Basic Approach

NSG Group believes that achieving and maintaining an advanced level of corporate governance is a key management agenda. We have created and adopted "NSG Group Corporate Governance Guidelines", supporting and endorsing the spirits and principles of Corporate Governance Code provided by Tokyo Stock Exchanges.

These Guidelines are intended to define and embed the basic principles and framework of our corporate governance in the organization. To further secure such purposes the Group has also adopted a self-disciplinary approach for the Guidelines which, among others, requires it to give a reasonable account to our shareholders if the Group should proceed with any actions deviating from these Guidelines.

Please refer to the "NSG Group Corporate Governance Guidelines".

The Group considers achievement of an advanced level of corporate governance a key management objective and will implement the following.

(1) Organizational structure

  • The Group's ultimate parent company, Nippon Sheet Glass Company, Limited will adopt a Company with Three-Committee structure and the Company hence will establish and maintain the Board of Directors (the "Board"), the Nomination Committee, the Audit Committee, the Compensation Committee (individually referred to as the "Committee") and office of Executive Officers.
  • The Board will authorize the Executive Officers to make decisions on the execution of businesses for the Company within the scope as permitted by law, thereby facilitating separation between business execution and oversight, enhancing the transparency of the management processes and strengthening the Board supervisory function over the executive management.
  • The Company will establish and maintain an internal control system operating on a Group-wide basis including in relation to financial reporting (J-SOX).

(2) Stakeholders Communication

  • The Group will establish and maintain good relationships with our stakeholders.
  • The Group will disclose corporate information in a timely and appropriate manner to ensure transparency of the management of the Group.

(3) Code of Conduct

  • The Group will, in order to materialize those values, create the Group Code of Ethics whichall entities and employees etc of the Group must comply with and will be regularly reviewed in light of the status of implementation/embedding within the Group and the contents.

The Group's Approach to TSE Corporate Governance Code

The Group has filed the Corporate Governance Report in accordance with the TSE Corporate Governance Code revised in June 2018.

Please refer to the Group's Corporate Governance Report (as of July 2019).

Corporate Governance Structure

NSG Group adopts “Company with Three Committees” governance structure, and has in place, as statutory corporate organizations, Board of Directors and —Nomination Audit and Compensation Committees, and an office of Executive Officer.

Various steps have been taken to date so that NSG Group has enhanced management transparency by further separation of functions between business execution and its supervision and strengthened role of independent external directors. For example, according to the NSG Group Corporate Governance Guidelines, the roles of Chairman of the Board and CEO are clearly distinguished. In the event that Chairman of the Board is not an Independent External Director, a Lead Director whose role is to advise Chairman of the Board on matters concerning corporate governance shall be appointed from among Independent External Directors. Independent External Directors meet on an as-needed basis, even without presence of executives, for discussion concerning matters such as corporate governance and businesses.

As regards executive function, the Group also has Management Committee, Sustainability Committee, and Strategic Risk Committee.

Overview of Corporate Governance Structure (As of 1 July 2018)
Key items Description
Type of Governance structure Company with Three Committees
Number of Directors (External Directors) / term of office 8 (5) /1 year
Number of Independent External Directors 4
Chair of the Board Mr. Günter Zorn (Independent External Director)
Chair of Three Committees Nomination: Mr. Masatoshi Matsuzaki (Independent External Director),
Audit: Mr. Toshikuni Yamazaki (Independent External Director),
Compensation: Mr. Yasuyuki Kimoto (Independent External Director)
Number of Executive Officers (Representative Executive Officers) /
term of office
11 (3) /1 year
Compensation system Executive Officer (including those who concurrently serve as Directors) (1) Basic salary
(2) Performance-related incentive scheme
i. Management Incentive Plan (annual bonus)
ii. Long Term Incentive Plan
External Director The level of compensation adequate for his/her duties
Accounting Auditor Ernst & Young ShinNihon LLC

Supervisory Function

Diverse and highly independent in its structure, the Board of Directors is responsible for making decisions on the Group’s material matters and supervising the execution of business.

【Board of Directors】
Role Board of Directors is responsible for making decisions on the Group’s material matters such as basic policies for business management, internal control system and duty allocation among Executive Officers, and supervision over business execution by executives.
Composition
  • 4 Independent External Directors, 1 External Director and 3 Directors who concurrently serve as Executive officers
  • Chaired by Mr. Günter Zorn, Independent External Director
Number of times met in FY2018 10
Secretariat Legal & Administration Department
Composition of Nomination Committee, Audit Committee, and Compensation Committee as of 1 July 2018
Name Position Nomination
Committee
Audit Committee Compensation
Committee
Günter
Zorn
Independent External Director
Toshikuni
Yamazaki
Independent External Director ◎( Chair )
Yasuyuki
Kimoto
Independent External Director ◎( Chair )
Masatoshi
Matsuzaki
Independent External Director ◎(Chair)
Shigeki
Mori
Director Representative Executive Officer -
(5) (4) (5)
【Nomination Committee】
Role Nomination Committee is responsible for making decisions on the General Meeting of Shareholders agenda items regarding the appointment and removal of Directors. It also oversees the succession plans for key executives, including President and CEO, and provides advice and recommendations for the Executive Officer candidates.
Composition
  • 4 Independent External Directors and 1 Internal Director
  • Chaired by Mr. Masatoshi Matsuzaki, Independent External Director
Number of times met in FY2018 5
Secretariat Human Resources Department
Legal adviser Legal & Administration Department
【Audit Committee】
Role Audit Committee is responsible for auditing the execution of duties by Directors and Executive Officers, preparing audit reports, and deciding details of proposals concerning appointment, removal or not reappointing the Accounting Auditor.
Composition
  • 4 Independent External Directors
  • Chaired by Mr. Toshikuni Yamazaki, Independent External Director
  • Having served as Representative Director and Executive Vice President for finance, investor relations and accounting of JFE Holdings, Inc., Mr. Toshikuni Yamazaki has considerable management experience and broad knowledge of finance and accounting.
Number of times met in FY2018 11
Secretariat and how to ensure its independence
  • Audit Committee Office
  • Any personnel affairs relating to staff of Audit Committee Office require a prior notice to Audit Committee and its consent.
  • The head of Audit Committee Office shall not concurrently hold any position that may be involved in the execution of businesses and affairs of the Group, and shall report only to Audit Committee.
Audit methodology and cooperation with others
  • Audit by Audit Committee is such that it interviews executives, attends material executive meetings such as Management Committee, and inspects business operations and financial status of the company and major subsidiaries, being assisted by Audit Committee Office, in accordance with its audit policy and plans, as well as periodically monitors and reviews status of development and operation of the Group’s internal control system.
  • Audit Committee meets with Accounting Auditor and internal audit function on a regular and as needed basis to receive reports on such as progress of audits, exchange views and gather information.
【Compensation Committee】
Role Compensation Committee is responsible for making decisions on a compensation policy for Directors and Executive officers as well as individual elements of compensation for Directors and Executive Officers.
Composition
  • 4 Independent External Directors and 1 Internal Director
  • Chaired by Mr. Yasuyuki Kimoto, Independent External Director
Number of times met in FY2018 4
Secretariat Human Resources Department
Legal adviser Legal & Administration Department

Board Effectiveness Evaluation

NSG Group started an annual evaluation process for the Board effectiveness since FY2016, in order to further and constantly improve performance and effectiveness of the Board of Directors and Nomination, Audit and Compensation Committees.

For FY2018

• Evaluation process
The effectiveness review of the Board and the Committees was conducted with reference to feedbacks and views taken from each Director in terms of composition, status of management, agenda setting and direction in the role of such organization, led and supervised by the Independent Directors (the leader is Chairman of the Board) to ensure its adequacy and independence.


• Summary results of evaluation, and Action plan
The effectiveness score has improved since FY2017 regarding the Board and Committee meetings. Evaluation process concluded that operation of such meetings was appropriate and adequate, thus, effectiveness of the Board of Directors and Committees had been well maintained. Specific recommendations and inputs were given through the process, however, regarding the following points, based on which the Board developed the action plan:

  • In-depth and focused discussion on material business strategies of the Group(e.g. growth or financial strategy ,talent development/human resources generally)
  • Continuous efforts for enhancement of robust risk management process and reporting
  • Discussion on the desirable Board composition of the Company (enhancing diversity)
  • Need to further strengthen succession plans for senior executives specifically CEO

For details, please see the following.

Executive Function

Eleven Executive Officers (as of 1 July 2018), a professional group furnished with diverse backgrounds, are responsible for the business execution of NSG Group

【Executive Officer】
Role Business execution of NSG Group
Composition 3 Representative Executive Officers (Chief Executive Officer (CEO), Chief Operation Officer (COO) and Chief Financial Officer (CFO), respectively) and 8 Executive Officers
【Management Committee】
Role Management Committee leads the Group’s business operation and oversees the implementation status of businesses in order to realize the policies and targets set forth by the Board of Directors efficiently and appropriately.
Composition Management Committee mainly consists of the Executive Officers.
Number of times met in FY2018 10
【Sustainability Committee】
Role Sustainability Committee builds the sustainability strategies, presides over all of the Group’s sustainability related activities, and ensures effective communication with various stakeholders.
Composition Group Sustainability Committee is chaired by CEO or a person who is nominated by CEO and composed of CEO, COO, CFO, Group Sustainability Director, the Heads of each Strategic Business Unit, the Head of Business Innovation Center, Chief Human Resources Officer (CHRO), Chief Legal Officer (CLO), Chief Corporate Planning Officer (CCPO), Chief Communication Officer (CCO) and the Heads of relevant Group Functions.
Number of times met in FY2018 2
【Strategic Risk Committee】
Role Strategic Risk Committee periodically reviews policies, strategies and frameworks concerning risk management throughout the Group, and appropriately take into account the results of such review in forming the organization strategy and goals, in order to promote efficiency of the Group’s business management.
Composition Strategic Risk Committee is chaired by CEO or a person who is nominated by CEO and composed of CEO, COO, CFO, Chief Risk Officer(CRO), the Heads of each Group Function, and the Heads of each Strategic Business Unit.
Number of times met in FY2018 3
Note: Strategic Risk Committee has started to meet from August 2017.

External Director

Criteria of Independency for External Director at NSG

An External Director is a director who has never been a director, executive officer nor employee of the company nor its subsidiary.

To enhance the transparency of business management, the Company has appointed five External Directors out of the eight Directors, four of whom are designated as Independent Directors under the TSE.

In addition to the criteria for independency defined by the TSE, the Company has established its own criteria of independency for External Directors, taking into consideration their relationship with the Group including such with its officers and major shareholders. All of the four External Directors satisfy the criteria of independency., its officers, major shareholders, etc. These all four External Directors meet the relevant criteria of independency.

Please refer to the Group's Criteria of independency for External Ddirectors.

Background , concurrent offices and activities of External Directors

Mr. Günter Zorn
* Independent External Director
Background
    Mr. Günter Zorn previously served in key positions such as President, Asia Pacific, Heidelberg , and as Executive Vice President, North Pacific (Japan and Korea), DHL GmbH, before currently serving as Representative Director and President, Z - ANSHIN K.K., He has abundant international experience, broad knowledge and perspectives with regard to business management.
Concurrent offices
    Representative Director and President, Z-ANSHIN K.K.
Activities
    Mr. Zorn attended all of the ten (10) meetings of Board of Directors held in the fiscal year ended March 2018, all of the five (5) meetings of the Nomination Committee, all of the eleven (11) meetings of the Audit Committee  and all of the four (4) meetings of the Compensation Committee, and made remarks mainly from the perspective of experienced business management, as necessary.
Mr. Toshikuni Yamazaki
* Independent External Director
Background
    Mr. Yamazaki has a career and experience serving as Representative Director, Executive Vice President (in charge of finance, investor relations and accounting) of JFE Holdings, Inc., and as a member of the Investment Advisory Committee of the Government Pension Investment Fund, Japan (GPIF). He has abundant experience, broad knowledge and perspectives regarding business management, in addition to a substantial degree of insight relating to finance and accounting.
Concurrent offices
    Representative Director and President, Ryugasaki Country Club
Activities
    Mr. Yamazaki attended all of the ten (10) meetings of Board of Directors held in the fiscal year ended March 2018, all of the five (5) meetings of the Nomination Committee, all of the eleven (11) meetings of the Audit Committee and all of the four (4) meetings of the Compensation Committee, and made remarks mainly from the perspective of experienced business management, as necessary.
Mr. Yasuyuki Kimoto
* Independent External Director
Background
    Mr. Kimoto has a career and experience leading in his capacity as then president, director and chairman of the Board of a UK subsidiary of Sumitomo Mitsui Banking Corporation along with his experience serving as chairman and director and thus leading the Board of Olympus Corporation whose majority consisted of independent external directors. He has abundant international experience and broad knowledge and perspectives with regard to business management.
Concurrent offices
    Adviser, The Japan Research Institute, Limited.
Activities
    Mr. Kimoto attended all of the ten (10) meetings of Board of Directors held in the fiscal year ended March 2018, all of the five (5) meetings of the Nomination Committee, ten (10) of the eleven (11) meetings of the Audit Committee and all of the four (4) meetings of the Compensation Committee, and made remarks mainly from the perspective of experienced business management, as necessary.
Mr. Masatoshi Matsuzaki
* Independent External Director
Background
    Mr. Matsuzaki has a career and experience serving as both senior executive officer and president and representative executive officer, and subsequently being the chairman of the Board of Konica Minolta Inc. which adopts a governance system of “Company with Three Committees” like the Group's. He has abundant experience, broad knowledge and perspectives from the standpoint of business management, with regard to the both sides of executive and supervisory functions of a company with three committees structure.
Concurrent offices
    Director and Chairman of the Board, Konica Minolta, Inc., External Director, Ichigo Inc., and External Director, Nomura Research Institute, Ltd.
Activities
    Mr. Matsuzaki attended all of the ten (10) meetings of Board of Directors held in the fiscal year ended March 2018, all of the five (5) meetings of the Nomination Committee, all of the eleven (11) meetings of the Audit Committee and all of the four (4) meetings of the Compensation Committee, and made remarks mainly from the perspective of experienced business management, as necessary.
Mr. Yuji Takei Background
    Mr. Takei joined a major Japanese financial institution before moving to an international consulting firm and then to an investment fund, where he served as a partner, to name but a few, through the course of his career. He has a career and experience being engaged in corporate management as an external director in multiple corporations. He currently serves as the Chief Operating Officer and Head of Investment, Japan Industrial Solutions Co., Ltd. He has abundant experience, broad knowledge and perspectives regarding business management.
Concurrent offices
    Director, Chief Operating Officer and Head of Investment, Japan Industrial Solutions Co., Ltd.
Activities
    Mr. Takei attended all of the ten (10) meetings of Board of Directors held in the fiscal year ended March 2018, and made remarks mainly from the perspective of experienced business management, as necessary.

Our actions to date aiming for an advanced level of corporate governance

2008
  • Changed the company's fundamental governance structure from the traditional StatutoryAuditor system to the current three-Committee structure
  • Four Independent External Directors were elected accordingly
2010
  • Created and adopted our original and stringent criteria for the independency of External Director, taking into account not only the standard of Tokyo Stock Exchanges but also those similar rules in other major jurisdictions
2012
  • All three (Nomination, Audit and Compensation) Committees became to be chaired by Independent External Directors respectively
2013
  • Board of Directors became to be chaired by an Independent External Director
2014
  • Made the independency criteria for External Directors more specific and publicly disclosed it
  • Incorporated the share purchase element into Long Term Incentive Plan
  • Set shareholding targets of Executive Officers
2015
  • Established NSG Group Corporate Governance Guidelines
2016
  • Started annual board effectiveness evaluation process
2018

Corporate Governance Report

The Group has filed the Corporate Governance Report in accordance with the TSE Corporate Governance Code revised in June 2018.

Please refer to the Group's Corporate Governance Report (as of July 2019).

Disclosure based on the principles of the Corporate Governance Code

Compensation for Directors and Executive Officers

The Company adopts a company with three committees structure and the Compensation Committee, which holds a majority of Independent External Directors, decides the following matters.

  • The policy on compensation and perquisites to be offered to the Directors and Executive Officers of the Company
  • Individual compensation and perquisites to be offered to the Directors and Executive Officers of the Company.

Compensation Policy for Executive Officers

NSG Group is a global business, operating in around 30 countries worldwide. The objectives of the compensation policy are to ensure that packages of employment terms and conditions are market competitive and designed in such a way as to attract, retain and motivate Executive Officers of the highest world-class caliber in an international business.

The policy aims to ensure that each individual’s basic salary and incentives are aligned with the performance of the Group and the interests of shareholders as well as reflecting the commitment and achievements of the individuals concerned. While some elements of the packages of the Executive Officers may vary depending on the market conditions in the countries in which they are directly employed, annual bonus and long-term incentive plans follow a global policy and are structured, designed and coordinated at the Group level.

Compensation Policy for Independent External Directors

The role of Independent External Directors is to supervise all Group business from their independent and objective standpoint as well as to engage in the material decision-makings as members of the Board of Directors. In order for them to fulfill this role adequately and effectively, and for the Group to retain individuals with the capability and experience required, the appropriate compensation level of Independent External Director is set based on comparisons with other companies using benchmark data provided by external specialists.

Independent External Directors receive compensation for the performance of their duties. They are not eligible for performance-linked bonuses or awards under long-term incentive plans.

For details, please see the following.