Strengthening Governance

Corporate governance structure

We believe that corporate governance is a system for achieving the sustainable improvement of corporate value. NICIGAS elected a corporate governance system of a company with an Audit Committee. This is because the Company believes that a system that allows each corporate auditor to exercise audit authority in a speedy manner is appropriate, considering the size of its business and the organizational structure of the company, while emphasizing a well-balanced control of its unique business model by both internal and external directors.

Corporate governance structure

As of June 25th, 2024

Board of Directors

The Board of Directors is composed of two-thirds internal directors, as the Company believes that decision-making by directors who have in-depth knowledge of the business is important. On the other hand, the Nomination and Remuneration, Environmental, etc., Committee ("NR&E Committee") (formerly ESG Management Promotion Committee), in which a majority of members are composed of non executive officers and the chairman is an outside director, has been consulting with the Board of Directors regarding nomination and remuneration functions. As of June 30, 2024, one-third of the six directors (one of whom is a woman) are from outside directors, and 44% of attendees to the Board of Directors, including the three corporate auditors, are from outside directors and corporate auditors.

Board Member Skills Matrix　　As of June 25th, 2024

The Company has identified the skills the Company believes are necessary for its medium- to long-term corporate value growth and created a skills matrix. The Company annually reviews the skills it believes are necessary for corporate value growth, supplementing the skills and knowledge required by the Company through the participation of Outside Directors, thereby invigorating discussions and enhancing the effectiveness of the Board of Directors.The Independent Outside Directors include persons with experience in management of other companies.

Nomination and Remuneration, Environmental, etc.,Committee ("NR&E Committee")
（Former name: ESG Management Promotion Committee）

The NR&E Committee, under the name of the ESG Management Promotion Committee, has been advising on ESG-related matters and reporting to the Board of Directors since 2020 as an advisory body to the Board of Directors. As a result of discussions on the purpose of its activities, the Committee has decided to change its name to the NR&E Committee at the Board of Directors meeting held on June 25, 2024,confirming that the most important matters to consider are nomination (personnel) and remuneration, which form the core of the monitoring function of the Board of Directors, and the environment, which is a key of medium- to long-term strategies. The Company believes that this name change will clarify the purpose of the Committee's activities and make the governance system easier to understand for stakeholders.

This committee is a voluntary advisory body to the Board of Directors and consists of five members (three external and two internal). As of June 30, 2024, the chairman is an outside director (Tsuyoshi Yamada), and the members are an outside director (Eriko Satonaka), an outside corporate auditor (Takao Orihara), a representative director, chief executive officer (Kunihiko Kashiwaya), a representative director, senior managing executive officer (Tomonori Tsuchiya). The Committee holds discussions and reports to the Board of Directors on key themes such as executive appointment, remuneration, long-term management challenges and sustainability priorities from the perspective of ESG management, along with specific measures and progress made in addressing them, as well as executive remuneration (Executive remuneration) and succession planning.
The Committee fully discusses and resolves the appointment of officers, including CEO, after confirming that the candidates are sufficiently qualified in various aspects, and reports to the Board of Directors. The details of the Committee's discussions are documented in the minutes of the meeting. In the event that the dismissal of director or executive officer, including CEO, should be considered due to poor performance or other reasons, the Company convenes the Committee to discuss the dismissal or recommendation for resignation.

Management Meeting

A decision-making body for business execution, composed of the following members (10 men, 0 women)

• NICIGAS: Chairman Executive Officer, Chief Executive Officer, General Managers and Deputy General Managers of the Sales Headquarters, and the Corporate Headquarters, full-time Corporate Auditor
• Group Company President, Executive Officers

In principle, the member meet once a month to receive reports on the status of business operations from each department (4-5 agenda items per month) and discuss and implement specific measures for management plans and strategies resolved by the Board of Directors, thereby enhancing agile business execution. In the fiscal year ended March 2023, an Investment Committee has been established as a subordinate body, and investments exceeding 30 million yen are reviewed by this Committee prior to the Management Meeting. The progress of investments is monitored regularly, and updates are provided to the Management Meeting accordingly.

Group Executive Officer Conference

It is composed of internal directors, full-time corporate auditors, executive officers, and presidents of subsidiary companies (23 male and 1 female) and is held once a month in principle. We discuss specific measures and implementation status, progress on KPIs, business improvements and new initiatives to achieve the goals of each department. 

Board of Corporate Auditors

The Board of Corporate Auditors consists of three corporate auditors (including two Outside Corporate Auditors). The Company believes that this system allows the Board of Corporate Auditors to exercise its own investigative authority over the execution of duties by the Directors through the independent appointment of Corporate Auditors, thereby fostering management with a greater sense of alertness and vigilance. The full-time Corporate Auditor reports the status of business execution of all Group companies and the results of inspections to the Outside Corporate Auditors, who provide opinions and advice from an independent standpoint and professional perspective. Through active exchanges of opinions based on this information, the Outside Corporate Auditors monitor and verify the execution of duties by the Directors.The Board of Corporate Auditors monitors and verifies the execution of duties by the Directors based on the audit policies and plans, by attending important meetings such as Board of Directors meetings and regularly exchanging opinions with the Directors.
The specific items reviewed by the Board of Corporate Auditors include the audit policies, audit plans, anticipated business risks, status of establishment and operation of the internal control system as key audit items, and the appropriateness of the audit methods and results of the Accounting Auditors.Furthermore, the Company believes that collaboration with Accounting Auditors and the internal audit department is important to improve the effectiveness of audits, and three-way audit meetings are held regularly to report on the status of audits and exchange opinions from various perspectives and roles. On-site inspections conducted by Accounting Auditors and the internal audit department are also actively attended. Opinion exchange meetings with Outside Directors and group auditor liaison meetings are held to further strengthen collaboration.

Executive Remuneration

Our executive remuneration is designed to ensure that management shares benefits and risks with our shareholders (“we are in the same boat as our shareholders” concept), and to increase their awareness of the importance of enhancing our corporate value over the medium- to long-term as well as short-term, and have introduced (1) Basic remuneration linked to consolidated operating income, etc. and (2) Stock remuneration more closely linked to shareholder value.

We have established the Nomination and Remuneration, Environmental, etc., Committee (“NR&E Committee”), chaired by an outside director, majority of whom are outside directors and an outside corporate auditor, as a voluntary advisory committee of the Board of Directors, and this Committee is responsibly involved in determining executive remuneration. We intend to deepen discussions at this committee and consider setting up effective performance-linked KPIs for each role and responsibility.

Number of officers subject to both（1）Performance-based basic remuneration and (2)a Stock remuneration(BIP trust) (FYE 03/24)

The 61st Ordinary General Meeting of Shareholders held on June 25, 2015 passed a resolution setting the limit of remuneration for Directors at the annual amount of JPY 400 million or less (of which annual remuneration for Outside Directors is JPY 30 million or less, and excluding employee salaries).

Our remuneration for outside directors consists of a fixed basic remuneration only, without performance-linked or stock remuneration, considering their role to avoid excessive risky business decisions by internal management and to ensure their independence. We consider that this structure will further ensure the supervisory responsibility of outside directors.

(1)Performance-based basic remuneration

The amount of basic remuneration for each director and executive officer is linked to consolidated operating income and other business results, and is calculated based on an evaluation by Independent Outside Evaluators*

Steps for deciding the amount of basic remuneration

1. Each Director and Executive Officer conducts evaluation interviews with independent outside evaluators after the end of the fiscal year to discuss the challenges undertaken and achievements made.
2. The independent outside evaluators conduct quantitative and qualitative evaluations for each item required for the roles and duties of each Director and Executive Officer based on the interview results. The quantitative evaluation is made based on the operating income of the Company and the status of achievement of the KPIs set by each Officer at the beginning of the evaluation period. The qualitative evaluation is made based on items such as contribution to the enhancement of corporate value, the formulation of policies and the penetration of strategies, the cultivation and discovery of successors, and expertise and foresight. Emphasis is placed on the ability to drive change without being bound by past customs or previous successes.
3. After the results of the independent outside evaluation are confirmed by the General Managers of each Headquarters, the Representative Director, Chief Executive Officer and the Managing Executive Officer in charge of Human Resource Department determine the basic remuneration concept for each individual based on the independent outside evaluation, and the NR&E Committee approves these contents. Based on the approved principles, the Representative Director, Chief Executive Officer and Managing Executive Officer in charge of the Human Resource Department engage in discussions to make the final decision on individual basic remunerations.

(2)Stock remuneration (BIP trust) (2015 and onward)

The stock-based remuneration is provided to Directors and Executive Officers as a medium- to long-term incentive plan, targeting a period of five business years, with a maximum limit of 851 million yen and 690,000 shares (post-stock split). The purpose of this plan is to enable Directors and Executive Officers to share medium- to long-term profit value with shareholders. In the stock remuneration, the BIP trust is used, and points calculated based on the position factor and the monthly amount of basic remuneration that will change according to the degree of achievement of consolidated operating income and others will be granted. The points are accumulated during the term of office and granted at the time of retirement.