CSR activities in FY2020
Corporate Governance
* The contents are based on “NTN Report 2021.”
Basic Approach and Implementation System
Basic Approach
Strengthening and enhancing our corporate governance is one of our top management priorities. We
take steps to make management more efficient and robust while working to increase management
transparency by disclosing information in a prompt and accurate manner to shareholders and
investors.
We made a transition from a Company with a Board of Company Auditors to a Company with a
Nominating Committee, etc. in June 2019 with the aim of establishing a prompt decision-making
structure and operational execution organization, strengthening the supervision of management,
and improving management transparency and fairness.
Under this structure, we will work on
further improvement of corporate value over the medium- and long-term.
■Corporate governance structure (as of July 30, 2021)
Board of directors
The Board of Directors decides the basic management policies, and supervises the execution of
duties of Directors and Executive Officers. Except matters stipulated by laws and regulations or
the Articles of Incorporation, the Board of
Directors delegated substantial authority to Executive Officers with the aim to strengthen the
supervision of management, and make decisions more promptly.
The Board of Directors is held once a month in principle, but it is also held flexibly as
needed.
The Articles of Incorporation specify that the term of office of Directors shall be one year,
and the number of Directors shall be within 15. The number of Directors is 11 as of June 25,
2021, and five of them are Outside Directors. The Board of Directors is chaired by Non-Executive
Director.
Nominating Committee
The Nominating Committee decides on the content of a proposal regarding appointment/ removal of Directors, which is submitted to the General Meeting of Shareholders. The majority of the members are Outside Directors. Three out of the five members of the committee are Outside Directors, and the committee is chaired by an Outside Director.
Audit Committee
The Audit Committee audits the execution of duties of Directors and Executive Officers, and
decides on the content of a proposal regarding appointment/removal of the accounting auditor,
which is submitted to the General Meeting of
Shareholders. The majority of the members are Outside Directors. Three out of the four members
of the committee are Outside Directors, and the committee is chaired by an Outside
Director.
Also, assistants, including the Audit Preparation and Support Office, are appointed from the
Internal Audit Divisions to support the duties of the Audit Committee. Regarding matters
relating to appointment, personnel relocation, disciplinary punishment, evaluation, etc. of
assistants, the approval from the Audit Committee shall be required for decision.
Compensation Committee
The Compensation Committee decides on the policy for compensation for Directors and Executive Officers, and details of compensation for individual persons. The majority of the committee are Outside Directors. Three out of the five members of the committee are Outside Directors, and the committee is chaired by an Outside Director.
■Members composing Nominating Committee, Audit Committee, and Compensation Committee Year ended March 31, 2022 (As of June 25, 2021)
| Director | Nominating Committee |
Compensation |
Audit |
|---|---|---|---|
| Eiichi Ukai | ○ | ○ | |
| Hideaki Miyazawa | |||
| Toshinori Shiratori | ○ | ||
| Masaki Egami | |||
| Hiroshi Ohkubo | ○ | ||
| Keiji Ohashi | ○ | ||
| Noboru Tsuda ★ (Non-standing) |
◎ | ○ | |
| Kouji Kawahara ★ | ○ | ◎ | |
| Ryo Kawakami ★ (Non-standing) |
◎ | ○ | |
| Tomonori Nishimura ★ (Non-standing) |
○ | ○ | |
| Yuriya Komatsu ★ (Non-standing) |
○ |
※★Please note that persons with ★ are Outside Directors, persons with ◎ are Chairpersons of committees, and persons with 〇 are members of committees.
Management Meeting
The Management Meeting discusses important matters relating to operational execution, as a supporting body for decision-making of President, Executive Officer. The meeting is composed of President, Executive Officer, and Executive Officers who are designated by him, and held twice a month in principle.
Executive Officers Meeting
The Executive Officers Meeting is held by President, Executive Officer under the attendance of all Executive Officers. Matters resolved at the Board of Directors are instructed, and each Executive Officer reports about the status of operational execution. This meeting is held once a month in principle, to make operational execution more efficient and effective by sharing information among Executive Officers.
Executive Officer
Executive Officers are elected by the resolution of the Board of Directors, and are in charge of executional decision making and execution of operations delegated by the Board of Directors. Its term of office is specified as a year by the Articles of Incorporation. The number of Executive Officers is 11 as of June 25, 2021.
■Basic information
|
Organizational design |
Company with Nominating Committee, etc. |
|---|---|
|
Directors |
11 |
|
Of those, independen |
5 |
|
Term of office of Directors |
1year |
|
Executive Officers |
11 |
|
Of those, Executive |
2 |
|
Executive Officers |
4 |
|
Structure to support duties of Audit Committee |
Available (Audit Preparation and Support Office) |
|
Accounting auditor |
Ernst & Young ShinNihon LLC |
Directors
■Directors①
■Directors②
Executive Officers (as of April 1, 2021)
| Name | Title | Responsible |
|---|---|---|
| Eiichi Ukai＊ |
Representative Executive Officer |
|
| Hideaki Miyazawa＊ |
Representative Executive Officer Executive Officers |
|
| Yoshinori Terasaka | Executive Officer |
|
| Isao Ozako | Executive Officer |
|
| Toshinori Shiratori＊ | Executive Officer |
|
| Hiroyuki Ichikawa | Executive Officer |
|
| Masaki Egami＊ | Executive Officer |
|
| Masayuki Kaimi | Executive Officer |
|
| Tetsuya Sogo | Executive Officer |
|
| Etsu Harima | Executive Officer |
|
| Masaaki Yamamoto | Executive Officer |
|
＊ Executive Officers currently serving as Directors
Governance-strengthening transition
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2011 |
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2015 |
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2016 |
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2018 |
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2019 |
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2020 |
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Board of Directors
Approach of Board of Directors
Directors other than Outside Directors are appointed from a wide range of fields, including manufacturing, marketing, technology, and administrative divisions. In addition, Outside Directors are appointed after considering diversity and balance, such as being a person with knowledge of finance, experienced management, and being a lawyer. We believe that the current number of Directors is an appropriate size for strengthening corporate governance and expanding our global businesses.
Diversity of Directors
Upon the approval of the General Meeting of Shareholders in the fiscal year ended March 2020, a female Director (Outside Director) was newly appointed for the first time at the Company. The female Director with experience in a different industry than ours will supervise management. This will enable us to integrate diverse values and accelerate transformation aimed at achieving sustainable growth.
Assessment of effectiveness of the Board of Directors
We conducted a self-assessment of the Board of Directors by sending out questionnaires to Directors from the viewpoints such as role/structure/management of the Board of Directors and management of committees. The result was generally positive, but there were comments regarding a succession plan of top management (CEO) and others. Based on those, discussions were held on future actions and others at the Board of Directors. We will continue to analyze and evaluate the effectiveness of the Board of Directors on a regular basis to make improvements.
The main areas of experience of Directors (Skill matrix)
Nominating Committee
Members, the number of meetings, and attendance
| Name | Title | Attendance | Number of attendances |
|---|---|---|---|
| Noboru Tsuda | Chairman Outside Director |
100% | 4 times/4 times |
| Kouji Kawahara | Outside Director | 100% | 4 times/4 times |
| Tomonori Nishimura | Outside Director | 100% | 4 times/4 times |
| Hiroshi Ohkubo | Director | 100% | 4 times/4 times |
| Toshinori Shiratori | Director | 100% | 4 times/4 times |
Discussions on Nominating Committee
The Nominating Committee was established in conjunction with the transition to a Company with a Nominating Committee, etc. in 2019. The committee was held four times for the year ended March 31, 2021, with discussions and resolutions mainly on the standards for selection of Directors, skill matrix related to such standards for selection and the standards regarding the independence of Outside Directors.
About Outside Directors
As of June 25, 2021, the Board of Directors consists of 11 members, including six Inside
Directors and five Outside Directors, and the ratio of Outside Directors is 45%. In this way, we
strengthen the supervision of management and improve management transparency and fairness. In
addition, in order to ensure appropriate corporate governance, we have established our own
standards regarding the independence of Outside Directors, stipulating qualification and
independence standards for them. These standards are used for appointing Outside Directors.
Also, all the Outside Directors are designated as Independent Officers as defined by the rules
of the Tokyo Stock Exchange, Inc. (TSE), and are reported to TSE as such.
For Outside Directors, we have established an environment where active discussions can be held
at the Board of Directors through actions such as explaining the issues as necessary prior to a
relevant meeting of the Board of Directors. Moreover, we continuously provide information
necessary to effectively fulfill the roles and responsibilities of an Outside Director by
creating opportunities to deepen their understanding of our business through on-site inspection
of business sites and other means.
Standards for Selection of Directors
Candidates for Directors will be selected from inside and outside the Company based on standards for selection of Directors as described below, considering the diversity and balance of the Board of Directors (including gender and internationality), after careful deliberation by the Nominating Committee.
- Must be in good condition both physically and mentally.
- Must have a high sense of ethics and a law-abiding spirit.
- Must be able to engage in constructive discussion from an objective viewpoint.
- Must be highly motivated to improve their abilities.
- Must have excellent decision-making skills from a company-wide and medium- to long-term perspective.
- Must have excellent insight and foresight concerning changes to the overall environment and to society.
- Must have a sufficient record of performance and expertise in relevant fields. (Corporate manager or expertise)
- Outside Directors must (1) have sufficient time to accomplish their duties, (2) satisfy the standards regarding the independence of Outside Directors, (3) ensure diversity between the Outside Directors, and (4) have the requisite abilities to accomplish duties as a member of any of the three Committees.
The appointment of Executive Officer
The appointment of an Executive Officer shall be determined after careful deliberation by
the Board of Directors, comprehensively considering whether they possess personalities,
insights, capabilities, experience/performance, etc. that are appropriate for fulfilling
their duties. In addition, if it becomes clear that an Executive Officer lacks the required
qualifications, he/she will be promptly dismissed by the Board of Directors.
Since June 25, 2021, the Company has removed the Managing Executive Officers and eliminates
hierarchical relationships among Executive Officers and makes them into one team. It enables
all Executive Officers to activate discussions and respond to various issues quickly toward
further enhancement of its corporate value.
Compensation Committee
Members, the number of meetings, and attendance
| Name | Title | Attendance | Number of attendances |
|---|---|---|---|
| Ryo Kawakami | Chairperson Outside Director | 100% | 6 times/6 times |
| Noboru Tsuda | Outside Director | 100% | 6 times/6 times |
| Yuriya Komatsu＊ | Outside Director | 100% | 4 times/4 times |
| Hiroshi Ohkubo | Director | 100% | 6 times/6 times |
| Toshinori Shiratori | Director | 100% | 6 times/6 times |
The number of attendances after becoming as a member of the Committee
Discussions at the Compensation Committee
The Compensation Committee aims to improve fairness, transparency, and objectivity of procedures regarding the decision making of compensation for Directors and Executive Officers and enhance corporate governance. Also, the committee passed resolutions regarding the details of compensation (such as compensation specified for each individual) of Officers.
■Compensation Committee (April 1, 2020 - March 31, 2021)
|
1st |
Special measures regarding stock delivery, etc. of BIP Trust for compensation of Officers |
|---|---|
|
2nd |
Points granted for BIP Trust for compensation of Officers Bonus for Executive Officers in 2020 Directors' and Executive Officers' compensation reduction Summer bonus for Operating Officers in 2020 |
|
3rd |
Decision of the order of substitution for the chairperson in the event of an
accident Policy for determining the amount of compensation or the method of calculating such amount Director compensation Annual activity plans |
|
4th |
New Medium-term Management Plan's medium-to long-term performance-linked
compensation system for Officers Compensation for Officers stationed overseas Examination of the level of compensation and compensation structure of Officers Winter bonus for Operating Officers in 2020 Compensation Committee report |
|
5th |
Compensation for Officers stationed overseas |
|
6th |
Executive Officer's compensation determination Performance indicators of New Medium-term Management Plan's medium- to long-term performance-linked compensation system for Officers |
Policies for determining the amount, or method of calculation, of compensation, etc., for Officers
The system and level of compensation for Officers, compensation specified for each individual, etc. are determined in the Compensation Committee chaired by an Outside Director using objective information including the level and trends of other companies as reference. Compensation for Executive Officers and compensation for Directors are determined separately, and if a Director also serves as an Executive Officer, those compensations are added up.
Compensation for Executive Officers
Compensation for Executive Officers consists of fixed compensation and performance-linked compensation, which fluctuates according to performance. The ratio of fixed compensation to performance-linked compensation is approximately 6:4 as a standard.
Fixed compensation shall be determined based on a relevant Executive Officer's role and increased in the case of, for example, Executive Officers who have the right to represent.
■Annual incentives
For Executive Officers, the Company determines whether or not to provide payment of monetary compensation that reflects the performance of a single fiscal year, based on consolidated financial results indicators, etc. of the previous fiscal year and, in the case of providing such payment, the total amount. The payment or non-payment to each Executive Officer, and in the case of payment, the amount, is determined within the total amount of provision by considering the Executive Officer's progress on priority target measures. Indicators related to the calculation of bonuses are based on consolidated financial results: net sales, operating income and net income from the perspective of emphasizing the achievement of earnings growth. The provision is made once a year in June after the determination of the Compensation Committee.
■Medium-to long-term incentives
The Company's shares shall be issued based on the achievement level of major target
figures in the Medium-term Management Plan (money equivalent to the converted amount of shares
shall be paid for a certain portion) as incentives to motivate them to achieve the targets in
the Medium-term Management Plan and contribute to raising shareholder value, and in order to
promote the holding of the Company's shares.
Medium- to long-term performance targets include key performance indicators (consolidated
operating margin, consolidated net sales, etc.) that take into account the Company's management
policies.
Compensation for Directors
Compensation for a Director consists only of fixed compensation. Fixed compensation shall be calculated by increasing basic compensation (which is determined based on his/her concurrent duties as an Executive Officer and whether he/she works full-time or part-time), taking into account a committee to which a Director belongs and his/her role at the committee.
Audit Committee
Members, the number of meetings, and attendance
| Name | Title | Attendance | Number of attendances |
|---|---|---|---|
| Kouji Kawahara | Chairperson Outside Director |
93% | 14 times/15 times |
| Ryo Kawakami | Outside Director | 100% | 15 times/15 times |
| Tomonori Nishimura＊ | Outside Director | 100% | 10 times/10 times |
| Keiji Ohashi＊ | Director | 100% | 10 times/10 times |
The number of attendances after becoming as a member of the Committee
Discussions at the Audit Committee
Major items to be discussed at the Audit Committee include the formulation of the Audit Committee's auditing standards, the formulation of auditing policies and auditing plans, the evaluation of the content of auditing plans of the independent auditors, the assessment of the selection of independent auditors, and the assessment of the status of development and operation of internal control systems.
Audit Status
The Audit Committee members attend meetings of the Board of Directors and other major meetings in accordance with auditing standards, policies, and plans determined by the Audit Committee. The Audit Committee receives reports or hears from Directors, Executive Officers, employees, etc. on the status of the execution of their duties, and audits the execution of duties by Directors and Executive Officers. In addition to the Board of Directors and Executive Officers Meeting, members of the Audit Committee attend and monitor the Sustainability Committee, the Risk Management Committee, the Compliance Committee, and the Fair Trade Monitoring Committee, which operate internal control systems.
Overview of the Committees
Sustainability Committee
The Sustainability Committee is chaired by the Executive Officer, who is in charge of the CSR Division, and is vice-chaired by the corporate general manager of the division. Members of the committee consist of the heads of ESG-and materiality-related divisions. The committee stipulates that each employee in our group should promote sustainability activities based on the 3 fundamental principles of our "Corporate Philosophy", "CSR Policy", and "Business Code of Conduct" in our day-to-day business activities. The committee is responsible for identifying materiality and establishing targets for achieving SDGs in order to examine initiatives related to sustainability.
Risk Management Committee
To respond to various risks surrounding the businesses of the Group, we have established the Risk Management Committee, chaired by the Executive Officer (Chief Management Officer of risk management), who is in charge of the Global Risk Management Department, as an advisory body on risk management to prevent risks from occurring and to minimize damage in the event of a crisis. The committee mainly consists of the general managers of the promotion departments of the risk management. The committee regularly checks activities including identification, analysis, evaluation, and treatment with regard to risks that have a major impact on the management of the NTN Group. The result of discussion at the Risk Management Committee is reported to the Board of Directors and instructions are fed back to the relevant departments.
Compliance Committee
The Compliance Committee, chaired by the Executive Officer in charge of CSR Headquarters (Overall Control Administrator of Compliance Promotion Activities), handles global compliance risks, excluding violation risks of the Anti-Monopoly Act and the Subcontracting Act. The committee members are comprised primarily of the heads of related risk management divisions. The committee members formulate and implement risk mitigation measures in cooperation with the Compliance Promotion Activities Supervisors appointed at each business site in Japan and the Internal Control Section established at each Office of the General Manager in 5 overseas regions, and reports to the committee on action plans and the status of implementation. The committee deliberates on the contents of such reports and then reports the findings to the Board of Directors.
Fair Trade Monitoring Committee
The Fair Trade Monitoring Committee is chaired by the President and Executive Officer and consists of Executive Officers in charge of sales and procurement divisions, an Outside Director, external lawyer and so on. In principle, this meeting is held twice a year to discuss the implementation plans and the performance reports for compliance with the Antimonopoly Act and the Subcontracting Act, and to provide supervision and guidance on effective control for fair trade practices along with education and awareness-raising activities. In addition, we have established the Fair Trade Promoting Department in CSR Headquarters as an overall supervisory department for compliance with antimonopoly law. Under the direction of the Fair Trade Monitoring Committee, the department conducts various activities (such as education, instruction and audit) for relevant divisions. Furthermore, overseas subsidiaries are monitored for the implementation status of compliance with antimonopoly law in cooperation with the Internal Control Section in each region.
Subsidiary management structure
Under the provisions of the Management Rules for Subsidiaries, we maintain a system for subsidiaries management by concluding a letter of confirmation concerning management control with subsidiaries. Under the system, subsidiaries will report the execution status of duties of their directors, and request the Company's approval for certain matters. In addition, based on the letter of confirmation, we develop systems for internal control, promotion of CSR activities, risk management, promotion of compliance activities, security trade control, and compliance of laws on competition. We also widely notify and operate a helpline (whistle-blower system) to subsidiaries as a contact point for various concerns.
Clarification of control structure by concluding a letter of confirmation concerning management control
- Report the status of execution of duties by subsidiaries'directors
- Application from subsidiaries for the headquarters'approval for certain issues, on the basis of authorization rules
- Development of internal control system
- Development system for promotion of CSR activities
- Compliance of basic policy of risk management
- Development system for promotion of compliance activities
- Development system for security trade control
- Instruction and audit of compliance of laws on competition
Securing responsiveness to Corporate Governance Code
We take active measures to strengthen our corporate governance while securing responsiveness to the purport of the Corporate Governance Code, including the transition to a Company with Nominating Committee, etc. in June 2019. We have implemented all of the general principles of the Corporate Governance Code. We will continue to work on strengthening our corporate governance while adapting to changes in our business environment.