Corporate Governance

Basic Stance

In the business area in which we operate, used car distribution centering on the auto auction business, our group's management goal is "to increase corporate value" through continuous business expansion.
Clearly, it is natural that the increase in shareholder value is the most important issue as since we are an incorporated public company, but, as illustrated and exemplified by the six core elements of our corporate vision which are "the creation of a fair market", "achieving symbiosis with our members", "providing service to consumers", "delivering returns to our shareholders," "respecting our employees," and "making a contribution to the community", our corporate value is the result of fulfilling our responsibilities to all of these interested parties (stakeholders). As such we conduct the management of our operations on the basis of the recognition that "shareholder value" is realized through "corporate value".
In addition, since every company is a member of society, it is natural that it should comply with social norms in its business activities, and so it is essential to comply with and to fully satisfy the requirements of both the Basic Policy on Corporate Governance and of the Corporate Governance Code. By conducting thorough evaluations of our operations and by formulating an improvement plan for the next fiscal year at the final regular meetings of the Board of Directors held at the end of each business year, we make every effort to ensure high performance in terms of the quality of our accountability (duty to explain and account for our activities) and of highly transparent management, and to improve our corporate governance.

Corporate Governance System

Simplified Chart of Corporate Governance
Main Items Content
Form of Organizational Design Company with Board of Auditors
Number of Directors (Female Directors) 7 persons (1 person)
External Directors (Female Directors) 3 persons (1 person)
Number of Corporate Auditors (Female Corporate Auditors) 3 persons (-)
Outside Corporate Auditors (Female Corporate Auditors) 3persons (-)
Number of Times Board Meetings Held (FY3/2021) 8 times
(Average Attendance Rate of External Directors) 100%
(Average Attendance Rate of External Corporate Auditors) 100%
Term of Office of Directors 1 year
Adoption of Executive Officer System Adopted
Voluntary Committee of Board of Directors Nomination and Compensation Committee
Audit Corporation KPMG AZSA LLC

The Board of Directors

The Board of Directors consists of seven Directors, including four Directors who are USS executive officers and three outside Directors, which is within the limit of 12 Directors specified in the Articles of Incorporation.
Director candidates and executive officers are selected from among individuals with the extensive experience, outstanding knowledge and professional expertise required by these positions. The Nomination and Compensation Committee, where a majority of the members are independent outside directors, first discusses these selections. The Board of Directors then makes the final selections while taking into consideration the conclusions of this committee.

The Board of Corporate Auditors

The Board of Corporate Auditors consists of three members (including three Outside Corporate Auditors), who attend the meetings of the Board of Directors and conduct surveys and audits of the Directors' execution of their duties and other business and asset-related considerations. Furthermore, the Board works in cooperation with the Internal Auditing Office, which conducts audits of each division and office (including at the Company's subsidiaries).
When nominating candidates for Corporate Auditor, persons with an abundance of experience, a significant degree of insight, and the high level of expertise appropriate for a Corporate Auditor of the Company are considered as candidates, with the final decision being made after obtaining the consent of the Board of Corporate Auditors.

Corporate Governance Flowchart

Corporate Governance Flowchart

Outside Directors and Corporate Auditors

The Company has appointed three Outside Directors to ensure management transparency and fairness. We consider all three Outside Directors to be Outside Executives in relation to whom there is no concern of any possibility of conflicts of interest arising with our ordinary shareholders, and have filed a report about their status as independent officers at the Financial Instruments Exchange on which the Company is listed. It is expected that, in relation to such independent directors, actions can be taken, such as stating such opinions as need to be taken into consideration at the decision phase etc. regarding execution of business by the Board of Directors etc. to safeguard the interests of our ordinary shareholders. Furthermore, the Company's three Corporate Auditors are Outside Corporate Auditors and have been reported as being independent officers because they all are possessed of a high degree of independence. These independent Corporate Auditors attend the meetings of the Board of Directors and conduct thorough investigations and audits of directors' execution of their duties and of other business operations and asset conditions.
Although there is no special provision stipulated in relation to the independence of the Company in its selecting Outside Directors and Outside Corporate Auditors, the Company is expected to maintain an objective and appropriate oversight or audit function and role, and one that is based on a wide range of experiences and professional insights, and so they have been appointed in accordance with the basic idea that there is no risk of any conflicts of interest arising with our ordinary shareholders.
Outside Directors and Outside Corporate Auditors regularly hold meetings to exchange information, share views among themselves, and work together. Furthermore, the Outside Corporate Auditors, the Internal Audit Department and the Accounting Auditors also exchange views and work together in a similar manner.

Reasons for Appointment of Officers and Status of Activities

Category Name Reason for Appointment Status of Activities in
the FY3/2021
Chairman and Representative Director, Chief Executive Officer Yukihiro Ando Following his election as a Director in July 1982, Mr. Yukihiro Ando was involved as a senior executive in the opening of new auto auction sites and the development of auto auction systems and was the Manager of the Nagoya Office. He became President and Representative Director in June 2006 and was named Chairman, Representative Director and Chief Executive Officer in June 2019. In this position, Mr. Ando has used strong leadership and decision-making backed by many years of experience and accomplishments to oversee large capital expenditures and M&A deals in order to achieve consistent medium to long-term growth of earnings and corporate value. Meetings of the Board of Directors
8 out of 8 (100% attendance rate)

Nomination and Compensation Committee
3 out of 3 (100% attendance rate)
President and Representative Director, Chief Operating Officer Dai Seta Mr. Dai Seta has outstanding knowledge and accomplishments concerning the operation of auction sites and was the Manager of the Auction Operations Department. He has also served as the president of consolidated subsidiaries, ARBIZ Co., Ltd. that operates a recycling business, and USS Support Service Co., Ltd. that operates a finance business.To utilize Mr. Seta's outstanding management skills, he was named President, Representative Director and Chief Operating Officer in June 2019. Since then, he has performed the roles of decision-making and supervising business operations very well. Meetings of the Board of Directors
8 out of 8 (100% attendance rate)

Nomination and Compensation Committee
3 out of 3 (100% attendance rate)
Executive Vice President Masafumi Yamanaka Mr. Masafumi Yamanaka has expertise in the fields of accounting and finance and acquired outstanding management skills as Manager of the Finance Department and was elected a Director in June 2004 to utilize these skills. Mr. Yamanaka is currently Executive Vice President and Manager of the Supervisory Office. He supervises all administrative operations and uses his thorough knowledge of USS business operations for management activities. In June 2020, Mr. Yamanaka was named president of Reproworld Co., Ltd., which buys and sells accident-damaged vehicles. Meetings of the Board of Directors
8 out of 8 (100% attendance rate)
Junior Managing Director Hiromitsu Ikeda Mr. Hiromitsu Ikeda has experience with the opening of new auction sites and the development of auction systems. He has considerable knowledge and accomplishments involving these systems and he acquired outstanding management skills at the Nagoya Office. He was elected a director in June 2004 to utilize these skills. As a Director, Mr. Ikeda was Manager of the Systems Office, Manager of the Tohoku Auction Site, Manager of the Osaka and Kobe Auction Sites, Manager of the Shikoku Auction Site, and Junior Managing Director of HAA Kobe which is a consolidated subsidiary. He is currently Manager of Nagoya and R-Nagoya Auction Site. In these roles, he oversees auto auction sites and uses his thorough knowledge of USS business operations for management activities. Meetings of the Board of Directors 8 out of 8 (100% attendance rate)
Director Hitoshi Tamura In his role as a Corporate Councilor of Ricoh, Mr. Hitoshi Tamura was involved with measures to increase the quality of Ricoh's management, the formulation of sales strategies and other activities. He has served for many years as a primary judge for the Japan Management Quality Awards. Overall, he has considerable experience and knowledge concerning the improvement of management. Since taking office as an Outside Director in June 2014, the Company has made use of Mr. Tamura's knowledge to provide advice about various aspects of its overall management and to contribute to the improvement of its corporate value. Meetings of the Board of Directors
8 out of 8 (100% attendance rate)

Nomination and Compensation Committee
3 out of 3 (100% attendance rate)
Director Akihiko Kato Mr. Akihiko Kato has experience of working at the Bank of Japan, as a Director of the Gifu Shinkin Bank, and also of corporate management as a Managing Director. Since taking office as an Outside Director in June 2014, the Company has made use of Mr. Kato's knowledge to provide advice about various aspects of its overall management and to contribute to the improvement of its corporate value. Meetings of the Board of Directors
8 out of 8 (100% attendance rate)

Nomination and Compensation Committee
3 out of 3 (100% attendance rate)
Director Nobuko Takagi Ms. Nobuko Takagi is a Certified Public Accountant, and has experience of working at both audit corporations and tax accountant corporations, and has also taken charge of M&A promotions at M&A advisory companies and operating companies, and so has abundant experience and specialized knowledge regarding finance and accounting, and M&A. Since taking office as an Outside Director in June 2018, the Company has also made use of Ms. Takagi's knowledge for advice about various aspects relating to its overall management. Meetings of the Board of Directors
8 out of 8 (100% attendance rate)

Nomination and Compensation Committee
3 out of 3 (100% attendance rate)
Corporate Auditor Kenichi Goto Mr. Goto has expertise concerning taxes and finance and experience working in key position at a government agency. Mr. Goto contributes comments as required, from his expertise as a tax accountant,at meetings of the Board of Directors and at the meetings of the Board of Corporate Auditors. -
Corporate Auditor Keiji Miyake Mr. Miyake has many years of experience as a certified public accountant and expertise in the fields of finance and accounting. Mr. Miyake contributes comments as required, from his professional standpoint as a Certified Public Accountant, at the meetings of the Board of Directors and at the meetings of the Board of Corporate Auditors. -
Corporate Auditor Jun Ogawa As an attorney for many years, Mr. Jun Ogawa has many years of experience as an attorney and an extensive knowledge of legal matters. Mr. Ogawa contributes comments as required, from his professional standpoint as a lawyer, at the meetings of the Board of Directors and at the meetings of the Board of Corporate Auditors. -

Nomination and Compensation Committee

The Nomination and Compensation Committee, as an advisory body to the Board of Directors, discusses the suitability of the following proposals submitted to the Board of Directors and submits reports about these proposals to the Board of Directors.
During the fiscal year that ended in March 2021, the Nomination and Compensation Committee held three meetings.
(1)Nominations of Director candidates and the appointment of Executive Officers
(2)Policy on the remuneration of Directors and Executive Officers
(3)The selection and dismissal of Representative Directors and Senior Directors
(4)The discharge of Directors and Executive Officers
In addition, the Nominations and Compensation Committee makes decisions concerning the remuneration of individual directors and executive officers in accordance with the policy for decisions concerning this remuneration.

Evaluation of the Effectiveness of the Board of Directors

To evaluate the effectiveness of the Board of Directors, USS asks all directors and corporate auditors to complete questionnaires. The results of this survey are reported to the Board of Directors.

  1. Evaluation process

    Time:March 2021
    Participants:All directors and corporate auditors (including outside directors and corporate auditors)
    Method:Self-assessment using a questionnaire

    (1) All directors and corporate auditors complete a self-evaluation questionnaire

    (2) Responses to the questionnaire are compiled and analyzed by the secretariat of the Board of Directors

    (3) Results and issues are reported to the Board of Directors, which then discusses these subjects

  2. Items evaluated

    (1) Composition of the Board of Directors - Size and composition (diversity, professional knowledge)

    (2) Operation of the Board of Directors - Frequency of meetings, length of discussions of agenda items, materials provided to directors

    (3) Support for the Board of Directors - Training programs, information provided to outside directors and corporate auditors

    (4) Discussions by directors - Discussions concerning management strategies and equity policies and actions

    (5) Board of Directors risk management - Risk management, activities concerning social and environmental problems

  3. Summary of evaluation results

    The use of this evaluation process confirmed that all questionnaire items are generally appropriate and that the Board of Directors is effective. The evaluation also showed that there were activities to deal with the two issues identified by the last year's evaluation and that improvements have been made.

    (1) Increase the percentage of independent outside directors
    Following the June 2020 annual shareholders meeting, three of the eight directors (37.5%) were independent outside directors as this percentage surpassed one-third.

    (2) Opportunities for outside directors and corporate auditors and the internal audit personnel to share information and opinions
    Outside directors and corporate auditors and internal audit personnel hold meetings to provide a place for sharing information and opinions.

  4. Upcoming activities

    Based on the results of this effectiveness survey, the following actions will be used to further upgrade discussions at the Board of Directors and make the board more effective.

    (1) Discussions concerning medium to long-term business plans will be upgraded and directors will be provided with the necessary information.

    (2) Opportunities will be increased for the directors to hold discussions and receive reports concerning ESG, the SDGs, and other social and environmental issues.

Voting by shareholders

When a resolution submitted by USS at a shareholders meeting passes with an approval percentage of less than 80%, the Board of Directors follows up by examining the reasons for opposition to the proposal and the causes of the large number of opposing votes. The directors then hold discussions to consider any actions that are needed.
At the shareholders meeting held on June 15, 2021, "Item 2 Election of eight (8) directors" was approved. There was no significant opposition to the election of any director.

Executive Remuneration

Remuneration in FY3/2021
Executive Classification Total Amount of Remuneration etc. (Million yen) Breakdown (Million yen) Number of Eligible Executives (Persons)
Basic Remuneration Performance-linked remuneration Stock options
Directors (Excluding Outside Directors) 251 201 49 7
Auditors (Excluding Outside Corporate Auditors) 6 6 1
Outside Executive Officers 24 24 5
(Notes):
  1. The remuneration in this table includes the remuneration of two directors who were no longer directors following the end of the shareholders meeting held on June 23, 2020.
  2. There are no officers who are also employees.
(1)Basic policy for remuneration of directors and corporate auditors
  • The USS Group provides competitive remuneration in order to attract and retain the talented managers who can contribute to the group's sustained growth and the medium to long-term growth of corporate value.
  • Remuneration is divided in a suitable manner between fixed (basic) remuneration and variable remuneration (stock options used as remuneration linked to medium to long-term results of operations) for the purpose of using remuneration as a sound incentive for achieving sustained growth.
(2)Remuneration of directors and corporate auditors (●indicates eligibility)
Type of remuneration,etc. Category
Internal Directors
(Note.1)
Outside Directors
(Note.2)
Auditors
(Note.3)
Fixed Basic Remuneration
Variable Stock-remuneration type stock options - -
(Notes):
  1. Internal directors receive basic remuneration and stock option remuneration. Basic remuneration is a fixed monthly payment based on the roles and responsibilities of each individual's executive position. Stock option remuneration is based mainly on points granted to individuals in accordance with the number of years as a director and contributions to results of operations and other accomplishments. The stock options can be exercised only after an individual is no longer a director, corporate auditor or executive officer.
  2. Remuneration for outside directors is only basic remuneration that is a fixed monthly payment because these directors oversee management from an highly objective and independent perspective.
  3. Remuneration for corporate auditors is determined by mutual agreement of the corporate auditors. This remuneration is only basic remuneration that is a fixed monthly payment because the corporate auditors oversee management and perform audits from a highly objective and independent perspective.
(3)Level and composition of remuneration of internal directors
  • A suitable level and composition of remuneration is established based on the business environment for the USS Group and on business and personnel strategies. In addition, objective remuneration market survey data from external organizations specializing in this field (Sumitomo Mitsui Trust Bank and Deloitte Tohmatsu Consulting) is used for reference when determining the level and composition of remuneration.
  • For internal directors, the level, format and composition of remuneration are determined with the objective of further clarifying the link between remuneration and results of operations and of further increasing motivation to contribute to the medium to long-term growth of sales and earnings and corporate value. The level, format and composition of remuneration are reexamined periodically.
Type of remuneration Composition
Basic Remuneration 70%~90%
Stock-remuneration type stock options 10%~30%
(4)Process for determining remuneration for directors

To further increase the transparency and objectivity of decisions concerning remuneration for directors, these decisions are entrusted to the Nominations and Remuneration Committee by a resolution of the Board of Directors. More than half of committee members are independent outside directors. This committee makes decisions based on all applicable factors, including an individual's title, responsibilities and contribution to results of operations, and within the limit established by a resolution approved by shareholders.

(5)Policy for determining remuneration for executive officers

The policy for determining the remuneration for executive officers is based on the policy for determining the remuneration of directors. Consequently, executive officer remuneration consists of basic and stock option remuneration.

Internal Audits and Corporate Auditor Audits

As the organization responsible for the Company's Internal Audits and Corporate Auditor Audits, the Internal Audit Office (2 members) is an independent organization and strives to strengthen and enhance the quality of the discharge of its functions, including the operation and evaluation of the internal controls related to financial reporting. The Corporate Audit involves, three Corporate Auditors, including Tax Accountants, in addition to Certified Public Accountants and lawyers, attending the meetings of the Board of Directors and auditing the Directors' business execution and financial conditions. Moreover, the Corporate Auditors collaborate with the Internal Audit Office and the Accounting Auditors to further improve internal control, including on-site audits of subsidiaries.

Accounting Audits

At the 27th Ordinary General Meeting of Shareholders held on June 26, 2007, the Azusa Audit Corporation (now the Azusa Limited Liability Audit Corporation) was appointed as the Accounting Auditor and has remained so to the present. The following persons are the Certified Public Accountants who have conducted accounting audits.

Names of the Certified Public Accountants Conducted the Audits Name of the Audit Corporation
Designated Limited Liability
Partner/Engagement Partner
Kenji Suzuki KPMG AZSA LLC
Designated Limited Liability
Partner/Engagement Partner
Atsushi Ohashi KPMG AZSA LLC