Sustainability

Board of Directors

Structure of the Board of Directors

Directors

Director Attributes and Committee Membership (as of June 30, 2023)

Name Age Gender Period in Office Board of Directors Nomination and Compensation Advisory Committee Corporate Council Conference of Outside Directors and Outside Audit & Supervisory Board Members Hearing Convened by Audit & Supervisory Board Members and Outside Directors Business Ethics Committee
Taku Oshima 66 Male 9
Shigeru Kobayashi 62 Male 3
Chiaki Niwa 63 Male 8
Ryohei Iwasaki 63 Male 14
Tadaaki Yamada 62 Male 1
Hideaki Shindo 58 Male 2
Hiroyuki Kamano
Outside / Independent
77 Male 12
Emiko Hamada
Outside / Independent
64 Female 6
Kazuo Furukawa
Outside / Independent
76 Male 4

◎: Chair / : Attending member

The term of office will run from the conclusion of the Ordinary General Meeting of Shareholders held on June 26, 2023 to the conclusion of the final Ordinary General Meeting of Shareholders in the fiscal year ending within one year.

Expertise of Directors (as of June 30, 2023)

Name Field of experience Specialized knowledge
Overall management Overseas business International experience Marketing Manufacturing technology R&D Finance Legal Compliance HR/Labor ICT Environment Energy conservation
Taku Oshima
Shigeru Kobayashi
Chiaki Niwa
Ryohei Iwasaki
Tadaaki Yamada
Hideaki Shindo
Hiroyuki Kamano
Emiko Hamada
Kazuo Furukawa

Ratio of Independent Outside Directors

Target ratio of Independent Outside Directors Result Name
One-third of the Board of Directors 1/3 Hiroyuki Kamano, Emiko Hamada, and Kazuo Furukawa

Board of Directors Diversity Policy

The Articles of Incorporation specify a maximum of 15 directors on the NGK Board of Directors. NGK does not discriminate on the basis of gender, age, nationality, and race. Based on this policy, NGK strives to enhance diversity in both gender and internationality of the Board of Directors by electing women directors and directors who possess experience in the management of overseas subsidiaries. NGK also strives to ensure independence of the Board of Directors by specifying that one-third or more of directors be independent directors.
NGK deems the following director skills necessary: Practical experience and demonstration of leadership in areas in which the NGK Group operates its business; professional expertise in finance, legal affairs, human resources and labor, information and communications, and other areas. We also think it is necessary to have highly independent outside directors who possess a high degree of expertise in legal affairs or corporate finance, or who possess knowledge of international affairs, trends in technology, and corporate management. The skill matrix (expertise) of the current Board of Directors is shown above.

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Outside Directors / Outside Audit & Supervisory Board Members

Standard and Policy for Independence of Outside Directors and Outside Audit & Supervisory Board Members

Outside Directors

In addition to the requirements for an outside director under the Companies Act and for an independent director specified by the Tokyo Stock Exchange, NGK may not designate a person who falls under any of the following items as an outside director with independence (hereinafter referred to as the “Independent Outside Director”). Even if a person falls under one or more of these items, the Company may make an exception and deem a person suitable for serving as an Independent Outside Director of NGK in light of his or her character, knowledge, and other attributes. However, the person must still meet the requirements of the Companies Act and Tokyo Stock Exchange and the Company must provide an external explanation of why such person is suitable to serve as an Independent Outside Director.
In these standards for determining independence, a business executive refers to an executive director, executive officer, corporate officer or other employee, and the NGK Group refers to NGK and its subsidiaries or affiliates.

  • A major shareholder who holds 10% or more of current voting rights in NGK, or who was a business executive of the corporation if the major shareholder is a corporation during the last three fiscal years, including the most recent fiscal year.
  • A current business executive of a business partner of the Company which has engaged in transactions with the NGK Group totaling 2% or more of consolidated net sales for either party in any of the last three fiscal years, including the most recent fiscal year.
  • A person who was a business executive in a corporation that is a financial institution or other major creditor which is absolutely essential in financing the NGK Group and for which no alternatives exist, in the past three fiscal years, including the most recent fiscal year.
  • A current director or officer of an organization that has received donations or grants totaling 10 million yen/year or 30% of total average annual expenses of the organization, whichever is greater, from the NGK Group in any of the past three fiscal years, including the most recent fiscal year.
  • A certified public accountant (CPA) or tax accountant, or a current employee of an accounting firm or tax accounting firm who served as an accounting auditor or accounting advisor of the NGK Group in the past three years, including the most recent fiscal year.
  • An attorney, certified public accountant, tax accountant, or other consultant who does not correspond to any of the individuals mentioned above in 5, who received 10 million yen/year or more in cash and other assets in addition to officer compensation in any of the past three years, including the most recent fiscal year, or who does not correspond to any of the individuals mentioned above in 5 and is a current employee, etc. of a law firm, accounting firm, tax accounting firm, consulting firm, or other organization that provides expert advice, and that organization has received payments from the NGK Group totaling 2% or more of total consolidated net sales in any of the past three fiscal years, including the most recent fiscal year.
  • A person who was a business executive in a company in which NGK is currently a major shareholder, in the past three fiscal years, including the most recent fiscal year.
  • A spouse or relative within the second degree of kinship of a person mentioned above in 1 through 7.

Outside Audit & Supervisory Board Members

In order to ensure that outside Audit & Supervisory Board members are impartial and that there is no conflict of interest with our general shareholders, NGK makes comprehensive decisions based on the Securities Listing Regulations of the Tokyo Stock Exchange.

Reasons for Appointment of Outside Directors and Outside Audit & Supervisory Board Members

Outside Directors

Name Reasons for appointment
Hiroyuki Kamano Having long engaged in legal practice as an attorney-at-law, Mr. Kamano possesses a wealth of experience and achievements in the legal community, including serving as Vice President of the Tokyo Bar Association. We expect Mr. Kamano to continue to utilize his expertise, extensive experience, and broad insight to oversee company management from an independent objective standpoint, primarily from the perspective of compliance. As an outside director of NGK, Mr. Kamano has been appropriately providing his opinions on matters such as our legal strategies and strengthening our quality management structure, making recommendations on business execution at NGK, and overseeing management. Therefore, we have elected him as an outside director.
Mr. Kamano holds 1,000 shares of NGK stock. However, apart from this, he has no personal, financial, or important business relationship with, nor other vested interest in, NGK.
Concurrent with his work with NGK, Mr. Kamano serves in a variety of roles, including as an outside director of Spancrete Corporation and as an outside director (Audit & Supervisory Committee member) of House Foods Group Inc. However, no personal, financial, or important business relationship, nor other vested interest, exits between NGK and the organizations with which Mr. Kamano currently works.
Emiko Hamada Ms. Hamada has made remarkable achievements such as leading the invention and the world’s first commercialization of the CD-R (recordable CD) while working for Taiyo Yuden Co., Ltd. Since then, she has been engaged in research activities mainly through industry-academia-government collaborations as Professor at Nagoya Institute of Technology and Visiting Professor at Nagoya University. We expect Ms. Hamada to continue to utilize insights she has developed through her career to oversee the management of NGK from an independent, objective standpoint based mainly on the perspectives of R&D and product commercialization. As an outside director of NGK, Ms. Hamada has been actually stating her opinions on product development, how to proceed on new businesses and personnel policies, making recommendations on business execution at NGK, and overseeing management. We have therefore elected her as an outside director.
Ms. Hamada holds 5,000 shares of NGK stock. However, apart from this, she has no personal, financial, or important business relationship with, nor other vested interest in, NGK. Concurrent with her work with NGK, she serves in a variety of roles, including as an outside director for Taiyo Yuden Co., Ltd. However, no personal, financial, or important business relationship, nor other vested interest, exits between NGK and the organizations with which she currently works.
Kazuo Furukawa After serving as President & CEO of the Information and Telecommunication Systems Group at Hitachi, Ltd., Kazuo Furukawa served as Director, Representative Executive Officer, President & COO of the company. He also served as Chairperson of NEDO (formerly an Incorporated Administrative Agency, now a National Research and Development Agency) and possesses knowledge in information & telecommunications and other areas of technology and experience in managing large organizations. We expect him to continue to utilize his broad knowledge and experience to oversee the management of NGK from an independent, objective standpoint as a management expert. As an outside director of NGK, Mr. Furukawa has been appropriately providing a wide range of opinions on management decisions and business activities in general, making recommendations on business execution at NGK, and overseeing management. We have therefore elected him as an outside director.
Mr. Furukawa holds 5,000 shares of NGK stock. However, apart from this, he has no personal, financial, or important business relationship with, nor other vested interest in, NGK. Concurrent with his work with NGK, he serves in a variety of roles, including as an outside director (Audit & Supervisory Committee member) for the Pasona Group Inc. However, no personal, financial, or important business relationship, nor other vested interest, exits between NGK and the organizations with which he currently works.

Outside Audit & Supervisory Board Members

Name Reasons for appointment
Masayoshi Sakaguchi Mr. Sakaguchi has a wealth of experience in the administrative sector and a proven track record in managing large organizations. He was chief of the Osaka Prefectural Police Headquarters, chief of the Commissioner-General’s Secretariat (National Police Agency), and commissioner-general of the National Police Agency. We have determined he can contribute to improving the Company’s corporate value such as by making use of this experience to express his opinions on the international situation, the impact of regulations in Japan and overseas on business, and the development of a risk management structure as an Outside Audit & Supervisory Board member from the viewpoint of the legality of business and risk management. We have therefore elected him to the position of outside Audit & Supervisory Board member.
Mr. Sakaguchi has no personal, financial, or important business relationship with, nor other vested interest in, NGK. He has served as senior advisor to Nippon Life Insurance Company, which is both an NGK shareholder and a source of financing for NGK. However, at the end of FY2022, Nippon Life Insurance Company’s holdings did not exceed more than 0.96% of total NGK shares, and, with regard to the financing received, NGK has business transactions with numerous financial institutions, and the nature of the financing secured from Nippon Life Insurance Company is not such that NGK is any way beholden to it. Therefore, we deem the shareholder and financial borrowing relationship between NGK and Nippon Life Insurance Company to be one which would not impact NGK’s management decision-making. Moreover, the total amount of our payments to that company of management fees for corporate pension plans is less than 0.1% of consolidated operating expenses and, thus, does not create a conflict of interest with our general shareholders.
Concurrent with his work with NGK, Mr. Sakaguchi serves in a variety of roles, including as president of the Japan Automobile Federation. However, no personal, financial, or important business relationship, nor other vested interest, exits between NGK and the organizations with which he currently works.
Takashi Kimura Mr. Kimura possesses many years of experience in managing companies through his service as a Managing Executive Officer at The Bank of Tokyo-Mitsubishi UFJ, Ltd. (now, MUFG Bank, Ltd.), as President and Representative Director of Mitsubishi Research Institute DCS Co., Ltd. In addition to his experience and knowledge in finance and corporate governance gained throughout his career, Mr. Kimura also served as a full-time Audit & Supervisory Board member of MITSUBISHI GAS CHEMICAL COMPANY, INC. and possesses extensive experience and expertise as an auditor of listed companies. We consider him capable of utilizing his broad experience to contribute to enhancing the corporate value of NGK by auditing NGK’s overall management, and have therefore elected him as an outside Audit & Supervisory Board member.
Mr. Kimura has no personal, financial, or important business relationship with, nor other vested interest in, NGK.
Mr. Kimura comes from the Bank of Tokyo-Mitsubishi UFJ (now MUFG Bank), which is both an NGK shareholder and a source of financing for NGK. However, at the end of FY2022, MUFG Bank’s holdings did not exceed more than 2.31% of total NGK shares, and, with regard to the financing received, NGK has business transactions with numerous financial institutions, and the nature of the financing secured from MUFG Bank is not such that NGK is any way beholden to it. Moreover, given that 13 years have already passed since he left the Bank of Tokyo-Mitsubishi UFJ (now MUFG Bank), we do not believe his decisions are affected by the wishes of MUFG Bank in any way that would constitute a conflict of interest with our general shareholders. Also, no personal, financial, or important business relationship, nor other vested interest, exits between NGK and the organizations with which he is or has been involved.

We have submitted written notification to the Tokyo Stock Exchange and Nagoya Stock Exchange of the appointment as independent officers of the above five individuals.

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Effectiveness of the Board of Directors

Election of Board Members, Executive Officers, and Audit & Supervisory Board Members

Policy on Nomination, Appointment, and Dismissal

The NGK Group is mainly engaged in the business of manufacturing materials such as ceramics and related products for supply to a wide range of areas, including overseas. The executive management we hire without regard to gender, age, nationality, and race, including representative directors, directors with special titles, directors in charge of business execution, and corporate officers. They are required to make management decisions and other decisions based on their detailed knowledge of business in each NGK Group business area, specialized knowledge of manufacturing technology and R&D, and knowledge of finance, legal affairs, labor, and other areas. Full-time Audit & Supervisory Board members must also perform audit responsibilities based on professional expertise in finance and other areas, and knowledge gained from individual business experience. For these reasons, we focus on two kinds of expertise when nominating candidates for the positions of director and full-time Audit & Supervisory Board member. One is practical experience and leadership in manufacturing technology, R&D, sales, planning, overseas business, and other business areas. The other is expertise in finance, legal affairs, labor, information and telecommunications, and other subjects. For outside directors and outside Audit & Supervisory Board members, we nominate candidates from among a pool of human resources who possess professional expertise in legal affairs, corporate finance, or other areas, or discernment into international affairs, social and economic trends, trends in technology, and corporate management.
When selecting candidates for the positions of representative director and director with a special title, we focus on candidates who possess insight into NGK Group issues and the ability to formulate corrective measures, and who possess the leadership to express the vision of the NGK Group and move the organization. When a member of executive management has committed a serious violation of local/national laws and regulations, the Articles of Incorporation, and other NGK Group rules, or has engaged in acts that seriously affect business execution, NGK will dismiss that individual upon receiving a recommendation that dismissal is appropriate from the Nomination and Compensation Advisory Committee and obtaining approval by resolution of the Board of Directors.
The Nomination and Compensation Advisory Committee, which has independent directors as a majority of its members, deliberates and on this policy and reports its conclusions to the Board of Directors.

Procedures for Nomination, Election/Appointment, and Dismissal

When nominating candidates for the positions of director and Audit & Supervisory Board member, all representative directors discuss each candidate and obtain consent from the Audit & Supervisory Board for Audit & Supervisory Board member candidates. In addition to this, NGK strives to ensure fairness, transparency, and timeliness in the process of nomination, election/appointment, and dismissal. This is accomplished through deliberation of the nomination of each candidate for director and Audit & Supervisory Board member, and appointment and dismissal of representative directors and executive directors by the Nomination and Compensation Advisory Committee, which has independent outside directors as a majority of its members. The committee then reports its detailed conclusions to the Board of Directors. After the Board of Directors has sufficiently considered the conclusions of the committee, the Board elects candidates for the positions of director and Audit & Supervisory Board member, and approves this as an agenda item (resolution) for the General Meeting of Shareholders. After directors are elected by the General Meeting of Shareholders, the Board of Directors appoints representative directors and executive directors, based on the report by the Nomination and Compensation Advisory Committee.

Training policies for officers

Directors and Audit & Supervisory Board members have been tasked with the responsibility of exercising the due care of a good manager. The Company therefore has established a training policy of providing the following types of opportunities to sharpen skills and knowledge so that they can fully execute their duties as experts in various kinds of management or as supervisors of business execution.

  • For internal officers: Training on the Companies Act, the Financial Instruments and Exchange Act, competition laws, and other aspects of corporate governance and compliance
  • For outside officers: Mainly providing separate explanations from the department in charge concerning items on the agenda of the Board of Directors and regularly providing information on the business environment and issues as well as opportunities for exchanging opinions

Evaluation on the effectiveness of the Board of Directors

NGK’s Board of Directors conducts a survey of directors and Audit & Supervisory Board members at the close of each fiscal year to evaluate the effectiveness of Board of Directors meetings. The Board entrusts analysis and evaluation of the responses to an external organization, which reports the results to the Board of Directors. The Company continually strives to improve effectiveness through such means as considering the importance and necessity of each issue identified and reinforcing efforts in Board of Directors meetings during the next fiscal year.

1. Status of Response to Issues Identified in the Effectiveness Evaluation Covering FY2021

(1) Deepen discussions at the Board of Directors meetings

  • The Board of Directors held free debates on the review of business portfolio and personnel system, in addition to making company-wide risk management an agenda after making a sharp distinction among the agenda items.
  • In addition, the energy storage business strategy was discussed intensively at the expansion strategy meeting, which was attended also by outside officers.

(2) Strengthen progress reports on the NGK Group Vision

  • In addition to enhancing the content of reports on the progress of the Vision at various committee meetings and company-wide projects, we have also established multiple reporting periods for each of them as scheduled annual agenda items.

2-1. Methods of Effectiveness Evaluation for FY2022

(1) A survey comprising a total of 50 questions and a free-response entry was conducted on all directors (9 members) and all Audit & Supervisory Board members (4 members) at the beginning of April 2023, and the analysis and evaluation of the responses were entrusted to an external organization.
(2) In addition, as part of the effectiveness evaluation of the Board of Directors, the Nomination and Compensation Advisory Committee has conducted a questionnaire to its members (chairperson, members, and observers) since FY2022, and entrusted the analysis and evaluation of the responses to an external organization.

2-2. Summary of Evaluation Results for FY2022

(1) A summary of the evaluation results was reported to the Board of Directors at its meeting on June 6, 2023.
(2) Based on the results of the questionnaire, the external evaluation of the effectiveness of the Board of Directors (including the Nomination and Compensation Advisory Committee) was high overall, and stated that the Board of Directors is operating appropriately.
(3) Overall comments from external organizations are as follows.

  • The NGK Board of Directors has maintained the elements that form the foundation necessary as a Board of Directors since the previous evaluation, including the commitment and leadership of each member and a healthy culture. Based on the results of last year's effectiveness evaluation, we believe that the Board of Directors has taken actions such as holding focused discussions on themes to be supervised intensively, leading to a continuous high evaluation of its effectiveness.
  • On the other hand, there seems to be an awareness of issues related to risk management based on the external environment, which is considered important for the realization of the long-term vision in the future; discussion and monitoring of human resource strategy and human capital, which are drawing attention as public trends; and the way information is shared with respect to communicating with investors and other stakeholders. In order to appropriately address these issues, it is expected that continuous efforts will be made in terms of management, such as the sharp distinction of agendas and operating time.
  • With regard to the Nomination and Compensation Advisory Committee, the committee itself was evaluated as operating effectively, but there were some comments on how information is shared with the committee and how information is shared from the committee to the Board of Directors, suggesting that the expected level of information sharing needs to be confirmed.

3. Policy for Initiatives for FY2023 to Further Improve Effectiveness

Based on the results of the evaluation in FY2022 and the exchange of opinions with outside officers, we have formulated the following policies for initiatives for FY2023. We will strive to strengthen the effectiveness of the Board of Directors and the Nomination and Compensation Advisory Committee through continuous efforts.

(1) Policies for initiatives of the Board of Directors

  • To realize the NGK Group Vision, the following items shall be regularly reported to and monitored by the Board of Directors.
    - Status of the business portfolio revision
    - Progress of the New Value 1000 (aiming for sales of 100 billion yen from new commercialized products by 2030)
    - Progress of various committee activities and company-wide projects
    - Progress of human resources strategy
    - Status of company-wide risk management
  • More in-depth discussion on business strategy
  • Enhance opportunities for dialog between senior management and outside officers
  • Emphasize dialog with shareholders and investors through IR activities

(2) Policies for initiatives of the Nomination and Compensation Advisory Committee

  • Further share the status of discussions from the committee to the Board of Directors
  • Enhancement of information provided to the committee on compensation and nomination

Management Succession Planning

The revised NGK Group Chief Executive Officer Succession Plan was approved by resolution of the Board of Directors in April 2023. This succession plan establishes the required qualities, development policies, selection procedures, and other actions for developing chief executive officer successors. Based on this, the president provides the Nomination and Compensation Advisory Committee with a progress report on the plan each year, and the committee reviews the appropriateness of the plan.

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Policy on Cross-Shareholdings

NGK holds shares in listed companies that contribute the long-term business development of the NGK Group as cross-shareholdings, primarily to maintain and strengthen transactional relationships. We also hold shares in each company in the Morimura Group, which shares a common founder. We hold these shares to mutually enhance management quality because the Morimura Group brand is part of NGK’s corporate value through its philosophy and history.
As part of our asset portfolio, all cross-shareholdings are positioned as assets to supplement the liquidity considered necessary for our business plans. We always keep shrinking the size of cross-shareholdings in mind from the perspective of asset efficiency, and the size of cross-shareholdings may change due to changes in overall business trends and risks, financial conditions, the transactional relationship with each company whose shares we hold, and other such factors.
The Board of Directors regularly reviews NGK’s capital policy and whether it is appropriate to continue holding these shares based on certain indicators in addition to significance of holding shares from the perspective of the transactional relationship. Such indicators include the credit rating and other indicators of the safety in holding shares, and the dividend yield and other indicators of efficiency. With respect to the cost of capital, shareholdings are not evaluated in isolation. We also evaluate cross-shareholdings as part of the balance sheets for each business, which have different risks and anticipated rates of return, in managing the return on invested capital (NGK version ROIC) for each business.
When exercising voting rights on cross-shareholdings, we focus on whether the business is being managed with an emphasis on enhancement of corporate value, shareholder return, in addition to evaluation from the perspective of the content of resolutions and whether they will adversely affect shareholder return.

Number of Stocks and Balance Sheet Amount

Number of stocks Total balance sheet amount
(million yen)
Unlisted shares 39 2,168
Shares other than unlisted shares 38 37,852

Stocks for Which Number of Shares Increased in FY2022

Number of stocks Total acquisition amount for increase in number of shares (million yen) Reason for increase in number of shares
Unlisted shares 2 99 Due to new investments in companies contributing to the creation of our new products and businesses
Shares other than unlisted shares

Stocks for Which Number of Shares Decreased in FY2022

Number of stocks Total acquisition amount for decrease in number of shares
(million yen)
Unlisted shares
Shares other than unlisted shares 2 1,180

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