In June 2023, Noritake transitioned to a company structure with an Audit and Supervisory Committee. We will continue to work on enhancing corporate governance with the view to achieving sustainable growth and increasing medium-to long- term corporate value.

Basic approach and basic policies toward corporate governance

At the Noritake Group, every officer and employee inherits the founding spirit of our company, and, by observing and practicing the Noritake Group's Code of Ethics formulated on the basis of that founding spirit, works toward ensuring that Noritake Group keeps to higher corporate ethics. In addition, by providing financial information and non-financial information through our website, we will strive to actively and fairly disclose information and heighten the transparency of our management.
The basic policies concerning our corporate governance are are follows.

Corpoorate Govenance Report756KB

Corporate Governance System

Noritake is further enhancing its corporate governance by strengthening the monitoring function of the Board of Directors, and is choosing a company structure with an Audit and Supervisory Committee, and creating the following system under the company structure with an Audit and Supervisory Committee member with the aim of accelerating decision-making processes for management.

Corporate Governance Structure (as of June 30, 2023)

Board of Directors

Members: 9 Directors(5 internal Directors (including 1 female), 4 Directors (Outside))

The Board of Directors comprises nine Directors (including 4 Directors (Outside)) makes decisions on key matters like management basic policies and matters stipulated by laws and regulations, and monitors the execution of duties. The Board generally convenes once a month. In accordance with the regulations and deliberation standard of the Board of Directors, deliberations are held to decide items regarding General Meetings of Shareholders, human resources and organizational matters, and financial reporting. The Board of Directors also appoint two Directors (Outside) as part of a system to strengthen oversight functions and ensure transparency in decision-making. The Representative Director is appointed to make decisions for certain matters, who receives reports from the Representative Director and other Executive Directors to supervise the status of execution of operations. 　
In fiscal 2022, the Board of Directors convened 13 times with a Director attendance rate of 100%. Two Audit & Supervisory Board Members and two Audit & Supervisory Board Member (Outside) attended all of the Board of Directors meetings.

Key topics of the Board of Directors

During FY2022, deliberations covered the following key issues.

Resolutions

• ● Approval of budget and financial results
• ● Forecast of operating results, amendment of expected dividend amounts
• ● Merger of subsidiaries, corporate separation to subsidiaries
• ● Proceeds from sale of assets and investment securities
• ● Investment for construction of new plant, production equipment, etc.
• ● Transition to a company structure with an Audit and Supervisory Committee

Reported Matters

• ● Progress of the Three-year Business Plan
• ● Ownership of investment securities
• ● State of activities of each committee
• ● Results of Board of Directors effectiveness evaluation

Nomination & Compensation Committee

Members: 5 Directors (1 Representative Director, 4 Directors (Outside))

We established the Nomination & Compensation Committee in order to ensure reasonable and transparent decision-making regarding Board of Directors membership and compensation. With independent Directors comprising a majority of its members, the committee serves as an advisory body to the Board of Directors and is generally held twice a year. Based on inquiries from the Board of Directors, the committee discusses personnel matters, assignments and compensation concerning Directors and Executive Officers, then reports to the Board of Directors on the results of its deliberations.

Key Issues for the Nomination & Compensation Committee

During FY2022, deliberations covered the following key issues.

• ● Matters concerning appointment of Executive Officers and work entrusted to Executive Officers
• ● Matters concerning remuneration for Executive Officers such as performance-linked stock compensation
• ● Transition to a company structure with an Audit and Supervisory Committee

Audit and Supervisory Committee

Members: 3 Directors (1 Standing Audit and Supervisory Committee Member, 2 Audit & Supervisory Board Members (Outside))

The Audit and Supervisory Committee comprises three Audit & Supervisory Board Members (of which 2 are Audit & Supervisory Board Members (Outside)), and audits and monitors the status of execution of duties by Directors. The Audit and Supervisory Committee participates in important meetings like the Management Committee and various committees by selecting Standing Audit and Supervisory Committee members, and ensures effective auditing and monitoring functions by collecting information on a daily basis and ensuring smooth coordination between the Accounting Auditors and Internal Audit Division.

Management Committee

Members: 8 Directors
Directors and Executive Officers designated by the President

Regarding key matters for management that involve prosecution of work, we conduct full deliberations in a Management committee, convened once a week regularly and composed of Directors and Executive Officers designated by the Representative Director & President and approved by the Board of Directors, as part of a system for precise and prompt management decision-making.

Evaluations of the effectiveness of Board of Directors

We perform evaluations of the effectiveness of the Board of Directors for the purpose of heightening its effectiveness and increasing corporate value. At the end of each fiscal year, a survey is conducted for Directors and Audit & Supervisory Board members, and the results will be analyzed and evaluated by an external organization before being reported to the Board of Directors.
In fiscal 2022, a questionnaire survey was administered to the Board of Directors and Audit & Supervisory Board regarding their evaluation of Board of Directors composition and operation, management and business strategies, corporate ethics and risk management, business performance monitoring, managerial evaluation/compensation, and dialog with shareholders. The analysis and evaluation results of the effectiveness of the Board of Directors is as follows.　
● The Board of Directors is composed appropriately with the required knowledge, skills, experience, and diversity to carry out their roles and responsibilities.
● The Board of Directors conducts appropriate monitoring and supervision to ensure that a corporate culture that emphasizes corporate ethics is disseminated throughout the company.
●The Board of Directors verifies that the Internal Whistleblower Contact Points is functioning properly. It also performs appropriate supervision regarding the construction and application of internal control systems.
From the above information, we have confirmed that our company’s Board of Directors is operated appropriately, and that its effectiveness is assured.
Of the areas of effectiveness that were identified as needing improvement addressed in the FY2021 survey, “Strengthening risk management” was addressed by analyzing and assessing climate change risks in line with the TCFD (Task Force on Climate-related Financial Disclosures) framework while creating a governance system for risk management; “Human resources development and improvement of the internal environment” was addressed by the management team holding town hall meetings and introducing work-from-home systems, and these efforts were reported to the Board of Directors. Improvements were observed for each issue in the FY2022 effectiveness survey for “Prior distribution and explanation of materials,” based on efforts to provide prior explanations and simplify distributed materials. We will continue making efforts toward “Strengthening risk management” as there is room for improvement in the future.
In addition, new items derived from these survey results indicating areas in which the effectiveness of the Board of Directors may be improved include “Revising business portfolios factoring in capital costs” and “Formulating and implementing an investment and human resource strategy for human capital based on long-term strategies.” Moving forward, we will address these items as we continue to work to maintain and improve the effectiveness of the Board of Directors.

Expertise and Experience of Directors (Skills Matrix) (as of June 30, 2023)

Status of Directors (Outside)

Noritake has four Directors (Outside), of which two are Directors who are Audit & Supervisory Committee members.
Directors (Outside) (excluding Directors who are Audit & Supervisory Committee members) Masanao Tomozoe and Ryoichi Yamamoto, and Directors (Outside) who are Audit & Supervisory Committee members Tatsuhiko Saruwatari and Takashi Morisaki have no person, capital, or business relationships or other conflicts of interest with our company.
While Noritake does not have any particular standards or policies concerning independence for the selection of Directors (Outside) (excluding Directors who are Audit & Supervisory Committee members) and Directors who are Audit & Supervisory Committee members, they are expected to fulfill their functions and roles of providing objective and appropriate audits and supervision based on their expertise and insight, and are appointed based on the underlying policy that there is no possibility of a conflict of interest with general shareholders.

Reason for Appointment and Attendance Rate

Policies concerning the determination of compensation for Directors, etc.

To decide on the individual compensation of Directors (excluding Directors who are Audit and Supervisory Committee members), these matters are deliberated at the Nomination and Compensation Committee comprising a majority of Independent Directors, with the findings reported to the Board of Directors to make a decision.
The decision-making policies for individual compensation of Directors (excluding Directors who are Audit and Supervisory Committee members) are as follows.

a. Policies concerning fixed monthly compensation

Compensation for Directors (excluding Directors who are Audit and Supervisory Committee members) is composed of “fixed monthly compensation” and “performance-linked stock compensation.” “Fixed monthly compensation” is determined by the Board of Directors within the scope approved by the Shareholders Meeting. Reasonable and transparent decision-making is ensured by a process in which the Nomination and Compensation Committee deliberates and reports its findings to the Board of Directors regarding the appropriateness of compensation amounts for each Directorship position as appropriate to its roles and duties in keeping with the basic policies pertinent to the compensation system.
Compensation for Directors (Outside) (excluding Directors who are Audit and Supervisory Committee members) is only “fixed monthly compensation,” taking into account their role in supervising management from an independent standpoint.
Compensation for Directors who are Audit and Supervisory Committee members is only “fixed monthly compensation,” which is decided within the scope approved by the Shareholders based on deliberation by Directors who are Audit and Supervisory Committee members.

b. Policies concerning performance-linked stock compensation

Performance-linked stock compensation is determined in accordance with degree of achievement of corporate performance targets (consolidated sales, consolidated operating profit, etc.) set in accordance with the Three-year Business Plan for the fiscal year based on regulations for the granting of stock, as an incentive for management that takes into account medium- to long-term improvement in corporate value and shareholder value. The standard for compensation varies between the range from 0% to 150%, with 100% being the degree of achievement of the baseline corporate performance targets (consolidated sales, consolidated operating profit, etc.). The compensation standard was 100% for the target indicator (consolidated sales of 139.4 billion yen, consolidated operating profit of 8.9 billion yen) related to performance-linked compensation during this fiscal year.

c. Policies concerning the ratio of compensation, etc.

The ratio of “monthly fixed compensation” to “performance-linked stock compensation” is set with an emphasis on stability of medium- to long-term performance and improvement of corporate value and shareholder value, avoiding an excess ratio of “performance-linked stock compensation” linked to business performance.

Total amount of compensation, etc., of Directors and Audit & Supervisory Board Members (Fiscal 2022)

• 1. The limit of fixed compensation for Directors was resolved to be within 40 million yen per month at the 109th Annual General Meeting of Shareholders (held on June 28, 1990).
  Note that at the 135th Annual General Meeting of Shareholders (held on June 29, 2016), the amount of performance-linked stock compensation was resolved to be paid separately to fixed compensation, where the maximum limit of trust money is to be 600 million yen for applicable Directors other than Directors (Outside), and Executive Officers who meet specific requirements, for each 3-fiscal year period in which the system is applicable.
• 2. The limit of fixed compensation for Audit & Supervisory Board Members was resolved to be within 6 million yen per month at the 109th Annual General Meeting of Shareholders (held on June 28, 1990).
• 3. The amount of performance-linked stock compensation is listed as the provision for share-based remuneration for directors posted as expenses in FY2023.。

Training for board members

When we appoint Internal Directors, we conduct appropriate explanations about their legal duties and responsibilities to be observed and make use of external training bodies as necessary. We also offer seminars to the members, to acquire higher skills and new knowledge required for them to perform better. In addition, we regularly conduct in-house training for Officers, and, in fiscal 2022, we held four sessions on themes such as governance.
For External Directors, we also create individual opportunities to provide them with information about our Group management strategy, the content of our business and work, financial information, and more. In addition, they deepen their understanding of the Group through factory tours and regular interviews with internal officers.

Internal Control

Noritake conducts reviews of our structures to ensure the properness of duties in accordance with revisions to laws and the current state of our G roup, and our current Basic Principles on Internal Control Systems were revised through resolution by the Board of Directors on June 23, 2023.
The Internal Audit Division governs internal control regulations for financial reporting, and performs continuous monitoring of work procedures to ensure the reliability of financial reporting. We have also established internal auditing regulations and conduct work audits involving the legal compliance of the business
activities of our business divisions and Group companies. Key matters discovered through these initiatives are reported to the Board of Directors or the Management Committee.

Communication with shareholders and investors

We hold the General Meeting of Shareholders at the Noritake Company headquarters in Nagoya City every year in late June. In June 2023, 41 shareholders attended the 142nd Annual General Meeting of Shareholder and provided open opinions.
In addition, after the announcement of these financial results and the second quarter results, we ordinarily hold a financial results briefing for securities analysts.
Additionally, we are continually improving the website so that shareholders and investors can easily obtain various types of information such as business reports and financial results announcements.

Preparation of a risk management system

We have set out risk management rules so that, when faced with the risk of a loss of corporate value due to problems in management, accident or disaster, we can mitigate losses to the extent and continue with our business. Safety is taken on the highest priority, especially to secure human life. In the case of an emergency, we set up a task force immediately to respond to the risks. We have also set forth “accidents management regulations,” and strive to establish a disaster prevention management system by raising the awareness of all employees on a daily basis so that they can respond quickly and appropriately in the event of any possible disaster.
The Sustainability Management Committee chaired by the President identifies risks that could have a significant impact on the company, and determines response measures to prevent them from occurring.

Disaster readiness and disaster mitigation initiatives

Disaster Prevention Committee meetings are held twice every year companywide, evacuation drills and confirmation of emergency contact networks are regularly conducted in preparation for the occurrence of a large-scale disaster at each business site.
Business groups and business sites have also started developing and formulating business continuity plans (BCPs).

Strengthening of information security

With regard to the protection of personal information and other information assets, we have information security management rules in order to eliminate risks and safely carry out business activities. These rules indicate a code of conduct concerning information security for all officers and employees. We create and employ countermeasure standards and implementation manuals based on this code.
We also have a promotional division under the officer in charge, and are working to strengthen security. To guard against unauthorized access and cyber attacks, we perform strict ID management, logging of PC access, 24-hour monitoring at our Security Operation Center. Drills for targeted e-mail are taken place periodically.

Policies for the protection of personal information

The Noritake Group fully recognizes the importance of the protection of personal information. We comply with Japan’s Act on the Protection of Personal Information and heed the laws of other countries as well, and properly manage the personal information provided by customers. The “Rules Regarding the Protection of Personal Information” was revised in January 2023 following revisions enacted for the Personal Information Protection Law, with revisions made to some items and new items added that need to be adhered to.

Reference URL (Protection of Personal Information)
https://www.noritake.co.jp/utility/privacy_policy/

Enforcement of compliance

In the Noritake Group’s Code of Ethics, the Noritake Group set forth ethics standards for the execution of duties and compliance with laws and regulations, and ensures that these standards are met by all employees while also focusing on preventive measures.
With its Compliance Committee, the Noritake Group focuses on ongoing compliance activities throughout the entire organization, and even appoints compliance managers on a workplace level as its compliance system. The Compliance Committee, comprising executive officers in charge of the business divisions and corporate divisions and legal counsels, meets twice a year, and the Compliance Meeting comprising division managers meets four times a year, to share information on incidents, examine measures to prevent recurrence, and implement policies across departments.
Ongoing compliance education is also included in training by qualification, training by organization, training by purpose, and training for staff appointed overseas. We also provide easily understood explanations of laws and ordinances in every issue of our internal newsletter with case examples that relate to our everyday work to spread awareness amongst all employees.

Compliance Structure

Preparation of an internal reporting system

We have established contact points both inside and outside the company so that any employee of the Noritake Group can consult and report directly, without going through superiors, in the event that a violation of laws or ordinances, company rules, or standards of conduct in the “Noritake Group’s Code of Ethics,” etc. is discovered or suspected. The confidentiality of persons reporting and the content of reports is strictly protected. Following the Amendment of the Whistleblower Protection Act, we revised the “Hotline/internal reporting system” in April 2023 in response to the additional obligations required by business operators. A total of 11 reports were made during fiscal 2022.