Corporate Governance

MARUI GROUP Corporate Governance Guidelines
www.0101maruigroup.co.jp/pdf/cgg_en.pdf
Corporate Governance Reportwww.0101maruigroup.co.jp/pdf/cgr_en.pdf

Corporate Governance:
Emphasizing Corporate ValueMARUI GROUP’s corporate philosophy calls for us to“continue evolving to better aid our customers” and “equate
the development of our people with the development ofour company.” Accordingly, we support the passion of
employees to aid customers to create a virtuous cycle inwhich the growth of employees and the Company arereciprocally linked in order to improve corporate value.
Reinforcing corporate governance is thus a top priority.
We endeavor to practice sound, transparent, and efficient management to heighten earnings capacity.

Directors

Audit & Supervisory
Board Members

External(Independent)

External(Independent)

7

In addition to its Board of Directors and Audit &Supervisory Board, MARUI GROUP has established theManagement Committee, the highest decision-making
body; the Nominating and Compensation Committee;
six committees that manage business risks, promote
speedy process improvements, and prevent accidents;
and the Compliance Promotion Board, which oversees
these committees.

43

Nominating and Compensation
Committee Members

Executive Officers

173

External(Independent)

Female322Ordinary General Meeting of Shareholders
Appoint / Dismiss
Coordinate

Appoint / Dismiss

Appoint / Dismiss
Select / Discharge

Audit
Audit &
Supervisory Board

Board of Directors
ReportNominating andCompensation
Committee

ReportManagement
Committee

ReportCompliance Promotion Board
Chairman: Representative Director,
Representative Executive Officer

Members: 15 (including 3 directors and 2 Audit & Supervisory Board members)
ReportCommittees
Audit

Public Relations IR Committee

Chairman: PresidentInternal Control Committee

Chairman: Senior Managing Executive Officer Members: 14

Members: 9

Environment CSR Promotion Committee

Chairman: Managing Executive Officer

Members: 10

Personal Information Protection Promotion Committee Chairman: Senior Executive Officer

Members: 9

Safety Control Committee

Chairman: Senior Executive Officer

Members: 12

Insider Trading Prevention Committee

Chairman: Senior Managing Executive Officer Members: 6

Legal Advisor

Report / Participate
Audit Department• Executive in charge of audits• Executive in charge of internal control

Consult

General Affairs Department• Executive in charge of legal affairs• Executive in charge of personal
information protection

Audit
Internal
Notification
SystemHead Office
Divisions

Communicate

Coordinate

MARUI Group Code of Conduct

ReportAccounting Auditor

DirectPresidentGroup Companies
Stores / Specialty Stores / Offices

ReportConsult

Committee Membershipwww.0101maruigroup.co.jp/pdf/committee_members_en.pdf

87Corporate GovernanceInitiatives for Reinforcing Corporate Governancewww.0101maruigroup.co.jp/en/sustainability/theme04/governance.html

Evaluations of the Board of Directors’ Effectiveness
The Company has been performing annual evaluations of the Board of Directors’ effectiveness since the fiscal year ended
March 31, 2016, with the aim of improving the effectiveness of the Board of Directors. In these evaluations, all directors
and Audit & Supervisory Board members complete a self-evaluation survey of the effectiveness of the Board of Directors
with regard to such aspects as the scale and composition of the Board of Directors, operating procedures, decision-making
processes, and roles and responsibilities. Based on the results of this survey, information on the current evaluation of theBoard of Directors and the issues it faces are shared and constructive discussions are held in order to formulate measures
for the future. In the fiscal year ended March 31, 2017, the evaluation found the Board of Directors to be functioning effectively, as was also the case in the fiscal year ended March 31, 2016.

Results of Effectiveness Evaluation from the Fiscal Year Ended March 31, 2016
Areas Applauded• Active discussion centered on external directors appointed by reducing the total number of directors• Respect for opinions of external directors• Incorporation of perspectives of shareholders, investors, and other stakeholders

Corporate GovernanceFuture Leader Development Program
MARUI GROUP unveiled its Co-Creation Management
Academy future leader development program in April 2017with the aim of cultivating human resources capable ofpromoting management reforms for driving ongoing
improvements in corporate value. This program is based on
open application, and each year 20 candidates are selectedfrom among volunteers. Those selected are submitted to a
one-year training curriculum developed under the guidanceof third-party institutions and external directors to instill inthem a management perspective. Participants continue tobe nurtured into future leaders through their actual work
even after the program is completed.
Name

Co-Creation Management Academy• Cultivate future leaders capable of supporting MARUI GROUP’s management into the future• Foster fundamental leadership skills including basic thinking, strategy forming, and project management• Help participants form their own visions so that they can exercise leadership in guiding the organization

Issues Identified
1 Failure to link director compensation to medium-to-long-term performance
2 Lack of successor development programs

Response to Issue 1

Response to Issue 2

In June 2016, director compensation systems were revised to increase the portion of variable compensation through the introduction of performance-linked stock-based compensation to serve as
medium-to-long-term incentives and performance-linked bonuses to serve as short-term incentives.
In May 2016, the Nominating and Compensation Committee was established with external
directors serving as its primary members. This committee discusses director nomination andmanagement compensation to ensure objectivity and transparency in this regard.
In April 2017, a future leader development program was instituted, based in part on input received
from external directors, and the Co-Creation Management Academy program was launched.

Aims• Promote cross-organizational networking and endow perspectives emphasizing overall optimization• Create community of program participants through follow-up monitoring of participants beginning from the following
fiscal year after they complete the program• Encourage participants to seek internal and external learning opportunities in fields other than those in which theygenerally work to broaden their perspectives and foster resourcefulness

Applicable ages
Guidance

20–49
Mikiharu Noma, Associate Professor Graduate School of International Corporate Strategy, Hitotsubashi University
External directors of MARUI GROUP

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Application by
employees aged
20–49

Evaluation basedon essays, etc.

Approximately 20
participants selectedeach year

One-year training
curriculum forlearning from amanagement
perspective

Experience gained
through practicalapplication ofconcepts

Participants growinto future leaders
over next
10–15 years

Results of Effectiveness Evaluation from the Fiscal Year Ended March 31, 2017
Issues and Future Measures• After the June 2016 revision of compensation systems, a third-party evaluation was conducted, which found that the
portion of variable compensation was low in comparison to other companies. The Company is engaged in ongoing
examinations of compensation ratios based on social trends with the aim of effectively linking director compensation
to medium-to-long-term improvements in corporate value.
• The future leader development program was only just introduced in April 2017 and is therefore not yet complete interms of development provisions or implementation procedures. The Company will continue to adjust this program
while seeking out the ideal form for development provisions, including future positioning and promotions, as well as
for implementation procedures from a medium-to-long-term perspective.

88

Medium-to-Long-Term Development of Human Resources—A Wellspring of Corporate Value

Mikiharu Noma
Associate Professor,
Graduate School ofInternational Corporate Strategy,
Hitotsubashi University

The goal of the Co-Creation Management Academy is to cultivate future leaders for MARUI GROUP. The first group ofparticipants in this program consisted of 21 members, eight of whom were women, and these members were of all ages
and of diverse perspectives. Also, a number of these individuals excelled at adopting a perspective focused on overall
optimization, as opposed to individual optimization, which was most likely a product of MARUI GROUP’s program forrelocation at Group companies. Moreover, the participants had a strong sense of responsibility fueling a passion tocontribute to the future of management. When formulating the curriculum for the Co-Creation Management Academy,
I focused on two main points. The first point was to broaden participants’ knowledge while elevating their viewpoint to
the level required of management. The second point was to hold in-depth discussions on how to respond to new industrial revolutions, FinTech, and other disruptive innovations. Over the period of one year, participants were submitted toan ongoing process of input, which included reviews of case studies, discussions with leaders, and identification ofissues faced by MARUI GROUP, and reflection. The medium-to-long-term development of human resources forms awellspring of corporate value. I look forward to seeing the fledglings from the Co-Creation Management Academy cometo soar as future leaders, and I am confident in their ability to do so.

89Corporate GovernanceCorporate GovernanceDiscontinuation of Takeover Defense Measures

Engagement with Stakeholders

At the Ordinary General Meeting of Shareholders held in June 2008, the Company received approval to implement takeover defense measures. These measures were later discontinued at the Ordinary General Meeting of Shareholders held in
June 2017. This decision was made based on trends regarding recent takeover defense measures as well as the results ofdiscussions with institutional investors and other domestic and overseas shareholders. In light of these exchanges, it was
judged that the discontinuation of these measures would facilitate efforts to contribute to the common interests of theshareholders of the Company by strengthening corporate governance, advancing the medium-term management plan, andfurther improving corporate value.

MARUI GROUP views corporate value as the intersection between the interests and happiness of all stakeholders.
The Company’s policy of co-creation management is also extended to corporate governance as we practice constructive
engagement with all stakeholders.

Establishment of an Advisory Board
In July 2016, the Advisory Board was established to formulate strategies for accomplishing the goals of the medium-term
management plan and for realizing medium-to-long-term improvements to corporate value. We welcomed one new member
to this committee in July 2017, raising the total number of members to four. The purpose of the Advisory Board is to enable
MARUI GROUP to receive multifaceted advice and proposals from external experts with insight into business strategies andvarious business areas. We anticipate that such advice will be a powerful asset in the Groupwide pursuit of improved corporate value as we seek to address the rapidly changing operating environment and the diversifying society. Regular monthly
meetings of the Advisory Board are held, at which representatives from relevant areas attend, and advice is also sought on
specific themes.

Advisory Board Members

Tadasu Ohe
President,
PLANTEC ASSOCIATES INC.

Masakazu Masujima
Partner,Mori Hamada & Matsumoto

Yuji Yamamoto
PhysicianRepresentative Director,
MinaCare Co., Ltd.

Meyumi Yamada (New)
Executive Director,
Chief Quality Officer,
istyle Inc.

90

Area of Specialty and Past Activities
Mr. Tadasu Ohe graduated from the Graduate School of Engineering at the Universityof Tokyo and also completed a Master’s course at this university. After working at thearchitecture firm of Kiyonori Kikutake, he established PLANTEC ARCHITECTS INC. in1985. Mr. Ohe provides MARUI GROUP with store renovation and distribution center
environment improvement proposals to help the Company better utilize its real estatefrom the user’s perspective.

Mr. Masakazu Masujima graduated from the Faculty of Law at the University of Tokyoand from Columbia Law School. He has held positions at the Palo Alto office of Wilson
Sonsini Goodrich & Rosati P.C., in the Supervisory Bureau of the Financial Services
Agency, in Blockchain Study Group of the Ministry of Economy, Trade and Industry,
and in the Review Committee for the Sharing Economy of the National Strategy Officeof Information and Communications Technology. Mr. Masujima provides MARUIGROUP with advice in relation to the development of the FinTech business.
→P.48 Dialogue 02

Co-Creation with Customers

Co-Creation with Shareholders and Other Investors

The planning meetings we hold with customers are not just a venue forsoliciting customer feedback; they are a co-creation activity that invites
customers to take part in the value creation process for developing
stores and products that all customers choose.

Through coordination between the IR Department and the ESG
Promotion Department, MARUI GROUP has been enhancing communication with investors and stepping up information disclosure. These
initiatives have earned the Company praise, with it receiving various
awards and being included in numerous indexes.

Planning Meetings Held with Customers

Institutional Investors Met withMore Than

600

300

Fiscal year ended March 31, 2017

Co-Creation with
Communities and Society

Co-Creation with Business Partners

Co-Creation with Employees

The Marui Group Procurement Policy wasformulated in 2016, and we conduct surveys
and on-site investigations together withbusiness partners to ensure a stable supply of
products and confirm partners’ human rights
and work environment initiatives.

Our intra-Group project teams, including
the Diversity Project Team, Marui Future
Project Team, Healthcare Promotion Project,
Medium-Term Management Visionary
Committee, and other such forums, provide
opportunities for employees to discussand share thoughts with individuals fromother companies.

MARUI GROUP is engaged in co-creation
activities with society. It participated in the
TOKYO RAINBOW PRIDE 2017 LGBT pride
event and held an event that utilized theanime series Osomatsu-san. We aim toincrease the number of EPOS card collabo­
ration partners.

Business Partners Participatingin Explanatory Forums

Employees Participating in
Intra-Group Project Teams

Number of Visitors Attending
TOKYO RAINBOW PRIDE 2017

Dr. Yuji Yamamoto graduated from the Faculty of Medicine at the University of Tokyoin 1999, after which he worked in cardiovascular medicine and other departments.
He is certified by The Japanese Society of Internal Medicine and the Japan Medical
Association. Today, Dr. Yamamoto fulfills his current role while also acting as a
researcher at Sony Computer Science Laboratories, Inc. He helps MARUI GROUP
analyze the relationship between health and productivity as part of its healthcare
management efforts while also offering guidance on how to be included in healthcare
management-related indexes. →P.64 Dialogue 03
Ms. Meyumi Yamada graduated from the Department of Biological Science andTechnology at Tokyo University of Science. She first gained experience at a cosmetics
manufacturer. Building upon the cosmetics e-mail magazine that she had been
distributing personally, Ms. Yamada drafted plans for @cosme, Japan’s largest cosmetics and beauty information website, in 1999, and took part in starting up its
website. She has also been a member of consumption- and Internet-related committees under the Ministry of Economy, Trade and Industry. Ms. Yamada provides MARUIGROUP with advice on omni-channel retailing strategies from a woman’s perspective.

Approx.

For planning Hakata Marui

Approx.

100

Fiscal year ended March 31, 2016

Approx.

320

Fiscal year ended March 31, 2017

100,000
May 7-8, 201791

Corporate Governance

Sustainability Management
As it seeks to provide enriching lifestyles to all customers, MARUI GROUP is turning its attention to inclusion. One of thecore concepts of the United Nations Sustainable Development Goals, which have been adopted by Japan and 192 othercountries around the world, is the idea that no one will be left behind, an inherently inclusion-based sentiment. This concept
is the same as directives of MARUI GROUP’s management. We seek to promote inclusion through our business activities byconducting co-creation together with all of our stakeholders. This is the way we will go about creating an inclusive societythat offers happiness to all.
To reinforce the management systems for supporting these efforts, we established the ESG Promotion Department in
October 2016 and changed the name of the CSR Promotion Department, which was initially created in 2005, to the
Sustainability Department in April 2017.

Core Theme 1

Customer Diversity and Inclusion
We will seek to develop products, services, and stores that bring joy to all
customers, regardless of their age, gender, or physical characteristics.

Core Theme 2

Workplace Inclusion

Corporate Governance

Responsible Procurement Practiced Together with
Business Partners
The MARUI GROUP Procurement Policy was formulated in2016. A step ahead of the announcement of this policy,
the Company held an explanatory forum for roughly 100
business partners related to its private brands. At this
explanatory forum, we discussed the importance ofaddressing human rights, labor, and other issues acrossthe supply chain, explaining MARUI GROUP’s policies inthis regard while using actual cases. Business partners
participating in the forum expressed their understandingof our stance.
In 2017, we began conducting surveys and on-site
audits of business partners with regard to initiatives
regarding the supply and procurement of safe and trustworthy products as well as human rights, labor, and otherissues. On-site audits involve meetings with dedicatedstaff from the Sustainability Department as well as inspections at the domestic and overseas factories of manufacturing subcontractors. Through these inspections, we
confirm the environmental measures and working conditions at these factories.

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Surveys of business
partners

Confirmation offactory and otherconditions based on
survey results

Communication
through on-site
meetings bydedicated staff

Feedback on activities
to be continued andimprovements tobe pursued

Sharing of informationon conditions andfurther initiatives withbusiness partners

Promotion of
improvements
together withbusiness partners

Based on MARUI GROUP’s corporate philosophy of striving to “continue evolving
to better aid our customers” and “equate the development of our people with thedevelopment of our company,” we will provide all employees with venues throughwhich they can excel.

Core Theme 3

Ecological Inclusion
We will develop eco-friendly businesses that are considerate of natural capital andpropose ecologically sound lifestyles that are in harmony with nature and theenvironment.

Core Theme 4

Co-Creation Corporate Governance
We will develop management frameworks that include stakeholders in order toachieve harmony between the interests and the happiness of all stakeholders.

Tracking of Environmental Footprint across the Value Chain
The Company has traditionally calculated emissions of CO2
and other greenhouse gases based on Scope 1 and Scope 2of the Greenhouse Gas Protocol, and it began calculating
emissions under Scope 3 during the fiscal year ended March
31, 2014. We are thereby able to track environmental
impacts across the entire value chain, including direct
and indirect emissions from MARUI GROUP (Scope 1 andScope 2) as well as emissions from raw material procurement,
transportation, and products purchased by customers.
Through this type of traceability that exceeds the boundariesof the Group, we are advancing initiatives for reducing environmental impacts together with customers, business partners, communities, and society as a whole.

Scope 3 Emissions Data (Fiscal Year Ended March 31, 2017)
Emissions by
MARUI GROUP
Scope 1 & 2:
110,000t-CO2

Emissions from Procurement to Delivery
Scope 3: 340,000t-CO2

Post-Purchase Emissions
Scope 3: 150,000t-CO2

Total Greenhouse
Gas Emissions
across the
Supply Chain
600,000 t-CO2

Process for Establishing Core Themes
Focusing our concept of co-creation management and the impact this approach will have on society, the environment, and natural capital, we examined the issues andopportunities this approach will create, based on which we defined four core themes for initiatives from the perspective of inclusion. In formulating these themes, we held
meetings with ESG-minded investors, sustainability experts, nonprofit organizations, and other stakeholders in the greater society as well as with customers, business partners,
and Group officers and employees. In addition, we referenced the ratings of ESG evaluation institutions; internal and external guidelines, such as those of the Global Reporting
Initiative, ISO 26000, the Sustainability Accounting Standards Board, and the International Integrated Reporting Council; and the SDGs.
More details on initiatives based on core themes can be found on the Company’s sustainability website, which was renovated on July 1, 2017.
www.0101maruigroup.co.jp/en/sustainability/

Raw material
procurement

Product
production

ProductdeliverySales
in stores

Customertransportation

Product use andrecycling

The Company calculates emissions volumes based on the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain, released by the
Ministry of the Environment and the Ministry of Economy, Trade and Industry. The results of Scope 3 emissions calculations have been confirmed by Mizuho Information &Research Institute, Inc.
Scope 3 Emissions Data
www.0101maruigroup.co.jp/en/sustainability/theme03/environment_01.html

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