Corporate Governance Initiative

NYK's Corporate Governance Organization Chart

Corporate Governance Organization Chart (As of June 20, 2018)

Transition of Board of Directors Members

Breakdown of Directors and Audit Supervisory Board Members

History of Enhancing Governance

  1. Introduced Committee of Corporate Officers
  2. Further enhanced management transparency
  3. Formulated corporate governance code
Year Details
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
2015

According to the Principles of the Japan's Corporate Governance Code, the Company prepared the following

  • Corporate Governance Guidelines
  • Our Views on Size, Balance and Diversity of the Board of Directors
  • Policies and Procedures for the Appointment and Nomination of Directors, Audit and Supervisory Board Members and Corporate Officers
  • Independence Criteria for Recommendation of Candidates for Outside Directors and Audit and Supervisory Board Members
  • Policies and Procedures for Determining Compensation for Directors, Audit and Supervisory Board Members and Corporate Officers
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)

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 9 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

With the need to promptly and appropriately respond to the dramatically changing business environment, we require further enhancement of decision-making and supervision provided by our Board of Directors. In order to further deepen substantial discussions with the diversity and expertise of the Board of Directors ensured, we have appointed 9 directors, with three of those being outside directors that meet the independence criteria. This is based on the idea that it is appropriate for our Board of Directors to comprise an adequate number of internal directors that 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 that have a high level of specialized knowledge to contribute to corporate management and further enhance the supervision function of the Board of Directors.
Not only do we give preliminary explanations on proposals to independent outside directors, but we also share sufficient information and opinions at informal gatherings to ensure that we can have substantial discussions about proposals at the Board of Directors and secure the time required for deliberation.
Furthermore, NYK has adopted a Committee of Corporate Officers. The Committee of Corporate Officers comprises 28 members, including those that are also on the Board of Directors, and executes operations under the supervision and resolutions of the Board of Directors, such as performing quick decision-making within the scope of delegated authority and prior discussions on resolutions made by the Board of Directors, etc.

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.

  • *Number of members will be based upon the approval by the ordinary general meeting of shareholders in June 2019

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.

Composition of Each Committee (in Fiscal 2017)

Attendance of Nomination Advisory Committee Attendance of Compensation Advisory Committee
Yasumi Kudo, Chairman, Representative Director
(Chairman Corporate Officer)
(Committee Chairman)
2/2 2/2
Tadaaki Naito, President, Representative Director
(President Corporate Officer)
2/2 2/2
Yukio Okamoto, Director
(Chief Outside/Independent Director)
2/2 2/2
Yoshihiro Katayama, Director
(Outside/Independent Director)
2/2 2/2
Hiroko Kuniya, Director
(Outside/Independent Director)
2/2 2/2
  • *Outside directors account for a majority.

Remuneration for Directors and Corporate Officers

Introducing a performance-based stock remuneration plan

Goal

NYK adopted a performance-based stock remuneration plan for directors and corporate officers that conduct business operations. The purpose of this plan is to raise the willingness to contribute to the sustainable and medium- to long-term growth of the company and share the interests of shareholders. The plan spans three consecutive fiscal years (fiscal years 2016 to 2018), and if extended will continue for an additional three consecutive fiscal years thereafter.

Calculation method

Granting Company stock after the final fiscal year according to the achievement of performance targets

Points

  • Points are assigned based on an assessment and evaluation conducted each fiscal year
  • The number of points assigned is calculated according to a position and a prescribed formula (evaluation standards include consolidated revenues, consolidated operating profit, consolidated recurring profit, consolidated net profit, EBITDA, ROE)

Total Amount of Directors' Remuneration (Fiscal 2017)

Category Number of persons remunerated Fixed remuneration Performance-based remuneration Total (yearly) amount
(Millions of yen)
Basic remuneration amount (Millions of yen) Bonus
(Millions of yen)
Stock remuneration
(Millions of yen)
Directors
[Outside Directors]
13[4] 465[57] - 228[-] 693[57]
Audit and Supervisory Board Members
[Outside Audit and Supervisory Board Members]
5[2] 105[27] - -[-] 105[27]
Total
[Outside Directors and Outside Audit and Supervisory Board Members]
18[6] 571[85] - 228[-] 799[85]
  1. *1The amount of remuneration paid to directors includes the amount paid to two directors who retired during fiscal 2017.
  2. *2The amount of remuneration paid to audit and supervisory board members includes the amount paid to one audit and supervisory board member who retired during fiscal 2017.
  3. *3The monthly remuneration of directors is paid according to their position within the limit of total monthly remuneration decided upon by the resolution at the General Meeting of Shareholders. Bonuses for directors are not paid every year as they are proposed at the General Meeting of Shareholders upon consideration of performance, etc., but are paid according to position within the limit of bonus remuneration decided by the resolution at the General Meeting of Shareholders.
  4. *4For the seven consecutive terms from fiscal 2011 to the current term, no bonus payments have been made to directors.
  5. *5The stock remuneration amount is the provision for stock payment during this fiscal year based on the performance-based stock remuneration plan introduced by resolution at the 2015 General Meeting of Shareholders and the amount to pay to directors that have retired.
Name Positions Fixed remuneration Performance-based remuneration Total (yearly) amount
(Millions of yen)
Basic remuneration amount
(Millions of yen)
Bonus
(Millions of yen)
Stock remuneration
(Millions of yen)
Yasumi Kudo Director 63 - 45 109
Tadaaki Naito Director 63 - 45 109
  • *Officers who have received 100 million yen or more in remuneration

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

  1. 1Reviewing discussion criteria, including the provision of items for reporting
  2. 2Delegating authority to the Committee of Corporate Officers
  3. 3Investigating how to conduct effective discussion at the Board of Directors meetings
  4. 4Giving preliminary explanations on important projects to outside directors
  5. 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.

Training Menu

  • Duties and responsibilities of directors (based on the Companies Act)
  • Internal control / compliance
  • Media correspondence, etc.

Policy for Holding Strategic Shareholdings

The Board of Directors is given periodic reports on the results of verification of the purpose and significance of strategic shareholding. We have been engaged in verifying the purpose and significance of strategic shareholding since fiscal 2008. As of this time, NYK has sold more than 50% (acquisition price ratio) of the shares held for strategic purposes compared to fiscal 2008. Current strategic shareholding consists of the stock of important customers related to long-term contracts, etc., which contribute to the stability of the company's performance and has been judged to be appropriate as a measure to maintain and strengthen relationships with those customers, etc.
In addition, when exercising voting rights for strategic shareholdings, NYK decides to vote for or against proposals after confirming whether it will result in damage to the value of the relevant company, as well as whether it will contribute to improvement of the company's corporate value, and the degree of such contribution.
We plan to actively promote the selling of strategic shares and verify the objective and significance of those shareholdings in order to ensure effective utilization of assets and improve capital efficiency.

Auditing System

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

Name Attendance
Internal Yoko Wasaki 16/16
Hiroshi Hiramatsu 11/11
Outside Toshio Mita 16/16
Hirohide Yamaguchi 16/16
  • *Attendance by Hiroshi Hiramatsu at meetings of audit and supervisory board members is indicated from June 21, 2017, the date he assumed his position

Accounting Audits

The certified public accountants who audit NYK's consolidated and non-consolidated financial statements are Toshiyuki Ono, Yuji Takei, 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 20 certified public accountants and 35 others. Audits are undertaken in accordance with standards generally accepted as fair and appropriate.
Furthermore, we generally appoint 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.

Independent Auditor Remuneration

Fiscal 2016 Fiscal 2017
Classification Remuneration paid for audit certification activities (Millions of yen) Remuneration paid for non-audit activities (Millions of yen) Remuneration paid for audit certification activities (Millions of yen) Remuneration paid for non-audit activities (Millions of yen)
The Company 145 4 168 6
Consolidated Subsidiaries 144 0 132 0
Total 289 4 300 7