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 Articles of Incorporation stipulate that we may have no more than 13 directors; as of the date of submission of the Securities Report, the Board of Directors consists of 12 directors (nine men and three women; 11 Japanese and one non-Japanese), five of whom are outside directors. The Audit & Supervisory Board consists of four members (three men and one woman, all Japanese), including two outside Audit & Supervisory Board members. In addition to the Board of Directors and Audit & Supervisory Board, we hold Management Committee meetings, chaired by the president, as well as an internal auditing system. Together these bodies comprise our corporate governance system.
The Company strives to respond promptly and appropriately to changes in the business environment, and, in order to establish sustained growth and a solid operating foundation, it strives to carry out management decision making rationally and efficiently. In addition, since the year 2000, to strengthen the business execution function, the Company has introduced a managing officer system in which managing officers are responsible for execution of business. Furthermore, in April 2012, to provide for mutual partnership between decision-making/ management functions (governance) and execution of business, and to clarify the operating responsibilities of Directors, the Company introduced an entrusted managing officer system.
The Board of Directors has authority to supervise the execution of duties of directors and managing officers. As a general rule, the Board of Directors’ meeting is held once a month with the board chairman acting as chairperson, and it takes decisions on matters (management objectives and important business-execution strategies such as the management strategy) prescribed in laws and regulations, in the articles of incorporation, and in the “Board of Directors Rules.” Furthermore, the Board of Directors operates to elicit the lively opinions of Outside Directors as well as the internal and Outside Audit & Supervisory Board Members, thereby strengthening the business-execution supervision functions.
In addition, to improve the independence, objectivity, and transparency of the decision process for the appointment, dismissal, and nomination of Directors, the Company has established a nominating and compensation committee both headed by Outside Directors and comprised of a majority of Outside Directors as an advisory panel for the Board of Directors. Also, not only concerning nomination and compensation, but Outside Directors through giving advice, etc. on the Company’s management strategies, takes the role of improving the appropriateness of the decision-making process and enhancement of corporate governance.
As a general rule, the Management Committee holds a meeting once a week, with the President and CEO acting as chairperson. In this manner, we strive to find early solutions to problems from the viewpoint of our work sites. With Audit & Supervisory Board Members attending this committee meeting and stating their opinions, etc., we are striving to improve the supervision function.
In accordance with the audit policy, the division of audit work, etc., the four Audit & Supervisory Board Members, which includes two Outside Audit & Supervisory Board Members, conducts rigorous auditing through measures such as attending important meetings including those of the Board of Directors, giving an audience to the Directors, viewing important resolution documents and other documentation, and investigating the status of operations and property. In addition, the Audit & Supervisory Board regularly holds meetings with the President and CEO, and, by receiving reports on matters such as important company issues and carries out frank exchanges of opinions.

Directors and Management Officers

List of Directors and Management Officers

Board of Directors, Audit & Supervisory Board Members and Managing Officers

◎: Chair 〇: Participant in attendance

NameBoard of Directors Audit & Supervisory Board Members Remuneration
Committee
Nominated
Committees
Afffiliation Attendance
FY Dec.2019
Afffiliation Attendance
FY Dec.2019
Afffiliation Attendance
FY Dec.2019
Afffiliation Attendance
FY Dec.2019
Directors Yoichi Nakata   (8/8 100%)            
Shigeru Yamashita   (8/8 100%)     (4/4 100%) (2/2 100%)
Norimasa Kitazawa   (8/8 100%)     (4/4 100%) (2/2 100%)
Eiji Akamatsu   (8/8 100%)            
Tadashi Itakura   (8/8 100%)            
Yasunori Kurachi   (8/8 100%)            
Kevin Vyse-Peacock   (7/8 87.5%)            
Takayuki Nitta Outside1 (8/8 100%)     (4/4 100%) (2/2 100%)
Rehito Hatoyama Outside1 (8/8 100%)     (4/4 100%) (2/2 100%)
Erika Okada Outside1 (8/8 100%)     (4/4 100%) (2/2 100%)
Chiaki Hayashi Outside1 (8/8 100%)            
Eriko Yamaguchi Outside1 (8/8 100%)            
Auditors Kazuhisa Amari   (8/8 100%) (9/9 100%)        
Tsutomu Matsunaga   (8/8 100%) (9/9 100%)        
Koichi Otsu Outside1 (8/8 100%) (9/9 100%)        
Atsuko Taishido Outside2 (8/8 100%) (9/9 100%)        

1: Independent directors based on the regulations of the Tokyo Stock Exchange

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

Executive Remuneration System

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). The retirement benefit system for directors was abolished at the conclusion of the 62nd Ordinary General Meeting of Shareholders held on April 25, 2019.
Basic remuneration amounts are determined by each director’s position, which is based on responsibilities, and bonuses vary (0–150%) according to the level of achievement of the Group’s consolidated performance targets (net sales, operating income, and PVA). Share-based remuneration consists of two components: performance-linked (60%) and non-performance-linked (40%). In principle, the performance-linked portion varies (0–150%) according to the level of achievement of performance targets and nonfinancial indicators stated in the Medium-Term Business Plan.
To increase the independence, objectivity, and transparency of the executive remuneration system, the Company established a Remuneration Committee to serve as an advisory body 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 meets at least four times a year to discuss basic executive remuneration policy and the details of the executive remuneration system, and the Committee also provides advice and recommendations to the Board of Directors.
Based on the Company’s business environment, as well as surveys and analyses produced by external databases of other companies in the same industry (manufacturing) and major companies of similar size, the total remuneration amount for directors is set at a maximum of ¥800 million per year for full-time directors and a maximum of ¥100 million for outside directors, in accordance with the basic executive remuneration policy. (These figures do not include the employee salary portion for those directors who serve concurrently as employees). Directors can also receive a performance-linked stock-based bonus, with total remuneration set at a maximum of ¥600 million over three business periods. (However, a maximum of ¥200 million was set for the fiscal period ended December 2019.) 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.

Executive Nomination Policy

To increase the independence, objectivity, and transparency of the processes of selecting and dismissing directors and deciding nominees, the Company established a Nomination Committee in 2019 to serve as an advisory body 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. In addition to human-resource requirements, the executive nomination policy tasks the Committee with determining criteria for executive selection and dismissal, succession plans, terms of office, and the like. The aim of the executive nomination policy is to attract “human resources who can continue enhancing human power and increasing corporate value (sum of social value and economic value) based on the values of the Pigeon Way” as envisioned by our CEO.

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.
To perform internal audits, the Company has established an Audit Office. Based on annual plans, the Audit Office conducts regular internal audits of every department across our entire group, including domestic and overseas subsidiaries. The results of these audits are reported to the directors and Audit & Supervisory Board members, and evaluations and continuous improvements are carried out under the PDCA cycle. The Audit Office also conducts internal-control audits related to financial reporting under Japan’s Financial Instruments and Exchange Act (J-SOX).