Sustainability
Corporate Governance
Corporate Governance
Corporate Governance Policy
Basic Approach
The Group believes that pursuing sustainable growth and medium- to long-term enhancement of our corporate value through fair business activities is the basic mission of corporate management worthy of the trust of shareholders and investors. We also have obligations to stakeholders other than shareholders and investors, namely customers, business partners, local communities, local governments, our employees, and the global environment.
In practicing corporate management under this approach, we recognize the importance of establishing corporate governance that includes ensuring accuracy and greater speed in decision-making, improving the transparency of management, enhancing disclosures and IR, and strengthening the compliance system and other forms of risk management. Accordingly, we are working to strengthen and enhance our governance initiatives through such means as innovating our management system.
Corporate Governance System
Overall View of Our Governance Organization
The Group is structured as a company with an Audit & Supervisory Board to ensure that the Board of Directors can perform proper business management while the Audit & Supervisory Board carries out management oversight.
So that these functions can be demonstrated fully, we appoint multiple outside directors who are capable of engaging in oversight with independent perspectives on business execution. Moreover, we appoint enough outside Audit & Supervisory Board members from multiple fields to make up half of the Audit & Supervisory Board, where they facilitate multifaceted oversight, so that we have a broad spectrum of experience and expertise from which to obtain advice and recommendations, as well as a corporate governance system with highly transparent and sound management.
We have also adopted an executive officer system that separates decision-making (the Board of Directors) from business execution to ensure both appropriate business management and efficient business execution. Additionally, we have established an Executive Committee comprising full-time directors and executive officers who deliberate on important management issues to assist the president with business execution.
Directors and the Board of Directors
In order to facilitate the establishment and achievement of corporate management strategies, policies, and targets, the Board of Directors is vested with the authority and responsibility to perform concrete planning, stipulate basic matters for overall management, and put forward resolution measures for internal issues, along with the authority to oversee the performance of representative directors and other directors and executive officers. The Board of Directors is obligated to pursue all duties fairly.
To facilitate prompt and appropriate decision-making and fulfillment of the full scope of responsibilities held by the Board of Directors, we limit the number of directors to nine, including three outside directors.
Directors serve for one year, after which they are eligible for reappointment.
Audit & Supervisory Board
The purpose of the Audit & Supervisory Board is to carry out the duties required of it by Japan’s Companies Act and to serve as an objective observer of our management. Full-time Audit & Supervisory Board members attend Board of Directors meetings, Management Council meetings, and other important meetings, and perform compliance- and legality-related auditing of the company’s business execution. Outside Audit & Supervisory Board members ask questions regarding the legality of company decision-making at Board of Directors meetings, and provide their own opinions on these matters.
To facilitate accounting and operational audit effectiveness, we limit the number of Audit & Supervisory Board members to four. At least half of these are outside Audit & Supervisory Board members.
Nitta has established an organization to support the work of Audit & Supervisory Board members, with dedicated support staff who execute duties under the leadership of the Audit & Supervisory Board.
Additionally, appointments and transfers of these staff members shall be determined through consultation with the Audit & Supervisory Board to ensure the independence of the staff from directors and to ensure their effectiveness in carrying out tasks as directed by Audit & Supervisory Board members.
Outside Directors and Outside Audit & Supervisory Board Members
The Nitta Group appoints outside officers who bring a wide range of experiences and insights in specialized and general fields to the decision-making of Group management, and who supervise the validity of our business execution from fair, neutral standpoints.
Regarding the criteria for independence of outside officers, the Group complies with the criteria for determining the independence of outside officers in the Guidelines for Listing set out by the Tokyo Stock Exchange in 2010. Although the same applies to the attribute information in the 2012 revision of the listing rules of the Tokyo Stock Exchange, the Group has set out and follows minimal disclosure criteria in the course of making appointments.
Outline of Limitation of Liability Agreements
Nitta maintains agreements with outside directors and outside Audit & Supervisory Board members, which are based on the stipulations of Paragraph 1, Article 427 of the Companies Act and which limit liability for compensation as well as the amount of liability compensation as stipulated by Paragraph 1, Article 423 and Paragraph 1, Article 425, respectively, of the Companies Act.
Nomination and Compensation Committee
The Nitta Group’s Nomination and Compensation Committee consists of three outside directors and two inside directors. Following consultation with the Board of Directors, the Nomination and Compensation Committee deliberates on candidates for appointment to and dismissal from the Board, human resource development programs, the compensation system for directors, and the level and distribution of compensation, after which it reports to the Board of Directors.
Nitta Group Corporate Governance System Diagram
Members in Attendance at Board of Directors, Audit & Supervisory Board, and Nomination and Compensation Committee Meetings
As of 25th June 2024
| Names of directors and Audit & Supervisory Board members |
Board of Directors | Audit & Supervisory Board | Nomination and Compensation Committee |
||
|---|---|---|---|---|---|
| Board of Directors | Representative director/president | Yasunori Ishikiriyama | ◎ | ◯ | |
| Representative director | Seiichi Kitamura | ◯ | ◯ | ||
| Director | Toyohiro Hagiwara | ◯ | |||
| Director | Atsushi Izumi | ◯ | |||
| Director | Koichi Kakegami | ◯ | |||
| Director (outside) | Hiroe Toyoshima | ◯ | ◎ | ||
| Director (outside) | Takehisa Ikeda | ◯ | ◯ | ||
| Director (outside) | Tomoyuki Ono | ◯ | ◯ | ||
| Audit & Supervisory Board member | Full-time Audit& Supervisory Board member | Junichi Akai | ◯ | ◎ | |
| Full-time Audit& Supervisory Board member | Katsuhiro Fukuwaka | ◯ | ◯ | ||
| Audit & Supervisory Board (outside) | Kazuyoshi Matsuura | ◯ | ◯ | ||
| Audit & Supervisory Board (outside) | Tetsuaki Ogami | ◯ | ◯ | ||
◎: Chair ○: Attending member
Percentage of Outside Members
Experience and Expertise of Directors and Executive Officers
As of 25th June 2024
| Position | Name | Experience and expertise | |||||
|---|---|---|---|---|---|---|---|
| Corporate management/ organizational operation |
Global | Sales/ marketing |
Manufacturing technology/R&D | HR/legal/ risk management |
Management strategy/ financial accounting |
||
| Directors | Yasunori Ishikiriyama | ● | ● | ● | |||
| Seiichi Kitamura | ● | ● | ● | ● | |||
| Toyohiro Hagiwara | ● | ● | ● | ||||
| Atsushi Izumi | ● | ● | ● | ||||
| Koichi Kakegami | ● | ● | ● | ● | |||
| Hiroe Toyoshima | ● | ● | ● | ||||
| Takehisa Ikeda | ● | ● | ● | ||||
| Tomoyuki Ono | ● | ● | ● | ||||
| Executive officers | Hiroki Suzuki | ● | ● | ● | |||
| Kazushige Kinoshita | ● | ● | ● | ||||
| Yuji Hamada | ● | ● | ● | ||||
| Takafumi Ishizuka | ● | ● | ● | ||||
| Keiji Hirata | ● | ● | ● | ||||
| Takemasa Kurokawa | ● | ● | ● | ||||
Corporate Governance Report
Nitta’s Corporate Governance Report is on the website of the Tokyo Stock Exchange.
Feel free to read this report.
Officer Compensation
Basic policy for the determination of directors’ compensation decided by the Board of Directors, based on the report by the Nomination and Compensation Committee, is as follows.
- 1.The composition of compensation will provide directors with incentive to steadily achieve yearly performance targets and to promote appropriate management, and will make directors sufficiently aware of sustainable improvement in corporate value over the medium to long term through the achievement of medium- to long-term business plans.
- 2.The compensation level will be sufficiently competitive in comparison with companies of similar scale and belonging to the same industry, to secure officers who are outstanding human resources possessing the abilities and the aptitude to meet the criteria for appointment as directors of the Company.
- 3.The compensation system will enable fair and impartial evaluation with high transparency.
In accordance with our basic policy, the Nomination and Compensation Committee deliberates matters related to performance evaluations involving calculation of individual compensation amounts for directors, and advises the Board of Directors regarding the results. Based on the Committee’s reports and advice, the Board of Directors determines the individual compensation amounts and other matters for directors.
The amount of compensation for Audit & Supervisory Board members is determined by resolution of the Audit & Supervisory Board, based on the advice of the Nomination and Compensation Committee and within the total amount of compensation determined through resolution at the General Shareholders’ Meeting.
| Type of compensation | Directors (excluding outside directors) |
Outside directors | Audit & Supervisory Board members | Outline | |
|---|---|---|---|---|---|
| Fixed compensation | Monetary compensation | 70% | 100% | 100% | This monetary compensation is paid monthly as basic compensation to ensure that recipients fully demonstrate qualities and abilities for driving corporate growth and meet their responsibilities. |
| Performance-linked remuneration |
Monetary compensation | 10% | - | - | This monetary compensation is paid in accordance with each fiscal year’s company-wide performance evaluation and officers’ individual performance evaluations following the end of the fiscal year, as a short-term incentive to encourage appropriate management and the steady achievement of the fiscal year’s performance targets. |
| Restricted stock compensation |
20% | - | - | Monetary compensation receivables are paid as assets in kind related to the granting of restricted stock, for the purpose of providing directors with incentive to continuously enhance the Company’s corporate value, while promoting further value sharing between directors and shareholders. | |
Analysis and Evaluation of the Effectiveness of the Board
Nitta uses a questionnaire to survey all directors and Audit & Supervisory Board members, including those outside the Company, about the effectiveness of the Board of Directors. The results are reported to the Board of Directors. An outline of the results is as follows.
- ・The operation of the Board of Directors (including frequency of meetings, number of agenda items, and time allotted for prior examination of materials) is appropriate overall.
- ・Board of Directors meetings maintain conditions in which outside directors and Audit & Supervisory Board members can freely express opinions.
As indicated, positive evaluations have been received, and our analysis and assessment show that the effectiveness of the Board of Directors is ensured overall.
At the same time, opinions have also been received calling for “more flexible setting of meeting times,” “review of the standards for items to be discussed at the Board of Directors,” and “implementation of training in response to changes in society.”
Drawing on such opinions, we intend to work toward further improvement of the effectiveness of the Board of Directors.
Internal Control Systems
The Nitta Group has established the Basic Policy on Construction of Internal Control Systems. In line with this policy, we maintain an internal control system covering things such as deliberation on important matters, establishment and implementation of relevant rules, internal audits, compliance, and risk management. This is how we strive to build and operate a system for ensuring all business is done appropriately. Details on the status of maintenance and operation of our internal control can be found in part IV, “Matters Concerning the Internal Control System,” in the Corporate Governance Report.