The Company considers the realization of a transparent and fair corporate governance system as the most important issue in corporate management. As the fundamental framework for the corporate governance of the Company, we have formulated the "Basic Policy for Pioneer Group Corporate Governance" for the purpose of achieving sustainable growth and increased corporate value over the mid- to long-term through the realization of effective corporate governance.
Based on this basic policy, the Board of Directors enhances the effectiveness of the board itself and other bodies that comprise corporate governance of the Company, through such measures as conducting a self-evaluation of each director on the operation of the Board of Directors, enriching the information provided to outside directors, and strengthening to cooperate between outside directors and outside audit & supervisory board members. Furthermore, by continuously and periodically reviewing and revising this basic policy, Pioneer will creatively develop corporate governance.
Pioneer has adopted an Audit & Supervisory Board system of corporate governance. Under this system, the Company has established the Board of Directors as a decision-making body for matters of the highest importance, such as management policies, and as a supervisory body. The representative directors are responsible for business execution, while the Audit & Supervisory Board is responsible for auditing. In addition, Pioneer has elected several highly independent outside directors, who have no significant transactional relationships with the Pioneer Group, and has shortened the term of office of directors to one year, in order to further clarify their responsibilities and respond promptly to changes in the business environment.
The Board of Directors has elected executive officers to expedite business execution and clarify the responsibilities for each business. Under the supervision of the Board of Directors, a Group Executive Committee comprising executive officers elected by the Board of Directors has been established and charged with decision-making regarding important issues that arise in the course of business promotion. Through these initiatives, Pioneer's corporate governance is strengthened by the fact that directors focus on their decision-making and supervisory functions from a Group-wide perspective, while executive officers enhance their business execution functions. Furthermore, every year, each director conducts self-evaluation regarding the operation of the Board of Directors. Based on the results of the self-evaluations by each director, the effectiveness of the Board of Directors is considered and the operation of the Board of Directors is reviewed, further strengthening the supervisory function of the Board of Directors. The Audit & Supervisory Board, half or more of which consists of highly independent outside audit & supervisory board members, audits the directors' performance of their duties and monitors audits by the Independent Auditor. In fiscal 2017, the Board of Directors held 12 meetings, while the Audit & Supervisory Board held 18 meetings.
Established under the supervision of the Board of Directors, the Group Executive Committee is a body charged primarily with decision-making or reporting to the Board of Directors regarding important issues that emerge in the course of business promotion or pertain to overall Group management strategy. In this capacity, the committee serves to enhance both the speed and effectiveness of business execution by the directors, as well as to strengthen the decision-making and oversight functions of the board itself. In fiscal 2017, the Group Executive Committee held 20 meetings and deliberated approximately 30 issues.
To realize effective corporate governance, Pioneer has established a Nominating Committee, a Compensation Committee, and a Special Committee, each chaired by an outside director, as advisory committees designed to heighten management transparency and strengthen the oversight function of the Board of Directors. The Nominating Committee discusses matters concerning the election and dismissal of directors and executive officers, and the election of audit & supervisory board members. The Compensation Committee discusses issues related to remuneration and other benefits for directors and executive officers. The Special Committee discusses matters that have a significant impact on corporate value, including mergers and acquisitions. The respective outside directors who chair these committees report on the results of their deliberations and make related recommendations to the Board of Directors, and the Board of Directors gives full consideration to these reports and recommendations in the course of its related decision-making.
In order for the Company to remain trusted and respected by society as a good corporate citizen, the "Pioneer Group Charter for Corporate Operations" is foremost in importance among the "Rules of the Pioneer Group." These rules also include the "Pioneer Group Code of Conduct," which stipulates specific decision-making and behavioral standards for Group directors, officers, and employees in the performance of their business duties, and the "Rules of the Pioneer Group," a collection of rules outlining the scope of authority and responsibilities for each Group company, and other rules related to compliance.
To ensure appropriate disclosure of corporate information and accuracy of financial reporting, Pioneer has formulated basic rules and principles, designated responsible departments, and coordinated with external specialists, with the aim of strengthening its information management system.
Furthermore, to ensure proper responses, we have developed a system necessary for ensuring proper operations by establishing a response policy in the event of a crisis, designating the authority and responsibilities of each Group company, and setting a policy for the approval process.
Regarding internal audits, the Audit Division audits the status of the Group's entire management and operations, and confirms compliance with laws and internal regulations. The Audit Division also works with the internal audit staff at Group companies and the Audit & Supervisory Board to enhance the internal audit function with regard to internal control systems, risk management, and areas related to corporate ethics, quality control, and environmental protection.
To safeguard the effectiveness of audits performed by the audit & supervisory board members, the Audit & Supervisory Board meets regularly with the representative directors, and ensures opportunities for audit & supervisory board members to periodically receive explanations and reports from the Audit Division and the Independent Auditor.
Furthermore, the supervising and monitoring functions of outside directors and outside audit & supervisory board members over the management are strengthened by offering opportunities for regular cooperation between them, enhancing the information on business execution provided to outside directors, and holding communication meetings between outside directors and the Audit & Supervisory Board.
The Company has established a Business Ethics Committee, chaired by an outside director, to ensure legal compliance as well as thorough observance of the "Pioneer Group Charter for Corporate Operations" and the "Pioneer Group Code of Conduct." The committee met twice in fiscal 2017.
In addition, a Business Ethics Hotline has been established as an internal reporting system, to quickly detect and appropriately address behavior that is in violation of the "Pioneer Group Code of Conduct." The hotline is set up outside the Company to ensure the anonymity of persons making reports and to clarify the details of those reports. The details of reports received by the hotline are simultaneously referred to the Business Ethics Committee and audit & supervisory board members, making it possible to respond to that information resolutely and in good faith.
The Company has established an Internal Control Committee, chaired by an executive officer in charge of risk management, to identify possible risks associated with business activities and to prevent such risks from occurring. The committee met twice in fiscal 2017.
This policy has been formulated for the purpose of achieving sustainable growth and increased corporate value over the mid- to long-term through the realization of effective corporate governance in the Pioneer Group.