CSR activities in FY2023
Corporate Governance
*This information is based on the content of the NTN Report 2024.
Basic Approach and Implementation System
Basic approach
NTN Group considers the strengthening and enhancement of corporate governance to be one of our top management priorities. While further improving the efficiency and soundness of our management, we are also striving to increase management transparency by rapidly disclosing accurate information to our shareholders and investors.
With the aim of creating a structure for rapid decision-making and execution, enhancing our business supervisory functions and improving the transparency and impartiality of our management, NTN Group transitioned from Company with Board of Company Auditors to Company with Nominating Committee, etc. in June 2019. Under this structure, we will work on further enhancement of corporate value over the medium- and long-term.
■Corporate governance structure (as of June 25, 2024)
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Board of Directors
The Board of Directors decides on the basic management policies and supervises the execution of duties of Directors and Executive Officers. Apart from matters stipulated by laws and regulations or the Articles of Incorporation to be resolved by the Board of Directors, the Board delegates substantial authority to Executive Officers with the aim of strengthening the supervision of management and speeding up decision-making.
The Articles of Incorporation stipulate that the term of office of a Director shall be one year, and the number of Directors shall be 15 or fewer. The Board of Directors convenes once a month in principle, but also meets flexibly as needed.
As of June 25, 2024, there are 12 Directors, of which six are Outside Directors. The Board is chaired by an Outside Director.
Nominating Committee
The Nominating Committee decides on the content of the proposal regarding appointment or removal of Directors, which is submitted to the General Meeting of Shareholders. Five members sit on the committee as of June 25, 2024, three of whom are Outside Directors. The committee is chaired by an Outside Director.
Compensation Committee
The Compensation Committee decides on the policy for determining the compensation of Directors and Executive Officers, and determines compensation for individuals. Six members sit on the committee as of June 25, 2024, four of whom are Outside Directors. 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 duties of the Audit Committee are supported by the Internal Audit Department, and its concurrently assigned staff members serve as the Audit Committee secretariat and other functions. These staff members, who have the requisite skills and experience to support the Audit Committee, are appointed by the manager of the Internal Audit Department with the approval of the Audit Committee. Decisions on matters related to transfer, disciplinary action or evaluation of these staff members require the approval of the Audit Committee.
The committee has five members as of June 25, 2024, three of whom are Outside Directors. The committee is chaired by an Outside Director.
Management Meeting
The Management Meeting discusses important matters relating to operational execution, as the supporting body for decision-making by the President, Executive Officer. The meeting is composed of the President, Executive Officer and other Executive Officers as designated by him and held twice a month in principle.
Executive Officers Meeting
The Executive Officers Meeting is convened by the President, Executive Officer and attended by all Executive Officers. Resolutions passed by the Board of Directors are communicated and each Executive Officer reports about the status of operational execution. This meeting is held once a month in principle, sharing information among Executive Officers to make operational execution more efficient and effective.
Directors
■General Meeting of Shareholders
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Executive Officers
Executive Officers (as of April 1, 2024)
| Name | Position | Assignments |
|---|---|---|
| Eiichi Ukai |
Representative Executive Officer President Executive Officer |
CEO (Chief Executive Officer) Corporate General Manager, Group Management HQ. |
| Hideaki Miyazawa |
Representative Executive Officer Executive Officer |
Corporate General Manager, CVJ & Axle Bearing Business HQ. Americas Region |
| Hiroyuki Ichikawa | Executive Officer |
Quality HQ. Composite Material Product Division India Region |
| Masayuki Kaimi | Executive Officer |
Corporate General Manager, SCM Strategy HQ. [Procurement Dept., Logistics Administration Dept., Trade Management Dept., Production Strategy & Control Dept., Production Reform Dept., Supply & Demand Control Dept.] China Region Production Engineering HQ. |
| Yasuhiro Kawabata | Executive Officer |
Deputy Corporate General Manager, Group Management HQ. Human Resources Strategy Dept. Personnel Dept. General Affairs Dept. Legal Dept. |
| Shumpei Kinoshita | Executive Officer |
Deputy Corporate General Manager, Group Management HQ. Corporate Strategy Dept. ESG Promotion Dept. Carbon Neutrality Strategy Promotion Dept. Internal Control Dept. |
| Koji Takahashi | Executive Officer |
Deputy Corporate General Manager, Group Management HQ. Corporate Communications Dept. ICT Strategy Dept. |
| Ikuya Tateoka | Executive Officer |
Deputy Corporate General Manager, CVJ & Axle Bearing Business HQ. General Manager, Business Strategy Unit, CVJ & Axle Bearing Business HQ. |
| Masayuki Tanio | Executive Officer |
Deputy Corporate General Manager, Bearing Business HQ. General Manager, Business Strategy Unit, Bearing Business HQ. |
| Yoshiyasu Nakano | Executive Officer |
CTO (Chief Technology Officer) Research Division [Advanced Technology R&D Center, CAE R&D Center] Innovation & Business Development HQ. New Product and Business Strategy Planning Dept. Intellectual Property Strategy Dept. |
| Etsu Harima | Executive Officer |
Corporate General Manager, Bearing Business HQ. NTN KOREA CO., LTD. ASEAN, Oceania & West Asia Region |
| Masaaki Yamamoto | Executive Officer |
CFO (Chief Financial Officer) Deputy Corporate General Manager, Group Management HQ. Financial Strategy Dept. Accounting Dept. Europe & Africa Region |
Appointment of Executive Officers
The appointment of Executive Officers shall be determined after careful deliberation by the Board of Directors, taking into overall account whether they possess the appropriate character, insight, capabilities, experience and track record to fulfil their duties. In addition, if it becomes clear that an Executive Officer lacks the required qualifications, they shall be promptly dismissed by the Board of Directors.
Flattening of the hierarchy and compensation structure
On June 25, 2021, NTN Group removed the Managing Executive Officers and eliminated hierarchical relationships among Executive Officers to create one team. This was also done in order to re-activate discussions among Executive Officers, respond to issues quickly and to further enhance corporate value.
In line with the flattening of the structure, the existing system of position-specific Directors’ remuneration was abolished in April 2022 and transitioned to a compensation system adapted to the responsibilities held by each Director in their field.
Adoption of ESG evaluation
Since April 2022, ESG factors have been set as key individual target measures for Executive Officers involved in the calculation of annual incentives (bonuses). The degree of achievement of these ESG factors is one of the evaluation indicators. Incorporating ESG factors into the evaluation system promotes active engagement by Executive Officers on ESG.
Governance structure timeline
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Board of Directors
Our approach to the Board
Directors are appointed from a wide range of fields within the Group, including manufacturing, technology, research and development, sales, and financial and administrative divisions. Outside Directors are also appointed after taking into account aspects such as diversity and balance, their knowledge of finance, their management or legal experience. We believe that the current number of Directors is an appropriate size for the Board in terms of strengthening corporate governance and expanding our global businesses.
Director diversity
Of the Directors in their roles as of June 25, 2024, one (Outside Director) is female, and she chairs the Board. With experience in a different industry, she supervises management and integrates diverse values, while striving to enhance sustainable growth in our corporate value.
Assessment of effectiveness of the Board
Every year, the effectiveness of the Board of Directors is evaluated to improve its effectiveness. In FY2023, a self-assessment survey of Directors was conducted asking about aspects such as the role, composition and operation of the Board and operation of committees. Although the evaluation was generally positive, the issue of information-sharing with the Nominating Committee and the Board regarding CEO succession planning was mentioned. On this matter, we have decided that the Nominating Committee will work to improve its operation. 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, attendance rate, and number of meetings attended
(from April 1, 2023 to March 31, 2024)
| Name | Title | Attendance Rate | Number of Meetings Attended |
|---|---|---|---|
| Akira Murakoshi | Chairperson Outside Directors |
100% | 4 times/4 times |
| Ryo Kawakami | Outside Directors | 100% | 4 times/4 times |
| Yasuo Kitani | Outside Directors | 100% | 4 times/4 times |
| Eiichi Ukai | Directors | 100% | 4 times/4 times |
| Isao Ozako | Directors | 100% | 4 times/4 times |
Deliberations of the Nominating Committee
During FY2023, the Nominating Committee met four times. It revised part of the independence standards for Outside Directors in accordance with the Corporate Governance Code, and discussions were held regarding the structure of officers for FY2024, as well as the selection of candidates for President, Executive Officer, Representative Executive Officers, Executive Officers and Directors.
About Outside Directors
As of June 25, 2024, the Board of Directors consists of 12 members, including six Inside Directors and six Outside Directors, a ratio of Outside Directors of 50%. We will continue to strengthen the supervision of management and improve transparency and fairness. In order to ensure appropriate corporate governance, we have also established our own standards regarding the independence of Outside Directors, stipulating qualification and independence standards for their appointment. All Outside Directors are designated as Independent Directors as defined by the rules of the Tokyo Stock Exchange, and are reported to the Exchange as such.
In order to ensure a Board environment of vibrant discussion, we have established in principle monthly seminars for Outside Directors on the content of discussions in key meetings of executive departments. Moreover, we continuously provide the information necessary for Outside Directors to effectively fulfill their roles and responsibilities by creating opportunities to deepen their understanding of our business through in-person inspection of business sites and other means.
Standards for appointment of Directors
Candidate Directors, whether selected from inside or outside the Group, shall be decided upon careful deliberation by the Nominating Committee based on standards for selection of Directors as stipulated below, taking into account the diversity and balance of the Board (including gender and international experience).
- 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 foresight and insight regarding environmental and social change.
- Must have sufficient track record of performance and expertise in relevant fields (corporate manager or specialization).
- Regarding Outside Directors, (1) they must have sufficient time to accomplish their duties, (2) they must satisfy the standards regarding the independence of Outside Directors as stipulated under separate cover, (3) diversity must be ensured among the Outside Directors, and (4) they must have the requisite abilities to accomplish duties as a member of any of the three committees.
Compensation Committee
Members, attendance rate, and number of meetings attended
(from April 1, 2023 to March 31, 2024)
| Name | Title | Attendance Rate | Number of Meetings Attended |
|---|---|---|---|
| Tomonori Nishimura | Chairperson Outside Directors |
100% | 5 times/5 times |
| Ryo Kawakami＊ | Outside Directors | 100% | 1 times/1 times |
| Yuriya Komatsu | Outside Directors | 100% | 5 times/5 times |
| Akira Murakoshi＊ | Outside Directors | 100% | 4 times/4 times |
| Eiichi Ukai | Directors | 100% | 5 times/5 times |
| Masaaki Yamamoto | Directors | 100% | 5 times/5 times |
＊The number of attendances after becoming as a member of the Committee
Deliberations of the Compensation Committee
Five meetings of the Compensation Committee were held from April 2023 to March 2024.
With the aim of improving the fairness, transparency, and objectivity of the procedures for determining the compensation of Directors and Executive Officers, as well as enhancing corporate governance, the committee resolved on matters related to executive compensation, including individual compensation.
■Compensation Committee(from April 1, 2023 to March 31, 2024)
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1st meeting |
Points granted by BIP Trust for compensation of Officers Bonus for Executive Officers in 2023 |
|---|---|
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2nd meeting |
Decision on the order of replacement in the event of the Chair being unable to serve Director compensation Annual activity plan |
|
3rd meeting |
Medium- to long-term performance-linked compensation for Directors under the new Medium-term Plan Review of compensation levels and compensation structure of Officers |
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4th meeting |
Executive Officer compensation |
|
5th meeting |
Executive Officer compensation Reference stock value of BIP Trust for compensation of Officers |
Basic policy for determining compensation
The Compensation Committee, chaired by an Outside Director, shall determine the system and level of compensation for Officers and individual compensation with reference to objective data on compensation levels and trends at other companies.
Executive Officers’ and Directors’ compensation shall be determined separately, and if a Director also serves as an Executive Officer, those compensations shall be combined.
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 consists of basic compensation, compensation by responsibility and compensation by representative authority.
■Annual incentives
For Executive Officers, the Group determines whether or not to provide payment of monetary compensation and, in the case of providing such payment, the total amount. The decision reflects the performance over the previous fiscal year, based on consolidated financial results indicators, among others. Whether or not to pay an annual incentive to an Executive Officer, and in the case of payment, the amount, is determined (within the total amount of provision) with reference to 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 profit from the perspective of focus on the achievement of earnings growth. The provision is made once a year in June as determined by the Compensation Committee.
■Medium to long-term incentives
NTN Group shares shall be issued based on the achievement of key targets in the Medium-term Management Plan (money equivalent to the converted amount of shares shall be paid for a certain portion) as an incentive to achieve those targets and to contribute to raising shareholder value, as well as to promote the holding of NTN Group shares. Medium- to long-term performance targets include key performance indicators (consolidated operating margin, inventory turnover ratio, etc.), taking 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 adding a supplement to basic compensation (which is determined based on any concurrent duties as an Executive Officer and whether the work is full-time or part-time), taking into account the committee(s) to which a Director belongs and their role on the committee(s).
Audit Committee
Members, attendance rate, and number of meetings attended
(from April 1, 2023 to March 31, 2024)
| Name | Title | Attendance Rate | Number of Meetings Attended |
|---|---|---|---|
| Yasuo Kitani＊ | Chairperson Outside Directors |
100% | 10 times/10 times |
| Ryo Kawakami | Outside Directors | 100% | 15 times/15 times |
| Tomonori Nishimura | Outside Directors | 100% | 15 times/15 times |
| Isao Ozako | Directors | 100% | 15 times/15 times |
＊The number of attendances after becoming as a member of the Committee
Deliberations of the Audit Committee
Major agenda items of the Audit Committee include the formulation of audit policies and plans, evaluation of the audit plans of accounting auditors, and assessment of the appointment of accounting auditors, and the assessment of the status of development and operation of the Internal Control System.
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 Meetings, members of the Audit Committee attend and monitor other committees which operate the internal control system – the Sustainability Committee, the Risk Management Committee, the Compliance Committee and the Fair Trade Monitoring Committee.
Committees of the Executive Organization
Sustainability Committee
The NTN Group has established the Sustainability Committee chaired by the Executive Officer in charge of the ESG Promotion Department (Chief Management Officer of Sustainability Activities). The Committee serves as a body that deliberates on the sustainability activities required for identifying and resolving issues with a view to realizing a “NAMERAKA Society.” Members of the Committee, comprising mainly of the heads of departments related to ESG, deliberate on the details of risks and opportunities related to sustainability as well as the initiatives to be implemented. The status of initiatives is reviewed regularly as a response measure for materiality linked to risks and opportunities. In addition, the Risk Management Committee has established a framework for reporting and deliberating on more specific countermeasures for sustainability-related risks. The details of risks and opportunities as well as the initiatives discussed by the Sustainability Committee are reported to the Board of Directors as appropriate.
Carbon Neutrality Promotion Committee
Amid the growing importance of climate change countermeasures worldwide, NTN established the Carbon Neutrality Promotion Committee in FY2023 to promote, globally and more strongly, the realization of carbon neutrality, which the Sustainability Committee has long been working on as one of our ESG issues.
The Carbon Neutrality Promotion Committee is chaired by the President, Executive Officer, with the Executive Officer in charge of the Carbon Neutrality Strategy Promotion Department serving as the Vice Chairperson. Its members include Executive Officers and general managers responsible for each region (Japan, Europe and Africa, the Americas, China, ASEAN/Oceania/West Asia, and India). The Committee meets twice a year in principle to deliberate on action plans toward achieving the carbon neutrality target and the status of efforts.
In addition, the regional subcommittee of each region, chaired by an Executive Officer in charge, functions as the subordinate organization of the Carbon Neutrality Promotion Committee. These subcommittees meet four times a year in principle to review measures and efforts corresponding to the actual conditions in each region, and report the results of their discussions to the Carbon Neutrality Promotion Committee.
Matters deliberated on by the Carbon Neutrality Promotion Committee are reported independently or jointly with the Sustainability Committee, to the Board of Directors as appropriate.
Risk Management Committee
NTN has established the Risk Management Committee, chaired by the Executive Officer in charge of the ESG Promotion Department (Chief Management Officer of Risk Management), for the purpose of preventing risks and minimizing 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. Matters discussed at meetings of the Risk Management Committee are reported regularly to the Board of Directors.
Risks that are discovered through internal audits conducted by the Internal Audit Department are shared with the Internal Control Department. This allows the Group to take preventive actions and make improvements to prevent risks in a timely and appropriate manner.
Compliance Committee
NTN has established the Compliance Committee, chaired by the Executive Officer in charge of the Legal Department (Chief Management Officer of Compliance Promotion Activities). It serves as an advisory body for compliance promotion activities, and meets twice a year in principle. Members of the Committee are comprised primarily of the heads of the related risk management departments. They discuss issues related to global compliance risks (excluding the risk of violating antimonopoly and subcontract laws), as well as action plans and results, and report to the Board of Directors. Based on the action plans discussed by the Committee, the relevant risk management promotion departments implement measures to mitigate risks in collaboration and partnership with the Compliance Promotion Activity Supervisors appointed at each domestic business site and subsidiary as well as the Administration & Internal Control Department established at each Office of the General Manager in each overseas region.
Fair Trade Monitoring Committee
NTN has established the Fair Trade Monitoring Committee, chaired by the President, Executive Officer, to engage in activities for promoting compliance with antimonopoly and subcontract laws. The Committee meets twice a year in principle. The primary members include the Executive Officers in charge of sales and procurement departments, Outside Directors, and external lawyers. The Committee discusses the implementation plans and performance reports for compliance with antimonopoly and subcontract laws, and provides supervision and guidance on effective control for fair trade practices along with education and awareness-raising activities. The discussed matters are reported to the Board of Directors. Under the direction of the Fair Trade Monitoring Committee, the Legal Department, which oversees activities related to compliance with antimonopoly laws, conducts activities including education, guidance, and supervision of the relevant domestic departments, and also works together with the Administration & Internal Control Department of each overseas region to manage the implementation status of activities related to compliance with antimonopoly laws.
Subsidiary Management System
Based on the Affiliate Company Management Regulations, we have established a subsidiary management system by concluding Written Confirmation of Management Control letters with subsidiaries, which have the subsidiaries (1) report on the state of execution by Directors, etc. and (2) apply for approval from NTN for certain matters.
Based on these letters, we are also establishing internal control systems, CSR activity promotion systems, risk management systems, compliance promotion activity systems, security export trade control systems, and systems for compliance with competition laws for our subsidiaries.
In addition, we are also operating a helpline as a consultation hotline for our subsidiaries.
Clarifying management systems via Written Confirmation of Management Control letters
・Reporting on the state of execution by Directors, etc. of subsidiaries
・Applications for approval from subsidiaries based on the Regulations of the approval authority
・Establishment of internal control system
・Establishment of CSR activity promotion system
・Compliance with the Risk Management Policy
・Establishment of a system to promote compliance activities
・Establishment of a security export trade control system
・Guidance for and audits of compliance with competition laws
Compliance with the Corporate Governance Code
In line with the intent of the Corporate Governance Code, we are actively working to strengthen our corporate governance, including by transitioning to a company with a Nominating Committee, etc. effective as of June 2019. We are also implementing all of the principles of the Corporate Governance Code, and, furthermore, we will continue working to strengthen our corporate governance in light of the changes in the environment surrounding us.