Business Report - Shiseido group website

[Translation: AGM 2012] 

Business Report 

(Fiscal Year from April 1, 2011 to March 31, 2012) 

1.Matters Concerning Shiseido Group 

1.1 Business Overview 

(1) Progress and Results 

1) Overview 

During the current fiscal year, the fiscal year ended March 31, 2012, factors including 

the impact of the Great East Japan Earthquake and the yen’s appreciation to historical 

highs created uncertainty about the future, resulting in subdued consumer sentiment. 

Consequently, the cosmetics market in Japan continued to contract despite signs of 

recovery apparent from October 2011. In overseas markets, while the impact of the 

financial crisis and the high unemployment rate stunted growth in Europe, the U.S. market 

was solid, and markets in China and emerging countries continued to expand. As a result, 

growth continued in all overseas regions. 

Since the fiscal year ended March 31, 2009, the Shiseido Group has been aiming to 

become a global player representing Asia with its origins in Japan. During the fiscal year 

ended March 31, 2012, under the theme of getting into a growth trajectory, Shiseido 

launched a Three-Year Plan with four growth strategies: the Global Mega-Brand Strategy, 

the Asian Breakthrough Strategy, the New Frontier Strategy and the Customer-First 

Strategy. The fiscal year ended March 31, 2012, the first fiscal year of this plan, was 

positioned as a time for organizational reform. Shiseido implemented its four growth 

strategies through initiatives such as aggressive investment in marketing expenses to 

support future growth in Japan and overseas. In addition, with the aim of reinforcing our 

management base, we moved to optimize our production system and improve our 

procurement system, establish IT infrastructure, globalize human resources, and deepen 

CSR activities. 

Devoting all of our strengths to these corporate activities during the fiscal year ended 

March 31, 2012 resulted in a number of achievements. 

Domestic sales edged down 0.8 percent amid ongoing overall market contraction caused 

by the changing market structure characterized by polarization towards high-priced and 

low-priced products since the so-called Lehman Shock, as well as the impact of the Great 

East Japan Earthquake. Overseas sales increased 5.1 percent despite the impact of the 

strong yen because of growth in Europe and the United States, together with continued 

high growth rates in Asian markets including China. As a result, consolidated net sales 

increased 1.7 percent compared with the previous fiscal year. 

Operating income decreased 12.0 percent because of aggressive marketing investments 

targeting growth in Japan and overseas, despite efforts to improve the cost of sales ratio 

and efficiently manage expenses. 

Net income increased 13.5 percent because significant extraordinary losses in the 

previous fiscal year did not recur, which compensated for the decrease in operating income 

and factors including the reversal of deferred tax assets resulting from a new corporate tax 

rate when Japan revised its tax code. 

As a result, consolidated operating profitability for the fiscal year ended March 31, 2012 

was 5.7 percent, consolidated return on equity (ROE) was 4.9 percent, and the overseas 

sales ratio was 44.3 percent. 

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Consolidated Results 

■Net Sales 

Current FY: ¥682,385 million 

Year-on-year change: 1.7% 

Sales composition: Overseas 44.3% 

Domestic 55.7% 

■Ordinary Income 


Year-on-year change: -11.3% 

Notes: 

1. “-”denotes loss or decrease. 

2. Shiseido Group subsidiaries in North America formerly recognized samples and promotional 

items associated with marketing activities at stores as assets when acquired and expensed them 

when shipped to customers. However, effective the 112th Business Term the Shiseido Group 

began to expense these items when acquired as part of its efforts to standardize Group 

accounting, and retrospectively applied this change to the consolidated financial statements for 

the 111th Business Term. 


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■Operating Income 


Year-on-year change: -12.0% 

■Operating Profitability 

Current FY: 5.7% 

Year-on-year change: -0.9 points 

■Net Income 


Year-on-year change: 13.5% 

■Consolidated ROE 

Current FY: 4.9% 

Year-on-year change: 1.0 points

2) Operational Review by Business Segment 

Domestic Cosmetics Segment 

Overall, sales in the Domestic Cosmetics segment decreased 1.3 percent compared with the 

previous fiscal year to ¥353,789 million. Operating income decreased 12.3 percent to 

¥29,459 million. Due to efforts to put the customer first in all initiatives, Domestic Cosmetics 

Division sales were only marginally lower despite a challenging market environment. 

Healthcare Division sales were essentially unchanged 

Domestic Cosmetics Division 

During the fiscal year ended March 31, 2012, we renewed efforts centered on new 

products and worked exhaustively to raise product value and refine our customeroriented 

proposals. To raise product value, we halved new product launches by carefully 

selecting products that customers would strongly support. We also focused on 

cultivating existing core products. Our customer-oriented proposals concentrated on 

customer lifestyle changes and latent needs. We proposed solutions to help customers 

lead comfortable lives, free of displeasure and dissatisfaction. Specifically, we 

supplemented our products and product lineups with information and communication 

programs to propose solutions geared to season-specific life experience in all channels. 

Examples included the “Cool Life Proposal”, aimed at helping customers stay cool and 

comfortable while saving electricity in summer, followed by the “Healing Proposal” in 

autumn, the “Warm Winter Life Proposal” in winter, and the “Refreshing Life Proposal” 

in spring. 

As a result, the core brands we have been cultivating performed well. These included 

the top-end prestige brand clé de peau BEAUTÉ; the MAQuillAGE makeup mega line, 

which we have been enhancing as a perennial bestseller by pruning the number of core 

products; the INTEGRATE self-selection makeup line, which benefited from continued 

popularity of its mascaras and eye liners; and the TSUBAKI haircare brand, for which we 

renewed both content and communication strategy. We also developed a new business 

model planned for launch in April 2012 that links the Internet with brick-and-mortar 

retail stores to create opportunities to discover new customers. 

Healthcare Division 


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In the Healthcare Division, we added to our lineup of collagen-related products as 

competition intensified in this market. Complementing the mainstay The Collagen line 

of beauty supplements for enhanced skin regeneration, we launched Bénéfique Collagen 

Royal Rich as part of the BENEFIQUE line sold exclusively in voluntary chain stores. 

Others 

Sales of the cosmetics brands Ayura, d’ici là, Ettusais and IPSA, which are not sold 

under the Shiseido name, all increased year on year. Efforts to nurture the existing core 

products of the Ettusais skincare and makeup brand sold in variety stores generated 

particularly strong growth. 

Global Business Segment 

Sales in the Global Business segment increased 5.6 percent to ¥319,678 million, and 

increased 12.2 percent on a local currency basis. Operating income decreased 9.0 percent to 

¥8,212 million. The Overseas Cosmetics Division continued to generate strong growth in 

Europe, North America and Asia, including China. The Overseas and Domestic Professional 

Divisions performed well. 

Overseas Cosmetics Division 

In the prestige market, sales of the global brand SHISEIDO increased in various 

countries. Key performers included the SHISEIDO BENEFIANCE anti-aging line and 

the SHISEIDO FUTURE SOLUTION LX premium skincare line. In addition, sales of the 

NARS makeup artist brand increased substantially, especially in North America. In 

addition, Beauté Prestige International generated solid growth in sales of its designer 

fragrances, including the Elie Saab fragrance launched in July 2011. The travel retail 

business 1 also performed well. Moreover, our online sales business in the United States 

got off to a good start. 

We achieved sustained growth of 2010 acquisition Bare Escentuals, Inc.’s mineralbased 

makeup brand bareMinerals with enhanced sales efforts in existing North 

American stores and the launch of READY, a new solid-type makeup. 

Note 1. Travel retail business: Business involving duty-free shops at airports and elsewhere. 


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In the core Chinese market, we faced intensifying competition from European, North 

American and other companies. In the department store channel, China-only brand 

AUPRES continued to perform well, supported by a renewal of its skin-brightening 

skincare line. Other highlights included continued solid performances by urara, a 

dedicated brand sold only in cosmetics specialty stores, and PURE & MILD, a brand that 

targets middle-income earners. Overall, our sales grew at a significantly higher rate than 

the market as a whole. In addition, our online sales business in China got off to a good 

start. 

In the Asian masstige market, 2 we increased sales of Za, a comprehensive skincare 

and makeup brand targeting middle-income earners. We also initiated a full-scale rollout 

of the TSUBAKI brand in China, and introduced Senka, a low-priced, highly functional 

skincare brand, in Taiwan and Hong Kong. 

In emerging countries, we continued expanding sales in Russia. We also steadily 

expanded our business into new markets with sales launches in Panama, Armenia, 

Belarus, and other initiatives. As of December 31, 2011, the global brand SHISEIDO 

was available in 87 countries and regions, including Japan. 

Note 2. Masstige: A word coined from “mass” and “prestige.” Masstige products are positioned as 

more expensive than mass-produced products, but more moderately priced than prestige 

products. 

Overseas and Domestic Professional Divisions 

THE HAIR CARE ADENOVITAL SCALP ESSENCE, a next-generation hair-growth 

treatment incorporating the active medicinal ingredient adenosine, was a major hit in 

Japan. Overseas, sales increased in the rapidly growing market of China. Three other 

Group companies also increased sales: Carita and Decléor, which sell products to 

esthetic and beauty salons, mainly in Europe; and Zotos International, which sells 

products to hair and beauty salons, mainly in North America. 

Others 

Sales in other businesses decreased 7.7 percent compared with the previous fiscal year to 

¥8,917 million. Operating income decreased 24.9 percent to ¥1,381 million. 


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Sales in the Frontier Science Division decreased compared with the previous fiscal year 

due to the discontinuation of sales of certain medical-use pharmaceuticals that were not 

very profitable. However, sales were solid in Japan for bio-hyaluronic acid, a raw material 

for cosmetics and pharmaceuticals, and sales of Navision, a line of cosmetics created from 

beauty therapy research for medical institutions, also increased. In addition, a newly 

launched extension of the 2e line of hypoallergenic cosmetics for medical institutions, 2e 

Baby Plus for infants and children, was well received. 

3) CSR Activities 

The Shiseido Group sees CSR as all corporate activities that put its corporate philosophy 

(Our Mission, Values and Way) into action. Aiming to realize a sustainable society through 

dialogue and cooperation with stakeholders, 3 we promote management that contributes to 

people's beauty and health by developing activities that address social issues and meet 

expectations. 

In the fiscal year ended March 31, 2012, we employed CSR Actions to identify issues 

through an internal survey. Based on the issues clarified through this process, the CSR 

Committee reviewed the Great East Japan Earthquake, revised the business continuation 

plan, and set policies for disclosing CSR-related information. Environmental activities 

included using sugar cane-based polyethylene for SUPER MiLD product containers under 

the Shiseido Earth Care Project, an environmental initiative involving all Shiseido Group 

employees throughout the world. This was the first time Shiseido has used this type of 

plastic in Japan for cosmetics and household products. In addition, employee volunteers 

initiated camellia tree-planting and forest conservation activities in the Goto Islands in 

Nagasaki Prefecture, where the camellia oil used in TSUBAKI is produced. Overseas, 

Shiseido continued to implement environmental activities, including the operation of wind 

power facilities at Zotos International, Inc.’s Geneva Plant in the United States and ongoing 

tree-planting activities in Lanzhou, Gansu Province, China. 

SUPER MiLD containers that use 

sugar cane-based polyethylene 

Note 3. Stakeholder: This term refers to everyone with an interest in a company. The Shiseido 

Group categorizes stakeholders into five groups: consumers, business partners, shareholders, 

employees, and society and the Earth 


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Camellia tree afforestation and preservation 

activities in the Goto Islands, Nagasaki Prefecture

Moreover, the Shiseido Group provided various types of support for areas stricken by the 

Great East Japan Earthquake. Immediately following the earthquake, we provided 

emergency support that included donating money and providing shampoo that does not 

require water. Subsequently, we supported evacuees who had to spend extended periods in 

shelters in ways such as providing cosmetics sets and beauty support activities such as 

hand massages and makeup sessions conducted by employee volunteers. In addition, 

ongoing unique information support activities tailored to the needs of stricken areas 

included publishing beauty information in local newspapers and providing content to 

community FM stations. In December 2011, we also brightened the New Year for people 

living in temporary housing by providing cosmetics sets containing items such as shampoo, 

conditioner, facial cleanser and lotion. 

Organizations that survey environmental, corporate ethics and other CSR issues 

enthusiastically praised Shiseido for this broad range of activities. 

(2) Capital Expenditures 

Investment 

(Millions of yen) 

Purpose of Investment 

Property, plant and equipment 21,620 Renovation and renewal of production facilities, 

upgrades at overseas stores, Shiseido-Ginza Future 

Planning Project (including reconstruction of 

buildings in Ginza) 

Intangible assets 8,181 Development of systems for the new business model, 

introduction of a new human resource system 

Long-term prepaid expenses 4,499 Installations of sales counters and fixtures 

Total 34,301 

(3) Financing 

Shiseido did not procure significant funding during the fiscal year ended March 31, 2012. 

(4) Summary of Consolidated Income and Assets of the Shiseido Group 

(Millions of yen, unless otherwise noted) 

109th Business 

Term 

(4/1/2008 - 

3/31/2009) 


Term 

(4/1/2009 - 

3/31/2010) 


Term 

(4/1/2010 - 

3/31/2011) 


Term 

(Current term) 

(4/1/2011 - 

3/31/2012) 

Net Sales 690,256 644,201 670,701 682,385 

Operating Income 49,914 50,350 44,458 39,135 

Operating Income to Net Sales 

(%) 

7.2 7.8 

6.6 5.7 

Ordinary Income 52,061 51,485 44,480 39,442 

Net Income 19,373 33,671 12,790 14,515 

Net Income per Share (Yen) 48.04 84.62 32.15 36.47 

Return on Equity (%) 5.4 9.8 3.9 4.9 

Comprehensive Income ― ― -18,260 5,456 

Total Assets 606,568 775,445 739,120 720,707 

Net Assets 351,951 365,207 320,127 303,715 

Net Assets per Share (Yen) 839.89 875.72 772.14 729.89 

Equity Ratio (%) 55.6 44.9 41.6 40.3 

Price/Earnings Ratio (Times) 29.9 24.0 44.8 39.2 


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Cash Flows from Operating 

Activities 

Cash Flows from Investing 

Activities 

Cash Flows from Financing 

Activities 

Cash and Cash Equivalents at 

End of Year 



Term 

(4/1/2008 - 

3/31/2009) 

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Term 

(4/1/2009 - 

3/31/2010) 


Term 

(4/1/2010 - 

3/31/2011) 


Term 


(4/1/2011 - 

3/31/2012) 

42,767 69,431 67,586 52,599 

-28,157 -204,884 -30,303 -20,668 

-32,283 120,359 -39,571 -35,482 

91,857 77,157 88,592 82,974 

Notes: 

1. “-” denotes loss or decrease. 

2. The increase in total assets as of the end of the 110th Business Term resulted from the acquisition of 

Bare Escentuals. 

3. The decrease in net income for the 111th Business Term reflected factors including the impact of 

changes in estimates for the recognition of samples and promotional items as assets, write-down of 

investments in securities, and extraordinary losses including loss on disaster associated with the Great 

East Japan Earthquake. 

4. Effective from the 111th Business Term, Shiseido began calculating comprehensive income in 

accordance with the application of Accounting Standard for Presentation of Comprehensive Income 

(Accounting Standards Board of Japan (ASBJ) Statement No. 25). 

5. Shiseido Group subsidiaries in North America formerly recognized samples and promotional items 

associated with marketing activities at stores as assets when acquired and expensed them when shipped 

to customers. However, effective the 112th Business Term the Shiseido Group began to expense these 

items when acquired as part of its efforts to standardize operations globally, and retrospectively 

applied the Accounting Standard for Accounting Changes and Error Corrections (ASBJ Statement No. 

24) to the consolidated financial statements for the 111th Business Term. 

6. Summary of Non-Consolidated Income and Assets 


Term 

(4/1/2008 - 

3/31/2009) 


Term 

(4/1/2009 - 

3/31/2010) 


Term 

(4/1/2010 - 

3/31/2011) 



Term 


(4/1/2011 - 

3/31/2012) 

Net Sales 264,511 244,470 236,742 224,897 

Operating Income 8,583 14,874 15,243 -2,320 

Ordinary Income 26,564 23,515 26,264 11,046 

Net Income 16,294 21,012 12,692 8,476 

Total Assets 481,137 612,417 596,091 595,417 

Net Assets 343,724 339,108 331,395 320,540 

(5) Income Distribution 


Term 

(4/1/2008 - 

3/31/2009) 


Term 

(4/1/2009 - 

3/31/2010) 

(Millions of yen, unless otherwise noted) 


Term 

(4/1/2010 - 

3/31/2011) 


Term 


(4/1/2011 - 

3/31/2012) 

Annual cash dividends per share (Yen) 50 50 50 50 (P) 

Annual dividends 20,148 19,881 19,895 19,899 (P) 

Share buybacks 4,488 6,752 ― ― 

Consolidated payout ratio (%) 104.1 59.1 155.5 137.1 (P)

Notes: 

1. Annual cash dividends per share and annual dividends are predicated on the approval of the First 

Item of Business, Dividends of Retained Earnings, at the ordinary general meeting of shareholders 

to be held on June 26, 2012. These figures were used to calculate the consolidated payout ratio. 

2. Share buybacks are the total value of treasury stock purchased by resolution of the Board of 

Directors based on Article 155-3 of the Companies Act of Japan. 

(6) Issues to Address 

1. Three-Year Plan 

The Shiseido Group is pursuing targets of net sales in excess of ¥1 trillion (over 50 

percent overseas sales), an operating margin of 12 percent or higher, and consolidated ROE 

of 15 percent or higher by the fiscal year ending March 31, 2018. By achieving these targets, 

the Group seeks to become a “global player representing Asia with its origins in Japan.” 

Under the Three-Year Plan we started in the fiscal year ended March 31, 2012, we are 

pursuing three visions: “Rebirth as a 100% Customer-Oriented Company,” “Brighten Our 

Brand, a Valuable Management Resource,” and “Fill the Shiseido Organization with People 

with Their Own Appeal.” These visions are designed to guide the Group along its desired 

medium-to-long-term path based on our newly formulated corporate philosophy, “Our 

Mission, Values and Way.” 4 To realize these visions and achieve our aspirations, we are 

pursuing four growth strategies: the Global Mega-Brand Strategy, the Asian Breakthrough 

Strategy, the New Frontier Strategy, and the Customer-First Strategy. 

Our targets in implementing these four growth strategies are compound annual growth in 

net sales of 6 percent or higher over three years and consolidated operating profitability of 

10 percent by the fiscal year ending March 31, 2014. However, changes in the economic 

environment since we formulated the Three-Year Plan will challenge our ability to meet our 

goal for consolidated operating profitability within three years, so at this point we expect to 

achieve operating profitability of 8 percent. 

We will continue to implement our four growth strategies during the fiscal year ending 

March 31, 2013, the second year of the Three-Year Plan. We have designated this as a year to 

experience growth. 

Road Map through the Fiscal Year Ending March 31, 2018 

Note 4. Our Mission, Values and Way: the new corporate philosophy that the Shiseido Group 

formulated in the fiscal year ended March 31, 2012. Our Mission defines the Group’s 

universal raison d'être, or how the Group can be of use to society. Our Values define the 

approach that must be held and shared by all employees of the Shiseido Group. Our Way sets 

out the action standards for complying with the laws and regulations of each country and 

region and internal rules, as well as for conducting business with the highest ethical standards. 


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Overview of the Three-Year Plan 

Vision 

Global 

Mega-Brand 

Strategy 

Asian 

Breakthrough 

Strategy 

New 

Frontier 

Strategy 

Customer- 

First 

Strategy 

Reinforcement 

of management 

base 

Rebirth as a 100% Customer- 

Oriented Company 

Global Mega-Brand Strategy 

Shiseido aims to become a “Global Multiple-Brand Company” possessing multiple 

brands that achieve sales of between ¥50 billion and ¥100 billion and are competitive with 

other major brands. Up until now, we have enhanced the unique value and increased the 

presence of globally developed brands originating in Japan, Europe and North America. 

Under the Three-Year Plan, by looking at markets that transcend regional boundaries we 

have selected six brands that we will focus on developing as global mega-brands: the three 

prestige brands clé de peau BEAUTÉ, bareMinerals and global brand SHISEIDO, and the 

three masstige brands Za, Senka, and TSUBAKI. 

Asian Breakthrough Strategy 

Shiseido aims to expand its overall share in Asian markets, which are expected to 

become the world’s largest in the near future, by designating Asia as its most important 

area. To this end, we will proactively engage in efforts to achieve growth and share 

expansion in China, which is the largest growth market, while also strengthening 

initiatives in East Asian countries and ASEAN nations. Additionally, in Japan we will seek 

to create value and enhance the activities of our salespeople and beauty consultants, 

placing top priority on growth recovery. 

New Frontier Strategy 

In order to swiftly address the changing consumer and distribution environments, we 

will introduce a new business model aimed at creating contact points with customers. In 

addition, we will step up online sales efforts in North America and China. We will also 

accelerate growth by stepping up expansion into rapidly growing areas, primarily 

emerging countries. 


Recovery of growth 

potential 

Optimization of production 

system 

Improvement of procurement 

system 

Brighten Our Brand, A Valuable 

Management Resource 

Japan China Asian Countries Americas 

sustained growth 

In the markets, 

which serve as 

a growth engine 

Establishment of 

IT infrastructure 

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Increasing 

Opportunities to 

discover customers 

in the expanding 

middle-income group 

Increase opportunities to discover customers 

Full-scale promotion of the masstige market 

Become a leading company representing Asia 

Expanding market share in Asia 

Enhancement of business foundations for growth 

Promote the priority activities in each country 

Expand opportunities to discover customers through new sales channels 

Full-scale entry to direct marketing 

Return to our origin as a manufacturer 

Refining product development 

Globalization of 

human resources 

Fill the Shiseido Organization with 

People with Their Own Appeal 

Refining the prestige image 

Upgrade Shiseido Group brand value 

Improvement of brand value in the prestige market 

Realize completely customer-oriented business 

Refining of sales activities 

Europe 

Develop the growth engine for the next generation 

Enhancement of initiatives in emerging countries 

Deepening of CSR Activities

Customer-First Strategy 

This strategy forms the cornerstone of the Three-Year Plan, because it involves all 

corporate activities. The term “customer first” has two meanings. One means 

implementing activities that put customers first in all initiatives, and the other means 

becoming No. 1 in terms of customer support worldwide through ongoing refinements in 

the quality of response to customers. We will build a framework conducive to sharing 

information – such as past successes of various work places and customer opinions – 

laterally, across segment and geographical lines. In the process, we will accelerate 

improvements in product development and responsiveness at sales counters. 

2. Initiatives for the Fiscal Year Ending March 31, 2013 

Domestic Cosmetics Business 

New Business Model 

In Japan, we will introduce a new business model designed to generate synergies 

between the Internet and brick-and-mortar retail stores. In April 2012, we launched 

Beauty & Co., a collaborative website for companies involved in beauty and health, as 

well as watashi+ (pronounced “watashi plus”), a next-generation beauty solution service 

linking stores with the Internet. 

The Beauty & Co. website introduces new customers to participating companies and 

promotes collaboration between companies in different industries, with the aim of 

adding value and delivering new products and services to customers. The watashi+ 

website will use services such as online counseling, brick-and-mortar retail store 

introduction and search, and web-based makeup simulations to provide optimal beautyrelated 

solutions for individual customers, drawing on broadly based content devoted to 

beauty. It will also incorporate an online sales service. 

The Beauty & Co. home page 


Overview of the New Business Model 

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The watashi+ home page

Innovation of Product Development and Sales and Responsiveness to Customers 

Aiming to make our products perennial bestsellers, we will continue to improve 

product value and refine our customer-oriented proposals by promoting season-specific 

proposals and focusing on strengthening cultivation of core products. We will also 

increase growth by concentrating investments on specific brands, including the global 

mega-brands clé de peau BEAUTÉ, global brand SHISEIDO, Senka and TSUBAKI. 

In addition, we will implement reforms in all corporate activities aimed at generating 

added value for customers, from R&D and production to marketing, advertising, sales, 

and sales counter responses. We will create new value built on proven technological 

capabilities, while stepping up and improving how we communicate information and 

respond at sales counters so that customers can easily understand the value we are 

offering. 

Global Business 

Prestige Market 

We will attract new customers to the global brand SHISEIDO by concentrating on 

the core SHISEIDO BIO-PERFORMANCE (BOP) skincare line, especially Corrective 

Serum, while leveraging the SHISEIDO FUTURE SOLUTION LX premium skincare line 

to raise the brand’s prestige image. We will also target further growth overseas for clé de 

peau BEAUTÉ by further refining brand value, expanding our presence in North 

America, and increasing the number of stores handling our products in China. We will 

maximize synergies with bareMinerals by fully deploying Shiseido’s technological and 

sales capabilities. In addition, we will strengthen its makeup lines centered on North 

America, reinforce communications, and expand categories to include skincare 

incorporating Shiseido technologies. We will also target bareMinerals growth in Europe, 

as well as in Japan and Hong Kong, where we are already deploying our sales 

capabilities. At the same time, we will actively enter emerging markets such as Brazil. 

Masstige Market 

For Senka, we will leverage the expertise we have gained in Japan and Taiwan with 

the aim of increasing the number of countries where it is available. TSUBAKI production 

has started in China and we are stepping up our rollout of this brand. For Za, we are 

targeting further sales growth by renewing advertising and counter designs to showcase 

the brand’s concept. 

Designer Fragrances and Makeup Artist Brand 

We will broaden our profile in the fragrance market by continuing to foster the 

ISSEY MIYAKE line of designer fragrances made by Beauté Prestige International, while 

increasing the number of countries where the narciso rodriguez line is available. In 

addition, we are targeting further sales growth for the NARS makeup artist brand through 

approaches such as making it available in more countries. 

China 

We intend to place top priority on allocating resources to China to grow sales faster 

than the market despite intensifying competition. In the department store channel, we 

will introduce a premium line under the AUPRES brand in top-selling stores in order to 

raise the brand’s overall premium image. At the same time, we will foster the global 

brand SHISEIDO by strengthening the capabilities of our beauty consultants. In the 

cosmetics specialty store channel, we will continue reinforcing the urara and PURE & 

MILD brands while deepening relationships between stores and customers in order to 

maintain steady growth. 

We will also reinforce our market advantage by harnessing the comprehensive 

strengths of the Shiseido Group, including professional and healthcare brands and 

products. 


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Emerging Countries 

We will strengthen business in emerging countries, which are the next-generation 

growth engines after China, with a focus on Russia, Brazil, and India. 

In Russia, we will steadily cultivate the global brand SHISEIDO by leveraging the 

business foundation we have created in energetically building relationships with new 

customer stores. At the same time, we will step up promotion of the TSUBAKI brand, 

which we introduced in Russia during the fiscal year ended March 31, 2012. In Brazil, 

we will launch the bareMinerals and NARS brands to start a full-scale multiple-brand 

rollout, with the aim of transforming Brazil into a core market. In India, where we have 

opened a representative office, we are considering business plans under a project system. 

Strengthening Our Business Foundation to Achieve Sustained Growth 

Enhancing Production and Procurement Systems 

For production, on a global level we will work to optimize our supply chain, achieve 

low-cost operations and exhaustively lower procurement costs. 

Establishing IT Infrastructure 

Our SAP core business processing system is already operational in Japan, Europe, 

China, and elsewhere. We will standardize business processes and raise the speed of 

decision-making by extending this system into other regions, thus enabling visualization 

of overall business indicators. 

Globalizing Human Resources 

In Japan, we will continue fostering global human resources who can accommodate 

different cultures and have a good understanding of global business. At the same time, 

we will nurture personnel on a region-specific basis. Targeting executives, we will also 

expedite efforts to foster and use human resources on a global basis. 

Deepening CSR Activities 

We will study issues and countermeasures to minimize risks associated with our 

business activities and maximize corporate value. We will emphasize the most important 

internationally recognized issues such as human rights and the environment. Seeking to 

approach our overall business activities from a CSR-based perspective, we will continue 

promoting our CSR Actions in order to identify risks throughout the Shiseido Group. 

This initiative will cover the entire supply chain, including both Group companies and 

business partners. 

Environmental initiatives will remain central to Shiseido Group management. We 

will continue strengthening and conducting our environmental activities with a focus on 

environmental responsiveness throughout the product life cycle and reducing CO2 

emissions worldwide. Specifically, we will promote use of environmentally friendly 

materials in our products and raise environmental responsiveness to a level where we 

can offer it as a new value. In addition, we will work to reduce CO2 emissions through 

initiatives such as introducing environmentally friendly equipment and pursuing energysaving 

activities in factories and offices, both in Japan and overseas. 

Initiatives to Eliminate Animal Testing 

Aiming to eliminate animal testing in the development of cosmetics, Shiseido 

convened the Roundtable Discussion on Eliminating Animal Testing of Cosmetics 

Ingredients. We listened to the opinions of various parties including animal welfare 

groups, consumer groups, experts in alternatives to animal testing and safe research, 

mass media, and experts in CSR, and, as announced, ended in-house animal testing as of 

March 31, 2011. 

Shiseido intends to eliminate all animal testing in cosmetics development from April 

2013, and is making continued progress in establishing a new safety assurance system 

that combines the use of information, human testing and alternatives to animal testing. 

We will also accelerate development of alternative testing methods and activities to 


- 19 -

publicize them, while continuing to promote official recognition 5 and to lobby 

government agencies in various countries. 

Concurrently, we will create a framework for providing value-driven products 

without the use of animal testing by incorporating potential customer needs in R&D 

through the development of synergies from combinations of existing medicinal agents 

and value proposals that combine three elements: the functional value of medicinal 

effectiveness, the value of brand narrative and other information, and user experience. 


*** 

In 2012, Shiseido is celebrating its establishment in Ginza, Tokyo 140 years ago in 1872. Shiseido 

is grateful to its shareholders and other stakeholders for their sustained support for its business 

activities, and we will be counting on the continued support of our valued shareholders for our 

future initiatives. 

Note 5. Official recognition: Approval of alternatives to animal testing as formal testing methods in national 

and regional legal frameworks. 

- 20 -

1.2 Outline of the Shiseido Group (As of March 31, 2012) 

(1) Principal Businesses of the Shiseido Group 

Segment Main Business 

Domestic Cosmetics Division (production and sale of cosmetics, cosmetic 

Domestic 

accessories and toiletries) 

Cosmetics 

Healthcare Division (production and sale of health & beauty foods, and 

Business 

over-the-counter drugs), etc. 

Overseas Cosmetics Division (production and sale of cosmetics, cosmetic 

accessories and toiletries), 

Global Business 

Overseas and Domestic Professional Divisions (production and sale of 

beauty salon products, etc.) 

Frontier Science Division (production and sale of cosmetics ingredients, 

Others 

medical-use pharmaceuticals, and beauty therapy cosmetics, etc.) 

Operation of restaurants, etc. 

(2) Major Business Hubs 

Registered Head Office: 5-5, Ginza 7-chome, Chuo-ku, Tokyo 

Principal Business Office(Shiodome Office): 6-2, Higashi-Shimbashi 1-chome, 

Minato-ku, Tokyo 

Factories 


Name Location 

Kamakura Factory Kamakura-shi, Kanagawa Pref. 

Kakegawa Factory Kakegawa-shi, Shizuoka Pref. 

Osaka Factory Higashi-Yodogawa-ku, Osaka-shi, Osaka Pref. 

Kuki Factory Kuki-shi, Saitama Pref. 

Laboratories 

Name Location 

Research Center 

(Shin-Yokohama) 

Tsuzuki-ku, Yokohama-shi, Kanagawa Pref. 

Research Center 

(Kanazawa-Hakkei) 

Kanazawa-ku, Yokohama-shi, Kanagawa Pref. 

- 21 -

(3) Major Subsidiaries and Affiliated Companies of the Shiseido Group 

Ownership 

Company Name Location Paid-in Capital 

Percentage 

of Voting 

Rights 

Principal Business 

Shiseido Sales Co., Ltd. 

Minato-ku, 

Tokyo 

(million JPY) 

100 

% 

100.0 

Sale of cosmetics, etc. 

Shiseido FITIT Co., Ltd. 

Chuo-ku, 

Tokyo 

(million JPY) 

10 

100.0 Sale of cosmetics, etc. 

Shiseido International Inc. 

Chuo-ku, 

Tokyo 

(million JPY) 

30 


The Ginza Co., Ltd. 

Chuo-ku, 

Tokyo 

(million JPY) 

100 


FT Shiseido Co., Ltd. 

Chuo-ku, 

Tokyo 

(million JPY) 

100 

100.0 Sale of toiletries 

Shiseido Professional Co., Ltd. 

Chuo-ku, 

Tokyo 

(million JPY) 

250 

100.0 

Sale of beauty salon 

products, etc. 

Shiseido Beauty Salon Co., Ltd. 

Chuo-ku, 

Tokyo 

(million JPY) 

100 

100.0 Operation of beauty salons 

Shiseido Pharmaceutical Co., 

Ltd. 

Chuo-ku, 

Tokyo 

(million JPY) 

100 

100.0 

Sale of over-the-counter 

drugs, etc. 

Shiseido Americas Corporation 

Delaware, 

U.S.A. 

(thousand 

USD) 

403,070 

100.0 

Holding company and sale 

of cosmetics, etc. in U.S.A. 

Shiseido America, Inc. 

New York, 

U.S.A. 

(thousand 

USD) 

28,000 

― 

(100.0) 

Production of cosmetics, etc. 

Blush Holdings LLC 

Delaware, 

U.S.A. 

(USD) 

100 

― 

(100.0) 

Holding company of Bare 

Escentuals, Inc. 

Bare Escentuals, Inc. 

Delaware, 

U.S.A. 

(USD) 

0.01 

― 

(100.0) 

Holding company of Bare 

Escentuals Group 

Bare Escentuals, Beauty Inc. 

Delaware, 

U.S.A. 

(USD) 

1.00 

― 

(100.0) 

Sales of cosmetics, etc. 

Zotos International, Inc. 

Connecticut, 

U.S.A. 

(thousand 

USD) 

25,000 

― 

(100.0) 

Holding company of Zotos 

Group and production and 

sale of beauty salon 

products, etc. 

Shiseido International Europe 

S.A. 

Paris, 

France 

(thousand 

EUR ) 

256,133 

100.0 Holding company in Europe 

Shiseido International France 

S.A.S. 

Paris, 

France 

(thousand 

EUR) 

36,295 

― 

(100.0) 


Shiseido Deutschland GmbH 

Dusseldorf, 

Germany 

(thousand 

EUR) 

5,200 

― 

(100.0) 


Shiseido Cosmetici (Italia) 

S.p.A. 

Milan, 

Italy 

(thousand 

EUR) 

2,400 

― 

(100.0) 


Shiseido Europe, S.A.S. 

Paris, 

France 

(thousand 

EUR) 

9,000 

― 

(100.0) 


Beauté Prestige International 

S.A. 

Paris, 

France 

(thousand 

EUR) 

17,760 

― 

(100.0) 

Holding company of 

Beauté Prestige 

International Group and sale 

of designer perfumes, etc. 


- 22 -

Laboratoires Decléor S.A.S. 


Paris, 

France 

- 23 - 

(thousand 

EUR) 

19,374 

Company Name Location Paid-in Capital 

Shiseido China Co., Ltd. 

Shanghai Zotos Citic Cosmetics 

Co., Ltd. 

Shiseido Liyuan Cosmetics Co., 

Ltd. 

Shiseido Hong Kong Cosmetics 

Ltd. 

Taiwan Shiseido Co., Ltd. 

Shanghai, 

China 

Shanghai, 

China 

Beijing, 

China 

Hong 

Kong, 

China 

Taipei, 

Taiwan 

(thousand 

RMB ) 

565,093 

(thousand 

RMB) 

418,271 

(thousand 

RMB) 

94,300 

(thousand 

HKD) 

123,000 

(thousand 

TWD ) 

1,154,588 

(million JPY) 

100 

(million JPY) 

― 

(100.0) 

Ownership 

Percentage 

of Voting 

Rights 

100.0 

20.0 

(92.6) 

32.0 

(65.0) 

Holding company of 

Decléor Group and 

production and sale of 

esthetic and spa products, 

etc. 

Principal Business 

Holding company and sale 

of cosmetics, etc. in China 


Production and sale of 

cosmetics, etc. 


51.0 

Holding company and 

production and sale of 

cosmetics, etc. in Taiwan 

Shiseido Parlour Co., Ltd. 

Chuo-ku, 

Tokyo 

99.3 Operation of restaurants, etc. 

Selan Anonymous Association 

Chiyoda-ku, 

Tokyo 

11,600 

― 

[100.0] 

Management of real estate, 

etc. 

Note: Figures in parentheses ( ) in the Ownership percentage of Voting Rights column include 

the share of indirect ownership. Those in brackets [ ] indicate share of related or 

approved parties. 

(4) Matters Concerning Employees of the Group 

Business Category Number of Employees 

Comparison with 

the Previous Fiscal Year 

Domestic Cosmetics Business 12,242 [8,236] +327 [-1,052] 

Overseas Business 19,888 [5,054] +1,056 [+1,759] 

Others 465 [382] -98 [-12] 

Total 32,595 [13,672] +1,285 [+695] 

Note: The numbers of employees shown are full-time employees. Annual average number 

of temporary employees are shown in [ ]. Temporary employees are part-time 

workers and non-regular staffs, and dispatched employees are excluded. 

(5) Main Supplies of Loans to the Group 

Lenders Outstanding Balance 

Mizuho Bank, Ltd. 48,037 million JPY 

Mizuho Corporate Bank, Ltd. 

32,000 

1,300 

600 

thousand USD 

thousand AUD 

million KRW

2. Matters Concerning Shares Issued by the Company (As of March 31, 2012) 

(1) Total Number of Shares Authorized to Be Issued: 

1,200,000,000 shares 

(2) Number of Shares Issued and Outstanding: 

400,000,000 shares (including 2,002,324 treasury stock) 

(3) Number of Shareholders 

72,244 

(4) Principal Shareholders 

Investment in the Company 

Shareholders Number of Shares Percentage of 

Held 

Shareholding 

The Master Trust Bank of Japan, Ltd. (Trust 

(thousand shares) 

% 

Account) 

28,832 

7.24 

Mizuho Bank, Ltd. 23,526 5.91 

Japan Trustee Services Bank, Ltd. (Trust Account) 16,715 4.19 

The Bank of New York Mellon as Depositary Bank 

11,855 2.97 

for Depositary Receipt Holders 

Asahi Mutual Life Insurance Company 11,744 2.95 

Association of Shiseido Employees’ Investment in 

9,694 2.43 

the Company’s shares 

NIPPONKOA Insurance Company, Limited 8,477 2.13 

Mitsui Sumitomo Insurance Company, Limited 8,000 2.01 

Nippon Life Insurance Company 7,798 1.95 

SSBT OD05 OMNIBUS ACCOUNT – TREATY 

7,769 1.95 

CLIENTS 

Notes: 

1. Calculations of percentage of shareholding, including below Notes are based on 

the total number of issued and outstanding shares excluding treasury stock. 

Calculations of percentage of shareholding indicated in < >, are based on the 

total number issued and outstanding shares including treasury stock. 

2. All shares held by The Master Trust Bank of Japan, Ltd. (Trust Account) and 

Japan Trustee Services Bank, Ltd. (Trust Account) are connection with the 

respective bank’s trust business. 

3. The number of shares held by Mizuho Bank, Ltd. as of March 31, 2012, 23,526 

thousand shares as indicated above, include their holding of 13,526 thousand 

shares in its own name and holding by its employee pension trust of 10,000 

thousand shares (6,000 thousand shares with voting rights and 4,000 thousand 

shares without voting rights) under a registered name, Mizuho Trust & Banking 

Co., Ltd. re-trusted to Trust & Custody Services Bank, Ltd. Employees Pension 

Trust for Mizuho Bank. 

A report of amendment to large shareholdings from Mizuho Bank, Ltd. that on 

September 24, 2010, it held 33,433 thousand shares through joint holdings 

(Percentage of shareholding: 8.40%), of which 23,338 thousand shares (5.86%, 

including 6,000 thousand shares with voting rights and 4,000 thousand shares 

without voting rights held by its employee pension trust) are held by Mizuho 

Bank, Ltd. has been filed with the Director-General of the Kanto Finance 

Bureau and the Company has received its copy. 

4. The Bank of New York Mellon as Depositary Bank for Depositary Receipt 

Holders is the nominee holder for the Bank of New York Mellon, a depositary 

bank for the American Depositary Receipts (“ADRs”) of the Company. 

5. A report of amendment to large shareholdings from Mitsubishi UFJ Financial 

Group, Inc that on April 18, 2011, it held 26,236 thousand shares through joint 

- 24 - 

[Translation: AGM 2012]

holdings (Percentage of shareholding: 6.59%), of which 21,838 thousand shares 

(5.48%) are held by the Mitsubishi UFJ Trust and Banking Corporation has 

been filed with the Director-General of the Kanto Finance Bureau and the 

Company has received its copy. 

However, the Mitsubishi UFJ Financial Group has been excluded from the 

above principal shareholders, as the actual number of shares held by the said 

company has not been confirmed by the Company as of the end of the fiscal 

year. 

6. A report of amendment to large shareholdings from Sumitomo Mitsui Trust 

Holdings, Inc. that on November 21, 2011, it held 20,066 thousand shares 

through joint holdings (Percentage of shareholding: 5.04%) has been filed with 

the Director-General of the Kanto Finance Bureau and the Company has 

received its copy. 

However, Sumitomo Mitsui Trust Holdings, Inc. has been excluded from the 

above principal shareholders, as the actual number of shares held by the said 

company has not been confirmed by the Company as of the end of the fiscal 

year. 

A report of amendment to large shareholdings from Sumitomo Mitsui Trust 

Holdings, Inc., that on April 18, 2012, it held 21,192 thousand shares through 

joint holdings (Percentage of shareholdings: 5.32%), of which 16,541 thousand 

shares (4.15%) are held by the Sumitomo Mitsui Trust Bank, Ltd. has been 

filed with the Director-General of the Kanto Finance Bureau and the Company 

has received its copy. 


- 25 -

3. Matters Concerning Shares Held by the Company (As of March 31, 2012) 

1) Number of Stock-Holdings in the Amount on the Balance Sheet, Which the 

Company Holds for Purposes Other Than Realizing Direct Investment Gains: 

Number of Companies Amount on Balance Sheet 


112 

- 26 - 

(million yen) 

19,023 

2) The 30 Largest Stock-Holdings of Publicly Listed Companies in the Amount on the 

Balance Sheet, Which the Company Holds for Purposes Other Than Realizing 

Direct Investment Gains 

(Including Publicly Listed Companies Whose Amounts Reported on the Balance 

Sheet Exceed One Percent of Capital): 

Amount 

on 

Balance 

Purpose for 

Holding 

Shares 

Company 

Number of 

Shares 

Main 

Transaction 

(thousand 

Sheet 

(million Financial transactions with 

Mizuho Financial Group, Inc. 

shares) yen) the subsidiaries of the 

16,625 2,244 issuer 

Purchase of product 

TOPPAN PRINTING CO., LTD. 1,628 1,051 packaging and sales 

promotion materials 

Financial transactions with 

Mitsubishi UFJ Financial Group, Inc. 2,496 1,028 the subsidiaries of the 

issuer 

Purchase of product 

Dai Nippon Printing Co., Ltd. 871 737 packaging and sales 

promotion materials 

Insurance transactions To further 

Tokio Marine Holdings, Inc. 300 681 with the subsidiaries of the facilitate 

issuer 

operations 

Medipal Holdings Corporation 562 

Product sales to the 

603 

subsidiaries of the issuer 

ONO PHARMACEUTICAL CO., LTD. 117 539 Product sales 

WACOAL HOLDINGS CORP. 439 

Commissioned production 

430 from the subsidiaries of 

the issuer 

Insurance transactions 

NKSJ Holdings, Inc. 221 409 with the subsidiaries of the 

issuer 

Insurance transactions 

MS&AD Insurance Group Holdings, Inc. 239 406 with the subsidiaries of the 

issuer 

Notes: 

1. The Company does not hold shares for the purpose of realizing direct investment 

gains. 

2. In terms of the top five companies listed above, the amounts reported in the balance 

sheet exceed one percent of the amount of capital of the Company.

4. Matters Concerning Stock Acquisition Rights (As of March 31, 2012) 

The Company issues stock acquisition rights for directors and corporate officers. These 

are executive compensation-type stock options. 

Total number of shares that are the object of all stock acquisition rights issued as of March 

31, 2012 and the percentage thereof to the total number of shares issued and outstanding as of 

the same date, excluding treasury stock are as follows: 


Total Number of Shares That Are the 

Object of Stock Acquisition Rights 

Shares 

1,744,200 

- 27 - 

Percentage of Total Number of Shares 

Issued and Outstanding (Excluding 

Treasury Stock) 

% 

0.44 

Although the Company had formerly issued executive compensation-type stock options as 

medium-term incentives, they have expired as the exercise period of the stock acquisition 

rights concluded on June 30, 2011. Hence, as of March 31, 2012, the only stock acquisition 

rights issued by the Company are the following executive compensation-type stock options as 

long-term incentives. 

Stock Options as Long-Term Incentives 

To link remuneration of the directors and corporate officers of the Company with 

an increase in its shareholder value on a long-term basis, while placing emphasis on their 

sharing interests with its shareholders, the Company issued stock acquisition rights as 

stock options. 

These stock acquisition rights were stock options characterized as long-term 

incentive to directors and corporate officers of the Company and as remuneration which 

fluctuate with the share prices. There are two kinds: one is the performance-linked 

compensation as remuneration to directors and corporate officers since fiscal 2008 and 

whose amount payable for exercise is set at Yen one (1). And another is the 

performance-linked stock option as remuneration to directors and corporate officers 

having offices by fiscal 2007 and whose amount payable for exercise is set based on the 

market fair value of the share of the Company at that time. 

No stock acquisition rights are allotted to external directors and corporate auditors. 

[Stock Acquisition Rights Issued during the Current Fiscal Year] 

Stock 

Acquisition 

Rights Issued in 

Consideration of 

Duty 

Issue Date 

of Stock 

Acquisition 

Rights 

August 30, 

2011 

Grantees of 

Stock 

Acquisition 

Rights 

Directors 

and 

corporate 

officer of the 

Company 

17 persons 

Amount 

Paid for 

Stock 

Acquisition 

Rights 

1,294yen 

per share 

Amount 

Contributed 

upon 

Exercise of 

Stock 

Acquisition 

Rights 

1 yen 

per share 

Exercise Period 

of Stock 

Acquisition 

Rights 

From August 1, 

2014 to July 31, 

2026 

Holding 

Condition and 

Position of the 

Stock 

Acquisition 

Rights 

Directors of the 

Company 

5 persons 

908 rights 

Corporate officers 

who do not serve 

as directors 

12 persons 

636 rights 

As of March 31, 2012 

Class and Number 

of Shares to Be 

Issued Upon 

Exercise of Stock 

Acquisition Rights 

Common stock of 

the Company 

90,800 shares 

63,600 shares 

Note: The number of allotted stock acquisition rights and allotted person during the current 

fiscal year and class and number of shares to be issued upon exercise of the stock 

acquisition rights are shown on "Holding condition and position of the stock 

acquisition rights" and “Class and number of shares to be issued upon exercise of 

stock acquisition rights” as of March 31, 2012.

[Stock Acquisition Rights Issued during in the Past Fiscal Years] 

Stock 

Acquisition 

Rights Issued 

Free of 

Charge 

Stock 

Acquisition 

Rights Issued 

in 

Consideration 

of Duty 

Issue Date 

of Stock 

Acquisition 

Rights 

July 16, 

2002 

July 31, 

2003 

July 26, 

2004 

July 28, 

2005 

Issue Date 

of Stock 

Acquisition 

Rights 

August 23, 

2006 

August 23, 

2007 


Grantees of 

Stock 

Acquisition 

Rights 

Directors and 

corporate 

officers of 

the Company 

27 persons 

Directors and 

corporate 

officers of 

the Company 

32 persons 

Directors and 

corporate 

officers of 

the Company 

32 persons 

Directors and 

corporate 

officers of 

the Company 

26 persons 

Grantees of 

Stock 

Acquisition 

Rights 

Directors and 

corporate 

officers of 

the Company 

23 persons 

Directors and 

corporate 

officers of 

the Company 

21 persons 

Amount 

Paid for 

Stock 

Acquisition 

Rights 

Gratis 

issue 

Gratis 

issue 

Gratis 

issue 

Gratis 

issue 

Amount 

Paid for 

Stock 

Acquisition 

Rights 

Gratis 

issue 

Gratis 

issue 

Amount 

Contributed 

upon 

Exercise of 

Stock 

Acquisition 

Rights 

1,669 yen 

per share 

1,287 yen 

per share 

1,427 yen 

per share 

1,481 yen 

per share 

Amount 

Contributed 

upon 

Exercise of 

Stock 

Acquisition 

Rights 

2,300 yen 

per share 

2,615 yen 

per share 

- 28 - 

Exercise 

Period of 

Stock 

Acquisition 

Rights 

From July 1, 

2004 

to June 26, 

2012 

From July 1, 

2005 

to June 26, 

2013 

From July 1, 

2006 

to June 28, 

2014 

From July 1, 

2007 

to June 28, 

2015 

Exercise 

Period of 

Stock 

Acquisition 

Rights 

From August 

1, 2008 

to July 30, 

2016 

From August 

1, 2009 

to July 30, 

2017 

Holding Condition 

and Position of the 

Stock Acquisition 

Rights 

Others 

15 persons 

196 rights 

Others 

5 persons 

104 rights 


Company 

2 persons 

40 rights 

Others 

25 persons 

415 rights 


Company 

2 persons 

37 rights 

Others 

22 persons 

209 rights 




Rights 


Company 

2 persons 

23 rights 

Corporate auditors 

of the Company 

1 person 

4 rights 

Others 

20 persons 

114 rights 


Company 

4persons 

57 rights 

Corporate auditor 


1 person 

4 rights 



as director 

2 persons 

8 rights 

Others 

14 persons 

90 rights 




Issued Upon 




the Company 

196,000 shares 


the Company 



the Company 

40,000 shares 



the Company 

37,000 shares 





Issued upon 




the Company 

23,000 shares 

4,000 shares 



the Company 

57,000 shares 

4,000 shares 

8,000 shares 

90,000 shares

Issue Date 

of Stock 

Acquisition 

Rights 

August 21, 

2008 

August 28, 

2009 

August 30, 

2010 


Grantees of 

Stock 

Acquisition 

Rights 

Directors and 

corporate 

officers of 

the Company 

19 persons 

Directors and 

corporate 

officers of 

the Company 

19 persons 

Directors and 

corporate 

officers of 

the Company 

18 persons 

Amount 

Paid for 

Stock 

Acquisition 

Rights 

2,381 yen 

1,468 yen 

1,757 yen 

Amount 

Contributed 

upon 

Exercise of 

Stock 

Acquisition 

Rights 

1 yen 

per share 

1 yen 

per share 

1 yen 

per share 

- 29 - 

Exercise 

Period of 

Stock 

Acquisition 

Rights 

From August 

1, 2011 

to July 30, 

2018 

From August 

1, 2012 

to July 31, 

2019 

From August 

1, 2013 

to July 31, 

2020 




Rights 


Company 

3 persons 

15 rights 



1 person 

3 rights 



as director 

5 persons 

15 rights 

Others 

4 persons 

15 rights 


Company 

5 persons 

583 rights 



1 person 

47 rights 



as director 

6 persons 

282 rights 

Others 

7 persons 

437 rights 


Company 

5 persons 

527 rights 



as director 

10 persons 

390 rights 

Others 

3 persons 

142 rights 




Issued upon 




the Company 

15,000 shares 

3,000 shares 

15,000 shares 

15,000 shares 


the Company 

58,300 shares 

4,700 shares 

28,200 shares 

43,700 shares 


the Company 

52,700 shares 

Note: Holding of the stock acquisition rights as of March 31, 2012 by a corporate 

auditor of the Company was granted during his term of office as a corporate 

officer. 

39,000 shares 

14,200 shares

5. Matters Concerning Directors, Corporate Auditors and Corporate Officers of the 

Company 

(1) Name, Position and Duty and Occupation for Directors and Corporate Auditors of 

the Company 

(As of March 31, 2012) (As of April 1, 2012) 

Position Name 

Chairman 

(Representative 

Director) 

President & CEO 


Director) 

Executive Vice 

President 


Director) 

Corporate Senior 

Executive Officer 

(Director) 

Corporate Executive 

Officer (Director) 

External Director 

 


 


 

Corporate Auditor 

(Full time) 


(Full time) 

External Corporate 

Auditor 

 

(Part time) 


Auditor 

 

(Part time) 


Auditor 

 

(Part time) 


Duty and Major 

Occupation 

Shinzo Maeda Chairman of the Board 

Hisayuki 

Suekawa 

Kimie Iwata 

Carsten 

Fischer 

Tatsuomi 

Takamori 

Shoichiro 

Iwata 

CEO 

Responsible for Corporate 

Culture, Advertising 

Creation, Beauty Creation, 

General Affairs, Legal 

Affairs, and Executive 

Affairs 

Responsible for 

Committees under Direct 

Control of the Board of 

Directors 

Responsible for Global 

Business (International 

Business, China Business 

and Professional Business) 

Responsible for Americas 

Chief Officer of 

International Business 

Division 

Responsible for Domestic 

Cosmetics Business, 

Healthcare Business and 

clé de peau BEAUTÉ 

Marketing Unit 

Chief Officer of Domestic 

Cosmetics Business 

Division 

― 

Taeko Nagai ― 

Tatsuo 

Uemura 

Yasuko 

Takayama 

Toshio 

Yoneyama 

― 

― 

― 

Akio Harada ― 

Reiko Kuroda ― 

Nobuo Otsuka ― 

- 30 - 

Position Name Duty and Major Occupation 

Chairman 


Director) 



Director) 

Corporate Senior 

Executive Officer 


Director) 

Corporate Executive 


Shinzo Maeda Chairman of the Board 

Hisayuki 

Suekawa 

Carsten 

Fischer 

Tatsuomi 

Takamori 

Director Kimie Iwata 


 


 


 


(Full time) 


(Full time) 


Auditor 

 

(Part time) 


Auditor 

 

(Part time) 


Auditor 

 

(Part time) 

Shoichiro 

Iwata 

CEO 

Responsible for Global 

Business (International 

Business, China Business 

and Professional Business) 

Responsible for Americas 

Chief Officer of 

International Business 

Division 

Responsible for Domestic 

Cosmetics Business, 

Strategic Planning Area and 

clé de peau BEAUTÉ 

Marketing Unit 

Chief Officer of Domestic 

Cosmetics Business 

Division 

― 

― 

Taeko Nagai ― 

Tatsuo 

Uemura 

Yasuko 

Takayama 

Toshio 

Yoneyama 

― 

― 

― 

Akio Harada ― 

Reiko Kuroda ― 

Nobuo Otsuka ―

Notes: 1.There are 8 directors and 5 corporate auditors, of which female are 4 and male are 9. 

2. Mr. Shoichiro Iwata, Ms. Taeko Nagai and Mr. Tatsuo Uemura are external 

directors as provided in Item 15 of Article 2 of the Companies Act of Japan. 

3. Mr. Akio Harada, Ms. Reiko Kuroda, and Mr. Nobuo Otsuka are external corporate 

auditors as provided in Item 16 of Article 2 of the Companies Act of Japan. 

4. The Company designates Mr. Shoichiro Iwata, Ms. Taeko Nagai, Mr. Tatsuo 

Uemura as independent directors and Mr. Akio Harada, Ms. Reiko Kuroda, and Mr. 

Nobuo Otsuka as independent corporate auditors provided in Article 436-2 of the 

Securities Listing Regulations of Tokyo Stock Exchange, Inc. All of the external 

directors and external corporate auditors (collectively the “External Directors”) 

meets the Company’s “Criteria for Independence of “External Directors” (Please 

refer to 7.3 Criteria for Independence of “External Directors” (pages 45 to 48), 7. 

Status of Corporate Governance) and have sufficient independency. 

5. Ms. Taeko Nagai, director and Ms.Yasuko Takayama, corporate auditor were newly 

elected at the 111th ordinary general meeting of shareholders of the Company held 

on June 24, 2011, and assumed their office as of the same date. The seven directors 

excluding Ms. Taeko Nagai and Mr. Nobuo Otsuka, corporate auditor were 

reelected at the same meeting. 

6. Ms. Kimie Iwata retired as executive vice president on March 31, 2012 and became 

a director without right of representation of the Company. 

7. Mr. Carsten Fischer held the office of representative director, corporate senior 

executive officer as of April 1, 2012. 

8. Mr. Toshio Yoneyama, corporate auditor, in addition to being responsible for the 

overall management of the subsidiaries and consolidated business management at 

the Corporate Planning Department, has had ample experience managing the 

businesses and administration at the subsidiaries, and has respectable knowledge in 

finance and accounting. 

9. Directors and corporate auditors who retired at the conclusion of the 111th ordinary 

general meeting of shareholders of the Company held on June 24, 2011 are as 

follows. 


Position at the Time of Retirement Name 

Director Yasuhiko Harada 

Corporate auditor (Full time) Kazuko Ohya 

(2) Matters Concerning Important Position of Other Organizations Concurrently 

Assumed by Directors and Corporate Auditors (As of March 31, 2012) 

Position Name 


(Representative Director) 

Executive Vice President 

(Representative Director) 

Corporate Senior Executive 


Important Position of Other Organizations Concurrently 

Assumed 

Hisayuki Suekawa Director of Shiseido Academy 

Kimie Iwata 

Carsten Fischer 

External Director Shoichiro Iwata 

External Director Taeko Nagai 

External Director Tatsuo Uemura 


(Full time) 

Toshio Yoneyama 

Outside Corporate Auditor of Kirin Holdings Company, 

Limited 

Chairman & CEO of Shiseido Americas Corporation 

Chairman & CEO of Shiseido America, Inc. 

Chairman of Zotos International, Inc. 

President & Chief Executive Officer of ASKUL 

Corporation 

Vice President of Setagaya Arts Foundation 

Outside Director of Mitsui Chemicals, Inc. 

Chairman of International Theatre Institute 

Professor, School of Law, Waseda University 

Professor, Waseda Law School 

Governor of Board of Governors and Auditor of Audit 

Committee of Japan Broadcasting Corporation (NHK) 

Auditor of Shiseido Academy 

Auditor of Shiseido Social Welfare Foundation 

- 31 -

External Directors 

Position Name 

Important Position of Other Organizations Concurrently 

Assumed 

External Director of Seiko Holdings Corporation 

Outside Corporate Auditor of Sumitomo Corporation 

Outside Director of Japan Post Holdings Co., Ltd. 

External Corporate Auditor 

(Part time) 

Akio Harada 

External Director of Enterprise Turnaround Initiative 

Corporation of Japan 

President of Tokyo Woman's Christian University 

President of International Civil and Commercial Law 

Centre Foundation 


(Part time) 

Reiko Kuroda 

Professor, Department of Life Sciences, Graduate School 

of Arts and Sciences, The University of Tokyo 


(Part time) Nobuo Otsuka Chairman of Keiseikai Hospital Group 

(3) Important Position of Other Organizations Concurrently Assumed by the 

External Directors and the Relationships between These Organizations and the 

Company 

Name 

Shoichiro Iwata 

Company in Which 

Concurrent Position 

Is Held 

ASKUL Corporation 


Important Position of Other Organizations 

Concurrently Assumed and the Relationships 

Between These Organizations and the Company 

The Company purchases stationeries, etc. from ASKUL and such 

purchases of stationeries, etc. from ASKUL represented less than 

0.1% of the total amount of the cost of sales and the selling, 

general and administrative expenses of the Company for the fiscal 

year ended March 31, 2012. Moreover, purchases by the Shiseido 

Group of stationeries, etc. from ASKUL represented less than 0.1% 

of the total amount of the consolidated cost of sales and the 

consolidated selling, general and administrative expenses of the 

Company for the fiscal year ended March 31, 2012. 

A subsidiary of the Company sells toiletries, etc. for office use to 

ASKUL and such sales represented less than 0.1% of the 

consolidated net sales of the Company for the fiscal year ended 

March 31, 2012. 

Purchases of toiletries, etc. for office use by ASKUL from a 

subsidiary of the Company accounted for approximately 0.2% of 

ASKUL’s cost of sales for the fiscal year ended May 31, 2011. 

ASKUL sells through catalogue sales toiletries, etc. for office use, 

which are produced by companies other than the Shiseido Group 

and such sales represented approximately 0.7% of the net sales of 

ASKUL for the fiscal year ended May 31, 2011. 

ASKUL sells stationeries, etc. to the Company and such sales 

represented less than 0.1% of the consolidated net sales of 

ASKUL for the fiscal year ended May 31, 2011, and the sales of 

stationeries, etc. to the Shiseido Group represented approximately 

0.1% of the consolidated net sales of ASKUL Group for the same 

fiscal year. 

Mr. Tadakatsu Saito who is an outside director of ASKUL 

assumed the office of Director of the Company during June 1997 

to June 2004, but the Company has no special relationships of 

interest with Mr. Saito at present. 

- 32 -

External Directors 

External Corporate Auditors 

Name 

Taeko Nagai 

Tatsuo Uemura 

Akio Harada 



Is Held 

Setagaya Arts 

Foundation 

Mitsui Chemicals, Inc. 

International Theatre 

Institute 

Waseda University 

Japan Broadcasting 

Corporation 

Seiko Holdings 

Corporation 





The Company made financial support, etc. to public performance of 

drama hosted by the Foundation in the amount less than 0.1% of 

the total of donation and supporting money of the Company for the 

fiscal year ended March 31, 2012. 

The above supporting money, etc. by the Company to the 

Foundation accounted for less than 0.1% of ordinary profit of the 

Foundation for the year ended March 31, 2012. 

The Company purchases raw materials, etc. from Mitsui Chemicals. 

Such purchases represented less than 0.1% of the total amount of 

the cost of sales and the selling, general and administrative 

expenses of the Company for the fiscal year ended March 31, 2012. 

Sales of raw materials, etc. by Mitsui Chemicals to the Company 

represented less than 0.1% of the net sales of Mitsui Chemicals. 

The Company has no special relationships of interest with 

International Theatre Institute 

The Company is engaged in joint studies on beauty and health with 

Waseda University. Mr. Uemura is not involved in these joint 

studies. 

The Company has no special relationships of interest with Japan 

Broadcasting Corporation. 

The Company and the Company’s subsidiary purchase watches, 

etc. from subsidiaries of Seiko Holdings Corporation and such 

purchases of the Company represented less than 0.1% of the total 

amount of the consolidated cost of sales and the consolidated 

selling, general and administrative expenses of the Company for 

the fiscal year ended March 31, 2012. Moreover, a subsidiary of the 

Company sells cosmetics to the subsidiary of Seiko Holding 

Corporation and such sales accounted for less than 0.1% of the 

Company’s consolidated net sales for the fiscal year ended March 

31, 2012. 

Seiko group sells watches, etc. to the Shiseido Group and such 

sales represented less than 0.1% of the consolidated net sales of the 

said group for the fiscal year ended March 31, 2012. 

Moreover, the sales of cosmetics of the Company’s subsidiary 

accounted for less than 0.1% of the consolidated cost of sales of the 

Seiko Group for the fiscal year ended March 31, 2012. 

- 33 -

External Corporate Auditors 

Name 

Akio Harada 

Reiko 

Kuroda 

Nobuo Otsuka 



Is Held 

Sumitomo 

Corporation 

Japan Post Holdings 

Co., Ltd. 

Enterprise 

Turnaround Initiative 

Corporation of Japan 

Tokyo Woman’s 

Christian University 

International Civil 

and Commercial Law 

Centre Foundation 

The University of 

Tokyo 

Keseikai Hospital 

Group 





The Company purchases raw materials, etc. from Sumitomo 

Corporation and such purchases of the Company represented less 

than 0.1% of the total amount of the cost of sales and the selling, 

general and administrative expenses of the Company for the fiscal 

year ended March 31, 2012. Moreover, the Company and 

subsidiary of the Company engage in transactions such as the 

purchase of raw materials, etc., equipment rental, and the 

Shiseido Group’s total payments to the Sumitomo Corporation 

group accounted for less than 0.1% of the total amount of 

consolidated cost of sales and consolidated selling, general and 

administrative expenses of the Company for the fiscal year ended 

March 31, 2012. 

Subsidiaries of the Company sell cosmetics, etc. to subsidiaries of 

Sumitomo Corporation and such sales represented less than 0.1% 

of the consolidated net sales of the Company for the fiscal year 

ended March 31, 2012. 

Sales of raw materials, etc. by Sumitomo Corporation to the 

Company represented less than 0.1% of the net sales of Sumitomo 

Corporation for the fiscal year ended March 31, 2012. Moreover, 

sales of raw materials, etc. by the Sumitomo Corporation Group 

to the Shiseido Group represented less than 0.1% of the 

consolidated total revenues of the Sumitomo Corporation Group 

for the fiscal year ended March 31, 2012. The sales of 

Cosmetics of the Company’s subsidiaries accounted for less than 

0.1% of the consolidated total cost of the Sumitomo Corporation 

group for the fiscal year ended March 31, 2012. 

The Company has no special relationships of interest with Japan 

Post Holdings Co., Ltd. 

The Company has no special relationships of interest with the 

Enterprise Turnaround Initiative Corporation of Japan. 


Tokyo Woman’s Christian University. 


International Civil and Commercial Law Centre Foundation. 

The Company is engaged in joint studies on beauty and health with 

the University of Tokyo. Ms. Kuroda is not involved in these joint 

studies. 

(4) Other Matters Related to External Directors 

1) Major Activities 


Keiseikai Hospital Group. 

Position Name Major Activities 

External 

Director 

Shoichiro Iwata 

Mr. Iwata attended 14 out of 14 Board of Directors meetings 

(Attendance rate: 100%). Based on his views to the management of 

the Company, which are free from the Company's established 

structure, he made remarks from a standpoint of a manager in other 

industry as necessary and fulfilled a supervisory function in regard 

to the management. He also served as Chairman of Remuneration 

Advisory Committee of the Company and a member of Nomination 

Advisory Committee of the Company. 

- 34 -

Position Name Major Activities 

External 

Director 

External 

Director 

External 

Corporate 

Auditor 

(Part time) 

External 

Corporate 

Auditor 

(Part time) 

External 

Corporate 

Auditor 

(Part time) 


Taeko Nagai 

Tatsuo Uemura 

Akio Harada 

Reiko Kuroda 

Nobuo Otsuka 

After elected as External Director on June, 2011, Ms. Nagai has 

attended 10 out of 11 Board of Directors meetings (Attendance 

rate: 90.9%). She made remarks from a standpoint in society, 

culture and consuming life as necessary and fulfilled a supervisory 

function in regard to the management. She also served as a member 

of Remuneration Advisory Committee of the Company and 

Nomination Advisory Committee of the Company and attended 

CSR Committee as an observer. 

Mr. Uemura attended 13 out of 14 Board of Directors meetings 

(Attendance rate: 92.8%). Based on his experiences and knowledge 

through in the area of the capital market and corporate governance, 

in addition to his legal knowledge as a university professor 

specializing in legal research, he made remarks as necessary and 

fulfilled a supervisory function in regard to the management. He 

also served as Chairman of Nomination Advisory Committee of the 

Company and a member of Remuneration Advisory Committee of 

the Company. 

Mr. Harada attended 14 out of 14 Board of Directors meetings 

(Attendance rate: 100%) and 14 out of 14 Board of Corporate 

Auditors meetings (Attendance rate: 100%). Based on his legal 

experiences and knowledge, he made remarks as necessary and 

fulfilled a supervisory function. 

Ms. Kuroda attended 11 out of 14 Board of Directors meetings 

(Attendance rate: 78.5%) and 12 out of 14 Board of Corporate 

Auditors meetings (Attendance rate: 85.7%). Based on her broad 

experiences as university professor and a member of Committee for 

Realizing Gender Equal Society, Cabinet Office, Government of 

Japan and The Japanese National Commission for UNESCO, and 

Vice-President for External Relations of the International Council 

for Science, and insight in wide range of field, she made remarks as 

necessary and fulfilled a supervisory function. 

Mr. Otsuka attended 14 out of 14 Board of Directors meeting 

(Attendance rate: 100%) and 14 out of 14 Board of Corporate 

Auditors meeting (Attendance rate: 100%). Based on his 

knowledge and experiences as a management executive of 

medical corporations, he made remarks as necessary and fulfilled 

a supervisory function. 

2) Outline of Execution of Liability Limitation Agreements 

The Company established provisions in the Articles of Incorporation enabling the 

Company to enter into an agreement with external directors and external corporate 

auditors limiting their liability through a resolution at the 106th ordinary general meeting 

of shareholders held on June 29, 2006 for the purpose of inducing external directors and 

external corporate auditors to fully perform expected roles and enabling the Company to 

invite competent personnel. 

Pursuant to these provisions the Company concluded such an agreement with all of 

the 3 external directors and 3 external corporate auditors under which his/her liability for 

compensation shall be limited to the minimum limited liability provided in the laws and 

ordinances. 

- 35 -

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

Corporate 

Officer 

(5) Name, Position and Duty and Occupation for Corporate Officers Who Do Not 

Serve as Director 

Position Name 

Michiko Achilles 

Kozo Hanada 

Tsunehiko Iwai 

Asa Kimura 

Masaru 

Miyagawa 

Yoshinori 

Nishimura 

Shoji Nishiyama 


Duty and Major Occupation 

As of March 31, 2012 As of April 1, 2012 

Responsible for Public Relations, 

Consumer Information, 

Environmental Affairs, CSR and 

Corporate Culture Reforms 

- 36 - 

Responsible for Public Relations, 

CSR, Environmental Affairs, 

Consumer Information, Corporate 

Culture Reforms and Advisory 

Committees to the Board of 

Directors(CSR Committee) 

Chief Officer of Professional Business Operations Division, 

President & CEO of Shiseido Professional Co., Ltd. 

Responsible for Technical Planning, Quality Management and Frontier 

Science Business 

Responsible for Cosmetics Products Research & Development and Software 

Development 

Chief Officer of China Business 

Division 

Chief Area Managing Officer of 

China 

Chairman of Shiseido China Co., Ltd. 

Chairman of Shiseido Liyuan Cosmetics Co., Ltd. 

Chairman of Shanghai Zotos Citic Cosmetics Co., Ltd. 

Responsible for Marketing of 

Domestic Cosmetics Business, 

Healthcare Business and Domestic 

Non-Shiseido Brand Businesses 

Chief Financial Officer 

Responsible for Finance, Investor Relations, Information System Planning 

Responsible for Internal Control 

Responsible for Functional Food 

Research & Development, 

Innovative Science Research & 

Development, Research 

Administration and Technology 

Alliances 

Shigeto Ohtsuki General Manager of Personnel Department 

Yu Okazawa 

Tooru Sakai 

Youichi 

Shimatani 

Mitsuo Takashige 

Ryuichi Yabuki 

General Manager of International 

Sales Department, International 

Business Division 

President of Shiseido Europe S.A.S. 

President of Shiseido International 

Europe S.A. 

Responsible for Production, 

Purchasing and Logistics 

Responsible for Marketing of 

Domestic Cosmetics Business and 

Domestic Non-Shiseido Brand 

Businesses 

General Manager of Corporate 

Planning Department 

- 

Responsible for Asian Breakthrough 

Strategy 

Chief Officer of China Business 

Division and General Manager of 

Asia Pacific Sales Department 

General Manager of Corporate 


Responsible for Functional Food 

Research & Development, 

Innovative Science Research & 

Development, Research 

Administration and Technology 

Alliances 

Responsible for Corporate Planning 

and General Affairs (Legal Affairs 

and Executive Affairs) 

Responsible for Sales of Domestic Cosmetics Business 

President & CEO of Shiseido Sales Co., Ltd., 

President & CEO of FT Shiseido Co., Ltd. 

Notes: 1. Corporate officer who retired on March 31, 2012 is as follows: 

Position at the Time of Retirement Name 

Corporate Officer Shoji Nishiyama 

2. Mr. Masaru Miyagawa and Mr. Yu Okazawa was promoted to corporate 

executive officer as of April 1, 2012.

3. Corporate officers who were designated on April 1, 2012 are as follows: 

Position Name Duty and Major Occupation 

Corporate 

Officer 

Kiyoshi Ishimoto 

Responsible for Production, Purchasing 

and Logistics 

Corporate 

Officer 

Corporate 

Officer 

Chikako Sekine 

Shigekazu Sugiyama 

General Manager of Beauty Consultation 


Responsible for Beauty Creation 

Responsible for Corporate Culture and 

Advertising Creation 

(6) Remuneration, etc. to Directors and Corporate Auditors 

1) Outline of the Directors, Corporate Auditors and Corporate Officers 

Remuneration Policy of the Company 

The directors, corporate auditors and corporate officers remuneration policy of the 

Company is established by the Remuneration Advisory Committee, which consists of 

members outside the Company and chaired by an external director, to maintain objectivity 

and high transparency. 

Remuneration to directors and corporate officers consists of a basic fixed portion 

and a performance-linked portion that fluctuates depending on the achievement of 

management targets and share price. Performance-linked remuneration consists of a bonus 

based on annual consolidated results, medium-term remuneration based on the 

achievement of the final year targets of the Three-Year Plan beginning in the fiscal year 

ended March 31, 2012, to be paid at the culmination of the plan, and stock options as 

long-term incentive, primarily aimed at fostering a shared awareness of profits with 

shareholders. Performance-linked remuneration is designed to give directors a 

medium-to-long-term perspective, not just a single-year focus, and to motivate 

management to become more aware of the Company’s performance and share price. 

In principle, the remunerations for directors and corporate officers have been set so 

that the higher the his/her position in the rank of corporate officers, the greater will be the 

performance-linked portion in his/her total remuneration. Assuming a 100% achievement 

rate of the standards for performance-linked remuneration (consolidated performance 

during the Three-Year Plan and each fiscal year under review, business performance of 

each director/corporate officer for the duties in charge, and personal evaluation of each 

director/corporate officer), the proportion of each type of remuneration for each rank of 

corporate officer shall be as indicated in the table below. 

Chairman (Representative Director) who serves as the chairman of the Board does 

not receive a bonus and is under a remuneration system that is separate from his rank as a 

corporate officer, as he does not concurrently serve as corporate officer and consequently 

does not directly engage in the execution of business. A remuneration system that is 

separate from his rank as a corporate officer but is more closely linked to his performance 

has been applied to Mr. Carsten Fischer, corporate senior executive officer (representative 

director), as he is a central figure in the Company’s global business, which drives the 

Company’s growth. 

External directors and corporate auditors receive only basic fixed remuneration, as 

performance-linked remuneration is inconsistent with their supervisory functions from a 

stance independent from business execution. 

The Company sets appropriate remuneration levels by making comparisons with 

companies in the same industry or of the same scale taking the Company’s performance 

into consideration. 

Meanwhile, the Company abolished its officer's retirement benefit plan as of June 

29, 2004 on which the 104th ordinary general meeting of shareholders was held. 


- 37 -

[Proportion of Each Remuneration Type by Rank and Standards for Performance-Linked 

Remuneration (Assuming 100% Achievement Rate of All Performance Targets)] 

Chairman 

President Executive 

& Vice 

CEO President 

Corporate 

Senior 

Executive 

Officer 

Corporate 

Executive 

Officer 

Carsten Fischer, 

Corporate Corporate Senior 

Officer Executive 

Officer 

Fixed 

Basic Fixed 

Remuneration 

42% 30% 43% 44% 45% 48% 34% 

Remuneration Calculation 

Standard 

According to the rank 

Calculated 

individually 

Bonuses (Short-Term) - 23% 22% 21% 21% 21% 22% 

Calculation 

Standard 

- 

Consolidated 

results 

Consolidated results and business results of 

duties in charge and personal evaluation 

Medium-Term 

Incentives 

29% 23% 17% 17% 17% 16% 35% 

Performance- 

Performance 

Linked 

Remuneration 

Calculation 

Standard 

Targets of the Three-Year Plan 

targets of the 

duties in 

charge for 3 

years 

Long-Term Incentives 29% 23% 17% 17% 17% 16% 9% 

Calculation 

Standard 


According to the rank 

- 38 - 

Calculated 

individually 

Total 100% 100% 100% 100% 100% 100% 100% 

For each rank, the remunerations for representative directors and directors are the same. 

2) Amount of Remuneration, etc. to Directors and Corporate Auditors of the Fiscal 

Year Ended March 31, 2012 

Basic Fixed 

Remuneration 

Bonuses 

Medium-Term 

Incentive 

Long-Term 

Incentive 

(Stock Option) 

(millions of yen) 

Directors (9 persons) 254 107 - 87 450 

External Directors among 

36 - - - 36 

Directors (3 Persons) 

Corporate Auditors (6 Persons) 96 - - - 96 

External Corporate Auditors among 

36 - - - 36 

Corporate Auditors (3 Persons) 

Total 350 107 - 87 546 

Notes: 

1. Basic remuneration for directors has the ceiling amount of Yen 30 million per 

month as per the resolution of the 89th ordinary general meeting of shareholders 

held on June 29, 1989. Basic remuneration for corporate auditors has the ceiling 

amount of Yen10 million per month as per the resolution of the 105th ordinary 

general meeting of shareholders held on June 29, 2005. 

2. The above amount to be paid as bonuses to directors during the fiscal year ended 

March 31, 2012 is subject to the approval of the Fourth Item of Business (Payment 

of Bonuses to Directors) at this ordinary general meeting of shareholders. A total 

amount of Yen 120 million was paid as bonus to the six directors (excluding the 

external directors) during the fiscal year ended March 31, 2011 (based on the 

resolution of the 111th ordinary general meeting of shareholders held on June 24, 

2011). 

Total

3. The medium-term incentives remuneration will be paid in a lump-sum payment 

corresponding to the three years after the end of the Three-Year Plan according to 

the extent to which the performance targets achieved. Being the first year of the 

Three-Year Plan, no payment was made in fiscal year ended March 31, 2012. 

4. The amount of long-term incentive stock options indicated above represents the 

expenses associated with the current fiscal year among the stock options (stock 

acquisition rights) in the fiscal year, upon the approval of the ordinary general 

meeting of shareholders, in consideration of duties executed by directors. 

5. The above payment includes the amounts of the following remunerations, etc., paid 

to directors and corporate auditors. 

1) Remunerations to one retired director 

The Company paid Yen 6 million in basic remunerations for the 

months April through June of 2011 to one director who retired at the 

conclusion of the 111th ordinary general meeting of shareholders held 

on June 24, 2011 and recorded Yen 6 million for the current fiscal year 

as expenses associated with stock operations granted to said director. 

2) Remuneration to one retired corporate auditor 

The Company paid Yen 7 million in basic remuneration for the months 

April through June of 2011 to one corporate auditor who retired at the 

conclusion of the 111th ordinary general meeting of shareholders held 

on June 24, 2011. 

6. The following remunerations are paid in addition to the above payments. 

1) Yen 1 million was recorded for the current fiscal year as expenses 

associated with stock options granted to three directors of the Company, 

at the time they served as corporate executive officers not holding the 

offices of directors. 

2) Four subsidiaries of the Company paid Yen 28 million to one director 

of the Company who also served concurrently as the director of said 

subsidiaries as basic remuneration for the current fiscal year. 

3) Yen 18 million was recorded as a final retirement payment granted to 

one director who retired at the conclusion of the 111th ordinary general 

meeting of shareholders held on June 24, 2011, at the time he served as 

corporate executive officer not holding the office of director. 

(Payment was made based on the abolition of the retirement bonus 

system for directors and corporate auditors in 2004). 

4) Yen 35 million was recorded as a final retirement payment granted to 

one corporate auditor who retired at the conclusion of the 111th 

ordinary general meeting of shareholders held on June 24, 2011, at the 

time he served as corporate executive officer not holding the office of 

director. (Payment was made based on the abolition of the retirement 

bonus system for directors and corporate auditors in 2004). 

7. None of the directors or the corporate auditors will be paid remunerations 

other than the executive remunerations described above (including those 

described in notes 1 through 6). 


- 39 -

3) Amounts of Remunerations, etc. of Representative Directors and Directors 

Whose Total Amount of Remunerations, etc. Exceeds Yen 100 Million, by Type 

of Payment for the Fiscal Year Ended March 31, 2012 

Shinzo Maeda, Representative 

Director 

Hisayuki Suekawa, Represent 

ative Director 

Kimie Iwata, 

Representative Director 


Basic Fixed 

Remuneration 

Bonuses 

- 40 - 

Medium-Term 

Incentive 

(millions of yen) 

Long-Term 

Incentive 

(Stock Option) 

Total 

49 - - 18 67 

46 31 - 12 90 

37 16 - 26 80 

Carsten Fischer, Director 53 47 - 16 117 

Notes: 

1. The above amount to be paid as bonuses to the four directors during the fiscal 

year ended March 31, 2012 is subject to the approval of the Fourth Item of 

Business (Payment of Bonuses to Directors) at this ordinary general meeting 

of shareholders. As bonuses during the fiscal year ended March 31, 2011, Yen 

28 million was paid to Mr. Shinzo Maeda, representative director, Yen 9 

million was paid to Mr. Hisayuki Suekawa, representative director, Yen 15 

million was paid to Ms. Kimie Iwata, representative director, and Yen 51 

million was paid to Mr. Carsten Fischer, director (based on the resolution of 

the 111th ordinary general meeting of shareholders held on June 24, 2011). 

2. The medium-term incentives remuneration will be paid in a lump-sum payment 

corresponding to the three years after the end of the Three-Year Plan according to 

the extent to which the performance targets are achieved. Being the first year of the 

Three-Year Plan, no payment was made in the fiscal year ended March 31, 2012. 

3. The amount of long-term incentive stock options indicated above represents the 

expenses associated with the current fiscal year among the stock options (stock 

acquisition rights) in the fiscal year, upon the approval of the ordinary general 

meeting of shareholders, in consideration of duties executed by directors. 

4. The following remunerations are paid in addition to the above payments. 

1) An amount of less than Yen 1 million has been recorded as expenses 

associated with stock options granted to Mr. Hisayuki Suekawa, 

representative director, at the time he served as corporate executive 

officer not concurrently holding the office of director. 

Additionally, an amount of less than Yen 1 million has also been 

recorded as expenses associated with stock options granted to Mr. 

Carsten Fischer, director, at the time he served as corporate executive 

officer not concurrently holding the office of director. 

2) Four subsidiaries of the Company paid Yen 28 million to Mr. Carsten 

Fischer, director, who also served concurrently as the director of said 

subsidiaries as basic remuneration for the current fiscal year. 

5. None of the four directors above will be paid remunerations other than the 

executive remunerations described above (including those described in notes 1 

through 4).

6.Matters Concerning Accounting Auditor 

(1) Name of Accounting Auditor 

KPMG AZSA LLC 

Notes: 

1: The Company does not conclude execution of agreements for limitation of 

liabilities with KPMG AZSA LLC. 

2: Of the significant subsidiaries of the Company, some overseas subsidiaries are 

subject to audits of accounts by a certified public accountant or incorporated 

accounting firm (including overseas auditors possessing similar qualifications) 

other than the accounting auditor or certified public accountant of the 

Company. 

(2) Remuneration, etc. to the Accounting Auditor 


- 41 - 


Category Amount 

Remuneration paid for services rendered as accounting auditors for the fiscal year 

178 

ended March 31, 2012 

Total cash and other remuneration to be paid by the Company and its subsidiaries to 

220 

the accounting auditors 

Note: In the audit contract between the Company and its accounting auditors, 

remuneration paid for audits under the Companies Act and audits under the 

Financial Instruments and Exchange Act are not clearly distinguished and cannot 

be practically separated. Therefore, the total payment for both is shown in 

“Remuneration paid for services rendered as accounting auditors for the fiscal year 

ended March 31, 2012” above. 

(3) Details of Duties Other Than Audit 

The Company commissioned to the accounting auditor for supportive service 

streamlining financial closing procedures. The remuneration, etc. paid for these 

services was Yen 1 million and this amount is included in “Total cash and other 

remuneration to be paid by the Company and its subsidiaries to the accounting 

auditors” of (2) Remuneration, etc. to the accounting auditor, above. 

(4) Policy Relating to Determination of Dismissal of or Not to Reappoint Accounting 

Auditor 

In the event that the Company determines that keeping an accounting auditor as its 

accounting auditor causes material troubles to the Company for the reasons, among 

other things, that the accounting auditor violates its duties, negates its duties or behaves 

in a manner inappropriate as accounting auditor, the Board of Corporate Auditors shall 

dismiss the accounting auditor pursuant to Article 340 of the Companies Act. 

Furthermore, in addition, in the event that it is deemed that the accounting auditor is 

unable to carry out its duties duly or change of the accounting auditor to another audit 

firm is reasonably required to enhance the appropriateness of accounting audit, the 

Company shall submit a proposal to the general meeting of shareholders for the 

dismissal of the accounting auditor or not reappointing the accounting auditor upon 

obtaining consent of the Board of Corporate Auditors or receiving request from the 

Board of Corporate Auditors.

7.Status of Corporate Governance 

7.1 Outline of the Company’s Framework for the Management and Execution of 

Business and Reasons for Adopting the Current Framework (As of March 31, 2012) 

(1) Corporate Governance Policy 

The Company is setting higher standards of corporate governance based on the 

understanding that maximizing corporate and shareholder value, fulfilling social 

responsibilities and achieving sustainable growth and development are the keys to maintaining 

support as a valuable company from all stakeholders (customers, business partners, 

shareholders, employees, society and the Earth). 

(2) Outline of the Company’s System for the Management and Execution of Business 

The outline of the Company’s system for the management and execution of business is as 

follows: 

 

Corporate Executive Officer Committee: Final decision-making body comprising 

corporate executive officers in charge of 

business execution, regarding material 

matters of business execution 

Policy Meeting of Corporate Officers: Committee of corporate officers to 

deliberate the Company’s 

medium-to-long-term strategies and decide 

the direction the strategies are to take 


- 42 -

In addition to the above, corporate executive officers make decisions regarding the 

execution of business in their respective business divisions and hold Decision-Making 

Meetings of Corporate Officers to deliberate matters to be proposed to the Board of Directors 

and the Corporate Officer Committee. 

 

Remuneration Advisory Committee: Makes reports to the Board of Directors regarding 

the remuneration system for directors and corporate 

auditors as well as evaluation of their performance. 

The committee was held four times during the fiscal 

year 2011 and reports of the fiscal year 2010 were 

made on the evaluation of the performance of the 

directors and corporate auditors and other matters. 

(Chairman: Mr. Shoichiro Iwata, external director) 

Nomination Advisory Committee: Makes reports to the Board of Directors on the 

selection of candidates for officers and their 

promotions and demotions. The committee was held 

once during the fiscal year 2011 and reports were 

made to the Board of Directors on the promotion of 

directors and corporate auditors, and the selection of 

new corporate officers to the Board of Directors 

(Chairman: Mr. Tatsuo Uemura, external director) 

 

CSR Committee: Addresses all areas that are required for Shiseido to 

fulfill its social responsibility. In addition to 

grasping the details of social requirements or 

expectations and examining the direction of CSR 

activities, the committee also comprehends and 

evaluates the risks of management strategies and 

business operations, thereby establishing necessary 

measures. 

(Chairman: Kimie Iwata, representative director, 

executive vice president. From April 1, 2012, 

Hisayuki Suekawa, representative director, 

President & CEO ) 

(3) Reasons for Adopting the Current Framework 

The Company has adopted the framework of a company with the Board of Corporate 

Auditors system, which exercises the dual checking functions over business execution by the 

Board of Directors and over the legality and effectiveness by the Board of Auditors. 

Furthermore, as the Company aims to become a truly global enterprise, it holds the 

establishment of corporate governance that is capable of surviving global competition to be of 

paramount importance. Consequently, the Company, to the end of improving the 

“Management transparency, fairness and speed,” has been engaged in reforms to its corporate 

governance from the following four perspectives: 


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• Clarifying the allocation of responsibility (Introduction of the corporate executive officer 

system and the like) 

• Enhancing management transparency and soundness (Establishment of the Remuneration 

Advisory Committee and the Nomination Advisory Committee) 

• Reinforcing supervisory and auditing functions (Inviting external directors, appointing 

highly independent external directors and external auditors) 

• Strengthening decision-making function (Establishment of the Corporate Executive 

Officer Committee and the like) 

In order to strengthen these functions, the Company has adopted the framework of a 

company with the Board of Corporate Auditors system as its base to which it has integrated 

the superior functions of a company with Committees. 

7.2 System under Which Execution of Duties by Directors Is Ensured to Comply with 

Laws, Ordinances, and the Articles of Incorporation of the Company; System under 

Which Business of the Company Is Ensured Duly to Be Conducted (As of March 31, 

2012) 

The Board of Directors held on May 31, 2011, revised “Basic Policy regarding 

Internal Control Systems” established by Board of Directors held on May 12, 2006 due to 

establish structure encouraging corporate ethical activities. 

“Basic Policy regarding Internal Control Systems” of the Company is as follows. 

(1) System under Which Execution of Duties by Directors and Employees Is Ensured to 

Comply with Laws, Ordinances, and the Articles of Incorporation of the Company; 

System under Which Business of the Company and Its Subsidiaries and Affiliates as a 

Group Is Ensured Duly to Be Conducted 

The Board of Directors shall determine important matters which will affect the Company 

and its subsidiaries and affiliates as a group. The representative directors of the Company 

shall regularly report the status of execution of business to the Board of Directors. The 

Company shall appoint external directors to strengthen and maintain the Board of Directors' 

supervisory functions in regard to operational execution. The corporate auditors audit legality 

and appropriateness of the director's execution of business. Upon request of any corporate 

auditor, directors and employees shall report the status of execution of business to the 

corporate auditor. 

In order to realize “Our Mission,” which defines the Shiseido’s Group corporate 

philosophy and business domains and sets out its raison d'être, the Company has established 

“Our Values,” which must be held and shared by each and every employee of the Shiseido 

Group, and “Our Way,” which sets out the action standards for business conducts with highest 

ethical standards, and promotes corporate activities that are both legitimate and fair. (*) 

The “CSR Committee,” under jurisdiction of the Board of Directors, shall be responsible 

for improving the quality of the Company by enhancing legitimate and fair corporate activities 

of the group, and risk management. The committee shall propose and report the plans and 

activities to the Board of Directors. 

The Company positions a “Corporate Ethics Promotion Leader” at each domestic business 

office and a "Corporate Ethics Leader (CEL)" at each overseas office, who shall promote 

legitimate and fair corporate activities, and the Company shall conduct regular training 

programs for compliance. The “Corporate Ethics Promotion Leaders” and the "Corporate 

Ethics Leaders" shall report the status of such activities to the “CSR Committee”. 

The Company shall provide multiple reporting and consultation help lines, which include 

external lawyers, to detect and correct at an early stage actions that contravene the law, 

ordinances, the Articles of Incorporation and other regulations of the Company. 

Internal auditing shall be conducted with respect to the overall group companies to assure 


- 44 -

appropriateness of business. The results of audit shall be reported to directors and corporate 

auditors. 

(2) System under Which Directors Shall Be Ensured to Efficiently Execute Duties 

The Company adopted a corporate executive officer system to actualize smooth and highly 

efficient corporate management, wherein functions of directors, who are responsible for 

decision-making and overseeing execution of business are separated from those of corporate 

officers, who are responsible for business execution. 

A representative director responsible for execution of business coordinates execution of 

the overall group business aimed at achieving corporate targets. A corporate officer shall fix 

the specified target in the assigned field and set up a business system by which the target shall 

efficiently be achieved. Furthermore, with respect to the execution of important business, the 

Corporate Executive Officer Committee consisting of corporate officers shall deliberate the 

business execution from viewpoints of various aspects. 

The Board of Directors and the Corporate Executive Officer Committee shall confirm the 

status of development vis-à-vis the target and conduct necessary improvement measure. 

(3) System under Which Information Regarding Execution of Business by Directors 

Shall Be Maintained and Controlled 

Important documents such as minutes of the Board of Directors meetings and minutes of 

the Corporate Executive Officer Committee meetings shall be controlled pursuant to the 

internal regulations of the Company and presented to directors and corporate auditors 

immediately whenever requested for inspection. 

In addition, information with respect to execution of business by directors and employees 

shall be controlled pursuant to “Information System Controlling Regulation”, “Confidential 

Information Controlling Regulation” and other regulations. 

(4) Regulation Regarding Control of Risk for Loss and Other Regulation Systems 

The “CSR Committee,” under the jurisdiction of the Board of Directors, shall manage 

risks associated with corporate activities of the whole group. Risks associated with 

management strategy and business execution shall be recognized and evaluated by the 

Committee so that necessary measures shall be taken. A contingency manual shall be prepared 

to deal with emergency situation. In the case of emergency, countermeasure headquarters, 

projects or teams shall be set up pursuant to the levels of the emergency and shall take 

countermeasures. 

(5) Matters Related to Employees to Assist Duties of Corporate Auditors When 

Corporate Auditors Request to Do So and Matters Related to the Independence of Such 

Employees from Directors 

Employees shall be positioned to assist the Board of Auditors and corporate auditors as the 

Board of Auditors Staff Group. 

The personnel of the Board of Auditors Staff Group shall be determined by taking 

corporate auditors’ opinion into consideration. 

(6) System under Which Directors and Employees Report to Corporate Auditors and 

Other Systems, under Which Any Report Is Made to Corporate Auditors 

Directors and employees shall report the status of business execution to corporate auditors 

through meetings of the Board of Directors and other important meetings, and the results of 

audit performed by the Internal Auditing Department. 

In addition, the status of business and conditions of assets shall be reported to corporate 

auditors upon their request. 

(7) Other Systems under Which Audit by Corporate Auditors Is Ensured Efficiently to 

Be Performed 

Opinion exchange meetings shall be held regularly between representative directors and 

corporate auditors. The Company shall ensure a system under which corporate audits are 


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implemented efficiently. Liaison meeting shall be held among corporate auditors, accounting 

auditors and the internal auditing department upon request of corporate auditors. In addition, 

corporate auditors shall be ensured to attend various meetings. 

* Fundamental Thought toward Exclusion of Anti-Social Power and the Status for 

Arrangement 

In the Our Way, the Company has declared that it will firmly stand on its ground against 

any person or group of people having anti-social power and it will never give such person or 

group any benefits. A coordination office was established in the CSR Department for the 

purpose of intensively collecting information and at the same time the Manual on how to cope 

with such power is revised on the intranet. Consulting with the local police offices for 

cooperation, the Company is a member of the “Conference on how to cope with particular 

violence” so that it strengths to collect outside information and the cooperation with outside 

organizations. 

In conjunction with the revision to the system for strengthening legitimate and fair 

corporate activities in overseas, a partial revision were made to the “Basic Policy regarding 

Internal Control Systems” as follows, per the resolution of the Board of Directors held on 

April 27, 2012. (Revision is shown with underlines.) 

(1) System under Which Execution of Duties by Directors and Employees Is Ensured to 

Comply with Laws, Ordinances, and the Articles of Incorporation of the Company; 

System under Which Business of the Company and Its Subsidiaries and Affiliates as a 

Group Is Ensured Duly to Be Conducted 

The Board of Directors shall determine important matters which will affect the Company 

and its subsidiaries and affiliates as a group. The representative directors of the Company 

shall regularly report the status of execution of business to the Board of Directors. The 

Company shall appoint external directors to strengthen and maintain the Board of Directors' 

supervisory functions in regard to operational execution. The corporate auditors audit legality 

and appropriateness of the director's execution of business. Upon request of any corporate 

auditor, directors and employees shall report the status of execution of business to the 

corporate auditor. 

In order to realize “Our Mission,” which defines the Shiseido’s Group corporate 

philosophy and business domains and sets out its raison d'être, the Company has established 

“Our Values,” which must be held and shared by each and every employee of the Shiseido 

Group, and “Our Way,” which sets out the action standards for business conducts with highest 

ethical standards, and promotes corporate activities that are both legitimate and fair. (*) 

The “CSR Committee,” under jurisdiction of the Board of Directors, shall be responsible 

for improving the quality of the Company by enhancing legitimate and fair corporate activities 

of the group, and risk management. The committee shall propose and report the plans and 

activities to the Board of Directors. 

In order to promote legitimate and fair corporate activities, the Company shall position a 

“Corporate Ethics Promotion Leader” at each business office in Japan, and a “BEO (Business 

Ethics Officer)” and a “CEL (Corporate Ethics Leader),” who will assist the BEO, at each 

business office outside Japan, respectively; and the Company shall conduct regular training 

programs for compliance to all employees. The “Corporate Ethics Promotion Leaders” and 

“BEOs” shall report the plans for corporate ethics activities at each workplace and the status 

and results of such activities to the CSR Committee. 

In Japan, the Company shall provide access to an external law firm as an “SHISEIDO 

External Consultation Office,” for reporting and consultations on matters relating to 

compliance, as well as appoint counseling staff to the “SHISEIDO Consultation Office,” 

which will be available for consultations within the Company, to the end of detecting and 

correcting at an early stage actions that contravene the laws, ordinances, the Articles of 


- 46 -

Incorporation and other regulations of the Company. Outside Japan, the Company, in addition 

to establishing the “Office Hotline,” a whistleblower system at each business office, shall set 

up a “Shiseido Group Global Hotline” within the CSR Committee for consultation and 

reporting on matters that cannot be resolved within each business office. 

Internal auditing shall be conducted with respect to the overall group companies to assure 

appropriateness of business. The results of audit shall be reported to directors and corporate 

auditors. 

(2) System under Which Directors Shall Be Ensured to Efficiently Execute Duties 

The Company adopted a corporate executive officer system to actualize smooth and highly 

efficient corporate management, wherein functions of directors, who are responsible for 

decision-making and overseeing execution of business are separated from those of corporate 

officers, who are responsible for business execution. 

A representative director coordinates and supervises execution of the overall group 

business aimed at achieving corporate targets. A corporate officer shall fix the specified target 

in the assigned field and set up a business system by which the target shall efficiently be 

achieved. Furthermore, with respect to the execution of important business, the Corporate 

Executive Officer Committee consisting of corporate officers shall deliberate the business 

execution from viewpoints of various aspects. 

The Board of Directors and the Corporate Executive Officer Committee shall confirm the 

status of development vis-à-vis the target and conduct necessary improvement measure. 

* Fundamental Thought toward Exclusion of Anti-Social Power and the Status for 

Arrangement 

In Our Way, the Company has declared that it will not have relationships with any 

individuals or organizations that engage in illegal activities such as threatening the public 

order or safety and that it will not respond to any requests for money or services from such 

individuals or organizations. A coordination function was established in the CSR Department 

for the purpose of intensively collecting information and at the same time the Manual on how 

to cope with such power is revised on the intranet. Consulting with the local police offices for 

cooperation, the Company is a member of the “Conference on how to cope with particular 

violence” so that it strengths to collect outside information and the cooperation with outside 

organizations. 

7.3 Criteria for Independence of “External Directors” 

The Company establishes its own rules of “Criteria for Independence of the External 

Directors” (the “Criteria”) with reference to foreign laws and ordinances and listing rules, 

etc. for the purpose of making objective assessment on the independence of the External 

Directors. 

In connection with selecting candidates for the External Directors, the Company places 

emphasis on a high degree of the independence of the candidate from the viewpoint of 

strengthening corporate governance and accordingly, the Company makes judgment on 

whether or not the candidate has a high degree of the independence in accordance with the 

Criteria. Provided, however, that the candidates for the External Directors are to be 

selected upon taking into consideration not only a high degree of the independence but 

also his/her personality and knowledge, etc. As far as the candidates fulfill the 

requirements for the independence of an External Director provided for in the Companies 

Act and has knowledge and experience, etc. enabling him/her to achieve duties as the 

External Directors of the Company, those candidates might be invited to the External 

Directors even if the Criteria might not be satisfied. 

The Criteria are as follows: 

Shiseido Company, Limited (the “Company”) deems an external director and external 

corporate auditor (collectively the “External Director”) or a candidate for the External 


- 47 -

Director to have sufficient independence against the Company in the event that all the 

following requirements are fulfilled upon the Company’s research to the practically 

possible and reasonable extent. 

1. He/She is not nor has been an executive person i of the Company or an affiliated 

company ii (collectively the “Shiseido Group”); 

In the case of an external corporate auditor, in addition to the above, he/she has not 

been a non-executive director nor accounting advisor (in the case of accounting 

advisor being an artificial person, a staff in charge of the duty) of the Shiseido Group. 

2. He/She does not fall under any of the following items for the current fiscal year and 

the last nine (9) fiscal years (all these fiscal years being referred to as the “Relevant 

Fiscal Years”): 

1) A counterparty which has transactions principally with the Shiseido Group iii , or 

its executive person (including a person having once been executive officer for 

the Relevant Fiscal Years. The same is applicable to Items 2) to 4) of this Clause 

below); 

2) A principal counterparty of the Shiseido Group iv , or its executive person; 

3) A large shareholder who holds or has held directly or indirectly 10% or more of 

the voting rights of the Company in the Relevant Fiscal Years or its executive 

person; 

4) An executive person of a company of which the Shiseido Group holds or has 

held directly or indirectly 10% or more of the total voting rights in the Relevant 

Fiscal Years; 

5) A consultant, accounting professional or legal professional who has been paid a 

large amount of money or other assets v in addition to the External Director’s 

remunerations in the Relevant Fiscal Years. In addition, in the event that the 

accounting professional or legal professional is an organization such as artificial 

person or association, a person who belongs to such organization (including a 

person who has once belonged to such organization in the Relevant Fiscal Years. 

The same is applicable to Items 6 and 7 below of this Clause) is included. 

6) A person/organization who received donation of a large amount of money or 

other assets v from the Shiseido Group in the Relevant Fiscal Years. In addition, 

in the event that those who received donation from the Shiseido Group are an 

organization such as artificial person or association, a person who belongs to 

such organization is included. 

7) An accounting auditor of the Company. In addition, in the event that the 

accounting auditor is an organization such as artificial person or association, a 

person who belongs to such organization is included. 

3. He/She is not a spouse of the following person, relative in second or less degree, 

relative living in the same place or a person with whom living costs are shared, 

provided, however that Item 2) is applicable only to make judgment on the 

independence of an external corporate auditor. 

1) An important person vi among executive persons of the Shiseido Group; 

2) Non-executive director of a company in the Shiseido Group; 

3) A person falling under any of Items 1) to 4) of Clause 2; provided, however, that 

with respect to these executive persons, applicable only to the important person vi . 

4) A person falling under any of Items 5) to 7) of Clause 2; provided, however, that 

with respect to a person belonging to the organization, applicable only to the 

important persons vii . 

4. Any of the following situations that could be deemed as “Cross-Assumption of 

Offices of Directors, etc.” is not applicable: 

1) In the event that the External Director of the Company or a candidate for the 

External Director of the Company currently assumes the office of an executive 

person, external director, corporate auditor or the office equivalent thereto viii of a 

company other than the Company, in Japan or overseas (the “Subject 

Company”), an executive person, an external director, corporate auditor 

(excluding the aforesaid External Director or candidate for the External Director) 

or person in the office equivalent thereto of the Shiseido Group assumes director 


- 48 -

(including an external director), executive officer, corporate auditor (including 

external corporate auditor), executive officer or person in the position equivalent 

thereto viii of the Subject Company. 

2) In the event that the External Director of the Company or a candidate for the 

External Director of the Company currently assumes the office of an executive 

person, director, officer or the office equivalent to director or officer of an 

artificial person or other organization (other than a company) (the “Subject 

Organization”), an executive person, an external director, corporate auditor 

(excluding aforesaid executive officer or candidate for External Director) or 

person in the office equivalent thereto of the Shiseido Group assumes the office 

of director, officer or person in the position equivalent thereto ix of the Subject 

Organization. 

5. In addition to Clauses 1 to 4, there exist no circumstances in which duties imposed on 

an independent External Director are reasonably deemed not to be achieved. 

6. It is presently expected that any event or matter stated in Clauses 1 to 5 would not 

occur or exist hereafter. 

i. An “affiliated company” means the affiliated company stated in Article 2, Paragraph 3, Item 22 of 

the Ordinance on Company Accounting. 

ii. An “executive person” means an executive director, executive officer, corporate officer, staff 

executing business of a company divided into interest (mochibun kaisha) (in the event of the staff 

being a artificial person, a person to discharge duties stated in Article 598, Paragraph 1 of the 

Companies Act), a person executing business of artificial person or organization other than a 

company and an employed person (an employee, etc.) of a artificial person or organization including 

a company. 

iii. A “counterparty which has transactions principally with the Shiseido Group” means a 

person/organization falling under any of the following items: 

1) The counterparty or the counter party group (a consolidated group to which the company that 

has direct transactions with the Shiseido Group belongs to) (collectively the 

“counterparty”)which provides or provided products or services to the Shiseido Group and the 

aggregate amount of transactions between the counterparty and the Shiseido Group exceeds 

Yen10 million per fiscal year, and which exceeds 2% of consolidated net sales of the 

counterparty (or if the counterparty does not prepare consolidated financial statement, 

non-consolidated net sales of the counterparty) for the Relevant Fiscal Years. 

2) The counterparty group to which the Shiseido Group is or was indebted to the counterparty group 

and the aggregate amount of indebtedness of the Shiseido Group exceeds Yen10 million as at the 

end of each fiscal year, and which exceeds 2% of consolidated total assets (or if the counterparty 

does not prepare consolidated financial statement, non-consolidated total assets of the 

counterparty) of the counterparty for the Relevant Fiscal Years. 

iv. A “principal counterparty of the Shiseido Group” means a person/organization falling under any of 

the following items: 

1) The counterparty to which the Shiseido Group provides or provided products or services and the 

aggregate amount of transactions between the counterparty and the Shiseido Group exceeds ¥10 

million per fiscal year, and which exceeds 2% of consolidated net sales of the Shiseido Group for 

the Relevant Fiscal Years. 

2) The counterparty to which the Company Group has account-receivable, advance and account due 

(collectively “account-receivable”) and the aggregate amount of the account-receivable of the 

Shiseido Group exceeds Yen10 million as at the end of each fiscal year, and which exceeds 2% of 

consolidated total assets of the Shiseido Group as at the end of the Relevant Fiscal Years. 

3) A financial institution group (to which the direct lender belongs) from which the Shiseido Group 

borrows or borrowed and the aggregate amount of the borrowing exceeds 2% of consolidated 

total assets of the Shiseido Group as at the end of the Relevant Fiscal Years. 

v. A “large amount of money or other assets” means in excess of Yen 10 million per fiscal year. 

vi. An “important person” from among executive persons means a director (excluding external director), 

an executive officer, corporate officer, and employed person in the office of senior management not 

lower than general manager. 

vii. An “important person” from among persons “belonging to the organization” stated in 5) and 7) in 


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Clause 2 above means an officer such as certified public accountants belonging to audit corporation 

or accounting firm, lawyer (including so as to call associates) belonging to law firm, director and 

supervisor belonging to a judicial foundation, incorporated association, incorporated school and 

other artificial persons (collectively “Various Artificial Person”) In the event that an organization to 

which a person belongs is not any of audit corporation, accounting firm, law firm and Various 

Artificial Person, a person who is deemed objectively and reasonably important equivalent to the 

persons stated above in this note by the organization. 

viii. An “office of an executive person, external director, corporate auditor or the position equivalent 

thereto” includes the positions such as “Counselor”, “Advisor”, etc. assumed by retired director, 

retired corporate auditor, retired executive officer or retired corporate officer enabling them to give 

advice to the Company, in addition to an executive person defined in Note ii above, non-executive 

director (including external director), and corporate auditor (including external corporate auditor). 

ix. The “office of director or person in the position equivalent thereto” includes the positions such as 

“Counselor”, “Advisor”, etc. assumed by retired director, retired councilor or retired supervisor 

enabling them to give advice to the subject organization, in addition to director, councilor or 

supervisor. 

8.Approach toward CSR 

The Shiseido Group understands that CSR encompasses the entire range of corporate 

activities conducted toward implementing its corporate philosophy basic approach is outlined 

below. The conduct required of Group employees when working with each type of 

stakeholder is set out in “Our Way” of Shiseido’s Corporate Philosophy of “Our Mission, 

Values and Way.” Thus Shiseido’s CSR is be said to be “Our Way” put into practice. 

Additionally, CSR activities have been divided into “Fundamental CSR,” which comprise 

activities to minimize risks and protect corporate value, including compliance with laws and 

the timely promotion of matters relating to the Company as a going concern; and “Unique 

Shiseido CSR, which comprise activities to enhance corporate value and encourage corporate 

growth. “Unique Shiseido CSR” also includes proposing new types of beauty and fulfilling 

lifestyles and various social contribution activities. The Company has focused its contribution 

activities in the three domains of “Women / Cosmetics (Beauty),” “Culture,” and the 

“Environment,” which are areas in which the expectations from society are the highest as well 

as being areas in which the Company is able to leverage its strengths. Going forward, the 

Company will focus on these domains on the belief that discovering and detecting the social 

needs of people both in Japan and around the world and providing products and services that 

answer to such needs will ultimately lead to the strengthening of the Company’s competitive 

edge and sustainable development. New businesses such as “beauty services geared toward the 

elderly” are examples of such undertakings. 

Approach toward CSR 

We aim to realize a sustainable society through dialogue and 

cooperation with stakeholders while also promoting management 

that contributes to the creation of people’s beauty and health by 

developing activities that address social issues and meet 

expectations. 


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Overview of Shiseido’s CSR Activities Domain 

Shiseido, since its foundation, has conducted its business by consistently showing 

gratitude and esteem toward the blessings of nature and the Earth. 

In the fiscal year 2009, placing environmental initiatives at the core of its management, 

Shiseido started the “Shiseido Earth Care Project”, an environmental initiative involving all 

employees throughout the world. The project’s mission is to realize a sustainable society 

where humanity and the Earth’s environment can coexist beautifully. In addition to the basic 

environmental activities, which are obvious social responsibilities, the project encompasses 

active promotion of “Shiseido’s unique environmental activities” in order to create “new 

lifestyles in which human beauty and the environment coexist.” 


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Shiseido Eco Policy 

In order to protect the earth environment in all of its business activities, 

Shiseido will 

1. consider the environment and use natural resources and energy with great care; 

2. promote the development and application of new technologies that do not place 

a burden on the environment; 

3. aim to raise the level of employee awareness toward environmental protection; 

4. endeavor to work closely with local communities and society. 

Amounts in this business report have been rounded down to the nearest million 

JPY, thousand USD, thousand EURO, thousand RMB, and thousand TWD. In the notation 

of 1,000 shares, shares of less than one unit have been omitted. 


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