Corporate Governance

Our Approach to Corporate Governance

Basic Policy on Corporate Governance

1. We are committed to respecting the rights of our shareholders and creating an environment where shareholders can exercise those rights appropriately and equality of shareholders is maintained.
2. We recognize the importance of social responsibility and will work appropriately with stakeholders other than shareholders.
3. We will continue to disclose financial and non-financial information in compliance with legal requirements and actively provide additional information beyond the requirements of regulation.
4. Our Board of Directors will appropriately fulfill its roles and responsibilities for the sustainable growth of the company and the medium to long-term enhancement of corporate value, based on its fiduciary responsibility and accountability to shareholders.
5. We will disclose information regarding our management strategy and financial and performance status in a timely and appropriate manner, which will enhance our investor relations (IR) activities and earn the trust and recognition of shareholders and investors.

• Corporate Governance ReportPDF

Corporate Governance Structure

Operational Performance of Principal Committees and Congressional Bodies

Analyzing and Evaluating the Effectiveness of the Board of Directors

1. Evaluations of Board Effectiveness in the Fiscal Year Ending March 31, 2024
   • (1)Implementation process
     • (i)Subjects: all (13) Directors
     • (ii)Implementation method
       • (a) The company conducted questionnaires for all Directors on ensuring the board’s appropriate fulfilling roles and responsibilities
       • (b) Third-party external professionals conducted personal interviews with a subject based on the content of the questionnaires
       • (c) Third-party external professionals summarized results and then analyzed
       • (d) Based on the analysis results by third-party external professionals, the board secretariat formulated the draft of the analysis results and evaluations and then made reporting to the Board of Directors. The Board of Directors made discussions.
     • (iii)Overview of Questions in Questionnaires and Interviews
       • ・Composition of the Board of Directors
       • ・Roles and responsibilities of the Board of Directors
       • ・Operational status of the Board of Directors
       • ・Status of addressing issues in the last year’s evaluations
       • ・Matters to be improved, among others.
   • (2)Evaluation Results and Initiatives
     • (i)Details of initiatives
       • [Strategy formulation] Better discussions on important themes
         The Company created annual reporting schedules for important themes*, made reporting to the Board of Directors, and thereby attempted to better discussed the themes
         • *Main important themes : structural reforms in installment credit business, formulation of business models and checks of progress status in new businesses, strategy formulation and progress checks in corporate settlement, impact and as such, of rising interest rates on each division, future outlook associated with environmental changes, status of response to credit risks by international businesses, strengthening human capital, cyber security, and so on
       • [Environmental development] Enhancement of effectiveness of monitoring
         The Board of Directors strengthened governance structure of the Group on the axis of strengthening self-controls of group companies, reviewing business management structure, and strengthening involvement in risks of group companies by departments in charge of risks
       • [Supervision] Further enhancement of effectiveness of governance structure
         The Board of Directors established various basic policies (on areas such as customer-oriented, human rights, information disclosure controls and environment) and followed the PDCA cycle on the execution side
     • (ii)Evaluation results
       • The management foundation such as business portfolio operation, risk management and governance has been strengthened steadily. However, each management plan had not been achieved. The Board of Directors finds it necessary to conduct better strategy discussions and supervision, with formulation of a new medium-term management plan in mind.
2. Major Views on Board Operation in the Fiscal Year Ending March 31, 2025

   Based on matters such as the board operational status and the board effectiveness evaluations in the previous fiscal year, the Company’s Board of Directors primarily thinks about the board operation in the Fiscal Year Ending March 31, 2025 as follows. To achieve sustainable corporate growth and enhance corporate value over the medium to long term continuously, the Board of Directors is committed to appropriately fulfilling roles and responsibilities such as the board’s formulating strategies and fulfilling supervision functions.

   • Viewpoint of strategies
     • ・Formulation of a new medium-term management plan
     • ・Promotion of sustainability management
     • ・Sophistication of human resources strategy
   • Viewpoint of supervision
     • ・Penetration of new Corporate Philosophy
     • ・Sophistication of corporate governance (including group companies)
     • ・Appropriate operation of risk management and compliance
     • ・Promotion of business structural reforms

Board of Directors' Policies and Procedures for Nominating Director Candidates and Appointing Executive Management

1. Board of Directors' policies and procedures for selecting executive management, nominating director candidates (excluding directors serving as auditors), and appointing members of the Audit and Supervisory Committee.

   • (1) The Board of Directors consists of directors who possess knowledge, experience, and qualities that contribute to the functioning of the board, taking into consideration the scope, scale, and operating environment of our business.
   • (2) When nominating candidates for Directors (excluding directors serving as auditors), internal Directors must have a high level of expertise in the Company's business and excellent management judgment and execution skills. For outside directors, candidates must have abundant experience in corporate management, expertise in retail finance, economics, corporate management, legal affairs, finance and accounting, or in-depth knowledge of other issues surrounding corporate management.
   • (3) For director candidates serving as auditors, the requirements include knowledge of business, finance and accounting, governance, risk management, legal affairs, compliance, and other knowledge and experience necessary to audit business execution from a fair and objective standpoint.
   • (4) The skill set of the Board of Directors is described in a skills matrix, and efforts are made to nominate director candidates with balanced capabilities.
   • (5) Based on (2) above, the Nomination and Remuneration Committee, a majority of whose members are independent outside directors, deliberates on director candidates (excluding directors serving as auditors). After receiving consent from the Audit and Supervisory Committee, the President and Representative Director will make a proposal to the Board of Directors and the Board of Directors will determine the candidates.
   • (6) Based on (3) above, the Nomination and Remuneration Committee, a majority of whose members are independent outside directors, deliberates on director candidates for the Audit and Supervisory Committee. After receiving consent from the Audit and Supervisory Committee, the President and Director will make a proposal to the Board of Directors and the Board of Directors will determine the candidates.
   • (7) When appointing executive management, the President and Director proposes to the Board of Directors candidates who will demonstrate leadership in management and implementing business strategies, and the Board of Directors will select the candidates.
   • (8) In the event that an executive manager is associated with misconduct, violation of laws, regulations, the Articles of Incorporation, or other situations that may damage the Company's corporate value, the executive manager will be dismissed by the Board of Directors after deliberation by the Nomination and Remuneration Committee, the majority of whose members are independent outside directors.

2. Reasons for the appointment of directors and executive management:

   ※For details including the profiles of directors and executive managers, as well as the rationale behind their appointment, please refer to the following:

• Reasons for Nomination and Appointment of Executives and Directors (Japanese Only)

Directors' Skills Matrix

Policy for Determining Directors' Compensation

1. Policy regarding individual compensation of Directors (excluding directors those who are members of Audit and Advisory Committee):

   • (1) Basic Policy

     To serve as a sound incentive for enhancing operating results and corporate value over the medium to long term, compensation of Directors (excluding Non-Executive Directors and External Directors) consists of title-based fixed compensation and performance-linked compensation. The former is paid based on their roles and responsibilities. The latter fluctuates payment amounts based on factors such as corporate business results, and is composed of cash compensation and stock compensation.
     The compensation of Non-Executive Directors and External Director is composed of fixed compensation and non-performance-linked stock compensation, taking into consideration their job responsibility.

   • (2) Policy on determining individual amounts of basic compensation (monetary compensation), including its conditions and timings.

     The basic compensation of our directors is fixed based on their roles and responsibilities, and it is provided on a monthly basis during their tenure.

   • (3) Policy on determining the content and amounts or numerical calculation methods of performance-linked compensation and non-monetary compensation (including policy on determining periods or conditions for providing compensation and as such)

     The performance-linked compensation for the Company’s Directors is composed of cash compensation and stock compensation. The non-performance-linked compensation is consisted of stock compensation only. The stock compensation is a stock reward system called the “Board Benefit Trust Restricted Stock (BBT-RS).” The BBT-RS uses money contributed by the Company as funding resources, acquires the shares of the Company through the trust, and provides these shares and money that is equivalent to an amount of cash converted by a market price through the trust.
     The performance-linked compensation fluctuates based on operating results of the overall company and performance of an individual. Specifically, the compensation amount is determined by multiplying a title-based standard amount by a payment rate, which varies within the range from 0% to 150% based on evaluations of operating results of the overall company and performance of an individual. The performance-linked compensation is a title-based compensation amount. The Company uses ordinary consolidated ordinary profit and other factors as indicators concerning operating results of the overall company. The Company decides payment rates corresponding to the indicators by using factors such as plan-to-actual and year-on-year comparisons. The Company reviews these indicators appropriately by comprehensively taking into consideration management targets, stakeholder expectations and requests, economic conditions, social environment and other factors and receiving advice and recommendations from the Nomination and Remuneration Committee of which main members are Independent External Directors.
     Of performance-linked compensation, the timing of receiving cash compensation is the month immediately following the period from July to the following June each year. In principle, the timing of receiving shares as stock compensation is a certain time each year.
     In principle, the timing of receiving cash is the time when a Director retires. If a Director receives stock compensation during its term of office, the Company will execute a transfer restriction agreement before the delivery to restrict disposition by transfer and other means from retirement until a specified period determined by the Company. If there are any events such as significant violations such as breach of various related internal regulations of the Company and certain non-compliance acts during tenure, the Company may forfeit whole or part of the right to receive stock compensation by a decision of the Board of Directors.

     The Company discloses actual results such as consolidated ordinary profit for the current business year in the Annual Securities Report on the corporate website below:
     Annual Securities Reports https://www.orico.co.jp/company/
     ir/library/securitiesreport/ (in Japanese language only)

     • *A malus provision allows for reduction or cancellation of remunerations including medium- to long-term incentives “prior to payment”, among “institutionalized schemes” for directors and other officers to return remunerations.

     The actual performance of consolidated ordinary profit for the current fiscal year is disclosed in the Securities Report available at the following URL:

     • Securities Report (Japanese Only)
   • (4) Policy on determining the ratio of monetary compensation, performance-linked compensation, and non-monetary compensation to the compensation amount for individual directors:

     The ratio between fixed compensation and performance-linked compensation is determined based on the expectations of roles, ranging from 70:30 to 60:40. The ratio between cash rewards and stock rewards within the performance-linked compensation is set between 1:1 to 2:1. The determination of these ratios is periodically reviewed, taking into account stakeholder expectations and requests, economic conditions, social environment, and other factors. The Nomination and Remuneration Committee, with external directors as key members, provides advice and recommendations for the determination of these ratios.

   • (5) Matters concerning the decision on individual director compensation:

     The determination of individual compensation falls within the approved total amount of compensation at the General Meeting of Shareholders and is delegated to the President and Director based on resolutions of the Board of Directors. To ensure appropriate exercise of this authority by the President and Director, compensation decisions are made in accordance with a remuneration system formulated in advance, taking into account the advice and recommendations of the Nomination and Remuneration Committee. As for the compensation of executive management, a policy and system similar to that of directors (excluding external directors) are established, and individual compensation is determined through discussions between the President and Director and the Chairperson, following the remuneration system formulated in advance and the advice and recommendations of the Nomination and Remuneration Committee.

     Furthermore, the individual compensation of directors (including audit members) is determined within the approved total amount of remuneration at the General Meeting of Shareholders through discussions among all members of the Audit and Supervisory Committee.

Compensation of Directors and Auditors

Compensation of Directors and Auditors

Ensuring Diversity among Core Personnel in the Company

Views on Ensuring Diversity

Voluntary and Measurable Goals and Their Status

• Promotion of women's empowerment

Human Resource Development Policies and Implementation Status Towards Ensuring Diversity

• the Human Resource Management Policy

• the implementation status of specific education programs(Japanese only)

Internal Environment Development Policies and Implementation Status Towards Ensuring Diversity

• Inclusion and divrsity basic policy

Strengthening Internal Controls

• Basic Policy on Internal Control Systems

Guidelines Concerning Minority Shareholders Protection Policy in Transactions with Controlling Shareholders

Matters Related to Takeover Defense

Policy on Compliance with the Corporate Governance Code

• Corporate Governance ReportPDF

Governance Structure Details

1. Board of Directors

   The Company’s Board of Directors consists of 12 members in total, including eight Directors (excluding those who are Audit and Supervisory Committee Members) and four Directors who are the Audit and Supervisory Committee Members. The Company discloses the so-called skills matrix which lists knowledge, experience, abilities and other information of Directors while increasing the ratio of Independent External Directors to more than one-third of the Board of Directors, ensuring multi-faceted consideration and the objectivity and transparency of decision-making at the board.
   Based on the provisions of the Articles of Incorporation, the Board of Directors delegates part of decisions on important business execution (excluding matters stipulated in each item of Article 399-13, paragraph (5) of the Companies Act) to the President and Director. This makes decisions on management more prompt and enables the Board of Directors to focus on priority deliberation matters and better discuss matters such as formulating management policies and management strategies.

   (Nomination and Remuneration Committee)
   The Company’s Nomination and Remuneration Committee serves as an advisory body to the Board of Directors. The Committee consists of three members in total including one Internal Director and two Independent External Directors.

   (Conflict of Interest Management Committee)
   The Company’s Conflict of Interest Management Committee serves as an advisory body to the Board of Directors. The Committee consists of three members in total including one Internal Director and two Independent External Directors. The Committee deliberates on material transactions with each company of MHFG, the major shareholder with 40% or more of the shareholding ratio.

2. Audit and Supervisory Committee

   The Company’s Audit and Supervisory Committee consists of four Directors who are Audit and Supervisory Committee Members (including one full-time Audit and Supervisory Committee Member). The majority of three members are External Directors. The Company has established a dedicated organization (Audit and Supervisory Committee Office) for supporting audit and other activities of the Audit and Supervisory Committee. The Audit and Supervisory Committee has developed the structure where the Committee collaborates with the Internal Auditing Group and conducts appropriate audits.

   
   
3. Business Execution Structure

   The Company places emphasis on strategy formulation and supervision functions of the Board of Directors, and delegates the authority for business execution to the President and Director as much as possible. Additionally, in order for the President and Director to make appropriate decisions, the Company has established advisory bodies to the President and Director such as the "Executive Management Meeting", the "Operational Auditing Committee", the "Sustainability Committee", the "Comprehensive Risk Management Committee" and the "Compliance Committee" to build structure where the President and Director makes appropriate decisions.

   (Executive Management Meeting)
   The Executive Management Meeting is established for the purpose of preliminarily deliberating on matters to be submitted to the Board of Directors and deliberating on important matters for business execution and operational management based on basic management policies decided by the Board of Directors. The Meeting is currently chaired by the President and Director (Makoto Umemiya) and composed of members such as all Heads of Divisions and Groups.

   (Operational Auditing Committee)
   The Operational Auditing Committee is established for the purpose of enhancing internal audits by deliberating on important matters concerning internal audits. The Committee is currently chaired by the President and Director (Makoto Umemiya) and composed of four committee members in total. The Committee reports the status of internal audit activities regularly to the Board of Directors.

   (Sustainability Committee)
   The Sustainability Committee is established for the purpose of deliberating on important matters concerning sustainability. The Committee is currently chaired by the President and Director (Makoto Umemiya) and composed of 20 committee members in total. The Committee reports the status of initiatives on sustainability regularly to the Board of Directors.

   (Comprehensive Risk Management Committee)
   The Comprehensive Risk Management Committee is established for the purpose of identifying and managing various types of risks comprehensively. The Committee is currently chaired by a Managing Executive Officer (Toshifumi Murata) and composed of 18 committee members in total. The Committee reports the status of risk management regularly to the Board of Directors and the Executive Management Meeting.

   (Compliance Committee)
   The Compliance Committee is established for the purpose of penetrating compliance at the Company and subsidiaries and other relating parties and enhancing corporate value as a company that contributes to society. The Committee is currently chaired by a Managing Executive Officer (Toshifumi Murata) and composed of 18 committee members in total. The Committee reports the status of initiatives on compliance regularly to the Board of Directors and the Executive Management Meeting.

   (ALM Committee)
   The Asset and Liability Management (ALM) Committee is established for the purpose of controlling market risks and fund liquidity risks properly. The Committee is currently chaired by a Managing Executive Officer (Toshifumi Murata) and composed of six committee members in total. The Committee reports the status of committee activities regularly to the Executive Management Meeting.

   (Credit Committee)
   The Credit Committee is established for the purpose of deliberating on important matters concerning strengthening proper credit management and member merchants management. The Committee is currently chaired by a Managing Executive Officer (Daisuke Horiuchi) and composed of 10 committee members in total. The Committee reports the status of committee activities regularly to the Executive Management Meeting.

   (New Business and New Products Committee)
   The New Business and New Products Committee is established for the purpose of evaluating and examining matters such as risks related to important new businesses and new products. The Committee is currently chaired by a Managing Executive Officer (Shinya Uda) and composed of 10 committee members in total. The Committee reports the status of committee activities regularly to the Executive Management Meeting.

   (IT Strategy Committee)
   The IT Strategy Committee is established for the purpose of deliberating on important IT strategies, IT investment plans and IT investment projects. The Committee is currently chaired by a Managing Executive Officer (Shoji Yakabe) and composed of 13 committee members in total. The Committee reports the status of committee activities regularly to the Executive Management Meeting.

   (Human Rights Promotion Committee)
   The Human Rights Promotion Committee is established for the purpose of deliberating on important matters concerning human rights. The Committee is currently chaired by a Senior Managing Executive Officer (Hideyuki Matsuoka) and composed of 18 committee members in total. The Committee reports the status of committee activities regularly to the Board of Directors and the Executive Management Meeting.