Corporate Governance Status

To achieve the sustainable growth of the NISSIN FOODS Group and enhancement of its corporate value over the medium to long term, the Company annually confirms whether the board of directors is fulfilling its role and evaluates its effectiveness with the aim of enhancing the Board’s effectiveness.The evaluation method is determined based on deliberations in the Management Advisory Committee and the board of directors. In FY 3/2022, we conducted a self-assessment via questionnaire. The company also has a third party conduct evaluations on a regular basis.

Analysis and Evaluation of Board Effectiveness

Overview of Results The Company confirmed that the board of directors was properly fulfilling both the supervisory and decision-making functions expected, and that effectiveness is ensured.
Efforts to Address Issues Presented in FY 3/2021
  • (1) Incorporating employee performance evaluations in human resources
  • In addition to discussing human resources policies in meetings of the board of directors and otherwise strengthening the involvement of the Board in executive officer and executive personnel assignments, the company has adopted a new structure for director remuneration.
  • (2) Enhancing deliberations on important matters for discussion
  • We strengthened the presence of the Board by adjusting the time required for each agenda item to ensure sufficient opportunities to report and deliberate on important matters for discussion.
Evaluation of Efforts
to Address Issues
While evaluations have been generally high in the past, we confirmed particular progress in incorporating performance evaluations in personnel affairs, which was identified as an issue in FY 3/2021. At the same time, we noted the need for greater efforts to enhance deliberations on important matters for discussion.
Issues to be Addressed for
Further Effectiveness Improvement
Although we have implemented measures, the committee identified the need to strengthen deliberations on important issues further, as well as the need to enhance dialogue with shareholders and provide training for directors.

We are committed to mounting further efforts to increase effectiveness of the board of directors by making improvements on a continuous basis.

Director Remuneration

The Company established standards for setting director remuneration, stipulating the level of remuneration for each position and role, performance indicators, and the impact of these factors on remuneration, etc.

The criteria for director remuneration is intended to enhance the medium-and long-term corporate value of the company and to motivate and raise the morale of directors to contribute to improved company performance. The Management Advisory Committee, an advisory body to the board of directors consisting of a majority of independent outside directors (as of November 2021, the committee has been composed of a majority of independent outside directors), deliberates and approves remuneration details, which are then confirmed by the board of directors.The Company delegated Koki Ando, president & representative director and CEO, the authority to determine certain portions of individual director remuneration. This structure determines the details of basic remuneration of directors in accordance with said established standards and ensures the appropriate exercise of authority in this regard in accordance with the details of the standards for director remuneration discussed and approved by the Management Advisory Committee. The Company determined that the best way to evaluate individual directors from the perspective contribution to overall Company business and performance is to delegate this authority to representative directors.

Remuneration Composition Ratio for Standard Performance

Remuneration Composition Ratio for Standard Performance

Basic Remuneration

The monthly provision of basic remuneration consists of a fixed remuneration based on the position and the role of each director and a performance-linked remuneration that is linked to the Company’s business performance and the degree of the director’s individual performance during the fiscal year under review. Performance-linked remuneration represents as much as 20% of the base amount relative to the actual results for the Company’s consolidated performance indicators and individual performance evaluation indicators, or a total of as much as 40% for both indicators combined. This amount is reflected in the performance-linked remuneration of the basic remuneration for the following fiscal year. Outside directors and members of the Audit & Supervisory Board receive only fixed basic remuneration.

Consolidated Performance Indicators

The following indicators are linked to consolidated performance, selected from the viewpoints of ease of understanding and contribution to short-term earnings growth.

Indicator Weighting Achievement Criteria Reason for Selection
Revenue 30% Achievement vs. Plan This is an indicator of earning power in our core businesses
Profit Attributable to Owners of the Parent 70% Achievement vs. Plan This is an indicator representing ultimate responsibility to shareholders

To evaluate individual performance, the Company clarifies the individual responsibility and performance for each director and evaluates their degree of accomplishment towards plans and compared with the previous fiscal year, based on the belief that the individual performance accomplished through business execution is tied to the business performance of the Company. Individual performance evaluations are made based on indicators covering business performance of all Group companies, respective business divisions in charge, and respective operating companies in charge. The percentage weights of these indicators used in the evaluation differs, depending on the position of each individual.

Performance-Linked Stock Remuneration

Performance-linked stock remuneration links the value of Company shares with director remuneration, creating shared interests with shareholders. In this way, the Company believes we will enhance the medium-to long-term corporate value, motivate directors, and raise their morale to contribute to the improvement of Company business performance. Under this plan, Company shares are acquired through a trust ("Trust") using money contributed by the Company as the source of funds. Company directors (excluding outside directors) are granted shares of Company common stock through the Trust according to Officer Share Grant Rules established by the Company.

Based on Officer Share Grant Rules, each director is given a number of provisional points determined by title. These provisional points are adjusted according to the degree of achievement, etc., under performance evaluations for every three-year performance evaluation period, the measurement of which begins with each fiscal year. After adjustments, said provisional points become finalized points. Upon retirement or death and according to the procedures determined under the Officer Share Grant Rules, eligible directors will be granted one Company share per finalized point from the Trust according to the number of finalized points said director has accumulated to that point. (If the conditions stated in the Officer Share Grant Rules have been met, a certain ratio of Company shares may be paid in cash equivalent to the market value of Company shares, rather than in the form of Company shares.)

Stock-Based Remuneration Calculation Method

Stock-Based Remuneration Calculation Method

Point Calculation Method

  • ・ Points awarded for each performance evaluation period = Cumulative total of provisional points for three fiscal years x performance coefficient
  • ・In the event of a change in director position during his/her term of office as a director, the number of provisional points shall be calculated by dividing the number of provisional points for each position by 12, and multiplying by the number of months that the director served in the respective position.
  • ・In the event that an eligible director retires in the middle of his/her term of office, provisional points shall be allocated proportionally according to his/her term of service.

Performance Indicators

From the viewpoint of medium-to long-term growth and returning profits to shareholders, the Company will use the three-year average of multiple indicators selected by the Management Advisory Committee as deemed appropriate for the purpose of this plan. Indicators include core operating profit growth rate for existing businesses, and relative TSR as indicators linked to consolidated business performance. We selected the following indicators for the three-year performance evaluation period beginning FY 3/2023.

Indicator Weighting Achievement Criteria Reason for Selection
Core Operating Profit Growth Rate for Existing Businesses 50% Three-Year Average Growth Rate This is an indicator of earning power in our core businesses
Relative TSR 50% Three-Year Relative TSR This is an indicator that allows for the return of profits to shareholders

*Performance-linked remuneration above reflects business performance in the previous fiscal year (FY 3/2021)

Eligibility by Renumeration Type

Officer Category Basic Remuneration Performance
-Linked Stock
Fixed Remuneration Performance
Directors (internal)
Directors (external) - -
Audit & Supervisory Board - -

Total Remuneration by Officer Category, Remuneration Amount by Type, and Number of Eligible Officers

(Unit: Millions of yen)

Officer Category Total
Total Remuneration by Type Number of Eligible
Officers (Persons)
Basic Remuneration Stock Options
(Excluding Outside Directors)
569 364 26 178 3
Audit & Supervisory
Board Members
(Excluding Outside Members)
15 15 - - 1
Outside Officers 78 78 - - 7
Total 664 459 26 178 11

*Performance-linked remuneration above reflects business performance in the previous fiscal year (FY 3/2021)

Total Consolidated Remuneration per Officer

(Unit: Millions of yen)

Name Total Performance
Consolidated Remuneration by Type
Basic Remuneration Stock Options
Koki Ando 371 Board of Directors Submitting Company 231 17 122
Noritaka Ando 193 Board of Directors Submitting Company 69 4 45
Board of Directors NISSIN FOOD PRODUCTS 69 4 -

At the 74th Ordinary General Meeting of Shareholders held June 28, 2022, the Company resolved that Company directors (excluding outside directors) will be subject to a performance-linked share-based remuneration system, and at the same time, that the Company will abolish the performance-linked remuneration system and the associated performance-linked remuneration-type stock option framework. It was further resolved that no new stock acquisition rights will be granted to Company directors (excluding outside directors) as remuneration for the execution of duties as of the end of the general meeting of shareholders in question.

Reducing Cross-Shareholdings

The annual securities report for FY 3/2021 contained our announcement of a policy to reduce strategic cross-shareholdings over two to three years by an equivalent of 20% by the end of May 2021 compared with FY 3/2020. We are pleased to announce that we achieved this goal ahead of schedule. Subsequently, at the time we published our FY 3/2021 financial results on May 11, 2021, we announced our policy to sell an additional ¥10,000 million over the following two years. Based on this policy, we sold the entire amount of two shareholdings for a total of ¥7,808 million based on market value as of the end of FY 3/2021. Accordingly, we achieved the majority of this goal during FY 3/2022. At a meeting held April 6, 2022, the board of directors resolved to continue this policy in FY 3/2023 to reduce the amount of strategic cross-shareholdings further.

The balance of strategic cross-shareholdings at as of March 31, 2022 was ¥444,590 million, or equivalent to 17.5% of total equity as of March 31, 2022. Excluding strategic cross-shareholdings of overseas companies, this amount is equivalent to 9.8% of shareholders’ equity. The number of companies in which we engaged in strategic cross-shareholdings as of March 31, 2022 was 57, compared to 59 as of March 31, 2021.

On May 24, 2022, the Company acquired an additional 3.9% stake in Premier Foods plc, making Premier Foods an equity-method affiliate. As a result, we excluded shares of Premier Foods from strategic cross-shareholdings. Excluding Premier Foods, the balance of strategic cross-shareholdings as of March 31, 2022 was 47,829 million yen, representing the equivalent of 10.8% of total equity as of March 31, 2022.