Corporate Governance at ORIX
Approach to Corporate Governance
- ORIX believes that a robust corporate governance system is essential for ensuring objective management and carrying out appropriate business activities in line with its core policies. We have therefore established a sound and transparent corporate governance system.
- Corporate governance is a system for management oversight. It involves setting management objectives for managers, performance analysis and evaluation, and supervision in order to ensure that management strives to attain outstanding results. The tension inherent in corporate governance encourages management to perform to the best of its ability and facilitates innovation in pursuit of corporate objectives. Such an approach is conducive to the achievement of consistently high ROE.
- Outside Directors have a crucial role to play in corporate governance. From various perspectives reflecting their diverse professional backgrounds, Outside Directors are able to objectively evaluate management’s performance in ways that transcend the industry’s conventional wisdom and the company’s ingrained practices. Moreover, by virtue of their external perspectives, Outside Directors are in the position to objectively evaluate the risk of management not taking adequate levels of risk.
- ORIX’s corporate governance system is characterized by:
・separation of operation and oversight through a “Company with Nominating Committee, etc.” board model;
・a majority of the members of the Nomination Committee are Outside Directors and all members of the Audit and Compensation Committees are Outside Directors; The chairperson for each committee is appointed from among the Outside Directors;
・all Outside Directors satisfying strict conditions for independence; and
・all Outside Directors being highly qualified in their respective fields.
ORIX’s Vision of Corporate Governance
Evolution of Corporate Governance
- 1964：Adopted U.S. GAAP
In order to present itself in an accurate and transparent fashion to investors, ORIX has been applying U.S. GAAP in its financial reporting since its founding in 1964.
- 1970：Listed on the second section of the Osaka Securities Exchange
Six years after its founding, ORIX listed its shares on the second section of the Osaka Securities Exchange. Going public reflected the Company’s aspiration to be a responsible member of society with transparency and accountability in its governance.
- 1997：Established Advisory Board
ORIX spearheaded the strengthening of corporate governance through measures such as establishing an Advisory Board, a committee composed entirely of outside advisors who provide advice to management, in 1997 and introducing a Corporate Executive Officer System in 1998.
- 1998：Introduced Corporate Executive Officer System and listed on the New York Stock Exchange
In 1998, ORIX adopted the Corporate Executive Officer System, which separates the supervisory function (Board of Directors) and business execution (Executive Officers). In the same year, ORIX listed its shares on the New York Stock Exchange after considering the growing number of foreign shareholders and the benefit of strengthening corporate governance through the more stringent disclosure requirements of the SEC.
- 2003：Adopted the “Company with Committees” board model*
ORIX welcomed its first Outside Director in 1999 and adopted the “Company with Committees” board model* in 2003. All of the current Outside Directors meet the independence criteria prescribed by the Tokyo Stock Exchange.
- Adopted the new “Company with Nominating Committee, etc.” board model in line with the amendment of the Companies Act of Japan in 2015.
This is how ORIX has been strengthening its management oversight since its founding. The current corporate governance framework requires a high level of discipline from the managers, but we believe this is how corporate governance is supposed to be.
Compliance with the Corporate Governance Code
ORIX complies with each principle of the Corporate Governance Code.
Corporate Governance Code (June 1, 2018)
ORIX does not cross-sharehold listed shares.
Adoption of Takeover Defense Measures
ORIX has not adopted takeover defense measures as of January 1, 2020. ORIX will take into account changes in laws and its operating environment if considering a change to this position.