Corporate Governance Principles and Overview

Main Principles and Structure

We consider it our mission to provide value to all Uzabase Group’s stakeholders, including shareholders, customers, users, suppliers, employees, and the society in general, while also adapting flexibly to the ever-changing business environment. As one of our key management tasks, we aim to pursue and constantly improve the agility, transparency, and soundness of our management decisions through the enhancement of corporate governance.

Main Principles and Structure

Corporate Governance at Uzabase: Distinctive Features

  • Audit & Supervisory Board

    In addition to the supervision by the General Meeting of Shareholders and the Board of Directors, Uzabase has established an Audit & Supervisory Board in order to leverage the advanced expertise of its members in the efforts towards the globalization and diversification of the company’s management, and to further improve the company’s governance through the participation of the Audit & Supervisory Board members in the decision-making processes of the Board of Directors.

    Mutual cooperation with the Internal Audit team is seen by the Audit & Supervisory Board as a means of ensuring the thoroughness and efficiency of business management.

  • External Directors as Chairs of Boards and Committees

    In order to improve the quality of discussions and make the governance structure more effective and efficient, the Board of Directors, the Audit & Supervisory Board, and the Nomination and Compensation Committee are all chaired by external directors.

  • Active Involvement of External Directors in Internal Projects

    The external directors are involved as advisors in various internal projects, committees, and management meetings with the purposes of:

    • Improvement of business visibility for outside directors;
    • Contribution to stronger governance;
    • Improvement of the quality of the company’s policies;
    • Creation of opportunities to learn from outside directors.
  • Double Reporting Line for Internal Audit Team

    Uzabase’s Internal Audit team employs a “double reporting line” system, whereby it receives direct orders both from the CEOs and also from the Audit & Supervisory Board. We believe that this helps strengthen governance by the Audit & Supervisory Board.

Corporate Governance Structure

  1. Board of Directors

    The Board of Directors holds regular meetings once a month, as well as irregular meetings when necessary, to ensure efficient and quick decision-making. The Board of Directors functions as a management decision-making and supervisory body in accordance with the Articles of Association and relevant laws and regulations, deliberating and making necessary decisions on important management matters (including matters relating to the nomination and compensation for Board Directors).

    Board of Directors
  2. Audit & Supervisory Board

    Each Director who is a member of the Audit & Supervisory Board actively participates in the Board of Directors meetings and other meetings to provide a professional perspective and opinions on the Directors' decision-making and business execution. In addition, the Audit & Supervisory Board itself meets at least once a month, receives regular reports from the Internal Audit team at such meetings, and also meets regularly with the audit firm to ensure that the audit functions effectively and appropriately.

    Audit & Supervisory Board
  3. Nomination & Compensation Committee (Voluntary)

    Uzabase has established a voluntary Nomination and Remuneration Committee to enhance its corporate governance by improving the fairness, transparency, and objectivity of procedures relating to nomination and compensation, and to ensure that the nomination and dismissal of the management team (Board Directors, business CEOs, incl. subsidiaries, and group Executive Officers) and their compensation are determined by members with in-depth knowledge and experience, particularly those among External Directors. The Committee’s task is to delve into each candidate’s performance by effectively leveraging human resources. The Nomination and Remuneration Committee is responsible for understanding each candidate's personality, competence, and reputation within and outside the company, designing a compensation package that works as an incentive, and creating frameworks for determining the exact amount of compensation. The Committee also works to address various other issues such as the selection and development of the next generation of business leaders. The Nomination & Compensation Committee convenes at least four times a year.

    Nomination & Compensation Committee (Voluntary)
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  • *1 Appointed and assumed office at the General Meeting of Shareholders in March 2022.
  • *2 Appointed and assumed office as a member of the Audit & Supervisory Board at the General Meeting of Shareholders in March 2022.
  • *3 Resigned at the General Meeting of Shareholders on March 2022.

Directors and Board of Directors

Responsibilities of Directors and Delegation to Management Team

Considering the nature of the business environment in which the Uzabase Group operates, we consider it appropriate to provide the management team, led by the Co-CEOs, with greater authority to make quick, high-quality decisions, while at the same time establishing a system to properly control it. With this goal in mind, we have separated management functions into Supervisory and Executive. As such, the Board of Directors, led by the independent external directors, serves primarily in a Supervisory role, while also acting in an advisory role to the Executive function whenever necessary.

Although the Board of Directors places emphasis on its monitoring role, Uzabase appoints four Inside Directors (three full-time Directors). The primary reason behind this structure is the desire to avoid a reliance on a single “perfect” CEO, but instead to ensure that the entire management team has a deep understanding of each other’s competencies and is able to complement each other’s strengths and weaknesses. Other than the Co-CEOs, the full-time Board Directors include a Chief Administrative Officer, who complements the knowledge of the Co-CEOs with her own professional expertise and helps drive the Execution part of the business with direct monitoring from the Board of Directors.

Responsibilities of Directors and Delegation to Management Team

Nomination and Dismissal of Board Directors

All candidates for the Board of Directors are nominated by the Board of Directors in consultation and with the consent of the Nomination and Compensation Committee established voluntarily by the Board of Directors. The Board of Directors consults with the Committee and makes decisions based on the results of the Committee's deliberations, in an effort to improve the objectivity and transparency of the process.

The Board of Directors elects and nominates (as well as dismissing) candidates for the Board of Directors who it believes have the ability to tackle the Company's management challenges and who demonstrate outstanding competency to achieve the Company's medium- and long-term goals, based on comprehensive consideration of the candidates' qualifications, including factors (1) through (6) below. Note that the factors (4) through (6) are to be considered only with respect to candidates for Executive roles in relation to business operations.

  1. Embodies Uzabase’s Purpose and Vision, and has a strong understanding of the Group's history, corporate culture, and employees;

  2. Possesses a high level of expertise themselves, while also having respect for the expertise of other people;

  3. Demonstrates the ability to express themselves, communicate their thoughts and respect the opinions and achievements of others, while maintaining healthy relationships with others without any fear of conflicting opinions and/or disagreements that inevitably accompany such communication;

  4. Has the capacity to show the direction for the future development of the organization that they are in charge of, and take responsibility and ownership for the results;

  5. Able to delegate the decision making to others, while still delivering results;

  6. Capable of self-disclosure and deep understanding of others to a degree that conforms with the principles of team-based management.

Board of Directors: Balance, Diversity, and Size

Uzabase’s Board of Directors comprises business professionals with knowledge, experience, and skills in a variety of areas, as illustrated below. This includes Directors with in-depth knowledge of finance and accounting, as well as lawyers with extensive practical experience. We believe that nine is an appropriate number of Board Directors to allow for active discussions, while also providing instant access to both professional expertise and the analysis of the current state of the business.

Board of Directors: Balance, Diversity, and Size

Compensation for Board Directors and Executives: General Guidelines

General Guidelines on Compensation for Directors and Executives

  • Compensation Sufficient to Attract Excellent Talent

    In order to “Awaken the world of play in business, with our insights” as described in our Purpose, Uzabase needs to attract the best talent from Japan and abroad to join the company as directors and contribute to the sustainable development of our corporate value. In order to achieve that, we need to set our compensation packages to a level that would be competitive but fair at the same time, reflecting the actual scope of responsibilities, any risks, and contributions of the role in question.

  • Simple, Transparent, and Global

    In order to attract the best talent from around the world, the compensation package should be simple and easy to understand, designed in a way that can also be used outside of Japan. Our goal is to ensure transparency, fairness, and rationality of compensation packages to establish sufficient accountability not only to the individual receiving this compensation but also to all other stakeholders.

  • Commitment to Growing Together

    The compensation system is also designed in a way that incentivises Directors to work further towards increasing Uzabase’s corporate value, whereby benefits from such an increase can be seen both by our shareholders and the Directors themselves. To achieve this, a part of compensation package for Directors is offered in the form of non-monetary compensation (RSUs and/or SOs).

  • Compensation System Based on Freedom of Choice

    We believe that true creativity is born in an environment that offers the freedom to set your own commitments and design your own work style. As such, our compensation system is designed to reflect the intentions of our Executives.

  • Agile

    The system is designed to be updated flexibly, in accordance with the current business environment, the business model of each product, and the local characteristics of each country or region where they are offered. It is reviewed annually by the voluntary Nomination and Compensation Committee.

Process to Determine Appropriate Compensation

The Company has established a voluntary Nomination Committee for the purpose of enhancing transparency, objectivity, and fairness in the determination of candidates for the positions of Board Director, business CEO (including CEOs of subsidiaries), and Executive Officers, thus improving corporate governance. Meanwhile, the Compensation Committee aims to deliberate the standards for the compensation offered to Board Directors, business CEOs (including CEOs of subsidiaries), and Executive Officers, as well as performance targets and the amount of compensation in accordance with the achievement of such performance targets. The joint Nomination and Compensation Committee is chaired by an independent External Director, and the majority of its members are also independent External Directors, as a measure to ensure objectivity and fairness.

The results of discussions by the Nomination and Compensation Committee are reported to the Board of Directors. The Board of Directors then determines the specifics for each individual Board Director, with respect to the decisions presented in the report of the Nomination and Compensation Committee.

The compensation for Directors who are members of the Audit & Supervisory Committee is, according to it's judgement, first determined via deliberation by the Nomination and Compensation Committee and finalized by the Audit & Supervisory Committee. The compensation for each Audit & Supervisory Committee member is then reported to the Board of Directors.

The compensation for Board Directors is determined in consideration of factors including social conditions, market standards, and competitiveness compared to other companies. It aims to be at a level that is appropriate as compensation for fully exercising their management decision-making and supervisory functions at Uzabase.

Compensation for External Directors (incl. Audit Board Members)

The following is a brief outline of main principles behind the compensation packages for External Directors (both members of Audit & Supervisory Board and others).

  1. Fixed compensation, not linked to business performance.

  2. Base compensation + additional predetermined amounts paid to Directors serving as Chairs of the Board of Directors, Audit & Supervisory Board members, Nomination and Compensation Committee members, or in other additional roles.

  3. Stock-based compensation also introduced with the aim of incentivising Directors to adopt a perspective aligned with that of shareholders and contribute to medium- to long-term growth of corporate value from the governance standpoint.

  4. Generally, 70% of total compensation is to be paid in cash and 30% in stock. However, the full sum may be paid in cash if there is a rational reason for it.

  5. Compensation for Audit & Supervisory Board members shall be determined via consultation with the Directors who are members of the same Board, with reference to the above policies.

Compensation for Executive Directors and Executive Officers

The following is a brief outline of main principles behind the compensation packages for Board Directors with Business Executive functions (Executive Directors) and Executive Officers.

  1. Total amount of compensation and ratio of stock-based compensation for each Grade

    1. Five executive Grades are based on the scope of supervision, responsibilities, and skills.
    2. Total amount of compensation is determined in relation to the previous year’s performance and current year’s commitments, with the upper and lower limits set for each Grade.
    3. The higher the grade, the higher the percentage of total compensation paid in the form of stocks.
  2. Directors may set the ratio of restricted stock units (RSUs) and to stock options (SOs) as a percentage of total compensation.

  3. All of the above is to be proposed to the voluntary Nomination and Compensation Committee and approved by the Board of Directors.

All of the above is to be proposed to the voluntary Nomination and Compensation Committee and approved by the Board of Directors.
  • * In exceptional cases, the proportion of stock-based compensation and cash-based compensation may change. For further information, please refer to the "Remuneration for Directors" section detailed in the Corporate Governance Report.
All of the above is to be proposed to the voluntary Nomination and Compensation Committee and approved by the Board of Directors.

Measures to Enhance the Effectiveness of the Board of Directors

  • External Director as Chair of the Board of Directors

    On March 25, 2022, Uzabase decided to appoint Shintaro Asako, an independent External Director, as Chair of the Board of Directors, continuing from FY2021. The Chair of the Board of Directors has significant influence over the discussions of the Board of Directors through their decisions on time allocation and proceedings, and we believe that by assuming the responsibilities of the Chair of the Board of Directors, Shintaro Asako will be able to operate the meetings of the Board of Directors with the objectivity required for the task.

  • Meeting of External Directors and Offsite Meetings for the Board of Directors

    In order to ensure the effectiveness of discussions at the Board of Directors meetings, Audit & Supervisory Board meetings, and voluntary Nomination and Compensation Committee meetings and avoid turning them into a formality, Uzabase has established the practice of holding meetings exclusively for External Directors, where they can share information to avoid compartmentalization. In addition, Uzabase has established offsite meetings, which are held separately from the Board of Directors meetings, where both the Inside Directors and External Directors can engage in more in-depth deliberations on medium- to long-term strategies and other, more time-consuming discussions. This practice has successfully increased the substantive significance of discussions among Directors, and was also positively evaluated by multiple participants in the Effectiveness Assessment.

  • Effectiveness Assessment

    1. Questionnaire Format and Outline of Results

      Each Board Director, Executive Officer who regularly participates in the Board of Directors meetings, and member of the Board of Directors Secretariat responded to a detailed questionnaire and described their reasoning behind each of the responses. The respondents generally agreed that the Board of Directors was effective and indicated that the Board of Directors meeting is demonstrating continuous improvements, as demonstrated by positive evaluations of “the quality and quantity of agenda items and materials submitted to the Board of Directors”, “activeness of discussions”, ”the progress in consideration of proposals”, “the size of the Board of Directors, the ratio and diversity of External Directors”, and “the degree of contribution made by each Director”.

    2. Actions to Address Issues Identified in the Effectiveness Assessment Conducted in January 2021

        1 Implementation of Performance-Linked Compensation
        As an incentive designed to motivate the management team to contribute to the increase of corporate value in the medium- to long-term, Uzabase determined that it would be appropriate to replace a portion of monetary compensation with RSU and SO packages (awarded without performance conditions). In accordance with this policy, the Company has implemented this system for its Directors since April 2022.
        2 Policies and Procedures for the Nomination and Dismissal of Executive Officers
        In order to ensure the effectiveness of discussions at the Audit & Supervisory Board meetings and avoid turning them into a formality, Uzabase has established the practice of holding meetings exclusively for External Directors, where they can share information among themselves to avoid compartmentalization, which has led to the improvement of nomination procedures. On the other hand, although Uzabase has a basic policy for the nomination of Executive Officers, as per the feedback received, more detailed criteria and policies still need to be formulated.
        3 Human Resource Strategy (Selection and Development of the Next Generation of Business Leaders)
        In December 2021, we introduced the Group Executive Officer system, one of the objectives of which is to select and develop the next generation of business leaders. Under this system, an Executive Officer is selected from among all Executive Officers of the Group in each fiscal year to address management issues from the broader perspective of the entire Group. In addition to selecting executive officers who possess expertise in certain areas connected with important management issues that need to be tackled in that fiscal year, this system also takes into consideration the development paths and diversity of Executive Officers from a long-term perspective.
    3. Issues Identified in the Effectiveness Assessment Conducted in January 2022

      As a result of the improvements made based on the findings of the Effectiveness Assessment in FY2021, no serious concerns have been identified in 2022.
      However, the following issues have been identified as potential areas for long-term, continuous improvement:

      • Management team development and training;
      • Human resource strategy in relation to External Directors (selection of the next generation of External Directors);
      • Operational improvements for the Board of Directors meetings.

Compliance Initiatives

Compliance Initiatives

Uzabase has established the Compliance Regulations that provide the basis for appropriate conduct when working with customers, business partners, shareholders, and other relevant parties. In order to cultivate compliance throughout the entire group, Uzabase itself, all of its officers, and employees have committed to the proper understanding of and adherence to these Regulations, towards establishing a solid compliance system and putting these corporate ethics into practice.

Specifically, this includes the prevention of illegal acts restricting competition, prevention of bribery, prohibition of insider trading, prohibition of discrimination and prejudice (whether conscious or unconscious), prevention of internal and external harassment, implementation of proactive social contribution initiatives, and blocking of relations with organized crime groups.

Internal Reporting System (Whistleblowing)

The Company has established an internal reporting (“whistleblowing”) system for the purpose of early detection and timely correction of any compliance violations and other issues, which would contribute to the strengthening of compliance management. The whistleblowing system is open to all Executive Officers and regular employees of Uzabase, as well as anyone engaged in business partnerships with the Uzabase Group companies. Whistleblowers can report any act of noncompliance involving Executive Officers and regular employees of the Uzabase Group.

As part of this system, we have established an internal contact who is independent of the management; additionally, we have also established contact points both in Japan and overseas that are staffed by independent external attorneys. The method of reporting to the contact point, the clarifications on the protection of the anonymity of the whistleblower, the prohibition of prejudicial treatment, and additional details concerning investigation, reporting, and disciplinary measures are described in the Whistleblowing Policy Guidelines.

Compliance Training for Employees

In 2021, we conducted training sessions on confidentiality and personal information protection (Information Security team), insider trading and the whistleblowing system (Legal team), and harassment prevention (People Experience team).

In addition, we provided a number of optional training programs for regular employees and Executive Officers in line with their wishes and questions. As part of our commitment to diversity and inclusion, we held workshops with external lecturers on topics including unconscious bias and the understanding of menstruation. Additionally, we conducted lectures for newly appointed Executive Officers on internal regulations, and business-specific legal training to improve the understanding of laws, regulations, and contractual obligations directly relevant to their business.

Compliance Comittee

In principle, Uzabase’s Compliance Committee holds a meeting once a year to discuss the compliance status and any potential issues across the Group.

In addition, in the event of a violation of the Compliance Regulations, a Compliance Committee chaired by a Director appointed by the Board of Directors is convened. In the event of a whistleblower report, the contact person in charge investigates its content, compiles a written report, and submits it to the Compliance Committee.