Corporate Governance
Basic Views on Corporate Governance
Daiwa Securities Group Inc. will respect the rights and interests of the shareholders, consider the position of all stakeholders and strive for sustainable growth and improvement of medium to long term corporate value through realization of our corporate principles "Building trust," "Placing importance on personnel," "Contributing to society," and "Maintaining healthy earnings results."
For that purpose, the Company practices group management based on a holding company structure, establishes a highly transparent and objective governance environment that conforms to international standards, realizes highly efficient oversight of group companies and builds a unified group management system that elicits synergies among group companies.
The Company has adopted Three Committees system (a company with nominating committee, etc.) as an institutional design in order to supervise management through the following (1) and (2).
- (1)Making swift and decisive decisions by having the Board of Directors assign wide-ranging authority to Corporate Executive Officers (Shikkoyaku) and clarifying the division of the duties among Corporate Executive Officers (Shikkoyaku)
- (2)Improving transparency and fairness of the management by establishing three committees: the Nominating Committee, Audit Committee, and Compensation Committee with highly independent Outside Directors as a majority of the members
Furthermore, the Company positively addresses corporate social responsibility activities in order to obtain trust from all of the stakeholders. There are indeed various aspects to corporate social responsibility, such as providing superior products, services, and sincere responses to customers; returning profits appropriately and disclosing information to shareholders appropriately; taking measures for labor environment and evaluation of the employees; establishing legal compliance and corporate ethics; environmental management; as well as social contribution.
The Company believes that these approaches, together with a strengthened corporate governance system which emphasizes transparency, mobility and efficiency will lead to the sustainable improvement of the corporate value.
Corporate Governance Guidelines
The Company's Corporate Governance Guidelines define the basic framework and policies of the Daiwa Securities Group's corporate governance.
| Daiwa Securities Group Inc. Corporate Governance Guidelines | |
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Corporate Governance System
The corporate governance system of the Company consists of the Board of Directors and the following Three Committees (Nominating Committee, Audit Committee, and Compensation Committee) as a supervising body, Outside Director's Committee as a subcommittee of the Board of Directors, Executive Management Committee and its subcommittees (Group Risk Management Committee, Group Compliance Committee, Disclosure Committee, Group Digital Strategy Committee, and Group Internal Audit Committee), which is in direct control of the CEO as an internal audit body.
Corporate Governance System at Daiwa Securities Group
Board of Directors and Committees: Roles, Duties, Composition and Activities
For roles, duties, composition and activities of the Board of Directors and the Committees, refer to:
- Corporate Governance Report
- Securities Reports
- Daiwa Securities Group Integrated Reports
- Sustainability Data Edition
| List of Items | Corporate Governance Report | Securities Report | |
|---|---|---|---|
| Board of Directors | Role and responsibility | ● | ● (including agenda) |
| Members and their status of attendance | ● | ● | |
| Evaluating the effectiveness of the Board of Directors | ● | ||
| Nominating Committee | Role and responsibility | ● | ● (including agenda) |
| Composition | ● | ● | |
| Members and their status of attendance | ● | ● | |
| Nomination policies, etc. | ● | ● | |
| Audit Committee | Role and responsibility | ● | ● (including agenda) |
| Composition | ● | ● | |
| Members and their status of attendance | ● | ● | |
| Audit Committee's activities | ● | ● | |
| Compensation Committee | Role and responsibility | ● | ● (including agenda) |
| Composition | ● | ● | |
| Members and their status of attendance | ● | ● | |
| Outside Directors' Committee | Role and responsibility | ● (including agenda) | ● (including agenda) |
| Executive Management Committee | Role and responsibility | ● | ● |
| Composition | ● | ● | |
| Subcommittees | ● | ● | |
| Group Internal Audit Committee | Role and responsibility | ● | ● |
| Composition | ● | ● | |
| Title and charge in the Company | Years on Board | Corporate management | Finance / Accounting | Legal / Compliance | DX / ICT | Global business | Sustainability *1 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Seiji Nakata | Chairperson of the Board and Corporate Executive Officer | Nominating Committee | Compensation Committee | 9 years | They have expertise and experience to execute adequately the management and control of the Group. |
● | |||||
| Akihiko Ogino | Member of the Board, Representative Corporate Executive Officer, President and CEO |
Nominating Committee | Compensation Committee | 4 years | ● | ||||||
| Shinsuke Niizuma | Member of the Board, Representative Corporate Executive Officer, Deputy President, COO and Head of Wealth Management |
- | |||||||||
| Keiko Tashiro | Member of the Board, Corporate Executive Officer and Deputy President, Head of Sustainability, Financial Education, Securities Asset Management and Think Tank |
10 years | ● | ● | |||||||
| Eiji Sato | Member of the Board, Senior Executive Managing Director, Head of Corporate Planning |
- | |||||||||
| Sachiko Hanaoka | Member of the Board | Audit Committee | 5 years | ||||||||
| Title and charge in the Company (★ indicates a Chairperson of the committee) |
Years on Board | Corporate management | Finance / Accounting | Legal / Compliance | DX / ICT | Global business | Sustainability *1 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Eriko Kawai | Outside Director | Nominating Committee | Compensation Committee | 6 years | ● | ● | ● | ||||
| Katsuyuki Nishikawa | Outside Director | Nominating Committee | Audit Committee | 5 years | ● | ● | |||||
| Toshio Iwamoto | Outside Director | Nominating Committee★ | Compensation Committee | 4 years | ● | ● | ● | ● | |||
| Yumiko Murakami | Outside Director | Audit Committee | Compensation Committee | 3 years | ● | ● | ● | ||||
| Noriko Iki | Outside Director | Nominating Committee | Audit Committee | 1 years | ● | ● | ● | ||||
| Mami Yunoki *2 | Outside Director | Audit Committee | Compensation Committee | - | ● | ||||||
- *1Criteria: People with experience in sustainability-related work (including experience in promoting the Group's sustainability strategy)
- *2Ms. Mami Yuzuki's name in her family register is Mami Kato.
Preventing Conflict-of-Interest Transactions between Group Companies
Conflict-of-interest transactions can occur between Daiwa Securities Group Inc. and Group companies in situations such as intra-Group transactions. Daiwa Securities Group applies rules regarding conflicts of interest stipulated by Japan's Companies Act to the Executive Management Committee as well as the Board of Directors. Conflicts of interest between Daiwa Securities Group Inc. and Group companies are appropriately prevented through a rule prohibiting an executive officer from voting when he or she concurrently serves as an officer of an interested Group company and thus has a special interest in a matter to be decided.
Performance -linked remuneration system for Directors and Corporate Executive Officers (Shikkoyaku)
At Daiwa Securities Group, Inc., as stipulated by the Companies Act, the Compensation Committee has determined "Policies for Determination of Remuneration of Directors and Corporate Executive Officers."
Policies for Determination of Remuneration of Directors and Corporate Executive Officers
Compensation for Directors and Corporate Executive Officers is based on the following fundamental policies.
- To create effective incentives, which contribute to the increase of shareholders' value through sound business development and also lead to the improvement of business performance in the short-term and in the medium/long-term.
- To maintain a remuneration level which is competitive enough to recruit and retain people not only in Japan but also in the world as a global securities company group.
- To ensure the execution and supervision functions operate effectively as a company with Three Committees (a company with nominating committee, etc.).
Remuneration of Directors and Corporate Executive Officers consists of base remuneration, Performance-linked remuneration and Stock-linked remuneration, and determined at the Compensation Committee which are specifically as below.
- Base remuneration
- A fixed amount calculated based on his/her position, duties and role, and paid monthly and in cash.
- Stock-linked remuneration
- To increase the link between remuneration and shareholders' value, the Company grants, as stock-linked remuneration, restricted stock, etc., the value of which corresponds to a certain percentage of base remuneration, as non-monetary remuneration at a certain time every year.
- Performance-linked remuneration
- Determined depending on the level of individual contribution, mainly on the basis of consolidated ROE, consolidated ordinary income and base income, which are settled as Performance KPIs of the Medium-Term Management Plan, while also comprehensively taking into account achievement status of the managerial goals set in the Medium-Term Management Plan and other relevant factors, and paid annually at a fixed time in the form of cash and restricted stocks.
- A certain limit is set for the cash payment regarding performance-linked remuneration based on business performance. If performance-linked remuneration exceeds the limit, the part exceeding the limit will be replaced from cash to restricted stock.
- It does not apply to Directors who do not serve as Corporate Executive Officers.
- (Note)Base Income: Total ordinary income from wealth management, securities asset management, and real estate asset management.
Regarding remuneration, etc. of Directors and Corporate Executive Officers (Shikkoyaku) for the current fiscal year, the Compensation Committee has determined that the remuneration, etc. conforms with "Policies for Determination of Remuneration of Directors and Corporate Executive Officers" because such remuneration, etc. was decided by the Compensation Committee only after confirming its consistency with such policies.
< Performance-linked remuneration >
The Company refers to KPIs, which are set as the Group numerical goals in the Medium-Term Management Plan "Passion for the Best" 2026 to calculate Performance-linked remuneration.
The performance assessments used in calculating Performance-linked remuneration reflect the financial performance evaluation, which is based on the Performance KPIs using the financial information and the quality evaluation, which is a comprehensive assessment of the KPIs other than the performance KPI. The Financial Performance Evaluation and the Quality Evaluation are determined by the Compensation Committee.
Performance-linked remuneration is calculated by multiplying the reference amount determined for each position and the performance evaluation, and reflecting the degree of individual contribution. The same calculation formula is applied to all positions for performance evaluation.
The indicators pertaining to Performance-linked remuneration are as shown below.
- (Notes)The standard value is determined at Compensation Committee, based on Medium-Term Management Plan.
< Image of remuneration >
Restricted stocks in a value corresponding to a certain ratio of performance-linked remuneration (cash) are paid to foster a system that increases incentivizes for long-term performance improvement and sustainable growth.
In order to foster a system that incentives long-term performance improvement and sustainable growth better, if Performance-linked remuneration exceeds a certain limit, the excess amount will be paid in the form of by restricted stock.
< Restricted Stock Compensation Plan >
The Company introduced the Restricted Stock Compensation Plan to increase incentives for the Company and its subsidiaries' Directors, Corporate Executive Officers (Shikkoyaku), and Executive Officers (Shikkoyakuin), etc., to enhance performance in the medium and long term and strengthen values shared among the Eligible Officers, etc. and shareholders.
| Stock Remuneration I (Stock-linked remuneration) |
It is intended to provide restricted stock for amount which equals to fixed ratio of the Base remuneration, and to function effectively as an incentive for long-term performance improvement, restriction will be released when he/she resigns he/her position as director, officers etc., of the Company and its subsidiaries and affiliates. |
|---|---|
| Stock Remuneration II (Performance-linked remuneration) |
Performance-lined remuneration is paid in the form of restricted stocks of a value corresponding to a certain percentage of performance-linked remuneration (cash). The restricted transfer period is three years, which functions both as an incentive to boost long-term performance and to defer actual compensation. |
| Stock Remuneration III (Performance-linked remuneration) |
Fixed limit is set for Performance-linked remuneration, which is provided by cash based on the performance, and if the amount exceeds the limit, part of the remuneration will be replaced by restricted stock. Restriction period is 3 years, it will function as substantial fee defer when Performance-linked remuneration exceeds a certain limit. |
- (Note 1)Stock Remuneration II is calculated by multiplying the ratios established by position by performance-linked remuneration (cash). Regarding the Representative Corporate Executive Officer, President and CEO, a structure is in place to decide the ratio of performance-lined remuneration based on the Company's TSR (total shareholder return) during the results evaluation period, the rate of change of the TOPIX, and a comparative valuation with the TSR of competitors.
- (Note 2)Where serious compliance violations are discovered at the Group, in addition to the forfeiture of unpaid stock remuneration (malus), based on deliberation by the Compensation Committee, a clawback scheme is being introduced to allow the Company to demand the return of all or part of the stock remuneration that has already been paid.
< Procedures on decision of remuneration for Directors >
For details on the procedures on decision of remuneration for Directors, etc., please see below.
< Consolidated Compensation, etc. by officer >
For details on Consolidated Compensation, etc. by officer, please see below.
Internal Control System and Internal Audit
The Company group has created management structure centered on the Company with regard to the group's various main risks, and seeks to ensure the effectiveness and efficiency of operations, the reliability of the finance report, compliance with the laws and regulations concerning business operations, and the preservation of assets, etc. This is based on the recognition that the maintenance of the internal control system to accomplish the sound and appropriate operation is the responsibility of the manager.
Based on the recognition that the establishment of a sound and efficient internal audit system enhances the value of the Group, and having concluded that the internal audit plays an important role in such a system, the Company has positioned a full-time Internal Audit Corporate Executive Officer (Shikkoyaku) in charge, and has an Internal Audit Department, which is independent from other sections, verify the internal control system.
By conducting risk-based audits, the Department strives to enhance the Group's corporate value.
Focus items in the internal audits of the Group's
- The state of internal control at Daiwa Securities and overseas locations as a global financial instruments business operator
- The state of businesses at Group companies, and the state of control from the Company
Authorization of Plans and Reporting of Results
Internal audit plans are subject to approval by and results of the audits are presented to the Group Internal Audit Committee. Furthermore, internal audit plans shall be consented to by the Audit Committee or the Selected Audit Committee Members who has been given certain authority from the Audit Committee, and the results of the audits are also reported directly to the Audit Committee.
Collaboration with Parties Inside and Outside the Group and Improvement of System
The Company's Internal Audit Department collaborates with the internal auditing divisions of major Group companies in Japan and overseas through regular meetings, monitoring, and audit activities.
The Company's Internal Audit Department is in close liaison with the Audit Committee and Accounting Auditors and make adjustments with them in order to carry out auditing efficiently. The Department may also be delegated investigative duties from the Audit Committee. The degree to which these internal auditing activities satisfy the Institute of Internal Auditors' "International Standards for the Professional Practice of Internal Auditing," the global standard for internal auditing, is routinely evaluated by independent outside third parties. The Group thus strives to constantly improve its system.
Risk Appetite Framework
Globally operating financial institutions are required to ensure that they are sound enough to adequately perform their financial intermediation function even in times of economic or market stress. Additionally, to be well prepared for stress, they need to secure sufficient liquidity and capital for risks even in ordinary times.
Under these circumstances, the Group has introduced the Risk Appetite Framework (RAF). The Group's RAF is documented as the Risk Appetite Statement and deliberated and decided at the Board of Directors. The Group is making efforts to instill it within the Group and improve the management structure.
Quantitative indicators of risk appetite are deliberated and decided as part of the Risk Appetite Statement and reviewed twice a year at the Board of Directors. The Audit Committee audits RAF-related execution of duties by the Board of Directors and the management.