Corporate Governance Initiative
NYK's Corporate Governance Organization Chart
Corporate Governance Organization Chart (As of June 19, 2019)
History of Enhancing Governance
- ①Introduced Committee of Corporate Officers
- ②Further enhanced management transparency
- ③Formulated corporate governance code
|2002||↓||Introduced Committee of Corporate Officers to strengthen operational execution system|
|2006||↓||↓||Established Advisory Board to heighten transparency of business management|
|2008||↓||↓||Abolished Advisory Board, appointed two outside directors
Shortened term of service of directors from two years to one year to clarify management responsibility of directors and build system that expedites responses to changes in business conditions
|2010||↓||↓||Filed notification of independent directors and auditors as stipulated by stock exchanges in Japan for all four outside directors and outside audit and supervisory board members|
According to the Principles of the Japan's Corporate Governance Code, the Company prepared the following
|2016||↓||↓||↓||Increased outside directors by one member to three, and decreased the total number of directors by one to 12 (decreased internal directors by two)
Introduced a performance-based stock remuneration plan for directors and corporate officers of the Company (excluding outside directors and audit and supervisory board members of the Company)
Established the Nomination Advisory Committee and the Compensation Advisory Committee
Conducted a non-anonymous self-evaluation survey of all directors including outside directors, and of all audit and supervisory board members including outside members, regarding the effectiveness of the meetings of the Board of Directors
|2017||↓||↓||↓||Decreased the total number of directors by one to 11 (decreased internal directors by one)
Reviewed the items for reporting to the Board of Directors, etc., and implemented measures to further stimulate discussions
Established the position of chief outside director (Yukio Okamoto)
|2018||↓||↓||↓||Appointed an outside agency in charge of tabulation and analysis, etc., of self-evaluations of the effectiveness of the Board of Directors to further improve governance and ensure fairness
Decreased the total number of directors by two to nine (decreased internal directors by two)
|2019||↓||↓||↓||Decreased the total number of directors by one to eight (decreased internal directors by one)|
Structure of the Board of Directors and the Audit and Supervisory Board
NYK is a company with a Board of Directors and an Audit and Supervisory Board. The Board of Directors comprises 8 directors, including three highly independent outside directors, while the Audit and Supervisory Board comprises 4 audit and supervisory board members, including two highly independent outside audit and supervisory board members.
Board of Directors and Operational Execution System
NYK seeks to construct an appropriate management system that supports transparent and efficient management capable of swiftly and accurately responding to sudden changes in the business environment and that supports fully informed decision-making and oversight by the Board of Directors.
The Board of Directors comprises eight directors including three Outside Directors that have met the criteria for independence. The directors are selected to bring diversity and expertise to the Board to stimulate substantive and deep discussions. The Board is configured this way to ensure a sufficient number of internal directors who are well versed in the business of the Group, which is mainly global shipping and logistics operations, and a certain number of Independent Outside Directors with high levels of specialized knowledge that will contribute to corporate management and further enhance the supervisory function of the Board of Directors.
The Independent Outside Directors serve on the Board of Directors and various advisory committees, share opinions with the Audit and Supervisory Board members, and attend important corporate meetings, including committee meetings related to internal control issues. To ensure substantive discussion and deliberation at the Board of Directors meetings, Outside Directors are provided with full explanations of discussion topics prior to the meetings and participate in discussion meetings* among directors and Audit and Supervisory Board members to share information and opinions. The Company also maintains a Committee of Corporate Officers comprising 28 members from domestic and overseas group companies, including individuals also serving on the Board of Directors. By resolution and under the supervision of the Board of Directors, the committee is authorized to make prompt decisions related to the execution of resolutions of the Board based on prior deliberations and within the scope of authority delegated to it.
- *Discussion meetings (held six times in fiscal 2018)
- Communication of the topics and initiatives in each department
- Discussion and policy decisions on measures to increase the efficiency of the Board of Directors
Establishment of Governance Committee
In response to illegal conduct by group subsidiaries inside and outside Japan, NYK recognized the need to strengthen its corporate governance. The company thus established the Governance Committee in January 2019, tasking the committee with the following objectives:
- Strengthen objective and independent supervision and monitoring of the organization by having outside officers play a leading role
- Identify and report problems; actively make recommendations for improvements
The newly established Governance Group will act as the secretariat of the committee.
Nomination Advisory Committee and Compensation Advisory Committee
In order to further enhance corporate governance and ensure the transparency of the Board of Directors functions, NYK has established a Nomination Advisory Committee and Compensation Advisory Committee comprising a majority of outside directors. Based on consultations with the Board of Directors, these committees discuss important items and give advice regarding the appointment/dismissal and compensation of directors and corporate officers, as well as consult with the Board of Directors about relevant proposals.
When meetings of these committees are held, the president consults with the chairman and each outside director individually to improve the functionality of the committees by ensuring the adequate exchange of opinions, etc.
In fiscal 2019, the Company adopted a policy of appointing an Outside Director to serve as Chairman of the Committees.
Composition of Each Committee (in Fiscal 2018)
|Attendance of Nomination Advisory Committee||Attendance of Compensation Advisory Committee|
|Yasumi Kudo, Chairman, Representative Director
(Chairman Corporate Officer)
|Tadaaki Naito, President, Representative Director
(President Corporate Officer)
|Yukio Okamoto, Director
(Chief Outside/Independent Director)
|Yoshihiro Katayama, Director
|Hiroko Kuniya, Director
Director Remuneration (Performance-based Stock Remuneration Program)
Summary of the Performance-based Stock Remuneration Program
Since fiscal 2016, the Company has adopted a highly transparent and objective performance-based stock remuneration program as an incentive for executive directors and officers to share the same interest with shareholders and act the sustained medium- and long-term growth for the Company. Directors and corporate officers are eligible for the program. Certain members, such as officers residing overseas, Outside Directors and Audit and Supervisory Board members are not eligible.
In the three years since the program was adopted, remuneration surveys by external specialized institutions have verified the remuneration levels in comparison to other companies and the Compensation Advisory Committee has assessed the program’s suitability. Based on these, the Board of Directors resolved to extend the program another three years beginning in fiscal 2019.
To provide incentive to contribute to achieving the objectives of the Staying Ahead 2022 Medium-term Management Plan, in fiscal 2019 the Company created a stronger link in performance assessments to increases in corporate value by raising the coefficients of financial targets for ROE and consolidated recurring profit from slightly above 40% to roughly 60%.
<Calculation and allotment methods>
- Company stock is allotted in the final year (third year) of the program according to the degree of attainment of performance targets
- Recipients are prohibited from transferring the shares in the market for one year after leaving their executive positions as directors and corporate officers
- Points are assigned based on an assessment and evaluation conducted each fiscal year
- The number of points assigned is calculated according to a prescribed formula
Total Amount of Remuneration (Fiscal 2018)
Total Remuneration Paid to Individuals Paid an Amount Exceeding 100 Million Yen
Yearly Evaluation of the Effectiveness of Meetings of the Board of Directors
In order to improve the effectiveness of the Board of Directors, since fiscal 2015 we have been conducting non-anonymous self-evaluation surveys regarding the effectiveness of the previous fiscal year's Board of Directors meetings to discuss goals and problems of the Board of Directors and enhance governance. Based on the results of these surveys, we implemented the below measures to improve effectiveness.
Concrete measures implemented
- 1Reviewing discussion criteria, including the provision of items for reporting
- 2Delegating authority to the Committee of Corporate Officers
- 3Investigating how to conduct effective discussion at the Board of Directors meetings
- 4Giving preliminary explanations on important projects to outside directors
- 5Sharing information and exchanging opinions at informal gatherings of directors, audit and supervisory board members, and corporate officers
In fiscal 2017, we appointed and cooperated with a specialist outside agency to ensure greater fairness and objectivity in our effectiveness evaluation process.
Process for Conducting Non-Anonymous Self-Evaluation Surveys
Training for Directors, Audit and Supervisory Board Members, and Corporate Officers
In order to achieve the medium- to long-term vision of the Group and improve sustainable corporate value, we provide opportunities for inside and outside directors, audit and supervisory board members, and corporate officers to participate in in-house training and external courses to maintain the effectiveness of the Board of Directors, deepen understanding of legal compliance such as fair trade, and improve governance functions.
We provide practical training, including timely lectures on the latest trends, as well as education for gaining knowledge on themes such as the Companies Act, internal control, risk management, compliance, crisis management and business analysis, and financial strategy. The status of this training is also reported to the Board of Directors to verify its effect.
- Duties and responsibilities of directors (based on the Companies Act)
- Internal control / compliance
- Media correspondence, etc.
Policy for Holding Strategic Shareholdings
The Company has adopted a policy to reduce its holdings of strategic shareholdings and has divested more than 60% (in terms of purchase value) compared to the acquisition value since fiscal 2008. Also, as stipulated in the Corporate Governance Guidelines adopted in November 2015, the Board of Directors annually conducts a comprehensive review of the purpose and objectives of holding individual strategic shares with a focus on the return targets based on the capital cost, the revenue from dividends, trades, and other transactions, and general trading conditions. The number of listed companies in the Company’s strategic shareholdings was 43 as of the end of fiscal 2018, down 10 from the number of 53 as of the end of fiscal 2017.
The Company’s current strategic shareholdings are of companies considered to be important business partners with which the Company expects to maintain long-term relationships that will help maintain stable results for the Company. The Board of Directors determined that retaining these shareholdings is suitable for maintaining and strengthening relations with those companies.
NYK is a company with a Board of Directors and an Audit and Supervisory Board. The Audit and Supervisory Board comprises 4 auditors including two outside auditors, of which at least one has suitable knowledge of finance and accounting. The auditors meet the auditing conditions defined by the Audit and Supervisory Board, attend important meetings such as Board of Directors meetings, and conduct hearings with directors and corporate officers, among others, regarding their execution of duties, etc. to perform auditing from an independent and objective perspective.
Furthermore, auditors hold a monthly auditor meeting to share auditing results and other information, have periodic meetings with the Internal Audit Chamber on a regular basis, and convene meetings with the independent auditor, thereby strengthening communication between all three audit-related groups. We have also established the Audit and Supervisory Board Office, consisting of three full-time staff members, which supports audit and supervisory board members in the effective execution of their auditing duties.
Members of the Audit and Supervisory Board and Board Meeting Attendance (in Fiscal 2018)
The certified public accountants who audit the Company’s consolidated and non-consolidated financial statements are Yuji Takei, Kazuhiro Sota, and Tomoya Noda, all of whom are with the accounting firm Deloitte Touche Tohmatsu LLC and have been auditing the Company’s accounts for less than seven consecutive years. These accountants are assisted by 17 certified public accountants, eight successful candidates of the certified public accountant examination, and 30 others.
Audits are undertaken in accordance with standards generally accepted as fair and appropriate. The Company generally appoints accounting firms that belong to the same network (Deloitte Touche Tohmatsu Limited) as our certified public accountants for major overseas consolidated subsidiaries that receive a financial statement audit and internal control audit.
The Audit and Supervisory Board evaluates accounting auditors regarding their auditing systems, independence, and performance in accordance with NYK’s standard evaluation sheet.
The Board also decides whether to renew or dismiss accounting auditors each year.