Governance Framework

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Board of Directors

The Board of Directors consists of ten directors, including seven outside directors with three female director. 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 (CEO) 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 as of Jun 2021)

Composition of the Board Directors (10 members)

Nomination Committee, Audit Committee, and Compensation Committee

LIXIL adopts the following structure so that the Nomination Committee, Audit Committee, and Compensation Committee are able to effectively fulfill their role and duties as required by law, in addition to enabling the Governance Committee to effectively fulfill its responsibility and role of monitoring and supervising corporate governance across each committee.

(1) The majority of the members of each committee shall all be independent outside directors who satisfy LIXIL’s independence criteria.

(2) The chairperson of each committee who also chairs its meetings shall be an independent outside director.

The deliberation details and resolution matters of each committee are reported by the chairperson of the committee at the Board of Directors Meeting held immediately after the committee meeting.

The Nomination Committee is made up of four outside directors. This Committee decides the details of proposals submitted to the Annual Shareholders’ Meeting concerning the appointment and dismissal of directors. Also, the Nomination Committee will report its opinion to the Board of Directors such as on the appointment, election, removal and dismissal of candidates for executive officers and representative executive officer (Chief Executive Officer), etc., requested by the Board of Directors. The Nomination Committee meets at least once a year, as necessary.

The Audit Committee is made up of three outside directors. In addition to auditing the execution of duties by the directors and executive officers, the Audit Committee decides the details of the Company’s audit policy, audit plans, proposals for the appointment or dismissal of the independent auditors the Annual Shareholders’ Meeting, 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 three outside directors. This Committee decides details of individual compensation for directors and executive officers. It also decides the basic policy regarding compensation of directors and executive officers, compensation scheme (including KPIs), guidelines for compensation level, and various kinds of compensation based on these. The Compensation Committee meets at least once a year, as necessary.

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

  Number of members Internal directors Outside directors Chairperson (of the committee)
Board of Directors 10 3 7 (7 are independent directors) Outside Director
Nomination Committee 4 0 4 Outside Director
Audit Committee 3 0 3 Outside Director
Compensation Committee 3 0 3 Outside Director

Governance Committee

The Governance Committee, with the objective of the company’s corporate governance continued enhancement, discusses or advises the Board of Directors on matters such as reviewing and amending the Group’s Corporate Governance General Policy and playing the lead role in carrying out the evaluation of the effectiveness of the Board of Directors. The Governance Committee, in cooperation with the three committees required by statute (the Nomination Committee, the Audit Committee and the Compensation Committee), strives to establish and improve the Group’s corporate governance system. The Governance Committee meets at least once a quarter. The improvements of the corporate governance system will be reported to shareholders, investors and other stakeholders through disclosed documents such as the Securities Reports and Corporate Governance Reports.

Audit Framework with Audit & Supervisory Board Member

To enhance the system that supports the Group’s Audit Committee and strengthen the internal control of the Group, “Audit & Supervisory Board Members under LIXIL Audit Framework” are distributed to domestic major subsidiaries to exclusively conduct audits of the subsidiaries, enhance the effectiveness of the subsidiaries’ audit activities, and aim to strengthen corporate governance.

The Group’s Audit & Supervisory Board Member under LIXIL Audit Framework is composed of an appropriate number of persons (no more than 5 persons) and periodically conduct meetings with the Audit Committee and report on the implementation status of audits through the Audit Committee Secretariat.

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 meet once a month, and extraordinary meetings are held as necessary.

Internal Audits

At LIXIL, Corporate Audit (the Internal Audit Group) supervises internal audit functions in Japan and overseas, covering all group entities worldwide.

※There are 64 Internal Audit Members across LIXIL (as of April 2020)

In addition to performing standard internal audits, including accounting audits, business audits and internal control assessment, Corporate Audit also continuously reviews LIXIL’s internal audit system and processes to help the group as a whole achieve sustainable growth, as well as strengthen governance, internal controls and human resource development.

Audit Committee Audits

LIXIL's Audit Committee conducts audits with the aim of increasing efficiency by staying in close contact with the Internal Audit Group of LIXIL and subsidiaries, and the Audit & Supervisory Board Members under LIXIL Audit Framework. The Audit Committee periodically receives audit results reports from the Internal Audit Group and the Audit & Supervisory Board Members under LIXIL Audit Framework and gives instructions at suitable times. It conducts interviews with executive officers, etc., sits in on important internal meetings, and reads minutes or approval requests of important committees, and by doing so, it audits the creation of internal control systems and their state of operation at the Company and important subsidiaries, as well as the state of execution of duties by directors and executives. The Audit & Supervisory Board Members under LIXIL Audit Framework also meet periodically to share each company's information and the unified audit policies of the group.

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 name of the certified public accountants who performed the Company’s auditing work in the fiscal year ended in March 2020, and their structure of assistants for audit services are as follows;

Name of certified public accountants who performed the auditing work Designated limited liability partners, managing members: Yasuhiro Katsushima, Yutaka Hamaguchi, Masayuki Furukawa

・Composition of assistants for accounting audit services:
18 certified public accountants and 7 assistant accountants

Other Committees

In order to enhance corporate governance at its group companies, in addition to establishing the Governance Committee within the Board of Directors as a voluntary committee, LIXIL also convenes, as appropriate, the Compliance Committee, Risk Management Committee, M&A Committee, Investment Review Committee, and Corporate Responsibility Committee, and discusses management strategies, medium- and long-term policies and investment matters to strive to accelerate decision-making and enhance the effectiveness of its governance.

Number of meetings held during FYE2021

Board of Directors 17 Made decisions on matters specified by law, basic management policies, and important management matters, while monitoring the conduct of duties of directors and executive officers.
Nomination Committee 14 Made decisions on the content of proposals to be submitted to the Annual Shareholders’ Meeting regarding the appointment and dismissal of directors. Reported its opinion to the Board of Directors when requested, such as on the appointment, selection, removal, and dismissal of candidates for executive officer and Representative Executive Officer(CEO), and on the selection and dismissal of the Chairperson of the Board, members, and chairpersons of each committee, etc.
Audit Committee 16 In addition to auditing the conduct of duties by directors and executive officers, discussed and made decisions on auditing policy, auditing plans, and the content of proposals to be submitted to the Annual Shareholders’ Meeting regarding the selection and dismissal of financial auditors.
Compensation Committee 13 Made decisions regarding the compensation of directors and executive officers and their individual compensation received from the Company as consideration for duties.
Governance Committee 7 Continually enhances the Company’s corporate governance, discusses or advises the Board of Directors on matters such as reviewing and amending the LIXIL Corporate Governance General Policy, and manages the implementation of the evaluation of the effectiveness of the Board of Directors.
Board of Executive Officers 21 As the decision-making body responsible for the execution of business activities in accordance with the basic policies approved by the Board of Directors, this committee decided on important matters relating to the execution of business in the Company and the LIXIL group of companies as a whole.
Investment Review Committee 32 Deliberated and made decisions on material investments (excluding those relating to M&A), financing, and matters relating to the establishment, reorganization, and restructuring of subsidiaries (conducted by the Company and its subsidiaries) within the authority delegated by the Board of Executive Officers.
M&A Committee 20 Deliberated and made decisions on matters relating to M&A (including divestment of business) conducted by the Company and its subsidiaries, within the authority delegated by the Board of Executive Officers.
Compliance Committee 4 Resolved the important compliance strategy and plans as well as reported on training and promotional activities of the LIXIL group of companies.
Risk Management Committee * 0 Endeavors to improve the ability to deal with future risks by predicting extraordinary risks of the Company and the LIXIL group of companies and establishing systems to address them in advance.
Corporate Responsibility Committee 4 Selected and reviewed material issues for the overall LIXIL group of companies, formulated the targets as well as the initiatives of the CR strategy, and provided oversight and guidance for the implementation of priority themes and activities.
Diversity and Inclusion Committee 3 Supervised formulation and implemention of basic diversity and inclusion policies and roadmaps throughout the LIXIL group of companies.
Environmental Committee 2 Discussed and decided on the overall LIXIL group of companies’ environmental strategy and important measures as well as monitored and reviewed its plans to enhance environmental management and performance.
Information Security Committee 3 This committee makes decisions related to information security issues. It made decisions and approved information security policies, and reported on the status of security measures throughout the LIXIL group of companies.
Compensation and Benefits Committee 7 Made decisions regarding compensation structures for executives of the Company and the LIXIL group of companies and their individual compensation, except for the matters to be exclusively resolved by the Compensation Committee.
Group Credit Committee 5 Resolved and deliberated on credit management related to business transactions with third parties conducted by the Company and its subsidiaries in order to accelerate decision-making and enhance effectiveness of governance.
Stock Sale and Purchase Review Committee 8 Conducted reviews and examined insider trading regulations in order to prevent rule violations as well as to fulfill the Company’s social responsibilities as a business in the event that officers or employees give prior notification they will be engaging in the sale or purchase of the Company's shares, etc.

* There was no meeting in FYE2021 due to the establishment of a task force for risk management in each region and the flexible cooperation between headquarters and the task force.

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