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TOP > SUSTAINABILITY AT NISSAN > SUSTAINABILITY REPORT 2019 > GOVERNANCE > CORPORATE GOVERNANCE SYSTEM IN DETAIL
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Corporate Governance System in Detail

In order to create unique and innovative automotive products and services, and deliver superior measurable value to all stakeholders, Nissan will pursue its vision of “enriching people’s lives” as a company that is trusted by society, and address improvement of corporate governance as one of its most prioritized managerial tasks. We will conduct our business while considering society’s expectations and our social responsibilities and devote ourselves to the development of a sustainable society by aiming for sustainable growth of our business.
We are developing new structures to strengthen our corporate governance system. On June 25, 2019, a new corporate form was selected for Nissan Motor Co., Ltd. consisting of a company with three statutory committees, clearly separating management functions and supervisory, oversight and auditing functions. In the past, directors supervised the execution of important business operations as well as the duties of individual directors, but the change in structure to a company with three statutory committees has separated execution from supervision. Those with the newly established executive officer role are responsible for the execution of business operations, while members of the Board of Directors focus on supervision of their assigned duties. This has improved the transparency of the decision-making process and also made business execution speedier and more flexible. Furthermore, by increasing the number of outside directors to a majority of the board, we are working to reflect a diversity of viewpoints into our management and strengthen our supervision function still further. The Board of Directors has established three committees: the Nomination Committee, which decides on candidates for director positions; the Compensation Committee, which sets compensation for directors and executive officers; and the Audit Committee, which audits the business execution of directors, executive officers, and those with similar responsibilities. Outside directors make up more than half of each committee, and play a leading role in the Nomination and Compensation Committees. This ensures healthy governance, with supervision, oversight and auditing by the Board of Directors and other corporate bodies heightening the effectiveness of our structures in terms of internal controls, compliance and risk management. Officers and employees of Nissan Motor Co., Ltd., including executive officers, will sincerely respond to this supervision, oversight and auditing.
In addition, we announce clear management targets and policies to all stakeholders and disclose our performance promptly with a high degree of transparency.
We have also established a corporate governance system that maintains business transparency. The system allows us to implement various monitoring systems, as well as assess and manage risks that have the potential of preventing us from achieving our business goals. In addition to carrying out cooperation among sites in the regions in which we operate, we have set up global management systems and provide relevant training programs to our employees and business partners. We aim to disclose governance information with even greater transparency in future.

Initiatives to Strengthen Corporate Governance System

  • (1) Separation of management and supervisory functions
  • (2) More independent outside directors
  • (3) Nomination, Compensation and Audit Committees led by independent outside directors

Board of Directors System

Our Board of Directors, led by independent outside directors, decides the basic direction of management by taking a variety of perspectives into account and plays the role of supervising the executive directors. The number of directors on the board is sufficient to facilitate lively discussions and swift decision-making. In order to create an environment where discussions in board meetings are led by independent outside directors, these directors constitute a majority of the board, with one of them serving as board chair.
The Board of Directors decides on basic management policies and important matters set forth under the law, articles of incorporation and regulations of the Board of Directors itself. In order to carry out effective and flexible management, as a general rule, the Board of Directors delegates much of its power to decide on business activities to executive officers. As of June 25, 2019, the Board of Directors consists of eleven directors, seven of whom are outside directors.

Nomination Committee System

The Nomination Committee has the authority to determine the content of the general shareholder’s meeting agenda concerning the appointment and dismissal of directors. It also has the authority to decide on the content of the Board of Directors meeting agenda concerning the appointment and dismissal of representative executive officers and to formulate an appropriate succession plan regarding the President and Chief Executive Officer and review it at least once a year.
The Board of Directors appoints a majority of the members of the Nomination Committee from among the independent outside directors. The committee chair is also an independent outside director. As of June 25, 2019, the Nomination Committee consists of six directors, five of whom are independent outside directors.

Compensation Committee System

The Compensation Committee has the authority to set policy regarding decisions on the content of the compensation received by individual directors and executive officers as well as the actual content of the compensation received by individual directors and executive officers.
The Board of Directors appoints exclusively independent outside directors to the Compensation Committee, including its chair. As of June 25, 2019, the Compensation Committee consists of four directors, all of whom are independent outside directors.

Audit Committee System

The Audit Committee consists of directors who are sufficiently qualified and capable to audit the business execution of executive officers. In addition, the Audit Committee appropriately audits effectiveness with regard to the monitoring function of the Board of Directors on an ongoing basis. The Audit Committee is also the final entity to receive any whistleblower’s report regarding any allegation that involves any member of management, including any executive officer.
The Board of Directors appoints at least a majority of the members of the Audit Committee from among the independent outside directors. The committee chair is also an independent outside director. As of June 25, 2019, the Audit Committee consists of 5 directors, 4 of whom are independent outside directors.
In order to allow the Audit Committee to perform its audits effectively and efficiently, the necessary staff are provided to the Audit Committee secretariat, and those staff members carry out their duties under the direction of Audit Committee members. Furthermore, evaluation of the Audit Committee secretariat’s staff is carried out in conference between committee members, and transfers and reprimands require approval from the Audit Committee.

Executive Officer System

Executive officers decide on business activities which are delegated in accordance with the resolutions of the Board of Directors, and execute the business of the Nissan Group.
Several conference bodies have been established to deliberate on and discuss important corporate matters and the execution of daily business affairs. Furthermore, in the pursuit of more efficient and flexible management, the authority for business execution is clearly delegated as much as possible to corporate officers and employees.
As of June 25, 2019, nine executive officers, two of whom are representative executive officers, are appointed.

Basic Principles of the Internal Control System

We aim to provide superior value to all stakeholders as a world-leading, trusted company well into the future. We consider healthy governance the foundation for this, and are engaged in a range of activities to achieve it. In line with this principle, and in accordance with Japan’s Companies Act and its related regulations, the Board of Directors has decided on internal control systems to pursue these goals and its own basic policy. The board continually monitors the status of implementation regarding these systems and the policy, making adjustments and improvements if necessary. One executive officer is assigned to oversee the internal control systems as a whole.

Audit System

We have adopted a system under which the outside directors, Auditing Committee, department for internal audit and outside accounting auditors coordinate to improve the effectiveness of our internal control systems. Independent outside directors lead our Board of Directors, deciding the basic direction of management and supervising the execution of duties by directors, executive directors, and others with similar responsibilities. The Audit Committee takes charge of the department for internal audit and instructs it with regard to auditing, and the department for internal audit shall report to the Audit Committee the status of the performance of duties and any findings therefrom on an ongoing basis. The Audit Committee also receives similar reports from the accounting auditors, as well as detailed explanations on the status of the quality control of internal audits, to confirm whether their oversight is at a suitable level.

Independent Internal Audits

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Avoidance of Conflict of Interest

In case of any transaction that involves any conflict of interest between the company and a director or executive officer, the Board Regulations provide that board approval, as well as a post-facto report to the board of important facts associated with the transaction, are required. Given the possibility of conflict of interest, the representative executive officer of the company must not concurrently serve as a director, executive officer, or any other officer or employee of a major shareholder; Mitsubishi Motors Corporation, which is one of the other parties of the Alliance; or any subsidiaries or affiliates of the above. If an executive officer serves in such position at the time of assuming the office of representative executive officer of Nissan, that officer and Nissan shall promptly take the necessary measures for the officer to leave the other company.
Regarding the designation of Audit Committee members, the company’s Corporate Governance Guidelines provide that, given the potential conflict of interest with minority shareholders, it is not desirable that the Audit Committee should include any person who has experience serving as a director, executive officer or other officer or employee at a major Nissan shareholder or a subsidiaries or affiliate of same (except for a person seconded from Nissan).
In addition, the company has established a Director Conflict of Interest Resolution Policy which defines conflicts of interest between a director and the company, requires directors to report any actual, potential or perceived conflicts and also establishes procedures to resolve such conflicts.