Notice: Undefined index: HTTP_ACCEPT_LANGUAGE in /home/noritsu/www/wp/wp-content/themes/noritsukoki/functions.php on line 328
Coporate Governance - Noritsu Koki

GOVERNANCE

BASIC APPROACH

The Noritsu Koki Group believes that fulfilling its social responsibility is a prerequisite for enhancing corporate value as a company that retains the trust and support of customers and shareholders. In addition, by strengthening corporate governance, we aim to support quick and accurate management decision-making and reinforce competitiveness. Our basic approach to corporate governance and policies are summarized in the Corporate Governance Policy, which is available on the Noritsu Koki website.

CORPORATE GOVERNANCE POLICY

STRUCTURE

COPORATE GOVERNANCE STRUCTURE

Building a corporate governance structure that combines transparency, fairness and agility is the foundation for maintaining our sound development into the future, and is therefore a key management priority. For the reason above, we have taken a number of steps to enhance corporate governance since transitioning to a holding company structure. Noritsu Koki will further strengthen the functions of each supervisory body as it works to create new economic and social value in order to be a Group trusted by stakeholders.

Overview

ZOOM UP

History of Enhancing Governance

ZOOM UP

Roles and Composition of Each Organization

Organization Board of Directors Audit and Supervisory
Committee		 Nomination and Remuneration
Committee
Composition
Black silhouette
＝Male
Red silhouette
＝Female
Executive：2
  • Male
  • Male
Executive：0 Executive：0
Non-executive：4
  • Male
  • Male
  • Male
  • Female
Non-executive：3
  • Male
  • Male
  • Male
Non-executive：4
  • Male
  • Male
  • Male
  • Male

(including one non-director third-party expert)
Chair/
Committee chair		 Representative director and CEO Non-executive director Non-executive director
Number of meetings 15 9 7
Attendance rate 100% 100% 100%
Key initiatives
in 2023
  • Review of/decisions on M&A
  • Qualitative and quantitative assessments of important matters of individual subsidiaries
  • Review of/decisions on use of funds
  • Establishment of and revision of regulations and policies
  • Review of exercise of voting rights
  • Review of consolidated business results and targets
  • Operational audits (to check whether directors are performing their duties in compliance with laws and the Articles of Incorporation)
  • Accounting audits (to check whether the accounting auditors’ audits, methods and results are appropriate)
  • Audit of risk management system (assessing the establishment and operation of the risk management system and understanding the management of domestic and overseas subsidiaries)
  • Nomination and review of directors
  • Review of policy for compensation of directors
  • Decision on compensation of directors
  • Discussion of succession plan

BOARD EFFECTIVENESS EVALUATION

We work to maintain and improve the functions of the Board of Directors by conducting an evaluation of its effectiveness and then analyzing and assessing the results to make further improvements.

2023 Analysis and Evaluation Methodology
Evaluation and
aggregation method		 Anonymous questionnaire using a third-party organization/Tabulation and compilation by a third-party organization
Questionnaire
topics		 Board status/Board composition/Operation of Board meetings/Board discussions/Monitoring function of the Board/Executive director performance/Non-executive director performance/Support system for directors (including Audit and Supervisory Board members)/Training/Engagement with shareholders (investors)/Own efforts/Nomination and Remuneration Committee/Audit and Supervisory Committee
Issues Identified in 2022
  • Timing of providing documents, enhancement of document organization and analysis
  • Cooperation with Audit Office
  • Provision of training opportunities
2023 Initiatives
  • Reinforced information support and sharing system for non-executive directors
  • Continued monitoring Board effectiveness
2023 Evaluation
  • Evaluation scores all improved from 2022 evaluation, including items addressed in 2023
  • A new issue identified was enhancement of the monitoring function for sustainability-related initiatives and capital efficiency
Future Action Policies
  • Take steps to enhance the content of reports to enable the Board to more effectively monitor sustainability-related initiatives and capital efficiency

POLICY ON APPOINTMENT AND DISMISSAL OF DIRECTORS BY THE NOMINATION AND REMUNERATION COMMITTEE

In appointing directors of the Company, we consider aspects such as the diverse perspectives, experience and knowledge of each candidate to ensure the optimal balance of know-how, expertise, ability and diversity on the Board of Directors. Please see the skills matrix of the Board of Directors.

Policy on Director Appointment and Dismissal
Appointment

In appointing directors, we will consider individuals who satisfy the following criteria and are capable of fulfilling their duties appropriately, taking into account concurrent duties.

  • Individuals who satisfy all legal requirements, with excellent character and business acumen, and are capable of performing all delegated duties
  • Individuals who are attuned to the Group’s Corporate Philosophy and capable of driving sustainable growth of the Group’s corporate value by responding appropriately to the external environment
Dismissal

We will consider submitting a resolution for the dismissal of a director to the General Meeting of Shareholders if any of the following criteria are met.

  • Confirmation of socially reprehensible links with antisocial forces
  • Violations of laws or regulations, the Articles of Incorporation or other Group rules that cause significant loss to the Group or that interfere with the execution of business activities
  • Significant issues preventing the execution of duties
  • Discovery of qualities that fall short of appointment criteria

SUCCESSION PLANNING

The Nomination and Remuneration Committee has established succession plans for the representative director and CEO, and for directors and other senior executives.To continuously improve the Board’s effectiveness, candidates are selected, evaluated and trained under the supervision of the Board based on the requirements for CEO and individual directors, as well as the overall Board composition requirements.

ZOOM UP

DIRECTOR COMPENSATION

BASIC APPROACH

The compensation system for the directors of Noritsu Koki (excluding Audit and Supervisory Committee members and non-executive directors) is designed to be aligned with the interests of shareholders. The goal is to provide sufficient incentive to sustainably enhance corporate value. Compensation of individual directors is based on a policy of setting compensation at appropriate levels according to respective responsibilities.

COMPOSITION OF DIRECTOR COMPENSATION

Director compensation consists of base compensation, which is a fixed amount; bonuses, which are linked to the Company’s performance; and stock compensation, which is non-cash compensation. The compensation level and composition ratio is set after review by the Nomination and Remuneration Committee.

Cash compensation Non-cash compensation
(stock compensation)*
Fixed compensation
(base compensation)		 Variable compensation
(bonuses)
Directors
(excluding Audit and Supervisory Committee members and non-executive directors)
 Determined based on comprehensive consideration of the director’s title, responsibilities and years of service, taking into account compensation levels at other companies, the Company’s performance, and the level of the director’s employee salary Standard of approx.
20% of base compensation
×
0% to 200% from performance linkage		 40%–60% of
base compensation
(up to ¥80 million/100,000
shares per year)
Non-executive
directors		 Consists of cash (fixed) compensation (base compensation) only - -
  • ＊Performance-linked paid stock options based on operating EBITDA were issued to Representative Director and CEO Ryukichi Iwakiri effective April 5, 2019, in addition to stock compensation.

DECISION-MAKING PROCESS FOR COMPENSATION AMOUNTS

The amounts of base compensation and bonuses to be paid to individual directors are decided by Representative Director and CEO Ryukichi Iwakiri within the compensation limits set by resolution of the General Meeting of Shareholders. However, the CEO must refer to the proposal submitted by the Nomination and Remuneration Committee, and make the final decision in accordance with its report.

Type of
compensation		 Amounts of base compensation and bonuses paid to individual directors Stock compensation
Decision-making
process		 Decision-making is delegated to the representative director and CEO within the compensation limits set by resolution of the General Meeting of Shareholders. However, the representative director and CEO must refer to the proposal submitted by the Nomination and Remuneration Committee, and make the final decision in accordance with its report. The number of shares to be allocated to individual directors is decided by the Board of Directors based on the report of the Nomination and Remuneration Committee.

2023 Results

Director compensation for 2023 was decided by a resolution of the General Meeting of Shareholders held on March 23, 2023. Compensation of individual directors is consistent with the Group’s basic policy on compensation.

ZOOM UP
  • ＊The representative director and CEO is issued paid stock options (effective April 5, 2019) in addition to stock compensation,so the variation rate is substantially higher than that of the director and CFO.
Target indicator Target Actual
(achievement rate)
Operating
EBITDA		 ¥12.4 billion ¥17.8 billion
(144%)
Profit attributable
to owners
of parent		 ¥4.3 billion ¥10.1 billion
(235%)
Director category Total compensation
(Millions of yen)		 Total compensation by type (Millions of yen) Number of
directors eligible
Base directors eligible
compensation		 Bonuses Restricted stock
compensation
Director
(excluding Audit and Supervisory Committee members and non-executive directors)
 226 130 41 54 2
Non-executive directors 25 25 - - 4

PERFORMANCE-LINKED COMPENSATION (BONUSES)

Noritsu Koki determines the amount of bonuses by evaluating the Company’s operating performance and each director’s contribution to performance. In the performance evaluation, the Company considers the operating EBITDA achievement rate and the profit attributable to owners of parent achievement rate at a ratio of 60% and 40%, respectively.

ZOOM UP

MANAGEMENT TEAM

Directors
Ryukichi Iwakiri
Ryosuke Yokobari
Kazue Murase
Akihisa Ota
Motoaki Ibano
Tsuyoshi Takada
Position
  • Representative Director and CEO
  • Director and CFO
  • Independent Non-Executive Director
  • Independent Non-Executive Director(Audit and Supervisory Committee Member)
  • Chair of Audit and Supervisory Committee
  • Independent Non-Executive Director(Audit and Supervisory Committee Member)
  • Independent Non-Executive Director(Audit and Supervisory Committee Member)
  • Chair of Nomination and
    Remuneration Committee
Career
background
Apr. 2001
Joined F&M Co., Ltd.
Sep. 2003
Joined OPT, Inc. (currently DIGITAL HOLDINGS, Inc.)
Mar. 2011
Director
Jun. 2018
President, Representative Director and CEO (currently Representative Director and CEO), the Company(current position)
Jul. 2018
Director, Teibow Co., Ltd.(current position)
Apr. 2020
Director, AlphaTheta Corporation (current position)
May 2021
Director, PEAG, LLC dba JLab(current position)
Nov. 2010
Passed the CPA Examination
Apr. 2012
Joined ES NETWORKS Co., Ltd.
Dec. 2016
Registered as a CPA
Jan. 2020
Executive Officer, the Company
Apr. 2020
Executive Officer and CFO, the Company
Apr. 2020
Director, AlphaTheta Corporation (current position)
Jun. 2020
Director, Teibow Co., Ltd. (current position)
Mar. 2021
Director and CFO, the Company (current position)
May 2021
Director, PEAG, LLC dba JLab (current position)
Apr. 2023
Representative Director, JLab Japan (current position)
Apr. 1995
Joined Angel Co., Ltd.(subsidiary of BANDAI CO., LTD.)
Apr. 1997
Seconded to BANDAI Engineering Center Co., Ltd.
Apr. 2016
Executive Officer, BANDAI CO., LTD.
Jun. 2022
Representative Director, FUNDARD Co., Ltd. (current position)
Mar. 2024
Non-Executive Director, the Company (current position)
Apr. 2005
Registered as a CPA
Jan. 2007
Joined Kaisei Certified Public Accountant Joint Office
Jan. 2007
Established Akihisa Ota C.P.A. Office, President (current position)
Feb. 2007
Registered as a tax accountant
Jun. 2010
Auditor, Sansei Co., Ltd. (current position)
Jun. 2015
Non-Executive Director, Audit and Supervisory Committee Member, the Company (current position)
Jan. 2021
Auditor, Lcode Co., Ltd. (current position)
Jul. 2022
Partner, TSUMUGU AUDIT CORPORATION (current position)
Apr. 1974
Joined IBM Japan
Apr. 1988
Director of the Board, Recruit Co., Ltd.
Apr. 1993
President, RECRUIT U.S.A., INC.
Feb. 2005
Distinguished Professor, Research Institute for Digital Media and Content, Keio University (New York, USA)
Apr. 2009
President and Representative Director, M’s Holding nternational Corporation (current position)
Jun. 2012
Director, Advanced Visual Communication Center (currently Advanced Valuable Communication Center) (current position)
Jun. 2012
Auditor, the Company
Jun. 2015
Non-Executive Director, Audit and Supervisory Committee Member, the Company (current position)
Apr. 2000
Admitted to the bar
May 2007
External Audit & Supervisory Board Member, The Maruetsu, Inc. (current position)
Jun. 2015
Outside Director, Topre Corporation (current position)
Jan. 2016
Partner attorney-at-law, Wadakura Gate Law Office (current position)
Mar. 2020
Outside Director, IP Dream Inc. (current position)
Mar. 2021
Non-Executive Director, Audit and Supervisory Committee Member, the Company (current position)
Jun. 2022
Outside Director, OpenDoor Inc. (current position)
Term One year1 One year1 One year13 Two years23 Two years23 Two years23
2023 Board
meeting
attendance		 15/15 15/15 - 15/15
(Audit and Supervisory Committee
meetings: 9/9)		 15/15
(Audit and Supervisory Committee
meetings: 9/9)		 15/15
(Audit and Supervisory Committee
meetings: 9/9)
Committee memberships - - - Audit and Supervisory Committee Nomination and Remuneration Committee Audit and Supervisory Committee Nomination and Remuneration Committee Audit and Supervisory Committee Nomination and Remuneration Committee
Skills Matrix
Ryukichi Iwakiri
Ryosuke Yokobari
Kazue Murase
Akihisa Ota
Motoaki Ibano
Tsuyoshi Takada
Corporate management
(CEO experience)		 ◯ ◯
Finance /
accounting		 ◯ ◯
Engineering /
technology /
DX4		 ◯ ◯
Marketing /
global business		 ◯ ◯ ◯
Legal /
risk management		 ◯ ◯
Sustainability ◯ ◯
Main
qualifications /
research, etc.
  • CPA
  • CPA
  • Tax accountant
 Attorney-at-law Research / presentations on nomination and compensation
Notes:
  1. 1.The term of office of directors (excluding Audit and Supervisory Committee members) is one year (from the close of the Ordinary General Meeting of Shareholders held on March 21, 2024 until the close of the Ordinary General Meeting of Shareholders for the fiscal year that ends within one year after their election).
  2. 2.The term of office of directors who are Audit and Supervisory Committee members is two years (from the close of the Ordinary General Meeting of Shareholders held on March 23, 2023 until the close of the Ordinary General Meeting of Shareholders for the fiscal year that ends within two years after their election).
  3. 3.Four directors (Kazue Murase, Akihisa Ota, Motoaki Ibano and Tsuyoshi Takada) are non-executive directors. The Company has designated Kazue Murase, Akihisa Ota, Motoaki Ibano and Tsuyoshi Takada as independent officers based on the rules of the Tokyo Stock Exchange, and reported their appointment to the Tokyo Stock Exchange.
  4. 4.Digital transformation
Executive
Officers
Yukiko Katabe
Megumi Iwamoto

GROUP GOVERNANCE

BASIC APPROACH

Noritsu Koki continuously works to strengthen Group governance with the aim of maximizing the corporate value of the Group. As basic guidelines, Noritsu Koki has formulated Subsidiary Management Regulations. Noritsu Koki is responsible for deciding management policies, monitoring performance and making investment decisions regarding Group companies based on what is optimal for the Group as a whole. In the interest of expediting decision-making, Noritsu Koki respects the judgment of the management of each Group company with regard to planning and executing individual strategies and measures.

GOVERNANCE STRUCTURE

Companies Structure
Three core Group
companies
  • Teibow
  • AlphaTheta
  • JLab
 Noritsu Koki’s three consolidated subsidiaries each have directors and auditors seconded from Noritsu Koki. This results in a flexible, well-governed management structure in which the intentions of the Group are reflected, with details concerning business execution delegated to each subsidiary, while Noritsu Koki participates in the decision-making process for major decisions.
Other Group
companies
  • Kidswell Bio
 Since it is currently listed on a stock exchange, under the Affiliate Management Regulations Noritsu Koki conducts appropriate information sharing while ensuring independence.

OVERVIEW OF GROUP GOVERNANCE

＊as of December 31, 2023
ZOOM UP