The Daiwa Securities Group clearly separates the supervisory and executive functions of management to create a  highly transparent and objective corporate governance system. The Group is pursuing a management structure  that improves the efficiency of head office operations and maximizes synergies between the Group companies.  Under this structure, employees responsible for head office functions also perform similar roles for securities  subsidiaries, in addition to the corporate executive officers of Daiwa Securities Group Inc. Daiwa Securities Group Annual Report 2012 Corporate Govern ance Features of the Corporate Governance System In 1999, the Daiwa Securities Group became the first listed  Japanese company to adopt a holding company structure. Since  then, we have been pursuing a highly transparent and objective  corporate governance system that maximizes synergies between  Group companies while showcasing the independence and unique  expertise of each Group member. In June 2004, Daiwa Securities Group Inc. made a transition to  a “Committee System” of corporate governance and accelerated  the decision-making process by transferring a substantial portion of  authority from the Board of Directors to corporate executive  officers. In addition, we strengthened the supervisory functions of  management by increasing the number of outside directors and  establishing the Nominating Committee, Audit Committee, and  Compensation Committee. The representative directors of the  major Group companies also serve as corporate executive  officers of the holding company, thereby allowing them to effi- ciently implement individual business strategies based on  Group strategies. The Nominating Committee met three times in FY2011 to dis- cuss the composition of the Board of Directors and its effect on  corporate governance, the basic policy for nominating candidates  for directorships, and the selection of these candidates. The Nomi- nating Committee selects candidates for directorships in light of the  Group’s selection standards for the appointment of directors.  These standards include criteria that ensure the independence of  outside directors. The Audit Committee met 12 times during FY2011. The com- mittee evaluated the activities of directors and corporate executive  officers, audited documentation including financial statements and  business reports, and prepared an audit report for the period  under review. The Compensation Committee met six times in FY2011 to  discuss compensation policy and determine the compensation of  each director, and also studied a Group-wide incentive plan aimed  at improving consolidated earnings results. The Board of Directors met 10 times during FY2011 and out- side directors had a 98% record of attendance. Corporate Governance System at Daiwa Securities Group 34 Other Information Financial Section Management Systems & CSR Business Strategy Executive Messages Corporate Summary Board of Directors, 12 members (including 5 outside directors) Executive Management  Committee, 12 members Shareholders’ Meeting Group IT Strategy Committee Overseas Management  Committee Disclosure Committee Group Risk Management  Committee Compensation Committee,  5 members (including 3 outside directors) Audit Committee,  4 members (including 3 outside directors) Nominating Committee,  6 members (including 4 outside directors) Representative Executive  Officer Sets policy for compensation of  directors and corporate execu- tive officers, and determines  compensation amount for each Audits the activities of direc- tors and corporate executive  officers Nominates directors for  selection, or recommends  dismissal Prepares original IT investment  budget, evaluates and moni- tors IT investments Makes decisions on issues  related to the management of  overseas offices and other  operations abroad Determines scope of consoli- dated financial reports, scope  of evaluation of internal control  reports and disclosure of  important information Gathers information on the  system and current situation of  risk management, and sets  policy and strategy regarding  risk management Group Internal Audit  Committee Makes decisions on issues  relating to the internal audit  system and the verification of  internal control activities Basic management policy Group-wide business strategy  and management issues,  important financial matters