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About Square Enix Group

Corporate Governance

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(as of November 8, 2019)

ⅡBusiness Management Organization and Other Corporate Governance Systems Regarding Decision Making, Execution of Business, and Oversight in Management

1.Organizational Composition and Operation

Structure of Organization Company with Audit & Supervisory Committee.
Directors
Maximum Number of Directors Stipulated in Articles of Incorporation16
Term of Office Stipulated in Articles of Incorporation1 year
Chairperson of the BoardPresident
Number of Directors8
Election of Outside DirectorsElected
Number of Outside Directors6
Number of Independent Directors6
Outside Directors' Relationship with the Company (1)
Name Attribute Relationship with the Company*
a b c d e f g h i j k
Yukihiro Yamamura From Other Company
Yuji Nishiura From Other Company
Masato Ogawa From Other Company
Ryoichi Kobayashi From Other Company
Ryuji Matsuda Attorney
Tadao Toyoshima CPA

* Categories for "Relationship with the Company":

"○" When the director currently falls or has recently fallen under the category

"△" When the director fell under the category in the past

"●" When a close relative of the director currently falls or has recently fallen under the category

"▲" When a close relative of the director fell under the category in the past

a. Executive of the Company or its subsidiaries

b. Non-executive director or executive of a parent company of the Company

c. Executive of a fellow subsidiary company of the Company

d. A party whose major client or supplier is the Company or an executive thereof

e. Major client or supplier of the Company or an executive thereof

f. Consultant, accountant, or legal professional who receives a large amount of monetary consideration or other property from the Company other than compensation as a director/auditor

g. Major shareholder of the Company (or an executive of said major shareholder if the shareholder is a legal entity)

h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only)

i. Executive of a company with which the Company engages in mutual appointment of outside directors/auditors (the director himself/herself only)

j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)

k. Others

Outside Directors' Relationship with the Company (2)
Name Audit & Supervisory Committee Member Designation as Independent Director Supplementary Explanation of the Relationship Reasons for Appointment
Yukihiro Yamamura ――― Appointed an outside director in recognition of his track record of supervising and serving as a check on directors' execution of operations based on his wealth of experience and breadth of insight as an executive; designated an independent director since he has no risk of developing a conflict of interest with general shareholders.
Yuji Nishiura ――― Appointed an outside director in recognition of his track record of supervising and serving as a check on directors' execution of operations based on his wealth of experience and breadth of insight as an executive; designated an independent director since he has no risk of developing a conflict of interest with general shareholders.
Masato Ogawa ――― Appointed an outside director in recognition of his track record of supervising and serving as a check on directors' execution of operations based on his wealth of experience and breadth of insight as an executive; designated an independent director since he has no risk of developing a conflict of interest with general shareholders.
Ryoichi Kobayashi ――― Possesses a wealth of experience and breadth of insight in corporate management, as well as a wealth of experience and a proven track record as an outside auditor for the Company. Appointed an outside director who is an Audit & Supervisory Committee Member to supervise and serve as a check on directors' execution of operations; designated an independent director since he has no risk of developing a conflict of interest with general shareholders.
Ryuji Matsuda ――― A qualified attorney who possesses extensive expertise in finance and accounting matters and who has a wealth of experience and proven track record as an outside auditor for the Company. Appointed an outside director who is an Audit & Supervisory Committee Member to supervise and serve as a check on directors' execution of operations; designated an independent director since he has no risk of developing a conflict of interest with general shareholders.
Tadao Toyoshima ――― A CPA who possesses extensive expertise in finance and accounting matters and who has a wealth of experience and proven track record as an outside auditor for the Company. Appointed an outside director who is an Audit & Supervisory Committee Member to supervise and serve as a check on directors' execution of operations; designated an independent director since he has no risk of developing a conflict of interest with general shareholders.
Audit & Supervisory Committee
Committee's Composition and Type of Chairperson
Total Committee Members Full-time Members Directors Outside Directors Chairperson
Audit & Supervisory Committee 3 1 0 3 Outside Director
Directors and employees who support the execution of duties by the Audit & Supervisory Committee Assigned
Matters regarding the Independence of the Relevant Directors and Employees from the Executive Officers

The Company designates persons belonging to the Internal Audit Department as the employees that are to assist with the duties of the Audit & Supervisory Committee. In order to ensure the aforementioned employees' independence from directors involved in operational execution, the Company specifies that persons belonging to the Internal Audit Department are to follow only the instructions and orders of the Audit & Supervisory Committee when providing assistance with its duties, and that decisions on personnel matters concerning the head of the Internal Audit Department, including but not limited to the appointment, transfer, and disciplining thereof, shall require the consent of the Audit & Supervisory Committee.

Cooperation Among Audit & Supervisory Committee, Accounting Auditors, and Internal Audit Department

Coordination between Audit & Supervisory Committee and Accounting Auditors The Audit & Supervisory Committee and Accounting Auditors meet at the timing of quarterly and full-year results (i.e., a total of 4 times per annum) to report and exchange views. In addition, they arrange forums for exchanging views as appropriate, and incorporate the results of such discussions into the performance of their auditing duties.
Coordination between Audit & Supervisory Committee, Accounting Auditors, and Internal Audit Department While sharing information with the Audit & Supervisory Committee and Accounting Auditors, the Internal Audit Department takes significance and risk into consideration as it regularly checks and studies/evaluates (i.e., performs internal evaluations on) the internal management structure and operational processes, including at Group companies. In addition, the Internal Audit Department regularly reports to the Audit & Supervisory Committee regarding operational audits, and, on an ongoing basis, incorporates the results of such discussions into the performance of its auditing duties.

Voluntary Committee
Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee Established
Committee Name, Composition, and Attributes of Chairperson
Committee Name All Committee Members Full-time Members Directors Outside Directors Outside Experts Other Chairperson
Committee Corresponding to Nomination Committee Remuneration and Nomination Committee 5 0 1 4 0 0 Director
Committee Corresponding to Remuneration Committee Remuneration and Nomination Committee 5 0 1 4 0 0 Director
Supplementary Explanation

In order to ensure the objectivity and transparency of decisions made regarding executive remuneration and candidates for director positions, the Company has at its discretion established a Remuneration and Nomination Committee comprising outside directors and the President and Representative Director. This committee makes decisions regarding the Basic Policy on the Executive Remuneration System, the individual remuneration amounts for directors (excluding Directors who are Audit & Supervisory Committee Members), and the Guidelines on the Nomination Criteria for Directors.

The members of the Remuneration and Nomination Committee are appointed by the Board of Directors as follows, and the committee is convened as needed.

  • ・Chairperson : Yosuke Matsuda (President and Representative Director)
  • ・Member: Yukihiro Yamamura (Outside Director)
  • ・Member: Yuji Nishiura (Outside Director)
  • ・Member: Masato Ogawa (Outside Director)
  • ・Member: Ryoichi Kobayashi (Outside Director, Standing Audit & Supervisory Committee Member)
Independent Directors
Number of Independent Directors 6
Matters Relating to Independent Directors

The Company designates as independent directors all outside directors that fulfill the independent director criteria.

Incentives
Incentive Policies for Directors Performance- linked remuneration, stock options
Supplementary Explanation

・To Executive Directors (only President and Representative Director Yosuke Matsuda as of the submission date of this report), the Company pays performance-linked remuneration (monetary).

・To Directors (excluding Directors who are Audit & Supervisory Committee Members), the Company grants the Stock Acquisition Rights (Stock Compensation-Type Stock Options) as consideration for the performance of duties with the aim of giving incentives to enhance business performance, increase corporate value, and raise awareness of the importance of shareholders in the management of the Company.

Recipients of Stock Options Directors, Outside Directors, Employees, Subsidiaries' Directors and Subsidiaries' Employees
Supplementary Explanation

The number of persons granted stock acquisition rights and the number of shares granted as of September 30, 2019 are as follows.

-Stock Acquisition Rights (Stock Compensation-Type Stock Options): the Company had granted 1,335 stock options (133,500 shares) to 5 directors (excluding Directors who are Audit & Supervisory Committee Members)..

-Stock Acquisition Rights (Stock Options): the Company had granted 5,836 stock options (583,600 shares) to 22 persons.

Remuneration for Directors
Disclosure of Individual Directors' Remuneration Partial Disclosure
Supplementary Explanation

Director remuneration was as follows in the fiscal year ended March 31, 2019.

Total Fixed Performance-linked Stock Options
・7 Directors (excl. Audit & Supervisory Committee) ¥275mn ¥138mn ¥88mn ¥49mn
  (of which, 3 Outside Directors) (¥41mn) (¥33mn) (N/A) (¥8mn)
・3 Audit & Supervisory Committee Members ¥33mn ¥33mn N/A N/A
  (of which, 3 Outside Directors) (¥33mn) (¥33mn) (N/A) (N/A)

President and Representative Director Yosuke Matsuda was the only executive who received total consolidated remuneration of ¥100 million or more. His total remuneration was ¥205 million (fixed remuneration of ¥80 million, performance-linked remuneration of ¥88 million, and ¥37 million in stock options).

Policy on Determining Remuneration Amounts and Calculation Methods Established
Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

The Company's basic policy and determination process regarding executive remuneration system is as described below. Moreover, in order to ensure the objectivity and transparency of decisions made regarding executive remuneration and candidates for director positions, the Company has at its discretion established a Remuneration and Nomination Committee comprising 4 outside directors and 1 Representative Director. This committee makes decisions regarding the Guidelines on the Executive Remuneration System and the individual remuneration amounts for directors (excluding Directors who are Audit & Supervisory Committee Members) based on the authority granted to it by the Board of Directors.

Basic Policy on the Executive Remuneration System

  • 1.Directors (excluding Directors who are Audit & Supervisory Committee Members):
    • ・Remuneration for Executive Directors shall comprise fixed remuneration (monetary), performance-linked remuneration (monetary), and stock acquisition rights as stock options (shares).
    • ・Remuneration for Non-Executive Directors shall comprise fixed remuneration (monetary) and stock acquisition rights as stock options (shares).
    • ・In order to strive for growth that strikes a balance between scale and profitability, the amount of performance-linked remuneration (monetary) is calculated using consolidated net sales and consolidated operating income as metrics. Specifically, the amount of performance-linked remuneration is obtained by multiplying the basic remuneration amount (¥90 million) by a multiple (no greater than 400% and no less than 0%) that is pre-determined according to the degree of deviation from the consolidated net sales figure of ¥256,824 million and the consolidated operating income figure of ¥31,295 million posted in the fiscal year ended in March 2017.
    • ・As regards stock acquisition rights as stock options (shares), in light of the use of stock-based remuneration as a replacement for the discontinued special retirement bonus and based on the objective of striving for sustained growth over the long term, the Company offers stock options, and the Remuneration and Nomination Committee determines the base remuneration value in each instance.
  • 2.Directors who are Audit & Supervisory Committee Members:
    • In consideration of independence from management, only monetary remuneration shall be made.

・Director Remuneration Determination Process

  • 1.Individual remuneration amounts for Directors (excluding Directors who are Audit & Supervisory Committee Members) shall be determined by the Remuneration and Nomination Committee.
  • 2.Individual remuneration amounts for Directors who are Audit & Supervisory Committee Members shall be determined via discussions by the Directors who are Audit & Supervisory Committee Members, with reference made to the basic policy determined by the Remuneration and Nomination Committee.
  • 3.Individual remuneration amounts shall be set within the confines of the remuneration allocation approved at the General Shareholders' Meeting and shall be determined based upon a comprehensive consideration of annual earnings and each director's performance in his/her role and contribution to corporate earnings, remuneration in past years, the need to retain talented human resources, remuneration trends at other comparable companies, and economic conditions.
Supporting System for Outside Directors

The President and Representative Director makes reports as appropriate to the outside directors on key corporate matters and exchanges views with them. The President and Representative Director also arranges opportunities as appropriate for the outside directors to exchange information and views with the executive management. Business-line managers also at appropriate times make reports to and exchanges views with the outside directors.

The full-time Audit & Supervisory Committee Member makes reports as appropriate to the outside directors who are Audit & Supervisory Committee Members on key corporate matters and exchanges views with them.


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