The Board of Directors

The Board of Directors

We believe that the Board of Directors and each Committee need to be comprised of Directors with suitable backgrounds with the aim of establishing a Board of Directors that is capable of performing its supervisory function in a sustainable manner in an ever-changing business environment. We have designated the three categories of “Experience in corporate management,” “Experience in global business operations” and “Experience in M&A” as the required experience, and the four categories of “Finance,” “Legal affairs,” “IT/Digital” and “Manufacturing/Technology/R&D” as the required skills. We nominate Director candidates to form a Board of Directors comprised of members who offer a good balance in terms of the seven categories above, and also appoint suitable Directors for the committees that require higher degrees of specialization. Experience in ESG-driven management, which has attracted attention in recent years, is included in “Experience in corporate management” in terms of being able to supervise and give advice concerning a broad range of matters on overall management. Skills in GRC (Governance, Risk management and Compliance) are included in “Legal affairs.”
At the same time, to ensure diverse opinions and supervisory functions at the Board of Directors, we endeavor to secure, expand and reinforce diversity based on a skill matrix without too much regard to particular attributes such as age, nationality, or gender.
As of March 29, 2022, 2 of the 11 Directors concurrently serves as an Executive Officer. In addition, 4 are foreign nationals, and 2 are female.

List of Directors (as of March 29, 2022)

Photo Name
Profile
Title Committee
membership
Years serving as Director
(assumption)
Attendance at Board of
Directors meetings*
Attendance at Committee
meetings(FY2021*)
FY2021 Nominating
Committee
Compensation
Committee
Audit
Committee
Yuichiro Wakatsuki Yuichiro Wakatsuki
Profile
Director, Representative Executive Officer & Co-President - newly appointed - - - -
Wee Siew Kim Wee Siew Kim
Profile
Director, Representative Executive Officer & Co-President - newly appointed - - - -
Goh Hup Jin Goh Hup Jin
Profile
Director, Chairman Nominating Committee
Compensation Committee
7 years 3 months
(December 2014)
22/22 15/15 18/18 -
Hisashi Hara Hisashi Hara
Profile
Independent Director Nominating Committee (Chairperson) 4 years
(March 2018)
22/22 15/15 - -
Peter M Kirby Peter M Kirby
Profile
Independent Director - newly appointed - - - -
Miharu Koezuka Miharu Koezuka
Profile
Independent Director Audit Committee 2 years
(March 2020)
22/22 - - 16/16
Lim Hwee Hua Lim Hwee Hua
Profile
Independent Director - newly appointed - - - -
Masataka Mitsuhashi Masataka Mitsuhashi
Profile
Independent Director Audit Committee (Chairperson) 2 years
(March 2020)
22/22 - - 16/16
Toshio Morohoshi Toshio Morohoshi
Profile
Independent Director Nominating Committee
Audit Committee
4 years
(March 2018)
22/22 15/15 - 16/16
Masayoshi Nakamura Masayoshi Nakamura
Profile
Lead Independent Director
Board Chair
Nominating Committee
Compensation Committee
4 years
(March 2018)
22/22 15/15 18/18 -
Takashi Tsutsui Takashi Tsutsui
Profile
Independent Director Compensation Committee (Chairperson) 4 years
(March 2018)
22/22 - 18/18 -

Attendance rates for fiscal 2021 are calculated based on late March 2021 to late March 2022.

Expertise/Experience

Expertise / Experience (applicable persons)
Yuichiro Wakatsuki
Yuichiro Wakatsuki
Wee Siew Kim
Wee
Siew Kim
Goh Hup Jin
Goh
Hup Jin
Hisashi Hara
Hisashi Hara
Kirby Peter M
Peter M Kirby
Miharu Koezuka
Miharu Koezuka
Lim Hwee Hua
Lim
Hwee Hua
Masataka Mitsuhashi
Masataka Mitsuhashi
Toshio Morohoshi
Toshio Morohoshi
Masayoshi Nakamura
Masayoshi Nakamura
Takashi Tsutsui
Takashi Tsutsui
Experience in corporate management (11)
Experience in global business operations (11)
Experience in M&A (11)
Finance (8) - - -
Legal affairs (5) - - - - - -
IT/Digital (5) - - - - - -
Manufacturing/Technology/R&D (5) - - - - - -

In addition to that shown above, “ESG Data” (“Governance” sheet) provides information related to Directors.

Required experience/skills

1. Experience in corporate management The ability to supervise and give advice concerning a broad range of matters on overall management, from formulation of business strategy to its implementation.
2. Experience in global business operations The ability to supervise and give advice on the businesses of the Company, which operates globally, taking into consideration diverse business environments, economic conditions and cultures around the world.
3. Experience in M&A The ability to supervise and give advice on the validity of M&As that the Company is pursuing, and the process of PMI.
4. Finance The ability to supervise and give advice on capital allocation and other financial activities of the Company.
5. Legal affairs The ability to supervise and give advice on regulations concerning operations, GRC (Governance, Risk management and Compliance) and internal controls.
6. IT/Digital The ability to supervise and give advice on the improvement of operations and creation of new business models through IT and Digital Transformation (DX).
7. Manufacturing/Technology/R&D The ability to supervise and give advice on the creation of new technology through R&D by making use of his or her knowledge of technology related to manufacturing operations and the businesses of the Company.

Roles of Independent Directors

Independence Criteria for Outside Director and Roles of Independent Directors

Independence Criteria for Outside Director

See “Nippon Paint Holdings Corporate Governance Policies” Annex 3.
Please see the link for Reason for Selection as Independent Directors.

Role of Independent Directors

  1. In regard to management policies and the improvement of management, based on their own knowledge, to provide advice from the perspectives of promoting the sustainable growth of the Group and Maximization of Shareholder Value in the medium to long term.

  2. To supervise management through the nomination and dismissal of Executive Officers and other important decisions of the Board of Directors.

  3. To supervise conflicts of interest between the Company and Directors of the Board, Executive Officers, and controlling shareholders, etc.

  4. From a position of independence from business executives and controlling shareholders, etc., to ensure that the opinion of stakeholders such as minority shareholders is appropriate reflected at the Board of Directors.

Meeting of the Independent Directors

Roles of the meeting of the Independent Directors

A meeting of the Independent Directors, chaired by the Lead Independent Director and comprised solely of Independent Directors, is held monthly. This meeting holds discussions that lead to resolutions at Board of Directors meetings and Committee meetings, such as agendas of the meetings of the Board of Directors and the Nominating, Compensation, and Audit Committees, as well as sharing the comprehensive background for matters of concern for the business execution and promoting communication by inviting the top management (GKP: Global Key Position) of Nippon Paint Group companies in Japan and overseas. As necessary, the Lead Independent Director aggregates opinions expressed in the Independent Directors meeting and shares and discusses them with the Chairman, Representative Executive Officer & Co-Presidents, and Executive Officers.

Functions to support Independent Directors

The Independent Directors regularly receive information from departments such as Finance and Accounting, Corporate Planning, and Investor Relations to quickly and accurately grasp the status of business execution in the Company. In addition, the Representative Executive Officers & Co-Presidents directly share comments from the capital markets and a variety of information on business execution with the Independent Directors in an effort to support them to further deepen their understanding of our Group’s businesses. Meanwhile, it is useful for business execution to receive questions, opinions and suggestions directly from the Independent Directors, who have a wealth of experience and knowledge. This sharing of information and opinions leads to lively discussions.
Furthermore, the Board of Directors Office serves as the secretariat for the Meeting of the Independent Directors in addition to the Board of Director meetings, and supports the Independent Directors by offering prior explanations on the agenda background at Board of Directors meetings, coordinating schedules for attending meetings held by the business executive, sharing information, arranging plant and site visits and holding meetings to exchange opinions with the business executive. By establishing such forums for direct communication with the business executive, we have in place a system that enables the Independent Directors to work more effectively. The Board of Directors Office is also tasked with supporting the Nominating, Compensation and Audit Committees, which makes it possible to provide thoroughly organized information and make adjustments at the request of the Independent Directors, taking into consideration language and time differences in response to the global expansion of our Group’s operations. In this way, the Board of Directors Office is endeavoring to enhance the effectiveness of the Board of Directors.


Committees

The Company selected to a Company with a Nominating Committee, etc., in order to further improve the transparency, objectivity, and fairness of management, and to separate and enhance business execution and supervision.

Composition and Roles of Nominating, Compensation, and Audit Committees

Composition of the committees Non-Executive Director / Independent Director

Roles and Main Activities of the Committees


Roles Main activities for fiscal 2021
Nominating Committee To make decisions on the content of proposals on the election and dismissal of Directors of the Board to be submitted to the General Meeting of Shareholders, and to deliberate and report to the Board of Directors on the Directors of the Board successor plan, as well as the appointment, dismissal, and successor plans for the Representative Executive Officer and President and other Executive Officers. The Nominating Committee resolved the proposals for the election and dismissal of Directors for fiscal 2022 submitted to the General Meeting of Shareholders and deliberated and reported on the Executive Officer structure for fiscal 2022.
Compensation Committee To make decisions on the decision-making policy for the individual remuneration, etc., of Executive Officers and Directors of the Board, and on the content of remuneration, etc., for individuals. The Compensation Committee resolved the policy for determining remuneration for each Director and Executive Officer (Remuneration Philosophy) and the contents of remuneration for each based on this policy.
Audit Committee The auditing of the execution of duties of Executive Officers and Directors of the Board, the creation of audit reports, and the making of decisions on the content of proposals relating to the election, dismissal, and non-reappointment of the Accounting Auditor to be submitted to the General Meeting of Shareholders. The Audit Committee prepared audit reports, based on the results of audits on the status of execution of duties by the Executive Officers and Directors, and resolved the content of proposals regarding the election, dismissal and refusal of reelection of the Accounting Auditor to be submitted to the General Meeting of Shareholders.

Election and dismissal of Directors and Executive Officers

Nominating Directors and election and dismissal of Executive Officers

Directors are elected at the General Meetings of Shareholders based on nominations of the Nominating Committee. We, in order to secure the effectiveness of the Board of Directors, have adopted a policy of nominating candidate Directors with diverse experiences, achievements, high levels of insight, high levels of expertise, etc., regardless of nationality or gender, whether from Japan or overseas, or from within or outside the Group, in the Nominating Committee, whose majority members are Independent Directors.
Executive Officers are elected by resolution of the Board of Directors. The policy for the elected and dismissal of Executive Officers at our Company is as follows.

Nomination of Directors

Corporate Governance Policies
Article 20 (Director of the Board Appointment and Qualification Standards)

  1. The Company, in order to secure the effectiveness of the Board of Directors, has adopted the policy of nominating candidate Directors of the Board with diverse experience, achievements, high levels of insight, and high levels of expertise, etc., regardless of nationality, gender, whether from Japan or overseas, or from within or outside the Group, etc.
  2. The Company nominates personnel that meet the following as candidate Directors of the Board.

    (1) Directors of the Board have the qualifications to appropriately perform their duty of loyalty and duty of care, and to contribute to the sustainable growth of the Group and MSV in the medium to long term.

    (2) Outside Directors of the Board, in addition to (1) above, have high levels of insight and extensive experience in the fields of corporate management, accounting, and legal affairs, etc., have qualifications to monitor the execution of business of Executive Officers from an independent and objective perspective as a general rule, and in addition, meet the “Independence Criteria for Outside Director of the Board” (Annex 3) prescribed by the Board of Directors.

    (3) Directors of the Board concurrently serving as Executive Officer, in addition to (1) above, have the abilities required to be conversant with the business of the Group and for the appropriate execution of the business management of the Group.

  3. As a general rule, the number of times that an Outside Director may be nominated as a candidate is four (a total of four years), and if the prior consent of a majority of Directors of the Board has been obtained, this may be up to a maximum of eight times (a total of eight years).

Executive Officers election policies

Corporate Governance Policies
Article 31 (Policies and Procedures for the Election and Dismissal of Executive Officers)

  1. The Company shall use the following as criteria for the election of the Executive Officers and the appointment of the Representative Executive Officers.

    (Executive Officer)

    A person who has the diverse experience, performance, high level of insight, and high level of expertise, etc., worthy of the Executive Officer, who will contribute to the achievement of the sustainable growth and MSV in the medium to long term of the Group, regardless of nationality, gender, whether from Japan or overseas, or from within or outside the Group.

    (Representative Executive Officer)

    A person who has a wealth of experience and achievements in corporate management, who will demonstrate high levels of ability worthy of the Representative Executive Officer and President and will contribute to the achievement of the sustainable growth and MSV in the medium to long term of the Group.

  2. The Board of Directors, pursuant to the policies of the preceding Paragraph, and based on the deliberations and reports of the Nominating Committee, shall elect and dismiss Executive Officers, and shall appoint and remove the Representative Executive Officers.

  3. The Board of Directors, in the case of an Executive Officer or Representative Executive Officer and President falling applicable under any of the following and being able to objectively determine that removal or dismissal would be appropriate, shall dismiss or remove him/her, upon sufficient deliberations at the Board of Directors, based on the reports of the Nominating Committee.

    (1) In the event of having violated a law or ordinance or the Articles of Incorporation, etc., and it being able to be recognized that significant damage has been caused to the shareholder value of the Group;

    (2) In the event of significant impediment having occurred to the execution of their duties;

    (3) In the event of it being realized that the requirements of the selection standards are not met.

Succession plan for Directors and Executive Officers

In order to ensure the function of a monitoring model to continue working effectively, we believe that it is important for Independent Directors to proactively and autonomously consider the composition of the Board of Directors and Nominate candidates for Director to realize the composition of the Board as well as examine candidates for the Representative Executive Officer and other Executive Officers.
The Nominating Committee works closely with other Committees and the meeting of the Independent Directors, keeps continuous and close communication with GKP, and considers respective candidates necessary for business execution and supervision based on information obtained.

Communication between the Independent Directors and the business executives
  • Explore the ideal form of the monitoring model system to contribute to MSV according to the situation of the Company
  • Communicate with GKP continuously and closely
Deliberations by the Nominating Committee
  • Deliberate on the business execution and supervision systems based on information obtained through daily communication with the business executives (Executive officers, Corporate Officers, GKP, and etc.)
Resolution
  • Resolution of candidates for Director by the Nominating Committee
  • Resolution by the Board of Directors on the election of Executive Officers based on reports from the Nominating Committee

Remuneration and Other Matters Concerning Directors and Executive Officers

Remuneration decision process for Directors and Executive Officers

At the Company, the Compensation Committee, which is chaired by an Independent Director, determines the remuneration structure and annual base remuneration for the Directors and the Executive Officers.
The Compensation Committee deliberates on and determines the remuneration structure and levels in a fair and transparent manner based on the Remuneration Philosophy and the Design Policies for the Remuneration of the Representative Executive Officers & Co-Presidents established by the Compensation Committee by taking into consideration the social environment, remuneration levels at other companies, market remuneration levels, and other factors.

Remuneration Philosophy

Overarching Principle

  • In order to implement ”Maximization of Shareholder Value” (MSV), to build a remuneration system that is transparent and satisfactory and to continue to provide appropriate motivation, incentives, etc., to key executives by implementing individual treatment based on the system.

Guiding Principles

  • To be able to attract and keep management talent that excels at practicing MSV.
  • To be able to continuously provide motivation so that maximum potential can be encouraged even under changing environments.
  • To function effectively and in harmony with the current state of business development, level of maturity of organizational systems, organizational values, and the community.

Design Policies for the Remuneration of the Representative Executive Officers & Co-Presidents

  • Remuneration that contributes to MSV

  • Total remuneration is commensurate with the performance of the Representative Executive Officers & Co-Presidents

  • A remuneration structure that promotes appropriate and decisive risk-taking

Remuneration Structure for Directors and Executive Officers

Remuneration Structure for Directors

Remuneration for the Directors is comprised of job-based compensation, allowances for committee memberships and other roles, and long-term incentives. A Director who concurrently serve as an Executive Officer does not receive compensation as a Director.

Remuneration Structure for Representative Executive Officers & Co-Presidents

Remuneration for the Representative Executive Officers & Co-Presidents is comprised of job-based compensation and long-term incentives. The remuneration for the Representative Executive Officers & Co-Presidents is deliberated and determined in a fair and transparent manner at meetings of the Compensation Committee based on the Remuneration Philosophy established by the Compensation Committee and the Design Policies for the Remuneration of the Representative Executive Officers & Co-Presidents. The Company reviews the optimal balance of remuneration for the Representative Executive Officers & Co-Presidents between cash compensation and restricted stock compensation, taking a zero-based approach in each fiscal year. The Compensation Committee has decided after deliberations that restricted compensation will not be granted to the Representative Executive Officers & Co-Presidents in FY2022 in view of the following points.

  • Remuneration should be structured to increase as much as possible the motivation of the Representative Executive Officers & Co-Presidents to contribute to pursuing MSV
  • Determine the optimal remuneration structure every fiscal year by giving due consideration to prevailing circumstances
  • Strictly evaluate the contribution of the two Representative Executive Officers & Co-Presidents to achieving MSV with emphasis on sharing value with shareholders

Remuneration Structure for Executive Officers

Remuneration for the Executive Officers, except the Representative Executive Officers & Co-Presidents, is comprised of job-based compensation, long-term incentives, and performance-linked compensation. The Compensation Committee deliberates on the suitability of proposals for the remuneration levels and structure from the Representative Executive Officers & Co-Presidents and determines remuneration based on the Remuneration Philosophy.
The base ratio of the base amount of job-based compensation, performance-linked compensation, and long-term incentives is 1:1:0.6. This ratio is varied and set to an appropriate level depending on positions and job types of individual Executive Officers.
In FY2022, we replaced restricted stock compensation with cash compensation as a long-term incentive for the Executive Officers. One-third of the standard cash compensation, which varies depending on positions and job responsibilities, will be provided over three years after each fiscal year. These three compensation payments will vary between 50% and 150% based on the evaluation of an individual Executive Officer’s contribution to improving sustainability in the Nippon Paint Group in each fiscal year.

Please see the Annual Securities Report for more information about the remuneration design processes and composition for Directors and Executive Officers.
Securities report (only Japanese)


Illustration of Officers remuneration for fiscal 2021

Policy on Director ownership of Company shares

In addition to the existing job-based compensation, we brought in long-term incentives for Directors. The aim was to create a remuneration structure that reflects the fact that Company Directors not only supervise management, but also take on long-term roles in key decision-making, including corporate acquisitions.
Long-term incentives are a restricted share compensation designed to provide Company shares equivalent to the amount determined by a ratio to the job-based compensation pre-determined based on the person’s position once a restricted share allotment agreement has been signed between the Company and the person concerned, and the ratio to the job-based compensation is increased based on the person’s position. Restricted share compensation is designed to provide incentives for Maximization of Shareholder Value by Company Directors and Executive Officers, and promote further sharing of values with shareholders.


Analysis and evaluation of the effectiveness of the Board of Directors

The Company carries out an analysis and evaluation of the effectiveness of the Board of Directors on an annual basis.
As in FY2020, we evaluated the effectiveness of the Board of Directors in FY2021 based on a questionnaire formulated by a third-party organization, Board Advisors Japan, Inc., and interviews of individual Directors.

The results of the analysis and evaluation are as follows.
The Board of Directors of the Company will continue to take actions to improve the effectiveness of the Board of Directors with the goal of consistently achieving Maximization of Shareholder Value (MSV).

Issues and Initiatives for FY2021

Issues identified in FY2021
  1. Further upgrade of the monitoring model
  2. Enhancement of discussions on important agenda items
  3. Further reinforcement of audit functions
  4. Reinforcement of nominating functions
Initiatives in FY2021
  1. Shifted to a model that delegates business execution to the Group partner companies in Japan and other countries
  2. Summarized reports from business execution at meetings of the Board of Directors in the Co-Presidents’ report, which resulted in an increase in the percentage of meeting time used for strategic discussions
  3. Continued to use the Audit on Audit system and started operating a flexible audit policy
  4. Election of non-Japanese Directors who have management experience in business related to the Group businesses

Evaluation for FY2021 and Issues for FY2022

Guidelines for evaluations

Subjects

All Directors in FY2021 (8 Directors)

Method

Questionnaire and individual interviews using Board Advisors Japan Inc.

Questions

  1. Status of progress with resolving issues identified in the previous evaluation of the effectiveness of the Board of Directors
  2. Issues for the Board of Directors and the Nominating, Compensation, and Audit Committees

Evaluation process

  1. Distribute questionnaires to Directors
  2. Conduct interviews with each Director based on the questionnaire responses
  3. Summarize and analyze information in questionnaire responses and individual interviews
  4. Report the evaluation of the Board of Directors at a meeting of the Board of Directors and hold discussions about the evaluation
Overview of evaluation outcome

The evaluation confirmed that the Board of Directors of the Company is generally effective.

  • The Board of Directors is taking many actions in order to respond to the change in the Company’s management structure following the shift to the Co-President setup.
  • Agenda determination and facilitation by the new Board Chair has significantly contributed to the effectiveness of the Board of Directors.
  • The Board of Directors has enhanced deliberations on important issues and other matters by holding meeting much more often and as required.
  • The Board of Directors has laid the foundation for reinforcing the Board’s composition to improve the Board’s functions by taking actions such as adding board members with experience as the CEO of overseas companies.
  • The Board of Directors has made progress on issues identified in FY2020, such as reinforcing audit functions.
Issues requiring stronger initiatives in FY2022

Directors identified the following matters as issues to be addressed, and we have designated these matters as issues requiring stronger initiative in FY2022.

  • Enhancement of discussions on strategies for growth
  • Improvement of the operational efficiency of meetings of the Board of Directors
  • Enhancement of contributions by Independent Directors
  • Enhancement of functions of the secretariat for the Board of Directors
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