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Corporate Governance

Governance and Compliance

 Yamada Denki aims to conduct sustainable corporate activities in a transparent and fair manner in order to be a company trusted by society.

 We strive to consistently enhance our corporate value and shareholder value by establishing a management organization that ensures quick decision-making concerning management affairs.

Corporate Governance

 Yamada Denki realizes clarification of management responsibility and quick decision-making through weekly PDCA (plan-do-check-act) cycles under an organic and flexible structure consisting of the CSR Committee, other committees and subcommittees.

Adoption and Implementation of CSR-focused Management

 Yamada Denki adopts a board of auditors system under which the execution of business both is supervised and monitored by the board of directors and the board of auditors. The executive officer system is introduced so as to enable quick response to changes in the business environment by clearly separating the function of management decision making and supervision and the function of business operation. The top management team is comprised of the following three: Representative Director, Chairman and Chair of Board of Directors; Representative Director, Vice Chairman and CEO, and President-Director, Representative Director and COO. Under the top management team are various business departments, committees and subcommittees, with executive officers being in charge of specific business operations. The system thus clarifies management responsibility.

 In addition to the Compliance Committee, Internal Audit Office and Risk Management Committee, we position corporate social responsibility (CSR) as the core of its management philosophy and have set up the CSR Committee. We established the Code of Ethics and corporate code that concretely specify our CSR approaches. These codes approved by the board of directors have been disseminated within and outside group companies to ensure full understanding of the significance of fulfilling CSR.

 Under these systems, we are striving to materialize our basic idea on corporate governance of consistently enhancing our corporate value and shareholder value by carrying out fair corporate activities through highly transparent business management.

Board of Directors

The board of directors consisting of 16 directors (including one external director) holds a regular meeting once a month and extraordinary board meetings as needed, where important matters are discussed, the business performances are reported, and necessary actions are taken promptly. In addition to one external director, two external auditors participate in the meetings.

Management Council

The Management Council holds a meeting every week in principle, excluding weeks when a board meeting is held. Management issues and the execution of business of each executive officer are reported and necessary actions are taken promptly.

Internal Audit Office

In order to improve internal audits, five internal audits directly under the president are appointed and they conduct routine audits, supervise inventory review and do internal checks, etc. Auditors and an auditing firm exchange information and actively cooperate with each other and conduct audits in order to check whether corporate activities are conducted in an appropriate and efficient manner.

(as of March 31, 2016)

Strengthening of the Governance System of the Group

 The Yamada Denki Group has established a total governance system centering on Yamada Denki. Yamada Denki dispatches directors and auditors to group companies as necessary and manages and supervises the entirety of the group by requiring monthly business reports on sales, balances, and finances, as well as weekly reports on business activities and compliance, and conducting regular internal audits. Yamada Denki also concludes basic affiliation agreements with each of the group companies.

Established the Risk Management Committee for Strengthening Governance

 In order to ensure the soundness and stability of the group’s business as a whole, the Yamada Denki Group also takes measures for risk management by properly operating its internal control system.

 In June 2015, the Risk Management Committee was newly established to strengthen risk management based on the understanding that risks that had been independently dealt with by each department are management risks of the company as a whole.

 The Committee consists of executive directors and the secretariat is set up in the General Affairs Department. Committee meetings are held once a month and the details of its activities are reported to the board of directors as necessary.

 Major themes are as follows:

 (i) Countermeasures against serious risks that may significantly affect the management, and the development and operation of the relevant system;

 (ii) Countermeasures against intrinsic risks of each department, and the establishment and operation of the relevant system;

 (iii) The establishment and operation of the system concerning responses to new Acts and amended Acts.

 The Yamada Denki Group will continue to develop and strengthen its risk management system.

[Message from External Director]

 As an external director, I always check (i) that Yamada Denki is reporting to the stakeholders about whether it is conducting compliance and able to contribute to the development of the home appliance distribution industry, (ii) whether it maintains the customers’ viewpoint and endeavors to be a company supported by customers, (iii) whether the business management of Yamada Denki is sound enough to match its position as the top in the industry, and (iv) whether governance is proper at all stores and subsidiaries of Yamada Denki.

 As an external director of Yamada Denki, I find the following three excellent points. The first is the speediness of the period from decision making to execution. Decisions made at the board of directors and the Management Council are executed immediately. The second is the establishment of the system using IT equipment that easily reveals various problems at stores and departments, etc. and enables speedy solution based on the Sangen shugi (a principle to prioritize relevant site, goods and facts), under which responsible personnel immediately go to the site to take concrete measures. The third is the fact that the top management, Chairman, Vice Chairman and President-Director, often visit and observe stores and departments, etc. and make appropriate business judgment promptly and that the corporate structure is simple, in spite of being a large company, and this enables agile business management.

 From now on, I will see whether the company can maintain its challenger spirit to cultivate new markets amid severe business environments and will also check the progress and outcomes of the business reform so that the company keeps high productivity all the time.

 I will pursue my role regarding stakeholders by supporting Yamada Denki so that it can surely achieve sufficient performance as the top home appliance mass merchandiser and can fulfil its social responsibility.

TOPICSEfforts for Ensuring Thorough Compliance

 As legal amendments have been made in the related fields in recent years, we have also been strengthening measures concerning especially significant matters through the activities of the Compliance Committee. In fiscal 2015, we held study meetings under multiple themes in which all relevant staff are obliged to participate, thereby trying to raise their awareness. In response to the amendment of the Act against Unjustifiable Premiums and Misleading Representations, we set up the Representation Management Department in 2016 for the purpose of ensuring price indication that is proper and easy to understand for customers. Through holding study meetings targeting related departments and opening consultation counters, we have tried to deepen staff’s understanding on price indications and raise their awareness and skills.

 The Yamada Denki Group will continue all-out efforts for ensuring thorough compliance.

Compliance

 Recognizing compliance as a critical corporate management issue, Yamada Denki endeavors to thoroughly ensure it by holding study meetings and carrying out awareness raising activities for employees throughout the year.

Compliance Committee Meeting Held Once a Week

 To ensure company-wide awareness and practice of compliance, we have established the Compliance Committee chaired by the responsible executive director. The Compliance Committee holds a meeting every week. Based on monthly themes, the Committee identifies problems and discusses countermeasures and remediation, and if necessary, takes actions for improvement. In fiscal 2015, the Compliance Committee discussed the following themes at its internal meetings.

● Examples of the Themes Studied by the Compliance Committee
(April 2015 to March 2016)

2015 April ・ A study meeting on the Act against Unjustifiable   Premiums and Misleading Representations
May ・ Development of a system against antisocial forces
June ・ Training on the prevention of power harassment and sexual harassment
July ・ Strengthening of the system for compliance related to labor affairs
August ・ A study meeting on the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors
September ・ Strengthening of the information security system
October ・ Development of compliance systems at respective departments
November ・ A study meeting on the prevention of insider trading
December ・ A study meeting on the Individual Number System
2016 January ・ Strengthening of the information security system
February ・ Confirmation of thorough compliance related to miscellaneous approvals and permissions
・ Strengthening of the system for compliance related to labor affairs
March ・ A study meeting on the Act against Unjustifiable Premiums and Misleading Representations in advance of the enforcement of the amendment thereof

Building of the Management System Well Prepared for Various Risks

 Yamada Denki has developed a risk management system to avoid, control and mitigate risk and to make a response when necessary. Risk management manuals are prepared in each department.

 Based on the experience of the Great East Japan Earthquake, we introduced a new system utilizing mobile phones for confirming the safety of employees in the event of a disaster, and also newly added measures in preparation for a possible outbreak of super-flu, such as vaccinations for employees. Risk management manuals are thus reviewed and revised constantly so as to reflect various risks that actually occurred recently.

Holding of the Group CSR Meeting

 We hold a CSR Meeting once a month to extend CSR-focused management into the Yamada Denki Group based on “Appreciation and Trust,” so as to contribute to the resolution of environmental problems and social problems through our business throughout the group.

 We are committed to promoting our CSR-focused management, not only in terms of business management but also in terms of customer satisfaction, environment, labor, and compliance, while sharing the management philosophy and CSR policies among the entirety of the group, with the goal of enhancing the overall credibility of the Yamada Denki Group.

Utilization of the Whistle-blowing System

 Yamada Denki adopts the whistleblowing system for receiving reports from inside and outside the company. This is an in-house system established mainly for the purpose of compliance, but any reports concerning human rights or discrimination are also accepted. The contents of reports are dealt with while making adjustments with relevant departments.

 

Efforts to Protect Personal Information of Customers Involving Business Partners

 Yamada Denki is making consistent efforts to ensure appropriate management of its large database of personal information of customers. Our headquarters has obtained the certification for Information Security Management System (ISMS) and Yamada Denki Group as a whole has established an information management system based thereon. We also ensure that companies directly and indirectly commissioned to conduct our business operations establish a management system similar to our system by appointing managers in charge of personal information and information security.

 In fiscal 2015, we held periodic seminars to study ISMS management items and consider how to prevent information leaks, with the participation of employees from relevant divisions and departments.

Fair Business Transactions

 Yamada Denki aims to achieve co-existence and co-prosperity with manufacturers and other business partners based on fair business practices by maintaining sound and transparent relationships and establishing long-term relationships of trust that are beneficial to both of us.

Basic Concept on Fair Business Transactions

 In October 2011, Yamada Denki disclosed its Sourcing Policy to business partners and has placed even and fair business transactions as a major pillar of its CSR-focused management.

 Yamada Denki has transactions with various business partners, including domestic major electric appliance manufacturers and daily commodity manufacturers, as well as wholesalers. Many domestic electric appliance manufacturers, in particular, have excellent expertise concerning CSR and a larger number of them have conducted advanced efforts compared with those in other industries. Yamada Denki aims to build sound partnerships with business partners based on the respective knowledge on each side, while mutually deepening understanding of their respective CSR activities and sharing information on corporate social responsibility.

Toward Fair and Sustainable Business Transactions

Observance of the Code of CSR Ethics

 In Article 4 of the Code of CSR Ethics, which was established in June 2007, Yamada Denki clearly indicates its commitment and basic policy to always conduct fair transactions. Based on such laws as the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, we have endeavored to ensure fair transactions with business partners. As the number of business partners is increasing through our business expansion, we implement employee training and conduct internal checks so as to continue to ensure fair transactions.

Holding of a Study Meeting on Compliance

 Mainly targeting employees working in the commodity department, who often have contact directly with business partners, we hold a study meeting on compliance as needed. At the study meeting, we provide education concerning what acts fall outside the scope of fair transactions based on case studies of past violations of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade and the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, etc.

Implementation of the Fourth CSR Questionnaire Survey

 Since fiscal 2010, Yamada Denki has been making efforts based on ISO26000. ISO26000 places importance on efforts for compliance covering the entirety of the value chain. Since fiscal 2012, Yamada Denki has carried out a CSR questionnaire survey, targeting major business partners and all group companies, to ascertain how they are making concrete efforts for ensuring compliance, with the aim of promoting social compliance, environmental compliance, and compliance in governance over the whole lifecycle of products that customers purchased. Questionnaires are prepared in reference to ISO26000 and the Global Social Compliance Program (GSCP), which is an international program aiming to continuously improve labor and environmental conditions throughout the supply chain.

 The results of the fourth CSR questionnaire survey showed a steady increase in the implementation rate both in business partners and group companies and the Yamada Denki’s Sourcing Policy is thus becoming deeply rooted. The Yamada Denki Group is committed to further promoting CSR activities covering the entirety of its supply chain.

Overview of the Fourth CSR Questionnaire Survey

● Targets: ・All group companies
       ・Major business partners

● Survey period: ・Group companies:
            End of May - Mid June 2015
           ・Major business partners:
            End of June - Early July 2015

● Response rate: ・Group companies: 100%
           ・Major business partners: 77.8%

Yamada Denki’s Sourcing Policy (Established in October 2011)

Towards our sustainable society, Yamada Denki proceeds with business transactions with companies running their entire value chain businesses based on the following policies.

● Comply with all domestic laws and international rules based on the corporate ethics.
● Comply with laws and regulations related to the environment, and continuously facilitate environmentally-sustainable efforts to reduce the environmental burden.
● Respect individual personality and human rights, comply with social and environmental requirements, and sustain fair and sustainable business.