Our Vision and Policy

Corporate Governance

• Corporate Governance Report (June 28, 2023)(659KB)

• Basic approach to Corporate Governance
• Diagram: System of Corporate Governance
• Effectiveness of the Board of Directors
• Director(Outside)
• Audit & Supervisory Board Member(Outside)
• Internal Control System
• Executive Compensation

Basic approach to Corporate Governance

With a view to improving the profitability and the capital efficiency of Nissui and its Group companies, as well as to promoting initiatives toward corporate social responsibility to encourage sustainable growth and the medium- to long-term enhancement of corporate value, the Board of Directors will demonstrate the major direction in corporate strategies and other matters and will place greater emphasis on supervising functions while retaining important decision-making functions.
The decision-making functions have been empowered to the Executive Officers (and Executive Committee) headed by the President & CEO, to speed up the decision-making process and to further separate supervising and execution.
Furthermore, in addition to the above management supervising by the Board of Directors, Nissui has adopted the governance structure of a company with an audit & supervisory board, based on its belief in the effectiveness of an audit system over management comprising four Audit & Supervisory Board Member including Outside Audit & Supervisory Board Member who are independent of management.

Diagram: System of Corporate Governance

Board of Directors, Directors

The Board of Directors Meeting is held at least once a month in principle to determine material matters and supervise management. In order to enhance the transparency of management and strengthen the function of management supervision, Directors act with a term of office of one year. Currently, the Board of Directors consists of nine Directors and includes three Outside Directors (of which one member is a woman), who are independent of the management team.

Nomination and Compensation Committee

As an advisory body to the Board of Directors, the Company has established the voluntary Nomination and Compensation Committee (established on June 27, 2018), consisting of three Outside Directors and two Representative Directors and chaired by an Outside Director. The Nomination Committee deliberates on the selection and dismissal of candidates for Officers including President & CEO and succession planning, and the Compensation Committee deliberates on the determination policy of compensation, details of the compensation system, and compensation standard, among other matters, in order to recommend to the Board of Directors. The Board of Directors determines executive appointments and compensation based on the recommendation.

Management structure and Expected Areas of Expertise of Directors and Audit & Supervisory Board Member

Audit & Supervisory Board, Audit & Supervisory Board Member

Regarding the audit system, the Company has appointed persons with the expertise necessary for audit including insight into finance and accounting as well as a wealth of knowledge in a wide range of fields. The Audit & Supervisory Board consists of four Audit & Supervisory Board Member including three Outside Audit & Supervisory Board Member (of which one member is a woman) independent of the management team. Each Audit & Supervisory Board Member attends the Board of Directors Meetings to audit execution of duties of Directors, and also attends other important meetings including the Executive Committees as necessary.

Executive Committee, Executive Officer

Regarding business execution, the Company has adopted the executive officer system (introduced on June 25, 2009) for flexible and efficient business management. The Executive Committee consisting of Executive Officers appointed by the Board of Directors is held at least once a month in principle, and makes quick and appropriate decisions and information sharing on major business execution matters, based on sufficient deliberation from a multifaceted perspective, in order to promote the sustainable growth and the enhancement of the corporate value of the Company and the Company Group. The Executive Committee consists of 18 men including six Directors concurrently acting as Executive Officers.

Internal Audit Department

Based on annual planning, the Internal Audit Department under the direct control of President implements evaluation on internal control in order to ensure the reliability of internal audit and financial reporting of the Company Group, and reports results to Directors, Audit & Supervisory Board Member, and the managers of organizations under audit.
The Internal Audit Department reports the business audit results of Nissui and all its Group companies to the Audit & Supervisory Board Member, and in terms of internal control, discusses the evaluation procedure, scope, schedule, etc. with the external independent auditor when formulating the evaluation plan for the fiscal year and finalizes the evaluation policy. Furthermore, we ensure cooperation between the external independent auditor and the Internal Audit Department by closely exchanging information with the external independent auditor and taking appropriate corrections when any deficiencies or problems in control are found.

Auditor of Accounts

Regarding accounting audits, the Company has concluded an agreement with Ernst & Young ShinNihon LLC to conduct accounting audits based on the Companies Act and the Financial Instruments and Exchange Act.

Effectiveness of the Board of Directors

<Timeline for the effectiveness evaluation of the Board of Directors>

The Company evaluated the effectiveness of the Board of Directors for FY2022 on all executives (9 Directors and 4 Audit & Supervisory Board Members) in accordance with the following timeline.

January 2023

Conducted a questionnaire based on a 4-point scale

February to March 2023

Upon summarizing the questionnaire results and identifying the issues, the secretariat conducted interviews with all executives

May 2023

Discussions facilitated by an Outside Director were conducted with the participation of all executives

<The content of the questionnaire and a summary of the results>

(1) The content of the questionnaire

The major content of the questionnaire included the following items to confirm the status of the Board of Directors as a whole.

1. i.Composition of the Board of Directors (Size, number of members, diversity, the ratio of Inside Directors to Outside Directors, etc.)
2. ii.Operation of the Board of Directors and the support structure (Annual schedule, the content and volume of meeting materials, the leadership of the Chairperson, etc.)
3. iii.Agenda of the Board of Directors (Number of agenda items and the content of the agenda and the relevance of the criteria for submitting proposals to the Board of Directors, etc.)
4. iv.Communication with third parties (The quality and the appropriateness of the content of disclosures to stakeholders and the like)
5. v.Training for Internal and Outside Directors

(2) Summary of the results

[Overview]
A comparison of the major evaluation items indicated that the average score for "1. Composition of the Board of Directors" was the highest, while the average score for "3. Agenda of the Board of Directors" was the lowest. The outside executives generally gave higher scores than the internal executives and a large discrepancy appeared in the scores given by the internal and outside executives particularly regarding "5. Training," in which internal executives evidently found that the training opportunities for both internal and outside executives were insufficient.

[Summary]
In the responses, the executives generally rated the current performance of the Board of Directors high in that active exchanges of opinions were conducted between internal and outside executives under the appropriate leadership of the Chairperson. The executives also appreciated the fact that corrective measures (setting the themes to be discussed by the Board of Directors, sharing the meeting materials and the details of the discussions of the Executive Committee, and improving and making the reporting items more substantial, etc.) were taken every time issues were identified through the evaluation of the Board of Directors' effectiveness, which has been conducted since FY2016. On the other hand, the responses indicate that there remain some issues for which sufficient improvement has not been achieved (decision-making and supervisory functions from a companywide perspective, the delegation of authority to the Executive Committee, the volume and content of the meeting materials of the Board of Directors). Additionally, in FY2022, human resources strategies and succession planning were pointed out as new issues.

<Interviews>

Based on the questionnaire described in 2, the secretariat recognized the following items as issues and conducted individual interviews with all executives. From the interviews, it became evident that each executive was strongly aware of and committed to ways of making the Board of Directors more effective.

1. i.Measures to ensure that the Board of Directors functions to the maximum extent and the revision of the composition of Directors
2. ii.Initiatives toward human resources strategies and succession planning (including methods for developing human resources)
3. iii.Discussion themes pertaining to growth strategies for realizing the long-term vision
4. iv.Specific details of initiatives on sustainability and the revision of IR strategies

<Summary of the discussion and next actions>

The discussion was conducted as an open-ended discussion with the participation of all executives, separate from the Board of Directors meetings. This year's discussion was facilitated by an outside executive. The executives discussed the following items, touching upon the awareness of the issues and the various viewpoints of the discussion on the resolution of such issues. Additionally, candid discussions took place on management themes such as succession planning and portfolio management that went beyond the theme of effectiveness evaluation of the Board of Directors. Deep-dive discussions were made possible on what the Company was currently lacking and what initiatives were needed for improvement with input from outside executives sharing case studies of other companies.

1. i.Composition of the Board of Directors (including diversity)
2. ii.Improving the operation of the Board of Directors (including meeting materials)
3. iii.Improving discussions on human resources strategies and succession planning
4. iv.Improving discussions on growth strategies and the business portfolio
5. v.The ideal way of communicating to third parties

Going forward we will implement initiatives to raise the quality of discussions such as providing explanations in advance on important matters to be deliberated by the Board of Directors and sharing discussions points of the Executive Committee, in addition to sharing basic information regarding businesses including onsite inspections of farming sites and plants, to further improve the effectiveness of the Board of Directors.

Director(Outside)

There are three Outside Directors, who have no personal, capital, trading or any other special relationship of interest with the Company.
In addition to his years of experience at financial institutions, Mr. Nagai has broad insight gained as a President and CEO of an operating company. The Company has elected him as an Outside Director in the expectation that he will appropriately supervise overall management by applying past experience and case studies in identifying issues and by providing frank opinions from a medium- to long-term perspective. In addition, he is expected to demonstrate leadership as Chairperson of the Nomination Committee and Compensation Committee.
In addition to many years of experience at a glass manufacturer, Mr. Matsuo has broad expertise accumulated as a Representative Director of a chemical manufacturer. The Company has elected him as an Outside Director in the expectation that he will appropriately supervise overall management by providing frank opinions on sustainability initiatives from a medium- to long-term perspective.
Ms. Eguchi has engaged in research & development and public relations/communications divisions at beverage and food manufacturing companies and has broad knowledge and abundant experience. The Company has elected her as an Outside Director in the expectation that she will appropriately supervise overall management from a perspective of corporate communication and diversity at the Board of Directors meetings, etc. of the Company.
Given that all three Outside Directors meet the requirements of independent officers set forth by the Tokyo Stock Exchange and the "Independence Criteria of Outside Executive Officers" set forth by the Company and thus do not pose any conflict of interests with general shareholders, the Company has deemed them to be independent and has designated them as Independent Officers as set forth by the Tokyo Stock Exchange and given notice thereto. The Outside Directors exchange information and opinions, as necessary, with the Internal Audit Department on the content of the reports submitted by the department.

Audit & Supervisory Board Member(Outside)

There are three Outside Audit & Supervisory Board Members, who have no personal, capital, trading or any other special relationship of interest with the Company.
Ms. Shino Hirose, is well-versed in corporate law, as well as in business in China from having served at the Japanese Embassy in Beijing, as a public servant for a fixed term with the Ministry of Foreign Affairs. The Company has elected her as an Outside Audit & Supervisory Board Member with the expectation that she will draw on her expertise in conducting the audits of the Company.
Mr.Masahiro Yamamoto has abundant experience as an accounting expert, having served as a representative partner of a major audit firm as a certified public accountant and currently serving as a Director (Audit and Supervisory Committee member) of a business company. He also serves as an Auditor of a public interest incorporated association, and has broad personal connections and insight in the business world. The Company has elected him as an Outside Audit & Supervisory Board Member in the expectation that he will provide effective guidance drawing on his experience and insight.
The Company has elected him as an Outside Audit & Supervisory Board Member in the expectation that Mr.Tadashi Kanki will provide effective guidance drawing on his broad experience in sales and corporate planning at financial institutions, in addition to his four years of experience as a Standing Audit & Supervisory Board Member at a company listed on the First Section of the Tokyo Stock Exchange.
Given that all three Outside Audit & Supervisory Board Members meet the requirements of independent officers set forth by the Tokyo Stock Exchange and the "Independence Criteria of Outside Executives" set forth by the Company and thus do not pose any conflict of interests with general shareholders, the Company has deemed them to be independent and has designated them as Independent Officers as set forth by the Tokyo Stock Exchange and given notice thereto.
Outside Audit & Supervisory Board Members periodically receive reports on audit plans and audit results from the Accounting Auditor, while at the same time mutually coordinate with them by witnessing certain audits conducted by the Accounting Auditor. Outside Audit & Supervisory Board Members also exchange information and opinions with the Internal Audit Department as necessary. The Internal Audit Department reports the results of the operational audits of the Group to the Audit & Supervisory Board Members.

Independence_Criteria_of_Outside_Executives (104KB)

Attendance at Board Meetings by Outside Directors and Audit & Supervisory Board Members

* As of the end of March 2023

Internal Control System

Basic Policy for Internal Control System

Executive Compensation

Policy on the Determination of the Amount of Executive Compensation, etc.

A basic policy for the determination of executive compensation has been established, as per the following, in accordance with the Corporate Governance Code.

＜Method for the determination of compensation of Directors＞

The policy for determining compensation, etc. of individual Directors is determined by the voluntary Compensation Committee which is chaired by an independent Outside Director and consists of three Outside Directors and two Representative Directors (Chairperson: Mikito Nagai), with the aim of ensuring compensation commensurate with the company's stage. Specifically, it is determined by the Board of Directors upon deliberation of (i) the basic policy for compensation; (ii) the compensation system; (iii) the compensation levels; and (iv) compensation item composition ratio; among other things, based on comparative verification against benchmark groups. The amount of each compensation to be paid shall be determined by the Compensation Committee delegated by the Board of Directors from the viewpoint of the objectivity and transparency of the operation of said system.
With respect to compensation, etc. of individual Audit & Supervisory Board Members, the amount of basic compensation (fixed compensation) shall be determined through consultation between Audit & Supervisory Board Members, and shall be within the range of the total amount of compensation, etc. approved by the General Shareholders' Meeting in advance.

＜Compensation of Directors and Audit & Supervisory Board Members, and calculation method and process of determination thereof＞

Compensation of Directors (excluding Outside Directors) consists of three components, namely, "basic compensation," "performance-linked compensation" and "stock-based compensation." Outside Directors and Audit & Supervisory Board Members receive only basic compensation (fixed compensation).
Until FY2022, the ratio between each compensation of Directors is roughly targeted at 65:30:5 when business performance targets are achieved 100%. From FY2023, in order to raise awareness among Directors of improving business performance and increasing corporate value over the medium to long term, the design of the system shall be changed to set the ratio to 55:25:20 when business performance targets such as consolidated ordinary profit, etc. and other KPIs of the Mid-term Business Plan are achieved 100%. Accordingly, the ratio of performance-linked variable compensation (performance-linked compensation and stock-based compensation) is to be raised to approximately half of the total.
The retirement benefit system for Directors and Audit & Supervisory Board Members was abolished on the day of the 92nd Ordinary General Shareholders' Meeting held on June 27, 2007.

Basic compensation

Basic compensation consists of three components, namely, representative consideration, supervisory consideration and executive consideration, and executive consideration is set according to the job rank.

Performance-linked compensation

Performance-linked compensation is paid to Executive Officers based on the idea that the compensation is distribution of added value generated in a single fiscal year. This compensation uses "consolidated ordinary profit," which is a performance evaluation indicator, and "total amount of dividends" conscious of shareholders' perspectives. Consolidated ordinary profit or the total amount of dividends, each multiplied by a certain percentage, whichever is the smaller amount, is used as the basic amount of the compensation, which is then allocated and paid in accordance with the job rank by adding individual evaluations. As the compensation composition ratio is set based on the timing when the Mid-term Business Plan is achieved, if consolidated ordinary profit or total amount of dividends, which is conscious of shareholders' perspectives, is increased or decreased, the ratio of performance-linked compensation in total compensation is designed to be increased or decreased accordingly.
Evaluation for each individual was introduced in FY2021 with an aim to clarify the degree of contribution of each officer to the business performance for a single fiscal year. Certain business performance targets, including sustainability targets, have been selected as evaluation items, and achievement rates are evaluated against those items within the range between 80% and 120%. The basic amount of performance-linked compensation paid, the allocation rate by job rank, and evaluation for each individual shall be determined by the Board of Directors after deliberation by the Compensation Committee.

Stock-based compensation

Evaluation items and evaluation weight for stock-based compensation

The following evaluation items have been established for stock-based compensation, in conjunction with the commencement of the new Mid-term Business Plan "Good Foods Recipe1" in FY2022. Specifically, sustainability evaluation items, in addition to the current evaluation items such as achievement rate of consolidated ordinary profit, have been selected with the aim of optimizing the business portfolio, improving capital efficiency, and enhancing shareholder value.

As detailed above, financial and non-financial (sustainability) items have been selected for evaluation of corporate performance, and their weightings have been set to 70:30. Financial targets are evaluated per actual achievement rates, while non-financial (sustainability) targets are evaluated within the range between 50% and 150%. The number of shares to be issued to individuals is determined by multiplying the basic points pre-determined in accordance with job rank by corporate performance achievement rates, and then reflecting the individual evaluations. For individual evaluations, KPIs and sustainability items under the Mid-term Business Plan are used, and the achievement rates are defined within the range between 80% and 120%. The corporate performance achievement rates and the individual evaluations shall be determined by the Board of Directors after deliberation by the Compensation Committee.

Total Amount of Compensation, etc. by Executive Category, the Types of Compensation and the Number of Eligible Executives for the FY2022 Term

The policy for determining the details of compensation, etc. of individual Directors shall be determined by the Board of Directors after deliberation by the Compensation Committee chaired by an independent Outside Director. The Board of Directors judged that the details of the compensation, etc. of individual Directors were in compliance with said policy and appropriate, as the amount of such compensation, etc. paid for the fiscal year under review was determined by the Committee delegated by the Board of Directors based on said policy.

(Note) The performance-linked compensation of Directors includes an amount estimated to be paid in June 2023.

Activities of the Compensation Committee in FY2022