Corporate Governance Initiative

NYK's Corporate Governance Organizational Structure

Corporate Governance Organizational Structure (As of June 22, 2022)

History of Enhancing Governance

  1. Introduced a system of executive officers which was formerly know as 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)
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.
2021 Established the ESG Management Committee for the purpose of steadily implementing ESG management.
2022 Introduction of the performance-based monetary compensation plan
Partially revised the details of a performance-based Stock remuneration plan

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 a highly effective governance system that supports transparent and efficient management capable of swiftly and accurately responding to sudden changes in the business environment and which supports fully informed decision-making and oversight of business execution by the Board of Directors. The Board of Directors comprises eight directors, including three outside directors who have met the criteria for independence. The directors are selected to bring diversity and expertise to the Board to stimulate substantive and deep discussions. To ensure substantive discussion and deliberation at Board of Directors' meetings, the independent outside directors and independent outside audit and supervisory board members 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, at which they discuss important themes to ensure effectiveness.
The Company delegates business execution, excluding matters to be resolved by the Board of Directors, to 29 executive officers (as of June 30, 2022), including those who concurrently serve as directors of the Company, and directors and officers of domestic and overseas Group companies. The executive officers execute business by resolution and under the supervision of the Board of Directors.
Furthermore, the Management Meeting, which comprises executive directors as well as chief executives of various headquarters and divisions, conducts thorough deliberations on important matters related to business execution, including matters to be discussed during Board of Directors' meetings as well as other important matters related to business execution.

  • *Held after regular meetings of the Board of Directors to discuss and 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

To further enhance corporate governance and ensure the transparency of the Board of Directors, the Company has established the Nomination Advisory Committee and the Compensation Advisory Committee, both of which are chaired by the chief outside director and have a majority of independent outside directors. In response to requests for advice received from the Board of Directors, these committees discuss important items and provide advice regarding the appointment, dismissal, and compensation of directors and then report or refer the related agenda items to the Board of Directors based on the discussion and proposals.
Moreover, in order to improve the functioning of the committees, the president consults with the chairman and each independent outside director individually and ensures adequate exchanges of opinions when the Nomination Advisory Committee and the Compensation Advisory Committee are convened.

Composition of Each Committee (in Fiscal 2021)

Attendance of Nomination Advisory Committee Attendance of Compensation Advisory Committee
Tadaaki Naito, Chairman, Director 4/4 4/4
Hitoshi Nagasawa, President, Representative Director
(President and Chief Executive Officer)
4/4 4/4
Yoshihiro Katayama, Director
(Chief Outside/Independent Director)
(Committee Chairman)
4/4 4/4
Hiroko Kuniya, Director
(Outside/Independent Director)
4/4 4/4
Eiichi Tanabe, Director
(Outside/Independent Director)
4/4 4/4

Executive Compensation

Performance-Based Stock Remuneration Plan

The Company introduced a performance-based stock remuneration plan in fiscal 2016 to provide a highly transparent and objective executive compensation system.
In fiscal 2022, the Company partially revised the details of said plan, with a view to further accelerating ESG management and establishing shared interests between executives and shareholders over the medium-to long-term.

Overview of the Performance-Based Stock Remuneration Plan
  1. i)Persons eligible for the performance-based stock remuneration plan
  • Directors who concurrently serve as executive officers, the Board of Directors' chairman not serving concurrently as chairman and executive officer, and executive officers excluding certain concurrent executive officers, who reside in Japan
  1. ii)Applicable period for the performance-based stock remuneration plan
  • Three fiscal years from April 1, 2022 to March 31, 2025
  • In the event that the trust term is extended, each threefiscal-year period afterward
  1. iii)Upper limit to the amount of trust money contributed by the Company
  • A total of ¥1.6 billion over three fiscal years (including trust expenses, etc.)
  1. iv)Upper limit to the number of Company shares, etc., to be acquired by directors and method for acquiring the Company's shares
  • The upper limit for the total number of shares shall be one million shares per three-year period, and the ratio of the number of shares issued (as of March 31, 2022, after excluding treasury stock) shall be approximately 0.6%.
  • The Company's shares shall be acquired from the stock market to avoid dilution.
  1. v)Method for calculating the number of Company shares, etc., to be acquired by directors
  • The calculation shall be divided into a role-fixed portion and a performance-based portion.
  • Indices for calculating the number of shares in the performance-based portion: the Company's total shareholder return (TSR) including dividends, and the Company's own ESG indices based on its ESG policy, which is outlined in the NYK Group ESG Story announced in February 2021. The Company's TSR shall be measured by comparing it with the growth rate of the Tokyo Stock Exchange's Stock Price Index (TOPIX) as well as with the TSR of competitors during the applicable period.
  • The performance-based coefficient shall vary between 0.0 and 2.0 depending on the degree of achievement of each index.
  1. vi)Timing of the delivery, etc., of Company shares, etc., to directors
Role-fixed portion After the conclusion of each fiscal year but with a three-year transfer restriction after delivery
Performance-based portion After the conclusion of three fiscal years

Performance-Based Monetary Compensation Plan

In fiscal 2022, the Company introduced a performance-based monetary compensation plan for directors concurrently serving as executive officers and for certain executive officers, with a separate budget for basic compensation. The purpose of the plan is to further increase the short-term incentives for directors and executive officers to contribute to earnings and provide a mechanism for helping increase corporate value. With the introduction of the plan, bonuses have been abolished from fiscal 2022 onward.

Overview of the Performance-Based Monetary Compensation Plan
  1. i)Persons eligible for the performance-based monetary compensation plan
  • Directors concurrently serving as executive officers and executive officers excluding certain concurrent executive officers
  1. ii)Upper limit to amount of compensation under the performance-based monetary compensation plan
  • ¥300.0 million per fiscal year
  1. iii)Details of business result achievement conditions
  • Performance-based indices shall be consolidated recurring profit and consolidated return on equity.
  • In principle, the base values for measuring the degree of achievement of performance-based indices shall be the targets defined in the Company's medium-term management plan.
  • The performance-based coefficient shall vary between 0.0 and 2.0 depending on the degree of achievement of each index.
  1. iv)Timing of monetary payments to directors
  • After the conclusion of each fiscal year

Outline diagram of remuneration plan for the Directors

  1. *1Bonuses are paid within the scope of proposals submitted to and approved at the General Meeting of Shareholders each time when payment is appropriate, taking into consideration management conditions, shareholder returns, and other factors.
  2. *2The amount of performance-based stock remuneration is the maximum amount of trust money to be contributed by the Company.
  3. *3The Performance-Based Monetary Compensation Plan and the Performance-Based Stock Remuneration Plan include Executive Officers who meet certain requirements, and the maximum amount shown above is the maximum amount for all the eligible persons under the Plans, including such Executive Officers.
  4. *4This does not include those who are excluded from the Performance-Based Stock Remuneration Plan due to non-residence in Japan.

Image diagram of remuneration structure

  • *The above percentages are assumed values in each case, and they may vary depending on each position.

Image diagram of payment of the Performance-Based Monetary Compensation and Delivery, etc. of the Performance-Based Stock Remuneration

Yearly Evaluation of the Effectiveness of Meetings of the Board of Directors

Since fiscal 2015, the Company has had all directors and audit and supervisory board members carry out self-evaluation surveys with the aim of further improving the effectiveness of the Board of Directors.

  1. 1Overview of the Fiscal 2021 Evaluation
    • In fiscal 2021, a survey consisting of 15 questions under four topics was conducted, taking into consideration the guidance and advice of a third party. The four topics were (1) composition and operations of the Board of Directors, (2) management strategies and business strategies, (3) corporate ethics and risk management, and (4) performance monitoring and evaluation and compensation of management members.
    • The results indicated that the Board of Directors was functioning appropriately and its effectiveness was ensured.
           
  2. 2Issues Recognized in Fiscal 2020 and Initiatives Taken
    • The Company took the following measures to improve the quality of operations and discussions, which led to enhanced discussions. Going forward, the Company will work to achieve further improvements.
      1. (1)Utilizing discussion meetings among directors and audit and supervisory board members, the Company selected important themes and facilitated free and open discussions.
      2. (2)By effectively holding pre-briefing sessions, the Company simplified briefings at meetings of the Board of Directors and strived to secure time for deliberation and discussion.
      3. (3)Meanwhile, it has been pointed out that there is still room for improvement regarding the quality of meeting materials. The Company recognizes this as an ongoing issue and will strive to make further improvements.
    • While some improvements were made in strengthening supervisory functions, diversity and human resource strategies, the Company recognizes the need for further improvements to the above going forward.
      1. (1)Timely and appropriate reports were made on financial indicators, as well as on the operational status of each business division. The Company will continue to strengthen supervisory functions.
      2. (2)The Company will continue to engage in deeper discussions on human resource strategies, including increasing diversity.

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.

Training Menu

  • Duties and responsibilities of directors (based on the Companies Act, Corporate Governance Guidelines)
  • Internal control / compliance
  • ESG Management, Human rights, etc.

Policy for Holding Strategic Shareholdings

The Company is pursuing a policy aimed at reducing its strategic shareholdings. 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. Based on these, we have decided on initiatives for reduction. The number of listed companies in the Company's strategic shareholdings was 36 as of the end of fiscal 2021, down 20 from the total of 56 as of the end of fiscal 2016.
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.

Auditing System

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 evaluation and re-assignment/non 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 ESG Management 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.
In Fiscal Year 2021, we conducted audits by making full use of the Internet and other means.
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 2021)

Name Attendance
Internal Noriko Miyamoto 18/18
Eiichi Takahashi 11/11
Outside Hiroshi Nakaso 18/18
Satoko Kuwabara 18/18
  • *Attendance by Eiichi Takahashi at the Audit and Supervisory Board is indicated from June 18, 2021, the date they assumed their current position.

Accounting Audits

The certified public accountants who audit the Company's consolidated and non-consolidated financial statements are Yoshiaki Kitamura, 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, four successful candidates of the certified public accountant examination, and 42 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.

Independent Auditor Remuneration