Corporate Governance

Policies on remuneration for Members of the Board of Directors

1. Basic policy

The remuneration for Nidec’s directors is determined based on the following policy, to enhance the company’s global competitiveness and secure the sustainable growth of its businesses.

• Increase motivation toward improving corporate value;
• Contribute to securing talented managerial human resources; and
• Ensure that the level of the remuneration is appropriate for the scale and area of Nidec’s businesses.

2. Composition of the remuneration

• Outside Members of the Board of Directors (excluding those who are members of the Audit and Supervisory Committee)
  Fixed remuneration
• Members of the Board of Directors (excluding those who are Outside Members of the Board of Directors and members of the Audit and Supervisory Committee)
  Fixed remuneration : Variable remuneration (bonuses) : Performance-linked share-based remuneration = 3:1.5:1

Reflecting ESG targets in performance-linked compensation for directors

From 2024, a performance-linked coefficient will be incorporated into the performance-linked share-based remuneration for directors (excluding the Founder and Chairman of the Board, outside members of the Board of Directors, and directors who are members of the Audit, etc. Committee) in accordance with the degree of achievement of performance targets in a single fiscal year, etc. The degree of achievement of ESG targets will be determined based on the ESG rating or score of the Company by MSCI, FTSE, and CDP, and will be reflected in the performance-linked coefficient.

3. Procedure to decide the remuneration amounts

The amounts of fixed and variable remunerations for individual directors (excluding members of the Board of Directors who are members of the Audit and Supervisory Committee) are determined by the Board of Directors based on reports submitted by the Remuneration Committee, which is a voluntary advisory body, in accordance with the criteria specified by this policy. Similarly, the details of the performance-linked share-based remuneration are determined by the Board of Directors based on reports submitted by the Remuneration Committee.

Total amount of remuneration by category of directors and by type of remuneration, and the number of eligible directors

*The introduction of the performance-linked share-based remuneration system was resolved at the 45th Annual General Meeting of Shareholders held on June 20, 2018. The amounts of expenses recorded for the fiscal year under review according to the Japanese standard are provided above. Outside members of the Board of Directors are not covered by the system.

4. Forfeiture, etc. of remuneration (clawback/malus)

The amounts of fixed and variable remunerations may be Outside Members of the Board of Directors 2 3 reduced if the recipient has caused serious damage to the company by obtaining the consent of the recipient. Based on the performance-linked share-based compensation plan, if any individual to be issued shares Chairperson Internal Member of the Board of Directors should, on or after the day when his/her right to receive compensation is finalized, commit an illegal action such as a material violation of his/her duties or internal rules/ regulations, the company may request that the individual pay restitution.

❺Sustainability Committee

The Sustainability Committee is headed by Takako Sakai, Outside Member of the Board of Directors and consists of two internal members and three outside members of the Board of Directors. It oversees business operations related to sustainability and reports to the Board of Directors. The Sustainability Committee meets once every quarter.

❻Various committees

❼Monthly Executive Meeting

The Monthly Executive Meeting is a meeting where the CEO and all the other executives gather to discuss high-priority issues to ensure that all executives share the same level of understanding on the Nidec Group’s direction.

❽Executive Management Meeting

The Executive Management Meeting is held twice a month and, as the decision-making body for the execution of business, it deliberates on matters to be discussed at the Board of Directors’ Meeting and important management issues in advance.

Support systems for Outside Members of the Board of Directors

The General Affairs Department, which acts as the secretariat for the Board of Directors, supports the Outside Members of the Board of Directors. The General Affairs Department provides the outside directors with the company’s information in a timely manner, and corresponds to their inquiries through day-to-day communication. With regard to the meetings of the Board of Directors, the General Affairs Department provides all members of the Board of Directors with materials related to the proposals for the meetings and accounting information, at the latest one day before the day of the meeting. In addition, assistance is provided by the Corporate Administration & Internal Audit Department, Nidec’s internal audit department, to Outside Members of the Board of Directors who are Audit and Supervisory Committee Members. When a meeting of the Audit and Supervisory Committee is held, meeting notices are sent out to all the Audit and Supervisory Committee Members by three days prior to the day of the meeting, while documents related to the proposals to be deliberated in the meeting of the Audit and Supervisory Committee are sent to the members, at the latest one day before the meeting. After a meeting of the Audit and Supervisory Committee, meeting minutes are sent to all Audit and Supervisory Committee Members. Furthermore, for Outside Members of the Board of Directors who are Audit and Supervisory Committee Members, various information is reported and provided as necessary by fulltime Audit and Supervisory Committee Members and Nidec’s executive officers.
Outside members of the Board of Directors who are not members of the Audit and Supervisory Committee have informal meetings with the Audit and Supervisory Committee members, where various information is provided by Nidec’s executive officers. They also conduct on-site inspections of the business sites and group company in Japan, in person or online.

Internal control

Basic stance

The Nidec Group commits itself to enhancing its management soundness and transparency by establishing a compliance system generally required of a listed company in Japan, and clarifying its risk management responsibilities. Specifically, through the auditing activities of the Corporate Administration & Internal Audit Department, the Group aims to maintain and improve the effectiveness of its internal control over financial reporting required by Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act. In addition, the Legal & Compliance Department, the Risk Management Committee, and the Information Security Committee are organized under the Board of Directors, under which the Legal & Compliance Office, the Risk Management Office, and the Information System Department, are placed as the secretariat respectively, working to create a corporate culture and enhance management systems for internal control.

Target

Materiality

Actions

Nidec Group companies’ corporate governance

Nidec Group companies act based on the Nidec Corporation’s business philosophies and policies, and are part of the Nidec Corporation’s internal control system. Nidec Corporation dispatches and seconds its executives and employees to its consolidated subsidiaries. The companies respectively consider the opinions of experts and others, and discuss sufficiently before making executive decisions based on each company’s situation, to secure its independency.

Cross-shareholding

Policy for cross-shareholding

Nidec holds shares in the companies that Nidec has relationships with in terms of trading and cooperation in its business and other areas, when it judges that such shareholding contributes to the company’s corporate value expansion through stabilization of its business from a medium-to-long-term perspective by maintaining and strengthening its relationship with those companies. Nidec assesses its cross-held shares individually at the Board of Directors meeting every year, on not only qualitative aspects such as the purpose of the shareholding, but also on quantitative aspects such as the benefits that can accrue through the shareholding from the perspective of economic rationality. According to the results of the assessment, Nidec intends to reduce the number of shares it holds if the cross-held shares are not expected to bring significant benefits.

Criteria for exercising voting rights for cross-shareholding

With regard to the exercise of voting rights in relation to cross-shareholdings, Nidec makes comprehensive decisions to vote for or against individual proposals to serve the investees’ sustainable growth from the perspective of whether appropriate governance and compliance structures are in place at investee companies.

(Basic views on exercising voting rights)
With regard to the individual proposals submitted to the shareholders’ meetings of the companies Nidec invests in, Nidec decides to vote for or against after confirming the following points: whether the proposals suit the purposes of the shareholding which are to maintain and strengthen the trade and cooperation relationships through medium-to-long- term investment; and particularly, whether there are any circumstances that might lead to undermining of the shareholders’ value due to the restructuring of organizations, including asset transfer and mergers. Nidec opposes all proposals that are considered to violate the law or constitute antisocial behavior, in all circumstances.