Governance Framework

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Board of Directors

The Board of Directors consists of ten directors including five outside directors with two female directors. The Board decides on matters stipulated by laws and regulations, basic management policy and other important management matters. At the same time, the Board supervises the execution of duties by the directors and executive officers. Outside directors in particular perform an important supervisory role from an independent standpoint, helping to ensure even more robust and effective corporate governance. The Board selects the Chief Executive Officer and other Executive Officers placing emphasis on whether the Company can continue to realize its management vision and policy in the years ahead. In principle, the Board of Directors meets once a month.

Composition of the Board Directors (10 members)

Composition of the Board Directors (10 members)

Nomination Committee, Audit Committee and Compensation Committee

Our three Committees' decisions are made from independent standpoint through the leadership of the Outside Directors.

The Nomination Committee is made up of three directors, two of whom are outside directors. This Committee decides the details of proposals submitted to the General Meeting of Shareholders concerning the appointment and dismissal of directors. The Nomination Committee meets at least once a year, or as necessary.

The Audit Committee is made up of three directors, two of whom are outside directors. In addition to auditing the execution of duties by the directors and executive officers, the Audit Committee decides the details of audit policy, audit plans, proposals for the appointment or dismissal of the independent auditors to the General Meeting of Shareholders, and other matters. As a rule, the Audit Committee meets once every two months or more, as necessary.

The Compensation Committee is made up of five directors, three of whom are outside directors. This Committee decides details of individual compensation for directors and executive officers. The Compensation Committee meets at least once a year, or as necessary.

Composition of the Board of Directions and Committees and Position of the Chairperson

  Number of members Internal directors Outside directors Chairperson (of the committee)
Board of Directors 10 5 5 (all 5 are independent directors) Internal Director
Nomination Committee 3 1 2 Outside Director
Audit Committee 3 1 2 Outside Director
Compensation Committee 5 2 3 Outside Director

Executive Officers Meeting

The Executive Officers Meeting is made up of the executive officers and serves as a decision-making body for business execution based on the basic policy decided by the Board of Directors. It decides on important matters relating to business execution of the Company. In principle, the Board of Directors meets once a month.

Internal Audit

LIXIL Group's Internal Audit Group conducts its audit by collaborating with internal audit functions organized in major group companies in Japan and overseas to cover all entities in the Group. (At the end of the fiscal year ended March 2017, total 78 people consist of the Group's internal audit functions.) In addition to the ordinary internal audit activities such as the audit on financial statement, business operations, and internal controls evaluation, Internal Audit Group is supporting to strengthen governance system of the Group and internal controls and to develop human resources through the activities to reduce business risks and costs and drive the development of action plans for the improvement of operations or remedial actions.

Accounting Audits

The Company has concluded, with Deloitte Touche Tohmatsu LLC, an audit agreement on audits under the Companies Act and audits under the Financial Instruments and Exchange Act. The Company's Audit Committee and Deloitte Touche Tohmatsu LLC have opportunities to share information periodically, and are endeavoring to improve the quality of each other's audits by such means as exchanging information on their respective auditing policies and various problems that have arisen during the period. Also, an audit debriefing session is held at the end of the fiscal year, where opinions are exchanged with respect to account settlement issues in concrete terms.

The names of the certified public accountants who led auditing duties for the year under review ending March 31, 2017, the number of consecutive years they have audited the Company, and details of personnel who assisted with audits are as follows.

Names of certified public accountants who led auditing duties and number of consecutive audit years
Designated limited liability partners:
Koji Inagaki (three consecutive years), Yasuhiro Katsushima (one year), Yutaka Hamaguchi (one year)

Assistants on audits: 16 certified public accountants, 17 persons who have passed the certified public accountant examination, etc.

Number of Meetings Held during the Fiscal Year Ended March 31, 2017

Board of Directors 16 Made decisions on matters specified by law, basic management policies, and important management matters as well as monitored the conduct of duties by the directors and executive officers
Nomination Committee 12 Made decisions on the content of proposals to be submitted to the General Meeting of Shareholders regarding the election and dismissal of directors
Compensation Committee 12 Discussed and made decisions regarding the content of compensation of individual directors and executive officers
Audit Committee 18 In addition to auditing the conduct of duties by the directors and executive officers, discussed and made decisions on auditing policy, auditing plans, and the content of proposals to be submitted to the General Meeting of Shareholders regarding the selection and dismissal of the financial auditors
Executive Officers Meetings 16 As the decision-making body responsible for the execution of business activities in accordance with the basic policies approved by the Board of Directors, decided on important matters related to the execution of business in the Company and the Group as a whole
Internal Audit Committee 4 Undertook inspections and checks of legal compliance and appropriateness of corporate activity and of management conformity not only with legal requirements but also with standards as determined by the Company
Compliance Committee 4 Provided guidance for structuring and operational management of compliance systems in Group companies and monitoring of the status of requiring compliance with laws and regulations
Risk Management
Committee
10 In addition to forming a risk management committee in the Company, also monitored the formation of such committees for risk management in Group companies mainly in Japan and confirmed the status of risk management
Investment Strategy Council 4 Discussed Group strategy (investments, funding, M&A, overseas strategy, etc.) and set directions with the objective of increasing the LIXIL Group's corporate value
Investment and Loan Council 12 Deliberated proposals made by the Company and the Group that are (1) investments that are closely involved with Group strategy, (2) investments that are related to more than one Group operating company, and (3) investments that exceed the approval authority of the president of the relevant operating company
New Business Council 6 Deliberated proposals made by the Company and the Group that are (1) investments that involve the establishment of a new company or are investments in an existing company and (2) investments for the acquisition, etc., of a business partner company of an operating company
Business Divestment Council 12 Deliberated proposals made by the Company and the Group that are (1) plans regarding business opportunity of subsidiaries suffering from unsatisfactory performance and (2) opportunities with respect to transfer of shares of subsidiaries to a third party
Corporate Responsibility Committee 2 Selected the material issues for the overall Group, formulated the Corporate Responsibility strategy, and provided oversight and guidance for the implementation of priority themes and activities

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