Corporate Governance

Basic Policy

The Company has developed the “Pigeon Way,” as described below, comprising its Purpose, Values, Action Principles and Vision, under its Corporate Philosophy of “Love” and its Credo of “Only love can beget love,” as the basis of its spirit and actions to be shared by all Pigeon Group employees, both in Japan and abroad.

The “Pigeon Way” is more than a mere slogan. The Company believes that having all employees become strongly aware of the “Pigeon Way” and putting it into action will inevitably improve corporate value, and that its corporate value encompasses both social and economic value. We are aiming to achieve the goal of improving social value mainly by becoming an indispensable part of society, while delivering joy and happiness to our target customers, by providing solutions and new value. The Company established the following six (6) priority materialities (Key Issues) to be addressed in terms of Sustainable Development Goals (SDGs) and Environmental, Social, and Governance (ESG): 1) enhancement of business competitiveness and R&D capabilities; 2) sustainable reduction of environmental impact; 3) enhancement of stakeholder support capability; 4) improvement of the quality of human resources; 5) creation of comfortable working environment; and 6) development of a solid management base, all of which will be incorporated into our business strategies. Meanwhile, we are aiming to achieve the goal of improving economic value mainly by increasing free cash flow consistently, efficiently, and strategically, as we move into the future.

Based on this approach, the Company defines corporate governance as “the system that pays due respect to the views of our employees, customers, business partners, shareholders and local communities, and that ensures transparent and fair as well as prompt and bold decision-making” and the purpose of corporate governance as the means to achieving “the Company’s sustained growth and the improvement of corporate value in the medium- to long-term.

The Company will continue to further strengthen this system in accordance with the above definition and make efforts to continuously enhance its corporate governance in pursuit of further improving its corporate value.

Pigeon Way

Corporate Philosophy Love
Credo Only love can beget love
Purpose We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs
Values - Integrity
- Communication, Consent, Trust
- Passion
Action Principles - Agility
- Keep sight of consumers
- Global collaboration among competent individuals
- Leadership and logical working style
- Willingness to change
Vision To be the baby product manufacturer most trusted by the world’s babies and families, i.e. “Global Number One”

Corporate Governance Organization Chart

  • Corporate Governance

Corporate Governance Report

Outline of the Governance System

We are organized as a company with an Audit & Supervisory Board. The Audit & Supervisory Board Members’ auditing to ensure strict adherence to the law, forms the cornerstone of our compliance management. Our current top management structure (meeting bodies) consists of the Board of Directors, chaired by the Chairman and consisting of 12 Directors (9 males and 3 females; 11 Japanese nationals and 1 foreign national), including 5 Outside Directors; the Audit & Supervisory Board, consisting of 4 members (3 males and 1 female; 4 Japanese nationals), including 2 Outside Audit & Supervisory Board Members; and the Management Committee meetings, chaired by the President and consisting of Executive Officers and Audit & Supervisory Board Members. For all bodies, we strive to increase diversity of membership. We have also introduced a managing officer system. The aims of this system are to provide for mutual partnership between the decision-making/management functions (governance) and execution of business and to clarify the operating responsibilities of Directors.

The Board of Directors has the authority to supervise the execution of duties of Directors and Managing Officers. It meets to make decisions on matters (management objectives and important business-execution strategies, such as management strategy) prescribed in laws and regulations, in the Articles of Incorporation, and in the “Board of Directors Rules.” Furthermore, the Board of Directors endeavors to elicit the lively opinions of Outside Directors, as well as internal and Outside Audit & Supervisory Board Members, thereby strengthening the business-execution supervision function. Moreover, the Company has a Nominating Committee and a Remuneration Committee, which serve as an advisory panel to the Board of Directors. To increase the independence, objectivity, and transparency of the determination process of appointment, dismissal, nomination of Directors and of the executive remuneration system, the chairs of these Committees and a majority of the Committee members are Outside Directors. In addition to the Nominating Committee and Remuneration Committee, on March 30, 2021 we established a new Governance Committee to serve as an advisory panel for the Board of Directors. The aim of the new committee is to further enhance corporate governance at the Pigeon Group, which is based around Pigeon Corporation. It is chaired by an Outside Director and a majority of its members are Outside Directors and Outside Audit & Supervisory Board Members.

Audit & Supervisory Board Members attend meetings of both the Board of Directors and the Management Committee, where they deploy their experience in the field to swiftly resolve issues. In addition to enhancing the supervisory function through expression of opinions and the like, Audit & Supervisory Board Members listen to directors, view important resolution documents, examine the current status of business and financial assets, and otherwise conduct meticulous supervision and oversight in accordance with Pigeon’s policies on auditing and allotment of duties. They also meet regularly with the President and CEO, receive reports on matters such as important company issues, and carry out frank exchanges of opinions.

Under the current management structure, centered on the Board of Directors, Audit & Supervisory Board, and Management Committee, Pigeon is working to improve corporate governance by increasing the number of Outside Directors and Audit & Supervisory Board Members, establishing the Nominating Committee, Remuneration Committee, and Governance Committee as advisory panels to the Board of Directors, and by actively exercising the supervisory function of the Audit & Supervisory Board.

Directors and Management Officers

List of Directors and Management Officers

Skill Matrix

For the story of how we set the "Expertise demanded of the Board of Directors" in the table below, please see here.

  Name Position Expertise demanded of the Board of Directors Committee members
◎chairman 〇member
Management, business strategy Experience in the company, industry experience Global business Design, R&D, product development SCM*1 Marketing, branding Human resource development, corporate culture Finance, accounting Law, compliance, risk management Solving societal issues Nominating Renumeration Governance
Directors Yoichi Nakata Executive Advisor & Member of the Board                  
Shigeru Yamashita Chairman of the Board          
Norimasa Kitazawa President & CEO          
Eiji Akamatsu Director, Senior Managing Executive Officer                    
Tadashi Itakura Director, Senior Managing Executive Officer                
Yasunori Kurachi Director, Managing Executive Officer                    
Kevin Vyse-Peacock Director, Executive Officer                
Takayuki Nitta Outside Director*2                
Rehito Hatoyama Outside Director*2              
Erika Okada Outside Director*2                
Chiaki Hayashi Outside Director*2              
Eriko Yamaguchi Outside Director*2            
Audit & Supervisory Board Members Tsutomu Matsunaga Audit & Supervisory Board Member                    
Hiroshi Nishimoto Audit & Supervisory Board Member                      
Koichi Otsu Outside Audit & Supervisory Board Member*2                    
Atsuko Taishido Outside Audit & Supervisory Board Member*3                 〇     

*1:SCM:Supply Chain Management

*2:Independent directors based on the regulations of the Tokyo Stock Exchange

*3:Independent directors who satisfy the requirements for an independent director based on the regulations of the Tokyo Stock Exchange

Members and Attendance Status of Board of Directors, Board of Audit & Supervisory, and Committees

◎: Chair 〇: Participant in attendance

Name Board of Directors Board of Audit & Supervisory Remuneration
Committee
Nominating
Committee
Governance
Committee
Affiliation Attendance*2
FY Dec.2021
Affiliation Attendance
FY Dec.2021
Affiliation Attendance*3
FY Dec.2021
Affiliation Attendance
FY Dec.2021
Affiliation Attendance
FY Dec.2021
Directors Yoichi Nakata 7/7 (100%)                
Shigeru Yamashita 7/7 (100%)     3/3 (100%) 5/5 (100%) 6/6 (100%)
Norimasa Kitazawa 7/7 (100%)     3/3 (100%) 5/5 (100%) 6/6 (100%)
Eiji Akamatsu 7/7 (100%)                
Tadashi Itakura 7/7 (100%)             6/6 (100%)
Yasunori Kurachi 7/7 (100%)                
Kevin Vyse-Peacock 7/7 (100%)                
Takayuki Nitta 7/7 (100%)     3/3 (100%) 5/5 (100%)    
Rehito Hatoyama 7/7 (100%)             6/6 (100%)
Erika Okada 7/7 (100%)     3/3 (100%) 5/5 (100%)    
Chiaki Hayashi 7/7 (100%)             6/6 (100%)
Eriko Yamaguchi 6/7 (  85%)     3/3 (100%) 5/5 (100%)    
Auditors Tsutomu Matsunaga 7/7 (100%) 8/8 (100%)            
Hiroshi Nishimoto*1 5/5 (100%) 4/4 (100%)            
Koichi Otsu 7/7 (100%) 8/8 (100%)         5/6 (  83%)
Atsuko Taishido 7/7 (100%) 8/8 (100%)         6/6 (100%)

*1: Mr. Nishimoto was elected and has taken office at the 64th Ordinary General Meeting of Shareholders, held on March 30, 2021.

*2: The Board of Directors, in addition to the number of times held above, carried out once written resolution.

*3: The Remuneration Committee, in addition to the number of times held above, carried out once written resolution.

Evaluating the Effectiveness of the Board of Directors

Seeking to improve corporate value and achieve sustainable growth over the medium and long terms, the Board of Directors conducts annual evaluations of its effectiveness and works to maintain and improve such effectiveness. In fiscal 2021, we addressed the effectiveness of internal control systems that was identified in the previous fiscal year's evaluation. Specifically, we established the Governance Committee below, and the Governance Committee identified governance issues at the Company, investigated matters requiring improvement, and held discussions about these matters. As a result, we will work to review coordination and information sharing between meeting bodies and the mechanisms and structures of reporting from meeting bodies to the Board of Directors. In doing so, particular attention will be given to clarifying roles and the ideal model for meeting bodies.
As a result, our effectiveness evaluation conducted from October to November 2021 revealed some improvements, including in the issues mentioned above. As in the previous fiscal year, it was confirmed that the Board of Directors is making effective decisions through open and lively discussion and playing an influential role in improving medium-to long-term corporate value. Conversely, continuing from the previous fiscal year, it came to light that further improvement was necessary regarding collaboration with both Outside Directors and auditors, along with initiatives to demonstrate the role and capabilities of the Board of Directors.

Governance Committee

To further enhance corporate governance at the Pigeon Group, which is based around Pigeon Corporation, the Company has established a Governance Committee as an advisory panel of the Board of Directors. The chair of the Governance Committee is an Outside Director, while Outside Directors and Outside Audit & Supervisory Board members constitute a majority of the Committee members.

The Governance Committee promotes organic liaison and integration and deliberates from a perspective of independent practice on a wide range of issues related to the Company’s corporate governance, including evaluation of the effectiveness of the Board of Directors. On this basis, the Governance Committee provides the Board of Directors with advice and proposals. The Board of Directors, in turn follows such advice and proposals to the greatest extent possible in its decision-making.

Remuneration Committee, Executive Remuneration System

To increase the independence, objectivity, and transparency of the executive remuneration system, the Company established a Remuneration Committee to serve as an advisory panel to the Board of Directors. More than half of the Committee’s members are Independent Outside Directors, and one of these Outside Directors serves as chairman.
The Remuneration Committee shall deliberate primarily on the items regarding executive remuneration amounts and calculation methods and policy for deciding the content of remuneration per individual, and provide advice and proposals to the Board of Directors. The Board of Directors, in turn follows such advice and proposals to the greatest extent possible in its decision-making.
Remuneration for Directors (excluding Independent Outside Directors) consists of basic remuneration (based on the position held), bonuses (a short-term incentive), and share-based remuneration (a medium-to-long-term incentive).
In order to further strengthen their independence from management, Outside Directors and Audit & Supervisory Board members receive only basic remuneration and are not eligible for the retirement allowance system.
Please note that executive remuneration will be paid within the limit of remuneration adopted at the General Meeting of Shareholders.

Nominating Committee, Executive Nomination Process

To increase the independence, objectivity, and transparency of the process of selecting and dismissing Directors, the Company established a Nominating Committee to serve as an advisory panel to the Board of Directors. More than half of the Committee’s members are Independent Outside Directors, and one of these Outside Directors serves as chairman.
The Nominating Committee shall deliberate on issues including the standards for appointment and dismissal of Directors as well as CEO successor plans, and provide advice and proposals to the Board of Directors. The Board of Directors, in turn follows such advice and proposals to the greatest extent possible in its decision-making.
In addition to human-resource requirements for CEO, the executive nomination policy sets out standards for appointment and dismissal, successor plans, terms of office, and the like. The ideal human qualities necessary for the role of Chief Executive Officer (CEO) of the Company are “Human qualities that can enhance resourcefulness and continuously increase the Company’s corporate value (social and economic value), based on the values of the Pigeon Way.”

Internal Controls

We have established a basic policy on the construction of its internal control systems, based on the Companies Act and its enforcement regulations. The purpose of this basic policy is to ensure the sound and efficient operation of our organizations. Based on this policy, we maintain and operate an internal control system governing the entire group.
We established the Audit Office, an independent organization under the directdirect control of the President, as an internal auditing body. Each year, the Office formulates an audit plan based on a risk approach for the Company and domestic and overseas group companies and conduct internal audits accordingly. In conducting the audits, it focuses mainly on the effectiveness and effi ciency of operations, reliability of financial reporting, compliance, and asset protection, and makes suggestions for improvement as necessary. The results of the audits are shared with all Directors and Audit & Supervisory Board Members at audit report meetings. In addition, the Audit Department established the J-SOX Secretariat to conduct evaluation tests on Groupwide internal controls and the financial process for closing accounts, pursuant to the basic plan for internal controls over financial reporting under the Financial Instruments and Exchange Act, and to monitor the appropriateness of the development and operation of these controls.