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Corporate Governance

Our Approach to Corporate Governance

(1) Basic Philosophy

At BOOKOFF, one core tenet of our management philosophy is to make a positive contribution to society through our business activities. As such, we are engaged in business activities that will lead to our company becoming a public institution. Part of these activities concern our pursuit of efficient management practices that lead to higher levels of governance and shareholder value, as we offer highly transparent corporate information disclosures of our operating results. We believe this is an important factor in winning the approval of our shareholders.

(2) Board of Directors

The BOOKOFF Board of Directors consists of thirteen members(as ofJune27.2015). The Board numbers seven internal directors (full-time directors), including the company president and CEO, as well as six external directors who provide outside opinions and advice from an objective standpoint.

Mr. Katsuo Nakano has been selected as an external director to provide management advice to BOOKOFF based on his long years of experience in managing companies operating BOOKOFF franchisee stores. Mr. Noriyuki Nobayashi has likewise been selected as an external director to provide advice regarding sales promotions and marketing based on his experience in managing other companies, as well as his expert knowledge in these areas. Mr. Yoshitaka Sato has been selected as an external director to provide advice regarding corporate management based on his wealth of experience and expertise in major publishing companies.

Mr. Yuji Umemura has been selected as an external director to provide management advice to BOOKOFF based on his wealth of experience and expertise in e-commerce and systems development. Mr. Umemura concurrently serves as corporate officer EVP, president of YAHUOKU! Company, Yahoo Japan Corporation.

(3) Business Execution driven by the Board of Directors

BOOKOFF has adopted an executive officer system to clarify reporting lines among departments and managers, and clearly define authority and responsibilities. The Board of Directors makes decisions regarding important management matters and corporate plans based on appropriate deliberations. The Board is also responsible for monitoring budgets and project progress. The Management Committee has been established as an executive organization consisting of full-time directors and executive officers under the guidance of the Board of Directors. As a rule, the Management Committee meets weekly to discuss Board of Director measures and important business matters in a structure allowing for rapid and appropriate business decisions.

(4) Control Functions and Compliance Structure for Business Execution

BOOKOFF is a company that has established a board of company auditors. To ensure the independence of corporate auditors and practicability of audits, the Board of Company Auditors consists of four members, three of whom are external corporate auditors. Full-time corporate auditors attend not only in the Board of Directors’ meeting, but also in other important internal meetings, including the Management Committee and Operations Committee meetings, which facilitates a structure for monitoring the execution of business as led by the Board of Directors. Further, the Internal Audit Department has been established as an organization under the direct control of the president and CEO.
BOOKOFF conducts internal audits throughout the fiscal year, reporting the results via the Internal Audit Department to the president and CEO and full-time corporate auditors. Further, internal audit reports are also delivered to full-time directors, executive officers and department/office heads. The main activities of the BOOKOFF Group business fall under the control of the Secondhand Articles Dealer Act; an understanding and commitment to legal compliance is important in all levels of our business, from top management down to in-store part-time employees. BOOKOFF is working to further strengthen coordination between the Internal Audit Department and BOOKOFF retail/sales locations to improve our compliance systems, as well as improve awareness of compliance at the local level. Audits conducted under the Companies Act and the Financial Instruments and Exchange Act are performed by Deloitte Touche Tohmatsu LLC from a stance of independence, fairness, and objectivity. The BOOKOFF corporate auditors and Internal Audit Department may share information with the company’s external auditors as needed.

(5) Communicating with our Stakeholders

The BOOKOFF management philosophy recognizes that our continued business growth relies heavily on a relationship of respect with all of our stakeholders. Accordingly, we have established an internal system for the timely and appropriate disclosure of information related to decisions regarding BOOKOFF and BOOKOFF Group corporate value.
We also believe that the general shareholder’s meeting is one key to corporate governance, and an important venue for communicating important matters to our shareholders. We purposely schedule our annual general shareholders’ meeting on a weekend that does not overlap with a majority of other corporate shareholder meetings. We schedule our financial briefings to coincide with the annual general shareholders’ meeting. Moving forward, we will continue to maintain an appropriate relationship with our various stakeholders, continuing to improve our information disclosure and communications with our shareholders, investors, and society as a whole. At the same time, we will continue to accomplish our duties and responsibilities for accountability as a public company.

Business Execution and Monitoring Organizations, Mechanisms

1. Board of Directors

The Board of Directors meets on a monthly basis and as needed to receive reports on the overall direction of the BOOKOFF Group, as well as to make timely management decisions.

2. Management Committee

As a rule, the Management Committee meets on a weekly basis. This meeting is attended by full-time directors and executive officers, who discuss important matters related to the execution of the BOOKOFF Business.

3. Operations Committee

As a rule, the Operations Committee meets on a weekly basis, attended by full-time directors, executive officers and department/office heads. This meeting is held to share Group information and communicate decisions.

Director Compensation

Director compensation is subject to a maximum amount as resolved by the annual general shareholders’ meeting, paid at a fixed rate as determined by the Board of Directors, not to exceed ¥18,500,000 per month. Corporate auditor compensation shall be paid in an amount not to exceed ¥3,000,000 per month. BOOKOFF does not provide director retirement benefits. Rather, the Company rewards directors with Company stock through a stock option and director stock ownership plan designed to tie the interests of shareholders and directors together so as to maximize the BOOKOFF Group’s consolidated corporate value. Total compensation paid to directors and corporate auditors for the fiscal year ended March 2015 is as follows.

CategoryIndividuals PaidPaid Amount
Directors (No. of External Directors) 10
(4)
\82,350,000
(\13,500,000)
Corporate Auditors (No. of ExternalCorporation Auditors) 3
(2)
\25,992,000
(\10,992,000)
Total (No. of External Directors) 13
(6)
\108,342,000
(\24,492,000)

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