Board of Directors

The Board of Directors consists of 14 directors, including nine outside directors with one 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 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 (14 members as of November 2019)

Nomination Committee, Audit Committee, and Compensation Committee

LIXIL Group 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 Group’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 five directors, four 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. 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 (CEO), 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 five directors, four 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 the Company’s 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 four directors, all of whom are 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

Governance Committee

The Governance Committee, with the objective of monitoring and supervising LIXIL Group’s corporate governance and its continued enhancement, discusses or advises the Board of Directors on matters such as reviewing and amending the Group’s Corporate Governance Guidelines 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 Compensation Committee and the Audit Committee), strives to establish and improve LIXIL 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 Group Audit Framework” are distributed to 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 Group Audit Framework is composed of an appropriate number of persons (no more than 14 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 twice a month, and extraordinary meetings are held as necessary.

Internal Audits

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 September 2019, the Group's internal audit functions totaled 65 people.) In addition to the ordinary internal audit activities such as audit on financial statements, business operations, and internal controls evaluation, the Internal Audit Group supports strengthening of the Groups' governance system and internal controls. Through activities aimed to reduce business risks and costs, it supports the development of human resources, and drives the development of action plans for improvement of operations or remedial actions.

Audit Committee Audits

LIXIL Group's Audit Committee conducts audits with the aim of increasing efficiency by staying in close contact with the Internal Audit Group of LIXIL Group and subsidiaries, and the Audit & Supervisory Board Members under LIXIL Group Audit Framework. The Audit Committee periodically receives audit results reports from the Internal Audit Group and the Audit & Supervisory Board Members under LIXIL Group 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 Group 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 2019, 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:
20 certified public accountants and 10 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 Group 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 the Fiscal Year Ended March 31, 2019

* From April 1, 2018, the Investment Strategy Committee, Investment and Load Council, New Business Council, and Business Divestment Council have been reorganized into the M&A Committee and the Investment Review Committee to enhance the effectiveness of corporate governance.