Corporate Governance System

Basic Approach

NGK Group’s basic policy on corporate governance is to ensure legality in business activities and transparency in management. NGK Group has established a structure that can respond swiftly to changes in the business environment and built and maintains shareholder-focused system to ensure fair management.
To put this policy into practice, NGK has chosen the governance structure of a company with an Audit & Supervisory Board. We have established a corporate governance system that increases the effectiveness of corporate governance through debate and deliberation on important matters. This was accomplished by establishing the Executive Committee, Sustainability Management Committee, Risk Management Committee and various other committees to support the president in making decisions, in addition to the General Meeting of Shareholders, Board of Directors, and Audit & Supervisory Board.
NGK recognizes the need for swift, optimal decision-making and execution to respond to changes in the business environment. We have therefore introduced an executive officer system to segregate the management decision-making and supervisory function from the business execution function to clearly define the roles of and strengthen each function.
To strengthen the supervisory and oversight function of the Board of Directors, we have mandated reporting to Board of Directors from the key committees among committees that handle various risks surrounding NGK. To ensure that the objectives of the Corporate Governance Code are thoroughly implemented, we established the Nomination and Compensation Advisory Committee, Corporate Council, Conference of Outside Directors and Outside Audit & Supervisory Board Members, the Business Ethics Committee, and other committees.
In addition, we have established the NGK Group Corporate Business Principles and NGK Group Code of Conduct to stipulate how everyone working for the NGK Group should execute their jobs so that they abide by society’s laws and NGK Group’s Articles of Incorporation and comply with corporate ethics. All executives and employees are well versed in the code and are obligated to abide by it.

Corporate Governance Report

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Internal Control Systems

The NGK Board of Directors has established the following systems to ensure that directors comply with laws and regulations and NGK’s Articles of Incorporation in the execution of their duties. This includes the systems deemed necessary to ensure the appropriateness of NGK’s business operations as well as the operations of the NGK Group consisting of NGK and its subsidiaries. The business execution organizational bodies that report to the president are responsible for operating these systems.

Basic Views on Internal Controls System and Status of Development

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Steps Taken to Strengthen Corporate Governance

We continue to strengthen the corporate governance system. Enhancements include introducing an executive officer system to improve the management supervision and monitoring functions and other functions, and to provide suggestions on all aspects of management.

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Corporate Governance System

We have established the following system to ensure legality in business activities and transparency in management. This system makes it possible to respond swiftly to changes in the business environment and maintains a shareholder-focused system to ensure fair management.

Corporate Governance Organizational Chart

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Policy on Cross-Shareholdings

NGK maintains cross-shareholding of listed stock that contribute to the long-term business development of our group for the primary purpose of maintaining and strengthening business relationships. Moreover, we maintain strategic cross-shareholding with each company in the Morimura Group, with which we share a founder. Since the Group brand forms a part of our corporate value through its history and philosophy, this arrangement aims to enhance the quality of management for both sides.
As part of our portfolio of assets, these all provide the supplemental liquidity deemed necessary by our business plan. While we are always looking to reduce the scope of our cross-shareholding in the interest of asset efficiency, it may fluctuate due to factors including overall business trends, changes in risks, financial conditions, and business relationships with individual parties. Moreover, for stocks, the Board of Directors not only considers the significance of holdings from the perspective of business relationships, but periodically confirms the appropriateness of continued holdings, the safety of ratings, and the efficiency of dividend yields, together with capital policy. Meanwhile, when comparing our capital costs, we do not evaluate stocks alone, but manage return on invested capital (NGK ROIC) for each business with differing risks and expected returns. And we include our cross-shareholding valuations in the balance sheet of each business. We exercise voting rights accompanying cross-shareholdings from the perspective of whether the content of a proposal would be detrimental to shareholder interests. We also pay attention to whether the company whose shares we hold is managed with an emphasis on increase corporate value and shareholder profits.
We sold 1,109 million yen in two specified investment stocks in FY2023 as a result of this verification. 

Number of Stocks and Balance Sheet Amount (March 31, 2024)

Stocks for Which Number of Shares Increased in FY2023

Stocks for Which Number of Shares Decreased in FY2023

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