Corporate Governance
In anticipation of the ten years ahead, NSK continues to grow under its corporate vision “To Become No. 1 in Total Quality.” With our activities expanding on a global scale, we are also determined to become the industry leader in terms of management quality. Toward that end, we are working to strengthen corporate governance, internal control and compliance systems.
Corporate Governance Philosophy and Systems
NSK defines corporate governance as a structure under which its executive organization can focus on business expansion and profitability improvement under the supervision of the Board of Directors. This philosophy is the foundation for our Corporate Governance Code, under which we are reinforcing our corporate governance systems through the implementation of the following policies. First, the Board of Directors has delegated more authority to the executive organization to improve management mobility. Second, the supervisory and executive organizations are working closely together to strengthen supervisory functions. Third, monitoring of performance of business operations is being strengthened.
NSK adopted a governance structure based on the “Company with Committees” system. Under this system, we have established the following corporate governance structure to implement these policies.
*Operational executive functions: The CEO makes decisions with the assistance of the Operating Committee. The Executive Officers in charge put these decisions into actions.
*Supervisory functions: The Board of Directors makes decisions on fundamental management policies and supervises the activities of executive officers. It has the Audit Committee, the Compensation Committee and the Nomination Committee, each of which consists of two independent directors and one non-independent director.
In this manner, NSK has clarified the roles between executive and supervisory functions, and has built a sound and highly transparent management structure.
Enhancing Internal
Control Functions
Under its divisional structure, each business division is responsible for the global operations of the NSK Group in its own areas. We are improving a group-wide internal control structure by establishing NSK Group Management Rules for the entire NSK Group. Basic principles are set forth in the Management Rules to serve as the framework of Group management and internal control systems. We have further strengthened our internal control systems by establishing the following organizational units as part of our head office functions.
*Internal Audit Office: This unit operates independently of the executive organization and supports the activities of the Audit Committee. In collaboration with the Audit Committee, it conducts internal audits of the legality, appropriateness and efficiency of business operations. It also proposes improvement measures and provides guidance based on the results of these audits.
*Compliance Division-Headquarters: This unit is responsible for the planning and implementation of measures relating to compliance with laws, regulations and business ethics. It also audits the progress.
*Risk Management Committee: Executive officers are appointed to this committee. Its tasks are to suppose various contingencies, especially hazardous risks that could affect business activities, to develop the preventative measures, and to devise the countermeasures when unforeseen situations arise. Its activities are supported by a secretariat belonging to Compliance Division-Headquarters.
*Corporate Strategy Division-Headquarters: This unit is responsible primarily for the control of management risks, the planning of management policies, and the monitoring of policy implementation and achievement. It is also working to strengthen internal control systems for the entire NSK Group, including Group companies.
*Internal Control Project Team: The team enhances internal control and evaluates its effectiveness on a global basis. This is required from next fiscal year under the Japanese version of the Sarbanes-Oxley Act, for ensuring reliability of financial reporting, which is one of the important purposes of internal control.
*Disclosure Committee: This team gathers and manages corporate information that could be required for disclosure to investors. It also implements educational programs concerning timely disclosure and works with the Internal Audit Office to improve the internal systems that support timely disclosure.
Risk Management
NSK places great importance on effective risk management, especially preparations for disasters, accidents, epidemics, and other contingencies. The first priority when situations arise is to protect human life. We must also take steps to ensure that we continue to fulfill our responsibilities by stably supplying our high-quality products to customers.
NSK’s risk management structure has centered on the Risk Management Committee, which consists of executive officers and operates under the direct supervision of the President. It consolidates significant risk factors such as major earthquakes, fires and environmental contamination, and deliberates on the preventive measures. In the unexpected event of a crisis situation, the Risk Management Committee will establish an emergency task force and take prompt action to bring the situation under control.
We have established corporate rules concerning safety and environmental requirements for day-to-day employee education and training. We are also continually developing our practical systems through the acquisition of ISO 14001 certification. Implementation of these systems is monitored through internal audits conducted by the Internal Audit Office, the Compliance Division-Headquarters and other units.
