About Directors, Independent Directors, and the Board of Directors
The Company has established a corporate governance system suited to the businesses of the NIPPON STEEL Group in order to achieve the sound and sustainable growth of the NIPPON STEEL Group and increase its corporate value over the medium- to long-term, in response to the delegation of responsibilities by and trust of all stakeholders, including its shareholders and business partners.
- Basic Structure of Corporate Governance
- Corporate Governance Relationship Diagram
- Policy on Strategic Shareholdings
- About Directors, Independent Directors, and the Board of Directors
Corporate Governance Report
Board Policies and Procedures in Determining the Compensation of Directors
1.Content of policies
The policies regarding the decisions on the amount of compensation, etc. for Directors of NIPPON STEEL are as detailed in the following (a) and (b) below.
NIPPON STEEL abolished its retirement benefits for Directors in 2006. Furthermore, the policies relating to their bonuses were removed from the "Policies regarding the Decisions on the Amount of Compensation" for Directors, etc. in 2013.
(a) Directors (excluding Directors who are Audit & Supervisory Committee Members)
a) Basic policy, and composition of compensation
Compensation for the Directors (excluding Directors who are Audit & Supervisory Committee Members and Outside Directors) consists of (i) fixed monetary compensation, (ii) performance-linked monetary compensation, and (iii) performance-linked stock compensation.
The fixed monetary compensation and the performance-linked monetary compensation are paid monthly. The base amounts of fixed monetary compensation and performance-linked monetary compensation (i.e., the amount of compensation when the Company’s consolidated performance reaches a certain level) are determined for each Director’s position in consideration of compensation level commensurate with the skills and responsibilities required. The amount of performance-linked monetary compensation varies within a certain range based on the Company’s consolidated performance. The amounts of the fixed monetary compensation and the performance-linked monetary compensation for each Director are determined within the limit approved by the General Meeting of Shareholders.
The performance-linked stock compensation is based on a trust-type stock compensation system. Pursuant to the share delivery regulations established by the Board of Directors, each Director (excluding Directors who are Audit & Supervisory Committee Members and Outside Directors) is awarded points according to their position and the Company’s consolidated performance, taking into consideration compensation level commensurate with the skills and responsibilities required. The Director receives the delivery of the number of Company shares (those acquired by the trust established through the Company’s monetary contributions) equivalent to the number of points so awarded through the trust upon his or her retirement, as a general rule.
Compensation for Outside Directors (excluding Outside Directors who are Audit & Supervisory Committee Members) consists solely of fixed monetary compensation, which is paid monthly.
The amount of fixed monetary compensation for each Outside Director is determined within the limit approved by the General Meeting of Shareholders taking into consideration compensation level commensurate with the skills and responsibilities required.
b) Policy on performance-linked compensation
As indicators for performance-linked monetary compensation and performance-linked stock compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members and Outside Directors), the Company uses consolidated underlying annual profit/loss (which is consolidated business profit/loss excluding inventory valuation impact and other items, and recognized as representing the Company group’s actual profitability) in order to set an appropriate compensation commensurate with performance for the corresponding term, while taking into account other factors including the revenue targets in the medium- to long-term management plan.
c) Method to determine compensation for each individual
The specific amount of monthly compensation for each Director (excluding Directors who are Audit & Supervisory Committee Members) is determined by the Board of Directors after deliberation by the Nomination and Compensation Advisory Committee consisting of the Chairman, the President, and three (3) or more Outside Directors appointed by the President who serves as the chairman of the committee.
(b) Directors who are Audit & Supervisory Committee Members
Compensation for Directors who are Audit & Supervisory Committee Members consists solely of fixed monthly compensation. The Company determines the amount of monthly compensation for each Director within the limited amount approved by the General Meeting of Shareholders by considering the duties of the Director's position and whether the Director is full-time or part-time.
2.Methods of determining the policies
The policies described in a. above for Directors (excluding Directors who are Audit & Supervisory Committee Members) are determined by resolution of the Board of Directors, after the deliberation of the “Nomination and Compensation Advisory Committee,” while for Directors who are Audit & Supervisory Committee Members, the policies described in a. above are determined through discussion by Directors who are Audit & Supervisory Committee Members.
The Nomination and Compensation Advisory Committee conducts discussions on a wide range of topics including the system of Directors’ compensation and the appropriateness of the compensation levels by position, taking into account the survey results of directors’ compensation levels of other companies obtained from the third-party research organizations.
Independence Standards of Independent Directors
NIPPON STEEL decides the independence of Outside Directors in accordance with the independence standards set by the financial instruments exchanges in Japan (e.g. Tokyo Stock Exchange), considering each individual's personal relationship, capital relationship, business relationship, and other interests with NIPPON STEEL.
Outside Director's Relationship with NIPPON STEEL
| Name | Reasons of Appointment |
|---|---|
| Jun Sawada | 【Reasons for Appointment as an Outside Director】 NIPPON STEEL believes that Mr. Sawada is well-qualified for the position by his deep insight and ample experience in corporate management. 【Reasons for Designation as an Independent Director】 He does not conflict with either the independence standards or attribute information as set by each financial instruments exchange on which NIPPON STEEL is listed (e.g. the Tokyo Stock Exchange), and does not have any special interests in NIPPON STEEL. Because NIPPON STEEL believes that there is no possibility of a conflict of interest between him and the general shareholders as stated above, NIPPON STEEL has designated him as an Independent Director. |
| Miharu Koezuka | 【Reasons for Appointment as an Outside Director】 NIPPON STEEL believes that Ms. Koezuka is well-qualified for the position by her deep insight and ample experience in corporate management. 【Reasons for Designation as an Independent Director】 Ms. Koezuka had previously been an executive officer of Takashimaya Company, Limited, from which NIPPON STEEL purchases goods and other items. However, she is no longer an executive officer of the company. Since the amount of transactions with the said company accounts for less than 1% of the consolidated selling, general and administrative expenses of NIPPON STEEL, the said company is not a specified associated service provider of NIPPON STEEL. She does not conflict with the independence standards as set by each financial instruments exchange on which NIPPON STEEL is listed (e.g. Tokyo Stock Exchange), and does not have any special interests with NIPPON STEEL. Because NIPPON STEEL believes that there is no possibility of a conflict of interest between her and the general shareholders as stated above, NIPPON STEEL has designated her as an Independent Director. |
| Kenji Hiramatsu | 【Reasons for Appointment as an Outside Director】 NIPPON STEEL believes that Mr. Hiramatsu is well-qualified for the position by his deep insight regarding international affairs, economy, culture, etc., that he accumulated at the Ministry of Foreign Affairs as well as ample experience as Ambassador Extraordinary and Plenipotentiary and other important positions. 【Reasons for Designation as an Independent Director】 He does not conflict with either the independence standards or attribute information as set by each financial instruments exchange on which NIPPON STEEL is listed (e.g. the Tokyo Stock Exchange), and does not have any special interests in NIPPON STEEL. Because NIPPON STEEL believes that there is no possibility of a conflict of interest between him and the general shareholders as stated above, NIPPON STEEL has designated him as an Independent Director. |
| Aiko Sekine | 【Reasons for Appointment as an Outside Director】 NIPPON STEEL believes that Ms. Sekine is well-qualified for the position by reason of her deep insight as a certified public accountant possessing deep familiarity with corporate accounting, and her ample experience as a Partner of an audit corporation and Chairman and President of Japanese Institute of Certified Public Accountants and other important positions. 【Reasons for Designation as an Independent Director】 She does not conflict with either the independence standards or attribute information as set by each financial instruments exchange on which NIPPON STEEL is listed (e.g. the Tokyo Stock Exchange), and does not have any special interests in NIPPON STEEL. Because NIPPON STEEL believes that there is no possibility of a conflict of interest between her and the general shareholders as stated above, NIPPON STEEL has designated her as an Independent Director. |
| Sumiko Takeuchi | 【Reasons for Appointment as an Outside Director】 NIPPON STEEL believes that Ms. Takeuchi is well-qualified for the position by reason of the deep insight she has cultivated as a researcher in the fields of environment and energy at an NPO and universities, as well as her ample experience in corporate management 【Reasons for Designation as an Independent Director】 She does not conflict with either the independence standards or attribute information as set by each financial instruments exchange on which NIPPON STEEL is listed (e.g. the Tokyo Stock Exchange), and does not have any special interests in NIPPON STEEL. Because NIPPON STEEL believes that there is no possibility of a conflict of interest between her and the general shareholders as stated above, NIPPON STEEL has designated her as an Independent Director. |
The Evaluation of the Effectiveness of the Board of Directors
To improve the effectiveness of the Board of Directors, NIPPON STEEL analyzes, evaluates, and improves the effectiveness of the Board of Directors as follows.
1.Evaluation Process
NIPPON STEEL evaluates the effectiveness of the Board of Directors through a five-step process of (i) evaluation preparation, (ii) evaluation, (iii) analysis, (iv) deliberation, and (v) improvement. In the (ii) evaluation phase, we conduct quantitative analysis through a comparison of the number of agenda items submitted for deliberation or reported to the Board of Directors and the number of hours of deliberation, as well as the attendance rate and the number of opinions expressed by each Director at the meetings of the Board of Directors, with those of prior years, while conducting questionnaires and individual interviews with each Director to grasp specific issues.
2.Evaluation of Effectiveness for Fiscal Year 2025
NIPPON STEEL, at the Board of Directors meeting held in May 2026, analyzed and evaluated the effectiveness of the Board of Directors for fiscal year 2025, confirming that on the whole, the Board of Directors functions effectively because all of the matters submitted for deliberation or reported to the Board of Directors pursuant to the Companies Act or NIPPON STEEL’s rules (such as the formulation of management policies and management strategies, matters regarding important business strategies and risk management, status of the carbon neutrality and diversity & inclusion initiatives, and measures to secure human resources and support employee participation and career advancement) were discussed and deliberated among Inside and Outside Directors, from the point of view of improvement of NIPPON STEEL’s corporate value in the mid- to long-term and other various perspectives, with relevant information being appropriately provided in advance.
In addition, from the standpoint of further enhancing the effectiveness of the Board of Directors, based on the opinions voiced by each Director in the effectiveness evaluation in fiscal year 2025, NIPPON STEEL will make improvements to the proceedings of the Board of Directors meetings in order to increase efficiency of the meeting administration and prioritize the deliberations, and will continue to share a wide range of information and exchange opinions by actively using forums other than the Board of Directors meetings.