Efforts are directed toward business continuity and stable development through appropriate responses at minimal and normalized cost to address various risks that could bring about economic loss, the interruption or suspension of business operations, and/or damage the CRE’s credit or brand image, and thereby hinder achievement of the Company’s management philosophy, goals and strategies.
Sustainability Activities (ESG)
Basic Policy on Governance
The CRE Group adheres to the following management philosophy.
Ei Eternal: Our mission is to achieve perpetual growth
Toku Virtue: We will work for the betterment of all people
Kan Cycle: We will value connections with society
CRE recognizes that enriching the corporate governance structure is a management priority and, to put the management philosophy into practice and raise corporate value, the Company will strive to establish a management structure that is highly transparent, sound and efficient.
Governance Structure
Effectiveness of the Board of Directors Meeting
Fiscal year ended July 31, 2023
- Notes:
- 1. Attendance is rounded up to nearest whole number.
- 2. Hidetoshi Nagahama resigned at the conclusion of the Annual General Meeting of Shareholders held on October 26, 2023.
Effectiveness of Audit Committee
Fiscal year ended July 31, 2023
- Notes: Attendance is rounded up to nearest whole number.
Reasons for appointing outside directors
Fiscal year ended July 31, 2023
| Reasons for Appointment | |
|---|---|
|
Yoshiyuki Ishikubo Outside Director and member of Audit Committee |
Mr. Ishikubo is well-acquainted with corporate accounting as a certified public accountant and, with extensive experience and broad-based knowledge, he was appointed as an outside director to sit on the Audit Committee. In addition, the Board of Directors feels he presents no risk for conflict of interest with ordinary shareholders since there are no issues that would call his independence into question, and he has been designated an independent director. |
|
Takeshi Yamada Outside Director and member of Audit Committee |
Mr. Yamada is well-acquainted with corporate accounting as a certified public accountant and, with extensive experience and broad-based knowledge, he was appointed as an outside director to sit on the Audit Committee. In addition, the Board of Directors feels he presents no risk for conflict of interest with ordinary shareholders since there are no issues that would call his independence into question, and he has been designated an independent director. |
|
Takuma Shimizu Outside Director and member of Audit Committee |
Mr. Shimizu is well-acquainted with corporate law as a lawyer and, with extensive experience and broad-based knowledge, he was appointed as an outside director to sit on the Audit Committee. In addition, the Board of Directors feels he presents no risk for conflict of interest with ordinary shareholders since there are no issues that would call his independence into question, and he has been designated an independent director. |
|
Katsue Okuda Outside Director |
Ms. Okuda was appointed as an outside director because she has considerable expertise in the real estate business as a real estate appraiser and, with experience in corporate management as representative director of Kudan Ogata Holdings Corporation, the Board of Directors expects that she will offer various management advice to CRE from an objective, neutral and independent perspective. In addition, the Board of Directors feels she presents no risk for conflict of interest with ordinary shareholders since there are no issues that would call her independence into question, and she has been designated an independent director. |
|
Keisuke Sato Outside Director |
Mr. Sato was appointed as an outside director because he has considerable expertise in corporate management and the real estate business as an executive officer and head of the corporate strategy department at Kenedix, Inc., and the Board of Directors expects that he will offer various management advice and opinions to CRE. |
Skill Matrix of Directors
- Notes: The above list does not represent all knowledge and experience possessed by each Director.
Director Compensation
Matters related to policy on amount of compensation for directors and calculation method used to determine such amount
At its meeting on June 17, 2021, the Board of Directors approved policy on decisions related to the content of individual compensation for directors (excluding directors who are members of the Audit Committee). In addition, the Board of Directors confirmed that the content of individual compensation for directors (excluding directors who are members of the Audit Committee) in that business year was in line with decision-making policy on content of compensation as well as the decided amount compensation, and determined that all related content aligned with said decision-making policy.
Details on the decision-making policy related to content of individual compensation for directors (excluding directors who are members of the Audit Committee) are provided below.
Details on the decision-making policy related to content of individual compensation for directors (excluding directors who are members of the Audit Committee) are provided below.
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Basic policy
CRE applies a compensation system linked to shareholder interests so that compensation for directors functions adequately as an incentive for continuous improvement in corporate value, and the Company’s basic policy is to ensure an appropriate level of compensation based on the responsibilities carried by each director when a decision is made on compensation for that director. To be more precise, compensation for an executive director comprises a fixed component as basic compensation, performance-linked compensation and stock-based compensation, while directors with supervisory functions and outside directors receive only basic compensation reflecting their duties. -
Policy for determining amount of basic compensation (monetary compensation) for each director (includes policy for determining timing of payment and conditions for granting compensation)
Basic compensation for CRE directors is a fixed, monthly amount determined holistically, corresponding to position, duties and years in office and also taking into account the level of compensation at other companies, the Company’s performance and employee pay scale. -
Policy for determining content of performance-linked compensation and nonmonetary compensation as well as method for calculating amounts and numbers thereof
(includes policy for determining timing and conditions for granting compensation)Performance-linked compensation is cash compensation using net income attributable to owners of the parent—a measurement of the success of corporate activities over the year across the CRE Group—as the reference point for the purpose of rewarding achievements during the one-year term of office for directors. This net income amount is the reference point used to determine bonuses, which are based on several components, including a director’s position, contribution to business results, and progress toward achievement of management plan targets. Bonuses are paid at set times each year.
Nonmonetary compensation is in the form of stock-based compensation, primarily restricted stock, intended to encourage directors to assume a shareholders’ perspective on the merits and risks of changing stock prices and to motivate directors to be actively involved in raising stock price and improving corporate value. The number of shares of restricted stock granted to directors is based on an amount determined by the same method used to calculate bonuses, as noted above, and is balanced against the aforementioned bonus. Stock-based compensation is distributed at specific times each year. -
Policy for determining proportion of monetary compensation, performance-linked compensation and nonmonetary compensation for individual directors
CRE seeks to present directors with the most appropriate salary ratio to promote a shared perspective between their interests and those of shareholders and to motivate them to contribute to sustainable improvement in corporate value. -
Matters pertaining to decisions on content of compensation for individual directors
For individual compensation, the Representative Director and President is entrusted with the specifics of compensation, in accordance with a resolution by the Board of Directors, and this authority extends to evaluation and allocation of basic compensation for each director as well as bonus and stock-based compensation given performance of the business area that each director is responsible for. To ensure that such authority is exercised properly, the Representative Director and President must make decisions based on consultation with and report from the Nomination and Compensation Committee, the majority of which consists of independent outside directors. The number of shares to be granted to each individual director as stock-based compensation shall be resolved by the Board of Directors based on consultation with and report from the Nomination and Compensation committee.
Monetary compensation for directors who are not members of the Audit Committee was approved at the 12th Ordinary General Meeting of Shareholders on October 28, 2020, up to ¥1.0 billion annually (of which, the limit for outside directors who are not members of the Audit Committee is ¥30 million).
Stock-based compensation—restricted stock shares—for directors (excluding outside directors) who are not members of the Audit Committee is separate from monetary compensation approved at the shareholders’ meeting noted above, and at this meeting, shareholders’ approved an annual amount of monetary claims up to ¥1.0 billion to be distributed as restricted stock compensation. In addition, shareholders also approved a proposal that the total number of shares of common stock issued to directors or disposed of by the Company as restricted stock compensation would not exceed 1,000,000 shares in each business year.
Note that compensation for directors who are members of the Audit Committee comprises basic compensation only, given their role and independent status, and total compensation for directors who are members of the Audit Committee, as approved at the General Meeting of Shareholders, takes the division of duties into account and is decided through consultation with members of the Audit Committee. Monetary compensation for directors who are members of the Audit Committee, as approved at the 10th Ordinary General Meeting of Shareholders on October 30, 2018, is an amount up to ¥80 million annually.
In addition, with regard to performance-linked compensation for this fiscal year, the Board of Directors resolved at its meeting on July 21, 2023, that the Company would pay cash compensation to each director based on anticipated consolidated net income for fiscal 2023, with individual payment amounts at the discretion of the Representative Director and President.
Stock-based compensation—restricted stock shares—for directors (excluding outside directors) who are not members of the Audit Committee is separate from monetary compensation approved at the shareholders’ meeting noted above, and at this meeting, shareholders’ approved an annual amount of monetary claims up to ¥1.0 billion to be distributed as restricted stock compensation. In addition, shareholders also approved a proposal that the total number of shares of common stock issued to directors or disposed of by the Company as restricted stock compensation would not exceed 1,000,000 shares in each business year.
Note that compensation for directors who are members of the Audit Committee comprises basic compensation only, given their role and independent status, and total compensation for directors who are members of the Audit Committee, as approved at the General Meeting of Shareholders, takes the division of duties into account and is decided through consultation with members of the Audit Committee. Monetary compensation for directors who are members of the Audit Committee, as approved at the 10th Ordinary General Meeting of Shareholders on October 30, 2018, is an amount up to ¥80 million annually.
In addition, with regard to performance-linked compensation for this fiscal year, the Board of Directors resolved at its meeting on July 21, 2023, that the Company would pay cash compensation to each director based on anticipated consolidated net income for fiscal 2023, with individual payment amounts at the discretion of the Representative Director and President.
Total amount of compensation by director category, total amount of compensation by type of compensation, and number of directors eligible for compensation
- Notes:
1. One outside director served without compensation and has been excluded from the number of paid directors.
2. Monetary compensation for directors who are not members of the Audit Committee was approved by shareholders at the 12th Ordinary General Meeting of Shareholders on October 28, 2020, up to ¥1.0 billion annually (of which, the limit for outside directors who are not members of the Audit Committee is ¥30 million). In addition, restricted stock compensation for directors (excluding outside directors) who are not members of the Audit Committee is separate from monetary compensation approved at the shareholders’ meeting noted above, and at this meeting, shareholders’ approved an annual amount of monetary claims up to ¥1.0 billion to be distributed as restricted stock compensation.
3. Monetary compensation for directors who are members of the Audit Committee, as approved at the 10th Ordinary General Meeting of Shareholders on October 30, 2018, is an amount up to ¥80 million annually.
4. Summary of restricted stock compensation plan follows.
(1) Allotment and payment of restricted stock
In accordance with a Board of Directors’ resolution, CRE will pay monetary compensation claims to eligible directors up to an amount of ¥200 million per year as compensation for restricted stock, and eligible directors will receive an allotment of restricted stock by paying all monetary claims provided by the Company as in-kind contributions.
Note that the paid-in amount for restricted stock will be determined by the Board of Directors and will be within a range that is not particularly advantageous to eligible directors who receive an allotment of restricted stock. The amount will be based on the closing price of the Company’s common shares on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution by the Board of Directors relating to the issue or disposal of such stock (or the closing price on the most recent trading day prior to that day if no transactions take place on that day).
Also note that payment of the aforementioned monetary compensation will be conditioned upon eligible directors agreeing to the aforementioned in-kind contributions and signing a restricted stock allotment agreement that includes the content described in (2) below.
(2) Total number of restricted stock shares
The total number of restricted stock shares allotted to eligible directors will not exceed 200,000 shares in each business year. However, the total number of restricted stock shares may be adjusted reasonably in the event of a stock split (including gratis allocation of common shares of the Company) or share consolidation of the Company’s common shares, or under any other circumstances that arise and necessitate an adjustment to the total number of restricted stock shares to be allotted.
(3) Restricted stock allotment agreement
The allotment of restricted stock is dependent upon a restricted stock allotment agreement signed between the Company and eligible directors, in accordance with a resolution by the Board of Directors. The agreement includes the following content.
(a) Restrictions on transfer
Eligible directors who have received an allotment of restricted stock cannot transfer, pledge, grant security rights, gift during their lifetime, bequeath or in any way engage in disposal of said restricted stock to a third party during a period of three to five years (hereafter, “the Transfer Restriction Period”), as determined by the Board of Directors.
(b) Gratis acquisition of restricted stock
In the event an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period, CRE will rightfully acquire the restricted stock allotted to that director (hereafter, “Allotted Stock”) without compensation, unless extenuating circumstances exist that are deemed reasonable by the Board of Directors.
In the event there are some Allotted Shares for which transfer restrictions have not been lifted pursuant to the provision set forth in (c) below regarding grounds for lifting transfer restrictions at the time the Transfer Restriction Period described in (a) above expires, CRE will rightfully acquire this portion of Allotted Shares without compensation.
(c) Lifting transfer restrictions
CRE will lift transfer restrictions for all Allotted Stock at the end of the Transfer Restriction Period on the condition that the eligible director who has received an allotment of restricted stock has held the position of director, executive officer or employee of the Company or a subsidiary of the Company continuously throughout the Transfer Restriction Period.
However, if an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period with good reason, as determined by the Board of Directors, CRE will make reasonable adjustments, as necessary, to the number of shares of Allotted Stock for which transfer restrictions will be lifted and the timing for lifting transfer restrictions.
(d) Treatment in organizational restructuring
If, during the Transfer Restriction Period, proposals concerning a merger agreement in which the Company becomes the disappearing company, a share exchange agreement or share transfer plan in which the Company becomes a wholly owned subsidiary, or any other matter related to organizational restructuring are approved at a general meeting of shareholders (or by the Board of Directors in situations where approval at a general meeting of shareholders is not required for organizational restructuring), CRE will, by resolution of the Board of Directors, lift transfer restrictions ahead of the effective date of the organizational restructuring for the number of shares of Allotted Stock that can be reasonably determined based on the period from the date the Transfer Restriction Period starts to the date the organizational restructuring is approved.
In such cases, CRE will rightfully acquire without compensation Allotted Stock for which transfer restrictions still apply immediately after transfer restrictions are lifted in accordance with aforementioned provisions.
2. Monetary compensation for directors who are not members of the Audit Committee was approved by shareholders at the 12th Ordinary General Meeting of Shareholders on October 28, 2020, up to ¥1.0 billion annually (of which, the limit for outside directors who are not members of the Audit Committee is ¥30 million). In addition, restricted stock compensation for directors (excluding outside directors) who are not members of the Audit Committee is separate from monetary compensation approved at the shareholders’ meeting noted above, and at this meeting, shareholders’ approved an annual amount of monetary claims up to ¥1.0 billion to be distributed as restricted stock compensation.
3. Monetary compensation for directors who are members of the Audit Committee, as approved at the 10th Ordinary General Meeting of Shareholders on October 30, 2018, is an amount up to ¥80 million annually.
4. Summary of restricted stock compensation plan follows.
(1) Allotment and payment of restricted stock
In accordance with a Board of Directors’ resolution, CRE will pay monetary compensation claims to eligible directors up to an amount of ¥200 million per year as compensation for restricted stock, and eligible directors will receive an allotment of restricted stock by paying all monetary claims provided by the Company as in-kind contributions.
Note that the paid-in amount for restricted stock will be determined by the Board of Directors and will be within a range that is not particularly advantageous to eligible directors who receive an allotment of restricted stock. The amount will be based on the closing price of the Company’s common shares on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution by the Board of Directors relating to the issue or disposal of such stock (or the closing price on the most recent trading day prior to that day if no transactions take place on that day).
Also note that payment of the aforementioned monetary compensation will be conditioned upon eligible directors agreeing to the aforementioned in-kind contributions and signing a restricted stock allotment agreement that includes the content described in (2) below.
(2) Total number of restricted stock shares
The total number of restricted stock shares allotted to eligible directors will not exceed 200,000 shares in each business year. However, the total number of restricted stock shares may be adjusted reasonably in the event of a stock split (including gratis allocation of common shares of the Company) or share consolidation of the Company’s common shares, or under any other circumstances that arise and necessitate an adjustment to the total number of restricted stock shares to be allotted.
(3) Restricted stock allotment agreement
The allotment of restricted stock is dependent upon a restricted stock allotment agreement signed between the Company and eligible directors, in accordance with a resolution by the Board of Directors. The agreement includes the following content.
(a) Restrictions on transfer
Eligible directors who have received an allotment of restricted stock cannot transfer, pledge, grant security rights, gift during their lifetime, bequeath or in any way engage in disposal of said restricted stock to a third party during a period of three to five years (hereafter, “the Transfer Restriction Period”), as determined by the Board of Directors.
(b) Gratis acquisition of restricted stock
In the event an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period, CRE will rightfully acquire the restricted stock allotted to that director (hereafter, “Allotted Stock”) without compensation, unless extenuating circumstances exist that are deemed reasonable by the Board of Directors.
In the event there are some Allotted Shares for which transfer restrictions have not been lifted pursuant to the provision set forth in (c) below regarding grounds for lifting transfer restrictions at the time the Transfer Restriction Period described in (a) above expires, CRE will rightfully acquire this portion of Allotted Shares without compensation.
(c) Lifting transfer restrictions
CRE will lift transfer restrictions for all Allotted Stock at the end of the Transfer Restriction Period on the condition that the eligible director who has received an allotment of restricted stock has held the position of director, executive officer or employee of the Company or a subsidiary of the Company continuously throughout the Transfer Restriction Period.
However, if an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period with good reason, as determined by the Board of Directors, CRE will make reasonable adjustments, as necessary, to the number of shares of Allotted Stock for which transfer restrictions will be lifted and the timing for lifting transfer restrictions.
(d) Treatment in organizational restructuring
If, during the Transfer Restriction Period, proposals concerning a merger agreement in which the Company becomes the disappearing company, a share exchange agreement or share transfer plan in which the Company becomes a wholly owned subsidiary, or any other matter related to organizational restructuring are approved at a general meeting of shareholders (or by the Board of Directors in situations where approval at a general meeting of shareholders is not required for organizational restructuring), CRE will, by resolution of the Board of Directors, lift transfer restrictions ahead of the effective date of the organizational restructuring for the number of shares of Allotted Stock that can be reasonably determined based on the period from the date the Transfer Restriction Period starts to the date the organizational restructuring is approved.
In such cases, CRE will rightfully acquire without compensation Allotted Stock for which transfer restrictions still apply immediately after transfer restrictions are lifted in accordance with aforementioned provisions.
Notes:
1. One outside director served without compensation and has been excluded from the number of paid directors.
2. Monetary compensation for directors who are not members of the Audit Committee was approved by shareholders at the 12th Ordinary General Meeting of Shareholders on October 28, 2020, up to ¥1.0 billion annually (of which, the limit for outside directors who are not members of the Audit Committee is ¥30 million). In addition, restricted stock compensation for directors (excluding outside directors) who are not members of the Audit Committee is separate from monetary compensation approved at the shareholders’ meeting noted above, and at this meeting, shareholders’ approved an annual amount of monetary claims up to ¥1.0 billion to be distributed as restricted stock compensation.
3. Monetary compensation for directors who are members of the Audit Committee, as approved at the 10th Ordinary General Meeting of Shareholders on October 30, 2018, is an amount up to ¥80 million annually.
4. Summary of restricted stock compensation plan follows.
(1) Allotment and payment of restricted stock
In accordance with a Board of Directors’ resolution, CRE will pay monetary compensation claims to eligible directors up to an amount of ¥200 million per year as compensation for restricted stock, and eligible directors will receive an allotment of restricted stock by paying all monetary claims provided by the Company as in-kind contributions.
Note that the paid-in amount for restricted stock will be determined by the Board of Directors and will be within a range that is not particularly advantageous to eligible directors who receive an allotment of restricted stock. The amount will be based on the closing price of the Company’s common shares on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution by the Board of Directors relating to the issue or disposal of such stock (or the closing price on the most recent trading day prior to that day if no transactions take place on that day).
Also note that payment of the aforementioned monetary compensation will be conditioned upon eligible directors agreeing to the aforementioned in-kind contributions and signing a restricted stock allotment agreement that includes the content described in (2) below.
(2) Total number of restricted stock shares
The total number of restricted stock shares allotted to eligible directors will not exceed 200,000 shares in each business year. However, the total number of restricted stock shares may be adjusted reasonably in the event of a stock split (including gratis allocation of common shares of the Company) or share consolidation of the Company’s common shares, or under any other circumstances that arise and necessitate an adjustment to the total number of restricted stock shares to be allotted.
(3) Restricted stock allotment agreement
The allotment of restricted stock is dependent upon a restricted stock allotment agreement signed between the Company and eligible directors, in accordance with a resolution by the Board of Directors. The agreement includes the following content.
(a) Restrictions on transfer
Eligible directors who have received an allotment of restricted stock cannot transfer, pledge, grant security rights, gift during their lifetime, bequeath or in any way engage in disposal of said restricted stock to a third party during a period of three to five years (hereafter, “the Transfer Restriction Period”), as determined by the Board of Directors.
(b) Gratis acquisition of restricted stock
In the event an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period, CRE will rightfully acquire the restricted stock allotted to that director (hereafter, “Allotted Stock”) without compensation, unless extenuating circumstances exist that are deemed reasonable by the Board of Directors.
In the event there are some Allotted Shares for which transfer restrictions have not been lifted pursuant to the provision set forth in (c) below regarding grounds for lifting transfer restrictions at the time the Transfer Restriction Period described in (a) above expires, CRE will rightfully acquire this portion of Allotted Shares without compensation.
(c) Lifting transfer restrictions
CRE will lift transfer restrictions for all Allotted Stock at the end of the Transfer Restriction Period on the condition that the eligible director who has received an allotment of restricted stock has held the position of director, executive officer or employee of the Company or a subsidiary of the Company continuously throughout the Transfer Restriction Period.
However, if an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period with good reason, as determined by the Board of Directors, CRE will make reasonable adjustments, as necessary, to the number of shares of Allotted Stock for which transfer restrictions will be lifted and the timing for lifting transfer restrictions.
(d) Treatment in organizational restructuring
If, during the Transfer Restriction Period, proposals concerning a merger agreement in which the Company becomes the disappearing company, a share exchange agreement or share transfer plan in which the Company becomes a wholly owned subsidiary, or any other matter related to organizational restructuring are approved at a general meeting of shareholders (or by the Board of Directors in situations where approval at a general meeting of shareholders is not required for organizational restructuring), CRE will, by resolution of the Board of Directors, lift transfer restrictions ahead of the effective date of the organizational restructuring for the number of shares of Allotted Stock that can be reasonably determined based on the period from the date the Transfer Restriction Period starts to the date the organizational restructuring is approved.
In such cases, CRE will rightfully acquire without compensation Allotted Stock for which transfer restrictions still apply immediately after transfer restrictions are lifted in accordance with aforementioned provisions.
2. Monetary compensation for directors who are not members of the Audit Committee was approved by shareholders at the 12th Ordinary General Meeting of Shareholders on October 28, 2020, up to ¥1.0 billion annually (of which, the limit for outside directors who are not members of the Audit Committee is ¥30 million). In addition, restricted stock compensation for directors (excluding outside directors) who are not members of the Audit Committee is separate from monetary compensation approved at the shareholders’ meeting noted above, and at this meeting, shareholders’ approved an annual amount of monetary claims up to ¥1.0 billion to be distributed as restricted stock compensation.
3. Monetary compensation for directors who are members of the Audit Committee, as approved at the 10th Ordinary General Meeting of Shareholders on October 30, 2018, is an amount up to ¥80 million annually.
4. Summary of restricted stock compensation plan follows.
(1) Allotment and payment of restricted stock
In accordance with a Board of Directors’ resolution, CRE will pay monetary compensation claims to eligible directors up to an amount of ¥200 million per year as compensation for restricted stock, and eligible directors will receive an allotment of restricted stock by paying all monetary claims provided by the Company as in-kind contributions.
Note that the paid-in amount for restricted stock will be determined by the Board of Directors and will be within a range that is not particularly advantageous to eligible directors who receive an allotment of restricted stock. The amount will be based on the closing price of the Company’s common shares on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution by the Board of Directors relating to the issue or disposal of such stock (or the closing price on the most recent trading day prior to that day if no transactions take place on that day).
Also note that payment of the aforementioned monetary compensation will be conditioned upon eligible directors agreeing to the aforementioned in-kind contributions and signing a restricted stock allotment agreement that includes the content described in (2) below.
(2) Total number of restricted stock shares
The total number of restricted stock shares allotted to eligible directors will not exceed 200,000 shares in each business year. However, the total number of restricted stock shares may be adjusted reasonably in the event of a stock split (including gratis allocation of common shares of the Company) or share consolidation of the Company’s common shares, or under any other circumstances that arise and necessitate an adjustment to the total number of restricted stock shares to be allotted.
(3) Restricted stock allotment agreement
The allotment of restricted stock is dependent upon a restricted stock allotment agreement signed between the Company and eligible directors, in accordance with a resolution by the Board of Directors. The agreement includes the following content.
(a) Restrictions on transfer
Eligible directors who have received an allotment of restricted stock cannot transfer, pledge, grant security rights, gift during their lifetime, bequeath or in any way engage in disposal of said restricted stock to a third party during a period of three to five years (hereafter, “the Transfer Restriction Period”), as determined by the Board of Directors.
(b) Gratis acquisition of restricted stock
In the event an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period, CRE will rightfully acquire the restricted stock allotted to that director (hereafter, “Allotted Stock”) without compensation, unless extenuating circumstances exist that are deemed reasonable by the Board of Directors.
In the event there are some Allotted Shares for which transfer restrictions have not been lifted pursuant to the provision set forth in (c) below regarding grounds for lifting transfer restrictions at the time the Transfer Restriction Period described in (a) above expires, CRE will rightfully acquire this portion of Allotted Shares without compensation.
(c) Lifting transfer restrictions
CRE will lift transfer restrictions for all Allotted Stock at the end of the Transfer Restriction Period on the condition that the eligible director who has received an allotment of restricted stock has held the position of director, executive officer or employee of the Company or a subsidiary of the Company continuously throughout the Transfer Restriction Period.
However, if an eligible director who received an allotment of restricted stock resigns or retires from his or her position as a director, executive officer or employee of the Company or a subsidiary of the Company before the end of the Transfer Restriction Period with good reason, as determined by the Board of Directors, CRE will make reasonable adjustments, as necessary, to the number of shares of Allotted Stock for which transfer restrictions will be lifted and the timing for lifting transfer restrictions.
(d) Treatment in organizational restructuring
If, during the Transfer Restriction Period, proposals concerning a merger agreement in which the Company becomes the disappearing company, a share exchange agreement or share transfer plan in which the Company becomes a wholly owned subsidiary, or any other matter related to organizational restructuring are approved at a general meeting of shareholders (or by the Board of Directors in situations where approval at a general meeting of shareholders is not required for organizational restructuring), CRE will, by resolution of the Board of Directors, lift transfer restrictions ahead of the effective date of the organizational restructuring for the number of shares of Allotted Stock that can be reasonably determined based on the period from the date the Transfer Restriction Period starts to the date the organizational restructuring is approved.
In such cases, CRE will rightfully acquire without compensation Allotted Stock for which transfer restrictions still apply immediately after transfer restrictions are lifted in accordance with aforementioned provisions.
Aggregate compensation for individuals whose total compensation exceeds ¥100 million
Risk Management
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Basic approach
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Risk management structure
The CRE Group’s risk management structure is described below.-
1
CRE established the Risk/Compliance Committee to manage various risks related to the businesses undertaken by the CRE Group, to promote the creation of a corporate risk management structure, and to evaluate the implementation of measures to control risk. -
2
Along with the Risk/Compliance Committee, the manager of the Corporate Service Division is involved in shaping a groupwide risk management structure. -
3
The general managers and division managers oversee and promote risk management structures in respective business segments and divisions. -
4
The presidents of CRE subsidiaries oversee and promote risk management structures at their respective subsidiary.
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Risk management activities
CRE established the Risk/Compliance Committee to promote and strengthen business management with a compliance emphasis as well as risk management, and the committee meets once every quarter in principle. This committee has the participation of the CRE president, directors who are full-time directors and members of the Audit Committee, the manager of the Corporate Service Division and the manager of the Internal Audit Office, as well as outside experts, including lawyers and certified public accountants, who are appointed through a resolution by the committee. The committee considers internal and external issues and offers advice to enable CRE to realize appropriate management based on internal rules and various laws. In addition, CRE implemented a whistle-blower system to properly process reports concerning violations of law or other illegal activity by employees and, seeking to identify such behavior as soon as possible and correct the situation, the Company created a structure to reinforce the compliance system.
Information Security
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Basic approach
Of late, cyberattacks on the Internet have become more sophisticated and globally pervasive, and the threat of incidents, such as cyberterrorism using computer viruses, large-scale information leaks and business email fraud, has grown.
At CRE, we built an information security management system based on Rules for Information Security Management, properly ensure the confidentiality, integrity and availability of information assets (including information and information systems) in the possession of or managed by companies under the CRE Group umbrella, and obtain and maintain a high level of trust from related in-house and external parties, including clients. -
Promotion system
Personal information is indispensable to the business activities of the CRE Group in providing services, and as a corporate group, we see this information as a vital asset entrusted to us by our clients. In the event, however unlikely, a breach of personal information or other incident related to information security occurs, we will immediately implement our crisis response plan—activating the Computer Security Incident Response Team—as set out in the Information Security Incident Response Manual, to connect with related in-house and external parties and move quickly to the emergency.
