulations, preserving the value of Company assets, and strengthening risk management.
The Company has structured the Internal Control Systems for the Group as a whole, based on the “Group Management Charter,” which sets forth basic Group management policies, and the “Group Internal Control Policy,” which sets internal control policy for the Group.
For the status of management and other decisions that are of some degree of importance and may have an effect on the management condition of the Group, Subsidiaries are required to receive approval from the Company in advance and report certain items to the Company.

Information Relating to Conflicts of Interest

When engaging in transactions with Directors, Executive Officers, or close relatives thereof, necessary systems shall be put in place and monitored to ensure that they are not detrimental to Yamaha Corporation or its shareholders’ common interests. With the approval of the Board of Directors pursuant to the Companies Act, the results of related party transactions shall be reported after a transaction is completed.

Reporting Serious Items of Concern to the Board of Directors and Taking Corrective Action

Yamaha has established a Compliance Help Line as a conduit for internal whistle-blowing, and this help line accepts reports of violations, or potential violations, of the YAMAHA Compliance Code of Conduct, Rules of Employment, or government laws or regulations. In addition to a dedicated line within the Company, reports can also be accepted through a line at a law firm outside of the Company. Anonymous reports can also be accepted, and, along with strictly protecting confidentiality, reports are appropriately addressed after they are checked, and the response is discussed by the Working Group for Compliance of the Risk Management Committee, a Companywide committee.
There were no serious items of concern within the Yamaha Group in FY 2017.

The compensation of members of the Board of Directors, excluding Outside Directors and Audit Committee members, and the compensation of the Executive Officers, excluding the officer in charge of the Internal Audit, shall consist of basic compensation and a bonus that reflects short-term Company performance. In addition to these forms of compensation, restricted stock of the Company will be paid with the objective of reflecting the medium-term performance of the Company in compensation and aligning the interests of the corporate officers with those of the shareholders. Compensation is determined by the Compensation Committee after due consideration.
Please note that that compensation of Outside Directors, director of members of the Audit Committee, and the officer in charge of the Internal Audit will consist of basic compensation only, in view of the roles these officers must play.
The compensation of Operating Officers shall be determined after deliberation in the Compensation Committee based on a similar compensation structure.

Remunerations for Directors

Director remuneration comprises, within the bounds of that approved in advance at the General Shareholders’ Meeting, fixed remuneration and performance-linked remuneration as well as director bonuses meant to reflect near-term performance, and acquired type remuneration of stock to provide more incentive to enhance enterprise value over the medium-to-longer term. These are decided by the Board of Directors after deliberation by the Corporate Directors Personnel Committee. Remuneration for corporate auditors is set through discussions with the Corporate Auditors, within the scope approved at the General Shareholders’ Meeting.
The remuneration for each Director (excluding Outside Directors) is set to consist of (1) a fixed amount, (2) a performance-based amount, and (3) bonuses for Directors. The performance-based amount in (2) is determined based on evaluation indices, namely, rate of sales (ROS), return on equity (ROE), the degree of increase in sales compared to the same period of the previous fiscal year, and the degree of improvement in operating income compared to the same period of the previous fiscal year, on a consolidated basis. The performance-based amount changes within the range from 0% to 50% of the fixed amount, depending on the performance. Bonuses for Directors in (3) are calculated in tandem with consolidated net income, within the upper limit of 0.5% of the consolidated net income for the previous fiscal year as predetermined at the General Shareholders’ Meeting. Starting from July 2015, Directors will acquire the Company’s shares via the Director Shareholding Association in an amount of 12.5% of the fixed amount, and will continue to hold the shares during their terms of office. This will further enhance the Directors’ incentive to improve medium- and long-term performance.
Each Outside Director is paid remuneration in only a fixed amount determined in consideration of the balance with the remunerations for Directors and the scale of the Company’s business operations. Each Corporate Auditor is paid remuneration, within the scope approved at the General Shareholders’ Meeting, in only a fixed amount determined in consideration of the balance with the remunerations for Directors and the scale of the Company’s business operations.
Please note that, as of June 22, 2017, accompanying the Company’s transition to a Company with Three Committees (Nominating, Audit, and Compensation), the policy for setting compensation of Directors and Executive Officers and the compensation of individuals was set by the Compensation Committee.
In addition, beginning in July 2017, the following compensation policy for Directors and Executive Officers became effective.
The compensation of Directors, excluding Outside Directors and members of the Audit Committee, and compensation of Executive Officers, excluding the Executive Officer in charge of the internal audit, will consist of (1) fixed compensation, (2) performance-linked bonuses, and (3) compensation in the form of restricted stock. The approximate breakdown of total compensation of (1), (2), and (3) will be 5:3:2. “(2) Performance-linked bonuses” will vary according to the Company’s consolidated net income and return on equity (ROE) in the previous fiscal year, and these bonuses will be calculated with consideration for the individual’s record of performance. The evaluation of individual performance will be based on indicators of performance set by business and function in each area the individual is responsible for. “(3) The Restricted stock compensation plan” has been introduced with the intent of having the Directors and Executive Officers share a common interest for the long term with shareholders.
Compensation based on Company performance has also been introduced to provide a motivation for reaching performance goals in the medium term, therefor the two thirds (2/3) of the total amount is linked to the Company performance. Conditions for performance will be measured with an indicator, which is contained in the medium-term management plan that gives equal weight to rate of sales (ROS), earnings per share (EPS), and return on equity (ROE).
The restricted period shall be for ten (10) years (or till the retirement of Director or Executive Officer) for the purpose of aligning the interests of the corporate officers with those of the shareholders over a long period after the end of the medium-term management plan. In addition, in the event of serious cases of accounting fraud and/or major losses, depending on the responsibility of the officers in charge, a claw-back clause is included that will require the return of all or a portion of restricted shares transferred to officers on an accumulated basis to date.
Outside Directors and Directors who are members of the Audit Committee as well as the Executive Officer in charge of the internal audit will receive only the fixed compensation.

Amount of Remuneration and Other Compensation Provided to Yamaha
(Fiscal 2017)
Classification Total Compensation
(Millions of Yen)
Compensation by Type
(Millions of Yen)
Number. of directors and corporate auditors
Fixed Remuneration Performance-based compensation Bonuses
Directors
(excluding Outside Directors)
248 125 46 76 3
Corporate Auditors
(excluding Outside Corporate Auditors)
60 60 2
Outside Directors and Outside Corporate Auditors 39 39 6
(Fiscal 2016)
Classification Total Compensation
(Millions of Yen)
Compensation by Type
(Millions of Yen)
Number. of directors and corporate auditors
Fixed Remuneration Performance-based compensation Bonuses
Directors
(excluding Outside Directors)
256 125 47 82 5
Corporate Auditors
(excluding Outside Corporate Auditors)
60 60 3
Outside Directors and Outside Corporate Auditors 32 32 7

A System to Reflect the Opinions of Stakeholders in Management

In addition to the respective dialogue with shareholders and investors, Yamaha Corporation gives presentations on its medium-term management plan and quarterly earnings, provides business briefings, and conducts facilities tours for securities analysts and institutional investors, and gives presentations to individual investors. The Company also posts its management plan and the explanatory materials used in earnings presentations on the Company website.
The results of the dialogue with shareholders and investors are reported to the Board of Directors by the Director responsible, Executive Officers, or Operating Officers on a timely basis, and they will be appropriately reflected in the management of the Company, leading to the Group’s sustainable growth and enhancing enterprise value over the medium-to-longer term. Additionally, the voting is analyzed for each resolution at the Ordinary General Shareholders’ Meeting, and this is reported to the Board of Directors.