Eisai has pursued the best corporate governance practices and has remained committed to the improvement of this governance for the purpose of fulfilling hhc, the company's corporate philosophy. Since June 2000, Eisai has appointed directors from outside the company, and in June 2004, Eisai revised its Articles of Incorporation at the Annual General Shareholders' Meeting and adopted the Company with Committees System (currently, Company with a Nomination Committee, etc., System). At the same time, the number of outside directors has been increased to account for the majority of the Board of Directors. This is intended to ensure the fairness and transparency of our business management and, as a consequence, the management supervision function has been strengthened.
Eisai remains committed to the sustainable improvement of its corporate governance in pursuit of increasing the benefits to stakeholders including patients, customers, shareholders and employees.
Eisai's Corporate Governance System
Features of Eisai's Corporate Governance
- Clear Separation of the Functions between Oversight of Management and the Execution of Business
The central aspect of Eisai’s corporate governance is the clear separation of the oversight of management and the execution of business by fully utilizing the fact that it is a Company with a Nomination Committee, etc., System.
The Board of Directors with outside directors making up the majority is able to enhance the vitality of and devote its attention to management by entrusting a large portion of the decision-making authority over business execution to corporate officers to the extent permitted by the laws and regulations. In accordance with the Companies Act, the Board of Directors has passed resolutions on rules for the Systems for Ensuring Proper Business Operations to establish specific internal controls that should be established and operated by corporate officers. In addition to the items set forth in the rules, corporate officers work to enhance and operate the internal controls within the scope of their responsibilities to secure autonomy and increase the speed and flexibility of business execution.
Under this structure, the Board of Directors also checks the status of execution of duties by corporate officers and inspects the appropriateness of the status of internal controls, such as the business execution and decision-making processes, from the perspectives of shareholders and society.
Furthermore, in order to achieve a clear separation between the oversight of management and the execution of business, Eisai has established that the chair of the Board of Directors be an outside director and that the Representative Corporate Officer and CEO be the only individual to concurrently serve as a corporate officer and a director.
- A Sustained, Autonomous Mechanism for Enhancement of Corporate Governance Centered on Outside Directors
The presence of 7 independent outside directors, who account for the majority of the Board of Directors, supports the effectiveness of Eisai’s corporate governance structure. Eisai has established and is operating a mechanism to enhance sustained, autonomous corporate governance centered on outside directors, including (1) a system of electing neutral and independent outside directors by a Nomination Committee, (2) operating the Board of Directors, etc., through the leadership of a chair who is an outside director, (3) an Outside Directors Meeting for broad discussion of corporate governance, including consideration of a succession plan, etc., and (4) corporate governance evaluations that drive the Plan-Do-Check-Act (PDCA) cycle of the Board of Directors and each committee. We will continue to work to enhance the contents of each of those efforts.
- Efforts to Ensure the Independence and Neutrality of Outside Directors
When electing outside directors, the Nomination Committee places the utmost importance on ensuring the independence and neutrality of outside directors.
The work of selecting candidates for outside directorships begins with creating a list of candidates. In addition to directors who are currently serving, the Nomination Committee asks Eisai’s former outside directors, who have extensive personal networks, to create a list of candidates, and updates the candidate list every year. The Nomination Committee screens the candidate lists for independence, competition, and other related matters, narrows down the candidates in accordance with the requirements for new candidates for the relevant fiscal year, then determines the candidates for whom requests for appointment will be submitted. After the decision is made, the Chair of the Nomination Committee promptly meets with the candidates, and submits requests for appointment to Eisai’s directors.
Eisai’s Nomination Committee consists of only 3 members, all of whom are outside directors. Utilizing the process described above, they select director candidates with fairness and transparency.
In addition, the Nomination Committee strictly applies the “Requirements for the Independence and Neutrality of Outside Directors” (hereinafter “the Requirements”), stipulated by the Committee, for the selection of candidates for outside directors. Every year, the Nomination Committee examines each outside director candidate, whether for new election or re-election, to determine whether he or she meets the Requirements and to assess his or her independence and neutrality.
Eisai inspects the Requirements each year, and revises them as necessary, to respond to changes in laws and regulations as well as standards of securities exchanges, etc., and also from the perspective of improving corporate governance.
- Chair of the Board of Directors (outside director)
Eisai selects the Chair of the Board of Directors, the central figure in Board of Directors operation, from the outside directors. In order to enable the Board of Directors to make fair and appropriate judgments on behalf of shareholders and other stakeholders, the Chair of the Board of Directors ensures that the selection of agenda items and the establishment of annual themes are scrutinized, that sufficient time is also spent to confirm the content of proposals presented to the Board of Directors, and that the Board of Directors Secretariat is instructed to explain the content of the proposals to each director in advance of meetings. Meetings of the Board of Directors are conducted in ways that enable directors, with their diverse backgrounds, to express their opinions on the basis of their varied knowledge.
As the director who leads the outside directors, the Chair of the Board of Directors serves as chair of the Outside Directors Meeting.
- Outside Directors Meeting
Eisai holds Outside Directors Meetings (with only outside directors in attendance) on a regular basis. These meetings provide outside directors with valuable opportunities to interact, communicate at a deeper level, and make discussions at gatherings of the Board of Directors, etc., more dynamic. At Outside Directors Meetings, participants freely discuss corporate governance- and business-related matters. If necessary, the Chair of the Board of Directors submits notifications, reports, and requests to the Board of Directors and operational divisions.
a）Information sharing and discussion regarding the succession plan
In FY2016, the Outside Directors Meeting discussed how to share information related to the CEO succession plan, etc., and preparation for unexpected events. As a result, in April 2017, rules regarding the consideration of a succession plan were established, with the unanimous support of the directors.
Since FY2017, in accordance with these rules, the Outside Directors Meeting has met regularly, with all directors, including inside directors, in attendance, to share information and discuss succession plans proposed by the Representative Corporate Officer and CEO.
b)Implementing the corporate governance evaluation
The effectiveness of the Board of Directors’ management oversight function is evaluated each year at the Outside Directors Meeting. If any issues related to the operation of the Board of Directors, etc., are identified, a request and proposal for improvement is submitted to the Board of Directors and operational divisions. In the corporate governance evaluation, the status of the activities of the Board of Directors, etc., is inspected and evaluated based on the corporate governance evaluation carried out in the previous fiscal year, issues are identified for the next fiscal year, and improvement measures are shown, thereby driving the Plan-Do-Check-Act (PDCA) cycle.
Beginning in FY2017, we have had an outside organization review our processes and results once every 3 years to ensure the appropriateness and suitability of continued, regular corporate governance evaluations.
c）Dialogue with outside directors and investors
Up to this point as well, Eisai has conducted meetings between institutional investors and outside directors in Japan and overseas. In FY2017, outside directors visited multiple institutional investors, providing explanations of Eisai’s efforts regarding governance and the activities of the Independent Committee of Outside Directors related to the Policy for Protection of Eisai’s Corporate Value and Common Interests of Shareholders, and taking the opportunity to exchange opinions.
Compliance with the Corporate Governance Code
Eisai ensures full compliance with all 73 principles of the Corporate Governance Code adopted by the Tokyo Stock Exchange in June 2015. The eleven principles that require the disclosure of information are detailed in the Corporate Governance Report. In addition, the Corporate Governance Report discloses the Company's audit system, compensation for directors and corporate officers (e.g. procedure for determining the compensation calculation method), internal control system and requirements concerning the independence and neutrality of outside directors.