Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management System

Back

Improving Management System
Corporate Governance
Policy and Concept
securing soundness and transparency of management andincreasing its effectiveness.

To enhance the corporate value of Tokyo Tatemono,
we strive to build optimal corporate governance while

Systemfunctions and transparency of management by appointing
outside directors and auditors. We believe that we have built
a system able to sufficiently execute the supervising andauditing functions of management and directors.
Furthermore, we established the Group Management
Meeting in an effort toward efficient and sound Groupmanagement.

Tokyo Tatemono has adopted a corporate governancesystem as the structure for corporate governance and wehave established a board of directors and an audit andsupervisory board. In addition, we clarified the division offunctions for management and the execution of operations
to strengthening the auditing functions and businessexecution functions. We are also strengthening the auditing
Corporate Governance Structure

General Meeting of ShareholdersAppointment/Dismissal

Advisory Committee
Advisory

Appointment/Dismissal

ReportReportBoard of Directors (Directors)
Appointment/Audit

Account Auditor
Cooperation

Dismissal

Account Audit

Audit and Supervisory Board (Auditors)

Audit

Cooperation

President & Chief Executive Officer
Group Management Meeting

Appointment/Dismissal

Internal Control Committee

Internal Audit Division
Audit

Each Headquarters/DivisionTokyo Tatemono

Each Group Company
Tokyo Tatemono Group●Directors (Board)
There are 12 directors and four are external directors. As
a general rule, Tokyo Tatemono holds a regular Boardof Directors meeting once a month and an extraordinarymeeting when a need arises to decide on importantmatters related to execution of operations and auditing of
the operations of the directors.

Auditors also attend Board of Directors meetings andshare their opinion when necessary. (Number of members
as of April 2018)●Auditors (Audit & Supervisory Board)
Audit & Supervisory Board consists from four auditors(two full-time auditors) and two external auditors.
52Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource AssetsImproving Management SystemBack●Internal Control Committee
Internal Control Committee discusses and monitors
management of internal control (promoting compliancemanagement and internal management risks), etc. andreports to the Board of Directors, Audit & Supervisory
Board, and other bodies when necessary. (See risk
management for details.)●Executive Officers
Executive Officer System is implemented to stimulate
the Board of Directors by separating management andexecution of operations and to accelerate decision
making process related to operations.
●Group Management MeetingGroup Management Meeting consisting of executiveofficers assigned roles is implemented to deliberate on
important matters related to the management of theGroup.
In addition, fill-time auditors participate in the GroupManagement Meeting to grasp the situation of thedeliberations and share opinions when necessary.

●Advisory Committee
An advisory committee was put in place as a body toadvise the Board of Directors when deliberating matterssuch as the selection of director candidates and the chief
executive officer as well as the remuneration for directors(excluding external directors). Committee members areappointed from the directors, but we appoint more thanhalf of the total of five directors as external directors toguarantee objectivity and transparency of procedures
while leveraging the knowledge and advice of theseexternal directors.

Supporting System for External Directors and Auditors
Furthermore, full-time auditors participate in important
meetings including the Group Management Meeting inaddition to the Board of Directors meeting while receiving
relevant reports from the accounting auditor, directors,
and the employees of each division to build a system thatenables the exchange of opinions with individual bodies at
any time.

The Planning Division, which acts as a Board of Directors
Secretariat, provides explanations and information asnecessary to support the external directors and auditors atTokyo Tatemono.
In addition, personnel are assigned as a staff of the auditors
upon request from the Audit & Supervisory Board tosmoothly execute the auditing duties.

Policy on Remuneration and Calculation Method●Status of Remuneration of Directors and Auditors(FY2017)
Position/Number of recipients/Total amount paid
Directors/12/¥422 million (excluding external directors)
Auditors/5/¥64 million (excluding external auditors)
Total/17/¥486 million

The remuneration for directors is set to less than ¥35 million
a month (equivalent to ¥420 million a year)*1 as fixedcompensation and 1% of consolidated recurring income andless than 2% of the income*2 of the previous fiscal year isset as performance based remuneration as decided during
the Board of Directors meeting.
Today, we have further clarified the link between
remuneration, such as that for directors, and the shareprice of the company, and we have adopted a stock
remuneration system via a stock bond trust at the 200th
General Meeting of Shareholders held March 28, 2018
for the purpose of heightening awareness about thecontribution to growth in the medium to long term corporate
value. By adopting this policy, remuneration, such as thatfor directors, is composed of three types of payments; fixed
remuneration, performance based remuneration, and sharebased remuneration. We limit payment of share based
remuneration (excluding external directors) to a maximum of
40,000 points (equivalent to 40,000 shares) per each fiscalyear.
Remuneration for auditors is limited to basic remuneration
based on the role of the full-time and temporary auditors
and it set to be less than ¥8 million a month (equivalent to¥96 million a year).

*1: Based on resolutions at the 190th General Meeting of Shareholders
held on March 28, 2008
*2: Based on resolutions at the 195th General Meeting of Shareholders
held on March 28, 201353

Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management System

BackRisk Management
Policy and Concept
risk management system to continually monitor and control
risk and provide comprehensive risk management.

The Tokyo Tatemono Group strives to manage risks thathave the potential to impact the businesses of the Group toheighten the stability of corporate value. We put in place aSystemrisks) among those general risks with the President as chair.
We also review policies to respond to general business risks
through the Group Management Meeting and other means.
Furthermore, important matters related to these risks arereported to the Board of Directors and Audit & Supervisory
Board as well as other bodies as necessary.
We are thoroughly managing risk through a series ofprocesses that include monitoring and improving theoperational status of this risk management.

We categorize and manage investment risks, financial risks,operational risks, internal control risks and general risks
that are aggregate risks as vital risks that have a potential
to greatly impact the management of the Tokyo TatemonoGroup.
General risks are stored in the Corporate Planning Division,
which is the department in charge of managing risk, andthe Internal Control Committee debates and manages theinternal control risks (internal control risks and compliance
Risk Management by Internal Control Committee

Board of Directors/Audit & Supervisory Board
Report of Important Matters

Risk
ManagementDivisionDebate and Report ofImportant Matters

Report of Important Matters

Corporate Planning Division

Person Responsible for Overseeing Risk Management:
General Manager of Corporate Planning Division
Person Who Assists in Overseeing Risk Management*:
General Manager of the General Affairs Division*Only for internal risk management

Internal Control Committee
Committee Chair: President
Secretariat: General Affairs Division
Assistance: Corporate Planning
Division/Internal Audit Division

Group Management Meeting, etc.
Chairman: President
Secretariat: CorporatePlanning Division

Integrated Risks

Risk
Category(Aggregate of Investment Risk, Financial Risk, Internal Control Risk, Business Risk)

Investment Risk
ReportFinancial Risk
Monitoring/
Improvement

Internal Control Risk

Business Risk

(Aggregate of Internal Management
Risk and Compliance Risk)

ReportMonitoring/Improvement

Each Division Office

ReportMonitoring/Improvement

Person Responsible for Risk Management: General Manager of Each Divisional Office
Management/Promotion of Operational Execution: Person Responsible for Operational Management

54Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management System

Back

Joint Training in Earthquake Measures with Group Companies
earthquake measures unified with each Group company
and confirm procedures such as the chain of command, thedivision of roles, informational collection and distribution andsafety confirmation.

The Tokyo Tatemono Group defined basic policies when
an earthquake strikes in the Basic Plan of Earthquake
Measures and prepared a manual that includes the initial
response, stockpiling and safety confirmation.
In October every year, we conduct collective training inComprehensive Informational Management
responsible for supervising the management of information
at the core. We are also strengthening management suchas that of personal information and confidential information
through informational management audits through theInternal Audit Division.

The Tokyo Tatemono Group has defined informational
management rules, rules for the handling of personal
information, and rules for handling personally identifiable
information in order to properly handle the information
handled in our operations. Furthermore, we have put inplace an informational management system with the person55

Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management System

BackCompliance
Policy and Concept
Tokyo Tatemono Group defines compliance as complying
not only with laws but also social standards and corporate
ethics to gain everlasting trust from society, and it continues
engaging in sound corporate activities. Corporations needto respond to the expectations of customers, business
partners, shareholders, investors, local society, employees,
and other stakeholders, and responding to the needs ofthese stakeholders with integrity is important.
Tokyo Tatemono Group has established the Compliance
Charter to promote corporate activities that observecompliance in June 2009, and it is advancing those efforts.

Tokyo Tatemono Group
Compliance Charter
As we engage in corporate activities, we observe
the Compliance Charter below:· We adhere to laws, regulations, and other rules
and engage in fair, sound corporate activities.
· We act faithfully by thinking from the customers'
standpoint.
· We contribute to making society better throughcorporate activities.
· We respect the personalities and values ofeach other and maintain a comfortable working
environment.
Established June 2009

SystemThe Tokyo Tatemono Group established the Internal Control
Committee that discusses Group compliance as well as
general internal control risks as a framework to promotecompliance and to supervise Group compliance activities.
In addition, the General Affairs Division of Tokyo Tatemono
supports and instructs Group companies on their operations
related to compliance while coordinating with Group
companies to improve the compliance function of the entireGroup.

Board of Directors

ReportAudit & Supervisory Board

Internal Control Committee
Committee Chair:
President & Chief
Executive Officer

ReportSecretariat
General Affairs DivisionCorporate Planning DivisionInternal Audit Division

Compliance Education
Activities Report

Receive Report

InternalAudit

Each Business Division
Each Group Company
Person in Charge ofCompliance56

Cooperation

Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management System

BackIndex and Performance
Number of Students and Completion Rate of Compliance (e-Learning) Training
Number of Students and Completion Rate of Compliance (e-Learning) Training
Completion Rate of Compliance Training

2015

2016

2017

657 people

814 people

847 people

99.4%

98.8%

98.5%

2015

2016

2017

28

1544

Number of Reports and Consultations to Helpline
Number of Reports and Consultations to Helpline

Compliance ManualWe formulated the Tokyo Tatemono Group Compliance
Manual to ensure the practice of the Compliance Charter
throughout the Tokyo Tatemono Group.
The Compliance Manual stipulates 16 compliance items asa code of conduct for all people engaged in operations ofoffices of Group companies regardless of their employee
classification, office organization or the employment system.
All employees who work in operations at offices in Group
companies are given the Compliance Manual as a booklet
or it is posted at each office to fully raise awareness.

Compliance
Manual<Compliance Items>
1. Observance of Laws and Regulations
2. Proper Relationships with Partners
3. Moderate Gifts and Entertainment
4. Sincere Response to Customers
5. Environmental Considerations
6. Proper Relationships withPolitics and Government

7. Ban on Relationships with Antisocial Forces
8. Timely/Proper Informational Disclosureand Appropriate Tax Reporting
9. Restriction of Insider Trading
10. Respect for Human Rights/Restrictionof Discrimination and Harassment

11. Guarantee of a Comfortable
Working Environment
12. Proper Management of Information
13. Restriction of Conflicts of Interest
14. Co-existing with Local Communities
15. Management of Information System
16. Respect for Corporate Assets

Compliance Training
In addition, we have introduced stratified training, such ascollective training for new Group employees, training forexecutives and general managers, training for new Tokyo
Tatemono employees, and training for newly appointed
supervisors.
We also hold seminars by inviting outside experts as
lecturers around themes regarding the law and regulation
field as well as taxes that have great importance inoperations and share the latest judicial examples,tax amendments and other information related to ourbusinesses throughout the entire Group.

The Tokyo Tatemono Group conducts joint Group e-learning
training every year. In 2017, we gained knowledge about
harassment prevention, informational management, theBuilding Lots and Buildings Transaction Business Law andthe Act on Prevention of Transfer of Criminal Proceeds aswell as brushed up our knowledge following amendments
to the laws and regulations for roughly 2,800 executives
and employees in 13 Group companies, in addition to ourfoundation in compliance that includes the Compliance
Charter and compliance items.

57Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management System

Back

Implementation of Compliance Surveys
We analyze the survey results for overall trends and traitsof each Group company, and then report that information tothe Internal Control Committee while providing feedback toeach Group company. These results play a role in resolving
issues before they happen and in compliance education
activities as well as being reflected in the compliancesystem.

The Tokyo Tatemono Group conducts compliance surveys
to periodically understand and review the awareness andpenetration about compliance of Group employees everyyear since 2009.
This survey was held for approximately 6,800 employees
from 16 companies throughout the entire Group in 2017 witha collection rate of roughly 80.5%.

Setup of a Helpline
are reported to the Tokyo Tatemono Internal Audit Division(organization under the direct control of the President) andthe facts are reviewed and verified in accordance with thecontent from an objective standpoint.
We appropriately respond to actions that violate compliance,such as immediate corrective measures as well as steps
to prevent recurrence. The Internal Control Committee
is convened for more important matters to consider theresponse.

The Tokyo Tatemono Group setup the Tokyo TatemonoGroup Helpline that can be used throughout the Group asa consultation and reporting window to prevent violations
to the laws and illegal acts. Furthermore, the helpline
establishes a contact window with an external law officeto create a system for easy consultation and reporting. All
employees who engage in the businesses of any of theGroup companies can use this helpline.
Consultations and reports received at each contact window

Responding to Anti-social Forces
Furthermore, we cooperate with external experts suchas the police and attorneys at law to respond with a firm
attitude to anti-social forces.

Our ban on any relationship with anti-social forces has beenclarified in the Exclusion of Anti-social Forces Rules of theTokyo Tatemono Group and we have stipulated specificprocedures for checks in the Anti-social Forces Check
Manual.

58

Index

Message from the President

FeatureEnvironmental Initiatives

Safety & Security Initiatives

Responding to Social Change

Community Involvement

Utilization of Human
Resource Assets

Improving Management SystemBack

Respect of Human Rights
Policy and Concept
discrimination and harassment, and the guarantee of awork-friendly work environment. We have also raised therealization of a satisfying working place in the Human
Resource Policy.

The Tokyo Tatemono Group raises the respect for
personalities and values in the Compliance Charter. We
formulated the Tokyo Tatemono Group Compliance Manual
to ensure the Compliance Charter is put into practice,which defines compliance as a code of conduct related
to the respect of human rights, the restriction of acts of→Compliance Charter P.56

SystemThe Internal Control Committee supervises the Groupcompliance activities.

We established the Internal Control Committee to discuss
general internal control risk, including compliance of theTokyo Tatemono Group, to promote human rights and othercompliance issues.

→Compliance System P.56

Human Rights Initiatives
The Tokyo Tatemono Group defines the restriction of actsof discrimination and harassment as well as the guaranteeof a work-friendly environment as part of the Compliance
Manual, which is a code of conduct to put into practice
the Compliance Charter. We fully raise awareness aboutcompliance by distributing the Compliance Manual toemployees and posting it at offices. Furthermore, we areconducting compliance training every year.
We are also preventing and quickly resolving harassmentand other issues through the Tokyo Tatemono Group
Helpline, which is a common consultation and reporting

window throughout the Group, and Compliance Surveys
while also taking the appropriate response to theconsultations and reports we receive on the helpline and thesurvey results.
Please see the pages below for specific initiatives.
→Compliance Training P.57

→Compliance Surveys P.58

→Setup of a Helpline P.58

Initiatives to Improve the Working Environment
The Tokyo Tatemono Group links to health insurance
associations and conducts a wide range of initiatives toimprove the health management of employees. In addition
to support to quit smoking, we work to understand andprevent the health risk characteristics of employees andencourage early diagnosis.
Furthermore, we support voluntary health managementof employees through a welfare plan. As mental healthinitiatives, we also implement self stress checks for
employees every year in addition to starting cooperation
with psychiatric advisors to put in place a support system.

In addition, we have been continually introducing measures
to prevent overtime since 2008 and are realizing a reduction
in long working hours.
Please see the pages below for specific initiatives.
→Health Improvement Initiatives P.47
→Mental Health Initiatives P.47

→Initiatives to Reduce Overtime P.4959