Corporate Governance Organization

Basic Views

The Nikon Group will strive to achieve sustainable growth and enhancement of its corporate value over the medium to long term, by improving management efficiency and transparency and further strengthening the supervisory function over management in light of the purpose of Japan's Corporate Governance Code.

System

Aiming to further enhance corporate governance, Nikon adopted a company with an Audit and Supervisory Committee. This position further strengthens the supervisory function of the Board of Directors as it strives to streamline decision-making and clarify management responsibility arising through delegation of authority.

Nikon's Corporate Governance Organization System (As of June 29, 2023): The General Shareholders' Meeting elects and removes directors, Audit and Supervisory Committee members, and the Accounting Auditor. The Board of Directors submits inquiries to the Nominating Committee and the Compensation Committee, and they report their findings to the Board of Directors. The Independent External Directors' Meeting submits proposals to the Board of Directors. The Board of Directors also supervises the Executive Committee and various other committees etc., including the Sustainability Committee. The Audit and Supervisory Committee audits and supervises the Board of Directors, the Executive Committee and various other committees etc., including the Sustainability Committee, and cooperates with the Accounting Auditor and the Internal Audit Department. The Accounting Auditor audits the Executive Committee and various other committees etc., including the Sustainability Committee, and cooperates with the Internal Audit Department. The Internal Audit Department reports to the President and Executive Committee, and audits officers and departments/group companies. The Sustainability Committee and the Risk Management Committee are under the control of the President, and the Environmental Subcommittee is under the control of the Sustainability Committee. The Quality Committee, Export Control Committee and Compliance Committee are under the control of the Risk Management Committee.

Board of Directors

The Board of Directors supervises management by directors and assumes the decision-making functions regarding matters prescribed under laws and regulations, the Articles of Incorporation of the Company, as well as the important matters concerning the Nikon Group. For the purpose of clarifying the scope of delegation to executive directors and officers while ensuring prompt decision-making and management by executive directors and officers, the Company specifically sets out the matters subject to deliberation at Board of Directors' meetings in the criteria for matters subject to deliberation and reporting at Board of Directors' meetings. For example, the Board of Directors makes decisions on matters concerning important management issues, including the basic management policies, the Medium-Term Management Plan, the annual plan, the Basic Policy on Internal Control System, and investments and loans exceeding a certain amount. Moreover, in order to further strengthen the supervisory function of the Board of Directors, the Company has appointed six independent external directors (including three Audit and Supervisory Committee members).
Meetings of the Board of Directors are presided at by Chairman of the Board, who is a non-executive director.

Audit and Supervisory Committee

The Audit and Supervisory Committee audits and supervises the status of management by directors other than those who are Audit and Supervisory Committee members, and officers as an independent body. For such a purpose, Audit and Supervisory Committee members regularly attend meetings of the Board of Directors as well as important meetings such as the Executive Committee, and conducts audits and supervision over management and directors. In addition, to further enhance the independence and neutrality of the audit system, the Audit and Supervisory Committee shall consist of five Audit and Supervisory Committee members, including three independent external directors.

Nominating Committee

The Company has a Nominating Committee as a voluntary advisory body to the Board of Directors. External directors comprise a majority of the members, and an external director chairs the Committee.
The Nominating Committee primarily formulates criteria for the election and removal of the chief executive officer, president and directors, nominates candidates, considers the composition of the Board of Directors, and oversees evaluation and assignment of officers so as to ensure that decisions on the election and removal of directors and officers are transparent and objective.

Compensation Committee

The Company has a Compensation Committee as a voluntary advisory body to the Board of Directors. External directors comprise more than half of its members, and an external director chairs the Committee. The Compensation Committee deliberates and makes proposals for policy regarding executive compensation as well as various related systems so as to ensure objectivity, transparency, and linkage with performance in the process of determining executive compensation.

Independent External Directors' Meeting

The Company has an Independent External Directors' Meeting whose members are all external directors. The meeting serves as an opportunity for the members to freely exchange opinions and have discussions from an independent and objective standpoint about issues and matters to be deliberated by the Board of Directors. Based on the results of this meeting, the Independent External Directors' Meeting makes proposals to the Board of Directors and helps stimulate discussions at Board of Directors' meetings.

Executive Committee

The Executive Committee, as the highest decision-making body of management, swiftly and decisively makes decisions on individual major management issues delegated by the Board of Directors, in accordance with basic management and other policies, as determined by the Board of Directors.

Directors' Skills Matrix

To accomplish its management strategy, the Company has selected the specific skills expected from its directors as shown in the table below, and authorized them following the deliberation by the Nominating Committee. The skills include knowledge on and experience in corporate management, management strategy, internal control, and governance as well as the Company's business characteristics and issues. The composition of the Board of Directors is designed to ensure that each director possesses these skills in a well-balanced manner and the Board as a whole can demonstrate its effectiveness, taking into account the need to maintain diversity and an appropriate number of directors.

  • *Indicates the External Director

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Title Name Nominating Committee Compensation Committee Knowledge and experience expected from directors
Corporate management and management strategy Internal control and governance Legal and risk management Finance and accounting / M&A Global business Technology
Chairman of the Board Kazuo Ushida
Representative Director Toshikazu Umatate
Representative Director Muneaki Tokunari
Director Takumi Odajima
Director* Shigeru Murayama
(Chairperson)
Director* Makoto Sumita
(Chairperson)
Director* Tsuneyoshi Tatsuoka
Director
Full-time Audit and Supervisory Committee Member
Satoshi Hagiwara
Director
Full-time Audit and Supervisory Committee Member
Atsushi Tsurumi
Director*
Audit and Supervisory Committee Member
Shiro Hiruta
Director*
Audit and Supervisory Committee Member
Asako Yamagami
Director*
Audit and Supervisory Committee Member
Michiko Chiba

(Of skills each director possesses, up to three items of knowledge and experience are listed on which the Board particularly relies.)

External Director

In the appointment of its external directors, the Company attaches importance to ensuring their independence. Nikon appoints external director candidates from among those with a wealth of knowledge and experience as executives of other companies or with expertise and experience as specialists such as attorneys and certified public accountants, and who are qualified to take part in the management supervision function from a fair and objective standpoint independent of management.

Reasons for Appointment

Reasons for Appointment of External Directors, except Audit and Supervisory Committee Members

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Name Reasons for Appointment
Shigeru Murayama Shigeru Murayama served as Representative Director of Kawasaki Heavy Industries, Inc. and other important positions, and possesses long years of management experience and outstanding insight, and we believe that he will be able to contribute to the Company's overall management from a big-picture perspective.
Makoto Sumita Makoto Sumita served as President and Representative Director of INNOTECH CORPORATION, Chairman & Director of TDK Corporation and other important positions, and possesses long years of management experience and outstanding insight, and we believe that he will be able to contribute to the Company's overall management from a big-picture perspective and that he can also contribute to securing the soundness and appropriateness of the Company's management as well as to the enhancement of its transparency.
Tsuneyoshi Tatsuoka Tsuneyoshi Tatsuoka has held important positions at the Ministry of Economy, Trade and Industry, and possesses exceptional knowledge regarding industrial and economic policies, and we believe that he will be able to contribute to the Company's overall management from a big-picture perspective.

Reasons for Appointment of External Directors who are Audit and Supervisory Committee Members

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Name Reasons for Appointment
Michiko Chiba Michiko Chiba possesses outstanding insight regarding corporate accounting and governance through her involvement as the person responsible for various auditing operations at an auditing firm, and we believe that she is qualified to fulfill the responsibilities of an Audit and Supervisory Committee Member.

Attendance at Meetings of the Board of Directors, and Audit and Supervisory Committee (Fiscal year ended March 31, 2023)

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Name Category Board of Directors Audit and Supervisory Committee
Shigeru Murayama Director 18 of 18 -
Tsuneyoshi Tatsuoka Director 13 of 14 -
Shiro Hiruta Director
(Audit and Supervisory Committee member)
18 of 18 10 of 10
Asako Yamagami Director
(Audit and Supervisory Committee member)
18 of 18 10 of 10
Makoto Sumita Director
(Audit and Supervisory Committee member)
14 of 14 7 of 7

Evaluation of the Board of Directors' Effectiveness

Nikon asks a third-party organization to analyze and evaluate the effectiveness of its Board of Directors in order to further improve its functions. The efforts to address issues identified through the previous evaluation (for the fiscal year ended March 31, 2022) as well as the issues identified in this evaluation (for the fiscal year ended March 31, 2023) are outlined below.

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Evaluation Method
  • A third-party organization conducted a survey and individual interviews of all directors on general matters related to the Board of Directors, its composition, meeting preparations, and details of deliberations, among others, to evaluate Board effectiveness and identify issues.
  • The evaluation results and identified issues were shared at a meeting of the Board of Directors and discussions on how to improve the functions of the Board of Directors were held by the Independent External Directors' Meeting.
Efforts to Address Issues Identified in Previous Evaluation
  • Monitoring of progress of Medium-Term Management Plan and growth strategies
    Enhanced the agenda of Board of Directors' meetings by focusing discussions on important management issues and growth strategies and conducted regular monitoring of Medium-Term Management Plan progress based on areas designated for monitoring by the Board of Directors
  • Strengthening of support functions for external directors
    Increased the quality and quantity of information provided to external directors and distributed materials prior to meetings to facilitate more extensive discussions; achieved particular improvements in providing information pertaining to discussions by management.
Main Issues Identified in This Evaluation
  • Improvement of monitoring of progress of Medium-Term Management Plan and growth strategies
    Need to assess necessity of revisions to the Medium-Term Management Plan and growth strategies based on changes in the operating environment and determine whether directives should be revised to make better progress toward goals
  • Reinforcement and monitoring of internal control and risk management systems
    Ongoing need to provide appropriate advice and monitoring based on regular reports on internal control and risk management systems and their implementation in order to facilitate the reinforcement of systems
  • Enhancement of coordination between Nominating Committee and Board of Directors
    Need to provide more information about the deliberation process at meetings of the Nominating Committee to the Board of Directors in order to invigorate discussions at Board of Directors' meetings on enhancing coordination with the Nominating Committee

Taking into account the issues raised by this evaluation, Nikon plans to continue implementing measures to further enhance Board effectiveness going forward.

Compensation of Directors and Officers

Compensation for Directors (Fiscal year ended March 31, 2023)

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Category Directors other than those who are Audit and Supervisory Committee members (of which External Directors) Directors who are Audit and Supervisory Committee members (of which External Directors) Total
Fixed compensation Fixed monthly compensation Number of persons 7
(3)
6
(4)
13
(7)
Amount of compensation(million yen) 241
(30)
108
(45)
349
(75)
Performance-based compensation Bonuses Number of persons 3
(–)
- 3
(–)
Amount of compensation(million yen) 138
(–)
- 138
(–)
Performance-based stock remuneration Number of persons 3
(–)
- 3
(–)
Amount of compensation(million yen) 26
(–)
- 26
(–)
Stock compensation Restricted stock remuneration Number of persons 3
(–)
- 3
(–)
Amount of compensation(million yen) 61
(–)
- 61
(–)
Total Number of persons 7
(3)
6
(4)
13
(7)
Amount of compensation(million yen) 465
(30)
108
(45)
573
(75)
  • *The number of persons and the amount of compensation pertaining to fixed compensation/fixed monthly compensation, and total shown above include one Director who is not an Audit and Supervisory Committee Member (of which, one External Director) and one Director who is an Audit and Supervisory Committee Member (of which, one External Director) who retired at the conclusion of the 158th Annual General Shareholders' Meeting held on June 29, 2022, and the amount of compensation pertaining to the said Directors.
  • *The amount of performance-based stock remuneration shown above indicates the total amount to be paid to Directors other than those who are Audit and Supervisory Committee Members (excluding Non-Executive Directors) during the fiscal year, by resolution of the Board of Directors held on May 19, 2023.

Number of Women and Non-Japanese Appointed as Nikon Group Directors / Officers and Corporate Auditors (As of March 31, 2023)

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Category Women Non-Japanese
Nikon Corporation 1 1
Group companies* 4 30
  • *Local equivalent to director, officer, and corporate auditor included in the count. Cases of directors or officers serving in concurrent posts are counted as one individual.