Corporate Governance

Our Fundamental Concept of Corporate GovernanceManagement Structure

The Tokyo Gas Group aims to achieve a continuous

Our emphasis on shareholder interests is not incompati-Management Structure

objectively. We believe that we have created a structure

increase in its corporate value to ensure management

ble with the continuing fulfillment of our responsibilities as

There is frequent debate over the relative merits of thethat supports prompt, effective decision-making while main-soundness and transparency. To this end, we are strength-a utility company. In recent years, public interest in corpo-

committee-based system and auditor system as suitable

taining proper management transparency.

ening our corporate governance with clear targets.

rate social responsibility has become so intense that thestructures to reinforce corporate governance. Tokyo Gas

Energy supply systems are vital to the social infrastruc-economic and social values of a company are now inextrica-

currently adopts the auditor system, since we see this as

Reforming the Remuneration Systemture. The profound awareness of our special role as a sup-bly linked. By responding to the expectations of our cus-

the optimal structure for attaining our corporate governanceIn 2005, Tokyo Gas restructured its officer remuneration sys-plier of energy has been reflected in a continuing commit-

tomers, employees, business partners, and local communi-

objectives, which are to maintain sound and transparent

tem and published details of the new system with the aim ofment to the safe, reliable supply of city gas, as well as

ties, ultimately we also fulfill the needs of our shareholders.

management while achieving sustainable growth in corpo-

further enhancing management objectivity and transparency

offering fair services. We are keenly aware of the need to

Our corporate value is the overall sum of the value that werate value. To maximize the advantages of our status as a

as well as clarifying the management responsibility toward

give priority to shareholder interests, in keeping with ourprovide to all stakeholders.

company with auditors, we have appointed two corporate

business performance. The main features of the new systemrole as a joint stock company. This renewed awareness

For Tokyo Gas, the purpose of corporate governanceauditors and three outside auditors. Their role is to audit theare as follows:reflects increased inter-company competition following theis the continual refinement of internal systems designed

legality and appropriateness of our business operations

1. Abolition of Retirement Benefits

deregulation of the energy sector, as well as the globaliza-

to maintain continual growth in corporate value by moni-from a position of complete independence from the Board

Retirement benefits for directors have been abolished. Yearlytion of the capital market.

toring corporate activities so that any issues can beof Directors. The auditors actively make recommendations

retirement benefits have been integrated into monthly pay-detected and remedied.

at management and directors’ meetings. They also work toments to officers.

enhance the effectiveness of monitoring.
Tokyo Gas has adopted an executive officer system. This
Corporate Governance Structure

system separates management and executive functions while
also providing clearly defined accountability. By delegating
substantial authority to the executive officers, the system sup-Customers

Local Community

ports speedy execution regarding operational matters.

Shareholders/Investors

Currently (as of July 1, 2007), there are 22 executive
General Shareholders’ Meeting
Report Submission

Appointment
Appointment

ReportInquiry

AdvisoryCommittee

AnswerReport Submission

Audit

Collaboration

FinancialAudit

ReportManagement Ethics
Committee

President(Management Report Meeting)
PolicyReportReportInternal Audit Dept.

Audit

Compliance Dept.

Independent Auditors

Board ofCorporate Auditors

ReportBoard of Directors

ReportMonitor

In-House Meeting*
Investment Evaluation Committee(Company-wide Committee)

ReportSupportReportStrategic Business Units
Promotion / Support

InternalAudit

2. Introduction of a Performance-linked
Remuneration Scheme
Performance-linked remuneration scheme that reflects thecompany-wide and divisional performance of the previousterm, has been introduced for the monthly payment ofDirectors who double as executive officers.

officers. To ensure clear accountability, executive officers

3. Share Purchasing Guidelines

are appointed for terms of one year. All officers at corporate

All Directors, excluding outside directors, will acquire Tokyo

officer level and above, as well as two corporate auditors,

Gas shares each month through the Employee

participate in weekly management meetings. After in-depthShareholding Association. The amount purchased is deter-discussion, the President makes decisions on important

mined according to our newly introduced share purchasing

management issues at these meetings.

guidelines. The ownership of those shares will be retained

When the executive officer system was introduced, weduring their terms of office.

reduced widely the number of directors and shortened thePrior to implementing the reform of the officer remunera-term of office for directors to one year. The purpose oftion scheme, we have established an advisory committee tothese moves was to speed up decision-making and estab-discuss matters relating to the officer remuneration system.

lish clear lines of management accountability. In addition toIn February 2005, this committee is comprised of Outside

12 directors we invited three outside directors, all of whom

Directors and Outside Corporate Auditors, Chairman, Vice

have extensive expert knowledge and are able to monitor

Chairman and President to makes an important contribution

the appropriateness of management activities flexibly andto the soundness and transparency of board activities.

Collaboration

Compensation for Directors and Corporate Auditors (Fiscal 2006)* Safety Committee, Customer Satisfaction Promotion Committee, CSR Promotion Meeting, Environmental Meeting and others.

Millions of yen

Thousands of U.S. $Compensation for 12 directors

545

Compensation for 5 corporate auditors

103873

648

5,492

Total

4,619

Compensation for independent public accountant (Fiscal 2006)
Millions of yen

174

1,475

Compensation for other services

81686

255

2,161

Total
28

Thousands of U.S. $Compensation for auditing services

29