The Maruha Nichiro Group strives to achieve sustainable growth and implement improvements in corporate values focusing on the long term by building equitable and productive relationships with our stakeholders. To this end, we place importance on ensuring operational integrity, transparency and efficiency while working to enhance corporate governance utilizing measures to accelerate decision making and strengthen oversight.
Corporate Governance Framework
Maruha Nichiro Corporation has adopted a corporate auditing system recognizing that having Audit & Supervisory Board members supervise the execution of duties by directors as an independent institution consigned by shareholders represents an effective means for securing the sound and sustainable growth of the company and strengthening our high-quality corporate governance framework in response to social credibility.
Corporate Governance Framework
(As of June 25, 2024)
Overview of the Corporate Governance Structure
- Corporate Governance System
- Company with Audit & Supervisory Board
- Directors
- 8 (Of whom 4 are Outside Directors)
- Chairperson of the Board of Directors
- President
- Auditors & Supervisory Board Member
- 5 (Of whom 4 are Outside Audit & Supervisory Board Members)
- Term of office for Directors
- One year
- Adoption of Executive Officer System
- Yes
- Advisory Committees to the Board of Directors
- Nomination and Compensation Committee
- Independent External Auditor
- KPMG AZSA LLC
(As of June 25, 2024)
History of Recent Governance Reforms
* Board of Directors composition for the FY2022: One internal director resigned during the fiscal year.
* Board of Directors composition for the FY2023: Four internal directors and four independent outside directors (including two female directors) as of June 27, 2023.
Board of Directors
Maruha Nichiro Corporation's Board of Directors is comprised of eight directors including four outside directors. Our Board of Directors provides highly effective supervision from an independent and objective perspective by incorporating an executive officer system in which supervisory duties are independent of executive duties. The Board of Directors meetings are generally held once a month to make decisions on important management matters such as the management basic policy, management strategy, Medium-term Management Plan, annual management plan, and capital policy. Decisions on individual operational execution are delegated to the Managing Executive Officers' Committee. The Managing Executive Officers' Committee meets generally once a week in which decisions are promptly made on matters delegated by the Board of Directors, and matters of importance are reported at the Board of Directors meetings. In FY2023, the Board of Directors met 17 times, including extraordinary meetings, with an average attendance rate of 98% for directors and 100% for Audit & Supervisory Board members.
Audit & Supervisory Board
Maruha Nichiro Corporation has implemented a corporate auditing system involving five auditors, four of whom are outside Audit & Supervisory Board members. Audit & Supervisory Board members audit the operational execution of directors by meeting at regularly held meetings and deciding on matters pertaining to audit policies, audit plans, audit methods, and execution of auditor duties, and by attending important meetings including Board of Directors meetings, holding interviews with Maruha Nichiro directors and division directors, conducting site visits at domestic and overseas subsidiaries, receiving and reviewing the results of audits from, and exchanging opinions with our accounting auditor, and regularly holding meetings of the Group Auditing Liaison Committee. In FY2023, Audit & Supervisory Board meetings were held six times, with an average Audit & Supervisory Board Member attendance rate of 100%. Moreover, at Maruha Nichiro, four highly independent outside Audit & Supervisory Board members are designated as independent officers. Three outside members have been appointed based on their long years of experience and in-depth knowledge from their career experience at financial institutions.
Nomination and Compensation Committee
Outside directors comprise a majority of the members of the Nomination and Compensation Committee. The chair and members of this committee are appointed by the Board of Directors. Additionally, this committee deliberates on the nomination and compensation system, and standards for directors and executive officers. The committee assists the Board of Directors with decision making by responding to views regarding these matters. With regard to nominations, the Nomination and Compensation Committee met in May 2023 to deliberate on candidates for director and executive officer positions after the Shareholders' General Meeting held in June 2023. Respecting the findings of the committee, the Board of Directors passed resolutions on the selection of director and executive officers. Moreover, when appointing a former President & CEO, Representative Director, etc., as Counselor or Corporate Advisor, the Nomination and Compensation Committee deliberates on the matter and the Board of Directors decides on the matter, but, at present, there are no applicable persons.
With regards to compensation, the Nomination and Compensation Committee met in May 2023 to deliberate on officer compensation for July 2023 and beyond. Respecting the findings of the committee, the Board of Directors passed a resolution on officer compensation during its meeting in June 2023. In FY2023, the Nomination and Compensation Committee met twice, with an average Committee member attendance rate of 100%.
Managing Executive Officer's Committee
Maruha Nichiro Corporation's Managing Executive Officer's Committee has six members comprised of Representative Directors and executive officers at the executive director level and above. The Managing Executive Officer's Committee plans and formulates management strategies for the entire Maruha Nichiro Group, to develop a system to promote such strategies, and to establish and effectively promote policies regarding overall management strategies to realize the long-term vision.
The Managing Executive Officer's Committee generally meets once a week in which decisions are promptly made on matters delegated by the Board of Directors and matters of importance are reported at the Board of Directors meetings. 46 meetings were held in FY2023.
Other Committees
Maruha Nichiro Corporation has established the following committees which are chaired by persons appointed by the Managing Executive Officers' Committee as advisory bodies to the Management Committee.
Advisory Body to the Managing Executive Officers' Committee
| Committee Name | Committee Chair / Chairperson | Role of Committee |
|---|---|---|
| Investment Council | Director, Managing Executive Officer | Deliberates on matters related to investment and other proposals promptly and accurately from a broad perspective based on expert knowledge and contributes to rational decision-making based on risk analysis and evaluation |
| Compliance Committee | Managing Executive Officer | Prevention and early detection of violations of laws and regulations within the Group, as well as spreading awareness of compliance with laws and regulations |
| Quality Assurance Committee | Representative Director, Executive Vice President | Formulates quality assurance policies for the Group, develop strategies and plans for quality assurance, and promote and manage the progress of activities related to quality assurance |
| Sustainability Committee | Director, Managing Executive Officer | Plans and implements the Group's sustainability strategies and activities, and progress management of initiatives for each materiality |
| Intellectual Property Committee | Director, Managing Executive Officer | Plans the Group's intellectual property strategy, as well as protecting and expanding the intellectual property of the core business |
| Information Management Committee | Director, Managing Executive Officer | Appropriately manages personal and confidential information, regardless of the form in which it is used, to address significant management risks related to information. |
| Product Development Committee | Representative Director, Executive Vice President | Approves policies and strategies for product development, gives final approval of new product launches, and establishes and operates systems related to product development |
| DX Promotion Committee | Executive Officer | Promotes DX infrastructure design, innovation, and digital technology through the consolidation and promotion of DX-related information |
| Human Rights Awareness Promotion Committee | Director, Managing Executive Officer | Conducts human rights education and awareness programs in the Group to deepen correct understanding and awareness of various human rights issues and to build a corporate culture of respect for human rights that does not tolerate discrimination |
Main Deliberations by the Board of Directors (FY2023)
- Examination of cross-shareholdings
- Future course of action for each issue discussed by Executives - Introduction of a Stock Benefit Plan for Employees (J-ESOP)
- Appropriateness of performance-linked coefficients
- Plan for Expansion of Eligible Employees - On Dividend Policy
- Enhancement of opportunities to return profits to shareholders
Evaluation of Board of Directors' Effectiveness
Once every year, Maruha Nichiro Corporation conducts a self-evaluation of its Board of Directors by each director as stipulated in Article 21 of the Corporate Governance Guidelines to analyze and evaluate the board's effectiveness, and discloses the summary of the results. In FY2023, the Board of Directors deliberated on the results of the evaluation based on self-assessment in the form of a questionnaire and interview with all Directors and all Audit & Supervisory Board Members conducted from February to April, and an analysis was conducted with the support of an external specialized organization. The Board of Directors is functioning appropriately, and its effectiveness is ensured.
Effectiveness Evaluation Process
Evaluation Items
Analysis and Evaluation of Board of Directors' Effectiveness
Looking Ahead
Independence Criteria for Outside Officers
Maruha Nichiro Corporation deems an outside officer independent if the following conditions do not apply.
- Operational execution person of a major business partner of the Group. A major business partner is a business partner whose transaction amount exceeds 2% of the consolidated net sales of the Group or the business partner (including its parent company and major subsidiaries).
- Operational Execution person of the Group's major lender. Major lenders are lenders who have financed the Group in excess of 2% of the Company's consolidated total assets at the end of the most recent fiscal year.
- Lawyer, certified accountant, tax accountant or consultant receiving monetary or financial benefits in excess of 10 million yen a year from the Company in addition to compensation as director
- Person or Operational Execution person who received donations or subsidies from the Company in excess of 10 million yen a year
- A person who fell under (a) to (d) above within the past 2 years
- If the person who falls under (a) to (d) above is an Operational Execution person, including Director, Executive Officer, or General Manager level or higher, or an operational executor with equivalent authority, the spouse or a blood relative within the second degree kinship of the above.
Training and Discussions among Outside Directors and Outside Audit & Supervisory Board Members
Maruha Nichiro Corporation is taking measures for briefings and inspections as needed in order to promote understanding of the Maruha Nichiro Group's businesses among outside directors and outside Audit & Supervisory Board members. In addition, outside directors participate as members of the Compliance Committee, which is an advisory body to the Managing Executive Officers' Committee, and provide opinions based on objective and specialized knowledge. Moreover, opinion exchange led by outside directors and outside Audit & Supervisory Board members are also held to aid in ensuring the effectiveness of Auditing.
Approach to the Remuneration System for Directors and Audit & Supervisory Board Members
Remuneration for management and directors at Maruha Nichiro Corporation consists of fixed remuneration, short-term performance-linked remuneration, and medium-term performance-linked remuneration. The evaluation indicators for performance-linked compensation are consolidated ordinary income for the short term, and consolidated financial indicators and ESG indicators for the medium term. Outside directors are paid only a fixed remuneration. The Nomination and Compensation Committee is an advisory body to the Board of Directors, which deliberates on the compensation system and levels, and makes decisions by resolution of the Board of Directors.
Amount of Compensation Paid to Directors and Audit & Supervisory Board Members
| Executive classification |
Total amount of compensation, etc. (million yen) |
Total amount of compensation, etc. by type (million yen) |
Number of eligible officers (persons) |
||
|---|---|---|---|---|---|
| Fixed compensation |
Performance-linked compensation |
||||
| Monetary | Non-monetary | ||||
| Director | 255 | 179 | 52 | 22 | 11 |
| (Outside Director) | (42) | (42) | (-) | (-) | (6) |
| Audit & Supervisory Board Member | 94 | 94 | - | - | 6 |
| (Outside Audit & Supervisory Board Member) | (73) | (73) | (-) | (-) | (5) |
| Total | 350 | 274 | 52 | 22 | 17 |
| (Outside Officer) | (116) | (116) | (-) | (-) | (11) |
Notes:
*1 The above table includes 3 Directors (including 2 outside Directors) and 1 Audit & Supervisory Board Member (including 1 outside Audit & Supervisory Board Member) who retired at the conclusion of the 79th Ordinary General Meeting of Shareholders held on June 27, 2023.
*2 With regard to Ms. Katsue Okuda, who retired as an Outside Audit & Supervisory Board Member and assumed the position of outside Director at the conclusion of the 79th Ordinary General Meeting of Shareholders held on June 27, 2023, her tenure as an outside Director and her tenure as an outside Audit & Supervisory Board Member are presented separately under Directors and Audit Supervisory Board Members, respectively, and included in the total and the number of officers in the table above.
*3 The amount remuneration, etc. for Directors does not include the portion of employee’s salary for Directors who concurrently serve as employees.
*4 Among performance-linked remuneration, etc. for the fiscal year under review, monetary remuneration has been determined based on the extent to which consolidated ordinary income targets were achieved in the previous fiscal year, with 134% of the target having been achieved in the fiscal year ended March 31, 2023. Consolidated ordinary income trends are presented under, “1. Overview of Operations of the Maruha Nichiro Group, (5) Trends in financial position and profit and loss.”
*5 The total amount of non-monetary remuneration, etc. within the performance-linked remuneration, etc. for the fiscal year under review is the amount that should be recorded as expenses for the fiscal year under review based on the number of share award points granted or expected to be granted during the fiscal year under review under the Performance-linked Stock Compensation Plan for Directors (excluding outside Directors).
*6 At its special general meeting of shareholders held on January 30, 2014, the Company resolved that amounts of remuneration for Directors and Audit & Supervisory Board Members are to be no more than ¥60 million per month (does not include the portion of employee’s salary for Directors who concurrently serve as employees) and no more than ¥10 million per month, respectively. At the conclusion of this General Meeting of Shareholders, the number of eligible Directors is 13 (of whom, 2 are outside Directors), and the number of eligible Audit & Supervisory Board Members is 5 (of whom, 4 are outside Audit & Supervisory Board Members).
*7 The Company has introduced a Performance-linked Stock Compensation Plan “Board Benefit Trust (BBT)” for Directors (excluding outside Directors, and persons who do not reside in Japan) and Executive Officers (excluding persons who do not reside in Japan; hereinafter “Directors, etc.”) following the resolution at the 78th Ordinary General Meeting of Shareholders held on June 28, 2022. It was resolved that the maximum total number of points per fiscal year to be granted to Directors, etc. shall be 50,000 points (of which 19,000 points shall be for Directors). The points granted to Directors, etc. shall be converted into one share of common shares of the Company per point upon the delivery of the Company’s shares, etc. The number of eligible Directors at the conclusion of this General Meeting of Shareholders is four.
Illustration of Performance-linked Stock Compensation Plan
- After receiving approval of the Plan at the General Meetings of Shareholders, the Company will establish a “Directors' Stock Benefit Regulations” within the framework approved at the General Meetings of Shareholders.
- The Company will place money in trust within the scope approved by resolution of the General Meetings of Shareholders.
- The Trust will acquire Company shares using the money entrusted in 2 above, as the source of funds, either through the stock exchange or by accepting the disposal of Company treasury stock.
- The Company will grant points to directors, etc. based on the “Directors' Stock Benefit Regulations”.
- The Trust shall not exercise voting rights pertaining to Company shares in the Trust account in accordance with the instructions of the Trust administrator, who shall be independent from the Company.
- The Trust shall deliver Company shares to those Eligible Directors who meet the requirements as beneficiaries as provided in the “Directors' Stock Benefit Regulations”, in proportion to the number of points granted to said Beneficiaries. However, if the Eligible Directors meet the requirements as provided in “Directors' Stock Benefit Regulations”, such Eligible Directors shall be granted payment in the equivalent of Company shares at market value according to an established proportion of points.
Approach to Cross-shareholdings
Maruha Nichiro Corporation holds shares in business partners as cross-shareholdings when we determine that it will contribute to strategic initiatives with business partners and enhance the medium- to long-term corporate value of our Group. Our basic policy is to determine the investment value of such shares by taking into consideration our business strategy and relationship in business transactions.
The Board of Directors annually reviews the investment value of individual cross-shareholdings and if the significance or rationality of the Company's continued holding of a stock is no longer recognized, the stock is sold or otherwise reduced in light of the stock price and market trends. In addition to a close examination of each stock's dividend yield, trading conditions, and other benefits, we also make a comprehensive judgment based on a qualitative evaluation of the stock's future trading approach, strategic importance, and other factors.
In the fiscal year ended March 2024, the Board of Directors reviewed its cross-shareholdings at its meeting held on September 25, 2023 and reduced 13 stocks by 1.3 billion yen.
Approach to Group Governance
Maruha Nichiro Corporation has established the Maruha Nichiro Group Risk Management Regulations, and has been conducting annual risk surveys to identify and evaluate risks among each division and Group company since FY2015. We also formulate the Risk Management Basic Plan. Details of these activities are reported to the Board of Directors, and risk information across the entire group is shared.
