Engagement Between Outside Directors and Institutional Investors
Nissan’s corporate governance guidelines stipulate that the company conducts constructive dialogue and establishes mutually trustworthy relationships with its shareholders and investors, through the timely and appropriate disclosure of corporate information and continuous communication. As part of this initiative, Nissan held a roundtable with its outside directors for institutional investors.
Roundtable held in March 2021
Participants:25
representatives
from
17
institutional
investment
funds
Participating
outside
directors:
Yasushi
Kimura,
Chair
of
the
Board
of
Directors
Masakazu
Toyoda,
Chair
of
Nomination
Committee
Keiko
Ihara,
Chair
of
Compensation
Committee
Motoo
Nagai,
Chair
of
Audit
Committee
Bernard
Delmas
Andrew
House
Jenifer
Rogers
Venue:Online
Q&A
Please explain the status of improvement in governance and challenges. How do you evaluate the effectiveness of the BOD?
In
FY2019,
the
company
transitioned
to
a
three
statutory
committee
structure
and
the
committees
established
respective
policies
and
principles.
In
FY2020,
each
committee
is
functioning
more
strategically.
Active
discussions
are
taking
place
at
the
BOD
and
committees
with
the
involvement
of
diverse
members
and
close
communication
with
executives.
The
effectiveness
of
the
BOD
is
ensured.
Currently,
the
biggest
challenge
is
to
deliver
the
results
of
Nissan
NEXT.
The
BOD
is
holding
in-depth
discussions
regarding
the
performance
recovery
as
well
as
the
mid
to
long-term
strategies.
What are the challenges for the nomination committee? Please share the development plan for the next generation of leaders.
One
of
the
three
key
challenges
for
the
nomination
committee
is
to
develop
a
succession
plan
for
the
future
CEO.
About
a
year
ago,
we
began
identifying
requirements
for
the
future
CEO.
We
are
entering
the
final
stages
of
developing
the
program
and
expediting
the
process
to
execute
the
program.
Nissan
has
next
generation
leaders
with
great
potential.
How do you evaluate the company's efforts in addressing climate change? What kind of discussions are held at the BOD and how is it monitored by outside directors?
Climate change will become one of the top priorities going forward. Nissan announced to be carbon neutral by 2050 and there are many items to be completed by the 2030s, including electrification and innovation of production technology. Nissan will decide on a strategy to address climate change, while utilizing its strengths in electrification and core competencies.
As an outside director, what do you see are the key challenges for Nissan to get back to a sustainable growth trajectory and enhance corporate value for the long term?
The performance recovery is on track, but it is still insufficient for the long-term sustainability of the company. It is important to increase unit sales to achieve profitable growth. Therefore, it is necessary to consider the value proposition of the company, which needs to be encompassed in the new mid-term plan.
What do you pay attention to as an outside director regarding the three company Alliance and what has been discussed at the BOD?
As an outside director, we represent minority shareholders and protect their interests. Nissan has a policy to eliminate conflicts of interest; the company established a conflicts of interest elimination team to enforce this policy, which is headed by the chair of the audit committee. The Alliance is an important asset, and it is important that the company fully utilize the assets of the Alliance to enhance its corporate value. We will manage from a neutral standpoint by checking for conflicts of interest and monitoring benefits to Nissan’s minority shareholders.
Diversity is important not only at the BOD level but also for executives. How do you view this topic as an outside director?
The CEO/COO are actively involved in diversity and inclusion efforts, but the number of female workers are still small at gemba. Nissan is a leader in diversity and inclusion among Japanese companies. However, we need to discuss this at the BOD level and on the business execution side, including HR, in order to further enhance diversity in Japan.
Roundtable held in September 2020
Participants:
12
representatives
from
12
institutional
investment
funds
(2
sessions
with
6
persons)
Participating
outside
directors:
Yasushi
Kimura,
Chair
of
the
Board
of
Directors
Masakazu
Toyoda,
Chair
of
Nomination
Committee
Keiko
Ihara,
Chair
of
Compensation
Committee
Motoo
Nagai,
Chair
of
Audit
Committee
Venue:NISSAN
MOTOR
CO.,
LTD.
Global
Headquarters
Q&A
What has changed the most before and after the transition to the 3-committee structure?
BOD meetings used to be around 30 minutes but now last approximately 3 to 4 hours and 7 to 8 hours if pre-BOD meetings are included. Discussions have become more active due to the diversity of the board members.
How do you build an organization which can satisfy investors by realizing shareholder returns exceeding the cost of equity?
We will work toward enhancing sustainable profitability through the transition from quantity to quality, selection and concentration and maximizing the Alliance.
How were the outside directors involved in developing the transformation plan?
We discussed the plan not only at the monthly BOD meetings but also at the Independent Directors Committee and extraordinary BOD meetings. We provided our feedback on the plan, which was prepared by the management team, and checked for possible areas of conflicts of interest.
Are there any plans to develop a long-term vision and growth strategy?
We would like to proceed with the development and implementation of a long-term-vision for the next MTP as soon as possible. However, the content is most important. Technology is the key factor for the future corporate value of an automobile company and Nissan has a considerable amount of potential.
Are there any long-term KPIs such as ESG in executive compensation?
There is no specific ESG-related KPI but implementation of the Nissan Way is one of the factors in determining compensation. We designed the scheme to incorporate many factors including performance and the Nissan Way in a balanced manner.