Corporate Governance

Last Updated: 2010.02.24
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Our Approach

FAST RETAILING strives to strengthen its corporate governance to ensure proper management action, a responsive and transparent management structure and to continue to grow to be the world’s number one apparel retailing group. We have initiated various measures to ensure the independence and strengthen the surveillance powers of the Board of Directors.

Accordingly, we introduced the entrusted officer system in November 2005 to separate the decision-making and execution functions of management. Also beginning in November 2007, we appointed a majority of external directors to the Board.^*1

The Group has adopted the corporate auditor governance model, which assigns responsibility for the oversight of corporate governance to the Board of Auditors,^*2 but has also established discretionary governance committees to augment the functions of the Board of Directors. Committees have been formed to oversee human resources, corporate social responsibility (CSR), disclosure, IT investment, the Code of Conduct and corporate ethics. To fulfill their responsibilities, these committees conduct responsive and open discussions and make decisions concerning their respective expertise. An external director, Mr. Hambayashi, serves as the chairperson of the Human Resources Committee. Other committees consist of corporate auditors, external professionals, lawyers and entrusted officers.

*1

External directors as provided for in Article 2-15 of Japan’s Company Law

*2

Under Japan’s Company Law, large, listed companies may select either the corporate auditor governance model or the “company with committees” governance model. FAST RETAILING has adopted the corporate auditor governance model.

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Activities of the Board of Directors

The Board of Directors makes decisions pertaining to management and supervises the activities of the CEO and entrusted operating officers. As a result of the appointment of a majority of external directors, the Board obtains highly professional and objective advice in a broad range of areas.

The backgrounds of external directors in brief are as follows: Toru Hambayashi was the president of one of Japan’s general trading companies for many years and has indepth familiarity with the apparel retailing industry. Nobumichi Hattori’s experience includes years of work in a U.S.-based financial institution and he presently serves as a visiting professor at the Graduate School of International Corporate Strategy of Hitotsubashi University. He has indepth knowledge of M&A. Toru Murayama has a wide range of knowledge and experience related to management and is the top manager of a leading U.S.-based consulting company. He also serves as visiting professor at the Comprehensive Research Organization of Waseda University. Masaaki Shintaku has held top management positions in a U.S.-based information systems company and has in-depth know-how regarding the management of global corporations.

Topics discussed during fiscal 2009 included: Approval of the annual budget and financial statements, the Group’s medium-term strategy and plans, the takeover bid for LINK THEORY HOLDINGS, governance committees, a project for structuring business systems, strategies for the footwear and low-priced apparel businesses and a review of J-SOX internal controls. In particular, Board members receive full briefings and thoroughly discuss M&A proposals that are important for the Group’s expansion. During fiscal 2009, the Board of Directors met 14 times and the average ratio of attendance of directors at these meetings was 93.6%.

Benefits, etc. paid to five board of directors in the year to end August 2009 totaled ¥432mln, of which ¥30mln was paid to 3 external directors. Maximum annual remuneration of ¥1.0bln set at general shareholder meeting held November 24, 2006.

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Messages from External Directors

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The Auditors

The role of the auditors is to supervise the Board of Directors. The auditors also attend committee meetings as members or as observers to ensure that activities are being conducted appropriately as well as to provide advice. The Board of Auditors consists of five members, four of whom are external auditors.^*3 External Auditor Takaharu Yasumoto is a certified public accountant; Norihiko Shimizu is a visiting professor at the Graduate School of International Corporate Strategy of Hitotsubashi University; and Akira Watanabe and Minoru Ota are attorneys at law and provide objective opinions based on their expertise. In fiscal 2009, the average ratio of attendance of auditors at the 14 meetings held by the Board of Directors was 95.7%, and the average ratio of attendance of auditors at the 13 meetings held by the Board of Auditors was 98.4%.

Benefits, etc. paid to five auditors in the year to end August 2009 totaled ¥55mln, of which ¥40mln was paid to 4 statutory auditors. Maximum annual remuneration of ¥100mln set at general shareholder meeting held November 26, 2003.

*3. Pursuant to Article 2-16 of Japan’s Company Law

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Corporate Governance at FAST RETAILING

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Composition of Committees

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Committees

• Articles of Association (Japanese Only) (20KB)
• Corporate Governance Report presented to the Tokyo Stock Exchange (Japanese Only) (277KB)

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