Corporate Governance

Basic Policy

ITOCHU commits itself to the global good. To realize this mission, ITOCHU strives to respect each individual and to make meaningful contribution towards creating a bright future for all human beings and the environment. In addition, “I am One with Infinite Missions” was adopted as a corporate message to express the ITOCHU Mission in plain terms. Underlying the message is the exceptional ability of each employee, the core strength of ITOCHU.

It is our fundamental management policy to build a fair and good relationship with various stakeholders based on our corporate philosophy and our code of conduct and thus improve our corporate value from a long-term perspective. In accordance with this policy, with the intention to ensure proper and efficient execution by management, we will enhance the transparency of decision-making and establish a corporate governance system in which monitoring and supervision functions are appropriately incorporated.

A strong leadership and a transparent decision-making system are pillars of good corporate governance. ITOCHU adopts an organizational structure with the presence of Audit & Supervisory Board (kansayaku secchi kaisha). In recent years, ITOCHU has gradually shifted to a governance model where executive officers decide and carry out the day to day business under the direction and supervision of the Board of Directors, along with implementing measures to strengthen monitoring.

In order to separate execution by and monitoring over management, we reduced several executive Directors and the percentage of outside Directors in our Board of Directors was increased to one-third or more from April 2017. We keep this percentage of outside Directors also in FY2020 and onwards. Additionally, ITOCHU has established a Governance and Remuneration Committee and a Nomination Committee as advisory committees to the Board of Directors. Each committee is chaired by an outside Director and the majority members of each committee are outside Directors and Audit & Supervisory Board Members. In appointing outside Directors and Audit & Supervisory Board Members, ITOCHU places great importance on their independence, and in this connection, ITOCHU has adopted its own independence criteria, augmenting the independence criteria established by the Tokyo Stock Exchange.

This highly independent Board of Directors monitors execution by management as well as deliberates the execution of business that is of high quantitative or qualitative importance. The Company believes this arrangement facilitates not only appropriate monitoring over execution by management but also the consideration of important business execution from an external perspective.

It is also vital that ITOCHU timely and adequately discloses its financial and non-financial information to the stakeholders as part of good governance. In May 2015, in line with the ITOCHU Mission and Corporate Governance Code of the Tokyo Stock Exchange, ITOCHU adopted a “Basic IR Policy” to further promote a multi-party stakeholder dialogue. Through the communication with its stakeholders, ITOCHU aims to enhance its corporate value on a long-term basis.

We believe that our current corporate governance structure accords with good and effective corporate governance called for by the Tokyo Stock Exchange, in its Corporate Governance Code. ITOCHU will continue to evaluate and improve its corporate governance structure so that it always best suits ITOCHU in any given moment and time in its corporate history.

Compliance with Corporate Governance Code

As of October 2019, ITOCHU complies with all principles set forth in Corporate Governance Code.
For details, please refer to Corporate Governance Report(596KB)[PDF]


  • Establishment of the Governance and Remuneration Committee and the Nomination Committee as advisory committees to the Board of Directors
    (Please refer to "Overview of ITOCHU's Corporate Governance and Internal Control System" below)
  • Establishment of policy and process for appointing executive officers, candidates for Directors and candidates for Audit & Supervisory Board Members (Please refer to below)
  • Establishment of policy on holding listed shares for purposes other than pure investment and standards for the exercise of voting rights thereon (Please refer to below)
  • Adoption of our own independence criteria regarding the judgement on the independence of outside Directors and outside Audit & Supervisory Board Members (Please refer to below)
  • Formulation of Basic IR Policy (Please refer to Basic IR Policy)

Results of Board Evaluation

ITOCHU conducted the evaluation as to the effectiveness of the Board of Directors, targeting the members of the Board and Audit & Supervisory Board in FY2019. Please refer to the following URL for an overview of the results.

Steps taken to strengthen Corporate Governance

1999

- Introduction of Executive Officer System

To strengthen decision-making and supervisory functions of the Board of Directors

2011

- Appointment of two outside Directors

To increase the effectiveness of the supervision of management and improve the transparency of decision making

2015

- Response to Japan's Corporate Governance Code
- Establishment of the Governance and Remuneration Committee and the Nomination Committee
- Revision of the Board of Directors' Regulations

To strengthen the Board of Directors' supervision function and increase transparency

2016

- Increase in the number of outside Directors(from two to three)
- Reorganized the Governance and Remuneration Committee and the Nomination Committee(appointing outside Directors as chairmen and accounting outside executive half or more of members)
- Implemented Board of Directors' effectiveness evaluation

To strengthen the Board of Directors' supervision function

2017

- Transition to a Board of Directors with a monitoring-focused structure
- Increasing the ratio of outside Directors to at least one-third
- No Directors except one Division Company President appointed to concurrent positions

For thorough separation of management execution and supervision

2018

- Transition to a Management Structure with a Chairman & CEO and a President & COO
- Improve diversity of outside Directors
- Maintain an outside Directors' ratio of at least one-third
- Discontinue consultant and advisor system

Maintenance of the Board of Directors' system in response to internal and external changes

2019

- Maintain the ratio of outside Directors more than one-third at any time
- Further improve the diversity of outside Directors
- Achieve 20% of the ratio of female Directors at the Board of Directors
(in addition, two female executive officers (non-director))
- Reorganized the Nomination Committee
(Majority members of both the Governance Committee and the Nomination Committee are outside executives)

Further improvement of the effectiveness of the Board of Directors

Corporate Governance System (As of October 10, 2019)

Type of system

Company with the Board of Directors and the Audit & Supervisory Board

Number of Directors (Of which, number of outside Directors)

10 (4)
*Two of the outside Directors is female, and the average term of overseas assignment period of our internal Directors is 5.5 years.

Number of Audit & Supervisory Board Members (Of which, number of outside Audit & Supervisory Board Members)

5 (3)

Term of office for Directors

1 year (the same for outside Directors)

Adoption of an Executive Officer System

Yes

Organization to support CEO decision-making

Headquarters Management Committee (HMC) deliberates on companywide management policy and important issues

Advisory committees to the Board of Directors

Governance and Remuneration Committee, Nomination Committee

Director Remuneration System
  • (1) Monthly remuneration (Fixed)
    Determined according to factors that include degree of contribution to ITOCHU, based on a standard amount for each position
  • (2) Performance-linked bonuses (Variable(Single Year))
    Total amount is determined based on consolidated net profit, and individual amount is determined in relation to the position points for the Director
  • (3) Share price-linked bonuses (Variable(Medium- to Long-term))
    Calculated based on an evaluation of the relative growth rate of ITOCHU's share price during the period of the medium-term management plan versus the growth rate of TOPIX(Tokyo Stock Price Index)
  • (4) Performance-linked stock remuneration (Variable(Medium- to Long-term))
    Total amount is determined based on consolidated net profit, and individual amount is determined in relation to the position points for the Director used in calculating the individual performance-linked bonus
  • Outside Directors paid monthly remuneration only
Independent external auditor

Deloitte Touche Tohmatsu LLC

Overview of ITOCHU's Corporate Governance and Internal Control System(As of October 10, 2019)

[Fig.]
  1. HMC=Headquarters Management Committee  CEO=Chief Executive Officer  COO=Chief Operating Officer 
    CSO=Chief Strategy Officer  CAO=Chief Administrative Officer  CFO=Chief Financial Officer 
    CDO・CIO=Chief Digital & Information Officer ALM=Asset Liability Management
  2. CAO is the chief officer for compliance. Also, each Division Company has a Division Company president.
  3. Internal control systems and mechanisms have been implemented at every level of ITOCHU. Only the main internal control organization and committees are described herein.

Advisory Committees to the Board of Directors

Name Function
Governance and Remuneration Committee

Deliberates and advises on proposals related to remuneration system for Directors and executive officers and other matters on corporate governance

Nomination Committee

Deliberates and advises on proposals related to nomination and dismissal of executive officers, nomination of candidates for Directors and Audit & Supervisory Board Members, dismissal of Directors and Audit & Supervisory Board Members, and appointment and dismissal of responsible Directors and officers

Principal Internal Committees

Name Objectives
Internal Control Committee

Deliberates on issues related to the development of internal control systems
Chairman : CAO

Disclosure Committee

Deliberates on issues related to business activity disclosure and on issues related to the development and operation of internal control systems in the area of financial reporting
Chairman : CFO

ALM Committee

Deliberates on issues related to risk management systems and balance sheet management
Chairman : CFO

Compliance Committee

Deliberates on issues related to compliance
Chairman : CAO

Sustainability Committee

Deliberates on issues related to sustainability and ESG, including environmental problems and social contribution initiatives, excluding governance related issues
Chairman : CAO

Investment Consultative Committee

Deliberates on issues related to investment and financing
Chairman : CFO

New Headquarters Project Committee

Deliberates on issues related to New Headquarters Project
Chairman : CAO

Composition of the Governance and Remuneration Committee and the Nomination Committee (As of October 10, 2019)

Name Title Governance and Remuneration Committee Nomination Committee
Masahiro Okafuji

Chairman & Chief Executive Officer

Yoshihisa Suzuki

President & Chief Operating Officer

Fumihiko Kobayashi

Director

 

Atsuko Muraki

Outside Director

◎(Chair)

Harufumi Mochizuki

Outside Director

 

◎(Chair)

Masatoshi Kawana

Outside Director

 
Makiko Nakamori

Outside Director

 
Kiyoshi Yamaguchi

Audit & Supervisory Board Member

 

*1

Shuzaburo Tsuchihashi

Audit & Supervisory Board Member

 
Shingo Majima

Outside Audit & Supervisory Board Member

 

Kentaro Uryu

Outside Audit & Supervisory Board Member

 

Kotaro Ohno

Outside Audit & Supervisory Board Member

 
 

(7 members)

(7 members)

  1. Kiyoshi Yamaguchi, Audit & Supervisory Board Member, attends as an observer

Policy and Process for Appointing Executive Officers, Candidates for Directors and Candidates for Audit & Supervisory Board Members

[Policy and Process for Appointing Executive Officers]
Executive Officers are appointed annually by the Board of Directors among, in principle, employees regarded as candidates for executives based on our HR system with high integrity and exceptional ability (or those who have already been appointed as Executive Officers) who are judged to be capable of assuming the role as the Executive Officers. Candidates for Executive Officers are first selected by the Chairman & CEO based on, among others, recommendations from other officers (or in terms of incumbent Executive Officers, based on their respective performance) and submitted to the Nomination Committee for further deliberation. Based on the deliberation and advice of the Nomination Committee, the Board of Directors appoints Executive Officers by its resolution. In case that an Executive Officer breaches the Executive Officers’ Regulation of the Company or otherwise his or her performance is judged to be not appropriate, the Chairman & CEO (or the chairman of the Nomination Committee) firstly makes a proposal of dismissal, and the Board of Directors dismisses such Executive Officer by its resolution based on the deliberation and advice of the Nomination Committee.

[Policy and Process for Appointing Candidates for Directors]
In order to effectively supervise management and decide important business matters as the Board of Directors of a general trading company with broad range of business, ITOCHU's Board of Directors consists of, in principle, the Chairman, President, officers in charge of headquarters administrative functions, one appropriate Division Company president, and such several outside Directors that the percentage of outside Directors in our Board of Directors is one-third or more to improve supervisory function of the Board of Directors. In appointing outside Directors, ITOCHU prioritizes candidates with higher independence, based on the criteria for “independent Directors” prescribed by the Tokyo Stock Exchange, and ITOCHU’s “Independence Criteria for Outside Directors and Outside Audit & Supervisory Board Members,” who with his or her experience and knowledge in the relevant category, are expected to contribute to the management of ITOCHU. Proposal on candidates for Directors is created by the Chairman & CEO taking into consideration diversity such as knowledge, experience, gender and international experience, and submitted to the Nomination Committee for further deliberation before the Board of Directors finally nominates the candidates for election at the General Meeting of Shareholders.

[Policy and Process for Appointing Candidates for Audit & Supervisory Board Members]
As Audit & Supervisory Board of a general trading company with broad range of business, for effective monitoring and audit, candidates for Audit & Supervisory Board Members are selected from those with understanding about ITOCHU’s management and with high expertise and extensive experience in the relevant area such as accounting, finance, legal and risk management. Among Audit & Supervisory Board Members, half or more of the members always consist of outside Audit & Supervisory Board Members. In appointing outside Audit & Supervisory Board Members, ITOCHU prioritizes candidates with higher independence, based on the criteria for “independent Directors” prescribed by the Tokyo Stock Exchange, and ITOCHU’s “Independence Criteria for Outside Directors and Outside Audit & Supervisory Board Members,” who are expected to effectively monitor and audit ITOCHU’s activities. In addition, ITOCHU selects at least one member with adequate expertise in finance and accounting. Candidates for Audit & Supervisory Board Members are selected by the Chairman & CEO after the discussion with the executive Audit & Supervisory Board Member and submitted to the Nomination Committee for further deliberation before the Board of Directors (with consent of the Audit & Supervisory Board) finally nominates the candidates for election at the General Meeting of Shareholders.

Policy on Holding Cross-Holding Shares and Standards for the Exercise of Voting Rights

ITOCHU classifies investments other than for pure investment purposes and to consolidated companies as “Investments to Non-Affiliated Companies,” and the “Cross-Shareholdings” as set forth in Corporate Governance Code is included in this classification. ITOCHU engages in investments to non-affiliated companies in order to create business relationships. In principle, it is the Company’s policy to limit investments to non-affiliated companies to those that have a high likelihood of generating investment returns, and those with a high strategic significance including affiliation in future or the “reinvention of business”. This policy remains the same, regardless of whether investments are in or outside Japan, or listed or unlisted.

In order to manage our investment, we set our internal rule. Through annual review of all investments to non-affiliated companies including the Cross-Shareholdings, we examine economic (quantitative) rationale based on returns on our investment, and review strategic objectives to hold such investments taking into consideration the likelihood that our investment purpose is realized in the future. Investments that do not generate economic added value over two-years or investments that lack strategic objective based on such annual review will be, in principle, sold. Results of such annual review with respect to Cross-Shareholdings are subject to further scrutiny at our Board of Directors from the perspective of economic rationale and strategic objective. Most recently, our Board of Directors made such scrutiny on 12 June, 2019 and reached its conclusion that the result of such annual review was reasonable.

ITOCHU places great importance on communication with each investee with the view to building, strengthening and maintaining business relationship as well as to improving corporate value of both ITOCHU and each investee. In May 2015, ITOCHU adopted the following internal voting guideline with respect to Cross-Shareholdings to ensure that ITOCHU’s voting rights on all of such investments are exercised in a timely and adequate manner.

[Voting Guideline]

  1. In principle, not to abstain from voting or to grant full authority to exercise voting rights on our behalf.
  2. To decide for or against a proposal taking into consideration our investment purpose and holding policy.

ITOCHU’s final position on voting is determined through internal decision making process based on an initial plan prepared by a department in question through which an investment is made.

Independence Criteria for Outside Directors and Outside Audit & Supervisory Board Members

ITOCHU has adopted its own independence criteria (augmenting the independence criterial established by the Tokyo Stock Exchange).

Reason for Appointment as Outside Directors

Name Reason for appointment
Atsuko Muraki
appointed in June 2016

[Attendance at Meetings of
the Board of Directors]
FY2019 : 17/17 (100%)

Ms. Muraki is appointed as an outside Director in the anticipation that she will use her wealth of experience and high-level knowledge she accumulated as a government official and also monitor and supervise the corporate management of ITOCHU from an independent perspective. According to the criteria for the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Ms. Muraki qualifies as an independent Director. Accordingly, ITOCHU believes that she is unlikely to have conflicts of interest with general investors, and she has been designated as an independent Director.

Harufumi Mochizuki
appointed in June 2017

[Attendance at Meetings of
the Board of Directors]
FY2019 : 17/17 (100%)

Mr. Mochizuki is appointed as an outside Director in the anticipation that, based on his wealth of experience and high-level knowledge he accumulated as a government official at the Ministry of Economy, Trade and Industry (and the former Ministry of International Trade and Industry) and his experience as a corporate executive at other entities where he concurrently serves, he will monitor and supervise the corporate management of ITOCHU from an independent perspective. According to the criteria for the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Mr. Mochizuki qualifies as an independent Director. Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest with general investors, and he has been designated as an independent Director.

Masatoshi Kawana
appointed in June 2018

[Attendance at Meetings of
the Board of Directors]
FY2019 : 13/13 (100%)

Mr. Kawana is appointed as an outside Director in the anticipation that, based on his experience as a doctor at Tokyo Women's Medical University Hospital for many years and as an important post such as the Deputy Director of the same hospital as well as his high level of medical knowledge, he will monitor and supervise the corporate management of ITOCHU from an independent perspective. According to the criteria for the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Mr. Kawana qualifies as an independent Director. Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest with general investors, and he has been designated as an independent Director.

Makiko Nakamori
appointed in June 2019

[Attendance at Meetings of
the Board of Directors]
FY2019 : - / - ( - %)

Ms. Nakamori is appointed as an outside Director in the anticipation that, based on her high level expertise regarding finance and accounting as a certified public accountant as well as her extensive experience as a corporate executive, she will monitor and supervise the corporate management of ITOCHU from an independent perspective. According to the criteria for the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Ms. Nakamori qualifies as an independent Director. Accordingly, ITOCHU believes that she is unlikely to have conflicts of interest with general investors, and she has been designated as an independent Director.

Reason for Appointment as Outside Audit & Supervisory Board Members

Name Reason for appointment
Shingo Majima
appointed in June 2013

[Attendance at Meetings of]
- Board of Directors
FY2019 : 17/17 (100%)
- Audit & Supervisory Board
FY2019 : 13/13 (100%)

Mr. Majima is appointed as an outside Audit & Supervisory Board Member in the anticipation that he will monitor management and provide auditing from an independent perspective by utilizing his wealth of experience and expertise on finance and accounting as a certified public accountant. According to the criteria for the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Mr. Majima qualifies as an independent Audit & Supervisory Board Member. Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest with general investors, and he has been designated as an independent Audit & Supervisory Board Member.

Kentaro Uryu
appointed in June 2015

[Attendance at Meetings of]
- Board of Directors
FY2019 : 16/17 (94%)
- Audit & Supervisory Board
FY2019 : 13/13 (100%)

Mr. Uryu is appointed as an outside Audit & Supervisory Board Member in the anticipation that he will monitor management and provide auditing from an independent perspective by utilizing his high level of expertise in law and extensive experience as an attorney-at-law for many years. According to the criteria for the independence of directors/ auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Mr. Uryu qualifies as an independent Audit & Supervisory Board Member. Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest with general investors, and he has been designated as an independent Audit & Supervisory Board Member.

Kotaro Ohno
appointed in June 2017

[Attendance at Meetings of]
- Board of Directors
FY2019 : 17/17 (100%)
- Audit & Supervisory Board
FY2019 : 13/13 (100%)

Mr. Ohno is appointed as an outside Audit & Supervisory Board Member in the anticipation that he will monitor management and provide auditing from an independent perspective by utilizing his advanced specialized knowledge in law and the extensive experience he accumulated while serving in important positions at the Ministry of Justice, including Vice-Minister of Justice, Superintending Prosecutor of Tokyo High Public Prosecutors Office and Prosecutor-General. According to the criteria for the independence of directors/ auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Mr. Ohno qualifies as an independent Audit & Supervisory Board Member. Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest with general investors, and he has been designated as an independent Audit & Supervisory Board Member.

ITOCHU’s Policy on the Governance of its Listed Subsidiaries

The Company’s listed subsidiaries include ITOCHU Techno-Solutions Corporation, ITOCHU ENEX CO., LTD., ITOCHU-SHOKUHIN Co., Ltd., CONEXIO Corporation, C.I. TAKIRON Corporation, FamilyMart Co.,Ltd., and Prima Meat Packers, Ltd.

ITOCHU respects the autonomy of these listed subsidiaries and prohibits any acts that contradict the principle of shareholder equality. In particular, with the recognition that there is a potential conflict of interest between ITOCHU and the minority shareholders of these listed subsidiaries and in order to secure the independent decision-making of these listed subsidiaries, we request these listed subsidiaries to set up the governance structure under which the independent outside directors of these listed subsidiaries are well functioned.

At the same time, to enhance the corporate value of the overall ITOCHU Group, ITOCHU, as their parent company and major shareholder, regularly pays adequate attention to the legal compliance systems and status of these listed subsidiaries. ITOCHU provides appropriate advice and support as needed on specific compliance-related matters, creation of internal control systems, and other managerial issues.

ITOCHU will perform our accountability as to the rationale to maintain listed parent-subsidiary relationship as well as the effectiveness of the governance structure of these listed subsidiaries.

Others

Itochu does not adopt any takeover defense measures.