Nissui upholds the Policy toward Society “to behave with integrity as a company and an individual” in its Code of Ethics. Board Members who engage in management for the benefit of the shareholders shall strive to enhance the functions of the Board of Directors, the decision-making body for the Company’s business execution, and ensure flexible decision-making and the transparency of management. The Audit & Supervisory Board Members shall ensure its independence while enhancing and strengthening its oversight function over the business execution of the Board Members.
Board Members have a term of office of one year to ensure greater transparency of management and to strengthen the functions of management oversight, and Outside Board Members independent from the executive team have also been appointed. The Board of Directors currently comprising eight male Board Directors, of whom two are Outside Board Members meet at least once a month, as a general rule, to decide important matters and to supervise the status of business execution.
With respect to business execution, the executive officer system was adopted from June 25, 2009 to further strengthen the business execution framework and to ensure greater flexibility and effectiveness in business operations. Executive Officers who have been appointed by the Board of Directors meet once a month at the Executive Committee, as a general rule, to deliberate and resolve important matters relating to operations and to report on the status of business execution. The Executive Committee comprises 18 male Executive Officers including six Executive Officers serving concurrently as Board Members.
With respect to supervision and auditing, Outside Board Members maintain a position that is independent from the executive team when attending the Board of Directors and conduct supervision over management, while the Audit & Supervisory Board Members (three male and one female) including three Outside Audit & Supervisory Board Members attend the Board of Directors and conduct audits of the business execution of the Board Members as well as attend the Executive Committee, as necessary.
Furthermore, an internal auditing division, which is under the direct control of the President, conducts internal audits of the business operations of the Group. With respect to accounting audits, Nissui has engaged Ernst & Young ShinNihon LLC, and undergoes accounting audits pursuant to the Companies Act and to the Financial Instruments and Exchange Act.
With respect to nomination and remuneration, the Nomination and Compensation Committee, a voluntary committee comprising the Representative Board Member and Outside Board Members, deliberate the election and dismissal of executive candidates including the CEO, succession plans, remunerations, etc. and make recommendations to the Board of Directors. The Board of Directors, keeping in mind this recommendation, resolves executive appointments and remunerations. Candidates for Audit & Supervisory Board Member obtain prior approval of the Audit & Supervisory Board.
The remunerations of Audit & Supervisory Board Members are determined by deliberation of the Audit & Supervisory Board Members.
The Internal Audit Department, an organization (with seven members including the General Manager) which is under the direct control of the President, has been established as an internal auditing division. The department conducts internal audits on the Group based on annual plans, evaluates matters relating to internal controls to ensure the reliability of financial reporting, and reports the results to the Board Members, the Audit & Supervisory Board Members and the heads of the audited organizations.
As of March 31, 2019, the Audit & Supervisory Board comprises four members including three Outside Audit & Supervisory Board Members. Each Audit & Supervisory Board Member conducts audits in accordance with laws and regulations, the Articles of Incorporation and the implementation procedures established by the Audit & Supervisory Board for the purpose of ensuring the effectiveness of audits. Audit & Supervisory Board Members also periodically receive reports on audit plans and audit results from the Accounting Auditor, while at the same time mutually coordinate with them by witnessing certain audits conducted by the Accounting Auditor, and exchange information and opinions with the Internal Audit Department as necessary. Furthermore, Audit & Supervisory Board Members also periodically exchange opinions with the Representative Board Member and Board Members (including Outside Board Members). The Company has established "Staff of Audit & Supervisory Board Members" to assist the operations of the Audit & Supervisory Board Members from a position independent from the Board Members and Executive Officers.
The Company has entered into an audit engagement agreement with Ernst & Young ShinNihon LLC.
There are two Outside Board Members, who have no personal, capital, trading or any other special relationship of interest with the Company.
Outside Board Member, Kazuo Ohki, has extensive insight accumulated over the years as a Representative Director of a telecommunications company and a network support company. The Company has elected him as an Outside Board Member with the expectation that he will offer appropriate supervision and decision-making on management in general.
Outside Board Member, Keisuke Yokoo, has extensive insight accumulated over the years through his experience at financial institutions and as the Representative Director, and since June 2013 has also been providing questions and advice, as necessary, to ensure the appropriateness of decision-making, as an Outside Audit & Supervisory Board Member at the Board of Directors meetings of the Company. The Company has elected him as an Outside Board Member with the expectation that he will offer appropriate supervision and decision-making on management in general based on his abundant knowledge of the Company.
Given that both Outside Board Members meet the requirements of independent officers set forth by the Tokyo Stock Exchange and the "Independence Criteria of Outside Executive Officers" set forth by the Company and thus do not pose any conflict of interests with general shareholders, the Company has deemed them to be independent and has designated them as Independent Officers as set forth by the Tokyo Stock Exchange and given notice thereto. The Outside Board Members exchange information and opinions, as necessary, with the Internal Audit Department on the content of the reports submitted by the department.
There are three Outside Audit & Supervisory Board Members, who have no personal, capital, trading or any other special relationship of interest with the Company.
Outside Audit & Supervisory Board Member, Shino Hirose, is well-versed in corporate law, as well as in business in China from having served at the Japanese Embassy in Beijing, as a public servant for a fixed term with the Ministry of Foreign Affairs. The Company has elected her as an Outside Audit & Supervisory Board Member with the expectation that she will draw on her expertise in conducting the audits of the Company. Ms. Hirose belongs to the law firm, Abe, Ikubo & Katayama.
Outside Audit & Supervisory Board Member, Motohide Ozawa, a Certified Public Accountant, has abundant experience as an expert in accounting from having served as a Representative Partner at a major accounting firm and from currently serving as Specially-appointed Professor of Graduate School of International Accounting, Professional Graduate Schools, Chuo University. He serves as an outside auditor, etc. of three listed companies including a warehouse company and an apparel manufacturing company and has extensive insight into the business world. The Company has elected him as an Outside Audit & Supervisory Board Member with the expectation that his advice based on his experience and knowledge will be effective toward the audits of the Company.
Outside Audit & Supervisory Board Member, Toshinari Iyoda, has had extensive experience over the years in international sales and media/information and communication sales at financial institutions, as well as being well-versed in auditing from having served for six years as a standing corporate auditor including a corporate auditor of a listed company. The Company has elected him as an Outside Audit & Supervisory Board Member with the expectation that he will draw on his deep insight and experience accumulated in the course of his career in conducting the audits of the Company.
Given that all three Outside Audit & Supervisory Board Members meet the requirements of independent officers set forth by the Tokyo Stock Exchange and the "Independence Criteria of Outside Executives" set forth by the Company and thus do not pose any conflict of interests with general shareholders, the Company has deemed them to be independent and has designated them as Independent Officers as set forth by the Tokyo Stock Exchange and given notice thereto.
Outside Audit & Supervisory Board Members periodically receive reports on audit plans and audit results from the Accounting Auditor, while at the same time mutually coordinate with them by witnessing certain audits conducted by the Accounting Auditor. Outside Audit & Supervisory Board Members also exchange information and opinions with the Internal Audit Department as necessary.
The Internal Audit Department reports the results of the operational audits of the Group to the Audit & Supervisory Board Members.
| Executive category | Total amount of compensation, etc. (Millions of yen) |
Total amount of compensation, etc. by type (Millions of yen) |
Number of eligible executives (persons) |
|
|---|---|---|---|---|
| Basic compensation | Performance-linked compensation | |||
| Board Members (excluding Outside Board Members) |
345 | 240 | 105 | 8 |
| Audit & Supervisory Board Members (excluding Outside Audit & Supervisory Board Members) |
24 | 24 | - | 1 |
| Outside Executives | 66 | 66 | - | 9 |
A basic policy for the determination of executive compensation has been established, as per the following, in accordance with the Corporate Governance Code.
The Company's executive compensation system comprises the three elements of 1) basic compensation which has been determined as a fixed compensation according to the rank of the officer, 2) performance-linked compensation (annual incentive) which is linked to annual business performance and 3) stock-based compensation (medium-term incentive) which is linked to the level of achievement of the Medium-Term Business Plan. Compensation levels and the proportion of each type of compensation are set, upon comparison with industry peers and similar-sized enterprises, based on the financial condition of the Company.
The Company's executive compensation is determined by resolution of the Board of Directors within the range of the total amount of compensation approved by the General Shareholders' Meeting, upon deliberation by the Nomination and Compensation Committee, a voluntary committee chaired by an Outside Board Member and comprising the Representative Board Member and Outside Board Members.
Compensation for Audit & Supervisory Board Members comprises fixed compensation and is determined by deliberation of the Audit & Supervisory Board Members within the range of Audit & Supervisory Board Member compensation approved by the General Shareholders' Meeting.
