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Corporate Governance

At Star Micronics, our basic approach to corporate governance is based on fulfilling our social responsibilities as a company. To this end, we strive for management that is both appropriate and efficient at sustainably raising corporate value, while distributing an appropriate amount of the resulting profits to our shareholders and other stakeholders.

Star Micronics uses the Audit & Supervisory Board member system. Under this system, a Board of Directors comprised of six directors (including one outside director) rigorously discusses business issues in order to making appropriate and efficient management decisions and to supervises the directors' execution of their duties. To maintain a management organization that is capable of responding readily to changes in the business environment, the Company sets a 1-year renewable term of office for directors. Furthermore, an executive officer system was introduced to Star Micronics to speed up and raise the efficiency of business execution even further, and ensure that management as an organization is flexible and capable of prompt, rational decisions for executing business.

Moreover, to establish a management system with a decision-making process based on judgment incorporating diverse values, one outside director is appointed. Furthermore, with a view to enhancing the management oversight function, all three members of the Audit & Supervisory Board at Star Micronics, including the standing auditor, are outside appointees. These Audit & Supervisory Board members fulfill their duties in accordance with an auditing standard the Company set forth for the Audit & Supervisory Board.

STAR MICRONICS'CORPORATE GOVERNANCE SYSTEM

Compensation of Directors and Audit & Supervisory Board Members

Members of the Board of Directors at Star Micronics are compensated in accordance with the Company's earnings performance. Their package consists of a basic compensation that is paid monthly, a yearly bonus that varies depending on how the Group performs on a consolidated basis and stock options provided as a medium- to long-term incentive bonus. In view of the tasks that they are asked to perform, Audit & Supervisory Board members receive only the basic compensation that is paid monthly.

Basic compensation for directors is set within a range no higher than ¥130 million a year. Star Micronics decides how much of this amount each director receives based on their rank within the Board and the Company's business performance.

Basic compensation for Audit & Supervisory Board members is set within a range no higher than ¥22 million a year. Star Micronics holds discussions with each Audit & Supervisory Board member in deciding how much of this amount each will be paid.

The bonus Star Micronics pays directors is set within a range of no higher than ¥100 million a year. The bonus is allotted to the Board of Directors in a lump sum, which is calculated by multiplying the Company's consolidated net income by a payout ratio that the Company decides each year. A system that assigns points in accordance with rank within the Board determines the amount each director receives of this bonus allotment. Furthermore, at a meeting of the Board of Directors held on May 22, 2014, the Company resolved to pay directors’ bonuses as earnings-linked compensation in accordance with Article 34-1, Item 3 of the Corporation Tax Act of Japan.

Breakdown of Compensation of Directors and Audit & Supervisory Board Members

Director rank Total compensation,
etc.
(¥ million)
Total compensation by category (¥ million) Headcount of those eligible
Basic compensation Stock options Bonus
Directors (excluding outside director) 124 76 14 34 6
Audit & Supervisory Board members (excluding outside Audit & Supervisory Board members) - - - - -
Outside director and Audit & Supervisory Board members 16 16 - - 3
    Notes:
  • 1. 
    The figures for “Stock options” and “Bonus” are the monetary amounts recorded as expenses in the fiscal year under review.
  • 2. 
    The amounts disclosed above exclude ¥68 million (including bonuses) paid out as employee salaries to four directors of the Board who were concurrently serving in employee positions at Star Micronics.
  • 3. 
    Star Micronics is scheduled to pay ¥72 million in total to three directors of the Board upon their retirement. These payments are for severance of a retirement benefit allowance for directors that was discontinued pursuant to a resolution of the Ordinary General Shareholders' Meeting for the 82nd Period held on May 24, 2007.

Internal Control System

Star Micronics strives to maintain an internal control system that will enable proper and efficient management to drive a continuous increase in corporate value.

To strengthen internal control, a Star Micronics Global Charter of Corporate Conduct was issued in March 2005, setting out the Group's basic policies on compliance. Since then, a Star Micronics Code of Conduct was drawn up for employees to follow, and we have been working to establish rules and organizational structures to ensure compliance at every level of our activities. In addition, a department dedicated to promoting corporate social responsibility (CSR) spearheads our compliance activities. This department plays a central role in providing reminders and education on compliance to the Group's directors, executives and employees, and is charged with holding periodic committee meetings and monitoring the status in regard to the Group's adherence with all relevant laws and regulations.

Star Micronics also has an appropriate internal control and whistleblower system for ensuring the reliability of its financial reporting, as stipulated in the Financial Instruments and Exchange Law of Japan.

Risk Management

Star Micronics approaches the management of material risks such as legal issues, natural disasters, environmental considerations and export management in an organized and systematic manner. Departments and individuals are assigned as needed to manage a specific risk, and take responsibility for establishing rules and manuals, etc., for managing the risks. They also implement programs to alert, educate and prepare the Group's directors, executives and employees against the risks. There is also a committee which meets periodically to monitor and manage risks for the Company as a whole.

STAR MICRONICS' RISK MANAGEMENT SYSTEM

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