With the aim of earning the continued support of our customers, shareholders, clients, employees, local communities and other stakeholders as a company with value that is worthy of trust, we strive to maximize corporate and shareholder value over the medium to long term and recognize the importance of fulfilling our responsibilities as a corporate citizen and achieving sustainable growth and development.
In line with Japan’s Corporate Governance Code and at the direction of top management, outside members of the Board of Directors and Audit & Supervisory Board provide independent oversight of the management team’s performance in a manner that takes into account the interest of stakeholders and ensures the appropriate execution of business activities. We also work actively to disclose information to shareholders and other stakeholders and strengthen our compliance framework.
We are a company with an Audit & Supervisory Board. The Board of Directors, which includes four outside members, determines overall management and business execution policies and supervises the execution of duties by directors. Executive officers, led by the President and Representative Director, are responsible for business execution. Under our corporate governance system, the Audit & Supervisory Board, which includes three outside members, and the Board of Directors coordinate with the internal audit departments to audit and supervise directors’ and executive officers’ discharge of their duties. We believe that this enables us to conduct independent oversight of management and ensure appropriate business execution.
The Nomination and Compensation Committee has been established as a discretionary committee of the Board of Directors. This committee, which is responsible for presenting candidates for the position of director to the Board of Directors and for ensuring the appropriateness of remuneration for directors, comprises seven directors, four of whom are outside.
(Board of Directors)
The Board of Directors comprises 11 directors and in principle meets monthly, with five members of the Audit & Supervisory Board also in attendance. The Board of Directors is responsible for deciding overall management policies and business execution policies, as well as for monitoring the performance of duties by directors, and strives to promote the active exchange of opinions with the aim of ensuring effective and swift decision making. Six of the 11 members are responsible for business execution, with the remaining five members (the founder and the four outside directors) having no involvement.
We have adopted an executive officers system, whereby the Board of Directors is responsible for decision making and the executive officers are responsible for business execution. This was done with the aim of strengthening field divisions and enhancing customer service systems by clarifying responsibilities and authority and expediting business execution. We currently have 30 executive officers, six of whom are also directors.
(Audit & Supervisory Board)
The Audit & Supervisory Board comprises five members, two of whom are full-time and three of whom are outside. In principle, the Audit & Supervisory Board meets monthly. Individuals well-versed in our businesses and internal affairs, as well as in finance and accounting, are appointed to serve as full-time members, while individuals who are independent of the management team, have extensive knowledge of corporate management, legal, financial and other matters and are capable of providing effective oversight and monitoring of the management team, are appointed to serve as outside members.
In accordance with the policy for appointment set forth by the Board of Directors, candidates for appointment to the Board of Directors and the Audit & Supervisory Board are decided through deliberation by the Board of Directors. Candidates for the Board of Directors are nominated from among candidates determined through discussion by the Nomination and Compensation Committee, the majority of whom are outside directors. Candidates for the Audit & Supervisory Board are nominated with the agreement of the Audit & Supervisory Board.
(Audits by Audit & Supervisory Board members)
Audit & Supervisory Board members attend important meetings, including those of the Board of Directors, to exchange opinions on overall corporate management, as well as to collect reports on the discharge of duties from directors and other pertinent individuals and conduct audits focused on the possible occurrence of violations of laws, regulations, the Articles of Incorporation and/or shareholders’ interests. The Audit & Supervisory Board also conducts audits of our overall business activities, as well as those of subsidiaries and affiliates, in accordance with annual audit plans.
|Participation in meetings of the
Board of Directors
|Participation in meetings of the
Audit & Supervisory Board
|Information sessions with directors
and other executives of the parent company,
subsidiaries and affiliated companies
|Audits conducted by Audit &
Supervisory Board members at
(Regular meetings between the President and Representative Director and Audit & Supervisory Board members)
Audit & Supervisory Board members hold regular (monthly) meetings with the President and Representative Director, during which they exchange opinions on important management-related issues, including the results of audits, to ensure common understanding.
(Meetings between Audit & Supervisory Board members and accounting auditors)
Audit & Supervisory Board members meet regularly (six times annually) with the accounting auditors, as well as additional meetings as necessary, for the purpose of exchanging opinions and information. Audit & Supervisory Board members receive explanations and exchange opinions regarding annual audit plans and audit results. If necessary, Audit & Supervisory Board members also act as witnesses during audits conducted by the accounting auditors at remote locations and during audit reviews (23 times in the fiscal year ended March 31, 2020).
(Collaboration with internal audit and other departments)
Audit & Supervisory Board members hold regular (monthly) meetings with the Internal Audit and Compliance Department, during which they receive reports and exchange opinions on the results of internal audits and, as appropriate, receive reports on inspections of subsidiaries from and exchange opinions and information with the Group Governance Department. If necessary, to ensure the efficiency of audits, Audit & Supervisory Board members ask the internal audit departments to conduct investigations.
We appoint individuals who have extensive knowledge of corporate management to serve as outside directors, thereby incorporating a broad range of external perspectives not constrained by the internal affairs. We thus have a structure that ensures the transparency and objectivity of management.
We appoint Audit & Supervisory Board members who have a wealth of knowledge of corporate management, legal, financial and other matters (including three outside members, who are essentially independent of the management team). We have also established an auditing organization (including the Office of Audit & Supervisory Board Members) that operates independent of day-to-day operations and a process (including periodic meetings between the President and Representative Director, among others, and the Audit & Supervisory Board members). This ensures that Audit & Supervisory Board members’ objective and neutral opinions are reflected promptly in operations. As a consequence, we believe that we fulfill our responsibility to conduct independent oversight of management performance in a manner that takes into account the interests of stakeholders.
We appoint outside directors and outside Audit & Supervisory Board members on the basis of pertinent requirements set forth in Japan’s Companies Act and the standards concerning independence set forth by financial instruments exchanges.
|Name||Principal activities||Attendance at Board of Directors’ meetings||Attendance at Audit & Supervisory Board meetings|
|Takaharu Hirose||Mr. Hirose offers advice and suggestions at meetings of the Board of Directors based on experience and insights gained in the foundation and management of multiple enterprises and industry organizations. He also asks questions and states opinions to clarify issues.||11/11||—|
|Hirobumi Kawano||Mr. Kawano offers advice and suggestions at meetings of the Board of Directors based on experience and insights gained through the holding of important positions in government. He also asks questions and states opinions to clarify issues.||11/11||—|
|Hajime Watanabe||Mr. Watanabe offers advice and suggestions at meetings of the Board of Directors based on experience and insights gained through his many years of experience in corporate management. He also asks questions and states opinions to clarify issues.||11/11||—|
|Name||Principal activities||Attendance at Board of Directors’ meetings||Attendance at Audit & Supervisory Board meetings|
|Hideki Kato||Mr. Kato offers advice and suggestions at meetings of the Board of Directors based on experience gained through the execution of national policies and insights gained as a result of his accomplishments at a policy think tank. He also asks questions and states opinions to clarify issues.||11/11||11/11|
|Makoto Yasuda||Mr. Yasuda offers advice and suggestions at meetings of the Board of Directors based on experience and insights gained in the management of a global enterprise. He also asks questions and states opinions to clarify issues.||11/11||11/11|
|Setsuo Tanaka||Mr. Tanaka offers advice and suggestions at meetings of the Board of Directors based on experience and insights gained through the holding of important positions in government. He also asks questions and states opinions to clarify issues. He also makes efforts to understand what was discussed at Board of Directors or Audit & Supervisory Board meetings he has missed by obtaining reports on resolutions from, respectively, the individual in charge of meeting administration or an Audit & Supervisory Board member.||7/8||7/8|
|Notes:||1.||Information on attendance at meetings of the Board of Directors and Audit & Supervisory Board is for the fiscal year ended March 31, 2020.|
|2.||Setsuo Tanaka was elected and assumed the position of Audit & Supervisory Board member at the ordinary general meeting of shareholders held on July 26, 2019.
Accordingly, the figures for his attendance are for meetings of the Board of Directors meetings and the Audit & Supervisory Board held on or after that date.
Remuneration for directors consists of pecuniary remuneration and stock compensation (shares with restrictions on transfer). Outside directors are eligible for pecuniary remuneration only.
Pecuniary remuneration is determined by the Nomination and Compensation Committee, which has received authorization from the Board of Directors, within the maximum limit resolved at the Ordinary General Meeting of Shareholders. Pecuniary remuneration for directors comprises basic remuneration and bonuses, the latter of which is linked to consolidated operating results and individual contribution. Outside directors receive basic remuneration only.
Stock compensation is determined by discussion of the Board of Directors, taking into account deliberations by the Nomination and Compensation Committee within the limit resolved at the Ordinary General Meeting of Shareholders set separately from that set for pecuniary remuneration. In addition to incentives offered with the goal of driving sustainable growth in corporate value, directors other than those who are outside receive shares with restrictions on transfer, the objective of which is to promote the further sharing of value with shareholders.
Remuneration for Audit & Supervisory Board members, which comprises pecuniary remuneration only, is determined through discussion involving Audit & Supervisory Board members in amounts commensurate with individual duties. Remuneration for Audit & Supervisory Board members is set within the maximum limit resolved at the Ordinary General Meeting of Shareholders.
|Position||Total remuneration(Millions of yen)||Breakdown of total remuneration(Millions of yen)||Number of entitled individuals|
|Basic remuneration||Bonus||Restricted stock|
|Directors(excluding outside directors)||341||272||52||15||7|
|Audit & Supervisory Board members(excluding outside members)||45||45||-||-||2|
|Outside Audit & Supervisory Board members||25||25||-||-||4|
The Board of Directors consists of internal directors, who are familiar with SECOM’s businesses and have diverse knowledge and several outside directors, includes several outside directors with extensive insight in corporate management and other areas. Diversity in terms of gender and international experience is ensured and the number of members is appropriate to facilitate discussions and resolutions of substance. We will continue working to enhance the effectiveness of the Board of Directors by promoting further diversity and ensuring the appropriate size of the Board.
The effectiveness of the Board of Directors is evaluated annually. In January 2021, a survey was conducted. Responses were collated by the Board’s secretariat in early March and findings were subsequently discussed by the Board.
(Composition of the Board of Directors, etc.)
With respect to the composition of the Board of Directors, the survey recognized opinions that the level of diversity as well as the balance between management oversight and business execution remained adequate, and that the Board’s size was also appropriate for active discussion and prompt decision-making. In particular, there were opinions saying that the appointment of a new female director this fiscal year has improved diversity in the aspect of gender, and that the ratio of outside directors has improved as well. Meanwhile, constructive opinions were made for further diversifying the Board composition, including the promotion of female directors from within the company.
(Operation of the Board of Directors meeting, etc.)
The Board of Directors meeting is held once every month in principle to ensure swift deliberation and resolution on the important proposals. To allow Directors and Audit & Supervisory Board Members to make appropriate judgments, matters of particular importance are discussed in advance at the Board of Directors prior to resolution, while a follow-up report on the progress of those matters is made at the Board of Directors subsequent to the resolution. There were opinions saying that Outside Directors and Outside Audit & Supervisory Board Members were actively expressing their opinions and the atmosphere was conducive to discussion. There were also comments saying that the explanations of various matters, including financial reports, have improved based on the evaluation results of the previous fiscal year. Furthermore, there were voices requesting time for free discussion for more in-depth debate as well as an opportunity to have better communication with outside members of the Board of Directors and Audit & Supervisory Board.
(Function and other attributes of the Board of Directors)
There were opinions saying that matters discussed at the Board of Directors were adequately selected pursuant to the Rules of the Board of Directors, while thorough debate was being held over issues such as management policy and corporate philosophy. Meanwhile, there were constructive suggestions prompting further development of debate from a medium- to long-term perspective on subjects including specific discussion on business after COVID-19, changes in the business environment resulting from technological innovations as well as a decrease in the working-age population and the risks associated therewith.
To further enhance corporate value and realize an even more effective Board of Directors, we will continue to promote efforts to improve the Board’s functions based on evaluations and opinions expressed.
We provide security services, the objective of which is to protect the lives and assets of our customers from legal violations or malfeasance by third parties. As such, we recognize that it is essential that we not only abide by the Constitution of Japan but also operate in a manner that complies with the letter and the spirit of pertinent laws and regulations.
Because they are in the position of regulating others, employees must also conduct themselves in a disciplined manner, discharging their duties in good faith and in compliance with the letter and the spirit of the law, to earn the trust of customers, which is critical to the security services business. Since our establishment, we have viewed compliance as a matter of utmost importance. Accordingly, our basic policy has always been to promote systematic measures to ensure unqualified compliance with the letter and spirit of the law.
The SECOM Group Code of Employee Conduct prescribes specific standards for employee behavior and ethical principles that must be observed by all executives and employees in their relationships with stakeholders, including communities, customers and suppliers. The code, which is also published in the form of a pocket-sized guide, thus serves as a universal and timeless template for everyone in the SECOM family. Standards govern, among others, deterring relations with antisocial elements, prohibiting of corruption and bribery and complying with related laws.
Our approach to compliance is notable in that it does not involve the establishment of a dedicated system overseen by a specific department or director, but rather positions each and every employee on the front line of promoting the SECOM Group Code of Employee Conduct, including standards governing compliance, and ensuring ethical behavior.
Compliance is the foundation of each employee’s day-to-day work. Managers are responsible for providing guidance regarding the SECOM Group Code of Employee Conduct and overseeing the actions of employees to ensure compliance. Executive officers are responsible for providing control for the department they supervise, while the President and Representative Director provides control for the company as a whole. Each executive officer must also have a thorough knowledge of the laws and regulations pertinent to the department he or she supervises, for which he or she may seek the assistance of the Legal Department and other related departments. When such laws and regulations are revised, executive officers are responsible for determining appropriate responses, including examining the need to amend the SECOM Group Code of Employee Conduct and, here again with cooperation of the Legal Department and other related departments, presenting related proposals to the President and Representative Director.
The duties of the internal audit departments, i.e., the Internal Audit and Compliance Department and the Group Governance Department, include inspecting each group, department and subsidiary, providing guidance on addressing matters requiring corrective action, and reporting inspection results to the President and Representative Director, as well as to relevant executive officers.
The SECOM Group Code of Employee Conduct requires employees to report to their superior should they discover that an employee, executive or other individual affiliated with a subcontractor has engaged in or appears likely to engage in an action that violates the code. In the event that no corrective measures are taken after a report has been made, or if circumstances make reporting to a supervisor difficult, employees may report directly to the Internal Audit and Compliance Department via the Hot Helpline. Executives and employees of subsidiaries may report violations via the Group Head Office Helpline directly to the Group Governance Department.
Whistle-blower’s names and the content of whistle-blower reports are kept confidential. As long as a report has been made in good faith, whistle-blowers are protected from any adverse impacts even if the report is not borne out by the subsequent investigation. Pertinent executive officers are obliged to swiftly assess the results of investigations and take appropriate corrective measures to resolve the situation. Whistle-blowers are notified confidentially of the nature and outcome of investigations.
March 31, 2018
March 31, 2019
March 31, 2020
|Number of reports||60||48||56|
The Organizational Culture Committee is a standing committee chaired by the President and Representative Director that meets periodically or as necessary at the direction of the President and Representative Director, and examines important organizational culture-related issues and determines important official commendations and punishments.
The Organizational Culture Committee also deliberates on matters related to compliance with and the administration of the SECOM Group Code of Employee Conduct that have been reported to the President and Representative Director by the Internal Audit and Compliance Department or the executive officer in charge. If necessary, the committee examines proposals for modifying the system for administering compliance or amending the SECOM Group Code of Employee Conduct. All such proposals must be deliberated by the Organizational Culture Committee, reviewed by Audit & Supervisory Board members and approved by the Board of Directors.
We have translated SECOM’s Philosophy and the SECOM Group Code of Employee Conduct, which outlines the basic concept and specific standards for employee behavior, into multiple different languages and work to advance awareness across the global SECOM Group. We also provide training to the senior management of overseas Group companies on key aspects of compliance, including observance of laws and regulations, the prevention of bribery and internal controls.
With the rapid spread of IT, information security risks have risen significantly, as can be seen from the increasing sophistication of cyber attacks. Any leaks of personal or confidential information entrusted to us by a customer has the potential to seriously hinder our ability to provide security services, damage or adversely impact the customer, and result in the forfeiture of our brand image and reputation for reliability. Accordingly, we have created and maintain a robust information security system.
We have also established the SECOM Group Information Security Basic Policy, to guide our efforts to promote stringent information security. When we outsource work, we enter into appropriate contracts and provide guidance and supervision to subcontractors. We have put an executive officer in charge of information security for the Group as a whole. In addition, executive officers in charge of each business have been made responsible for information security–related matters for their particular business, as well as for collaborating with the executive officer in charge of information security to report on issues and presenting proposals to the President and Representative Director.
We have implemented powerful security measures to reduce risks associated with information leaks and cyber attacks. We also work to ensure that all employees of the SECOM Group, regardless of employment format, comply fully with our information security rules, which include rules governing the use of personal computers and cellular telephones that must be protected for confidentiality reasons, the storage and carrying of information, and steps to be taken when an information security–related incident arises or a violation of any other information security rule is discovered.
Information system controls and audits are the responsibility of subsidiary Secom Trust Systems and are conducted in accordance with Japan’s Information Security Management System (ISMS) standards under the guidance of the executive officer in charge of information security. As well as conducting regular assessments of vulnerability to external cyber attack risks, we monitor information systems around the clock to ensure we are prepared to respond to risks, including those related to large-scale disasters and cyber attacks.
The SECOM Group Code of Employee Conduct states that all information obtained in the course of business is confidential and must not be leaked, a stipulation with which all executives and employees must strictly comply. We strive to prevent leakage, loss and damage through employee training and efforts to promote awareness regarding the treatment of personal information, as well as by ensuring stringent management. All employees are required to participate in e-learning programs and tests annually to confirm understanding of and adherence to basic procedures and rules. The internal audit departments conduct periodic inspections of the handling of personal information, data management and access control at each SECOM Group site. In addition, we have established a contact point for queries regarding the handling of personal information and for complaints and consultations regarding our system for managing and protecting personal information, facilitating swift and appropriate responses. The parent company and Secom Trust Systems have earned certification under Japan’s Privacy Mark, which is granted to organizations that take appropriate measures to protect personal information.
Thorough information security (Year ended March 31, 2020)
*Scope of reporting: SECOM CO., LTD.