Last Updated: 2025.03.04
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Our Approach to Corporate Governance
Corporate Governance at Fast Retailing
Directors' expertise
Committees and Their Responsibilities
Shareholder Engagement
The Audit ＆ Supervisory Board
Independent External Directors
Strategic Shareholdings
Outline of Corporate Governance
Messages from External Directors
and External Audit ＆ Supervisory Board Members
Composition of Committees
General Meeting of Shareholders
The Board of Directors
The Nomination and Remuneration of Directors,
Audit ＆ Supervisory Board Members and Corporate Officers
Shareholder Dividends
FR Policy on Transactions between Related
Parties
Our Approach to Corporate Governance
Fast Retailing is more determined than ever to pursue business expansion and sustainability initiatives in tandem as part of our aim to become a global No.1 brand that is essential to daily living and trusted by all customers around the world based on our corporate statement: Changing clothes. Changing conventional wisdom. Change the world.
To achieve these aims, we are working hard to establish an effective corporate governance structure. The company's form of organization is a company with Board of Audit ＆ Supervisory Board Members system. To enhance the Board's independence and strengthen its surveillance ability, the majority of the directors on the Board are external directors. The company has introduced a corporate officer system designed to split management decision-making and business-execution functions, and facilitate fast management decisions and business implementation. In addition, Fast Retailing has established a variety of committees to complement the effective functioning of the Board, including the Human Resources, Sustainability, Disclosure, IT Investment, Code of Conduct, Business Ethics, Risk Management, Nomination and Remuneration Advisory, and Human Rights committees. Each committee encourages effective, open debate and decision-making to fulfill its designated purpose and responsibilities. This system is our way of responding to the needs and demands of our customers, business partners, shareholders and all other stakeholders.
As we continue to expand our global operations, Fast Retailing is focusing on compliance to ensure the proper implementation of solid internal control systems in each market in which we operate, strengthening our risk management frameworks, and ensuring firm management of confidential information and proper internal audit processes. We are also committed to strengthening our corporate governance by encouraging all employees to adhere to the Fast Retailing Group Code of Conduct governing employee conduct and take an annual online course to deepen understanding and compliance with the Code.
Outline of Corporate Governance (Year ended November 29, 2024)
| Form of Organization | Company with Audit ＆ Supervisory Board | |
| Chairman of the Board | Tadashi Yanai | |
| Number of Directors | 10, including 6 external directors | |
| Number of Audit ＆ Supervisory Board Members | 5, including 3 external Audit ＆ Supervisory Board Members | |
| Details of Board of Directors Meetings in Fiscal 2024 | Number of Meetings | 13 |
| Director Attendance*1 | 100% | |
| Audit ＆ Supervisory Board Member Attendance*2 | 100% | |
| Sample Agenda | Approval of the annual budget, corporate results, officer appointments, financial planning and fund management policies, and transactions with related parties, etc. | |
| Details of Audit ＆ Supervisory Board Meetings in Fiscal 2024 | Number of Meetings | 15 |
| Audit ＆ Supervisory Board Member Attendance*2 | 97.7％ | |
| Sample Agenda | Auditing policy, auditing planning, discussions with the Representative director, the efficacy of the company's global internal reporting systems, the current situation and issues in the global distribution function, and the current situation and issues in the e-commerce function, etc. | |
| Principal meetings Audit ＆ Supervisory Board Member attend | Board of Directors Meetings, Human Resources Committee, Sustainability Committee, Disclosure Committee, IT Investment Committee, Code of Conduct Committee, Business Ethics Committee, Risk Management Committee, Nomination and Remuneration Advisory Committee, Human Rights Committee | |
| Election of Independent Directors | 6 external directors and 3 external Audit ＆ Supervisory Board Members elected | |
| Determination of Individual Director Remuneration |
Internal director remuneration consists of basic fixed remuneration and variable performance-related remuneration (both short and long-term) based on each director's performance, etc. The basic portion of internal director remuneration is calculated using a table of fixed compensation for individual internal directors according to their stipulated grade, which is based on their specific job description, level of responsibility, past achievements, and degree of contribution to the company. Each director's grade is determined by the Board of Directors following discussion in the Nomination and Remuneration Advisory Committee. The performance-related remuneration element is based on an evaluation of each director's performance during a specified period and calculated within the upper limit approved at the general shareholders' meeting. The Board delegates the determination of specific monetary totals for each director to company president and representative director Tadashi Yanai with reference to prior discussions in the Nomination and Remuneration Advisory Committee. Targeted amounts of long-term performance-related remuneration are determined with reference to remuneration tables established for each stipulated grade and with the approval of the Nomination and Remuneration Advisory Committee. External director remuneration is determined by Board of Directors within the total amount for external director remuneration approved at the general shareholders' meeting. Fiscal 2024 compensation to the ten directors totaled 851 million yen, including 90 million yen to external directors. | |
| Determination of Individual Audit ＆ Supervisory Board Member Remuneration |
Overall limit determined at the general shareholders meeting. Individual compensation decided through mutual consultation between Audit ＆ Supervisory Board Members. Fiscal 2024 compensation to the six Audit ＆ Supervisory Board Members totaled 93 million yen, including 45 million yen to external Audit ＆ Supervisory Board Members. | |
| Independent Auditor | Deloitte Touche Tohmatsu LLC | |
*1. Average attendance of each director.
*2. Average attendance of each Audit ＆ Supervisory Board Member.
Corporate Governance at Fast Retailing (As of November 29, 2024)
Messages from External Directors and Extenal Audit ＆ Supervisory Board Members
-
Conducting Solid Global Risk Management, Advising on Increasing Shareholder Value
Fast Retailing is expected to enjoy strong growth into the future. To help fulfill those expectations, I intend to ensure solid global risk management and offer advice from ...
Nobumichi Hattori,
External Director -
Promoting Next-stage Growth and Digital Consumer Retail Company
Fast Retailing is transforming into a digital consumer retail company by investing efficiently in the area of IT and accelerating internal efforts to ...
Masaaki Shintaku,
External Director -
Awareness on the Ground to Build a Better Company
Our Board is well-balanced and boasts members with diverse business backgrounds. Everyone exchanges lively opinions and Mr. Yanai is always open to ideas ...
Naotake Ono,
External Director -
Promoting Diversity as a Growth Driver, Helping Fuel Business Expansion
Fast Retailing is accelerating the development of global operations, and it will enjoy greater growth potential if it encourages employees from diverse backgrounds to ...
Kathy Matsui,
External Director -
Envisioning the Ideal Future Society, Supporting Innovation
I intend to use my experience and expertise in construction to offer better proposals and advice on the building of sustainable next-generation stores that will meet ...
Joji Kurumado,
External Director -
Balancing Challenges and Risk Management, Improving Corporate Value
I spent many years in the food industry, so the idea of LifeWear as a daily necessity resonates with me. I draw on the international management knowledge ...
Yutaka Kyoya,
External Director -
Offering Multifaceted Advice
Companies with global operations often face unexpected challenges. As an external Audit & Supervisory Board Member, I take my function of supporting corporate growth ...
Keiko Kaneko,
Audit & Supervisory Board Member -
Offer Candid Opinions on Diverse Issues
The stronger the opinion, the more attentively Mr. Yanai listens, so auditors and directors can always conduct open-minded discussions. With over 30 years' experience as ...
Takao Kashitani,
Audit & Supervisory Board Member -
Supporting our mission to grow business in harmony with society
The mission of the Audit & Supervisory Board is to carefully monitor appropriate decision-making processes, ascertain any risks that might hinder intended business plans ...
Masakatsu Mori,
Audit & Supervisory Board Member
Directors' expertise
Given our aspirations to become the world's No.1 brand as a digital consumer retailing company, Fast Retailing expects our directors to have a high level of knowledge and experience particularly in corporate management and global business. We also believe that any advice or recommendations based on knowledge and experience in the specialist fields of IT and digital, store opening and logistics, financial affairs, accounting, and finance will be useful to our business management. We have listed the specialist areas below to which we expect each director will make a special contribution. This list is by no means an exhaustive representation of our directors' expertise.
| Tadashi Yanai | : | Corporate Management, Global Business, Sustainability, IT & digital, Store Development, Logistics, Treasury, Accounting & Finance |
| Nobumichi Hattori | : | Corporate Management, Global Business, Sustainability, Treasury, Accounting & Finance |
| Masaaki Shintaku | : | Corporate Management, Global Business, Sustainability, IT & digital |
| Naotake Ono | : | Corporate Management, Global Business, Sustainability, Store Development, Logistics |
| Kathy Mitsuko Koll (Kathy Matsui) | : | Corporate Management, Global Business, Sustainability, Treasury, Accounting & Finance |
| Joji Kurumado | : | Corporate Management, Global Business, Sustainability, Store Development |
| Yutaka Kyoya | : | Corporate Management, Global Business, Sustainability, Logistics |
| Takeshi Okazaki | : | Corporate Management, Global Business, Sustainability, IT & digital, Treasury, Accounting & Finance |
| Kazumi Yanai | : | Corporate Management, Global Business, Sustainability |
| Koji Yanai | : | Corporate Management, Global Business, Sustainability |
Composition of Committees (As of November 29, 2024)
Note: The head of the Sustainability Department chairs the Sustainability and the Business Ethics Committees, the head of the Legal Department chairs the Code of Conduct Committee, and an external expert chairs the Human Rights Committee. External Director and Audit ＆ Supervisory Board Members offer opinions based on their individual areas of expertise.
Committees and Their Responsibilities
Human Resources Committee
The Human Resources Committee discusses important organizational changes and adjustments to human resource systems across the Group, and offers views and suggestions to the Board. The committee met three times in FY2024.
Sustainability Committee
Discusses and determines Fast Retailing's overall strategy on sustainability issues, environmental protection, social responsibility activities, human rights issues, diversity, and the communication of information. The committee is chaired by the internal director in charge of sustainability, and includes influential external experts, directors, Audit ＆ Supervisory Board Members, and executive officers among its members. The committee met four times in FY2024.
Disclosure Committee
The Disclosure committee, chaired by the individual in charge of disclosing information to the Tokyo Stock Exchange (TSE), boosts management transparency by "disclosing information that is timely, accurate, fair and easy to understand." The committee is responsible for timely disclosure to the TSE and the Stock Exchange of Hong Kong and voluntary disclosure of information that may materially impact investor and shareholder investment decisions. The committee met 12 times in FY2024.
IT Investment Committee
This committee debates and advises on the IT investments that will best achieve the Group's digital innovation targets, deliberating on the efficacy of individual investments, and checking whether IT investment budgets submitted by external specialist organizations are reasonable and appropriate. The committee is chaired by the company president, and includes influential external experts, external directors, and executive officers as members and advisors. The committee met three times in FY2024.
Code of Conduct Committee
The Code of Conduct Committee considers how best to resolve any violations of the Fast Retailing Group Code of Conduct (CoC), and make improvements. It advices on educating executives and employees about the CoC, and on operating the internal reporting system (hotline). The committee is chaired by the head of the Legal and Compliance Department and committee members include a lawyer serving in the capacity of an external Audit ＆ Supervisory Board Member. The committee met 13 times in FY2024.
Business Ethics Committee
This committee ensures the Group does not use an advantageous position to exert undue pressure on business counterparts such as partner factories and suppliers. The committee provides advice and counsel to departments based on external field inspections and partner company surveys. The committee is chaired by the head of the Sustainability Department. Audit ＆ Supervisory Board Members (including external Audit ＆ Supervisory Board Members), executive officers and others participate as committee members. The committee met 11 times in FY2024.
Risk Management Committee
To identify risks latent in business activities on a regular basis and to strengthen systems for detecting and managing material risks, this committee analyzes and assesses the extent of impact and frequency of risks on business, and prioritizes areas of highest potential risk in discussions of countermeasures to contain risk before it occurs or to mount a speedy response if the risk does occur. The committee is chaired by the Group CFO, and committee members include outside directors and executive officers. The committee met four times in FY2024.
Nomination and Remuneration Advisory Committee
With the aim of strengthening Fast Retailing governance, the committee discusses and advises the Board of Directors on important items relating to Fast Retailing corporate governance, such as the requirements and nomination policy regarding candidates for director and Audit ＆ Supervisory Board Member positions, the policy for determining director remuneration, requirements relating to the Company's chief executive officer, and smooth management succession planning. The Board appoints members of the committee from the directors and auditors, who vote and elect the Chairman from among them. Currently, all the Company's independent external directors and an external Audit ＆ Supervisory Board Member serve as committee members and the chairman of the committee is an external director. We believe that Fast Retailing's corporate statement and corporate spirit represent vital sources of growth and that it is important to pass on those commitments and values. For that reason, the Company's representative director also serves on the committee. The committee met three times in FY2024 to discuss and decide policies relating to the nomination of candidates for director and Audit & Supervisory Board Member and the determination of remuneration for internal directors. All committee members attended both committee meetings.
Human Rights Committee
Chaired by an external professional, this committee debates and advises on the execution of human rights due diligence. The committee is responsible for ensuring human rights are upheld according to the 2018 Fast Retailing Group human rights policy. It provides various educational activities and advises business administration sections to ensure all business is conducted appropriately. As part of its counselling and supervisory responsibilities, the committee also investigates human rights violations and implements relief measures. The committee met seven times in FY2024.
General Meeting of Shareholders
Fast Retailing views the annual general meeting of shareholders as a precious opportunity to talk directly with shareholders. We try to make the most of the meeting to fully explain the proposals on the agenda, the company's current operations, any issues that need to be addressed, and to respond to questions.
Our general meeting of shareholders is held towards the end of November each year at our corporate headquarters in Yamaguchi, Japan.
We send out a convocation notice for the general shareholders' meeting to our shareholders, and we also disclose the content of this notice in advance on the Fast Retailing website to ensure shareholders have time to consider the agenda. An English and Chinese translation of the convocation notice is also published on the website at least three weeks prior to the general shareholders' meeting.
Once concluded, we then disclose the minutes of the general shareholders' meeting on our website for the benefit of any shareholders who were unable to attend.
We pay close attention to any company proposal that was voted against by a considerable number of shareholders, even if the proposal was passed at the shareholders' meeting. The Board of Directors analyzes the cause and extent of any shareholder opposition and considers what action to take.
Shareholder Engagement
Fast Retailing has established a framework for constructive dialogue with shareholders outside the annual general shareholders meeting that enables shareholders and a broad range of other stakeholders to fully understand and appropriately evaluate our company.
1)
The departments responsible for communicating with shareholders, our Investor Relations, Public Relations, and Sustainability departments, hold regular discussions with our CEO and the officer in charge of handling information regarding the best means of communication, and any action required to facilitate that communication. That communication is aimed at both domestic and overseas shareholders and covers topics ranging from our most recent corporate performance and future outlook to our medium- to long-term business policy and the status of our sustainability activities.
2)
Our Disclosure Committee regularly investigates whether there is any significant company-related information that should be disclosed, in terms of both timely and voluntary disclosure. If so, that information is disclosed swiftly to the Tokyo Stock Exchange, the Hong Kong Stock Exchange, and via our corporate website.
3)
Fast Retailing discloses a variety of information to encourage a deeper understanding of our management strategy and business environment, including the publication of news releases on our company website, the transmission of video footage of our corporate results and sustainability briefings, and the disclosure of written information about our corporate results.
4)
We strive to help our shareholders gain a clear understanding of our operations by sending them publications, such as our business review, convocation notices for shareholder meetings, and a copy of our integrated report in Japanese or English. We also disclose these documents on our website.
5)
We proactively share opinions offered by our shareholders by reporting them to senior management meeting, relevant departments, and other feedback forums.
6)
As part of our investor relations (public relations for investors and shareholders) activities, we determine IR policy and strive to disclose information accurately, fairly and swiftly, and also ensure the thorough management of insider information. Each quarter, we impose a quiet period during which we do not conduct any IR activities from the day after the end of each quarter through to the day of the announcement of that quarter's business results.
We disclose details of our IR policy on our website:
https://www.fastretailing.com/eng/ir/policy/.
The Board of Directors
(1) The Role of the Board of Directors
The Board of Directors shall discuss and determine matters that require resolution by the Board according to laws, regulations, and the company's articles of incorporation as well as important management matters at Board meetings, and ensure any discussions progress in accordance with those Board regulations and other internal rules. In order to strengthen its corporate governance system, Fast Retailing operates a delegated authority, in which the representative director and the Board delegates discretion over the execution of business administration to corporate officers. The authority to determine and -implement individual executive matters or matters that do not require Board approval is delegated to the appointed corporate officer in accordance with internal stipulations. Fast Retailing also has separate governance committees which support the decision-making duties of the Board.
(2) The Structure of the Board of Directors
To ensure substantive and lively discussion in Board meetings, as well as appropriate and swift decision-making, Fast Retailing believes it is best to have between three and ten directors on its Board. Our Board consists of a good balance of both internal and external experts with specialist expertise and knowledge in various areas that are vital to Fast Retailing's corporate strategy. We disclose details about Fast Retailing directors and Audit ＆ Supervisory Board Members who also serve on the boards of other listed companies, both on our website and in the reference materials accompanying convocation notices for annual general shareholders' meetings. Our directors and Audit ＆ Supervisory Board Members work hard to ensure they have the information they need to effectively fulfill their duties. In addition, the relevant officer in charge provides information to directors and Audit ＆ Supervisory Board Members on important operational issues, finance matters and organizational management. To promote a better understanding among Board members of Fast Retailing Group operations and management principles, Fast Retailing provides opportunities for directors and Audit ＆ Supervisory Board Members to visit the virtual store in the Ariake head office and the Ariake warehouse and to participate in the semi-annual FR Convention.
(3) Meetings of the Board of Directors
In principle, the Board of Directors meets once a month. The annual meeting schedule is determined in advance to ensure that the greatest number of directors and Audit ＆ Supervisory Board Members can attend. The agenda and any relevant material are sent to directors and Audit ＆ Supervisory Board Members two working days prior to the Board meeting to encourage a lively discussion in the meeting.
Once a year, Fast Retailing asks each individual Board member and Audit ＆ Supervisory Board Member to fill in a questionnaire regarding the effectiveness of the Board. The FY2024 survey results showed that the company received respectable evaluations from each Board member and Audit ＆ Supervisory Board Member regarding our efforts in each evaluation category. However, respondents pointed out the need to devise further improvements regarding the timing of notification and distribution of Board meeting agendas and related materials as well as the content of written and verbal explanations and the way those explanations are conveyed. They also mentioned a need to further strengthen the debate in various committees and coordination between committees and the Board of Directors. Some respondents expressed the opinion that the diversity of Board members should be subject to further discussion. The survey responses and suggestions were shared among all Board members and Audit ＆ Supervisory Board Members and vigorously discussed in a subsequent Board meeting. Fast Retailing will consider how to further improve the effectiveness of the Board based on the content of the discussions.
Audit ＆ Supervisory Board
Audit ＆ Supervisory Board Members attend all Board of Directors' meetings and audit the execution of company management. Fast Retailing's Audit ＆ Supervisory Board, which consists of two full-time Audit ＆ Supervisory Board Members and three external Audit ＆ Supervisory Board Members, receives regular and ad hoc reports on important auditing-related matters from the Internal Auditing Department and the accounting auditor, conducts thorough discussions, and maintains strong communication links at all times.
Items discussed in the Audit ＆ Supervisory Board include the effectiveness of the company's global internal reporting systems, the current status and issues relating to our global distribution function, and the current status and issues relating to the e-commerce function.
The duties of full-time Audit ＆ Supervisory Board Members include attending Board meetings of subsidiary companies and other important meetings, conducting hearings with directors and executive officers regarding the execution of their duties, inspecting and confirming important documentation, visiting overseas subsidiaries, visiting stores and warehouses, and attending briefings run by the Internal Audit Department.
The Nomination and Remuneration of Directors, Audit ＆ Supervisory Board Members and Executive Officers
(1) Nomination of directors, Audit ＆ Supervisory Board Members, and executive officers
At Fast Retailing, the Board of Directors nominates new director candidates following deep discussion in the Nomination and Remuneration Advisory Committee, which is chaired by an external director and on which all external directors serve. The Board of Directors also nominates all new Audit ＆ Supervisory Board Member candidates following debate in the Nomination and Remuneration Committee and with the agreement of the Audit ＆ Supervisory Board. Candidates for the Board of Directors and the Audit ＆ Supervisory Board Members are selected according to whether they have sufficient specialist expertise and experience in finance, accounting, legal affairs or other areas to fulfill their duties. The Board makes decisions regarding the appointment or dismissal of executive officers after considering a range of factors, including a candidate's appropriateness, knowledge, experience, and specialist expertise, and following deliberations in the Human Resources Committee. The Board makes decisions regarding the appointment or reappointment of the CEO or other executive officers after considering candidates' appropriateness, knowledge, experience, and specialist skills, and consulting with the Human Resources Committee. The Board of Directors is made up of a good balance of members with international experience or with specialist knowledge, expertise or aptitude in the areas most required to fulfill our management strategy, without reference to members' age, gender, or origin from inside or outside the company. The Board of Directors proposes candidates for director and Audit ＆ Supervisory Board Member positions at the general meeting of shareholders and list its reasons for selecting specific candidates in both the governance report and the convocation notice.
Fast Retailing views the Group's human resource strategy and planning, including CEO succession planning, as an important management issue, and consistently discusses human resource topics in its Board of Directors' meetings. With particular reference to the selection of a successor to the current CEO, the Nomination and Remuneration Advisory Committee, of which all our external directors are members, discusses a range of matters including the qualifications and attributes of potential successor candidates, the planning of succession training, and the timing of any transfer of authority. The content of these discussions in the Nomination and Remuneration Advisory Committee is reported to the Board when necessary and the Board supervises the overall process. Once this process has been completed, the Board of Directors will ultimately select a successor to the CEO based on the discussions in the Nomination and Remuneration Advisory Committee.
(2) Remuneration, etc. of directors, Audit ＆ Supervisory Board Members, and executive officers
The 60th general meeting of shareholders held on November 25, 2021 approved an overall annual limit for directors' remuneration of 2 billion yen, which includes annual remuneration for external directors up to 200 million yen but does not include the salaries of any employees who also serve as directors). Remuneration for internal directors (all directors who are not external directors) is made up of a fixed basic compensation and a performance-related element. The basic portion of internal director remuneration is calculated using a table of fixed compensation for individual internal directors according to their stipulated grade, which is based on an individual's job description, level of responsibility, past achievements, and degree of contribution to the company. Each director's grade is determined by the Board of Directors following discussion in the Nomination and Remuneration Advisory Committee. The performance-related portion of internal director remuneration comprises a short-term and a long-term performance element, with the short-term performance element being calculated based on an evaluation of each internal director's achievements over a said period and in accordance with predetermined compensation tables. Once the performance-related remuneration for each individual internal director has been calculated using to the aforementioned method, the company president and representative director Tadashi Yanai, who has been delegated by the Board, will make the ultimate decision on specific individual director remuneration with reference to discussions in the Nomination and Remuneration Advisory Committee and within the confines of the upper overall remuneration limit approved at the general meeting of shareholders. Regarding the long-term performance-related remuneration portion, targeted amounts are determined with reference to remuneration table for each stipulated grade and with the approval of the Nomination and Remuneration Advisory Committee.
External director remuneration is fixed at an annual sum of 15 million yen per director. That fixed sum is determined by the Board of Directors within the overall limit approved at the general shareholders meeting.
The Board of Directors delegates the determination of individual director remuneration, etc. to Company President, CEO and Chairman Tadashi Yanai. That delegation is based upon the judgement that President, CEO and Chairman Tadashi Yanai is the appropriate person for evaluating the duties of each director while maintaining a comprehensive view of the Company's overall performance. We believe that authority is appropriately exercised when determining remuneration etc. for individual directors given the fact that all decisions are made following discussions in the Nomination and Remuneration Advisory Committee, upon which all our external directors serve.
The 42nd general meeting of shareholders held on November 26, 2003 approved an overall annual limit for Audit ＆ Supervisory Board Members' remuneration of 100 million yen. The Audit ＆ Supervisory Board apportions that total among Audit ＆ Supervisory Board Members by mutual consultation.
Executive officers are evaluated based on their duties, responsibilities, performance and contribution, and are remunerated according to internal criteria for the Fast Retailing Group determined by the Board of Directors.
（3）Approach to Succession Planning for CEO and Other Executive Officers
Fast Retailing views CEO succession planning as a key management issue and is always working to develop future managers. Each future management candidate is assigned to an important position so that they can acquire the qualities expected of a Fast Retailing manager through practical experience. Fast Retailing founder, chairman and president Tadashi Yanai devotes a considerable amount of time to nurturing the Group's senior executive officers. Many of the Group's senior executive officers joined the company out of school and have amassed 20 to 30 years of experience. Working their way up from the front line in our stores, these individuals have a thorough understanding of Fast Retailing's management philosophy, business principles, spiritual strength and commitment to truth, goodness and beauty. Fast Retailing Group senior executive officers already manage individual Group businesses and the company has established a firm team management system.
The next CEO will be appointed at an appropriate time from among the Fast Retailing Group's team of senior executive officers. The current chairman and president, Tadashi Yanai, suggests draft proposals and debates and determines agenda items in the Board of Directors based on discussions undertaken by the Nomination and Remuneration Advisory Committee.
Independent External Directors
Six of the ten members of the Fast Retailing Board are external directors and all six external directors are registered as independent officers at the Tokyo Stock Exchange.
In addition to the independence criteria set by the Tokyo Stock Exchange, Fast Retailing has set the following independence standards and qualifications for external directors and statutory auditors:
A person shall not qualify as an independent director or statutory auditor of Fast Retailing, if:
(1) he/she is, or has been within the past three years, a Business Partner*1 or an Executive Officer*2 of a Business Partner*2 of the Fast Retailing Group, whose annual business dealings with Fast Retailing Group during the most recent business year constituted 2% or more of the Fast Retailing Group's consolidated revenue;
(2) he/she is, or has been within the past three years, a Business Partner*1 of the Fast Retailing Group or an Executive Officer of a Business Partner*2 of Fast Retailing, whose annual business dealings with the Fast Retailing Group during the most recent business year constituted 2% or more of the Business Partner's consolidated revenue;
(3) he/she is a consultant, an accountant or an attorney who receives, or has received over the past three years, any monies or property equivalent to 10 million yen or more from the Fast Retailing Group, except for remuneration for a director or a statutory auditor; or
(4) he/she is, or has been over the past three years, a partner, an associate or an employee of an accounting auditor of Fast Retailing or its subsidiaries.
- *1
- "Business Partner" includes law firms, auditing firms, tax accounting firms, consultants and any other organizations.
- *2
- "Executive Officer" means (i) for corporations, Executive Directors (as defined in the Companies Act of Japan), Executive Officers (shikko-yaku, as defined in the Companies Act of Japan), corporate officers and employees, and (ii) for non-corporate entities (including general incorporated associations (shadan-hojin), general incorporated foundations (zaidan-hojin), and partnerships), directors with executive functions, officers, partners, associates, staff and other employees.
Shareholder Dividends
In recognition of the fact that returning profits to shareholders is one of our most important management issues, our basic policy is to constantly improve our business performance and consistently allocate appropriate returns to shareholders in accordance with that business performance. In terms of shareholder dividends, our policy is to pay high dividends that closely reflect business performance after considering the funds required to expand Group operations and increase profits, and our financial soundness.
Management Focus on Cost of Capital and Shareholder Returns
Fast Retailing considers return on equity (ROE) to be an important management indicator. Promoting medium- to long-term growth has always been our top priority, coupled with an awareness of cost of capital and a fundamental understanding that ROE should consistently and sufficiently exceed cost of capital. We have been able to successfully maintain ROE above 15%. In FY2024, ROE reached 19.4%, a level that significantly exceeds the cost of capital. Meanwhile, the price to book ratio (PBR) stood at 7.1 at the end of August 2024. Our PBR consistently far exceeds 1.0, which we see as proof of a certain degree of market recognition regarding our business performance and growth potential. Going forward, we will continue to pursue strong corporate growth by expanding our global business operations, while maintaining a high level of ROE at 15% or more.
Furthermore, Fast Retailing considers shareholder returns to be a key management issue. Our basic policy is to consistently and appropriately distribute profits to reflect our business performance. While we intend to continue to prioritize necessary growth investments, we will also continue to consider all means of returning profits to shareholders, including dividend levels, after taking into account our future capital needs and the financial soundness of our company.
FR Policy on Transactions between Related Parties
If Fast Retailing wants to conduct business transactions with directors or major shareholders of related businesses, it would apply to the Board of Directors. The Board, which includes a majority of external directors, would then discuss the business and operational rationale behind the intended transaction, and consider whether the business conditions were reasonable before making a decision.
