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, three of the current 10 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.

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.

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, Group Human Resources, Group Risk Management, Group Environmental Protection, Group Quality Assurance, Group Supply Chain, Group Internal Control, Group Officer Examination, and  Social Action Program Committees.
In addition, to advance the execution of business by the president, we have set up the 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 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 Environmental Protection Committee Convened by the chairperson twice yearly and as required
Group Quality Assurance Committee Convened by the chairperson twice yearly and as required
Group Supply Chain Committee Convened by the chairperson once 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

To achieve the targets of our medium-term management plan, 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.

Director Compensation
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 2020
  • MethodSelf-assessment involving questionnaires conducted by third party experts.

Opinions from outside experts

  • After combining the opinions of all corporate officers who participated in the questionnaire, I have determined that Nichirei’s Board of Directors conducts discussions while maintaining an atmosphere in which participants are comfortable in sharing their views.
  • To increase the depth of discussions held by its Board of Directors, ahead of meetings Nichirei is improving the materials provided, and making more information available, to Outside Directors. They also benefit from receiving advance briefings, and are permitted to attend internal meetings. Through these and other efforts, Nichirei’s Board has achieved a considerable degree of overall effectiveness.
  • The composition of the Nominating Advisory Committee and the Remuneration Advisory Committee, which function as advisory bodies for the Board of Directors, have become more relevant due to systemic changes implemented on January 1, 2020.
  • Notable improvements have been made in response to issues identified during the previous fiscal year through evaluations of the Board’s effectiveness.

Initiative 1Board of Directors membership

In recent years, there has been a growing demand for management to achieve an optimal balance between diversity and scale, while institutional investors have been seeking a higher proportion of independent Outside Directors. The Nichirei Group has thus decided to continue conducting analyses in order to achieve an optimal Board composition based on the Group’s management strategy.

Initiative 2Succession plan

Nichirei has confirmed that relevant Group-wide, medium- to long-term measures are being implemented, primarily by the Nominating Advisory Committee (which includes the Representative Director, President), in accordance with Nichirei management principles. In addition, we have resolved to resume discussions within the Nominating Advisory Committee concerning personnel requirements for next-generation CEO and corporate officer candidates, the selection of sample groups for consideration, training policies, and training plans. Reports on these matters shall be made to the Board of Directors as necessary. The Company also has decided to consider increasing opportunities for direct contact between its outside directors and next-generation management candidates.

Initiative 3Proposal documents

Proposal documents concerning specific agenda items such as investment and equity participation projects tend to be lengthy. To facilitate better understanding on the part of Board members, we have decided to provide set-format executive summaries that present information drawn from the main text of proposal documents and accompanying materials.

Diagram of Corporate Governance Structure
Diagram of Corporate Governance Structure
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.