Corporate Governance

Corporate Governance Organization

Nippon Sanso Holdings Corporation's Board of Directors consists of 9 members, three of whom are outside directors, and operates to ensure correct business judgement. It holds a regular meeting every month to discuss important matters and hears reports about business activities. The Company has established an Advisory Committee on Appointments and Remuneration as a discretionary advisory committee under the Board of Directors. The company president (CEO), chairman of the Board, and independent outside directors are the members of this committee. The committee is chaired by an independent outside director.

The Board of Directors strives to ensure transparency and objectivity in decision making by consulting the Committee and seeking advice from the independent outside directors when revising bylaws concerning director remuneration, selecting candidates for the positions of director or auditor, appointing and dismissing the president (CEO), appointing and dismissing executive officers and choosing successors to the president (CEO).

In addition to the Board of Directors, the Management Committee, which meets every month in principle and consists of CEO and executive officers etc., is set up for prompt decision making. The term of a director is limited to one year to facilitate responsible management in each fiscal year.

Under the provisions of Article 427, Paragraph 1 of the Company Law, Nippon Sanso Holdings Corporation has entered into contracts with the three independent directors to limit their liability for damages prescribed in Article 423, Paragraph 1 of the Company Law, to the minimum liability for damages in accordance with Article 425, Paragraph 1 of the Company Law. The Audit & Supervisory Board also consists of four members, three of whom are outside member. Audit & Supervisory Board members attend meetings of the Board of Directors and the Management Committee, independently audit the business activities of directors and impartially forms opinions and gives them to the Board and the Committee.

In performing audit the Audit & Supervisory Board hears reports on the plans and results of audits from the Accounting Auditors and hears explanations of internal audit results from the Corporate Audit Office, and works with them. To ensure effectiveness of the audit the Company establishes a secretariat working exclusively for the Audit & Supervisory Board.

Three outside directors and two outside Audit & Supervisory Board members are independent. The Company appoints Ernst & Young ShinNihon LLC as an accounting auditor. In addition to that the Company establishes Code of Conduct of Nippon Sanso Holdings Group and strive to ensure compliance and business ethics of the group companies.

Compensation for Directors

Compensation for directors and Audit & Supervisory Board Members in Fiscal Year 2021 (from April 1, 2020 to March 31, 2021) was as shown below. In this regard, compensation for directors consists of basic compensation, medium-term performance-based compensation and short-term performance-based compensation.

Medium-term performance-based compensation fluctuates according to the degree of target achievement in each fiscal year towards the medium-term management plan goal, and short-term performance-based compensation fluctuates according to the degree of performance prudence since the performance of the previous fiscal year.

(Million yen)
Compensation paid to directors 287
Compensation paid to Audit & Supervisory Board Members 103
(Reference)(Million yen)
Compensation paid to accounting auditors in Fiscal Year 2021 105
Total amount of monetary and property compensation paid by the Company and its subsidiaries to accounting auditors 210

Accountability

Nippon Sanso Holdings Corporation recognizes that ensuring the timely disclosure of corporate and financial information is a key component of corporate governance, and is taking steps to fulfill its obligation to provide adequate explanations to investors as well, and to ensure that investor feedback is properly communicated to management.

In an effort to translate this commitment into action, company officers attend two presentations for analysts and institutional investors every year, where they participate in question-and-answer sessions with the participants on such topics as the Company's performance, forecasts for subsequent periods and the formulation and progress of medium-term management strategies, and endeavor to respond in a manner that provides both information and deep insight as representatives of the Company.

Risk management and compliance promotion

Nippon Sanso Holdings Corporation has decided on the basic risk management policies of the Group and establish organizations and rules to ensure their viability. Risk management is implemented by the department in charge of each category.

In addition, we have established the Global Risk Management Committee, which selects key risks pertaining to the entire Group and takes countermeasures to manage these risks. The auditing department conducts internal auditing of the status of risk management.

We also decide on the basic compliance policies of the Group and establish organizations and rules to ensure their viability. We have appointed the Chief Compliance Officer (hereafter called "CCO") at Nippon Sanso Holdings Corporation and Regional Chief Compliance Officers (hereafter called "RCCOs") in each of the overseas regions.

We provide training in line with the compliance risks in Japan and each of the overseas regions. In addition, we have clearly defined the rules for handling compliance infringements and made them known to all the group companies. The GCCO and RCCOs have control over compliance promotion activities and work to enhance and instill compliance promotion activities within the Group.


Furthermore, we have established whistle-blowing systems in Japan and overseas to ensure that anyone who finds a compliance infringement, or a possibility thereof, can report it without fear of repercussions. The auditing department conducts internal auditing of the status of the compliance promotion activities.

Audit and Risk management systems

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