Corporate Governance

Basic Views

Artner’s No.1 business challenge is steadily improving shareholder value over the long term. So in addition to expanding our business and ensuring profitability, we want to grow as a “technical partner” together with our client companies in various industries, as a collective of engineers focused on developing more and more advanced levels of technical expertise. At the same time, with a constant awareness of what society needs most, and a desire to create a demand for it, we strive for business efficiency and soundness to help in the sustainable development of the Company.

At Artner, we are highly conscious of our social responsibility as a company, so in addition to strictly observing all applicable laws and regulations, we strive to sustain and develop favorable relationships with shareholders, with our local community, with all of our client companies, and with all employees.

We are committed to further strengthening our internal control and risk management efforts through the application of business management systems (including internal control systems) to enable flexible adaptation to changes in the business environment. In this way, we will constantly improve our business management. Artner also will promptly disclose relevant information both inside and outside the Company and enhance business transparency.

Company Organization and Internal Control System

Overview of the Current Corporate Governance System

The Company has in place the Audit and Supervisory Committee, and has five Directors who are not members of the Audit and Supervisory Committee and three Directors who are members of it.
Board of Directors
The Board of Directors is comprised of eight Directors, five of whom are not members of the Audit and Supervisory Committee and three who are members of the Committee.
The Board meets twice a month: at a mid-month business report board meeting, the members deliberate on the Company’s monthly business performance; and at a regular month-end board meeting, they deliberate and decide on matters relating to the Company’s management plan, as well as significant matters relating to day-do-day business operations.
Compliance and Risk Management Meeting
The Company convenes Compliance and Risk Management Meetings once a month, attended by the President and CEO and other Directors who are not members of the Audit and Supervisory Committee, Directors who are members of the Committee, and division and department heads.
In these meetings, members discuss policies and actions to ensure that all officers and employees of the Company abide by laws and the Company’s Articles of Incorporation, and draw up the Risk Management Guidelines.
Sustainability Committee
The Company convenes the Sustainability Committee four times a year, attended by the President and CEO and other Directors who are not members of the Audit and Supervisory Committee, Directors who are members of the Committee, and division and department heads.
The members hold discussions to promote and manage the progress of issues and initiatives related to sustainability.
Audit and Supervisory Committee
The Audit and Supervisory Committee is comprised of three Outside Directors and meets twice a month.
Directors who are members of the Committee also attend board meetings and other important internal meetings. The Committee provides impartial and independent oversight of the Company’s corporate management, based on the audit standards as well as the audit policy and plans established by the Committee.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee, chaired by a member of the Audit and Supervisory Committee, is composed of four members including the President and CEO and three members of the Audit and Supervisory Committee who are Outside Directors, and will be held at least four times a year.
The Nomination and Remuneration Committee will report to the Board of Directors on the appointment/ dismissal and remuneration of Directors in order to enhance the fairness and objectivity of the decision-making process of nominating and determining the remuneration of Directors as well as enhancing corporate governance.
External Accounting Auditor
The Company employs KPMG AZSA LLC as its accounting auditor.
The Company has no conflict of interest with the accounting firm or with the firm’s managing partners who conduct accounting audits of the Company.

Activities of the Board of Directors and Committees (FY2024)

《Attendance》
Position Name Board of Directors Compliance and
Risk Management
Meeting
Sustainability
Committee
Audit and Supervisory
Committee
Nomination and
Remuneration
Committee
President and CEO SEKIGUCHI
Sozo
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Director HARIGAE
Tomonori
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Director OKUSAKA
Kazuya
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Director SATO
So
29 out of 30 meetings
(97% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Director EGAMI
Yoji
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Outside Director and
standing member of the
Audit and Supervisory
Committee
NOMURA
Ryuichiro
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
26 out of 26 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Outside Director and
member of the Audit and
Supervisory Committee
TERAMURA
Yasuhiko
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
26 out of 26 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
Outside Director and
member of the Audit and
Supervisory Committee
MORII
Shinichiro
30 out of 30 meetings
(100% attendance rate)
12 out of 12 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
26 out of 26 meetings
(100% attendance rate)
4 out of 4 meetings
(100% attendance rate)
《Discussion and Resolution Themes》
Board of
Directors
Discussions and Resolutions
General Meeting of Shareholders / Policy for the Mid-Term Business Plan / Corporate planning and strategy / Department policies and business plan for the FY2025 / Financial results, finances, and dividends / Revisions to the forecast of financial results / Nomination of director candidates and remuneration of directors / Internal controls / Organizational changes and personnel transfers / Rule revisions / Reappointment of the Accounting Auditor(s) / Joining the UN Global Compact / Donations to support organizations / Compliance with “Handling of Transition Measures and Other Matters Relating to the Continued Listing Criteria” / Updating and disclosing ESG data / COVID-19 measures, etc.
Compliance and
Risk Management
Meeting
Discussions
Performance trends in the manufacturing industry / Competition with other companies in the industry / Effectiveness of education and training / Securing suitable clients for our dispatching business / Regulations on total work person-hours / Securing science and engineering graduates / Securing career engineers / Information management / Laws, regulations, licenses, and permits / Disasters, accidents, etc. / Climate change / M&A / Medium-Term Business Plan, etc.
Sustainability
Committee
Discussions
Policies and goals related to sustainability, including social and environmental issues such as the SDGs and ESG / Formulation of an action plan / Management and evaluation of progress toward goals / Individual measures, etc.
Audit and
Supervisory
Committee
Discussions
Audit policy, audit plan, audit methods, assignment of audit duties, etc. / Appointment and dismissal of Accounting Auditor(s) / Appointment, dismissal, and remuneration of directors who are not members of the Audit and Supervisory Committee, etc.
Nomination and
Remuneration
Committee
Discussions
Appointment and dismissal of directors / Selection and discharge of the President and CEO / Selection and discharge of representative directors / Remuneration, etc., of directors who are not members of the Audit and Supervisory Committee / Remuneration limits for directors and directors who are members of the Audit and Supervisory Committee / Succession planning (including successor development), etc.

Policy and Process for Appointment or Removal of Director Candidates Who Are Not Members of the Audit and Supervisory Committee

The Nomination and Remuneration Committee deliberates and reports to the Board of Directors on director candidates who are not members of the Audit and Supervisory Committee after an extensive scrutiny of their knowledge, experience, and ability necessary to manage the Company´s business divisions and day-to-day operations. The Board of Directors then nominates the director candidates.

Policy and Process for Appointment or Removal of Director Candidates Who Are Members of the Audit and Supervisory Committee

The Nomination and Remuneration Committee deliberates and reports to the Board of Directors on director candidates who are members of the Audit and Supervisory Committee after an extensive scrutiny of their experience, expertise in corporate financing and accounting, practical knowledge on the Company´s businesses, and general knowledge on corporate management necessary to audit and oversee the performance of duties by directors who are not members of the Audit and Supervisory Committee.
The Board of Directors then nominates the director candidates.

Appointment or Removal of the President and CEO

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, the 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.

Succession Plan

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, the voluntarily established Nomination and Remuneration Committee, composed of a majority of Independent Directors, shall deliberate and make recommendations to the Board of Directors, thereby establishing a structure with high fairness, transparency and objectivity under appropriate supervision from the Board of Directors.

Appointment or Removal of Executive Team Members

The Board of Directors makes a decision upon deliberation of the job performance of the member and other factors.

Status of Outside Directors

The Company has three outside directors, all of whom hold shares of the Company. Apart from this shareholding position, none of the three outside directors have any vested interests in the Company, including personal, capital, or business relationships. Each outside director plays a role in ensuring that highly effective audits are conducted, from an objective and neutral viewpoint, and we believe that the current system satisfactorily fulfills its management monitoring and advisory functions. The three outside directors are designated as independent directors as defined by the Tokyo Stock Exchange and they are registered with the exchange.
Although the Company does not have any specific standards or policies regarding independence for the appointment of outside directors, when making such appointments we not only meet the regulatory requirements established by the Companies Act, but also take into account the Tokyo Stock Exchange´s criteria for ensuring the independence of independent directors.

Policies for Determining the Remuneration of Directors and Calculation Methods for the Fiscal Year Ended January 31, 2024

Remuneration of Directors
The remuneration of directors consists of a basic remuneration and a performance-linked bonus. The upper limits of the remuneration established by resolution at the General Meeting of Shareholders held on April 27, 2017, are ¥200 million per year for five directors who are not members of the Audit and Supervisory Committee and ¥30 million per year for three directors who are members of the Committee.

Board of Directors and the Audit and Supervisory Committee
The Board of Directors and the Audit and Supervisory Committee have authority over the remuneration of directors. This authority extends to deliberating and determining the amount of a basic remuneration and a performance-linked bonus for each director.
The remuneration of directors who are not members of the Audit and Supervisory Committee is determined solely by the Board of Directors, whereas the remuneration of Audit and Supervisory Committee members is determined by deliberation among the members of the Committee.

Determining the Policy for Determining the Remuneration for Each Individual
The method of determining this policy is set forth in the rules concerning the remuneration of directors, resolved by the Board of Directors.

Board of Directors
The Board of Directors receives reports that are deliberated by the Nomination and Remuneration Committee based on the policy for determining the remuneration and within the range of the total amount resolved by the General Meeting of Shareholders, so the Board of Directors deems that the content of the report is in line with the said policy.

Policy for Determining the Percentage of the Amount of Remuneration for Each Individual
This policy shall be decided based on the reports that are deliberated by the Nomination and Remuneration Committee, comprehensively taking into account the role and contribution status of each director as well as business performance.

Basic Remuneration
The basic remuneration is determined based on the amount established for each director position, with the Company´s business performance, relative weight against employee salaries, and remuneration levels at other companies taken into consideration. However, if it is not appropriate to pay a remuneration calculated in such a manner due to a significant decline in the Company´s business performance or other factors, the Company reserves the right to reduce the amount of basic remuneration.

Metrics for Performance-Linked Bonuses
The metrics for performance-linked bonuses are calculated using a formula based on the Company´s annual profit, as this is judged to be the most reasonable way to measure the performance of directors.

Total Amount of Remuneration for Each Director Paid
We have omitted providing information here as no directors were paid remuneration of ¥100 million or more.

Incentive Policies for Directors
Performance-linked remuneration may be paid to Directors out of up to 2% of annual profits.


Total Amount of Remuneration of Directors (FY2024)
Type of director Total amount of
remuneration
(in thousands of yen)
Amount by type of remuneration
(in thousands of yen)
Number of
corresponding directors
Basic
remuneration
Performance
-linked bonus
Directors who are not members of the Audit and Supervisory Committee or outside directors 115,185 95,450 19,735 5
Outside directors 25,154 23,400 1,754 3

Analysis and Evaluation of the Effectiveness of the Board of Directors

Under its Corporate Governance Code, Artner Co., Ltd. (“the Company”) periodically analyzes and evaluates the effectiveness of its Board of Directors in order to make it work better. On this occasion, we carried out analysis and evaluation for the fiscal year ended January 31, 2024, and hereby notify the summary of the findings.

Evaluation Method and Process
A questionnaire survey to evaluate effectiveness for the fiscal year ended January 31, 2024, was distributed to all eight directors. Based on the responses collected, the Board of Directors discussed its issues and actions to address them.

Evaluation Items
The Company conducted a 31-item questionnaire survey to evaluate effectiveness. The survey asked members of the Board to make a self-evaluation by giving comments and grading on a point scale. The survey focused on the following five areas:
a. The composition of the Board of Directors;
b. Planning, convening, and administrating board meetings;
c. Matters selected for deliberation at board meetings;
d. Administrative assistance provided to the Board of Directors; and
e. Relationships with shareholders.


Summary of Analysis and Evaluation Results
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.

Way Forward
The Board of Directors will take the necessary actions to address some remaining issues identified from the survey to continue to enhance its effectiveness.
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