Governance
Management Structure .......... 878
Messages from Representatives of Outside Directors and Audit & Supervisory Board Members .......... 90
Chapter
Daiwa House Group Integrated Report 2023 86
Message from the CEO
Long-Term Vision and the 7th Plan
The Story of the Group's
Value Creation
Message from the CFO
Developing
our Businesses
Environmental Vision
Strengthening | Governance | Financial Results, |
our Bases | Corporate Information | |
Chapter 8 Governance
Management Structure
The Daiwa House Group positions enhancing its structure of governance as a priority issue for management so that we may continue to be a company that earns the trust of society. We take the basic stance of working to construct a system of accurate and timely decision making and business execution, as well as a framework of appropriate oversight and supervision. The 7th Plan includes provisions to promote reinforcement of the restructuring of governance that was completed as a priority issue in the 6th Plan. Along with transforming our vision in tune with expanding business operations and the management environment, we aim for sustainable improvements in corporate value to realize Our Hopes for the Future based on diverse viewpoints and long-term perspectives.
Concept of governance system enhancement
Corporate governance
1 | Optimization of | 2 | Foster next generation of | |
management structure | business managers | |||
Strengthen the supervisory | Set age limits to allow for smooth | |||
functions of outside directors | succession and run programs to | |||
and enhance | foster next generation | |||
medium-tolong-term | ||||
management strategy |
Ongoing updates
Follow up on actions and make improvements to meet the challenges posed by a growing number of new risks and opportunities
Establish emergency | Restructure the system of | |||
response practices and | business execution | |||
preventive measures, and put | by delegating responsibilities | |||
operational environment in place | and authority | |||
4 | Entrench risk | 3 | Improve system of | |
management structure | business execution |
Business risk management
Initiatives in the 7th Medium-Term Management Plan | Approaches in fiscal 2022 | |||||
Optimization of management structure | ||||||
1 | Reviewed the agenda standard for meetings of the Board of Directors | |||||
Raise the proportion of stock remuneration in director | Revised the agenda standard for meetings of the Board of Directors to secure time for proposals related | |||||
remuneration and introduce non-financial evaluation indicators | to "strengthening the monitoring function of the Board of Directors," including raising the amount of the | |||||
Strengthen monitoring function of the Board of Directors | agenda standard for decisions related to business execution to that in line with the scale of the business | |||||
Foster next generation of business managers | Expanded the succession planning system for the next generation of business managers | |||||
2 | Continued effort to pass on the spirit of our founder through qualitative improvements in the | |||||
Build a succession process for Directors/Executive Officers | entire Group by integrating the D-Succeed system and the Daiwa House Juku for training man- | |||||
agement successors and expanding off-site training opportunities | ||||||
Newly established the Management Strategy Planning Headquarters | ||||||
In April 2023, established the Management Strategy Planning Headquarters, aiming at building an | ||||||
integrated strategy to enhance the Group's value. Transferred the Corporate Strategy Planning, Business | ||||||
Development, and Sustainability Planning Department under the Management Administration | ||||||
Headquarters, to the Management Strategy Planning Headquarters. Launched the Business Human | ||||||
Resources Planning Department to optimize human resources to achieve our business plan and | ||||||
Improve system of business execution | design an organizational structure aligned with overall strategy. Further, started the DX Planning | |||||
3 | ||||||
Prepare and strengthen regional corporate functions overseas | Department to promote DX strategies for the business divisions and Group companies. | |||||
Internal reorganization | ||||||
Strengthen asset management in line with asset increase | ||||||
Regarding our operations within Japan, under the business division-based system, abolished the | ||||||
Continuous improvement of organizations and functions | ||||||
existing block system and instituted a new structure having the head office and | offices tasked with | |||||
for overlapping businesses within the Group | ||||||
administrative and supervisory functions, as well as branches thereunder in each area. Rearranged | ||||||
Continual improvement of the Group's head office functions | the region across the country into 11 areas where the head office and | offices | are allocated as the | |||
and optimal allocation of human resources | regional headquarters in each area, replacing the existing structure in which block managers in 15 | |||||
blocks nationwide had supported the branches and branch offices' management. By reorganizing | ||||||
the business divisions as branch offices thereunder in each area, strengthen administrative and | ||||||
supervisory functions to provide management support and enhance governance. | ||||||
Began work on formulating detailed management indicators for our overseas business | ||||||
Developed detailed management indicators, and plan to start on-site management using the | ||||||
detailed management indicators | ||||||
Entrench risk management structure | ||||||
4 | Established an information security system | |||||
Effectively operate and continuously improve risk management structure | Overhauled the structure of information security rules to reflect recent diversification of societal | |||||
Continuously strengthen the efficient business operating base to | demands for information security and the Group's diversified business | operations. Accordingly, | ||||
sustain risk management and compliance activities | revised the existing Information Security Statement in line with these activities. | |||||
Daiwa House Group Integrated Report 2023 87
Message from the CEO
Long-Term Vision and the 7th Plan
The Story of the Group's
Value Creation
Message from the CFO
Developing
our Businesses
Environmental Vision
Strengthening | Governance | Financial Results, |
our Bases | Corporate Information | |
1 Optimization of management structure
Create an optimal management structure for supervision of medium-to-long-term management strategies for enhancing corporate value
Based on the philosophy of "Don't do things because they will make a profit, but because they will be of service to society" that the Daiwa House Group has valued since our founding, the Board of Directors sees its mission as being to put Our Hopes for the Future into practice and to foster the next generation who will take up the challenge in the future. To realize this, executive management must always explore the needs of society based on the attitude of a bottom-up approach while the Board of Directors, as a group that co-creates value for individuals, communities, and people's lifestyles deliberates and decides how to embody such needs as a business, and quickly grasps reported risks regarding business execution to control and oversee these risks.
The Board of Directors has outside members who account for over one-third of the Board. By making greater use of diverse and external knowledge, experience and know-how possessed by outside directors, we aim for trustworthy and transparent management.
In fiscal 2022, the Board of Directors discussed and deliberated on the following matters.
Management strategies
- Formulation of the Seventh Medium-Term Management Plan
- Formulation of the Action Plan for the Environment "Endless Green Program 2026"
- Determination of the Digital Transformation initiative plan
- Decision on key themes for technological development at the Central Research Laboratory
Governance
-
Enhancement of head office's strategic functions
(newly established the Management Strategy Planning Headquarters) - Amendment to the Information Security Statement
- Report on self-review results and revision of the Corporate Governance Guidelines
- Evaluation of the effectiveness of the Board of Directors
- Revision of agenda standards for meetings of the Board of Directors (e.g., transfer of authority to executive divisions)
Investment projects
- Approval of Osaka Marubiru reconstruction plan and initiatives for Expo 2025 Osaka Kansai
- Approval of M&A projects (e.g., Kouyama UNYU Co., Ltd. becoming a wholly owned subsidiary)
- Approval of important potential investments in the real estate development business and other businesses in the US, Asia, and other regions
Other than the above, the Board of Directors deliberates and passes resolutions, as necessary, on matters stipulated by laws, regulations, and the Articles of Incorporation.
Board of Directors
Nomination Advisory Committee Remuneration Advisory Committee
Ratio of outside members: 71.4%
Outside: 5, Inside: 2 (CEO and CFO)
(Chair: an independent outside director)
Representative
Directors
Outside3 Directors
5 13
( female: 2 )
Inside Directors
5
Ratio of | 38.5% |
Outside Directors: |
Daiwa House Group Integrated Report 2023 88
Message from the CEO
Long-Term Vision and the 7th Plan
The Story of the Group's
Value Creation
Message from the CFO
Developing
our Businesses
Environmental Vision
Strengthening | Governance | Financial Results, |
our Bases | Corporate Information | |
Improvements to management resilience based on a multi-faceted and long-term approach so as to better suit our operating environment and the expanding scope of our business
Corporate Auditors | Outside Auditors | |||||||||
(Independent Officer) | (Independent Officer) | (Independent Officer) | ||||||||
Non- | A G | A G | A G | A G | A G | A G | |||||
Tomoyuki Nakazato | Tadatoshi Maeda | Yoshinori Hashimoto | Akihisa Watanabe | Tatsuji Kishimoto | Takashi Maruyama | ||||||
Executives | |||||||||||
Outside Directors | |||||||||||
(Independent Officer) | (Independent Officer) | (Independent Officer) | (Independent Officer) | (Independent Officer) | |||||||
B N R G | B N R G | B N R G | B N R G | B N R G | ||||||||||
Yukiko Yabu | Yukinori Kuwano | Miwa Seki | Kazuhiro Yoshizawa | Yujiro Ito | ||||||||||
Representative | Executive | Executive | ||||||||||||
Vice President, CFO | ||||||||||||||
President, CEO | Vice President | |||||||||||||
Head of Management | ||||||||||||||
Head of Technology | ||||||||||||||
Administration | ||||||||||||||
Directors | B N R G | B N R | G | B G | ||||||||||
Keiichi Yoshii (64) | Takeshi Kosokabe (65) | Yoshiyuki Murata (68) | ||||||||||||
Senior Managing Executive Officer | Managing Executive Officer | Managing Executive Officer | Managing Executive Officer | Managing Executive Officer | ||||||||||
Head of Commercial | Head of Management | Head of | Head of Compliance / | Head of | ||||||||||
Construction Business | Strategy Planning Headquarters | Rental Apartment Building | Quality Assurance | Single-Family Housing Business |
Corporate Governance Committee (2 times/year)
Internal Control
Structure of Committee for strengthening monitoring function of Board of Directors
Nomination | N | Remuneration | R | ||||||
Advisory Committee | Advisory Committee | ||||||||
Board of Directors | B | Audit & Supervisory | A | ||||||
Board | |||||||||
Corporate Governance Committee G | |||||||||
Reason for new appointments
Name | Reason for appointment |
Executive Directors | Head of | Head of Overseas | Head of | |||||
General Construction Business | In charge of Livness Business | Environment and Energy Business | ||||||
B | B | B | B | B | ||||
Keisuke Shimonishi (64) | Hirotsugu Otomo (63) | Kazuhito Dekura (61) | Yoshinori Ariyoshi (64) | Toshiya Nagase (60) |
Note: Figures in parentheses are the ages as of April 2023
Committee (4 times/year)
Takashi Maruyama
He has long-term experience in corporate management at corporate groups with diverse business opera- tions. The Company expects that he will audit the overall management of the Company and provide useful advice from an independent standpoint by utilizing his abundant knowledge based on his career.
Daiwa House Group Integrated Report 2023 89
Message from the CEO
Long-Term Vision and the 7th Plan
The Story of the Group's
Value Creation
Message from the CFO
Developing
our Businesses
Environmental Vision
Strengthening | Governance | Financial Results, |
our Bases | Corporate Information | |
Messages from Representatives of the Outside Directors and Audit & Supervisory Board Members
-Contributing to improvement of corporate value in the medium to long term
Contributing to Daiwa House Group's sustainable growth amid
the latest global trends
Yukinori Kuwano
Outside Director (Independent Officer) B N R G
Amid major changes taking place globally, including trends such as SDGs, ESG, and digital and green transformation, we defined our Purpose as "Our future landscape-Celebrating the Joys of Life." I am determined to do my best to make things happen in this new direction. In 2001-about 21 years ago, when I was in my previous position, Daiwa House Group's consolidated net sales were approximately ¥1 trillion and operating income was ¥44.2 billion. I was later given the opportunity to become an outside director of Daiwa House, and in fiscal 2022, the Company posted consolidated net sales of ¥4.9 trillion and operating income of ¥465.3 billion-robust growth of roughly five times for net sales and 11 times for operating income. The Group has grown into the housing and construction industry leader thanks to the hard work of employees and close cooperation of other stakeholders. The objective of the 7th Plan is to complete a model for sustainable growth to maximize business value and social value over the long term. I too am determined to do my utmost to make this happen.
I am chairman of the Corporate Governance Committee, and unfortunately, two years ago, we received administrative measures including a business suspension order from the Ministry of Land, Infrastructure, and Transport, because some of our operation and management engineers were not properly qualified. I felt responsible for this serious breach as chairman of the Corporate Governance Committee and took steps to rectify it, such as investigating the cause and ensuring there will be no recurrence. These cases relating to corporate governance are an essential part of completing a sustainable growth model. Going forward we will be working to benefit shareholders, doing our best to help the company maintain vigorous growth with an uncompromising approach to strengthening governance.
Roles and functions fulfilled by outside directors
Our outside directors are tasked with helping to foster a corporate culture that contributes toward improving the Company's corporate value from a highly independent position, making the most of their backgrounds such as specialist knowledge and experience.
Yukinori Kuwano became an Outside Audit & Supervisory Board Member in June 2008 and an Outside Director in June 2020. With highly specialized knowledge in photovoltaic power generation, he has provided useful advice regarding the operations and projections of the Environment and Energy Business. He has expressed many opinions and offered critiques over the years at meetings including those of the Board of Directors as a company executive, shareholder, and consumer. He chairs the Corporate Governance Committee, Nomination Advisory Committee, and Remuneration Advisory Committee, communicating with the management team from an independent position. At meetings where themes for discussion by the Corporate Governance Committee are selected, he also plays a coordination role among Outside Directors, such as having them discuss human capital performance and work environment provision that contribute to sustainable management among many management issues, reflecting the requests and opinions of shareholders and institutional investors fielded by the IR, General Affairs, and other departments. Currently, he also plays the important role of supervising progress in building information modeling (BIM) and digital transition as part of key digital transformation strategies that apply across all management policies of the Seventh Medium-Term Management Plan.
All the other outside directors help us strengthen governance (especially the supervisory function) by attending meetings of the Board of Directors, advisory committees of the Board of Directors (Board Committees), etc. They have also been active in providing feedback during Board of Directors meetings and related meetings on the Our Hopes for the Future Project, which looks ahead to 2055, our centennial year, taking the initiative so that we can implement the best corporate governance.
Daiwa House Group Integrated Report 2023 90
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Daiwa House Industry Co. Ltd. published this content on 17 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 October 2023 08:26:33 UTC.