Governance

HOTEL LOTTE commits to its duty to society
through transparent and responsible governance.

Board of Directors' Engagement in Responsible Management

HOTEL LOTTE practices responsible management through its board of directors. The directors, charged with the decision-making related to legal obligations, shareholders’ meeting outcomes, and the general operations of the company, strive to uphold the principles of transparency, fairness, and diversity in promoting stakeholders’ interests, improving HOTEL LOTTE ’s value, and achieving sustainable development.

Disclosures

governance

Regulations of the Board of Directors

HOTEL LOTTE has the Articles of Incorporation and Regulations in place regarding the Board of Directors. The letter defines in full the rights and responsibilities of the board of directors and the procedures of its operation. Operating under the board of directors are four expert committees whose purpose is to ensure the expertise and fairness of the board of directors: the Transparent Management Committee, the Compensation Committee, the Outside Director Candidate Recommendation Committee, and the Audit Committee. The board of directors holds a regular meeting at least once every quarter, and holds additional meetings as needed.

BoD Composition

Board of Directors

Transparent Management Committee	Compensation Committee	Outside Director Candidate Recommendation Committee	Audit Committee
Responsibilities Reinforcement of internal regulation for transactions with affiliates and related parties	Responsibilities Determination of directors' pay through the Compensation Committee for reinforced management transparency and compliance	Responsibilities Recommendation of ideal outside director candidates for improved corporate governance and competence of the board of directors; fair appointment of outside directors for improved management transparency	Responsibilities Independent and objective review of the suitability and effectiveness of internal policies and systems
Rights ① Review and approval of internal transactions ② Request to the company to submit the documents and information necessary to verify business activities, agreements, grounds for selection of transaction parties, detailed transaction conditions, and other such details	Rights ① Upper limit on registered directors' pay, to be submitted at general meetings of shareholders ② Approval of individual registered directors' pay (bonuses included) ③ Other rights as conferred by the board of directors	Rights Recommendation of outside director candidates to undergo election at a general meeting of shareholders	Rights ① Review of accounting documents such as financial statements and accounting firms' audit procedures and results ② Review of the internal accounting management system ③ Regular and impromptu audits

Transparent Management Committee

Responsibilities: Reinforcement of internal regulation for transactions with affiliates and related parties

Rights: ① Review and approval of internal transactions; ② Request to the company to submit the documents and information necessary to verify business activities, agreements, grounds for selection of transaction parties, detailed transaction conditions, and other such details

Compensation Committee

Responsibilities: Determination of directors' pay through the Compensation Committee for reinforced management transparency and compliance

Rights: ① Upper limit on registered directors' pay, to be submitted at general meetings of shareholders; ② Approval of individual registered directors' pay (bonuses included); ③ Other rights as conferred by the board of directors

Outside Director Candidate Recommendation Committee

Responsibilities: Recommendation of ideal outside director candidates for improved corporate governance and competence of the board of directors; fair appointment of outside directors for improved management transparency

Rights: Recommendation of outside director candidates to undergo election at a general meeting of shareholders

Audit Committee

Responsibilities: Independent and objective review of the suitability and effectiveness of internal policies and systems

Rights: ① Review of accounting documents such as financial statements and accounting firms' audit procedures and results; ② Review of the internal accounting management system; ③ Regular and impromptu audits

Expertise, Diversity, and Independence of the Board of Directors

Expertise, diversity, and independence are the guiding principles in the appointment of the members of the board of directors. Candidates for directorship are nominated by the board of directors and the Outside Director Candidate Recommendation Committee, to be appointed by election at a general meeting of shareholders. With internal directors who are corporate management experts and outside directors coming from fields such as finance, law, and business, the board of directors performs oversight of HOTEL LOTTE's corporate management objectively as enabled by the individual directors' perspectives. The independence of each director is guaranteed so as to achieve the objectivity of the board of directors' decisions.

Framework for
Sustainability
of Management

Sustainable Management Council

In 2021, HOTEL LOTTE installed an ESG Division in each of its four component companies with the purpose of achieving sustainable management, and formed the Sustainable Management Council consisting of members of the upper management and ESG-related departments.
The issues and risks facing each of the four companies were ranked in the order of importance, and an annual plan has been set detailing the strategies to be implemented to deal with the identified issues and risks. The Sustainable Management Council holds regular meetings, where progress achieved from the strategies is reported and matters concerning the strategies are discussed.
HOTEL LOTTE's board of directors will be scheduled for its first briefing on issues, risks, and disclosures related to sustainable management by the Sustainable Management Council.

Sustainable Management as a Foundation of All Business Activities

Recognizing sustainable management as one of its critical success factors, HOTEL LOTTE started monitoring sustainable management performance indicators as one of its KPIs in 2021 to distribute the positive effects of sustainable management among all of its business activities. Sustainable management KPIs make up 20% to 30% of the KPI structure of each component company. This ensures that the value of sustainable management stays linked with the organizational goals and performance.