On the basis of its holding company structure, the Group engages in business through its Group companies across a wide range of fields that includes processed foods, marine products, meat and poultry products, temperature-controlled logistics, and biosciences. In pursuit of sustainable growth and the enhancement of corporate value over the medium to long term, the Company’s Board of Directors formulates Group strategies and supervises the business execution of operating companies.
The holding company adheres to the principles of the Corporate Governance Code and views the achievement of fair and transparent management as an important management issue. Accordingly, under the supervision of the Board of Directors, we will continue to strengthen governance by promoting appropriate resource allocation, speeding up decision-making and ensuring thorough compliance.
In addition, we have established ourselves as a company with an Audit & Supervisory Board system, an institutional design specified within the Companies Act of Japan.

Specific Discussions at Board of Directors’ Meetings

In pursuit of sustainable growth and the enhancement of corporate value over the medium to long term, the Company’s Board of Directors formulates Group strategies and supervises the business execution of operating companies. The specific matters discussed during FY2023 were as follows.

Election and Term of Office of Directors

The Board of Directors comprises up to 11 members, appointed to one-year terms in order to enhance flexibility in response to changes in business conditions. Resolutions to appoint directors must be approved by a majority of shareholders, with at least one third of those shareholders who have voting rights in attendance. To improve transparency and strengthen supervisory functions, three of the current 10 directors are outside directors. The Board meets at least once a month. The Board of Directors is chaired by the Representative Director and Chairman, who also serves as an executive officer. Together, the Representative Director and Chairman and the Representative Director and President oversee the Group’s overall execution of business.

Audit & Supervisory Board Member System and Role of Audit & Supervisory Board meetings

Nichirei has adopted the audit & supervisory board member system. Of the five audit & supervisory board members, three are outside audit & supervisory board members, of whom one has experience at a financial institution, another is an experienced attorney, and the third has worked at a government agency. Audit & Supervisory Board meets once a month, in principle, convening additional meetings as necessary. Nichirei has established a framework to enhance the supervisory functions of audit & supervisory board members, allowing for the effective use of audit & supervisory board members, and strengthening the supervisory role of management.

Independent Outside Directors and Outside Audit & Supervisory Board Members

The Company adheres to its Criteria for Independence when appointing outside directors and outside audit & supervisory board members designated by the Company as independent directors/audit & supervisory board members. A vested interest in Nichirei is denied outside directors and their close relatives, as well as outside audit & supervisory board members and any companies or organizations of which they are directors or that they serve in other important positions.

Skill Matrix

The Nichirei Group believes that in order for the Board of Directors to effectively fulfill its roles and responsibilities, it must be composed of both internal and external members with sufficient knowledge and experience in fields related to business management. We have designated the following knowledge and experience as important from a corporate management perspective. In addition to having appropriate experience in all of the following areas, the Company selects director candidates based on the areas in which the Company has particular expectations.

■Experience and Skills

		Corporate Management	ESG/ Sustainability	Global	Research & Development	Marketing	Human Resources Strategy	DX	Financial Accounting/ Finance	Legal Affairs/ Compliance
Directors		●	●	●	●		●			●
		● (Processed foods)		●	●	●
		● (Marine, meat and poultry products)		●		●
			●	●			●		●	●
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		● (Logistics)		●		●		●
			●	●					●
		●	●		●	●	●
		●	●	●					●
			●	●			●
			●	●				●
Audit & Supervisory Board Members			●		●					●
			●							●
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				●					●
			●	●

• * The above list does not represent all the knowledge, experience, and abilities possessed by each director and auditor.

Succession Plan

The Company positions the succession plan for the representative director, president as one of its most important issues, and implements this initiative from a medium- to long-term perspective based on the Group’s Management Principles. Specifically, the Nominating Advisory Committee, which is chaired by an outside director, carries out training, monitoring, and selection of successor candidates according to the selection process, and reports its findings to the Board of Directors based on thorough discussions.
Based on the Nominating Advisory Committee’s report, the Board of Directors approves the proposed new Group officer structure and decides on the representative director, president.

Officer Remuneration System

Design of the remuneration scheme for directors and executive officers incorporates the opinions of a third-party organization. Remuneration comprises a base remuneration component and a bonus component. Base remuneration is paid at a fixed rate determined in accordance with a remuneration schedule. Bonuses are paid according to the concept of productivity-linked bonuses, based on the results of the Nichirei Group, the performance-budget achievement rate of the relevant officer’s business area, and an individual qualitative assessment. Outside directors receive base remuneration only; they are not paid a bonus. Nichirei has established a Remuneration Advisory Committee which meets, in principle, once a year to deliberate on such topics as the remuneration system, remuneration levels, and the validity of remuneration, before reporting its findings to the Board of Directors. The committee comprises the Representative Director and President, a audit & supervisory board member, and outside directors. Officer remuneration is determined by the Board of Directors. The total amount of remuneration and bonuses paid to directors must be within the limit resolved at a General Meeting of Shareholders.

①Policies and Methods for Determining Officer Remuneration

The policy for determining individual director remuneration is for the Remuneration Advisory Committee to discuss the appropriateness of each director’s remuneration each fiscal year and for the decision to be made by the Board of Directors. In these discussions, the Remuneration Advisory Committee reflects changes in the management environment and the opinions of shareholders and investors, and obtains information necessary for discussion from third-party agencies with extensive global knowledge and experience.

②Changes in Policies for Determining Officer Remuneration

We have decided to change the performance-linked bonus key performance indicator (KPI) in conjunction with the start of Medium-Term Business Plan Compass Rose 2024 in FY2023. Specifically, ROIC and profit were selected to replace REP1 in order to optimize the business portfolio and improve capital efficiency and shareholder returns. In addition, we adopted a new way of utilizing ESG third-party assessments2 to strengthen our response to sustainability-related issues. There are no other significant changes in the policy for determining officer remuneration.

• *1Retained Economic Profit (REP) is a unique business management indicator used by the Group and is calculated by deducting capital costs (capital used x WACC) from NOPAT.
• *2For ESG third-party assessments, we utilize the assessments of multiple ESG assessment organizations to ensure objectivity and fairness. Specifically, we will utilize the following three types of assessment.

Policies for Determining Officer Remuneration

①Basic Policies

②Remuneration Composition and Levels

Remuneration for Directors Other Than Outside Directors

Basic (fixed) remuneration consists of role-based remuneration and a director allowance, and variable remuneration consists of performance-linked bonuses and stock compensation. Remuneration levels are set at appropriate amounts with reference to objective compensation market survey data (compensation levels of companies competing with the Group in terms of business and human resources, including those in the food and logistics industries), taking into consideration the responsibilities and number of directors, changes in the business environment going forward, and the opinions of third-party organizations.

Remuneration for Outside Directors

Only basic (fixed) remuneration is paid to outside directors. The level of remuneration is set at an appropriate amount, taking into consideration the time and effort spent by each outside director fulfilling expected roles and functions, as well as objective compensation market survey data (compensation levels of companies similar in business type and size to that of the Company).

③Performance-Linked Bonuses

The amount of money to be paid to each individual as a performance-linked bonus varies within a range of 0% to 200% of the base amount for each position, depending on the achievement of Company-wide, business and individual performance targets.

Amount of individual bonus = Base amount by position × Performance evaluation coefficient (0–200%)
Performance evaluation coefficient = (a) Company-wide performance evaluation coefficient + (b) Business performance evaluation coefficient + (c) Individual performance evaluation coefficient

④Procedures for Determining Remuneration

In order to ensure appropriateness and objectivity in matters related to remuneration for individual directors, the Remuneration Advisory Committee, comprising mainly independent outside directors, discusses matters first and reports its findings to the Board of Directors, which then makes its decisions.
The details of officer remuneration for FY2023 are presented in the 105th Annual Securities Report.

• *1The above includes one director and one Audit & Supervisory Board Member who retired at the conclusion of the 104th Annual General Shareholders Meeting held on June 24, 2022.
• *2The total amount of remuneration, etc. above is stated as consolidated remuneration, etc. (total amount of expenses, etc. paid or to be paid or borne by the Company and its subsidiaries). For directors (excluding outside directors), the amount in parentheses is the total amount of remuneration, etc. paid or to be paid by the Company. With respect to outside directors and Supervisory Board Members, the total amount of the consolidated remuneration, etc. is the total amount of remuneration, etc. to be borne by the Company. For the total, the amount in parentheses is the total amount of remuneration, etc. to be borne by the Company.
• *3The amount of "basic remuneration" above is the total amount of remuneration, etc. paid in FY2023 (all monetary remuneration).
• *4The above "performance-linked bonuses" amount is the amount expected to be paid in June 2023 based on the results of business performance, etc. in FY2023 (all monetary compensation).
• *5The amount of "Restricted Shares Compensation" above is the total amount expensed in FY2023. In FY2023, the Company granted monetary compensation claims to six directors (excluding outside directors) and had all such claims contributed in kind to the Company, resulting in the delivery of 26,016 shares of common stock of the Company as stock compensation. The delivery of such shares is subject to the condition that they do not transfer their positions as officers of the Company until they retire from the Company.
  * The Company has introduced a restricted shares compensation plan similar to that for directors for executive officers who do not concurrently serve as directors, and in FY2023, 8,788 shares of the Company's common stock were issued to three executive officers.
• *6The maximum remuneration amounts, etc. for directors and Audit & Supervisory Board Members approved at the General Shareholders Meeting are as follows.

• *The maximum amount of remuneration, etc. for directors does not include salaries for employees of directors who concurrently serve as employees.

Evaluations of Effectiveness of the Board of Directors

As necessary, and with the assistance of outside experts, the Company conducts analyses and evaluations of the Board of Directors’ activities to ensure its decision-making is effective. Summaries of the results are subsequently disclosed.

Support System for Outside Directors (Outside Audit & Supervisory Board Members)/ Policy for Training Directors and Audit & Supervisory Board Members

Nichirei distributes materials for use at Board of Directors meetings to each director and Audit & Supervisory Board member at least three days in advance of meetings in order to ensure meaningful discussions.
When internal communication and coordination are required to accurately provide Company information in response  to instructions from independent outside directors or independent outside Audit & Supervisory Board members, the secretary in charge acts as the contact point in order to ensure necessary coordination with relevant departments.
Newly appointed directors and Audit & Supervisory Board members are given training as necessary on the Companies Act and other related laws, management strategy, financial analysis and other such matters. Additional training on legislative revisions and management issues is provided as necessary after new members assume office. Moreover, explanations of the Group’s businesses and tours of the major facilities are provided to outside officers as necessary.

Approach to Cross-Shareholdings

Cross-shareholdings are only utilized when it is determined that they will contribute to improving the Company’s corporate value: for example, by maintaining and strengthening trade and cooperative relationships. In addition, every year the Board of Directors reviews the economic rationale of individual shareholdings of this type from a medium- to long-term perspective. If the importance of a particular shareholding is determined to have diminished, the shares are sold. In conducting such reviews, the Board of Directors carefully examines and makes a comprehensive judgment on whether the benefits, such as profits from transactions, and dividends or risks are commensurate with the cost of capital, followed by consideration of a qualitative evaluation of the strategic importance of the shareholding.
In regard to the exercise of voting rights for cross-shareholdings, the Company will review all the details of the relevant proposals in the investee company’s shareholders meeting agenda, and if any of the following apply to the investee company, the Company will make a decision after careful examination on a case-by-case basis:
(1) The investee has engaged in acts that will lead to a loss of shareholder value
(2) The investee’s performance or stock price has deteriorated significantly
(3) There are other serious doubts with respect to agreeing to the proposal