Corporate Governance Initiative
NYK's Corporate Governance Organization Chart
Corporate Governance Organization Chart (As of June 29, 2020)
History of Enhancing Governance
- ①Introduced a system of executive officers which was formerly know as 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)
Established the Governance Committee
|2020||↓||↓||↓||Revised decision-making process and established Management Meeting to ensure flexible decision-making.
Changed naming conventions (changed from corporate officer to executive officer) and changed position and prominence of Meeting of Executive Officers to clarify executive responsibilities.
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 the chief outside director serves as chairman of both the Nomination Advisory Committee and the Compensation Advisory Committee. The independent outside directors also share opinions with the audit and supervisory board members and attend important corporate meetings, including meetings of the Governance Committee, which discusses issues related to internal control. To ensure substantive discussion and deliberation at meetings of the Board of Directors, the independent 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 system of executive officers comprising 28 executive officers 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 executive officers are 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 them. Furthermore, in April 2020 the Management Meeting was established comprising executive directors as well as chief executives of various headquarters and divisions to ensure more flexible and substantive decision-making. The meeting deliberates on matters to be discussed during meetings of the Board of Directors and other important matters related to business execution.
- *Discussion meetings
Held after regular meetings of the Board of Directors to exchange opinions on medium- to long-term management issues. The meeting comprises directors, members of the audit and supervisory board, and chief executives of various headquarters and divisions.
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. The company has adopted a policy of appointing the Chief Independent Outside Director to serve as Chairman of the Committees. 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 2019)
|Attendance of Nomination Advisory Committee||Attendance of Compensation Advisory Committee|
|Tadaaki Naito, Chairman, Director
(Chairman and Executive Officer)
|Hitoshi Nagasawa, President, Representative Director
(President and Chief Executive Officer)
|Yoshihiro Katayama, Director
(Chief Outside/Independent Director)
|Hiroko Kuniya, Director
|Eiichi Tanabe, 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 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 2019)
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 Meeting of Executive 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 executive 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.
- 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 approximately 70% (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, general trading conditions and business activities. The number of listed companies in the Company's strategic shareholdings was 40 as of the end of fiscal 2019, down three from the number of 43 as of the end of fiscal 2018.
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. The Company has set specific standards related to the exercise of voting rights with companies for which it has strategic shareholdings. Under these standards, the Company confirms whether a certain vote will damage the investee company and whether it will contribute to the corporate value of the Company. After these criteria are confirmed and evaluated, a decision to approve or reject a proposal is made.
NYK is a company with a Board of Directors and an Audit and Supervisory Board. The Audit and Supervisory Board comprises four auditors including two outside auditors, of which one has suitable knowledge of finance and accounting.
The Audit and Supervisory Board deliberate on the formulation of audit policies and audit plans, the preparation of audit reports, the re-assignment of the independent auditor, the compensation of the independent auditor, and the auditing of the content of deliberations to be submitted to the Ordinary General Meeting of Shareholders.
In accordance with the auditing conditions defined by the Audit and Supervisory Board, the auditors attend meetings of the Board of Directors in accordance with the auditing policy and the auditing plan, including the division of duties, express their opinions through important meetings such as the Governance Committee, and appropriately perform auditing.
Full-time Audit and Supervisory Board Members attend important meetings such as the Management Meeting, the Meeting of Executive Officers and the Internal Control Committee. In addition, the auditors ask the directors, the executive officers, and users to report and provide explanations on the implementation status of their duties. The auditors monitor proceedings and adjudication documents to investigate the status of the directors' duties, company assets, etc. With regard to subsidiaries, the auditors exchange information with directors and corporate auditors of subsidiaries, etc., receive business reports as necessary, and visit subsidiaries to investigate the status of operations and assets. We also regularly monitor and verify the status of the establishment and operation of the Internal Control System, and regularly report to outside audit and supervisory board members at the Audit and Supervisory Board. We also endeavor to share information and communicate with outside audit and supervisory board members, and to form appropriate audit opinions. We hold regular meetings with the Internal Audit Division and the independent auditors and hold extraordinary meetings as necessary to maintain close collaboration.
Under the supervision of the Audit and Supervisory Board Members, an Audit and Supervisory Board Office with full-time staff is established independently from the executive division to support in the effective execution of their auditing duties.
Members of the Audit and Supervisory Board and Board Meeting Attendance (in Fiscal 2019)
- *Attendance by Noriko Miyamoto and Toshinori Kanemoto at the Audit and Supervisory Board is indicated from June 19, 2019, the date they assumed their current position.
The certified public accountants who audit the Company's consolidated and non-consolidated financial statements are Yuji Takei, Takuya Sumita, and Katsuhiro Shibata, all of whom are with the accounting firm Deloitte Touche Tohmatsu LLC. The fiscal year ended 31 March 2007 was the first year for continuous audits by the accounting firm, and the number of years for continuous audits by each member as an engagement partner is seven years or less. These accountants are assisted by 20 certified public accountants, six successful candidates of the certified public accountant examination, and 35 others. Audits are undertaken in accordance with standards generally accepted as fair and appropriate.
Major overseas consolidated subsidiaries that have financial statements and internal controls audited generally appoints accounting firms that belong to the same network (Deloitte Touche Tohmatsu Limited) as the independent auditor for the Company.
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.