NOF introduced the Operating Officer system with a view to architecting a management system that can appropriately and promptly respond to changes in the business environment. It separated the decision-making and the business executing functions of management with the intention of strengthening the decision-making and supervision functions of the Board of Directors, while at the same time enhancing the efficiency of the business executing system under the authorization of the Representative Director.

The Board of Directors, consisting of ten members including five independent Outside Directors, holds one regular meeting every month and extraordinary sessions are also convened as required. Besides deciding on important matters set forth by laws, regulations, the articles of incorporation, and the rules of the Board of Directors, the Board supervises the state of business execution.  Any important matter to be referred to the Board of Directors goes through preliminary deliberation, intended to ensure more appropriate decision making, by the Executive Committee from time to time attended by Directors who concurrently serve as Operating Officers, Operating Officers with a title, standing Audit and Supervisory Committee members, and heads of the organizational unit or units concerned, or the weekly Strategic Meeting as a rule attended by the Directors who concurrently serve as Operating Officers and Operating Officers with a title.

The Audit and Supervisory Committee consists of four Directors, including three independent Outside Directors. In accordance with auditing policy and standards, the standing Audit and Supervisory Committee members play a leading role in attending important meetings including meetings of the Executive Committee, implementing audits through inspection of important documents, and supervising the business execution of Directors. In addition, with regard to internal control, the Committee receives reports on audit plans and audit results conducted by the Internal Control Office, our Internal Audit Department, and confirms the situation to aim for effective collaboration, including giving instructions for investigations as necessary. In addition, the Committee holds regular or ad-hoc meetings with the Accounting Auditor to exchange relevant information, including receiving reports on audit plans and audit results.

In order to improve the oversight function of the Board of Directors and strengthen the corporate governance system, the Nomination Committee, which is a voluntary advisory committee to the Board of Directors, has been established. In consultation with the Board of Directors, the Nomination Committee deliberates and reports to the Board of Directors on matters such as the election and dismissal of directors (excluding Audit Committee members), the selection and dismissal of representative directors, and succession planning for such directors. The committee is chaired by an independent Outside Director, and consists of five independent Outside Directors and two Internal Directors. This ensures the committee’s independence and objectivity. In fiscal 2024, the Nomination Committee met four times, with all members attending each meeting.

In order to improve the oversight function of the Board of Directors and strengthen the corporate governance system, the Compensation Committee, which is a voluntary advisory committee to the Board of Directors, has been established. The Compensation Committee, in consultation with the Board of Directors, deliberates and reports to the Board of Directors on matters related to the compensation of Directors, excluding Audit and Supervisory Committee members. The committee is chaired by an independent Outside Director, and consists of five independent Outside Directors and two Internal Directors. This ensures the committee’s independence and objectivity. In fiscal 2024, the Compensation Committee met four times, with all members attending each meeting.

Ernst & Young ShinNihon LLC has been selected as the Accounting Auditor.

Each NOF Group company has developed an internal control system for ensuring adherence to laws and regulations, the articles of incorporation, and various internal rules of the company, and to ensure the appropriateness of operations. Specialist committees conduct audits and investigations to reinforce these efforts.
In addition to regular meetings, the committees convene extraordinary sessions as required to analyze risks, consider countermeasures, analyze and evaluate matters under their jurisdiction, and report to the Board of Directors.

In addition to audits conducted by each risk-related committee, NOF has established the Internal Control Department as our Internal Audit Department to audit the execution of operations encompassing all management activities and report the results to the Representative Director and the Board of Directors. Moreover, these results are also reported to the Audit and Supervisory Committee as necessary for evaluation and receiving necessary instructions.
The Internal Control Department, Audit and Supervisory Committee, and Accounting Auditor strive to mutually cooperate by sharing information on their respective annual audit plans and audit results, in addition to exchanging opinions at regular or ad-hoc meetings.

The Sustainability Committee was established to promote and develop sustainability activities. The Committee deliberates and approves sustainability activity plans submitted by each department and oversees the activities of the specialist committees and related departments. The Committee also requests activity reports from and provides advice to affiliate companies through the specialist committees and related divisions.

The Compliance Committee was established to promote compliance and roll out corporate activities with high ethical standards. The Committee deliberates and plans matters related to compliance, reports to the Board of Directors, and rolls out the formulated content internally and at affiliated companies.

The Risk Management Committee was established to promote risk management. The Committee deliberates and plans basic policies on risk management, reports to the Board of Directors, and rolls out the formulated policies internally and at affiliated companies.

The RC Committee was established to ensure implementation of Responsible Care policies and guidelines. The Committee discusses and deliberates support plans and improvement measures regarding important matters concerning Responsible Care activities, submits reports to the President, and rolls out the formulated content to related parties inside and outside the Company.

The Quality Management Committee was established to ensure the implementation of our Quality Policy in order to “provide the highest quality products and services.” The Committee discusses and deliberates important matters concerning quality management, submits reports to the President, and rolls out the formulated content internally and at affiliated companies.

【Number of meetings of each committee in FY2024】

• Sustainability Committee：1meeting
• Compliance Committee：5meeting
• Risk Management Committee：4meeting
• RC Committee：2meeting
• Quality Management Committee：2meeting

Meetings are held regularly, with ad-hoc meetings held when required

　　　　　　　　　　　Skills Table

Compensation of directors, excluding those who serve as Audit and Supervisory Committee members, is set to reward performance and other achievements through an appropriate level of compensation while promoting sustainable growth and medium- to long-term enhancement of corporate value based on our Corporate Philosophy. Decisions on such compensation are made through a fair and transparent process.
Compensation consists of monthly compensation, bonuses, and stock-based compensation. In order to maintain incentives, at least 40% of the compensation paid is set as performance-linked compensation (bonuses, ESG indicators-linked compensation, stock compensation). Furthermore, compensation for Outside Directors is limited to fixed compensation. In addition, the compensation system, compensation levels, individual compensation, and other such matters are deliberated by the Compensation Committee.

Regarding the policy on compensation of Directors (excluding Audit and Supervisory Committee members), after undergoing deliberation by the Compensation Committee, an advisory body to the Board of Directors, a resolution on partial revision of the policy was reached at the Board of Directors meeting held on January 27, 2023.

Calculation methods, etc. of fixed compensation for Directors are deliberated by the Compensation Committee and resolved at the Board of Directors meeting. In addition, with regard to the determination of the specific details of the amount of fixed compensation for each individual director, excluding members of the Audit and Supervisory Committee, a resolution is passed by the Board of Directors after deliberation by the Compensation Committee.

Bonuses

Calculation methods, etc. of bonuses for Directors (excluding Audit and Supervisory Committee members and Outside Directors) are deliberated by the Compensation Committee and resolved at the Board of Directors meeting.  The calculation method of the said bonuses is based on consolidated operating income, an important indicator related to the Group’s business performance evaluation. The base amount is multiplied by a designated coefficient determined for each Director position to calculate his or her bonus. The Compensation Committee verifies this calculation method and the amount paid in each term.

ESG indicators-linked compensation

At the Board of Directors meeting held on January 27, 2023, it was decided to use a calculation method utilizing the level of achievement of ESG indicators and other factors for a portion of the compensation (monthly compensation) for Directors (excluding Audit and Supervisory Committee members and Outside Directors). The method for calculating this compensation is based on ESG indicators related to the NOF Group’s efforts to address sustainability challenges. It is calculated by multiplying a standard amount, which is set for each Director position, by an evaluation coefficient that reflects the degree of achievement. The Compensation Committee verifies this calculation method and the amount paid in each term.

Stock compensation

Based on the resolution of the 96th Annual General Meeting of Shareholders held on June 27, 2019, a new performance-linked stock compensation plan (Board Benefit Trust) was introduced. At the 98th Annual General Meeting of Shareholders held on June 29, 2021, NOF transitioned to being a company with an Audit and Supervisory Committee. In conjunction with this transition, the plan applies to Directors who concurrently serve as Operating Officers and Operating Officers with a title (excluding Outside Directors and Audit and Supervisory Committee members,  hereinafter collectively “Directors, etc.”).
For each fiscal year, the Directors, etc. are awarded points, the number of which is to be decided taking into account their respective positions, achievement level of their performance, etc. based on the Officer Stock Distribution Rules. Each point awarded to the Directors, etc. is converted into one share of NOF’s common stock at the time of the distribution of NOF’s shares, etc. (In the event of a stock split, allotment of shares without contribution, or a consolidation of shares, the maximum number of points, the number of points already granted, and the conversion ratio will be reasonably adjusted in accordance with such ratio, etc.) The number of points held by a Director, etc., which will be used as the basis for the distribution of NOF’s shares, etc., is, in principle, the number of points awarded to the said Director, etc. by the time of his/her retirement.
The Officer Stock Distribution Rules, which determine the calculation method, etc., which considers such matters as the respective positions and achievement level of performance targets of the Directors, etc., are deliberated by the Compensation Committee and then resolved by the Board of Directors.

[Calculation methods of points awarded]

The number of points awarded is calculated by multiplying the number of position-based points, decided for each position, by the performance evaluation coefficient, which is determined by the achievement level, etc. of consolidated operating income and ROE in the Mid-term Management Plan, important indices for the evaluation of the NOF Group’s business performance.

[(Formula) Number of position-based points × Performance evaluation coefficient]

[Distribution methods]

Distribution takes place after the retirement of Directors, etc., and the Company’s shares and cash, equivalent to the Defined Number of Points, 
are distributed (when distributed as survivor benefits, cash is distributed).

[Achievement level of the targets for consolidated operating income and ROE during the fiscal year]

The planned target for consolidated operating income in the 2025 Mid-term Management Plan is ¥46.0 billion (final year of the said plan). The actual result of consolidated operating income in the fiscal year under review was ¥45.3 billion, representing a 102.4% achievement level in the fiscal year, calculated according to the level of growth in the period of the 2025 Mid-term Management Plan. In addition, the ROE target for the final fiscal year of the 2025 Mid-term Management Plan was 12% or more, and the actual ROE for this fiscal year was 13.4%, representing a 111.9% achievement level of the target.

For matters regarding the compensation system and policy concerning Directors, matters regarding the calculation method in determining specific compensation amounts for Directors, and individual compensation amounts, etc., the Compensation Committee conducts deliberations from a multi-faceted perspective, including compliance with the policy on compensation of Directors. The Board of Directors respects the details of the deliberations and deems that they are aligned with the said policy. Furthermore, the Compensation Committee consists of five Outside Directors and two Internal Directors, and an independent Outside Director serves as the chairperson.

1. The maximum amount of compensation for Directors (excluding Audit and Supervisory Committee members) was resolved to be ¥360 million per year (including ¥40 million per year for Outside Directors, but excluding remuneration received as employees) at the 98th Annual General Meeting of Shareholders held on June 29, 2021.  There were six Directors as of the conclusion of the aforementioned Annual General Meeting of Shareholders (including two Outside Directors).
2. Separate from the maximum amount of compensation for Directors mentioned in point 1 (excluding Audit and Supervisory Committee members), based on the resolution of the 98th Annual General Meeting of Shareholders held on June 29, 2021, the Company will contribute up to a maximum of 12,000 points to the performance-linked stock compensation plan (Board Benefit Trust) for Directors who concurrently serve as Operating Officers, per fiscal year (each point awarded to the Directors, etc. is converted into one share of the Company’s common stock at the time of the distribution of the Company’s shares, etc.). There were four Directors who concurrently served as Operating Officers as of the conclusion of the aforementioned Annual General Meeting of Shareholders.
   NOF conducted a split of common stock at the ratio of one share to three shares effective April 1, 2024. Therefore, from that date onward, the maximum total number of points granted per fiscal year for Directors who concurrently serve as Operating Officers is set at 36,000 points.
3. The maximum amount of compensation for Directors who are Audit and Supervisory Committee members was resolved to be ¥80 million per year at the 98th Annual General Meeting of Shareholders held on June 29, 2021. There were four Directors who concurrently served as Audit and Supervisory Committee members as of the conclusion of the aforementioned Annual General Meeting of Shareholders.

NOF analyzes and evaluates the effectiveness of the Board of Directors once a year, in principle. Since fiscal 2016, NOF has implemented an effectiveness evaluation every year. In fiscal 2024, the Company employed a questionnaire form crafted by an external institution, and implemented the Board of Directors effectiveness evaluation questionnaire by surveying all 10 Directors.
By combining a five-level rating scale and open-ended questions, the questionnaire aimed to understand current conditions and identify challenges from both aspects of quantitative and qualitative evaluation. As the questionnaire was answered by sending responses directly to the external institution, anonymity was ensured. The tallying and analysis of the questionnaire forms was also delegated to an external institution, for the purpose of securing objectivity and further increasing the effectiveness of the Board of Directors going forward. Based on the tallying and analysis of the results of the external institution, the Board of Directors conducted a deliberation and evaluation in April 2025.

• Roles and functions of the Board of Directors (5 questions)
• Scale and composition of the Board of Directors (4 questions)
• Operation of the Board of Directors (6 questions)
• Improvement of internal control (3 questions)
• Use of Outside Directors (3 questions)
• Relationship with shareholders and investors (3 questions)
• Degree of improvement (1 question)
• Open-ended section (3 questions)

The NOF Board of Directors ensures a suitable diversity of knowledge, experience, and abilities necessary in light of management strategies and provides appropriate opportunities to utilize the experience and expertise of Outside Directors. It was confirmed that based on the Corporate Philosophy and values of the NOF Group, the Board of Directors is generally operating appropriately, with Directors freely and openly expressing their opinions while leveraging their careers and expertise, open and active discussions taking place as a Board of Directors, and ensuring of sufficient time for deliberation on important matters.
The Board of Directors earnestly discussed the issues identified in the fiscal 2023 effectiveness evaluation, such as cost of capital-conscious management and non-financial information including sustainability, engaged in dialogue with the executive side, and focused on improving the situation.

It was confirmed that the Board will continue to focus on realizing cost of capital-conscious management, while also considering and discussing measures to further enhance corporate value.

Competitive and proprietary transactions between NOF and its Directors are subject to approval by the Board of Directors under the Rules of the Board of Directors.

There are no cases of mutual appointments.

NOF holds shares for policy purposes only when it deems that they contribute to enhancing the Company’s corporate value over the medium to long term through smooth business operations and the maintenance and strengthening of business relationships. Under the basic policy of reducing cross-shareholdings that are considered to be of unsubstantial significance, the Board of Directors examines the risks and capital costs, etc. involved in holding each issue and reviews the propriety of holding it on an annual basis. As a result of selling some of our cross-shareholdings in fiscal 2024, we achieved our aim of reducing the ratio of cross-shareholdings to consolidated net assets to 15% or less. In fiscal 2025 and beyond, we will continue to reduce our cross-shareholdings.
In the event that a shareholder that holds NOF shares for policy purposes expresses the intention to sell NOF shares or another such action, NOF will not prevent the shareholder from doing so by, for example, suggesting that the transaction be curtailed. NOF will not engage in transactions with shareholders that hold NOF shares for policy purposes that are detrimental to the Company or the common interests of shareholders, such as continuing a transaction without fully verifying the economic rationality for the transaction.

There is(are) no controlling shareholder(s).

As NOF does not currently have a parent company or major shareholder holding 10% or more of its shares, no approval procedures have been established for transactions with these shareholders.