Corporate Governance

Basic Policy

The Pigeon DNA and the Pigeon Way

Our corporate philosophy “Love” and the credo “Only love can beget love” are the core of Pigeon. These are the unchanging spirit that each and every Pigeon employee and executive will uphold into the future as the Pigeon DNA, as long as Pigeon continues to exist as an essential part of society.
Our Purpose “We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs” and Values and Action Principles that employees and executives should cherish to realize the Purpose are collectively called the Pigeon Way, the cornerstone of all our activities. The Pigeon Way embodies our “heart and soul” and sets the grounds for our actions to stream from this core.
We have reclassified our corporate philosophy and the credo as the Pigeon DNA, the underlying concept of the Pigeon Way. We will continue to drive our business activities toward the realization of the Purpose, positioning it as the core of the Pigeon Way. The Pigeon DNA and the Pigeon Way are defined as follows.

Establishment of Key Issues

Pigeon’s Purpose “We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs” cannot be achieved solely through the efforts of Pigeon Group employees and executives, but through collaboration with external stakeholders, including customers, business partners, shareholders, and local communities. We believe that by realizing our “Purpose,” we can not only continue to be recognized as an essential part of society, but also contribute to the creation or realization of a sustainable society that is the basis for coexistence with our stakeholders. In this sense, our underlying Pigeon DNA and the Pigeon Way, the social and environmental challenges we must address, and the future vision we should aim for by addressing the challenges must be shared not only with Pigeon Group employees and executives, but also with our customers, business partners, shareholders, local communities, and other external stakeholders.
Therefore, the Company established the following five (5) Key Issues to be addressed and realized in the process of achieving Pigeon’s Purpose “We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs” so that we can share the same mindset with all stakeholders.

Pigeon's Basic Policy of Corporate Governance

Our corporate governance must be based on the Pigeon DNA and the Pigeon Way, be directed toward solving and realizing the Key Issues, contribute to the creation and realization of a sustainable society, and ultimately realizing the Purpose “We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs.”
Based on this approach, we define the Company’s corporate governance as follows: 1) Offensive governance: a mechanism for transparent, fair, prompt and decisive decision-making to enhance Pigeon Group’s sustainable growth and medium- to long-term corporate value (societal value and economic value), for the resolution and realization of the Key Issues, and ultimately the realization of the “Purpose”; and 2) Defensive governance: a mechanism for risk control through timely collection and sharing and review and verification of information aimed at prevention and prompt elimination of factors that could hamper Pigeon Group’s sustainable growth and damage its corporate value, or impede the resolution and realization of the Key Issues and the realization of the “Purpose.”
By continuously strengthening these mechanisms, we aim to further enhance corporate governance, increase our corporate value, and ultimately contribute to the creation and realization of a sustainable society, as well as realizing the “Purpose.”

Corporate Governance Organization Chart

Corporate Governance Report

Outline of the Governance System

The Company adopts the system of a company with Audit & Supervisory Board Members and has made rigorous legal audits by Audit & Supervisory Board Members the basis of compliance management. The primary management structures (meeting bodies) are: The Board of Directors comprised of 9 members (six men, three women; eight Japanese nationals, one foreign national) including five Independent Outside Directors; the Audit & Supervisory Board comprised of four members (three men, one woman; four Japanese nationals) including two Outside Audit & Supervisory Board Members; Management Committee headed by the President and CEO and comprised of standing Directors and Senior Managing Officers. The Company is working to enhance the diversity of each of the meeting bodies. In addition, the Company adopts a mandatory executive officer system to provide for mutual partnership between decision-making and oversight (governance) with business execution and to clarify the operating responsibilities of Directors.

The Board of Directors makes decisions on matters (management objectives and important business-execution strategies such as the management strategy) prescribed in laws and regulations, the articles of incorporation, and the “Board of Directors Rules” based on its authority to supervise the execution of duties of directors and managing officers. The Board of Directors actively elicits the opinions of Outside Directors and Audit & Supervisory Board Members, and the supervisory function of the Board of Directors has been further strengthened by having an Independent Outside Director serve as Chairman of the Board from March 2023. Further, apart from Board meetings, we hold a meeting on future strategies biannually to eliminate information asymmetry among Directors and Audit & Supervisory Board Members and for them to discuss the Group’s management issues and strategies from a medium- to long-term viewpoint. Also, in addition to the Voluntary Nominating and Remuneration Committees chaired by and with a majority consisting of Independent Outside Directors, we established the Governance Committee as an advisory panel to the Board of Directors. The Governance Committee is headed by an Independent Outside Director and is comprised of a majority of Outside Directors and Audit & Supervisory Board Members.

Audit & Supervisory Board Members attend meetings of both the Board of Directors and the Management Committee, where they deploy their experience in the field to swiftly resolve issues. In addition to enhancing the supervisory function through expression of opinions and the like, Audit & Supervisory Board Members listen to directors, view important resolution documents, examine the current status of business and financial assets, and otherwise conduct meticulous supervision and oversight particularly in accordance with audit policy and segregation of duties. They also meet regularly with the President and CEO, receive reports on matters such as important company issues, and carry out frank exchanges of opinions.

Under the current management structure, centered on the Board of Directors and Audit & Supervisory Board, the Company has been working to improve corporate governance by expanding the diversity of the Board of Directors through the appointment and increase of Outside Directors since 2015, strengthening the supervisory function of the Board of Directors by appointing an Outside Director as the Chairman of the Board from March 2023, establishing advisory panels to the Board of Directors, and active demonstration of supervisory functions by Audit & Supervisory Board Members.

Directors and Management Officers

List of Directors and Management Officers

Skill Matrix

For the story of how we set the "Expertise demanded of the Board of Directors" in the table below, please see here.

Members and Attendance Status of Board of Directors, Board of Audit & Supervisory, and Committees

Evaluating the Effectiveness of the Board of Directors

The Company conducts an annual evaluation of the effectiveness of the Board of Directors in order to strengthen it and improve its governance.

Regarding the effectiveness evaluation and analysis methods implemented in FY2023

【Implementation period】Oct. to Nov. 2023

【Respondents】Directors and Audit & Supervisory Board Members (total 13 people）

【Questionnaire items】

① The role and function of the Board of Directors ② The composition and size of the Board of Directors ③ Operation of the Board of Directors ④ Coordination with auditors

⑤ Providing opportunity for Outside Directors to their success ⑥ Engagement with shareholders and investors ⑦ Advisory panels (the Voluntary Nominating Committee, Voluntary Remuneration Committee and Governance Committee)

① The role and function of the Board of Directors
② The composition and size of the Board of Directors
③ Operation of the Board of Directors
④ Coordination with auditors
⑤ Providing opportunity for Outside Directors to their success
⑥ Engagement with shareholders and investors
⑦ Advisory panels (the Voluntary Nominating Committee, Voluntary Remuneration Committee and Governance Committee)

Regarding FY2022 issues, FY2023 evaluation result and issues, and Future efforts

Issues identified at the FY2022 evaluation	The Company set the following issues to be addressed in the future to realize the Purpose of the Pigeon Way. ・Continuous operational improvements aimed at further invigorating discussions by the Board of Directors, such as strengthening discussions and progress checks on Key Issues (Materiality).
Initiatives in FY2023	The Company continuously addressed operational improvements aimed at further invigorating discussions by the Board of Directors, focusing on the following: ・Selected Key Issues (Materiality) to be discussed at the Board of Directors meeting in FY2023, set them as agenda items in the Board of Directors meeting schedule in advance, and discussed them. ・With the appointment of an outside director as the chairman of the Board of Directors, we secured time for discussion at the Board meetings by streamlining the Board operations, such as by holding preliminary briefings and applying bulk deliberations.

FY2023 evaluation result and issues

The Company confirmed that the Company's Board of Directors and advisory panels make appropriate decisions through open and active discussions, taking advantage of the diverse expertise, values, and perspectives of its Outside Directors and other members, and that they play an effective role in enhancing corporate value over the medium- to long-term. Regarding the issues recognized in the FY2022 evaluation, we confirmed that progress has been made as shown below. ・Among Key Issues (Materiality), new business (business portfolio), human capital/appointment of women to higher positions, and business in China were selected as the agenda. They were discussed, and progress was confirmed at the Board of Directors meeting. Regarding business in China, we also had a business trip to the country (visiting Chinese business bases, etc.), so we were able to improve our understanding and have discussions ・By holding a preliminary briefing and applying bulk deliberations, we were able to operate the Board of Directors meeting with a more balanced time allocation, and were able to secure sufficient time for agendas that require time for discussion. ・An outside director assumed the position of chair of the Board of Directors and facilitated listening to a wide range of opinions from inside and outside directors, which enabled more lively discussions. The following issues have been identified as needing to be addressed in the future in order to realize the Purpose and sustainable growth. ・Demonstrate more advanced supervisory functions by the Board of Directors ・Achieve more substantive engagement with stakeholders ・Systematic organization of officer training

Future efforts(in FY2024)

We will continue to review and take necessary measures to maintain and improve the effectiveness of the Board of Directors, improve corporate value, and achieve sustainable growth over the medium to long term, focusing on the following: ・Demonstrate more advanced supervisory functions by the Board of Directors: Strengthening confirmation and supervision of important matters including group governance ・Achieve more substantive engagement with stakeholders: Further enhancement of information disclosure in light of requests for “efforts to realize management with an awareness of capital costs and stock prices" ・Systematic organization of officer training: Organize officer training based on internal, external, and newly appointed personnel; and expand as necessary

Initiatives to enhance the effectiveness of the Board of Directors

Governance Committee

To further strengthen corporate governance in the Pigeon Group, we established the Governance Committee as an advisory panel to the Board of Directors, chaired by an Independent Outside Director and with a majority of its members being Outside Directors and Outside Audit & Supervisory Board Members. The Committee deliberates on various issues related to corporate governance within the Group that have been identified through the evaluation of the effectiveness of the Board of Directors, etc., from the perspective of promoting organic coordination and integration and proactive implementation, and provides advice and recommendations to the Board of Directors. During the current fiscal year, we reviewed our policies and views on human resources (including details subject to disclosure), reviewed amendments to the Articles of Incorporation (business purposes), followed up on performance of the Global Head Office functions, and implemented the evaluation of the effectiveness of the Board of Directors (consideration of implementation methods including external evaluation by a third party, analysis and verification of results, and review of details subject to disclosure).

Voluntary Remuneration Committee, Executive Remuneration System

In order to increase the independence, objectivity, and transparency of the executive remuneration system, the Company has established a Voluntary Remuneration Committee as an advisory panel to the Board of Directors. The chairman and the majority of members of the committee are Independent Outside Directors. The Voluntary Remuneration Committee provides advice and proposals to the Board of Directors upon having deliberated on matters that include: governance of executive remuneration; whether it is necessary to revise the executive remuneration policy; remuneration levels of individual executives (base amount by position); performance targets and evaluation table for bonuses and stock remuneration; performance evaluations and individual payment amounts for bonuses and stock remuneration in the previous fiscal year; status of initiatives of the Medium-Term Business Plan and the Key Issues; factors such as level, composition and indicators of executive remuneration using external data and other research; the necessity of response to executive remuneration due to changes in the external environment and business environment; and improving the effectiveness of the Voluntary Remuneration Committee. During the fiscal year under review, the Committee examined revisions to the executive remuneration policy; confirmed performance targets and evaluation table for bonuses and stock remuneration; confirmed matters such as performance evaluations and individual payment amounts for bonuses and stock remuneration in the previous fiscal year; confirmed progress associated with indicators of Key Issues for bonuses and stock remuneration; confirmed factors such as level, composition and indicators of executive remuneration using external data and other research; and considered executive remuneration systems for fiscal year 2024 and beyond.
The remuneration for the Company's Directors (excluding Independent Outside Directors) consists of "basic remuneration" commensurate with position, "bonuses" provided as short-term incentives, and "stock remuneration" provided as a medium- to long-term incentive. The remuneration for Independent Outside Directors and Audit & Supervisory Board Members consists of "basic remuneration" only.
Please note that executive remuneration, etc. will be paid within the limit of remuneration adopted at the General Meeting of Shareholders.
The Company has already abolished the retirement benefits system for Directors.

Voluntary Nominating Committee, Executive Nomination Process

The Company has established a Voluntary Nominating Committee as an advisory panel to the Board of Directors to enhance the independence, objectivity, and transparency of the appointment/dismissal and nomination processes for Directors. The chairman and the majority of members of the committee are Independent Outside Directors. The Voluntary Nominating Committee deliberates on the appointment/dismissal criteria for Directors and the successor plan for Chief Executive Officer (CEO), etc., and provides advice and proposals to the Board of Directors. During the fiscal year under review, the Committee examined revisions to the Executive Nomination Policy; verified and implemented the CEO successor plan; examined candidates for Directors; reviewed the term of office and tenure of Directors; reviewed the roles of the Chairman of the Board, reviewed revisions to the skill matrix; and examined the formulation of a successor plan for Outside Directors.
In addition to the human resource requirements of the CEO (responsibilities and authority, main duties and expected results, and required competencies (behavioral characteristics, personality characteristics, experience and achievements, and knowledge and skills)), the executive nomination policy sets out standards for appointment and dismissal of senior management, Directors and the CEO, successor plans for CEO, terms of office of Directors, and the like. The ideal human qualities necessary for the role of CEO of the Company are “Human qualities that can enhance resourcefulness and continuously increase the Company’s corporate value (social and economic value), based on the values of the Pigeon DNA and the Pigeon Way.”

Internal Controls

We have established a basic policy on the construction of its internal control systems, based on the Companies Act and its enforcement regulations. The purpose of this basic policy is to ensure the sound and efficient operation of our organizations. Based on this policy, we maintain and operate an internal control system governing the entire group.
As an internal audit function, an Audit Department under the direct control of the President and CEO was established as the Internal Audit Department, which regularly implements internal audits on the Company and its domestic and overseas Group companies from the perspective of confirming operational effectiveness, efficiency, compliance, and asset preservation. Audit results are reported to all Directors and Audit & Supervisory Board Members, and suggestions for improvement and follow-ups are implemented. Furthermore, the Audit Department has established the J-SOX Secretariat, which conducts assessment tests on company-wide internal controls and the process of financial settlement based on the basic plan for internal control over financial reporting under the Financial Instruments and Exchange Act, and monitors the adequacy of maintenance and operation.

Basic Policy for the Internal Control System