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, five 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 four 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 twice 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

The Board of Directors of the Company analyzes and evaluates its own performance with the aim of ensuring its effectiveness, with the assistance of outside experts as necessary, and accordingly discloses summaries of such findings. The findings in FY2024 are described below.

Evaluation
procedure

SubjectsDirectors and Audit & Supervisory Board Members (15 individuals in total)
PeriodFrom January 2024 to February 2024
MethodSelf-assessment involving a questionnaire survey and individual interviews conducted by a third party

Summary of Evaluation Results

Outside expert observations based on the aforementioned questionnaire survey and individual interviews are as follows.
“To sum up the responses of directors and Audit & Supervisory Board members to the questionnaire survey and interviews, on the whole, most expressed positive opinions indicating that the effectiveness of the Board of Directors was secured to a considerable extent. These opinions included responses indicating that in addition to improvements being made in materials for meetings of the Board of Directors, free and frank exchange of opinions is conducted in an atmosphere that encourages speaking up, and ongoing efforts are being made to make discussions at Board meetings more substantial based on previous evaluations of the effectiveness of the Board of Directors, such as by sharing more of the discussions of the Nominating Advisory Committee and Remuneration Advisory Committee with the Board of Directors. Furthermore, several directors and Audit & Supervisory Board members pointed out multiple potential areas for improvement in order to further enhance the Board’s effectiveness. These matters are expected to be reviewed in future deliberations of the Board of Directors.”

Taking the outside experts’ evaluation seriously, the Board of Directors of the Company discussed the matters pointed out or suggested and decided to reflect the following in managing the Board of Directors going forward.

(a) Securing Time for Discussions Related to Long-term Strategies

There were numerous opinions to the effect that there is currently not enough time for discussions of the Group’s long-term strategies and that more time should be allocated for this purpose. In response to questions about the Group’s risk tolerance and preparedness, there were opinions pointing out that concrete measures to deal with these matters are an issue for the future, as well as numerous negative evaluations on the five-point scale of the questionnaire survey, suggesting that many directors and Audit & Supervisory Board members perceive that discussions on risk management have been insufficient.

・ Future approach
The Board of Directors has decided to take the following measures to secure more opportunities and time at its meetings for discussions related to long-term strategies and risks.

1) Cooperation with other advisory bodies and committees of the Board of Directors
In order to formulate medium- to long-term management strategies for the entire Group, the Board has decided to deepen cooperation with the Group Strategy Committee, which discusses medium- to long-term strategies, and with the Group Risk Management Committee, which deliberates on risks that could impair corporate value.

2) More efficient operation of Board of Directors meetings

i. Further reduction of time spent explaining proposals and other matters
The Board has decided to have its members evaluate and review the quality of presentations for explaining proposals and the allocation of time to deliberations on a specific proposal basis, and to simplify or omit explanations on the day of the meeting, depending on the proposal, to secure sufficient time is devoted to strategic discussions.

ii. Further review of Board of Directors meeting materials
In addition to specified proposals such as investments, the Board has decided to improve the content and quality of proposal materials that tend to be large in volume by having the Board of Directors’ Secretariat support the preparation of Board of Directors meeting materials by working more closely with the proposing department.

iii. Review of matters submitted for discussion at Board of Directors meetings
The Board has determined that the revision of the standards for submitting matters to the Board of Directors (effective April 1, 2023), which oriented the standards toward a monitoring model, has had some effect from the perspective of more broadly delegating specific individual business execution decisions to the executive side, within the scope permitted by the current institutional design of a company with an Audit & Supervisory Board system. The Board will continue analyzing the effectiveness of the revision. It has also decided to continue comparing and considering a potential shift to a company with an audit and supervisory committee system or a company with a nominating committee, etc., system, which would enable greater transfer of the authority of the Board of Directors to the executive side.

(b) Composition of the Board of Directors

In light of Corporate Governance Code Principle 4.8 and social trends such as the increasing number of institutional investors who demand that outside directors constitute a majority of the Board, many respondents felt that the appropriate ratio of outside directors will continue to be an issue for ongoing study, and that the number of outside directors should be increased. On the other hand, there were also respondents who felt that the opinions of inside directors, who possess a deep understanding of the Company’s business, are crucial. Therefore, even if the ratio of outside directors is increased, it is important to maintain a balance with the ratio of inside directors. In addition, numerous respondents felt that although the Company has made relatively good progress in appointing female directors and Audit & Supervisory Board members and that there is no immediate need to act, no female inside directors or Audit & Supervisory Board members have ever been appointed, and therefore it is necessary to expedite the training and promotion of female inside directors and Audit & Supervisory Board members.

・ Future approach
At the annual general shareholders meeting held on June 25, 2024, the Company proposed an increase in the number of outside directors by one, and 11 directors, including five outside directors (three of whom are female), were elected. In addition, the Company has set a ratio of 30% for women employees in management positions at the holding company as a KPI for “securing and developing a diverse array of human resources,” which is a material matter it has identified for achieving the Nichirei Group’s long-term management goals toward 2030. With the aim of appointing female inside directors and securing diversity, the Company is steadily promoting women to management positions as a pool of candidates (the ratio of women employees in management positions in FY2024 was 17%). It also established a Diversity Promotion Department on April 1, 2024, which is advancing initiatives under the leadership of the Company’s first female executive officer, appointed on the same day. The Board of Directors will continue to review its composition and ensure diversity based on the Group’s management strategy and social trends.

Diagram of Corporate Governance Structure: As of June 25, 2024

Code of Conduct

Corporate Governance Report

Latest Corporate Governance Report

June 25,2024 Corporate Governance ReportPDF(616KB)

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