Corporate Governance Framework

Election and Term of Office of Directors: The Board of Directors comprises up to 11 members, appointed to one-year terms in order to enhance flexibility in response to changes in business conditions. Resolutions to appoint directors must be approved by a majority of shareholders, with at least one third of those shareholders who have voting rights in attendance. To improve transparency and strengthen supervisory functions, four of the current 11 directors are outside directors. The Board meets at least once a month.

Roles and Responsibilities of the Audit & Supervisory Board and Members: Nichirei has adopted the Audit & Supervisory Board Member system. Of the five Audit & Supervisory Board Members , three are outside Audit & Supervisory Board Members , of whom one has experience at a financial institution, another is an experienced attorney, and the third has worked at a government agency.
The Audit & Supervisory Board meets once a month, in principle, convening additional meetings as necessary. Nichirei has established a framework to enhance the supervisory functions of Audit & Supervisory Board Members, allowing for the effective use of Audit & Supervisory Board Members, and strengthening the supervisory role of management.

Independent Outside Directors and Outside Audit & Supervisory Board Members: A vested interest in Nichirei is denied outside directors and their close relatives, as well as outside Audit & Supervisory Board Members and any companies or organizations of which they are directors or that they serve in other important positions.

Criteria for Independence

Internal Audits, Audits by Audit & Supervisory Board Members, and Accounting Audits: Audit & Supervisory Board Members at the holding company and three core operating companies hold regular liaison conferences, conduct joint audits, and ensure the effective auditing of Group-wide management. The Corporate Internal Audit, responsible for internal auditing, conducts business execution and accounting accounts to verify the status of internal controls across management activities, and offers advice as necessary, in order to ensure strict compliance and observance of the Group code of conduct, and raise awareness of risk management. In addition, the division conducts facility audits—inspecting the status of production plants, distribution centers, and other facilities—providing appropriate guidance and advice.

The Company‘s accounting is audited by Ernst & Young ShinNihon LLC. The rotation of the managing partners is appropriately implemented. They have not involved in the audit for more than seven consecutive accounting periods. The lead engagement partner has not been involved in the audit for more than five consecutive accounting periods. The managing partners will have an interval of five accounting periods after being replaced. The lead engagement partner will not be involved in the company again.

Committees for Effective Corporate Governance

Nichirei has set up committees to advise the Board of Directors, to ensure effective corporate governance. The committees include the Nominating Advisory, Remuneraiton Advisory,Sustainability,Risk Management,Internal Control,Officer Examination. Group Risk Management, Group Internal Control, Group Officer Examination.
In addition, to advance the execution of business by the president, we have set up the Group Human Resources,Group Quality Assurance,Social Action Program,Management,Examination, and Intellectual Property Management Committees, an overview of which follows.

Nominating Advisory Committee	Convened by the chairperson twice yearly and as required
Remuneration Advisory Committee	Convened by the chairperson once yearly and as required
Group Sustainability Committee	Convened by the chairperson third yearly and as required
Group Human Resources Committee	Convened by the chairperson twice yearly and as required
Group Risk Management Committee	Convened by the chairperson twice yearly and as required
Group Quality Assurance Committee	Convened by the chairperson twice yearly and as required
Group Internal Control Committee	Convened by the chairperson once yearly and as required
Group Officer Examination Committee	Convened by the chairperson as required
Social Action Program Committee	Convened by the chairperson once yearly and as required
Management Committee	Held weekly on Tuesdays, except the third Tuesday of the month
Examination Committee	Convened by the chairperson as required
Intellectual Property Management Committee	Convened by the chairperson as required

Director Compensation: We have strengthened director incentives and devised a compensation package for Internal Directors and Executive Officers. By making stock compensation part of their remuneration, we see that they share in the same value as our shareholders.

Board of Directors Evaluations

As necessary, and with the assistance of outside experts, the Company conducts analyses and evaluations of the Board of Directors’ activities to ensure its decision-making is effective. Summaries of the results are subsequently disclosed.

Evaluation
procedure

SubjectsDirectors and Audit & Supervisory Board Members (15 individuals in total)
PeriodJanuary–February 2022
MethodSelf-assessment involving questionnaires conducted by third party experts.

Summary of Evaluation Results

Outside experts shared the following observations: "Based on the opinions of all corporate officers who participated in the questionnaire, I have concluded that, as in the previous fiscal year, Nichirei's Board of Directors held free and spirited discussions in an atmosphere that facilitated verbal exchange despite conducting meetings in the midst of operational changes necessitated by the spread of the COVID-19 pandemic. I observed many positive comments indicating that the overall effectiveness of Nichirei's Board of Directors has been adequately secured. Among other topics, these comments referred to initiatives aimed at enhancing discussions held during meetings of the Board of Directors, including efforts targeting further improvement in the content of materials associated with these meetings and the timing at which they are provided. Additionally, each participating corporate officer indicated several improvements that could be considered to further enhance the effectiveness of Nichirei's Board of Directors, and these points could be explored through discussions held during future meetings of this board." Nichirei's Board of Directors has given serious consideration to the evaluations of these outside experts and plans to discuss the suggestions they have raised and appropriately reflect them through future operations of the Board of Directors as follows.

Institutional Design

The majority of participants did not express any issues with Nichirei's current institutional design as a company with an Audit & Supervisory Board and indicated that they viewed transition toward a different institutional design as unnecessary. However, several participants suggested that Nichirei needs to consider the possibility of transitioning to a different institutional design based on the pros and cons of its current institutional design and possible future changes in its surrounding business environment.

(Future Action)

Although we do not consider a change in our institutional design to be essential at this time, through a meeting of the Nominating Advisory Committee held during May 2022, we affirmed our ongoing medium- to long-term commitment toward examining the effectiveness of our current institutional design as a company with an Audit & Supervisory Board while giving due consideration to our management strategies, potential changes in our business environment, and requirements associated with the Corporate Governance Code. Moving forward, our Nominating Advisory Committee will hold more targeted and active discussions covering a range of topics, including comparisons between companies with Audit & Supervisory Boards and companies of other institutional designs. At the same time, we have also decided to report and deliberate on these issues as appropriate during meetings of the Board of Directors.

Agendas of Board of Directors’ Meetings

Several participants indicated that the agendas of meetings held by Nichirei's Board of Directors are appropriate. However, others expressed concern that these meetings are becoming increasingly long due to the large number of items on the agenda and the amount of time required to discuss each of these items. These participants suggested that agenda items should be reviewed and further narrowed down. Some participants also emphasized that the Board of Directors is responsible for setting the direction of medium- to long-term management strategies.

(Future Action)

To avoid overly lengthy Board of Directors' meetings and ensure sufficient time for discussions regarding highly important agenda items, such as "setting the broad direction of corporate strategy" (listed as a responsibility of boards of directors under Japan's Corporate Governance Code), we have decided to create an annual agenda schedule and streamline current agenda items. In addition to examining our institutional design as described above, we will also conduct a full review of agenda items for meetings of our Board of Directors.

Size and Composition of Board of Directors

Overall, the size and composition of the Board of Directors was deemed adequate. On the other hand, many participants pointed out the need for more female members and expressed particular concern regarding the lack of female inside directors. In addition, several participants expressed a desire for academic experts to join the board as outside directors and also requested the inclusion of individuals familiar with digital transformation.

(Future Action)

By establishing a skills matrix, the company has identified skills and other attributes that its Board of Directors should possess given the company's business strategy and includes these attributes in its Corporate Governance Report. We have identified "securing and developing a diverse array of human resources" as a material matter on which we will concentrate as we aim to achieve our Long-term Management Goals toward 2030. As a key indicator of our performance with regard to this material matter, we are targeting a 30% ratio of female line managers at our holding company. Through the pursuit of this target, we will establish a pool of female line managers that will serve as a source of female inside directors and help us ensure diversity among members of our Board of Directors. Meanwhile, our Board of Directors will continuously review its size and composition and revise its skills matrix as necessary in response to changes in our management strategy and our surrounding business environment.

Corporate Officer Training Opportunities

Many participants indicated that opportunities for both fundamental and more comprehensive training aimed at preparing corporate officers for future roles as members of the Board of Directors were adequate. However, some respondents indicated that training and knowledge acquisition opportunities were not always adequately available during the fiscal year ended March 31, 2022, with several expressing a desire for knowledge acquisition and study opportunities that reflect rapid changes in external environments.

(Future Action)

We plan to appropriately identify the expertise required to ensure proper response to changes in external environments and continuously consider providing opportunities for acquiring and refining this expertise. To provide one illustrative example, we plan to hold study sessions regarding sustainability management, which is a high-profile issue for Nichirei. These sessions will be led by outside experts, and a total of five are scheduled to take place during 2022.

Diagram of Corporate Governance Structure: As of June 27, 2023

Code of Conduct

Corporate Governance Report

Latest Corporate Governance Report

June 27,2023 Corporate Governance ReportPDF(600KB)

Risk Management: The Nichirei Group has set up the Group Risk Management Committee, chaired by the Representative Director, President, to manage the various risks associated with its business activities, in the most appropriate and rational ways from a comprehensive standpoint, and to maximize the Group’s enterprise value. The committee identiﬁes and evaluates Group-wide risks and Nichirei and its business companies respond to these risks on their own accord, based on the established risk management cycle. Important items are reported to the Board of Directors of Nichirei Corporation, the holding company, which considers the response. Further, Nichirei has introduced an internal reporting system (a hotline) in an effort to minimize risk.

Risk Management