- Basic Policies
- Corporate Governance Structure Scheme
- Committees on Corporate Governance
- Outside Directors and Outside Audit & Supervisory Board Members
- Remuneration of Directors and Audit & Supervisory Board Members
- Whistle-blowing System
- Approaches to Observe the Corporate Governance Code
- Internal Control Systems
- Evaluation on the Effectiveness of the Board of Directors
Committees on Corporate Governance
NGK has further strengthened and enhanced its corporate governance structures by establishing committees to bolster the supervision and monitoring functions of the Board of Directors.
Board of Directors
The Board of Directors deliberates matters prescribed in the Companies Act, as well as other important management issues, providing oversight for the execution of duties by directors. The Board of Directors includes three outside directors to create a system enabling management monitoring based on professional knowledge and decision-making from a wider perspective. As of June 26, 2018, the current Board of Directors comprises 12 members (11 men and one woman).
Audit & Supervisory Board
The Audit & Supervisory Board consists of four members, each of whom attends Board of Directors meetings and conducts other activities to audit the execution of duties by directors. The Audit & Supervisory Board includes two external members, each possessing significant business experience and extensive insight. The Audit & Supervisory Board members, including these highly independent outside members, conduct audits on the execution of duties by directors, business operations, and the company's financial position.
Comprising the president, directors, Audit & Supervisory Board members, and executive officers and division heads designated by the president, this body deliberates the matters necessary to help the president with decision-making.
As of June 26, 2018, the current Executive Committee comprises 16 members (15 men and one woman).
Business Ethics Committee
Comprised of outside directors and one internal director responsible for compliance, this committee monitors for fraud or illegalities involving senior management, as well as for compliance with the Competition Law and the Foreign Corrupt Practices Act, and reports directly to the Board of Directors. As a mechanism to prevent fraud or legal violations, in addition to the Helpline, an internal reporting system (Hotline) linked directly to outside lawyers was established with the aim of strengthening NGK's compliance structure.
The meeting enables outside directors to exchange opinions with representative directors and others when proactive recommendations for senior management are sought from outside directors regarding various management-related issues.
Conference of Outside Directors and Outside Audit & Supervisory Board Members
Comprised exclusively of outside directors, these meetings facilitate an exchange of opinions regarding NGK management issues, with the intent of proactively contributing to discussions at Board of Directors meetings.
Hearing convened by Audit & Supervisory Board Members and Outside Directors
Comprised of Audit & Supervisory Board members and outside directors, these hearings gather information from internal sources regarding the business environment and issues surrounding NGK.
Nomination and Compensation Advisory Committee
Comprising a majority of outside directors (total of 8, three outside directors, two outside audit & supervisory board members, and three internal directors), this committee attempts to ensure fairness and increase transparency related to determining the appointment and remuneration of board members and officers by deliberating matters related to the appointment and remuneration of board members and executive officers, Chief Executive Officer succession planning, and other matters, the results of which are reported to the Board of Directors.
Bodies Concerning Observance of Laws, Regulations, and Corporate Ethics
|Internal Controls Committee||
This body deliberates matters necessary to help the president and Internal Controls Committee Chair with decision-making regarding internal controls system assessment and reporting related to financial reporting based on the Financial Instruments and Exchange Act.
This body assists the president and CSR Committee Chair with decision-making by deliberating matters necessary for the observance of laws, regulations, and corporate ethics.
Additionally, responses to items determined to pose a significant threat to the company among other matters, incidents or accidents related to laws, regulations or corporate ethics, as well as consideration and evaluation of the projects promoted by each subcommittee and other CSR-related items identified as important by the CSR Committee Chair, are also deliberated.
|Environmental Protection Committee||This body formulates and deliberates the planning of matters necessary to help the president and the Environmental Protection Committee Chair with decision-making regarding the realization of our Core Policy on the Environment to promote business activities in harmony with the environment.|
Aiming to increase customer satisfaction and trust by realizing even higher-quality products and services, this body deliberates the matters necessary to help the president and the Quality Committee Chair with decision-making regarding the following items.
|Safety and Health Committee||This body deliberates important issues on safety and health to assist the decision-making of the president and Safety and Health Committee Chair regarding the establishment of basic policies and priority targets pertaining to safety and health and the confirmation of labor accidents and priority activities.|
|Development Committee||This body deliberates items necessary to assist the decision-making of the president and Development Committee Chair regarding policies, evaluations, budgets, major individual planning, and commercialization projects related to development.|
|Facilities Committee||This body deliberates items necessary to assist the decision-making of the president and Facilities Committee Chair regarding the examination and evaluation of policies, budgets, performance, and major individual planning related to capital expenditure and information systems.|
|Education Council||This body deliberates items necessary to assist the president's decision-making regarding policies, systems, structures, and major promotion programs related to human resource development.|
|BCP Countermeasures Headquarters||Aimed at ensuring business continuity in times of emergency, this body executes the operation and maintenance of business continuity planning (BCP) in normal times as well as gives instructions on and support to restoration systems, and prioritizes restoration orders when BCP is in effect.|
|Central Disaster Prevention and Control Headquarters||This body executes requisite duties under commands from the Head and deliberates items necessary to assist the decision-making of the president and Head of this body regarding items related to earthquakes, storm and flood damage, fires, and explosions that threaten or significantly impact the company.|
|Security Export Control/Specified Export and Customs Clearance Control Committee||This body deliberates and determines items necessary for guidance for subsidiaries and affiliates, legal compliance and the improvement of other internal systems with respect to security export controls, specified export declaration systems, and the management of customs clearance operations.|
Business Execution Status
Regarding business execution based on the Board of Directors resolutions, the president presides over company business as the chief executive of business execution. The Executive Committee holds discussions to assist the president's decision-making with respect to important matters regarding business execution. In addition, the Board of Directors is asked for proactive recommendations for management by outside directors pertaining to management-related issues at the Corporate Council, which facilitates an exchange of opinions between outside directors and representative directors.
In line with audit policies and plans defined by the Audit & Supervisory Board, Audit & Supervisory Board members make an effort to collect information through hearings convened by Audit & Supervisory Board members and outside directors, in an attempt to communicate with directors and employees while monitoring director business execution by attending Board of Directors and Executive Committee meetings. At Audit & Supervisory Board meetings attended by outside Audit & Supervisory Board members, the members exchange information with accounting auditors and the Internal Auditing Department in an attempt to facilitate mutual cooperation.
Election of Board Members, Executive Officers, and Audit & Supervisory Board Members
With respect to the nomination of candidates for the Board of Directors and Audit & Supervisory Board, all representative directors discuss matters related to each candidate. The Nomination and Compensation Advisory Committee, of which external directors make up a majority, then deliberates matters related to each candidate, and reports the results to the Board of Directors. As for candidates for the Audit & Supervisory Board, approval is obtained from the Audit & Supervisory Board in order to secure the independence of Audit & Supervisory Board members. With consideration given to the report made by the Nomination and Compensation Advisory Committee, candidates for the Board of Directors and Audit & Supervisory Board are determined by resolution of the Board of Directors and their confirmation is set as an agenda item for the General Meeting of Shareholders. Members of the Board of Directors and Audit & Supervisory Board are then appointed by resolution of the General Meeting of Shareholders. Also, to further clarify the directors' mission and responsibilities, the term of office for directors is one year.
Training Policies for Executives
Newly appointed directors and executive officers are provided with training conducted by attorneys practicing in the United States and Japan related to the Companies Act and the Competition Law, conducted at the time of their appointment. In addition, each year lectures are held, targeting all directors and executive officers, related to compliance with the Competition Law, focused on the expanding scope of Competition Law enforcement and practical business risks. In addition, with regard to outside directors, we provide regular opportunities for the provision of individual explanations by personnel from relevant business divisions concerning mainly proposals presented to the Board of Directors meeting as well as information and exchange of opinions pertaining to business environment and related issues.
Comments from Outside Directors
Three lines of defense to ensure more thorough compliance
Apr. 1971 Joins Ministry of Foreign Affairs
Apr. 1981 Becomes registered attorney
Oct. 1988 Becomes representative attorney of Kamano Sogo Law Offices (present position)
June 2007 Appointed as Outside Auditor of Komatsu Ltd.
July 2007 Appointed as Outside Director of Sumitomo Life Insurance Company
Apr. 2009 Appointed as Vice President of Tokyo Bar Association
June 2011 Appointed as Director of NGK (present position)
June 2015 Appointed as Outside Auditor of House Foods Group Inc. (present position)
For NGK, strict compliance is an essential business creed, and President Oshima is in the vanguard promoting awareness of it. Systems are in place to ensure that accidents or problems, even at overseas plants, are reported to top management immediately, as well as to the Board of Directors. I view this as compliance-minded business operation.
And yet an incident involving a delivery test discrepancy occurred recently. This unfortunately shows that a gap yet remains with regard to compliance-mindedness between top management and those on-site. Having said that, however, in a large organization, gaps in awareness are inevitable and preventing such incidents will require preventive systems be put in place in addition to awareness-raising efforts. In the case of delivery tests, we are separating the inspection department from the business division; however, the construction of this sort of system is the responsibility of management. Also, I feel that improving the awareness gap that exists between management and those on-site will require further personnel exchange and interaction between business divisions within Japan and overseas.
In addition, there are three lines of defense that are essential to ensuring strict compliance within a company whose operation is becoming increasingly globalized. The first line is the compliance activities undertaken on-site; the second is the support system comprised of the legal department, finance department, quality control department, and other functional departments working together across borders; and the third is internal auditing performed by the auditing department. A single mistake in compliance can be all that is needed to upend the management of a company. If you are not strict about compliance, it will end up costing you a lot more than if you were. I believe the issue of how to efficiently maintain the three lines of defense while finding ways of further raising on-site awareness is a challenge for management to address and the Board of Directors to verify.
Concentrating on robust communication and improved decision-making
Apr. 1970 Joins Ministry of International Trade and Industry (now Ministry of Economy, Trade and Industry)
June 1998 Appointed as Director for Policy Coordination of Minister's Secretariat
June 2000 Appointed as Director-General of Small and Medium Enterprise Agency
Nov. 2007 Appointed as President of Japan Chamber of Commerce and Industry, and Tokyo Chamber of Commerce and Industry
June 2011 Appointed as Director of NGK (present position)
Mar. 2016 Appointed as Chairman of National Association of Trade Promotion for Small and Medium Enterprises(present position)
May 2016 Appointed as Outside Director of Aoki Super Co., Ltd. (present position)
June 2016 Appointed as Outside Director of SMK Corporation (present position)
This is my seventh term as Outside Director, and over that time I have developed a strong understanding of NGK's operations and business practices and have brought an outside viewpoint to meetings of the Board of Directors to ensure more robust discussion. Following every meeting of the Board of Directors, I talk with representatives from each division to hear their opinions as well as offer my own.
The larger an organization becomes, the greater the need for internal and external communication. When the divisions and departments within a company do not communicate with one another about what challenges exist, how company policies are working, etc., they will become insular and cut off from one another. It is not uncommon to find that the seeds* of new business, as well as possibilities for technologies that employees have, are to be found outside of a given business division's immediate domain. New awareness and perspectives gained from sharing experiences often leads to great leaps in business. I, too, endeavor to use the opportunity which the Board of Directors' meeting affords me to pursue more robust communication with those inside NGK.
What is also important, from the standpoint of corporate administration, is paying attention to the discussions and decision-making that take place prior to big decisions, as this makes it possible to perform reviews and verification after the fact.
By ensuring that the points of discussion, and the arguments made surrounding those points, are recorded in a manner which allows them to be explained later, they can be reviewed to see whether something was forgotten or unanticipated or whether the risk decisions made were appropriate. The results of this review can then be applied to the benefit of future decisions. Amidst increasing uncertainty about the future, performing reviews and verification after the fact is essential for improving the quality of decision-making, and within NGK and elsewhere people are becoming increasingly accountability-conscious. As for myself, I see my role as providing ongoing input and feedback to ensure the thoroughness of this process.
*Technologies and know-how that can lead to the development of new business and products.
Expectations for further growth April 1971 in NGK technology
Apr. 1984 Joins Taiyo Yuden Co., Ltd.
Dec. 2001 Appointed as General Manager, Quality Assurance Control R Technology Division, Engineering Group, Taiyo Yuden
Sep. 2003 Appointed as Chief Engineer, Basic Research Division, General Research Laboratory, Engineering Group, Taiyo Yuden
Nov. 2008 Appointed as Associate Professor,Center for Social Contribution and Collaboration, Nagoya Institute of Technology (NITech)
Apr. 2011 Appointed as Professor, Center for Social Contribution and Collaboration, NITech, and Professor for Master of Techno-Business Administration, NITech Graduate School
Apr. 2012 Appointed as Professor, Center for Research on Assistive Technology for Building a New Community, NITech
May 2015 Appointed as Third-Area Program Officer, A-STEP (Adaptable and Seamless Technology Transfer Program through Target-driven R&D), Japan Science and Technology Agency (present position)
July 2016 Appointed as Part-time Lecturer, NITech (present position)
Aug. 2016 Appointed as Visiting Professor, Nagoya University (present position)
June 2017 Appointed as Director of NGK (present position)
New products are not created in a year or two. They are the cumulative result of many years of research trial and error. It is from that perspective that I am quite impressed with the achievement in this financial period of the Challenge 30 initiative, as well as the road map for steady roll-out of new products in the coming financial periods.
Still, though, I feel that NGK's material development strengths could be showcased even better. While it is good that NGK maintains a serious and professional corporate culture, I feel it still has challenges to overcome in terms of communicating its appeal. By making changes in how it communicates information, in particular changing how it presents itself so as to increase outside interest, NGK can facilitate more open innovation, through which the potential value of NGK technology can surely be enhanced even further. At present, all of the innate potential of NGK's technology is not being utilized. More proactive efforts to communicate this information is needed.
During Board of Director meetings and new product briefings, I make sure to draw on the B2C experience I have accumulated to allow me to steer discussion around to what the appeal of a new product is from a customer's perspective. I also make a point of asking whether the components and technology of the product can be put to use in even broader applications that meet customer needs, and whether this can be developed into an entire business package rather than just parts supply.
All of this has an impact on the future of NGK's business portfolio. NGK's high profitability is due to a lack of competition and an extremely good market position. I believe that action is needed for the future which will increase the range of products NGK offers in order to build up its business portfolio, and I intend to keep having this discussion with the Board of Directors.
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