• Corporate Governance Report
  [PDF:1,697KB]

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. (1)Making swift and decisive decisions by having the Board of Directors assign wide-ranging authority to Corporate Executive Officers and clarifying the division of the duties among Corporate Executive Officers
2. (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

Preamble:Purpose of our corporate governance Article 1:Basic approach to corporate governance and the positioning of these Guidelines Article 2:Organizational design (adoption of a Three Committees system) Article 3:Role of the Board of Directors Article 4:Composition of the Board of Directors Article 5:Chair of the Board of Directors Article 6:Composition of the Committees Article 7:Agenda setting and management of Board of Directors meetings Article 8:The role and requirements of Directors Article 9:The role and requirements of Outside Directors Article 10:The Outside Directors' Committee Article 11:Support systems for Directors (including the provision of information and training) Article 12:Evaluating the effectiveness of the Board of Directors

Article 13:The role of Corporate Executive Officers (Shikkoyaku) Article 14:The role of the Nominating Committee Article 15:Succession plans for the position of CEO Article 16:The role of the Compensation Committee Article 17:The authority and role of the Audit Committee Article 18:Internal control systems Article 19:Information disclosure Article 20:Securing equality of shareholders Article 21:Related party transactions Article 22:Dialogue with shareholders and investors Article 23:Dialogue with stakeholders Article 24:Basic policy on strategic shareholding Article 25:Amendments to and revocation of the Guidelines

• Corporate Governance Guidelines
  (as of June 1, 2023) Complete Text

Corporate Governance System

The corporate governance system of the Company consists of the Board of Directors and the 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 IT Strategy Committee, and Overseas Management Committee) as an executive body, 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 (as of June 28, 2023)

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

• ★ indicates a Chairperson of the committee

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.

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."

< 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" 2023 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.

< Image of remuneration >

< 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.
Under a Restricted Stock Compensation Plan, the Company has introduced the malus provisions. If Eligible Officers commit a serious criminal offense, a breach of duty of care, or any other misconduct that damages the Group's reliability during the restriction period, the Company will automatically acquire subject stocks without compensation.

< Consolidated Compensation, etc. by officer for FY2022 >

(Notes)

1. 1The persons, each of whose total remuneration, etc., paid is equal to or more than 100 million yen, are listed above.
2. 2Type of officer refers to the officer categories used by Daiwa Securities Group Inc.
3. 3Officers serving as both Directors and Corporate Executive Officers are listed as Corporate Executive Officers in the type of officer column.
4. 4Performance-linked remuneration does not include the amount granted as Restricted Stock.

< Procedures on decision of remuneration for Directors >
The Articles of Incorporation stipulate that the remuneration, etc., of the Directors and Corporate Executive Officers (Shikkoyaku) is determined by the resolution of Compensation Committee.
In determining the amount of remuneration, it is calculated based on the indicators determined by Compensation Committee, majority of which is held by Outside Director to secure the transparency.

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.
Reports to the Group Internal Audit Committee are not limited to the audit results conducted at Daiwa Securities Group Inc. and Daiwa Securities Co. Ltd. They also include highly important findings made during audits conducted on companies in Japan and overseas.

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 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.