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Corporate Governance

With the aim of sustainable growth of the Group and medium- to long-term enhancement of corporate value, the Company is committed to reinforcing corporate governance to ensure the transparency and objectivity of management through collaboration with stakeholders.

The Company has adopted the Company with Three Committees (Nomination, Audit and Remuneration Committees) system. The purpose of this adoption is to further strengthen corporate governance from the following standpoints.

1) Strengthening of the management oversight function by separating oversight from execution
The Company will strengthen the oversight function for business execution of the Board of Directors by separating oversight from execution. In addition, the Company aims to promote sophistication of strategy by having the Board of Directors actively include the insights of external persons in order to hold rigorous discourse on important issues relating to the management of the Group.

2)Greater clarity of authority and responsibility in business execution and promotion of agile management
The Company will enable decisions of business execution to be delegated to Executive Officers, clarify the authority and responsibility between the Board of Directors and Executive Officers and between the holding company and the operating subsidiaries, and carry out speedy management decision making.

3)Improvement of transparency and objectivity of management
The Company will improve the transparency and objectivity of management by adopting a Company with Three Committees (Nomination, Audit and Remuneration Committees). The majority of the members of each committee are Outside Directors.

4) Building of a globally applicable governance system
The Company will build a governance system that is easy to understand from global perspectives, such as those of overseas investors.

Overview of Corporate Governance System

The Company is a pure holding company and, with the exception of authority for important matters relating to the management of the Group, it delegates authority to its respective business subsidiaries with respect to matters involving business execution by the business subsidiaries in an effort to speed up business decisions and to make managerial responsibilities clear.

The roles and responsibilities of the Company, as a pure holding company, are as described below:

・Establishment of corporate governance practices for the entire Group;
・Planning and formulating of the Group Vision, Group Medium-term Business Plan and Group Management Policy and tracking of the progress and results thereof;
・Optimal allocation of the Group’s management resources;
・Establishment of the Group-wide risk management system and involvement in internal audits;
・Decision making on important matters involving business execution relating to the management of the Group; and
・Provision of advice and approval for the management policies and management strategies of respective business companies and oversight and evaluation of the progress thereof.

The Company has six supervisory units (Management Strategy Unit, Group Digital Strategy Unit, Affiliated Business Unit, Financial Strategy Unit, Human Resources Strategy Unit and Administration Unit) as management bodies to clarify each unit’s roles, responsibilities and authorities, thereby strengthening the oversight function and improving the internal control system of the entire Group.

JFR Corporate Governance Structure Chart

Corporate Governance Guidelines(PDF 885KB)

Corporate Governance Report(PDF 883KB)

Board of Directors

Directors who are appointed by shareholders and are entrusted with the management of the Company are to carry out the following roles and responsibilities in the Board of Directors in accordance with their fiduciary responsibility and accountability to shareholders with the aim of realizing the Group Vision:

・Indicating the overall direction that the Group management is to take by engaging in constructive discussions with respect to the Group Vision, Group Medium-term Business Plan, Group Management Policy and other fundamental management policies and carrying out multifaceted and objective deliberations that include evaluation of risks with respect to the aforementioned;
・Appropriately making decisions in terms of overall policy and plans pertaining to the Group management on the basis of the direction noted above and overseeing the progress and results of the plans;
・Improving the environment to drive aggressive management toward discontinuous growth;
・Taking steps to build and develop internal control systems of the Group overall and otherwise overseeing the operational status of such systems;
・Overseeing conflicts of interest between related parties; and
・On the basis of summary reports furnished by the Nomination Committee, overseeing the progress of senior management team succession planning, personnel assignment plans pertaining to managerial talent and management team training, as delegated to the Nomination Committee.

The Board of Directors of the Company is comprised of the appropriate number of 15 or less Directors as set forth in the Articles of Incorporation. Currently the number of Directors is thirteen (six of whom are independent Outside Directors including one female Director) and the term of office is one year. From the standpoint of separating oversight from execution and ensuring the effectiveness of discussions at the Board of Directors meetings, one-third or more of Directors are independent Outside Directors and the majority of Directors are independent Outside Directors and internally promoted Directors who do not execute business. The Chairperson of the Board of Directors is chosen from among internally promoted Directors who do not execute business from the standpoint of separating oversight and execution and ensuring the smooth operation of the Board of Directors.

When nominating Director candidates, the Company ensures diversity in consideration of the balance of knowledge, experience and ability on the Board of Directors as a whole.

Three Committees (Nomination Committee / Audit Committee / Remuneration Committee)

(Nomination Committee)
The Nomination Committee is composed of three Outside Directors, the Chairperson of the Board of Directors who does not execute business and President and Representative Executive Officer. The chairperson is chosen from among independent Outside Directors from the standpoint of ensuring transparency and objectivity. The Nomination Committee determines the content of the proposals relating to the election and dismissal of Directors to be submitted to the Shareholders Meeting as well as the content of the reports relating to the election and dismissal of Executive Officers of the Company, the appointment and removal of the Chairperson of Board of Directors, matters relating to succession plans (for the next senior management team) and the appointment and removal of the chairpersons and members of the three committees to be submitted to the Board of Directors.

(Audit Committee)
The Audit Committee is composed of three Outside Directors and two full-time Inside Directors who do not execute business and are well informed about the Company’s internal information to maintain and improve the accuracy of audit. In addition, at least one of the Audit Committee members must have appropriate knowledge of finance and accounting. The Audit Committee audits the performance of duties by Directors and Executive Officers in line with the overall policy and plan determined by the Board of Directors and audits important matters to be discussed at the Board of Directors meetings and other individual matters deemed necessary by the Audit Committee as well as building and operation of internal control and prepares audit reports.
In addition, the Audit Committee oversees accounting auditors to ensure the reliability of accounting information and determines the content of proposals relating to the election and dismissal of accounting auditors to be presented to the Shareholders Meeting.
An internally promoted Director who does not execute business chairs the Committee from the standpoint of achieving a smooth transition from the Audit & Supervisory Board system. However, the Company will reconsider this system to establish the most appropriate system in the future.

(Remuneration Committee)
The Remuneration Committee is composed of three Outside Directors, the Chairperson of Board of Directors who does not execute business and President and Representative Executive Officer. The chairperson is chosen from among independent Outside Directors from the standpoint of ensuring transparency and objectivity. The Remuneration Committee determines policies concerning the decision relating to the details of remuneration, etc. of Directors and Executive Officers of the Company and officers of subsidiaries (directors, executive officers and auditors) on an individual basis and the details of remuneration of each individual Director and Executive Officer of the Company.

Management Advisory Board

The Company has a "Management Advisory Board" that is composed of President and Representative Executive Officer, all Outside Directors, and Chairperson of Board of Directors to freely, vigorously, and constructively discuss and exchange opinions about various issues concerning corporate governance and overall corporate management and share information and facilitate cooperation with Outside Directors.

Risk Management / Compliance

The “Risk Management Committee” systematically manages and addresses risks as a whole from a company-wide perspective, particularly with respect to risk related to strategies, and makes management decisions from a perspective focused on risk management. The Committee is chaired by President and Representative Executive Officer and consists of members including the senior executive general managers of supervisory units and the presidents of major business companies. Drawing on extensive specialized knowledge of the committee members elected from supervisory units, the Committee assesses a variety of risks, prepares necessary measures and monitors progress in that regard.

The Company has established a “Compliance Committee” (whose membership includes a corporate lawyer) for the purpose of appropriately addressing issues concerning the Group’s compliance management practices. The Committee is chaired by President and Representative Executive Officer and draws up a policy for addressing matters involving serious compliance-related violations, and through close collaboration with departments in charge of promoting compliance, develops the foundation of compliance system (e.g. the preparation of promotion systems and plans) and continuously oversees the status of implementation to promote compliance with laws and regulations, corporate ethics and other such standards.

Both committees report the details of their deliberations to the Audit Committee regularly (twice or so a year) and in a timely manner.

Appointment of Outside Directors

The Company has five independent Outside Directors out of 13 Directors to separate oversight appointed from execution, ensure the effectiveness of the Board of Directors’ discussions, and maintain and improve transparency and objectivity. In appointing Outside Directors, we confirm, in accordance with the Criteria for Determining Independence of Outside Directors set by the Company, that nominees are not susceptible to conflicts of interest with the Company’s shareholders and are in an objective position, independent of the management team that executes business.

Officer remuneration system

Policy on determining remuneration for Directors and Executive Officers
In order for each Director and Executive Officer to play his/her role to the fullest to realize and promote sustainability management and implement the Medium-term Business Plan steadily, the Company has formulated the “Officer Remuneration Policy” including a stock-based remuneration system. The basic policies on the officer remuneration are as follows:

●Contributing to the sustainable growth of the Group and increasing corporate value over the medium to long term and aligning with corporate culture;
●A highly performance-based remuneration system that provides incentives to Executive Officers both for accomplishing objectives set under management strategies and business plans and for achieving targets with respect to corporate performance;
●Remuneration levels that can secure and retain personnel who have the “desirable managerial talent qualities” required by the Company;
●Increasing shared awareness of profits with shareholders and awareness of shareholder-focused management; and
●Enhanced transparency and objectivity in the remuneration determining process.

Remuneration composition for Executive Officers
Remuneration composition for Non-executive Directors
Proportion of remuneration by type for Executive Officers of each rank

Note: The above figure represents the case of a bonus for a standard ranking where the performance achievement rate for stock-based remuneration was 100%.

Note: The remuneration composition for Directors and Executive Officers at Daimaru Matsuzakaya Department Stores is the same as that shown for “Executive Officers excluding President” in the figure above.

Details of performance shares

KPI Short term Medium to long term Methods of use



Consolidated operating profit

Evaluation based on the achievement rate of targets (absolute value) Evaluation is weighed as 50% for each indicator.


Basic earnings per share


Free cash flows

If targets are not achieved, the amount of stock-based remuneration is reduced by 50% (reduced by 25% if one target is not achieved).




Note: KPI stands for Key Performance Indicator.

Note: Short-term targets are the initial forecasts for the relevant fiscal year as announced in the Consolidated Financial Results each April (IFRS basis).

Succession planning

The Company considers the selection and dismissal of the President and Representative Director as the most important strategic decision-making and positions the development and implementation of succession plans (for the next senior management team) as matters of particular importance in terms of management strategy.

The Company ensures clarity and transparency in the process of selecting successor candidates through repeated reviews of successor candidates’ individual evaluations based on assessments made by a third-party organization using internal data. The deliberations are conducted by the Nomination Committee, in which Outside Directors comprise a majority. The Board of Directors plays a supervisory role focused on realizing the Basic Mission Statement and the Group Vision, based on proposals received from the Nomination Committee. With regard to the qualities required of successors, the Company clearly defines the necessary values, capabilities, and behavioral traits in the form of the five qualities required of an officer in the Corporate Governance Guidelines under “Desirable qualities required of JFR Group managerial talent.” These are a “strategic mindset,” “reform-oriented leadership,” “tenacity to achieve results,” “organization development strengths” and “human resource development strengths.” The Company endeavors to ensure impartial cultivation and selection of successors by sharing these qualities among all members of the Nomination Committee to make them all aware of the indicators used in cultivating and assessing successors.

In addition, the dismissal of the President and Representative Director is determined by the Board of Directors after being discussed and resolved by the Nomination Committee based on the goals set, expected and actual results (e.g. annual performance and strategy execution status), and the status of results, etc., achieved by successor candidates who are selected under the succession plan resolved by the Nomination Committee.

The Nomination Committee will continue to have discussions on succession planning in a planned manner so that changes in the environments and situations surrounding the Company, the progress of strategies formulated, etc., can be reflected in such planning.

The Nomination Committee also discusses and resolves the dismissal of senior management team members as in the case of the President and Representative Director.

Basic capital policy

The Company believes that any increase in free cash flows and improvement in ROE should help to ensure its sustainable growth and increase corporate value over the medium to long term. To such ends, the Company promotes a capital policy that takes a balanced approach to “undertaking strategic investment,” “enhancing shareholder returns” and “expanding net worth” being equipped to address risks.

Moreover, in procuring funds through interest-bearing debt, we aim to achieve an optimal structure of debt to equity in a manner cognizant of our funding efficiency and cost of capital, carried out on the basis of having taken into consideration our capacity for generating free cash flows and our balance of interest-bearing debt.

A “business strategy” where higher sales are accompanied by profits and a “finance strategy (encompassing the capital policy)” that heightens the rate of return on invested capital are essential elements with respect to improving free cash flows and ROE. In addition, we believe it is crucial that we maximize our operating profit and continually improve our operating margin by strengthening our core businesses and concentrating management resources on initiatives such as business field expansion and active development of new businesses.

As our key financial indicators through efforts to realize the Group Vision, we focus primarily on ROE for capital efficiency, consolidated operating profit for business profitability, free cash flows for profitability and stability, and ratio of equity attributable to owners of parent to total assets (equity ratio) for financial soundness.

Shareholder return policy

The Company’s basic policy is to appropriately return profits. Hence, while maintaining and enhancing its sound financial standing, the Company strives to provide stable dividends and target a consolidated dividend payout ratio of no less than 30%, taking profit levels, future capital investment, free cash flow trends and other such factors into consideration. The Company also gives consideration to the option of purchasing its own shares as appropriate, in accordance with aims that include improving capital efficiency and implementing a flexible capital policy.


Policy on cross-shareholdings
In principle, the Group will not newly acquire cross-shareholdings, which means the holdings of listed shares other than those of subsidiaries and associates which are not held for pure investment purposes. However, this does not apply to shares deemed to be essential for promoting the Group’s business strategy and to contribute to enhancing corporate value over the medium to long term through validation of rationale for such holdings.

Validation of rationale for cross-shareholdings
The Board of Directors validates individual issues from both qualitative and quantitative perspectives on a regular basis each year. From a qualitative perspective, it considers business strategies such as maintaining harmonious and favorable business relationships with corporate customers and business partners and securing supply chains. From a quantitative perspective, it considers whether income from such shareholdings including related trading profits and dividends exceeds the capital costs, etc.

Voting policy on cross-shareholdings
Decisions are made from both of the perspectives of whether cross-shareholdings contribute to the sustainable growth of and the medium- to long-term enhancement of the corporate value of the company whose shares are held and whether the cross-shareholdings contribute to the Group’s sustainable growth and medium- to long-term enhancement of corporate value. Specifically, in regard to proposals that we consider to be of high priority with respect to strengthening corporate governance, such as proposals relating to the corporate governance system (appointment of officers), proposals relating to shareholder return (appropriation of surplus) and proposals that have an effect on shareholder value (introduction of takeover defense measures), we establish policies upon which to base judgment of our exercise of voting rights, and acting as the Group as a whole, we take a response that is in line with such policies. We engage in dialogue with companies whose shares we hold if necessary when we exercise voting rights.

Corporate Information