|
 |
Financial Information:
Annual Report 2003
NSK recognizes the importance of reinforcing and improving
its corporate governance system. Steps have been taken to speed
up management decisions as well as to separate monitoring functions
from management’s execution of corporate policy as a means
of enhancing transparency. Beginning fiscal 1999, NSK has implemented
measures such as streamlining the board of directors, introducing
an executive officer system, and appointing an independent director.
Work began this fiscal year on the creation of a new corporate
governance system in order to improve management responsiveness
and further enhance the efficiency of monitoring functions.
| NSK’s
Decision–making System |
 |
| Executive
Compensation Committee |
|
In connection with the introduction
of an executive officer system, NSK established an executive compensation
committee in June 1999 for the purpose of ensuring fairness and
transparency in determining executive compensation. The committee
is made up of three members from the board of directors, including
an independent director who chairs the committee. Day-to-day operations
of the committee are handled by the executive officer in charge
of personnel, and outside consultants act as advisors to the committee
as needed. Thus far, the committee has decided on and implemented
a structure of fixed salaries based on position and responsibility
as well as performance-linked compensation and a “management
by objectives” system, stock options, and executive officer
tenures.
Going forward, NSK will strengthen its corporate governance
through external monitoring as it responds to changes in the commercial
law and provides further disclosure on compensation-related issues.
| Risk
Management Committee |
|
NSK’s Risk Management Committee, formed in March 2002,
is currently made up of 13 individuals including six directors
and seven executive officers. The Committee’s role is to
prevent crises where possible, or minimize damage in the event
that a crisis does occur. The Committee also handles all aspects
of risk management up to and including disaster recovery. While
enacting “NSK’s Business Ethics Regulations”
in July 2002, we also established an internal counseling hotline
that primarily handles matters involving corporate ethics. This
fiscal year, the committee has responded directly to crises including
the war in Iraq and the SARS outbreak.
| Audit
Committee and Audit Office |
|
To strengthen monitoring throughout the NSK Group and in
preparation for the transition to the “Company with Committees
System*,” in June 2003 we established an audit committee
under the board of directors and an audit office to carry out
related tasks. The Audit Committee is composed of an independent
director who heads the committee, two members from the board of
directors and a statutory auditor. The Committee is striving to
enhance its monitoring function while preparing to implement a
new auditing structure.
| Preparation
Committee for the “Company with Committees
System” |
|
To prepare for next fiscal year’s transition to the
“Company with Committees System” and to enhance functions
of the aforementioned committees, we established a preparation
committee in June 2003.
This committee is composed of four directors including an
independent director, four executive officers, and outside consultants.
It is studying the corporate governance system that NSK should
adopt, including such issues as the rights and responsibilities
of the board of directors and board members, the soundness of
the company’s decision-making structure, as well as the
rights and accountability of the executive officers.
*Company
with Committees System
The revised Japanese Commercial Code, effective as of April 1,
2003, gives Japanese corporations the option to adopt a US-style
corporate governance system ("Company with Committees System”),
whereby it will be required to establish three committees (nomination,
audit and compensation) under the board of directors and to introduce
an executive officer system. At the same time, the company will
be required to abolish the statutory auditor/board of statutory
auditors structure, which was mandatory under the former Commercial
Code.
|
|
