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Corporate Information

Corporate Governance

Basic philosophy

The basic policy of the Company is to improve its corporate governance and maintain good and stable relationships with its stakeholders over the long term, in order to achieve sustainable growth of the Company and increase its corporate value over the medium-to-long term. Based on this policy, we will create structures that lead to the acceleration of decision-making and the strengthening of supervision by the Board of Directors and our business execution systems.

Initiatives on Corporate Governance by Nishimatsu Construction Co., Ltd.

For information about our policy on each principle of the Corporate Governance Code, please refer to Initiatives on Corporate Governance by Nishimatsu Construction Co., Ltd. For information about our initiatives, please refer to the Corporate Governance Report.

Initiatives for Strengthening Corporate Governance

Strengthening the corporate governance system is one of the highest priority management issues that we are tackling at Nishimatsu Construction. In FY2016, we transitioned into a company with an Audit and Supervisory Committee and worked to ensure the efficacy of the oversight functions of the Board by bringing in Audit and Supervisory Committee members as part of the Board. In FY2023, we established the Sustainability Committee and the Risk and Opportunity Management Committee to increase corporate value from a sustainability perspective. In FY2024, the Sustainability Strategy Meeting began convening. In FY2025, we established the Corporate Unit and reviewed the roles of each committee and the connections between them to enhance our system for the execution of business. We will continue to strive to further strengthen our corporate governance system.

Corporate Governance System

Composition of the Board of Directors and the Audit and Supervisory Committee

The Company's Board of Directors comprises of four executive directors and five directors who are Audit and Supervisory Committee members. The Audit and Supervisory Committee comprises one full-time internal director and four outside directors (wo have management experience at a listed company, and one has experience at an information and communications company). As such, all of these outside directors possess specialized knowledge in fields considered to be important for business management.
Currently, the percentage of outside directors on the Board of Directors is 44.4% and the percentage of female directors is 22.2%. Going forward, we will continue verifying the skill sets of those on the Board of Directors and will work to improve the efficacy of the Board.

Board of Directors' skill set

Selection Criteria for Director Candidates

  • Candidates for director shall be selected from those who have a wealth of knowledge, experience, and competence, and excellent character and high ethical standards.
  • Candidates for executive director shall be appointed from among people who have extensive knowledge and experience in the Company’s business, or who have superior knowledge of finance and accounting, etc.
  • People who are candidates for director (Audit and Supervisory Committee) who are judged to be capable of auditing and supervising appropriately, with emphasis on their expertise and background, will be appointed.
  • Candidates for outside director will be selected with an emphasis on independence, and those with specialized knowledge and experience in corporate management are selected. We also take into consideration the diversity of the Board of Directors.

Reasons for Appointing Outside Directors

Position Full Name Reason for appointment
Outside director
(Audit and Supervisory Committee member)		 Toshihiro Kubo Mr.Kubo possesses a wealth of experience during his tenure at Kubota Corporation, and he also possesses a wide range of knowledge cultivated as Representative Director of Kubota Corporation. We have appointed him as an outside director who is a member of the Audit and Supervisory Committee because we believe he is an appropriate person who can supervise our management from an objective point of view.
Outside directo
(Audit and Supervisory Committee member)		 Yayoi Ito In addition to her wealth of experience gained during her tenure at NTT Data Corporation and other companies, Ms.Ito possesses extensive knowledge of ICT. For these reasons, we deem her to be the appropriate talent for auditing and supervising Nishimatsu Construction's management from an objective point of view and appointed her as an outside director who is a member of the Audit and Supervisory Committee.
Outside directo
(Audit and Supervisory Committee member)		 Hajime Oshita Mr.Oshita has a wealth of experience from his time at JFE Engineering Corporation, and possesses broad knowledge cultivated in his role as representative director, president and CEO of JFE Engineering and director of JFE Holdings, Inc. Accordingly, we determined that he is an appropriate person who can audit and supervise the Company's general operations from an objective viewpoint, and have appointed him as an outside director who is a member of the Audit and Supervisory Committee.
Outside directo
(Audit and Supervisory Committee member)		 Misako Kikuchi Ms.Kikuchi has a wealth of experience gained during her tenure at MITSUI & CO., LTD. and possesses extensive knowledge cultivated as a president and representative director of its subsidiary, as the above past experience shows. Accordingly, the Company determined that she is an appropriate person who can audit and supervise the Company's general operations from an objective viewpoint, and has appointed her as an outside director who is a member of the Audit and Supervisory Committee.
Criteria for Determining the Independence of Outside Directors

If any of the following apply for a candidate for outside director, we determine that independence with the Company is not guaranteed.

  1. 1Persons affiliated with the Nishimatsu Construction Group
    • Worked for the Company or a subsidiary of the Company
    • A spouse or relative within the second degree or closer was a director, auditor, executive officer or management personnel at the Company within the five years prior to the candidate starting at their position.
  2. 2Persons affiliated with a major transaction partner
    • Persons who were a director, executive officer, or management personnel at one of our transaction partners with which the Company has a transaction amount that amounts to 2% or more of the Company's consolidated net sales in any of the three business years leading up to taking up their position at the Company. Or, persons for which this applied in the past, and five years have not elapsed since they left such position.
    • Persons who were a director, executive officer, or management personnel at a company which is a major transaction partner with us, which had a transaction amount with the Company that amounted to 2% or more of that company's consolidated net sales in the any of the three business years leading up to taking up their position at the Company. Or, persons for which this applied in the past, and five years have not elapsed since they left that position.
  3. 3Persons affiliated with a major creditor to the Company
    • Persons who were a director, executive officer, or management personnel at a major lending partner in the business report from the most recent business year. Or, persons for which this applied in the past, and five years have not elapsed since they left such position.
  4. 4Persons affiliated with attorneys or certified public accountants
    • Employees of an audit firm for the Company, persons who led auditing for the Company, or persons for whom these applied in the five years before taking up their position at the Company
    • Attorneys, certified public accountants, or consultants who received compensation from the Company of 5 million yen or more in the three years leading up to taking up their position at the Company, or persons for whom these applied in the five years before taking up their position at the Company (Includes persons in corresponding positions at corporations)
  5. 5Persons affiliated with donation recipients
    • Persons affiliated with a university or group to which the Company made donations exceeding 10 million yen on average in the three years leading up to joining the Company
  6. 6Major shareholders
    • Shareholders who possess shares amounting to 10% or more of the voting rights (if the shareholder is a corporation, then it applies to its director, management personnel, etc.)
  7. 7Other
    • If a mutual dispatch of directors is taking place
    • If another important interest with the Company is recognized

Analysis and Evaluation of the Effectiveness of the Board of Directors

The Company, to confirm whether the Board of Directors is appropriately carrying out its role in the Company's sustainable growth and the increase of its corporate value, has stipulated in the "Initiatives on Corporate Governance by Nishimatsu Construction Co., Ltd." that it shall make efforts toward enhancing the functions of and improving the Board of Directors by performing analysis and evaluation of the effectiveness of the Board of Directors once every year. Based on the policies for initiatives, the Company conducted evaluations of the effectiveness of the Board of Directors over the period as described in (1), (2) below. Based on the results of the evaluation shown in (3), (4) below, the Board of Directors confirmed to continue its initiatives toward improving the effectiveness of the Board of Directors as described in (5) below in order to further advance corporate governance.

(1)Evaluation Process
The Audit and Supervisory Committee led in creating a questionnaire given to all members of the Board of Directors. The counting process of the collected questionnaires was outsourced to a third-party institution to ensure anonymity in the survey. An analysis and evaluation were conducted based on the compiled questionnaire results and were then reported to and discussed by the Board of Directors.
　Period covered by questionnaire : April 2024-March 2025
　Consideration of questionnaire items : December 2024-January 2025
　Questionnaire response (anonymous) : January-February 2025
　Questionnaire results compilation and analysis : March 2025
　Report to and discussion by Board of Directors : March and May 2025


(2)Questionnaire Evaluation Items
The questionnaire evaluated the following items: "Roles and functions of the Board of Directors," "Composition and size of the Board of Directors," "Operation of the Board of Directors," "Coordination with audit institutions," "Relationship with outside directors," and "Relationship with shareholders and investors." These items were determined after taking into account matters reported to the Board of Directors by the Audit and Supervisory Committee in the evaluations of the effectiveness of the Board of Directors conducted in the previous fiscal year


(3)Overview of Evaluation Results
The evaluation results confirm the effectiveness of the Company's Board of Directors is being maintained, regardless of the change of the Chair, with frank discussions taking place due to smooth proceedings conducted by the Chair and active commenting by individual directors.
In particular, the fact that opportunities are given to outside directors to adequately understand the Company to provide appropriate advice and supervision as well as the fact that discussions about nomination and compensation are held appropriately are confirmed as being the strengths of the Company's Board of Directors.


(4)Response to Issues Identified in Previous Questionnaire
The following notes respond to items identified as the main issues in the previous fiscal year.
  1. 1Considerations regarding how the Board of Directors should be: The Board of Directors concluded that the members generally share their visions of how the Board of Directors should be. At the same time, the need to further discuss how much weight should be placed on the supervisory and decision-making (execution of business) functions of the Board of Directors has been identified.
  2. 2Training for officers: The number of training sessions, etc. increased. At the same time, the need to enhance training has been identified.


(5)Future Initiatives Taking into Account Issues
To further advance the effectiveness of the Board of Directors, the Company will continue to address the issues identified in the previous questionnaire and has acknowledged the following to be matters of particular importance.
  1. 1Enriching discussions about how the Board of Directors should be
  2. 2Discussing medium- to long-term issues regularly (creating a discussion schedule)
  3. 3Building a system to ensure that identified issues are properly addressed
  4. 4Flexibly managing risk to grow sustainably

The Board of Directors will continue discussions in the future.

Director Compensation

Overview of our director compensation (excluding Audit and Supervisory Committee members)

Compensation for the executive directors comprises base compensation and performance-linked compensation. Compensation for the non-executive directors shall be limited to base compensation.
Base compensation, as fixed (monthly) compensation determined in accord with the director’s position, is calculated taking into account Nishimatsu Construction’s employees’ salary levels, standard salary levels in the business community, and other factors.
Performance-linked compensation fluctuates according to the degree to which performance targets were met. It includes a base level of compensation in accord with each director’s position, with this base level multiplied by a performancelinked coefficient to calculate the final amount. To calculate the final amount, evaluation indices covering the director’s contribution to corporate value are set for each position and job title, and the degree to which performance targets were met each fiscal year.
Performance-linked compensation is paid partly in cash, as a short-term incentive, and partly in stock, as a long-term incentive. The cash portion is paid as a bonus in July of each year and the stock portion is conferred every June in the form ofconversion points for the Board Benefit Trust. When a director retires from his or her position as director, cumulative points are converted into shares of stock and delivered to the beneficiary.
The ratios of base compensation and performance-linked compensation are appropriately determined taking into account Nishimatsu Construction’s management strategies, business environment, and the level of difficulty of achieving job responsibilities and targets, while also referencing relevant changes at other companies in our industry. To enhance the incentives to increase corporate value over the medium-to-long term, base compensation was reduced and performance-linked compensation was increased in FY2025, resulting in a ratio of base compensation to performance-linked compensation of approximately 7 to 3. Within performance-linked compensation, there is generally a two-to-one ratio of cash-based compensation to stock-based compensation.
Based on these policies, the President drafts a preliminary proposal, then consults with the Nominating and Compensation Committee, whose input is taken into account and decided on by the Board of Directors (Base compensation and performance-linked compensation are determined in March and June, respectively, each year).

Compensation details
Category Performance-linked indices Overview of payment method
Base compensation - Base amount paid in cash
Short-term incentives Performance-linked
bonus
  • Group-wide performance (operating income, profit attributable to owners of parent)
  • Business division performance (profits)
  • The president’s evaluation of performance (ROE, PBR, enhancing corporate value, environmental management (reducing CO2 emissions), and action indicators to prevent accidents)
 Amount calculated by multiplying the base amount by a performance-linked coefficient, paid in cash
Long-term incentives Performance-linked
equity compensation
(Board Benefit Trust)		 Points conferred (calculated by multiplying the base amount by a performance-linked coefficient); cumulative points converted into an equivalent amount of stock when the director retires

Compensation conceptual image

Overview of compensation for directors who are Audit and Supervisory Committee members

Directors who are Audit and Supervisory Committee members receive only base compensation that takes into consideration the compensation of directors who are not Audit and Supervisory Committee members, as well as the standard salary levels in the business community. Said base compensation is determined through discussions among all directors who are Audit and Supervisory Committee members.

Directors' compensation（FY2024）
Category Paid personnel Base compensation Performance-linked compensation
(cash-based compensation)		 Performance-linked compensation
(non cash-based compensation)		 Total amount of compensation, etc.
Directors (excluding Audit and Supervisory Committee members)
(of which outside directors)		 7
(1)		 ¥215million
(¥10million)		 ¥47million
(-)		 ¥32million
(-)		 ¥295million
(¥10million)
Directors (Audit and Supervisory Committee Members)
(of which outside directors)		 7
(5)		 ¥58million
(¥40million)		 -
(-)		 -
(-)		 ¥58million
(¥40million)
Total
(of which outside directors)		 14
(6)		 ¥273million
(¥51million)		 ¥47million
(-)		 ¥32million
(-)		 ¥353million
(¥51million)
  1. ※1The total amount of performance-linked compensation (cash-based compensation) indicates the amount of provision for directors’ bonuses in FY2024. In addition, the total amount of performance-linked compensation (noncash-based compensation) indicates the amount of provision for directors’ stock benefits in FY2024 based on the “Board Benefit Trust (BBT),” a performance-linked stock compensation plan that uses a trust.
  2. ※2The compensation above includes the compensation paid to two directors (Audit and Supervisory Committee members) who retired at the conclusion of the 87th annual general meeting of shareholders held on June 26, 2024.