Corporate Governance Structure

Nikkiso has the following corporate governance structure relating to decision-making, execution, and supervision of corporate management, which includes an audit & supervisory board as prescribed in the Companies Act of Japan.

Corporate Governance Structure

As of April 1, 2023

Organizational type Company with an audit & supervisory board
Number of directors (number of outside directors) 9 (3)
Term of office of directors 1 year
Number of audit & supervisory board members (number of outside members) 4 (2)
Executive officer system Adopted
Voluntary advisory body to the Board of Directors Nomination and Compensation Committee
Accounting Auditor Deloitte Touche Tohmatsu LLC

Establishment of Nomination and Compensation Committee

The Company has established the Nomination and Compensation Committee as a voluntary advisory body to the Board of Directors.
The purpose is to enhance transparency and objectivity regarding the nomination of directors and corporate auditors and compensation for directors, and to strengthen the supervisory function of the Board of Directors.
The Nomination and Compensation Committee consists of three or more directors and corporate auditors selected by a resolution of the Board of Directors, and the majority of them are outside officer (outside directors and outside corporate auditors).

Composition of Nomination and Compensation Committee

All members Breakdown
Exective Directors Outside Officers
Outside Directors Outside Audit Supervisory Board Members
6 1 3 2

Criteria for Electing Board Members

Nominees to be appointed as board members must be able to see the big picture when it comes to the Nikkiso Group's operating environment, and move quickly to boldly address important business issues, and deliver results. They must also be able to play a vital role in developing a corporate governance structure that supports the kind of transparent, fair, prompt, and bold decision-making needed to realize Nikkiso's corporate philosophy.

Criteria for Electing Outside Directors

Nominees to be appointed as outside directors must neither have any personal, financial, business or other relationships with the company, nor have any potential conflicts of interests with general shareholders so that being an outside director is the only relationship they will have with the company. As outside directors, they must be able to fulfill the role of overseeing directors in making decisions and performing their duties from an objective and professional standpoint independent from the company's operations. They must also be able to use their expertise to provide sound advice that will help the company achieve sustainable growth and enhance its corporate value over the medium- to long-term.

Name Reason for election
Haruko Hirose (Independent director) She possesses extensive international experience and advanced knowledge about personnel development, acquired by providing meritorious service in the areas of personnel and industrial development for the United Nations system. It is expected that she can supervise management in an objective, independent and fair manner using these experiences and past results.
Mitsuaki Nakakubo (Independent director) As an attorney, he has obtained advanced and specialized knowledge and has acted in the field of corporate legal affairs, focusing on disputes related to officers’ liability. It is expected that he can supervise management in an objective, independent and fair manner using these experiences and past results.
Junko Fukuda (Independent director) She engaged in teaching and research for a long time at University, specializing in management studies, marketing and distribution. From this and important positions held at various organizations promoting environmental conservation and regional development, she has obtained extensive specialized knowledge and experience in corporate management and ESG It is expected that she can supervise management in an objective, independent and fair manner using these experiences and past results.

Criteria for Assessing Independence of Outside Directors

Nikkiso uses the independence criteria set forth by the Tokyo Stock Exchange to assess the independence of outside directors. In interpreting and adopting this criteria, we substantively assess whether an outside director has any personal, financial, business, or other relationships with the company other than being an outside director or has any potential conflict of interest with shareholders so that he or she can fulfill the role of overseeing directors in making decisions and performing their duties from an objective and professional standpoint independent from the company's operations.

Criteria for Electing Audit & Supervisory Board Members

Nominees to be appointed as audit & supervisory board members must, in addition to fulfilling the role of auditing company operations and accounting practices, be able to actively and willingly exercise their authority as well as express relevant opinions at meetings of the board of directors. At least one of the audit & supervisory board members must possess sufficient knowledge of financial and accounting practices.

Reason for Electing Outside Audit & Supervisory Board Members

Nominees to be appointed as audit & supervisory board members must neither have any personal, financial, business or other relationships with the company nor have any potential conflicts of interests with general shareholders so that being an outside audit & supervisory board member will be the only relationship they will have with the company. As outside audit & supervisory board members, they must be able to fulfill the role of auditing directors in making decisions and performing their duties from an objective and professional standpoint independent from the company's operations. They must also be able to use their extensive knowledge to identify risks in business strategies and provide advice.

Name Reason for election
Naoshi Ogasawara (Independent director) He has obtained advanced and specialized knowledge relating to financial affairs and accounting as a certified public accountant and has obtained extensive experience in roles such as auditor and M&A assistant in companies listed on stock exchanges. It is expected that he will appropriately audit the performance of duties by Directors in an objective, independent and fair manner using this knowledge and these experiences.
Eiichiro Nakatani (Independent director) He possesses a high level of expertise as an attorney and extensive experience in dealing with legal issues in various fields for both domestic and foreign companies as well as international taxation. It is expected that he will audit the performance of duties by Directors in an objective, independent and fair manner using his knowledge and experience.

Board Member Training Policy

We help directors and audit & supervisory board members learn what they need to know in order to fulfill their roles and duties. Newly appointed board of directors as well as audit & supervisory board members receive specific training as needed in order to acquire or reacquaint themselves with the basics they need to serve in their appointed positions. Reappointed members receive specific training on business strategies, financial affairs, accounting, human resources, organization, etc. Training on accounting, personnel, compliance, insider trading, and other areas related to our company's management and operations as well as training on business strategies and plans is provided at executive officer meetings held several times a year, which all board of directors and audit & supervisory board members, including executive officers, attend.

Board Member Compensation

We maintain the monetary compensation to stock-based compensation ratio at a proper level so that the directors’ compensation, etc. will function as a healthy incentive for the Nikkiso Group’s sustained growth and the increase of its medium- and long-term corporate value.
A steady accumulation of performance should lead the Nikkiso Group to sustained growth and the increase of corporate value. Directors should receive compensation as they deserve in terms of their fulfillment of their responsibilities for performance during a single-year. For this purpose, the company’s single-year performance and the director’s positions, jobs, performance and the degree of contribution are comprehensively taken into consideration in determining the amount of the director’s compensation.
The Board of Directors consults the Nomination and Compensation Committee, which consists of a majority of independent outside directors, on the payment standards and individual remuneration for each director established based on the above policy, and receives deliberations and reports on the appropriateness of the committee. After the board received a report from the committee, the president & CEO fairly reviews each individual’s performance and decides the amount of compensation for each director based on the above payment standards and other factors, on the condition that the Board of Directors passes a resolution leaving decisions regarding compensation to the president & CEO.
The restricted stock compensation plan allows Nikkiso to obtain allotted shares to be acquired by a director free of charge if that director has engaged in an act such as the violation of laws or in-house rules and the Board of Directors deems it appropriate.

Anti-Takeover Measures

We do not employ anti-takeover measures.
In order to enhance our corporate value and ensure the common interest of shareholders, control of our company is determined by those shareholders who gain a stake in the company through free and fair trading on the stock market.