Governance structure

Basic Stance

We believe that our corporate philosophy, the Three Corporate Principles, and our corporate activities based on the principles of fairness and justice will continue to enhance our corporate value. We have also defined “contributing to the realization of a sustainable society through the food business” + “simultaneous resolution of key sustainability issues” as our Purpose, and believe that achieving this Purpose will satisfy the expectations of our shareholders, business partners, and other stakeholders.
Based on this belief, to ensure sound, transparent, and efficient management, we have designated continuous enhancement of corporate governance as an important management issue and strived to build necessary systems; for example, we are working to enhance the management supervisory function by appointing outside officers, including independent officers, based on the Audit & Supervisory Board system. We have also worked to speed up and improve the efficiency of decision-making and business execution by introducing an executive officer system, among other efforts.

Mitsubishi Shokuhin Corporate Governance Structure (as of June 24, 2024)

Board of Directors

The Board of Directors is responsible for making decisions on important management matters and supervising the execution of business operations. The Company strives to achieve appropriate decision-making and management supervision by leveraging the abundance of experience, deep insight, and advanced expertise provided by its internal Directors as well as the practical, objective, and professional perspectives of the Outside Directors.
The policy and procedures for the selection of candidates for Director have been decided by the Board of Directors as described below.

1. Policy for the selection of candidates for Director

The Company conducts wide and diversified operations in the food distribution industry. In order to achieve appropriate decision-making and management supervision, we have selected internal as well as external people who possess an abundance of experience, high-level insight, and expertise.
Regarding the specifics of the policy for the selection of candidates for Directors, Directors (internal) are selected from Executive Officers responsible for each business field and administrative department of the Company, in addition to the President, who is the highest person in charge of the execution of business. Outside Directors are selected from among people who possess objective and expert perspectives based on abundant experience. As a rule, there may be no more than a total of 12 Directors.
In the event of the dismissal of a Director due to physical or mental disability, or misconduct or other conduct unbecoming of a Director, the Board of Directors consults with the Nomination, Remuneration & Governance Committee, chaired by an Outside Director and with independent officers comprising a majority of the members. Upon receiving the Committee’s report, the Board of Directors passes a resolution and submits a proposal to the General Meeting of Shareholders.

2. Procedure for the selection of candidates for Directors

The Company selects candidates for Director in line with the Policy for Selection of Directors. When determining whether the candidates possess the skills necessary for the Board of Directors and whether they satisfy the human resource requirements, the Board of Directors consults with the Nomination, Remuneration & Governance Committee, deliberates based upon receiving a report from the Committee, and submits a proposal at the General Meeting of Shareholders. A majority of the members of the committee is independent officers, and it is chaired by an Independent Outside Director.

3. Skills that the Board of Directors must have, etc.

Mitsubishi Shokuhin has created a skills matrix for directors and corporate auditors that lists the skills that the Board of Directors should possess, as well as human resource requirements for the President and Chief Executive Officer, Directors, and Executive Officers, and has identified the skills required for the Board of Directors and the qualities required of the President and Chief Executive Officer, directors, and Executive Officers. The human resource requirements for the President and Chief Executive Officer, Directors, and Executive Officers are built around the four pillars of personal magnetism, innovative leadership, ability to get things done, and management abilities, in addition to which is the requirement for a good state of health.

Audit & Supervisory Board

The Audit & Supervisory Board audits the decision-making process and execution of duties by Directors in accordance with laws, regulations, the Articles of Incorporation, and other rules. Sound management is ensured through auditing from a perspective based on the advanced expertise and wealth of experience possessed by the internal Audit & Supervisory Board Members, as well as from a neutral and objective perspective provided by Outside Audit & Supervisory Board Members.

1. Policy for the Selection of Candidates for Audit & Supervisory Board Member

In order to ensure sound management development and increase public confidence in the Company through audits, we have selected internal as well as external people who possess the required abundant experience and high level of expertise to perform audits. In particular, we have selected at least one candidate who has sufficient knowledge regarding finances and accounting.
Regarding the specifics of the policy for selection of candidates for Audit & Supervisory Board Members, internal Audit & Supervisory Board Members are selected from among people who possess insight and experience on company management, finances, accounting, risk management and others. Also, Outside Audit & Supervisory Board Members are selected from among people who possess an abundance of insight and experience in a variety of fields.
In the event of the dismissal of an Audit & Supervisory Board Member due to physical or mental disability, misconduct, or other conduct unbecoming of a member, the Board of Directors consults with the Nomination, Remuneration & Governance Committee, chaired by an Outside Director and with independent officers comprising a majority of the members. Based on the committee's report, the Board of Directors passes a resolution and submits a proposal to the General Meeting of Shareholders.

2. Procedure for the Selection of Candidates for Audit & Supervisory Board Member

The Company selects candidates for Audit & Supervisory Board Member in line with the Policy for Selection of Audit & Supervisory Board Members, and has received a report on the appropriateness from the Nomination, Remuneration & Governance Committee. Moreover, the Board of Directors passes a resolution after obtaining the consent of the Audit & Supervisory Board, and submits a proposal at the General Meeting of Shareholders.

Voluntary Advisory Committees for the Board of Directors

Overview of the Nomination, Remuneration & Governance Committee

The Company has established the Nomination, Remuneration & Governance Committee as an advisory body to the Board of Directors to discuss and review nominations, remuneration, and other matters related to governance in general. The committee deliberates on the aforementioned matters to be determined by Committee regulations based on consultations from the Board of Directors and reports back thereto. The majority of the committee members are independent officers, and the committee is chaired and presided over by Outside Director Masahiro Yoshikawa. In addition, a full-time Audit & Supervisory Board Member who excels at gathering information attends as an observer to further enhance the effectiveness of the committee.

Overview of the Group Transaction Committee

The Company has established the standing Group Transaction Committee as an advisory body to the Board of Directors to discuss and review important transactions and actions that may possibly cause conflicts of interest between the controlling shareholder and minority shareholders. Whenever such transactions and actions occur, the Board of Directors consults the committee, the committee discusses on whether the transaction is acceptable in terms of the adequacy of transaction purposes, the validity of the transaction price, and other perspectives regarding such transactions and actions, and the Board of Directors determines whether such transactions are admissible based on the response of the committee. The Company has formulated committee regulations and guidelines for the committee. Transactions and actions that are subject to consultation with the committee are specified in the guidelines with standards, including the details of the transactions and actions that may be considered to have a high risk of interfering with the interest of minority shareholders and transaction amounts exceeding a certain amount. The committee is composed solely of independent officers and is chaired and presided over by Outside Director Masahiro Yoshikawa. In addition, a full-time Audit & Supervisory Board Member who excels at gathering information attends as an observer to further enhance the effectiveness of the committee.

Sessions and Attendance at Board of Directors Meetings, Voluntary Committee Meetings, and Audit & Supervisory Board Meetings

Board of Directors Meeting Sessions and Attendance

(*1) Attendance for Kimiko Kunimasa, Yoshiharu Ojima, and Eiji Yoshikawa is for Board of Directors meetings held after their assumption of their positions on June 26, 2023.
(*2) Nobuyuki Teshima, Seisui Kamigaki, and Yoshio Takahashi resigned at the conclusion of the Annual General Meeting of Shareholders on June 26, 2023.

Voluntary Committee Sessions and Attendance

(*1) Attendance for Kimiko Kunimasa and Yoshiharu Ojima is for the Nomination, Remuneration & Governance Committee held after their assumption of their positions on June 26, 2023.
(*2) Nobuyuki Teshima and Seisui Kamigaki resigned at the conclusion of the Annual General Meeting of Shareholders on June 26, 2023.
(*3) In FY2023, the Nomination, Remuneration & Governance Committee made one written resolution in addition to the above number of meetings.

Audit & Supervisory Board Meeting Sessions and Attendance

(*1) Attendance for Yoshiharu Ojima and Eiji Yoshikawa is for Audit & Supervisory Board meetings held after their assumption of their positions on June 26, 2023.
(*2)Seisui Kamigaki and Yoshio Takahashi resigned at the conclusion of the Annual General Meeting of Shareholders on June 26, 2023.

Periodic Evaluation of the Board of Directors Effectiveness

The Company strives to continuously enhance the effectiveness of the Board of Directors by annually conducting a questionnaire and interviews with all Directors and Audit & Supervisory Board Members on the composition, operation, and other matters of the Board of Directors, and reviewing the summarized and analyzed results as well as the challenges to be addressed to further enhance the effectiveness of the Board of Directors at the Board of Directors’ meetings.
In addition, every set number of years (approximately once every three years), the Company receive cooperation from an external agency to incorporate objectivity to this effectiveness evaluation, and we conducted it in a self-assessment format in FY2023. Implementation and evaluation methods in FY2023 are as follows.

Implementation and evaluation methods

Respondents: All of nine (9) Members of the Board and four (4) Audit & Supervisory Board Members in FY2023

Implementation/evaluation methods:

• The Company conducted a questionnaire and individual interview with each of the respondents (answered on anonymous basis)
• The Company implemented an information compilation and analysis based on the answers from the respondents
• The Company implemented an analysis and evaluation of the Board of Directors

Questions:

• Composition of the Board of Directors
• Operation of the Board of Directors
• Information provision and training to support discussion
• Exercise of the supervisory function of the Board of Directors and its deliberation topics
• Risk management
• Nomination and remuneration of management
• Dialogue with shareholders, etc.
• Summary

Results

The results of the evaluation regarding the effectiveness of the Board of Directors above confirmed that the effectiveness of our Board of Directors is ensured at a high level in terms of the role and nature of the current Board of Directors.
Continuing on from FY2022, the fact that an atmosphere in which it is easy to speak up has been created with appropriate management of meetings by the chairperson and that free and vigorous discussions are held with the outside officers, as well as the commitment to continuous improvement toward operation, composition, and issues of the Board of Directors, are highly regarded as strengths of the Company. As our business environment rapidly changes in FY2023, the matter for consultation, apart from existing matters to be discussed and reported, for the issue regarding making a place for discussion and confirmation of medium- to long-term strategies based on the diverse knowledge, experience, and values of the members including Directors and Audit & Supervisory Board Members was established as a place for free discussion and exchange of opinions, and the discussions that have been held multiple times in formulating the “MS Vision 2030” management plan are also highly regarded.

Improvement initiatives for previous issues

The Company has implemented initiatives to improve the issues identified in previous evaluations as follows.

• Improvement of the efficiency of the operation of the Board of Directors (review of the content and granularity of reports)
  By reviewing the frequency of the execution of duties reports from executive directors, the Company improved the operation of the entire Board of Directors to allow them to discuss and consider each agenda item more thoroughly and also made continuous improvements on the content of reports.
• Further enhancement of information provided to Outside Directors (ensuring site visit opportunities for Outside Directors)
  The Company endeavored to strengthen the information sharing system by having the Outside Directors attend, as observers, meetings to discuss matters with the President, Chief Executive Officer, and each supervisor and on-site audits held by the Audit & Supervisory Board and made effort to further enhance opportunities to share information by having Outside Directors inspect sites, such as our sales offices and distribution centers, and exhibitions.
• Improvement of risk management of subsidiaries (building shared understanding among Directors regarding what risks are expected for each subsidiary and individual or cross-company management systems)
  The Company strengthened the risk management system on consolidated basis by reviewing the risk maps of subsidiaries each year to visualize the risks of each subsidiary depending on the business environment of individual companies and by reporting and reviewing the status of that initiative to the Board of Directors.
• Further cultivation and operational enhancement of the voluntary advisory committees for the protection of minority shareholders (Nomination, Remuneration & Governance Committee; Group Transaction Committee)
  The Nomination, Remuneration & Governance Committee further discussed and considered the skills and diversity required for our Board of Directors through multiple discussions. The Group Transaction Committee continuously reviewed explanatory materials based on the opinions of the members (independent officers) for the purpose of having more fruitful discussions and made operational improvements.
• Further enhancement of dialogue with shareholders (IR activities) and feedback to the Board of Directors
  Besides our IR activities of financial results briefings for analysts and institutional investors, briefings for private investors, and information disclosure on the corporate website, to promote understanding for the Company’s management strategies, financial situation, and other matters, the Company also held dialogues with domestic and overseas institutional investors and other activities in FY2023.
  The Company visualized the evaluation from investors and their interests by reporting these IR activities to the Board of Directors and improved operation and IR activities by sharing this with the related internal departments and sections.

The Company will further enhance the effectiveness of the Board of Directors by continuously focusing on improving the above items.

Future issues

As a result of the Board of Directors’ deliberations on this effectiveness evaluation of the Board of Directors, the Directors shared awareness among themselves regarding continuous consideration of the composition and nature of the board operation in order to achieve the “MS Vision 2030” management plan and enhance our corporate value, and confirmed that they will promote initiatives to further enhance the effectiveness of the Board of Directors including the items listed below, as our business environment is expected to change over the medium- to long-term.

• Enhancement of discussion of medium- to long-term strategies
  The Company established matters for consultation for the Board of Directors and held discussions multiple times to formulate the “MS Vision 2030” management plan in FY2023. We will discuss medium- to long-term strategies on more diverse themes such as confirmation of the progress of the management plan and management and human capital strategies to enhance our corporate value.
• Visualization of the succession plans for executive management and development plans for female managers
  The Company will further promote human resource development that forms the basis of sustainable growth by reviewing and discussing the initiatives for various personnel measures such as succession plans for management who will be future candidates for executive management and development plans for female managers through the Board of Directors, the Nomination, Remuneration & Governance Committee, and other committees.
• Continuation of dialogue with shareholders and further enhancement of disclosed information
  The Company will continuously secure and expand the opportunities for dialogue with shareholders including dialogue with institutional investors, which we held in FY2023, and will expand disclosed information including the corporate website and integrated report.
• Further enhancement of the operation of the Board of Directors (preparation of reporting materials that contribute to the discussion of medium- to long-term strategies)
  The Company will further enhance discussions at the Board of Directors through further enhancement of the operation of the Board of Directors by providing easy-to-understand materials and explanations with clearer awareness of how the matters to be discussed and reported at the Board of Directors are connected with the management plan.

Skill Matrix　(as of June 24, 2024)

Based on its Purposes of “contributing to the realization of a sustainable society through the food business” and “simultaneous resolution of key sustainability issues”, the Company has been working to strengthen the corporate governance structure and carry out management that positions sustainability at the core for sustainable growth and the increase of corporate value. The Board of Directors of the Company has sufficiently recognized the importance of insight regarding SDGs and ESG, and believes that it possesses the skills necessary to realize these initiatives. The skills that each individual is thought to possess are presented in the table below.

(Note) Mitsubishi Shokuhin’s independent outside directors include persons with management experience at another company.

Officer Remuneration

1. Basic policy

The Company recognizes that officer remuneration is an important driving force for realizing the Purpose and the Vision.

• It should secure and retain an excellent management team, and also promote an appropriate level of challenging spirit and self-improvement.
• It should be strongly linked to the Company’s performance and enhance the mindset of contributing to the medium- to long-term corporate value.
• Its contents should reflect an awareness of shareholders and all other stakeholders and promote sharing interests with them.
• It should have a highly transparent and objective basis, and the Company should fulfill its duty to properly explain it to all stakeholders.

2. Remuneration Levels

The levels of remuneration for Directors and other officers are determined by setting a mid-level standard as a target for each position by utilizing data from external research organizations and establishing a peer group made up of similarly sized companies in similar industries.

3. Composition of remuneration

The remuneration for the Company’s Directors (excluding part-time Directors) and Executive Officers will be comprised of basic remuneration,bonuses, and share-based remuneration, as summarized below. The entire amount of remuneration for part-time Directors and Audit & Supervisory Board Member is fixed remuneration.

Overview of remuneration composition

(*1) Remuneration is structured as follows: In principle, base salary shall be 67.0%, bonuses 16.5%, and stock-based compensation 16.5%, however these percentages may vary slightly depending on position.
(*2) The Management Index Milestone Period indicates the four fiscal years from FY2024 to FY2027, which is the Management Index Milestone Period designated in the MS Vision 2030 management plan.

Basic remuneration

A fixed amount of monetary remuneration determined by the standard established for each position. It is paid monthly at one-twelfth the total amount.

Bonuses

A standard bonus is established for each position, and bonuses are paid in June every year as monetary remuneration that fluctuates according to the Company’s performance and the individual’s level of contribution in each fiscal year. Regarding the Company’s performance, among the indicators that the Company places importance on, consolidated ordinary profit is used as the indicator because it strongly reflects the executed content during the period, and the amount to be paid is determined using a formula based on the level of achievement compared to the initially announced target value.
For the individual’s level of contribution, the amount to be paid is determined based on a five-level evaluation of the level of contribution of each Director conducted by the Nomination, Remuneration & Governance Committee, chaired by an Outside Director and with independent officers comprising a majority of the members.

Stock-based remuneration

Share-based remuneration is non-monetary remuneration that fluctuates according to financial and non-financial indicators, and is provided through a trust mechanism. Points, which are determined according to a base amount for each position,are granted at a certain time every year, and after the end of the Management Index Milestone Period in the Medium-term Management Plan of the Company, shares corresponding to the performance-linked points are provided. In addition, 50% of the shares to be provided are converted and paid in cash as an allocation of funds for tax payment.
For the financial indicator and non-financial indicators, the Company uses ROE, TSR*, ESG evaluation by an external organization and employee engagement, which are important indicators for achieving the Company’s medium- to long-term vision.

(Note) ROE is an abbreviation of “Return On Equity”.
TSR is an abbreviation of “Total Shareholder Return”.
ESG stands for three perspectives: environment, social, and governance.
TOPIX is an abbreviation of “Tokyo Stock Price Index.”

4. Process for Determining Remuneration

The Company established the Nomination, Remuneration & Governance Committee, chaired by an Outside Director and with independent officers comprising a majority of the members, as an advisory body to the Board of Directors in order to strengthen fairness, transparency and objectivity in the procedures for determining officer remuneration. In addition, full-time Audit & Supervisory Board Members and, when necessary, external experts attend the committee meetings as observers in order to obtain appropriate advice. Based on reports received from this committee, the Board of Directors established the policy for determining the amounts and calculation methods of remuneration for Directors.
The Board of Directors has also resolved to leave all decisions regarding the amount of remuneration for individual Directors to the sole discretion of this Committee.