Investor Relations

Section 4: Responsibilities of the Board

General Principle 4

The Company aims to establish an efficient system of corporate management, including decision-making and oversight responsibilities, and business execution suitable for the size of the Company. The Company has several Independent Directors in place who oversee the Company’s business execution as members of the Board to ensure the transparency of the Company’s management.

Principle 4.1 Roles and Responsibilities of the Board (1)

Remaining true to the Corporate Philosophy of “Being an Engineer Support Company,” the Board of Directors meets to deliberate on the Company’s business strategies and plans as part of helping achieve the Company’s objectives of achieving sustained growth and increasing its medium- and long-term enterprise value.

Supplementary Principle 4.1.1

Pursuant to relevant laws, the Company has established the “Board of Directors Rules,” which define the scope of matters to be deliberated on by the Board. In addition, the Company’s “Administrative Authority Rules” and “Division of Duties Rules” define the scope of decision-making authority granted to the Board of Directors as well as individual Directors by type of duty.

Supplementary Principle 4.1.2

The Company has established its Medium-Term Business Plan for the three years from the fiscal year ending January 31, 2023 to the fiscal year ending January 31, 2025.

Basic Policy
• Build a foundation for sustainable and next-generation growth
• Make Value for 2022 to 2024

Basic Measures
i. Promote strategies by segment
• Develop strategies for each segment (recruitment – education – assignment – system).
• Establish approaches to markets by segment.
• Explore and seek new specialist fields of technology.
ii. Promote diversity and inclusion in talent management
• Utilize workers of retirement age, women, and foreign workers (overseas students) as personnel.
• Utilize and organize partner companies (set up a contracting system).

The Company provides a progress report on achievements of the Medium-Term Business Plan at investor briefings.

Supplementary Principle 4.1.3

The Company recognizes that it is critically important to have in place a succession plan for the President and CEO and other members of the Executive Team. The Board of Directors is responsible for nominating successors to these members from among qualified candidates after an extensive scrutiny of their experience, knowledge, and expertise in recruiting, training, sales, and administrative functions that support the Company’s engineer placement business.
Regarding future nominations of successors to the President and CEO, and other members of the Executive Team, Nomination and Remuneration Committee, a voluntary advisory board composed of a majority of Independent Directors, shall deliberate and report to the Board of Directors, thereby establishing a structure with high fairness, transparency and objectivity under appropriate supervision from the Board of Directors.

Principle 4.2 Roles and Responsibilities of the Board (2)

The Board of Directors meets twice a month and on an ad hoc basis as needed. At board meetings, Directors deliberate extensively on matters to be resolved, from their independent and objective perspectives.
Three Outside Directors join in the deliberation and decision-making at board meetings.
Remuneration of members of the Executive Team is performance-based, determined based on their respective positions, responsibilities, and KPI achievements as well as on the Company’s business performance. The total amount of remuneration should fall within the ceiling established by a resolution adopted at a general meeting of shareholders.

Supplementary Principle 4.2.1

The remuneration of Directors is performance-based, determined based on their respective positions, responsibilities, and KPI achievements as well as on the Company’s business performance, to provide them with an incentive to help achieve medium- and long-term growth of the Company.
The Company will consider the need to offer Directors a stock-based compensation plan, taking into consideration the composition of total remuneration and the balance between the cash and stock portion of compensation.

Supplementary Principle 4.2.2

From the perspective of improving our business value in the medium to long term, the Company has acknowledged the importance of sustainability issues, and established a basic sustainability policy.
The Company has formed the Sustainability Committee, which is responsible for establishing sustainability policies, targets, and action plans, managing and evaluating progress toward these targets, and deliberating on individual measures. The Board of Directors manages and supervises the Committee.

Principle 4.3 Roles and Responsibilities of the Board (3)

The Board of Directors includes three Independent Directors, who oversee the performance of other Directors effectively from an independent and objective perspective.
The Information Disclosure Committee and the Board of Directors review information to be disclosed to ensure its timely and accurate disclosure. The Board of Directors reviews whether the Company’s internal control system is up and running smoothly. The Company has a risk management system in place, under which management risks are defined and classified into types, exposure of each type of risk is identified and analyzed by relevant divisions and departments, and the evaluation and management of risks by type is overseen by Compliance and Risk Management Meetings.
The Company requires that any transaction between the Company and its Director or its major shareholder be sanctioned in advance by the Board of Directors in order to safeguard the interests of the Company as well as the common interests of the shareholders.

Supplementary Principle 4.3.1

The Board of Directors appoints or removes members of the Executive Team upon deliberation on their job performance and other factors.

Supplementary Principle 4.3.2

The Board of Directors, which includes three Outside Directors who are members of the Audit and Supervisory Committee, deliberates on the appointment or removal of the President and CEO from office when such need arises, based on the business performance of the Company as well as the job performance of the President and CEO.
Regarding future CEO appointments and dismissals, Nomination and Remuneration Committee, a voluntary advisory board composed of a majority of Independent Directors, shall deliberate and report to the Board of Directors, thereby establishing a structure with high fairness, transparency and objectivity under appropriate supervision from the Board of Directors.

Supplementary Principle 4.3.3

The Board of Directors, which includes three Outside Directors who are members of the Audit and Supervisory Committee, deliberates on the removal of the President and CEO from office when such need arises, based on the business performance of the Company as well as the job performance of the President and CEO.
Regarding future CEO dismissals, Nomination and Remuneration Committee, a voluntary advisory board composed of a majority of Independent Directors, shall deliberate and report to the Board of Directors, thereby establishing a structure with high fairness, transparency and objectivity under appropriate supervision from the Board of Directors.

Supplementary Principle 4.3.4

The Company has established the “Risk Management Policy,” under which management risks are defined and classified into types, exposure of each type of risk is identified and analyzed by relevant divisions and departments, and the evaluation and management of risks by type is overseen by Compliance and Risk Management Meetings.

Principle 4.4 Roles and Responsibilities of Kansayaku and the Kansayaku Board

The Company’s Audit and Supervisory Committee is comprised of three Independent Directors, who exercise highly independent judgement in carrying out their responsibilities.
Members of the Audit and Supervisory Committee attend board meetings and other important meetings, in which they voice their opinions based on their extensive knowledge and experience in corporate management and other fields to ensure the legal compliance and appropriateness of the decisions reached by participants.

Supplementary Principle 4.4.1

The three members of the Audit and Supervisory Committee attend board meetings in their capacity as Independent Directors, in which they voice their opinions on the Company’s business operations. This arrangement makes the committee an effective oversight body. In addition, the members of the committee share information with Inside Directors, regarding the Company’s business operations.

Principle 4.5 Fiduciary Responsibilities of Directors and Kansayaku

The Company’s Directors act in the interest of the Company and the common interests of its shareholders and work with stakeholders as part of fulfilling the responsibilities entrusted to them by shareholders.

Principle 4.6 Business Execution and Oversight of the Management

Three Independent Directors contribute to the effectiveness of oversight by the Board of Directors, in which they voice their opinions from independent and objective perspectives.

Principle 4.7 Roles and Responsibilities of Independent Directors

The Independent Directors voice their opinions at board meetings and other meetings based on their professional expertise and knowledge and from perspectives independent of those of other members of the Executive Team and controlling shareholders. This arrangement ensures that views of minority shareholders and other stakeholders are taken into consideration and provides oversight of the Company’s business operations as well as oversight against potential conflicts of interest.

Principle 4.8 Effective Use of Independent Directors

Three of the Company’s eight Directors are Independent Directors. The Company believes that they are fulfilling their roles and responsibilities in increasing the Company’s enterprise value by offering advice on the Company’s corporate management based on their wide-ranging insights gained through years of experience and knowledge in business operations and management.

Supplementary Principle 4.8.1

Independent Directors convene meetings of the Audit and Supervisory Committee, of which they are primary members, to share information and insights among them from independent and objective perspectives. This arrangement provides them with a basis upon which to make meaningful contributions to discussions at board meetings.

Supplementary Principle 4.8.2

Independent Directors select by vote a principal Independent Director (standing member of the Audit and Supervisory Committee) from among themselves, who works closely with other members of the Executive Team.

Supplementary Principle 4.8.3

The Company has no controlling shareholders.

Principle 4.9 Independence Standards and Qualification for Independent Directors

The Company uses the criteria established by the Companies Act of Japan and the Tokyo Stock Exchange to appoint Independent Directors. The Company will consider the need to establish criteria of its own design.

Principle 4.10 Use of Optional Approach

The Company has established the Audit and Supervisory Committee. Three Independent Directors who are also members of the committee voice their opinions from independent perspectives and ask other Directors and heads of relevant divisions and departments to provide information and clarification and to take corrective actions. In addition, the Company has established a Nomination and Remuneration Committee, a Compliance and Risk Management Meeting, an Information Disclosure Committee, and other voluntary advisory boards to the Board of Directors to further enhance governance functions.

Supplementary Principle 4.10.1

The Company has established the Audit and Supervisory Committee. Although Independent Directors do not represent a majority of the Board of Directors, the Company has established a Nomination and Remuneration Committee, composed of a majority of Independent Directors, as an advisory board to the Board of Directors in order to ensure the independence, objectivity and accountability of board functions.
The Nomination and Remuneration Committee will also deliberate on issues from the perspectives of gender, global expertise, and other diversity-related issues as well as skills.

Principle 4.11 Preconditions for Board and Kansayaku Board Effectiveness

The Company recognizes that members of its board, as a whole, have well-balanced knowledge, experience, and skills necessary to perform their roles and responsibilities. However, the Company recognizes that the composition of the board is not sufficiently diverse in terms of gender, international experience, career history, and age. The Company will take diversity into consideration when selecting candidates for future Directors.
The Company’s Audit and Supervisory Committee is comprised of three members who have experience in managing companies and are well versed in corporate finance, accounting, and legal affairs.
The result of an evaluation of the effectiveness of the Company’s Board of Directors are provided under Supplementary Principle 4.11.3.

Supplementary Principle 4.11.1

The Company’s Articles of Incorporation stipulate that there be 10 or less Directors who are not members of the Audit and Supervisory Committee and five or less Directors who are members of the Audit and Supervisory Committee. The Company currently has five Directors who are not members of the Audit and Supervisory Committee and three Directors who are members of the Audit and Supervisory Committee.
The Company selects candidates for Directors who are found, after an extensive scrutiny, to be compatible with its corporate philosophy and business strategy, to be capable of acting fairly and faithfully in the best interests of the Company, and to have extensive experience, knowledge, and expertise in recruiting, training, sales, and administrative functions that support the Company’s engineer placement business.
The Company submits a list of candidates selected in this manner to a general meeting of shareholders for resolution upon the review and approval of the Board of Directors.
The Company has disclosed on its website (https://www.artner.co.jp/en/ir/governance/skill/) a skill matrix for its Directors that shows the scope of knowledge and experience that each of them possesses.

Supplementary Principle 4.11.2

The Company discloses, in Notices of Convocation for General Meetings of Shareholders and its Securities Reports, information about Directors who are not members of the Audit and Supervisory Committee and who also hold key management positions at other companies, as well as information about Directors who are members of the Audit and Supervisory Committee and who also hold such positions.
None of the current Directors of the Company who are not members of the Audit and Supervisory Committee, nor the current Directors who are members of the Audit and Supervisory Committee, serve as directors of other companies.

Supplementary Principle 4.11.3

The Company periodically analyzes and evaluates the effectiveness of its Board of Directors in order to make it work better. The evaluation is conducted by asking members of the board to complete a 31-item questionnaire survey that focuses on the following five areas:
　a. The composition of the Board of Directors
　b. Planning, convening, and administration of board meetings
　c. Matters selected for deliberation at board meetings
　d. Administrative assistance provided to the Board of Directors
　e. Relationships with shareholders
The Company has found from the most recent survey results that the effectiveness of its Board of Directors has been maintained.
The Nomination and Remuneration Committee discussed and reported to the Board of Directors the succession plans for the President and CEO and Directors, and confirmed the need for continuous discussion.
It was also confirmed that the Sustainability Committee needs to conduct an ongoing review of non-financial disclosure efforts in order to add disclosure items on ESG data and enhance human capital disclosures.
It was confirmed that important agenda items for the Board of Directors, such as the Medium-Term Business Plan and risk management efforts, require discussion on medium- and long-term strategies, including the formulation of a new Medium-Term Business Plan, and appropriate supervision of the progress of each measure.
The Company will take actions to address some remaining issues identified from the survey to continue to enhance the effectiveness of the Board.

Principle 4.12 Active Board Deliberations

At board meetings, Outside Directors provide their opinions, suggestions, and recommendations while Inside Directors report on wide-ranging topics and provide their opinions. All of them contribute to constructive discussions and exchange of ideas at the meetings.

Supplementary Principle 4.12.1

To facilitate attendance of Directors at board meetings, the Company provides them with an annual schedule of board meetings before a new fiscal year begins, which include 12 mid-month business report board meetings, 12 regular monthly board meetings, and four special board meetings to review and approve quarterly financial results. In addition, the Company provides Directors with supporting documents for resolution and business reports prior to each board meeting. The Company selects the number of agenda items so that sufficient time is allocated to deliberation on each of them.

Principle 4.13 Information Gathering and Support Structure

As part of fulfilling their responsibilities, Directors who are not members of the Audit and Supervisory Committee and Directors who are members of the Audit and Supervisory Committee ask relevant divisions and departments for information and supporting documents, which are furnished to them. The Management Division provides administrative assistance to Directors who are not members of the Audit and Supervisory Committee. While no dedicated staffers are available to assist Directors who are members of the Audit and Supervisory Committee, staffers of relevant divisions and departments provide them with assistance upon request.

Supplementary Principle 4.13.1

As part of making transparent, fair, timely, and firm decisions, Directors who are not members of the Audit and Supervisory Committee ask relevant divisions and departments for information and supporting documents as needed.
The Audit and Supervisory Committee works with Directors and the Internal Audit Office to collect information necessary for audits and ask relevant divisions and departments for information and supporting documents as needed.

Supplementary Principle 4.13.2

As part of fulfilling their roles and responsibilities, Directors who are not members of the Audit and Supervisory Committee and Directors who are members of the Audit and Supervisory Committee ask external experts, such as lawyers, certified public accountants, and licensed tax accountants, for professional advice when they need independent opinions and perspectives.

Supplementary Principle 4.13.3

The Company reports the result of an internal audit to the President and CEO, and relevant divisions and departments are responsible for taking corrective actions by deadlines specified in the report in the areas recommended for improvement. An annual schedule of internal audits as well as internal audit results and actions taken are reported to a board meeting attended by Directors who are members of the Audit and Supervisory Committee to ensure that key information is shared between the committee and the Internal Audit Office.

Principle 4.14 Director and Kansayaku Training

Directors who are not members of the Audit and Supervisory Committee and Directors who are members of the Audit and Supervisory Committee attend training sessions and external seminars to gain or broaden knowledge and insights necessary to fulfill their professional responsibilities.

Supplementary Principle 4.14.1

The Company provides Directors and members of the Audit and Supervisory Committee, including Outside Directors, with opportunities to become familiar with the Company’s businesses, finances, and organization when they step into their new positions.
While in office, they attend training sessions and external seminars to gain or broaden knowledge and insights necessary to fulfill their professional responsibilities.

Supplementary Principle 4.14.2

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