Governance

Corporate Governance

Basic Approach

We aim to enhance management soundness and efficiency by developing an internal control system to facilitate the effective functioning of corporate governance. The Board of Directors comprises eight members, of which four are outside directors. Management strategy meetings and management execution meetings are also held for the purpose of strengthening the functions of the Board. The Audit & Supervisory Board liaises with the Internal Audit Division and the accounting auditor to conduct audits of the management. Also, to ensure that we are in compliance with laws, the articles of incorporation, and internal regulations, we have established an Internal Control Committee and an ethics violation consultation hotline.

Corporate Governance Structure

Board of Directors

The Board of Directors consists of eight members (of which four are outside directors). We have also introduced an operating officer system for the execution of business operations.
The Board meets once a month to basically ensure that the directors perform their duties efficiently. Extraordinary meetings are held whenever necessary. Management strategy meetings are also held twice a month, chaired by the representative director, to discuss basic strategies, policies, and various measures related to management in advance, thereby promoting the swift and efficient implementation of management activities. Moreover, to further strengthen the functions of the Board of Directors, a management execution meeting is held once a month, attended by the directors, managing officers, and senior operating officers. Basic items and important matters concerning business execution are discussed during the meeting.

Audit & Supervisory Board and Internal Audit Division

We employ a corporate auditor system centering on an Audit & Supervisory Board, which comprises four members, including two outside auditors. We have also established an Internal Audit Division (comprising two members) that reports directly to the president.
The auditors attend Board meetings and other important meetings and conduct audits of the execution of duties by directors from an objective and independent standpoint.
The Internal Audit Division is responsible for auditing all aspects of management in accordance with the Internal Audit Rules. By conducting regular audits of accounting, operations, and efficiency, including at subsidiaries, it aims to detect operational deficiencies that ought to be avoided in management, enhance management efficiency, and contribute to the safeguarding of company assets.

Nomination and Remuneration Committee

We have established a Nomination and Remuneration Committee as an advisory body to the Board of Directors for the purpose of enhancing corporate governance and the fairness, transparency, and objectivity of procedures pertaining to the nomination and compensation of directors.
The Nomination and Remuneration Committee is made up of three or more directors selected by resolution of the Board of Directors. The majority of members are independent outside directors, one of which has been selected to serve as chairperson by resolution of the Board of Directors.

Board Effectiveness Evaluation

The Board of Directors assesses, analyzes, and verifies the effectiveness of the Board overall. In fiscal 2022, all directors and auditors were surveyed about the makeup and operations of the Board of Directors, and based on the results, deliberations were carried out by the Board of Directors. As a result, the composition, operations, and deliberations of the Board of Directors were assessed to be more or less appropriate as a framework for the Board to perform its supervisory functions and that its effectiveness has been ensured. Going forward, we will continue to work on improving the effectiveness of the Board of Directors, focusing mainly on the chairperson and the secretariat.

Training for executives

  • 1.
    IT security training concerning business operations

    Developing a framework to accurately recognize the threats and risks of cyber-attacks and safeguard critical information that forms the cornerstone of our operations

  • 2.
    Multifaceted feedback training for management personnel

    Multifaceted feedback training for management personnel Strengthening the leadership and management capabilities of managers

Executive Remuneration

Remuneration is linked to shareholder interests so that it functions as an incentive for sustained improvements in corporate value. Our basic policy is to establish appropriate levels based on responsibilities in order to determine the remuneration for each director. Remuneration for executive directors consists of basic remuneration based on position, responsibilities, and experience, as well as performance-linked remuneration. The latter includes bonuses (short-term incentives) paid annually and a medium-to-long-term incentive paid once within a certain period based on the medium-term management plan, provided in the form of restricted stock (non-monetary remuneration) that is subject to transfer restrictions on some or all of the shares granted. Compensation for outside directors tasked with a supervisory role consists only of basic compensation in light of those duties. The individual compensation amounts for directors are deliberated by the Nomination and Remuneration Committee, which then makes recommendations to the Board of Directors for approval.

Remuneration Amounts for Directors and Audit & Supervisory Board Members

Category Total amount of remuneration (¥ million) Total amount by type of remuneration (¥ million) Number of eligible officers
Fixed remuneration Performance-linked bonus
Monetary reward Non-monetary reward
Directors
(of which are outside directors)
110
(28)
86
(28)
18
(-)
5
(-)
9
(4)
Audit & Supervisory Board Members
(of which are outside Audit & Supervisory Board Members)
42
(10)
42
(10)
- - 5
(3)
  1. Notes:
    1. 1.
      The remuneration amount for directors does not include remuneration for directors who concurrently hold a key position in the Company.
    2. 2.
      The total amount of remuneration includes director bonuses of ¥24 million (for four directors) that were recorded as provisions for director bonuses and stock-based remuneration during the current fiscal year.
    3. 3.
      The payment of performance-linked remuneration is dependent on the attainment of metrics that measure performance. Those metrics are the KPIs important to the Nichiban Group, such as consolidated operating income and consolidated operating income margin, as well as the indicators directly linked to the achievement of our longer-term vision, including the new product ratio, the overseas sales ratio, and the stock growth rate.
      Results for the indicators pertaining to performance-linked remuneration for the current fiscal year are shown on the right.
Performance metrics Results
Consolidated operating income ¥1,609 million
Consolidated operating income margin 3.6%
New product ratio 4.4%
Overseas sales ratio 10.1%
Stock growth rate 112.0%

Internal Control System

Development of Internal Control System

By developing an internal control system for the Nichiban Group based on a basic policy adopted by the Board of Directors, we are endeavoring to ensure proper business operations and to establish strong corporate value by ensuring the reliability of various information, including financial reports.

Internal Control Committee

We have established an Internal Control Committee as a governing body to oversee matters of mainly compliance and corporate governance. Chaired by the president, it meets every six months to review important matters and improvement measures related to internal controls. It also discusses timely disclosure and Company-wide risk management, and takes steps to strengthen and improve the internal control system.

Compliance

Approach

We have established the Nichiban Group Ethics to foster a shared compliance mindset among all employees.

Nichiban Group Ethics

Basic Policy

We recognize that corporations are public instruments for the benefit of society and we will fulfill our social responsibilities by undertaking activities based on the following action guidelines.

Action Guidelines

  • 1.
    Compliance with laws and regulations

    We will abide by the law, adhere to social norms, and engage in fair and transparent corporate activities.

  • 2.
    Providing useful, safe, and reliable products

    We will place the utmost emphasis on quality, safety, and the environment, and by improving customer satisfaction through our products, we will build the trust of customers and contribute to society.

  • 3.
    Standing firmly against antisocial behavior

    We will take a firm stance against antisocial behavior that threatens the order and security of civil society.

  • 4.
    Thoroughgoing information management and disclosure

    We will properly manage and protect all information related to the Nichiban Group and will disclose corporate information in a timely and appropriate manner.

  • 5.
    Strict adherence to ethics

    Management will lead by example to establish an internal framework and ensure it is widely understood and implemented in keeping with the spirit of the Nichiban Group Ethics.

Ensuring Compliance

We have produced a Nichiban Group Action Handbook and distributed it to all Group employees as a way of providing concrete guidance on how the Nichiban Group’s ethics should be put into practice. The handbook is reviewed every year so that it is always up to date with evolving social conditions and changes in laws and regulations. We also make sure employees have a thorough understanding of it during training sessions and meetings.
Also, in an effort to raise awareness of compliance, we offer numerous e-learning programs related to compliance that employees can access anytime and from anywhere.

Nichiban Group Action Handbook

List of e-learning compliance training modules

  • Proper disposal of industrial waste
  • Risk management
  • Learning from recent cases: Personal information protection
  • Food safety and security compliance: Food labelling and false advertising
  • Considering organizational culture: Corporate ethics and compliance
  • Insider trading regulations
  • Introduction to subcontracting laws
  • Introduction to truth-in-advertising laws
  • Introduction to intellectual property: Copyright, trade secrets, trademarks, and company names
  • Introduction to anti-trust laws
  • Preventing consumer disputes: Introduction to specified commercial transactions laws

Enhanced Whistle-blowing

We have set up two consultation channels through which employees can report ethical violations and instances of harassment. The ethical violations hotline is staffed by the General Manager of the General Affairs Department, corporate auditors, and external legal advisors. It serves as a general point of contact for compliance-related concerns with the aim of identifying instances or potential cases of legal violation.
For the harassment reporting channel, a dedicated hotline has been established at each business site, thus making it easier for employees to report issues. Moreover, in order to deepen the understanding of harassment, we run training sessions to improve the skills of the personnel that man the reporting channel.

Guidelines on the transparency of relationships between corporate activities and medical institutions

October 1, 2016
Nichiban Co.,Ltd.

Based on the business situation that the business domain covers regarding both medical devices and pharmaceuticals, the company has implemented the Japan Pharmaceutical Manufacturers Association's “Transparency Guidelines for the Relationship between Business Activities and Medical Institutions” and "Guidelines for Transparency with Medical Institutions in the Medical Device Industry” of the Japan Federation of Medical Device Industries. The following is an announcement of our guidelines.

With a corporate philosophy of "always creating value that is useful to society, welcoming the new era, and fostering happiness for all those concerned with Nichiban Group'', our company philosophy is actualized through research and development as well as a stable supply of adhesive products. Our mission is to continuously support providing comfortable lives to people.
To fulfill that mission, we must cooperate with both research institutions and medical institutions, such as universities, to respond to high medical needs.
With the cooperation of universities and other research institutions and medical professionals, we hereby announce that we aim to increase the transparency of the relationship between business activities and medical institutions and become a company that can gain high trust from society.

  • 1.
    Purpose

    This guideline states that the pharmaceutical and medical device industries contribute to the development of life sciences, including medical and medical engineering, by ensuring the transparency of our activities with medical institutions and other corporate activities. The aim is to gain a broad understanding of what is done with high ethical standards.

  • 2.
    Publishing Method

    The method of publication will be disclosed on the website.

  • 3.
    Release Date

    Related information from the 2015 fiscal year onwards has been released since October 2016.

  • 4.
    Publishing Target

    Regarding disclosure targets, we follow the Japan Pharmaceutical Manufacturers Association's "Transparency Guidelines for Relationships between Business Activities and Medical Institutions" and the Medical Device Industry Federation's "Transparency Guidelines with Medical Institutions in the Medical Device Industry".

Risk Management

Basic Policy

We take predictive and preventive measures in advance to avoid any kind of major crisis that could jeopardize business continuity. However, in the event a crisis does occur, we manage it properly and ensure business continuity/stable development by keeping the damage to a minimum and taking steps to prevent a recurrence.

Risk Management System

Risks that need to be managed on a Company-wide level are handled by the General Affairs Department, while climate change and environmental risks are addressed by the Sustainability Committee. Chaired by the director in charge of CSR, this committee analyzes and examines these risks and reports its findings to the Board of Directors. Also, we have established a BCP Committee chaired by the General Manager of the Supply Chain Division for the purpose of addressing risks related to business continuity.

Risk Management Structure

ニチバンでは、コンプライアンス・マインドを全社員で共有するために、『ニチバングループの倫理』を定めています。この『ニチバングループの倫理』を基本に、日々の活動の中で実践していくための具体的な手引きとして「ニチバングループ行動ハンドブック」を作成し、グループの一人ひとりに配布しています。
「ニチバングループ行動ハンドブック」については年に1回見直しを行い、社会情勢や関係法令の変化に随時対応するとともに、教育研修や会議の中で周知徹底を図ることで、グループ全体としてコンプライアンスを徹底しています。

Emergency Response Drills

We have established a set of Emergency Response Rules so that the right decisions can be made swiftly in the event of an emergency situation that poses a threat to the lives and well-being of employees and other parties or an emergency that could significantly impede or affect our business activities. Once a year, based on the scenario that a disaster has occurred, we run a training drill to practice setting up and operating emergency response units for the entire organization and at each business site with the aim of minimizing harm to employees and damage to Company property, and the impacts on the safety and environment of the areas around our business sites. In addition, we conduct emergency response training using a safety confirmation system and emergency radios.

Establishment of BCP-driven Stable Supply Structure

In the Nichiban Business Continuity Management Regulations, we have prescribed guidelines for the kinds of actions and measures that should be implemented during each stage; namely, when a disaster has occurred, when business has resumed, and when business is continuing. In light of climate change and heightened geopolitical risks in recent times, the BCP Committee is studying risks across the entire supply chain and focusing on measures to ensure we can make good on our product supply responsibilities. For example, it is mapping manufacturers of raw materials, assessing the risks associated with procuring specialized and rare materials, and responding to the risks identified in TCFD scenario analyses.

Information Security

Development of IT Controls

Information technology has become indispensable to business strategy and the quality of information systems achieved with the use of IT now has a significant impact on management. By developing and deploying IT controls, we can carry out appropriate self-assessments and audits around IT strategy, development, and operations. This is reinforcing IT governance throughout the Nichiban Group, whilst also properly controlling risks pertaining to information systems. We have established a Group IT Liaison Committee to facilitate the sharing of information between Group companies and to monitor how the proprietary systems of each company are being operated.

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