Corporate GovernanceSUSTAINABILITY FOR THE MEDIA DO GROUP

Basic Policy

MEDIA DO pursues its vision of “More Content for More People!” through operations based on the concept of digital distribution of written works. Through this approach, the Company aims to fulfill its mission of “unleashing a virtuous cycle of literary creation” in which creators are appropriately compensated when their works are used in digitized formats. To accomplish this mission, MEDIA DO has put forth the basic management policy of improving corporate value and thereby maximizing shareholder value over the medium to long term based on an accurate understanding of the importance of its various stakeholders. MEDIA DO recognizes the following as important management issues to be addressed as its management grows increasingly more global: The expedition and streamlining of management decisions to facilitate the further broadening of its business and the heightening of corporate value, and the improvement of management health and transparency through enhanced corporate governance. Entrenching corporate ethics and awareness of these principles throughout the Company will be imperative to improving the health and transparency of management. By fostering such awareness, MEDIA DO aims to develop a corporate culture in which all internal institutions, officers, and employees make fair and accurate decisions. Meanwhile, improving management transparency, and thereby building long-term, trusting relationships with stakeholders, will require prompt and proactive disclosure of information. Systems for information disclosure, both legally mandated and voluntary, are therefore being enhanced toward this end.

To ensure impartial and highly effective management, MEDIA DO will continue to strengthen its corporate governance systems through such means as more effectively allocating resources, expediting decisions, and entrenching compliance awareness under the guidance of the Board of Directors.

For more information, please refer to below.
- MEDIA DO Basic Corporate Governance Policy

Corporate Governance System

The Company has selected the Company with Board of Company Auditors structure described in the Companies Act of Japan for its organizational structure as this structure provides for two lines of checks on operational execution through supervision by the Board of Directors and audits from the perspectives of legal compliance and appropriateness by the Audit & Supervisory Board. Under the Company’s current corporate governance system, all outside Audit & Supervisory Board members have been designated as independent auditors as stipulated by the TSE, while the three outside directors are established as independent directors.

This composition makes it possible for outside Audit & Supervisory Board members to audit the operational execution of directors with operational execution functions (executive directors) from the perspectives of legal compliance and appropriateness. Similarly, outside directors are able to exert influence on executive directors through the supervision of their exercise of voting rights at meetings of the Board of Directors and the appropriateness of these decisions. With all officers performing their functions in this manner, the Company is working to protect the interests of general shareholders. Furthermore, the Nomination and Compensation Committee was voluntarily established in June 2021 to facilitate the improvement of management transparency and impartiality, to strengthen the oversight function of the Board of Directors, and to expedite the execution of decisions. In addition, the Sustainability Committee was established in June 2022 to help build upon integrated Companywide risk management activities while enhancing sustainability management initiatives. Going forward, the Company will continue working to increase corporate value through the exercise of its corporate philosophy and the improvement of the effectiveness of its corporate governance systems.

Overview of Corporate Governance System(As of June 1, 2023)

Organizational structure Company with Board of Company Auditors
Number of directors (of which, outside directors) 8(3)
Number of Audit & Supervisory Board members
(of which, outside Audit & Supervisory Board members)
4(3)
Term of directors 1 year
Term of Audit & Supervisory Board members 4 years
Has executive officer system Yes
Voluntary advisory body to the Board of Directors Nomination and Compensation Committee
Incentives provided to directors Restricted stock compensation system, etc.
Accounting auditor Avantia G.P

Corporate Governance System(As of June 1, 2023)

Functions and Role of Corporate Governance System Constituents

NameOverview
1. Board of Directors
Number of Meetings / Frequency in FY2022
17 times a year

The Board of Directors is the Company’s highest management decision-making body. Based on the internal regulations for the Board of Directors, the Board of Directors makes decisions on important matters (management policies, business plans, acquisition and disposal of important assets, etc.) and supervises the status of operational execution. Regular meetings of the Board of Directors are held once a month, in principle, and special meetings are convened as necessary.

2. Audit & Supervisory Board
Number of Meetings / Frequency in FY2022
17 times a year

Audit & Supervisory Board members attend meetings of the Board of Directors to maintain an understanding of conditions within the Company and perform audits of operations along with accounting audits by interviewing directors and reviewing relevant documents. Standing Audit & Supervisory Board members also attend important meetings other than those of the Board of Directors to provide for sufficient oversight of the status of operational execution by directors. The Audit & Supervisory Board meets once a month. At meetings, the three Audit & Supervisory Board members establish audit plans and review the status of audit implementation and audit results and perform other tasks to ensure effective and efficient audits. Moreover, information is shared between Audit & Supervisory Board members, the Internal Audit Office, and the accounting auditor to ensure efficient and synergetic audits.

3. Executive Committee
Number of Meetings / Frequency in FY2022
Once a week

The Executive Committee meets once a week, in principle, primarily to discuss matters pertaining to business operation and to facilitate efficient operational execution through the examination and decision of matters pertaining to regulations for divisions of authority and basic operational execution items related to management that are not decided by the Board of Directors.

4. Internal Audit Office

The Internal Audit Office is an organization under the direct jurisdiction of the representative director, president and CEO. This organization reports directly to the Board of Directors and performs internal audits in accordance with the plans approved by the representative director, president and CEO. In this manner, the office audits the Company’s business activities while supervising the actions of directors and employees from the perspective of legal compliance. Any requests for improvements issued as part of these audits are submitted directly to the respective divisions and Group companies via the representative director, president and CEO to drive the necessary improvements. The results of internal control audits are reported to the Board of Directors and the Audit & Supervisory Board. Forums for exchanges of information between the Audit & Supervisory Board and the Internal Audit Office are arranged once every three months in order to build mutual understanding, gather information, and pursue higher levels of effectiveness and efficiency.

5. Sustainability Committee
Number of Meetings / Frequency in FY2022
3 times a year

The Sustainability Committee is chaired by the director in charge of corporate divisions and membered by oversight representatives that divisions have defined to clarify responsibility for managing risks and opportunities, and is tasked with guiding the evolution of MEDIA DO into a more sustainable organization and company. Positioned beneath the Board of Directors, this committee reports to the Board of Directors on the findings of its discussions when appropriate. Meetings are held as necessary (once a quarter, in principle) as the committee seeks to identify, manage, and oversee business opportunities and risks based on a broad definition of risk management incorporating the perspectives of social expectations related to such matters as ESG and the SDGs. This approach is taken to facilitate management and strategy implementation based on MEDIA DO’s mission and vision.

6. Nomination and
Compensation Committee

Number of Meetings / Frequency in FY2022
3 times a year

The Nomination and Compensation Committee shall be comprised of three or more directors, including the representative director, appointed via resolution of the Board of Directors, a majority of which should be outside directors designated as independent directors. The chairperson of this committee shall be selected from among the members who are outside directors designated as independent directors based on a majority vote by members. These measures will be taken in order to ensure high levels of independence and transparency. As an advisory body to the Board of Directors, the Nomination and Compensation Committee reports to the Board of Directors on its examinations and deliberations pertaining to matters such as the nomination of director candidates, the appointment and dismissal of directors and executive officers, policies and procedures related to the compensation of directors and executive officers, and succession plans for the president and CEO.

7. Independent
Accounting Auditor, etc.

Lawyers and the accounting auditor are involved in the corporate governance system in so much as legal advisors are consulted with regard to important legal matters while the accounting auditor is consulted with regard to important accounting matters. In this manner, the Company seeks to formulate effective measures for addressing such matters. Currently, the Company has concluded consultant contracts with Mori Hamada & Matsumoto and OMM LAW OFFICE, and it is therefore able to receive legal advice through consultations regarding legal issues. The Company contracts accounting auditor Avantia G.P. to perform audits of finance and accounting activities based on Article 193-2 (1) of the Financial Instruments and Exchange Act of Japan. This provision ensures compliance with regard to financial reporting by enabling the Company to receive pertinent advice in relation to important accounting issues

Policies for Appointment of Directors and Audit & Supervisory Board Members

The articles of incorporation stipulate that the Board of Directors should comprise eight or less directors and that the Company should have four or less Audit & Supervisory Board members. Within this scope, the Company’s basic policy is to choose the membership of the Board of Directors that is deemed ideal while considering the balance of business knowledge, experience, and skills of members as well as their gender and other diversity aspects. From the perspectives of objectivity and transparency, candidates for positions as directors are selected by the Board of Directors after consulting with the Nomination and Compensation Committee and receiving reports on the discussions and evaluations of this committee. Evaluations and decisions regarding director candidates are carried out with comprehensive consideration paid to their experience, insight, and specialties based on MEDIA DO’s business philosophy and management strategies. In selecting candidates for positions as outside directors and outside Audit & Supervisory Board members, the Company seeks individuals that fulfill the requirements for outside directors and outside auditors stipulated by the Companies Act of Japan and for independent directors and independent auditors put forth by the Tokyo Stock Exchange. Moreover, these individuals must not present the risk of conflicts of interest with general shareholders.

Areas of Expertise and Experience of Directors and Audit & Supervisory Board Members (Skill Matrix)

The Company’s Board of Directors consists of diverse directors with the differing expertise, experience, skills, and backgrounds necessary to raise the level of sustainability in Board governance while enhancing the effectiveness of corporate governance.

Moreover, the Company’s Audit & Supervisory Board consists of Audit & Supervisory Board members who provide supervision of the execution of duties by directors and of the Company’s management from their respective professional standpoints and thereby contribute to the strengthening of management monitoring functions.

Director

Name Possessed specialization/ Field of expected contribution
Corporate management/ management strategies Legal affairs/ risk management Finance & accounting/ capital policy Technologies/ Systems Personnel/ HR development Internal control/ Governance ESG/ Sustainability Marketing/ Business development International experience Industry experience Independence
Yasushi Fujita
Shin Niina
Atsushi Mizoguchi
Hiroshi Kanda
Kayoko Hanamura
Ayako Kanamaru
Haruo Miyagi
Junko Mokuno

Audit & Supervisory Board Member

Name Possessed specialization/ Field of expected contribution
Corporate management/ management strategies Legal affairs/ risk management Finance & accounting/ capital policy Technologies/ Systems Personnel/ HR development Internal control/ Governance ESG/ Sustainability Marketing/ Business development International experience Industry experience Independence
Kazuyoshi Ohwada
Makoto Nakajima
Toshiaki Morifuji
Tsuyoshi Shiina
Director Reason for Appointment
Yasushi Fujita
President and CEO
Attendance at Board of Directors Meetings
17/17

As the founder of the Company, Yasushi Fujita is well versed in all of its business and has a wealth of experience and exceptional insight as a manager. He was appointed to his current position so that his wealth of experience and exceptional insight can be utilized in the management of the Company.

Shin Niina
Director, Vice President, and COO
Attendance at Board of Directors Meetings
17/17

Shin Niina is knowledgeable in the publishing industry and in the eBook industry and has been involved in a wide range of business within these industries and also possesses a wealth of experience and exceptional insight as a manager. He was appointed to his current position so that his wealth of experience and exceptional insight can be utilized in the management of the Company.

Atsushi Mizoguchi
Director
Attendance at Board of Directors Meetings
17/17

Atsushi Mizoguchi has a breadth of experience in digital distribution, digital libraries, new business development, and other businesses that are central to the Company as well as deep insight into mobile communications and IT. He was appointed to the position of director so that his wealth of experience and exceptional insight can be utilized in the management of the Company.

Hiroshi Kanda
Director
Appointed to current position in May 2022

Hiroshi Kanda has been in charge of the Corporate Planning Office, and while being acquainted with the management strategies of the MEDIA DO Group, investor relations activities, corporate governance and other aspects, he has extensive experience and in-depth knowledge as a corporate manager. He was appointed to his current position so that his wealth of experience and exceptional insight can be utilized in the management of the Company.

Ayako Kanamaru
Outside Director*
Attendance at Board of Directors Meetings
13/13

As an attorney at law, Ayako Kanamaru has extensive experience and expert knowledge related to general corporate legal affairs encompassing international transactions, internal controls and corporate governance. She has been providing appropriate advice and supervision for the management of the Company as outside Director. The Company proposes her election as outside Director again in expectation of applying such knowledge and experience to the Company’s risk management and governance domains. She has never been involved in the management of a company in the past, except as an outside Director or outside Audit & Supervisory Board Member. However, the Company judges she will appropriately fulfill her duties as an outside Director based on the above reasons. She is expected to provide pertinent advice from the viewpoint of risk management and governance based on her knowledge and experience as an attorney at law, and effective supervision of the management team from an independent and objective standpoint.

Haruo Miyagi
Outside Director*
Appointed to current position in May 2022

Haruo Miyagi has extensive experience and in-depth knowledge regarding business support and organizational operation in a broad range of fields as the Representative Director of an NPO dedicated to the fostering and mentoring of entrepreneurial leaders. The Company proposes his election as an outside Director in the expectation of applying such experience and knowledge to further strengthen business promotion and organizational operation in the Media Do Group. He has never been involved in the management of a company in the past, except as an outside Director or outside Audit & Supervisory Board Member. However, the Company judges he will appropriately fulfill his duties as an outside Director based on the above reasons. He is expected to provide pertinent advice from his viewpoint on promotion of business and organizational operation in a broad range of fields, based on his long-standing knowledge and experience gained through fostering and supporting entrepreneurial leaders, and effective supervision of the management team from an independent and objective standpoint.

Audit & Supervisory Board Member Reason for Appointment
Kazuyoshi Ohwada
Standing Audit & Supervisory Board Member
Attendance at Board of Directors Meetings
17/17
Attendance at Audit & Supervisory Board Meetings
17/17

Kazuyoshi Ohwada has experience in the human resource, general affairs, and finance and accounting divisions of the Company and possesses the insight necessary for facilitating the healthy and appropriate operation of the Company. He was appointed to the position of Audit & Supervisory Board member because it was judged that he is capable of effectively fulfilling this role.

Toshiaki Morifuji
Outside Audit & Supervisory Board Member*
Attendance at Board of Directors Meetings
17/17
Attendance at Audit & Supervisory Board Meetings
17/17

Toshiaki Morifuji is qualified as a certified public accountant and therefore has considerable insight pertaining to finance and accounting. He was appointed to the position of outside Audit & Supervisory Board member out of 17/17 consideration for this insight.

Tsuyoshi Shiina
Outside Audit & Supervisory Board Member*
Attendance at Board of Directors Meetings
17/17
Attendance at Audit & Supervisory Board Meetings
17/17

Tsuyoshi Shiina is qualified as a lawyer and a tax accountant and therefore has considerable insight pertaining to corporate legal affairs, finance, and accounting. He was appointed to the position of outside Audit & Supervisory 17/17 Board member out of consideration for this insight.

* Notification has been submitted designating the individuals in question as independent directors or auditors as stipulated by the Tokyo Stock Exchange.

Succession Plan for CEO and Other Top Executives

Succession plans for the president and CEO are formulated through ongoing discussion and monitoring by the Nomination and Compensation Committee to ensure that these plans account for factors such as the Company’s medium-term management policies, the progress of its strategies, and changes to its operating environment. Candidates for the position of president and CEO may be chosen from within management or from outside of the Company and should be individuals judged to possess a strong track record combined with superior management decision-making capabilities. These capabilities are to be assessed based on consideration of factors such as the strength of their leadership, the level of passion they devote to exercising MEDIA DO’s corporate philosophy, their reputation inside and outside of the Company, their pursuit of innovation, and their personality and popularity. The final decision regarding the successor to the president and CEO will be made by the Board of Directors, selecting the most suited individual from among the candidates and with due consideration paid to input from the Nomination and Compensation Committee.

Compensation of Directors and Audit & Supervisory Board Members

Executive Director Compensation Policies and Composition
Compensation for directors is decided in accordance with the basic policies detailed above.

  • Compensation systems for directors should be designed to generate strong motivation to pursue ongoing improvements in corporate value.
  • Compensation systems should also incorporate objective and transparent procedures founded on principles of accountability toward shareholders and other stakeholders.
  • Compensation amounts should be set appropriately based on the roles and responsibility of each individual director.

The Nomination and Compensation Committee was established in June 2021 to heighten transparency in deciding compensation in line with the basic policies. Based on discussion by the Nomination and Compensation Committee, compensation of directors and executive directors is comprised of monetary compensation and stock compensation (restricted stock compensation). In addition, performance-linked compensation was introduced in the fiscal year ended February 28, 2022. The indicators used for calculating performance-linked compensation have been set as consolidated net sales and operating profit in order to emphasize profitability and growth potential. In addition, amounts of stock compensation issued to individuals are determined with due consideration paid to the degree of each individual’s contributions to the accomplishment of qualitative targets related to ESG from the perspective of facilitating ongoing growth and improving medium- to long-term corporate value.

Compensation
Type
Fixed Compensation Performance-Linked
Compensation
Monetary Stock Monetary
Ratio of Compensation Approx. 70% Approx. 20% Approx. 10%
Policies for Calculation
Methods
Fixed monetary compensation shall be determined based on the roles and responsibilities of individuals (with consideration paid to the salaries of employees who are not directors). Fixed compensation for execu-tive directors will also be influenced by comprehensive evaluations of individual performance in the preceding fiscal year as well as individual performance targets (commitments) set for the given fiscal year. Stock compensation shall be allocated to individuals in amounts determined based on a comprehensive evaluation of each individual’s contribution to the accom-plishment of ESG and other qualitative goals set from the perspectives of ongoing growth and medium- to long-term improvements in corporate value. The indicators used for calculating performance-linked compensation shall be consolidated net sales and operating profit in order to emphasize profitability and growth potential.

Compensation of Directors and Audit & Supervisory Board Members in FY2022

Total Compensation
(Millions of yen)
Compensation by Type (Millions of yen) Number of Recipients
Monetary
Compensation
Non-Monetary Compensation
(Stock Compensation)
Directors (excluding outside directors) 122 92 30 5
Audit & Supervisory Board members (excluding
outside Audit & Supervisory Board members)
6 6 - 1
Outside directors and auditors 19 19 - 5

Note: Figures for “Directors (excluding outside directors)” above include compensation paid to two directors who resigned following the expiration of their term at the conclusion of the 23rd Annual General Meeting of Shareholders held on May 26, 2022.

Activities of the Nomination and Compensation Committee

The Nomination and Compensation Committee was established on June 1, 2021, as an advisory body to the Board of Directors for the purpose of improving the transparency and objectivity with regard to the decision-making processes for nomination and compensation of directors. The committee is to be comprised of three or more directors, including the representative director, appointed via resolution of the Board of Directors, a majority of which should be outside directors designated as independent directors. The chairperson of this committee shall be selected from among the members who are outside directors designated as independent directors based on a majority vote by members.

Major Topics of Discussion in FY2022

  • Formulation of director and Audit & Supervisory Board member skill matrix and examination of Board of Directors’ composition
  • Examination of director evaluation systems, processes, and items
  • Confirmation and potential revision of compensation systems for executive officers and other officers
  • Examination of succession plans

Evaluation of Effectiveness of the Board of Directors

Self-evaluations and analyses of the effectiveness of the Board of Directors are performed for the purpose of improving the functionality of the Board of Directors and subsequently the corporate value of the Company. Advice from third-party institutions has been received in performing the self-evaluations and analyses, which were performed through the following procedures. Based on evaluations of the effectiveness of the Board of Directors, swift action is taken after sufficient discussion of the identified issues to continuously heighten the functionality of the Board of Directors.

FY2023 Initiatives Based on Results of FY2022 Evaluation

The evaluation of the effectiveness of the Board of Directors conducted in March 2023 showed a generally positive evaluation of the Board of Directors. Factors cited in this positive evaluation included the appointment of support staff, setting of appropriate agendas, and provision of training opportunities to aid directors and Audit & Supervisory Board members and ensure that discussion time at meetings is sufficient. Meanwhile, issues were identified including the need to respond to potential risks and opportunities, emphasize cost of capital in management, and develop succession plans for members of management. The Board of Directors will spearhead the monitoring and promotion of measures for addressing these issues, which are congruent to the material issues defined by the Company.

FY2023 Initiatives Based on Results of FY2022 Evaluation

Engagement with Stakeholders

In pursuit of ongoing growth and medium- to long-term improvements in corporate value, MEDIA DO includes policies regarding frameworks and initiatives for facilitating constructive dialogue with shareholders in the MEDIA DO Basic Corporate Governance Policy, which is available for viewing. By acting in accordance with these policies, the Company seeks to improve its transparency through effective disclosure and engagement. In addition, a disclosure policy has been implemented and other steps are taken to share value and build trust with shareholders and other investors through effective communication.

Moreover, MEDIA DO seeks to improve management by incorporating the feedback it gains through continuous and proactive information disclosure and engagement activities.

Frameworks for Facilitating Constructive Dialogue

Representatives President and CEO and director, CSO and CFO
Internal venue for
facilitating engagement
Corporate Planning Department (finance and IR sections)
主な活動 • Briefings for analysts and institutional investors
• Regular engagement activities targeting domestic and overseas shareholders and other investors
• Participation in conferences for domestic and overseas investors arranged by securities companies
• Organization of non-deal road shows for investors overseas
• Preparation and disclosure of financial results materials and IR tools
Methods of incorporating
feedback
• Quarterly reports on input gained through IR activities to the Board of Directors
• Communication of feedback to heads of relevant businesses
Examples of incorporation
of feedback
• Disclosure of monthly distribution growth rates
Subjects of Interest among Institutional Investors

See more: Corporate Governance Report
(Date of Latest Update: May 27, 2022)