Materiality:
Strengths and initiatives to help

“Maintaining/enhancing the corporate base”
As the corporate philosophy of the Mandom Group, we consider that “Social Responsibility & Sustainability” is the sustainability of
the Mandom Group. With that in mind, we treat sustainable management aimed at resolving social and environmental issues (ESG
management + SDG management) as a fundamental concept.
We will continue to develop as a company that is recognized by all stakeholders for its existence value, with the dynamism to survive inany era, and we will further strengthen our corporate foundation based on our management philosophy with advancing our Dedication
to Service deeply and widely as the going concern.
In addition, in order to provide cosmetics that consumers can use safely and with peace of mind, we are working to ensure conformity
with Mandom safety standards (safe quality) and to achieve conformity with consumer satisfaction (reliable quality).

Providing High Quality and Peace of Mind
Quality Management System

42

In accordance with Japanʼs Pharmaceutical Affairs Law,
we comply with the ISO 22716 international standard thatpertains to good quality practices (GQP), good vigilance
practices (GVP), and good manufacturing practices (GMP) for
cosmetics.
Please refer to the following pages for details of the MandomGroupʼs quality assurance activities aimed at achieving “truecustomer satisfaction” and the system for utilizing customer
feedback in its operations.
CSR Information
Consumer Issues > Promotion of Quality Assurance System▲

Regarding quality assurance for cosmetics and quasi-drugs,
Mandom works to assure fully satisfactory quality as demandedby consumers from purchase to end of use. We take measures
to improve the quality of our products and services at every
stage̶planning, design and development, production andshipping. To ensure the reliability of these activities, inJanuary 1998 Mandom established the Quality Philosophy
and Fundamental Quality Policy, and built a quality assurance
system that became ISO 9001-certified in December 1998.
Since that time, as the quality philosophy and practices weredeemed to have taken root company-wide, we voluntarily
surrendered ISO 9001 certification in December 2013.
We have since pursued continuous improvement of quality
through the Mandom quality management system.

Quality Assurance Activities andReconfiguring Our Quality Assurance System

Analysis of active ingredients in quasi-drugs

Confirmation of process operations

Confirmation of process operations

Visual inspection of products

Product sampling inspection

Microbiological inspection

Mandom Report 2022

Mandom Quality Assurance Activities and Implementation of Customer Feedback

Production

Discovering customersʼ wants

Regulatory compliance
ISO 22716 (Cosmetics GMP) conformity
Mandom quality management system conformity
Production guidelines

Marketing research

Drafting and reviewing plan●●

Ordering of raw materials

Marketability Preference Functional superiority
Eco-friendliness Regulatory compliance●

About Mandom

Product Planning●●

Deliberation over content of plan
Acceptance of raw materials
Quality check Acceptance inspection

Board of Directorsʼ Meeting

Quality check

Value Creation Story

Marketing strategy meetings (monthly)
Chairperson: operating officer in charge of marketing

Compliance with material standards

Approval for sale of new productPreparation of content
Deliberation over validity of draft plan
Quality check Content inspection

Planning and design combined meetings (monthly)
Chairperson: operating officer in charge of technology and production

Compliance with content standards

Design of content and container●

Safety Stability Functionality
Regulatory compliance●●

Filling, packaging

Usability

Quality check Product inspection

Design of production methods

Compliance with product standards,
deliverability screening

Selection of raw material suppliers●

Regulatory compliance●

Materiality●●

Procurement guidelines

Delivery

Product Design●●

Assurance of traceability through lot control
Management of retention samples

Middle-Range Planning

Board of Directorsʼ Meeting
Director in charge of overall manufacturing
and sales
Director in charge of quality assurance
Director in charge of safety management

Performance for the Fiscal Year Ended March 31, 2022

New product development, product improvement

Customers
Consumers, retailers, distributors, trade partners,
investors, etc.

Publicity and sales promotions
Creation of advertising ● Creation of sales promotion tools
Information dissemination through website, social media, etc.
● Plan management and implementation of promotions, etc.
●●

Communication with Customers
Regulatory compliance, privacy policy●

Regulatory compliance
Compliance with voluntary standards of industry

Advertising is to be carried out based on the following guidelines.
Appropriate Advertising Guidelines including Cosmetics
from the Japan Cosmetic Industry Association
https://www.jcia.org/user/business/advertising (Japanese Only)(Consultations, questions, complaints, etc.)
Daily reports

Company Information

Collation and analysis of customer opinions Gathering
customer opinions, feedback to customers

●

Sales
In-store communication
Supply of information to distributors, retailers● Gathering of market information, etc.
●●

Collation and analysis of customer opinions
Monthly reports, quality management reviews (twice a year)●

Regulatory compliance●

Sales guidelines

Mandom Report 2022

43

Materiality: “Maintaining/enhancing the corporate base”

Customer Inquiry System

Customer Inquiries in FY2021

We set up a Customer Relations Division in 1994 as a generalcontact point for communicating with customers, including theirsuggestions, requests and other feedback. After reviewing
the feedback received, we add information to the Frequently
Asked Questions (FAQ) & Inquiries section of our website aspart of our efforts to ensure the supply of information.
Furthermore, feedback is compiled in a database, and throughmutually attended internal meetings, is passed along to top
management and relevant departments to be integrated into
future product development and improvement.

Other

How to use, Product function

3,580 inquiries/ 21.1%

1,623 inquiries/ 9.6%

Purchasing methods

Suggestions and requests
except product193 inquiries/ 1.1%

Product suggestions,
Requests

2,481 inquiries/ 14.7%
Customer Inquiries

16,921 inquiries

354 inquiries/ 2.1%

Opinions, Advice

8,690 inquiries/ 51.4%

Quality Assurance Div.
Consumers

Distributors
Requests, inquiries,
etc.

Employees

Information
providers・Telephone
・Email・MailOverseasGroupcompanies

・Information provided
・Inquiry content

Investigating
dept.

Reportresults

Customer Relations Div.
・Information provided
・Inquiry content
・Other information
・Proposal/request information

Response

Domestic Group companies

RetailersRequestinvestigation

・Information provided
・Inquiry content

Confirm
information

Individual
dept.

Information
provision
Reportinformation
Management
decisionManagement
team▲

Top Page
Customer Support

Examples of Utilizing Customer Feedback
At Mandom, we share feedback from customers with top management and relevant departments,
and work to achieve true customer satisfaction.
Regarding the “Lúcido-L Oil Treatment Series,” a customer commented, “It is difficult to see
the remaining amount.” In response to this, we have improved the label by widening the gap tomake it easier to see the remaining amount.
Before improvement

Initiatives in FY2021

44

Mandom Report 2022

After improvement

Corporate Governance
About Mandom

Corporate Governance Policy
The Mandom Groupʼs mission is co-existence, mutual growth and mutual creation with
global society. Consequently, to realize our core philosophy, we are dedicated to generating
stable profits by pursuing efficiency, while ensuring soundness and transparency.
As a result, we look to achieve sustainable, steady growth together with consumers,

Value Creation Storysociety and other stakeholders.

Corporate Governance System
The activities of the Group are overseen by the Audit &Supervisory Board. With legal oversight from its members as
the basis for corporate governance, we invite multiple external
directors to sit on our board, to reinforce our monitoring andadvisory functions.

By clarifying responsibilities and delegating authority under asystem of supervisory and executional officers in charge of
specific operations, we have created a system for the proactive
and expeditious execution of operations.

Materiality

Efforts to Strengthen Corporate Governance
1985

1995

2000

2005

2010

2015

2020

Management Supervision and Auditing
Inviting independent external executives

1995

Middle-Range Planning

Inviting external Audit &Supervisory Board members 1985
Inviting external directors

Establishment of committees consisting of independent external executives
Establishment of nominating committee

2008

2021

Changed the chairperson of the committee to an external director

Improvement based on annual evaluation and analysis
Evaluation of the effectiveness of the Board of Directors
Evaluation of the effectiveness of the Audit & Supervisory Board

2016
2019

Separation of supervision and execution
Introduction of executive officer system

2001
Performance for the Fiscal Year Ended March 31, 2022

Enhancement of effectiveness and transparency
Abolition of advisors, honorary advisors, and counselors

2018

Compensation for Executives
Establishment of committees consisting of independent external executives
Establishment of Compensation Committee

2005

2021

Changed the chairperson of the committee to an external director

Ensuring objectivity and transparency of compensation for executives
Terminated retirement benefits for directors and corporate auditors

2005

Review of executive compensation program
Introduced restricted stock compensation plan

2018

Complied with Japanʼs Corporate Governance Code, announced Corporate Governance Guidelines

Company Information

Reinforcement of the System
2015

Promotion of sustainable management
Establishment of Sustainability Committee

2015 CSR Promotion Committee 2020

Compliance system
Establishment of the Mandom Groupʼs Code of Conduct
Introduction of Helpline System

1999 (revised 2002, 2007, 2011, 2014, 2018)2002

2007: Expanded coverage to business partners

Mandom Report 2022

45

Materiality: “Maintaining/enhancing the corporate base”

Corporate Governance System (as of June 24, 2022)
Top Decision-Making Body, Venue for Communicating with Shareholders

General Meeting of Shareholders
Advice/Recommendations
Transparent and fair
selection process
3 Nominating

Appointment/Dismissal

Decision-making/Oversight function
1 Board of Directorsʼ Meeting

Committee● Representative Director● External Directors● Outside Experts

Femaleemployee
ratio

Disclosure/Explanation
Femaleemployeeratio

Statutory
auditing

External
ratio● Internal Directors

ProposalReport● External Directors

Advance discussion,mutual checks, monitoring

Legal Audits

Supervisory
Board

6 Executive Board● Audit & Supervisory

Board Members● President Executive Officer● External Audit &● Supervisory Executive Officer

Supervisory Board
Members● Audit & Supervisory Board

Business execution

External
ratio

Appointment
Dismissal

2 Audit &● Chairman

Authority delegation/
Supervision

ReportMembers

President Executive Officer
Supervisory Executive Officers
Transparent and faircompensation system

Technology

Domestic
Sales

4 Compensation

Committee

Marketing

Production● Representative Director● External Directors● Outside Experts

Femaleemployee
ratio

Externalratio

Human Resources/
General Resources
Overseas
Business

Corporate
Planning/
Financing

ProposalReportSocial Responsibility
7 Sustainability

Committee

Total Risk Management
Committee

Quality AssuranceCommittee

Executive Officers

Direction/
Management

ESG Executive
Committee
Occupational Health and
Safety Committee

Audit of internal
controls forfinancial reporting

Independent
AuditorCode of Conduct
Promotion Committee

Authority delegation/
Supervision

Reporting, discussion,and mutual checks of business execution
5 Management Council

Independent audits
Statutory
auditing

Internal control,
business audits
Statutory
auditing

Internal Audit
Div.

Workstyle Reform
Promotion Committee

System construction/
Overall management

Information
provisionCompany-wide organizations(Group companies in Japan and overseas)

1 Board of Directorsʼ Meeting

The Board of Directors is comprised of directors and makes decisions
regarding important business execution matters based on a corporate
philosophy and corporate planning in addition to supervising the executionof business by directors and executive officers.
Representative Director and Chairman serves as Chair.

2 Audit & Supervisory Board

The Audit & Supervisory Board is comprised of Audit & Supervisory Board
members, who attend important meetings, such as Board of Directors
and Management Council meetings. Audit & Supervisory Board members
also exchange information with the Accounting Audit and Internal Audit
Division and audit the business execution of directors, etc. throughhearing of each division and affiliated company.
An Audit & Supervisory Board member serves as Chair.

3 Nominating Committee

The Nominating Committee is comprised of the Representative Director
and external directors. It is established as an advisory body to the Boardof Directors in order to ensure fairness and transparency of the process
when determining candidates for directors and Audit & Supervisory Board
members. This committee advises the Board of Directors on proposals
regarding candidates for director, Audit & Supervisory Board member andsupervisory executive officer.
An external director serves as Chair.

5 Management Council

The Management Council is comprised of officers of executive officer
level and higher. It performs decision-making and reporting related
to business execution of the management strategy, primarily for theapplicable fiscal year. The Mandom Group promptly responds tochanging business environments by delegating business execution to theManagement Council.
The President Executive Officer & Director serves as Chair.

6 Executive Board

The Executive Board is comprised of officers of supervisory executive
officer level and higher. It performs decision-making and reporting related
to business execution of the management strategy, primarily for the
medium- to long-term. The Executive Board also deliberates on efforts torealize VISION2027 as developed by the Company.
The President Executive Officer & Director serves as Chair.

7 Sustainability Committee

The Sustainability Committee is comprised primarily of directors, Audit &Supervisory Board members, and supervisory executive officers. Whiledeveloping our approach for promoting the sustainability of the MandomGroup and holding discussions with relevant departments at committee
meetings and other meetings, this committee is strengthening our efforts
to contribute to the sustainable development of society.
The President Executive Officer & Director serves as Chair.

4 Compensation Committee

The Compensation Committee is comprised of the Representative
Director and external directors. It is established as an advisory body to
the Board of Directors in order to ensure transparency and fairness of theprocess when determining directorsʼ compensations. This committee
advises the Board of Directors on policies regarding compensation for
directors and supervisory executive officers.
An external director serves as Chair.

46

Mandom Report 2022

(Note) Major meetings and committees from FY2020 have been held online in orderto maintain social distance during the COVID-19 pandemic.

Skill Matrix of Directors and Audit & Supervisory Board Members
By appointing external directors and external Audit &Supervisory Board members who have no special interest
relationships with the Company and are highly independent of
the Company, the Company aims to reinforce its corporate
governance and augment the Groupʼs overall management
quality. The Company has formulated the Standards for the
Independence of Independent Outside Executives shown below.
The external directors and external Audit & Supervisory Board
members of the Company satisfy these standards and theTokyo Stock Exchangeʼs independence criteria. The Company
has notified the Tokyo Stock Exchange that all of these
executives are independent executives.

About Mandom
Value Creation Story

Standards for the Independence of Independent Outside Executives
https://www.mandom.co.jp/company/src/g_guideline_ex2.pdf(Japanese Only)
Explanation of individual reasons for the selection of the principle
members of the management and the nomination of candidates for
directors and Audit & Supervisory Board members
https://www.mandom.co.jp/company/src/g_guideline_ex1.pdf(Japanese Only)

Materiality

Mandom acknowledges the importance of a composition of
personnel with various business experiences and of diversity
when it comes to the composition of the Board of Directors
and the Audit & Supervisory Board.
From the standpoint of promoting womenʼs contribution,
Reiko Nakayama was appointed as an external director in June
2019. At our listed subsidiary in Indonesia, which is our biggest
subsidiary in the overseas business, there are four Japanese
directors and five directors who are overseas nationals(including two female directors) of the total nine directors.
In addition, five overseas nationals (one of whom is anequity-method affiliate) have already served as representative
directors of overseas subsidiaries.
Mandom aims to become a global company, and while wecurrently do not have any foreign national directors or Audit &Supervisory Board members, we acknowledge this as animportant issue in order to promote diversity management. Goingforward, our policy is to proactively promote foreign nationaland female employees to executive and managerial positions
to provide opportunities for them to leverage their talents.

Skill Matrix (as of June 24, 2022)
Field of experience*
Name

Corporateplanning

Globalbusiness

Marketing

Sales

Technology/
Production

Human
Resources/
GeneralResources

Legal affairs
and riskmanagement

ESG

DX and IT

●

●

●

●

●

●

●

Finance/
Accounting

Motonobu
Nishimura●

Ken
Nishimura●

YasuakiKameda●●●Independent External

Reiko
Nakayama●

ShigekiSuzuki●

Hitoshi
Tanii

●

●

●

●

●

●

●

●

●
●

●
●

●

Performance for the Fiscal Year Ended March 31, 2022

Shinichiro
Koshiba●

Middle-Range Planning[ Directors ]●●●[ Audit & Supervisory Board Members ]Takehiko
Ikehata

Independent External

Masahiro
NishioMikiharu
Mori

●
●

●

Company Information

Takeshi
Hibi

●

●

CPA

●

Attorney* Areas of practical or supervising experience.
“Global business” means that the person was seconded by Mandom Corporation to its subsidiaries or affiliated companies where he/she held a management position.
For independent external officers, this refers to experience in other companies.
Mandom Report 2022

47

Materiality: “Maintaining/enhancing the corporate base”

Message from External Director Hitoshi Tanii
Q 1 . You have been an external director for two years.
What changes have you seen in Mandom since yourfirst appointment and what challenges do you see forthe future?
It has already been two years since I assumed the position.
Amidst the COVID-19 pandemic that has been continuing since
I took office, the directors and executive officers are working as
one to consider how we can be dedicated to service in this era.
The COVID-19 pandemic has not only had an economic impact
on our company, but it has also caused us to rethink how weshould be. What I mean by this is that there is an argumentthat our recent disappointing performance is not due to the
COVID-19 pandemic, but rather to our inability to provide value
to our customers in an intrinsic way. I think there is very soundargument here, and I think it is characteristic of Mandom.
The loyalty of our employees to Mandom has not changed, andexpectations toward the new president remain high. I believethat the combination of the chairman, who has long-term
experience, and the president, who has new ideas and energy,
is very well-balanced and has a promising future. The president
has willingly engaged in discussions with employees on thefront lines.
On the other hand, however, there are some real challenges.
We have not produced any new products that will support theCompanyʼs future in recent years. When hit products are notproduced for a long period of time, people become impatientand companies then tend to launch new products just forthe sake of doing so in rapid succession, based on shallow
discussions and deliberations. From my personal point of view,
I think it is necessary to reorganize the brand structure rather
than just aiming for a hit with a single product.
In particular, the Gatsby brand has a broad product lineup anda wide range of customer ages. This is actually preventing
the brand from gaining strong support from the consumer
segment, which is the core of the brandʼs target.
Reinforcing the brand is an essential requirement as a sourceof long-term competitiveness in the future. I hope that
Mandomʼs strong marketing capabilities will be demonstrated
without holding back.
Q 2 . You assumed the chairmanship of the Nominating
Committee and the Compensation Committee last
fiscal year (ended March 31, 2022). Please tell us
about the status of each committee and any issues
that you think need to be addressed.
From last fiscal year (ended March 31, 2022), the chairmanshipof the Nominating Committee and the Compensation
Committee was transferred to an external director. I think thisis a wonderful thing from the standpoint of transparency andsoundness of management.
Each member of the committees has been active in speaking

48

Mandom Report 2022

out. We have a very open and flat corporate culture that allows
us to speak frankly about what is good for the Company, and I
believe that this corporate culture is working positively in thesecommittees as well.
In terms of the issues discussed by the committees, I thinkthat in the future it will be necessary to link the compensationof directors and managing executive officers to businessperformance in a more balanced manner than has been thecase to date.
We are also discussing diversity in the composition of theBoard of Directors, with a focus on external directors. Currently,
our external directors have a well-balanced composition ofpeople with diverse backgrounds, including experience in large
company management, experience related to technology andproduction, women, stock market perspectives, and experiencein startup management, and I also believe that knowledge ofoverseas markets will be required in the future.
Q 3 . The Companyʼs financial results have beenchallenging, with two consecutive fiscal years postinga loss. What are your aspirations for future growth?
The president has set a goal for the current fiscal year (ending
March 31, 2023) of achieving a return to profitability in terms
of profit at each level, and the entire company is united in
striving to achieve this goal. As an external director, I would
like to contribute to the achievement of this goal by engaging
in sound discussions with the directors and executive officers.
The Company has the DNA of having overcome several
business crises on our own. Although we are currently in adifficult situation, with two consecutive fiscal years of losses,
I am confident that the Company will demonstrate its DNA
without holding back and start on the path of renewed growth.

Evaluation of the Effectiveness of the Board of Directorsthat need to be strengthened in future corporate governanceare identified as issues and items for improvement.
The following is a summary of our evaluation and analysisof the effectiveness of the Board of Directors for the fiscal
year ended March 31, 2022 (105th fiscal year) based on the
Corporate Governance Code (hereinafter the “CG Code”)[Supplementary Principle 4-11 3] in our Corporate Governance
Guidelines (hereinafter the “CG Guidelines”).

About Mandom

Since 2016, the Company has conducted an annual survey
on the effectiveness of the Board of Directors targeting thoseparticipating in the Board of Directors (excluding the chairman).
Based on the results of the survey, we believe that theeffectiveness of our Board of Directors has been ensured if thequantitative evaluation shows that the Board of Directors has
been appropriately implemented. In addition, items that werepointed out or suggested in the qualitative evaluation and items

Value Creation Story

Evaluation and Analysis Procedures and Quantitative Results
1 A questionnaire was distributed to participants in the Board of Directors todetermine whether the Companyʼs Board of Directors is effectively fulfilling
its role in accordance with the policies and other requirements of Section
4 (Responsibilities of the Board) of the CG Code as stated in the CG
Guidelines, and responses were obtained from all eligible participants.
2 Based on these responses, the President Executive Officer & Director
interviewed each internal director to confirm their content.
3 The responses to the above questionnaire and the results of the interviews
were provided to the participants of the Nominating Committee, and after
ensuring a period and opportunity for consideration by the participants,

the Nominating Committee made a report to the Board of Directors after
careful deliberation.
4 Upon receiving the Nominating Committeeʼs report, the Board of Directors
confirmed the results of its own evaluation and analysis of the effectivenessof the Board of Directors based on an understanding and respect forthe content of the report, and the results were as follows: 66.1% for thehighest evaluation (appropriate), 30.3% for the next highest evaluation(appropriate with some issues), and 1.7% for the lowest evaluation (notappropriate with many issues).

Materiality

Items for Which Effectiveness Has Been Ensured
1 Based on the Mandom Mission Framework, the Board of Directors has

and the “Policies and Procedures Related to Appointment of Directors”
after receiving advice from independent external directors and Audit &Supervisory Board members (hereinafter “independent outsiders”) andconducting constructive discussions, and has maintained the structure of
the Board of Directors in accordance with these policies.
5 The Board of Directors will properly organize the Nominating Committee,
establish appropriate operating procedures, respect the reports of theNominating Committee, and make appropriate decisions regarding
personnel matters (appointment, reappointment, and dismissal) of principal
members of the managerial team (directors and supervisory executive
officers).
6 The independent outsiders shall regularly (once a year) hold a meeting forexchange of opinions, which consists solely of independent outsiders, andcommunicate among independent outsiders as appropriate, to exchange
information and share recognition, based on an objective standpoint.

Middle-Range Planning

developed, revised as needed, and disclosed the Corporate Governance
Policy and CG Guidelines through constructive discussions in priordeliberations at the Executive Board and Management Council meetings.
2 The Board of Directors is appropriately managing conflicts of interest
between the management and related parties and the Company based on“Principle 1-7. Transactions with Related Parties” in the CG Guidelines.
3 The Board of Directors formulated and disclosed appropriate Standards
for the Independence of Independent Outside Executives. In addition
to complying with these standards, the Board of Directors also invited
persons capable of monitoring from an objective perspective of ashareholder who possess a wealth of business experience and anunderstanding and knowledge of management.
4 The Board of Directors appropriately established and disclosed the“Philosophy of Balance, Diversity, and Scope of the Board of Directors”

Issues and improvement items
executive officers and at executive board meetings led by supervisory
executive officers, sufficient discussions are being held to share issues andachieve the management plan. By improving the accuracy of analysis of
issues causing differences between plans and actual results and progress
management of countermeasures, it will be possible to accurately reflect theresults of analysis in the strategies and plans for the next year by utilizing
the business management method based on a business and function matrix
structure, so further improvement of management efficiency can be realized.
2 Because the Company operates in a climate that respects free and vigorous
discussion, opinions were exchanged in a proactive and frank manner, andchallenging proposals involving risk-taking were made by the managerial

team. Going forward, while ensuring profitability and financial defense, themanagerial team, directors, and Audit & Supervisory Board members should
reaffirm and raise awareness of the importance of reforming the businessfoundation and taking on the challenge of creating new value for the future,so that aggressive governance can be realized and more advanced andchallenging decisions can be made in an agile manner.
3 Regarding the monitoring function of independent external directors,
information gathering support was provided through exchanges of opinionswith each department, but further enhancement of support functions would
enable external directors to actively and proactively gather information andhave more active and meaningful discussions even during the COVID-19
pandemic.

Performance for the Fiscal Year Ended March 31, 2022

1 Through preliminary deliberations at the Management Council led by

Examples of Specific Comments Provided in the Questionnaire by Board of Directors ParticipantsWith regard to the three-pronged audit
by Audit & Supervisory Board members,
independent auditors, and the Internal Audit
Division, the effectiveness of the audit has
been enhanced by the active participation of
the Internal Audit Division in the meetings
between Audit & Supervisory Board
members and independent auditors.

Company Information

I think the Board of Directors should consider
a composition of members that will allow active
discussions from a wide range of viewpoints,
such as inviting people who approach
management from the perspective of academia
and other fields, as well as diversity in nationality,
gender, and age, as a matter of course.

The Audit & Supervisory Board andindependent external directors have held
several meetings to exchange opinions, andsince candid exchanges of opinions between
external directors and external Audit &Supervisory Board members have taken place
during these meetings, we believe that therequirements of the CG Code are being met.

Mandom Report 2022

49

Materiality: “Maintaining/enhancing the corporate base”

Method of Determining Compensation Amounts for Company Executives
In addition to ensuring soundness and transparency, theCompanyʼs compensation for directors is aimed at theappropriate pursuit of efficiency, leading to the achievement ofmanagement plans and the enhancement of corporate value.
To this end, the Company sets an amount of fixed compensation
to ensure steady devotion to their duties. In addition, a certain
amount of performance-linked variable compensation is provided
to serve as an incentive to a higher level of motivation. The
Companyʼs policy is to strike a balance between these two.
The Company sets fixed compensation amounts at appropriate
levels by referring to third-party data. These amounts differ
according to executive rank and Group management
responsibilities.
Variable compensation is linked to single-year and medium- tolong-term performance at an appropriate ratio. Annual payment
amounts are set to reflect performance with reference to theCompanyʼs performance in the preceding fiscal year andachievement of planned targets, and to the business plan forthe current fiscal year (amounts paid to individual internal
directors are based on evaluation of their individual
performance). Restricted Stock compensation (in principle, theamount will correspond to compensation for performance of
duties in the first year covered by Middle-Range Planning) islinked to medium- to long-term performance. Restricted Stockcompensation aims to further promote shared value withshareholders and provide an incentive to strive to continually
increase the Companyʼs corporate value.
Compensation for external directors is composed solely of fixedcompensation.
Compensation for Audit & Supervisory Board members is set at
an appropriate level that reflects their important role andresponsibility for conducting rigorous legal audits that form thebasis of compliance management for the Group and improve
corporate value. As the role and responsibility of Audit &Supervisory Board members is to conduct rigorous legal audits
unrelated to the Companyʼs operating performance, theircompensation is composed only of the fixed compensation
portion, which is not affected by operating performance.
The amount of compensation for directors is determined by aresolution of the Board of Directors within the limit ofcompensation approved at the General Meeting of
Shareholders based on the deliberation and report of theCompensation Committee, which is chaired by an independent
external director and of which more than half of the members
are from outside the Company (external directors and external
experts).
The Compensation Committee also deliberates and makes
recommendations on policies related to determining director
compensation. Based on these results, the Board of Directors
resolves compensation amounts.

Appropriate Balance of Fixed and Performance-Linked Compensation (at time of standard evaluation)
Percentage ofcompensation

Fixed compensation(monetary)

Short-term performance-linked
compensation (monetary)

Approximately 59%

Approximately 32%

Medium- to longterm performancelinked compensation(shares)
Approximately 9%

Set compensation level based on
responsibility

Performance evaluation based onachievement of single-year targets

Performance evaluation based on achievementof Middle-Range Planning targets

Payment method

Paid as monthly
fixed compensation

Paid as bonus after
evaluating target achievement

Paid Company shares within
three fiscal years corresponding to
Middle-Range Planning

Performance
evaluation period−

One yearThree years (FY2021 - 2023)

Company performance

Evaluation indicator−・Achievement rate for consolidated net
sales forecast in pertinent fiscal year
・Achievement rate for consolidated
operating profit margin forecast in
pertinent fiscal year
・Rate of dividend growth

Individual performance
・Evaluation of contributions(Representative Director only evaluated basedon Company performance)

Range of fluctuationof evaluation
Eligible persons

50

Mandom Report 2022

Company performance・Middle-Range Planning
Achievement rate for consolidated net
sales in final year
・Middle-Range Planning
Achievement rate for consolidated
operating profit margin in final year
・ROIC

−

50% above or below standard

33% above or below standard

Directors
Audit & Supervisory Board members
Supervisory Executive Officers

Directors (excluding external directors)
Supervisory Executive Officers

Directors (excluding external directors)
Supervisory Executive Officers
Executive Officers

Amount of Compensation, etc. for Directors and Audit & Supervisory Board Members for FY2021

Basic compensation

Performance-linked
compensation, etc.

Non-monetarycompensation, etc.

Directors(external directors)

273
（24）

208
（24）

37
（−）

27
（−）

8
（3）

Audit & Supervisory Board Members(external Audit & Supervisory Board Members)

51
（15）

51
（15）

−
（−）

−
（−）

6
（3）

Total
(external executives)

324
（39）

259
（39）

37
（−）

27
（−）

14
（6）

About Mandom

Total amount by type of compensation (Millions of yen)

Total amount ofcompensation(Millions of yen)

Category

Eligible number of
executives

Value Creation Story(Notes) 1. The above table includes one director and two Audit & Supervisory Board members (including one external Audit & Supervisory Board member) who retired at theconclusion of the 104th Ordinary General Meeting of Shareholders held on June 24, 2021.
2. The amount of monetary compensation for directors was resolved at the 89th Ordinary General Meeting of Shareholders held on June 23, 2006 to be no more than 450
million yen per year. As of the close of said General Meeting of Shareholders, the number of directors was eight (including one external director).
Separately from the above compensation framework, a resolution was passed at the 101st Ordinary General Meeting of Shareholders held on June 22, 2018 that theannual amount of compensation under the Restricted Stock compensation plan shall not exceed 150 million yen and the maximum number of shares shall not exceed
39,000 shares per year (external directors are not eligible for the grant). This compensation amount is, in principle, based on the assumption that an amount equivalent
to the compensation for the execution of duties over the period covered by the Middle-Range Planning will be paid in a lump sum in the first year of the period coveredby the Middle-Range Planning. The number of directors (excluding external directors) as of the close of said General Meeting of Shareholders was five.
3. The amount of monetary compensation for Audit & Supervisory Board members was resolved at the 88th Ordinary General Meeting of Shareholders held on June 24,2005 to be no more than 70 million yen per year. As of the close of said General Meeting of Shareholders, the number of Audit & Supervisory Board members was four(including two external Audit & Supervisory Board members).

Materiality

Policy Related to Stockholdings

Category

Trend of listed shares
Left axis: ■ Amount recorded on balance sheet

2019

2020

2021

2022

(Year ended March 31)(Year ended March 31)(Year ended March 31)(Year ended March 31)

Right axis:

Number of companies(Millions of yen)(Companies)

20,000Listed

24

24

18

30

14
24

Number ofcompanies

24

16,000Not
listed

6

7

6

6

Total

30

31

24

20

12,00024

11,09911,15818
18

Listed11,09911,158

8,976

6,247

8,000

Not
listed

3

26

24

24

4,000

Total

11,102

11,184

9,000

6,271

0

14
6,247

Company Information

8,976

Amountrecorded onbalance sheet(million yen)

Performance for the Fiscal Year Ended March 31, 2022

Number of Companies with Stock Held and Amount on Balance Sheet

Middle-Range Planningstockholdings at less than 10% of net assets at the end of
March 2022, and achieved the result of 9.1%. The Companyʼs
policy is to reduce by at least 30% by the end of March 2024
compared to the end of March 2021.
Stockholding of shares is a matter for approval by the Board of
Directors. The Group publishes the purpose for holding major
stockholdings in the securities report. The Group judges
exercising voting rights for stockholdings based on whether adecision will contribute to the improvement of shareholder
value for the Group and the alignment with the purpose of thisinvestment. The Group strives for constructive dialogue withthe company from the position of a shareholder and maintains
a policy to appropriately and strictly exercise voting rights toimprove mutual healthy corporate value and synergies.

The Group maintains a basic policy of strategically holding
shares of listed companies that it determines will contribute to
the sustainable improvement of corporate value in the Group
from a medium- to long-term perspective due to the synergies
emerging from strengthening relationships throughstockholding. Each year, the Board of Directors verifies
whether the profit and risks that correspond to holding eachindividual company stock are aligned with capital costs andmaintains a policy to comprehensively judge the logic ofholdings. The Board of Directors will consider reducing
holdings if it determines that a stockholding is not logical. Even
if stockholding is logical, the Board of Directors will consider
selling as needed after considering a myriad of factors,
including free cash flows, investment plans, etc. We set ourplan for the amount recorded on the balance sheet for policy

12

6

2019

2020

2021

2022

0

(Year ended March 31) (Year ended March 31) (Year ended March 31) (Year ended March 31)

Mandom Report 2022

51