Connecting Markets East & West
ESG (Environment, Social and Governance) initiatives
Nomura Holdings, Inc.
December 2019
© Nomura
Agenda
1
2
3
4
Introduction
Nomura's ESG (Environment, Society and Governance)
Strengthening the Corporate Governance System
Activities of the Board of Directors
1
Nomura's mission
Social contribution through risk capital cycle
OUTCOME
Preparing for | Investment |
the future | (reinvestment) |
Resolve social
issues
Prosperous | Individuals' asset | Capital | |||||||
lives | formation | markets | |||||||
資本市場 | |||||||||
Asset building | |||||||||
Succession to | |||||||||
the next | Improving | Capital gains, | |||||||
generation | living | dividends and | |||||||
standards | interest income | ||||||||
ReturnsProfits
Finance by
corporates and public
bodies
Financing Investment
OUTCOME
Resolve social
issues
Promote
innovations
Provide
infrastructure
Stimulate
regional
economies
Increase
employment
Challenges in Japan
- More than 50% of individual financial assets sits in cash and bank deposits
- Shift from saving to asset building still halfway
3.0% | Japan1 | |||
Cash and deposits | ||||
Bonds | ||||
28.6% | Investment trusts | |||
Equities, etc. | ||||
53.3% | Insurance & | |||
10.0% | annuities | |||
Other | ||||
3.9% | ||||
1.3% | ||||
Investment securities: 15.2% | ||||
2.7% | US1 | |||
12.9% | Cash and deposits | |||
31.7% | 6.5% | Bonds | ||
Investment trusts | ||||
12.0% | ||||
Equities, etc. | ||||
Insurance & | ||||
annuities |
Nomura connects both investors and companies to the capital markets, thereby supporting the
productive use of risk capital, paving the way to a better future.
1. As of March 31, 2019. Source: Bank of Japan
34.3% | Other |
Investment securities: 52.8%
2
Nomura Group Corporate Philosophy
Mission
Vision
Values
Contributing to Society
We help to enrich society through our expertise in capital markets
Trusted Partner
As a leading financial institution, we aim to be the most trusted partner for our clients
Entrepreneurial LeadershipWith passion and courage, we continually innovate to meet the needs of our stakeholders
TeamworkTo build our values and 'Deliver Together', we promote diversity and collaboration across divisions and regions
IntegrityPersonal integrity is paramount to us. We act honestly, fairly and openly
3
Agenda
1
2
3
4
Introduction
Nomura's ESG (Environment, Society and Governance)
Strengthening the Corporate Governance System
Activities of the Board of Directors
4
ESG initiatives
- The Nomura Group reorganized the CSR Committee chaired by an executive officer into the ESG Committee chaired by the Group CEO in FY2018/19, in an attempt to deal with issues related to ESG in ways that are more strategic than before
Framework
Board of Directors | Japan | ||||||
Report | |||||||
EMEA | |||||||
Executive | |||||||
Management Board | Cooperation | ||||||
Approvals | Report | ||||||
Americas | |||||||
ESG Committee | Report | ||||||
Secretariat | |||||||
Approvals | AEJ | ||||||
ESG Committee members, and discussions in FY2018/19
Initiatives in FY2018/19 and onwards
Jul 2018 | Nomura Holdings pledged support for TCFD | |
Conducted group work on the subject of the | ||
Sep 2018 | SDGs in Nomura |
Group Executive Meeting (incl. Outside Directors)
- Relationship betweenlong-term management vision (Vision C&C) and SDGs
- Changes in the relationship between Nomura and stakeholders
- Deepening Nomura's sustainable growth model
Dec 2018 | Established mid- and long-term CO2emission reduction targets | |||
Area | Global | |||
Target type | Absolute | |||
Base year | FY2012/13 |
Chairman
Members
-
of meetings
Agenda
Outline of
discussions
Group CEO
Nomura Group executives in charge of businesses and corporates
2 (from April 1, 2018 to March 31, 2019)
- Matters concerning ESG initiatives and information disclosure
- Matters concerning fundamental ESG policy
- ESG risks and opportunities
- Reports related to climate change
- Formulation of the Nomura Group ESG Statement
- Review of material ESG issues (materiality)
- Response to TCFD
- Matters concerningMedium/Long-term CO2Emission Reduction Target
- Matters concerning sustainable development goals (SDGs), etc.
Target years | Mid-term | Long-term | ||||
FY2030/31 | FY2050/51 | |||||
Level | 32% reduction | 65% reduction | ||||
Jan 2019 | Established Nomura Group ESG Statement | |||||
To further promote the realization of a sustainable | ||||||
environment and society by informing stakeholders of our | ||||||
approach to ESG-related activities and our envisaged | ||||||
response to environmental and social risks. | ||||||
Mar 2019 | Nomura Asset Management pledged support for TCFD | |||||
Identified "Nomura Group Materiality" by comprehensively | |
Jul 2019 | |
reviewing management issues and key traditional ESG issues | |
5 |
Nomura Group Materiality
Identified "Nomura Group Materiality" by comprehensively reviewing management issues and key traditional ESG issues
growth sustainable toward Initiatives growth sustainable toward Platform
Nomura Group Materiality
Categories | Material issues | Metrics | ||||
• Diversity of the Board of Directors | ||||||
Corporate governance | • | Strengthen corporate governance | Reflecting qualitative factors such as compliance in | |||
executive compensation | ||||||
• | Instilling the Code of Conduct and ensuring an operational framework | • Number of calls to compliance hotline | ||||
• | Compliance training | |||||
• | Legal compliance and reporting of violations | Status of compliance with Code of Ethics | ||||
Compliance | • | Fair financial business practices | ||||
Understanding of policies for providing gifts and | ||||||
• | Prevent bribery | |||||
entertainment | ||||||
• | Prevent financial crime | |||||
• Progress in building the operational framework | ||||||
• | Establish and strengthen risk management systems | |||||
Risk management | • | Ensure financial soundness and transparency | Risk Appetite Monitoring | |||
• | Business resilience | |||||
• | Address social and environmental risks | |||||
• | Nurture human resources | • | Employee satisfaction survey | |||
Human resources | Education/training expenses | |||||
• | Diversity and inclusion | |||||
valuing diversity | Number of female managers | |||||
• | Create employee-friendly work environment | |||||
• Use of childcare and family nursing care support plans | ||||||
• Offer high-quality financial services to diverse clients | • | Customer satisfaction level | ||||
Contribute to sound | • | Number of complaints | ||||
• | Products and services that address environmental and social issues | |||||
and sustainable | Sustainable finance issuance amount | |||||
• | Customer protection and information security | |||||
capital markets | • Financial and economic education activities | |||||
• | Improve financial literacy | |||||
• | Sustainable investment ratio | |||||
Business selection | • Optimal allocation of resources | |||||
• | Flexible review of business portfolio | Enhancing profitability | ||||
and focus | ||||||
• | EPS | |||||
Contribute to a | • | Promote environmental conservation initiatives | ||||
sustainable | • | Combat climate change and protect natural capital through our | CO2emissions | |||
Environment | business activities | |||||
Contribute to a | • | Global initiatives | Community contribution expenditures | |||
• | Dialogue with stakeholders | |||||
sustainable society | • | Dialogue with stakeholders | ||||
• | Respect human rights | |||||
Realization of corporate philosophy
SDGs
6
ESG: Sustainable finance
-
With the UN's sustainable development goals gaining recognition, we are seeing growing demand for SDG bonds
(green bonds, social bonds, sustainability bonds, etc.)
Volume and number of sustainable finance issuances Nomura involved in
Examples and success of initiatives aimed at developing sustainable finance
(billions of yen) | (#) | |
2,500 | 50 | |
Sustainability Bond | ||
Social Bond | ||
2,000 | Green Bond | 40 |
International Capital Market Association
- Only Japanese firm to join The Green Bond Principles and The Social Bond Principles advisory council*
- New advisory body set up to support the executive committee that sets the rules for the Green Bond Principles, The Social Bond Principles, sustainability bond guidelines, etc. and develop systems better aligned to market circumstances
1,500 | # of sustainable | 30 | ||||
finance issuances | ||||||
1,000 | 20 | |||||
500 | 10 | |||||
0 | 0 | |||||
FY12/13 | FY13/14 | FY14/15 | FY15/16 | FY16/17 | FY17/18 | FY18/19 |
Published first index for Japan SDG bonds, NOMURA-BPI SDGs (November 2019)
Research group on
sustainable
development of ESG
bond market
Global Capital
Green / SRI Awards
2019
- Result of joint research with Nomura Research Institute
- Investment performance calculated using SDG bonds chosen fromNOMURA-BPI component universe based on certain criteria
- Set up by Nomura Institute of Capital Markets Research consisting mainly of external experts
- Issued research report in June 2019: The Era of Sustainable Finance - ESG/SDGs and the bond market
- Ranked second in Most Impressive Investment Bank for Asia Pacific Green/SRI Capital Markets
7
Agenda
1
2
3
4
Introduction
Nomura's ESG (Environment, Society and Governance)
Strengthening the Corporate Governance System
Activities of the Board of Directors
8
Outline of Nomura Holdings Corporate Governance
Guidelines
- Corporate Governance Code established in 2015
- Aim to define and contribute to the realization of a framework of effective corporate governance as a structure for transparent/fair and timely/decisivedecision-making
Board of Directors
- Delegate its authority to execute business to Executive Officers and focus on management oversight
- Diversity that enables active discussions from diverse perspectives
- Majority of members is Outside Directors
- Three board committees established
- Analyze and evaluate the effectiveness of the Board and disclose the results
Internal Controls System
- Oversee status of maintenance and operation of internal controls through audits by Audit Committee and activities by Internal Audit
- Internal Controls Committee chaired by CEO and attended by Audit Committee members established for the purpose of strengthening and enhancing the Internal Controls System.
- Involvement of Audit Committee in implementation plans of the Internal Audit as well as in election and dismissal of Head of the Internal Audit
Risk Management
- Ensure financial soundness and to maintain and improve corporate value, management shall establish a risk management framework and the Board of Directors shall oversee the effectiveness of the framework
Dialogue with Shareholders
- Treat shareholders equally and disclose information appropriately and timely to avoid information disparity
- Take necessary measures to ensure that shareholders are not unfairly precluded from exercising their rights
- Endeavor to enhance dialogue and provide explanations on general policies for allocation of management resources
- Share outcomes of such dialogue with the Board of Directors
Policy for Strategic Shareholdings
- Ongoing discussions concerning the purpose of strategic shareholdings
- Hold shares only if such shareholdings contribute to maintaining/enhancing the corporate value of Nomura Group
- As a result of the discussion, concerning stocks whose sale has been determined to be reasonable, we proceed with sale of such stocks while taking into consideration impact on the market and other circumstances
Fulfill Corporate Responsibilities
- Established "Nomura Group Code of Conduct" as guidelines for each director, officer, and employee of Nomura Group to comply with
- Enhance corporate value inlong-term by respecting diversity and establishing a sound workplace to enable all directors, officers, and employees to perform at their full potential
- Actively engage inESG-related activities for sustainable growth and solving social issues, in addition to contributing to expanding securities markets through daily business
9
Corporate Governance Structure
- In 2001, Nomura formed a holding company structure; Nomura Holdings listed it shares to NYSE, introduced an outside director system for the first time among other Japanese companies
- In 2003, transition to Company with Committees (currently referred as a Company with Three Bard Committees)
- Separation of management oversight from execution to reinforce supervision. Delegation ofdecision-making on business execution to executive directors for swift decisions
General Meeting of Shareholders
10 | |||
Board of Directors | meetings/year | ||
(FY18/19) |
GCEO | ||||||||
Formulation of proposals | Determination of | |||||||
Audit | ||||||||
for election and dismissal | compensation | |||||||
Nomination | Audit | Compensation | ||||||
Committee | Committee | Committee | ||||||
(Chair | (Chair) | (Chari) | ||||||
(Full-time member) | ||||||||
6meetings/ | 17meetings/ | 4meetings/ | ||||||
year(FY18/19) | year(FY18/19) | year(FY18/19) |
Management oversight
- Oversight
- Delegation ofdecision-making authority on business execution
Determination of compensation for Executive Officers
Audit
Outside Directors / External Experts (Advisory Board)
Inside Directors (Non- | Inside Directors | |||
executive) | (Executive) | |||
Executive | ||||
Group CEO | Management | |||
Board |
Group
Integrated
RiskAdvisory Board
Management
Committee
Four Business
Divisions
Corporate
Function
Execution
10
Independence Criteria for Outside Directors, Measures to avoid Conflict of Interests
- The nomination committee, comprised its majority of outside directors based on the independence criteria, shall determine proposals concerning election of directors to be submitted to the Board
- Respective regulations of the Board and committees articulate measures to avoid conflict of interests in resolutions
Independence Criteria for Outside Directors (excerpt)
(1) Person Related to the Company
The person, currently, or within the last three
years*, shall not correspond to a person
listed right
A person satisfying any of the following requirements shall be considered a Person Related to the Company:
- Executive of another company where any Executive of the Company serves as a director or officer of that company;
- Major shareholder of the Company (directly or indirectly holding more than 10% of the voting rights) or Executive of such major shareholder; or
- Partner of the Company's accounting auditor or employee of such firm who works on the Company's audit.
- Executive of a Major Lender (*2) of the Company.
- Executive of a Major Business Partner (*3) of the Company (including Partners, etc.).
- A person receiving compensation from the Nomura Group of more than 10 million yen per year, excluding director/officer compensation.
- A person executing the business of an institution receiving more than a Certain Amount of Donation (*4) from the Company.
The person's spouse, relatives within the second | ||
degree of kinship or anyone who lives with the | (1) | Executive of the Nomura Group; or |
person shall not correspond to a person listed right | (2) | A person identified in any of subsections (1) ~ (5) above |
(excl. persons in unimportant positions) | ||
•NYSE criteria for outside director independence about so-calledcooling-off; 3 years1
Countermeasures to conflict of interests in resolutions
Regulations of the Board of
Directors
Regulations of the
Nomination Committee
Regulations of the
Compensation Committee
Article 9. (Resolutions)
- The resolution of a meeting of the Board of Directors shall be adopted by an affirmative vote of a majority of the Directors present which Directors present shall constitute a majority of all Directors then in office who are entitled to participate in the voting.
- No director who has a special interest in any matter requiring a resolution shall be entitled to participate in the voting on such matter.
1. New York Stock Exchange Listed Company Manual 303A.02 Independence Tests
11
Board diversity
Highly-independent Board of Directors | Leveraging diversity of expertise and experience | |||||
Independent outside | ||||||
directors: 6 | ||||||
(Non-Japanese director: 2, | ||||||
female director: 2) | ||||||
Executive Officers | ||||||
20% | Company | |||||
Management | ||||||
20% | ||||||
- of outside directors 6 out of 10 people
Board Training Program
- Training for new outside directors
- In order to deepen the understanding of Nomura Group and its internal controls, approximately three days of training were provided on Nomura Group overview, business model, general shareholders meetings and committees, finance, risk management, compliance, litigation and notification, internal audit, and internal investment rules.
- Others
- Ethics training is conducted once a year for executives (Including outside directors) in order to further raise their awareness of professional ethics.
1. # of directors is as of December 2019
Diverse | ||
Securities | backgrounds | |
Accountants | ||
industry experts | ||
20% | ||
20% | ||
Company | ||||
Experts in finance- | ||||
related legal | management, | |||
systems | corporate accounting | |||
10% | experts | |||
10% | ||||
12
Each director's profile and role (1)
Involved | Experience | No. of | ||||||||||
Commitee1 | ||||||||||||
Year | significant | |||||||||||
of | Corp | Inter | Secu | Acco | Legal | concurrent | ||||||
Name | appoi | Background | positions | |||||||||
Nomi | Com | orate | natio | untin | ||||||||
ntme | natio | pens | Audit | man | nal | rities | g/Fin | /Reg | other than | |||
indus | ulatio | |||||||||||
nt | Nomura | |||||||||||
n | ation | age | busin | try | ancia | ns | ||||||
Group | ||||||||||||
ment | ess | l | ||||||||||
Non-Executive | ||||||||||||
Nobuyuki | Director | Jun. | ✔ | ✔ | ✔ | Mr. Koga has been a non-executive director of the company since June | ||||||
(Chairman of | 〇 | 〇 | 2008. He also has not been involved in an execution of the company's | 1 | ||||||||
Koga | 1995 | |||||||||||
the Board of | subsidiary, Nomura Securities Co., Ltd. since June 2011 | |||||||||||
Directors) | ||||||||||||
Hisato | Non-Executive | Jun. | 〇 | ✔ | ✔ | ✔ | - | |||||
Miyashita | Director | 2016 | ||||||||||
Mr. Kimura has extensive experience with respect to corporate | ||||||||||||
Hiroshi | Outside | Jun. | ◎ | ◎ | ✔ | ✔ | management and has held positions such as President, CEO and | 2 | ||||
Kimura | Director | 2015 | Representative Director of the Board of JT and Chairman of the Board of | |||||||||
JT | ||||||||||||
Kazuhiko | Outside | Jun. | ✔ | ✔ | Mr. Ishimura has extensive experience with respect to corporate | |||||||
〇 | 〇 | management and has held positions such as Representative Director and | 3 | |||||||||
Ishimura | Director | 2018 | ||||||||||
President and CEO, and Chairman of the Board of AGC | ||||||||||||
Mr. Shimazaki has extensive experience with respect to corporate | ||||||||||||
management and a high degree of expertise with regard to international | ||||||||||||
accounting systems corresponding to a Sarbanes-Oxley Act of 2002 | ||||||||||||
Noriaki | Outside | Jun. | ◎ | ✔ | ✔ | ✔ | financial expert. He has held positions such as Representative Director and | 1 | ||||
Shimazaki | Director | 2016 | Executive Vice President of Sumitomo Corporation, Member of the | |||||||||
Business Accounting Council of the Financial Services Agency, Trustee of | ||||||||||||
IASC Foundation, Special Advisor of Sumitomo Corporation and Director of | ||||||||||||
the Financial Accounting Standards Foundation | ||||||||||||
1. ◎: Chairman of the Committee,〇: Member of the Committee
13
Each director's profile and role (2)
Involved | Experience | No. of | ||||||||||
Commitee1 | ||||||||||||
Year | significant | |||||||||||
of | Corp | Inter | Secu | Acco | Legal | concurrent | ||||||
Name | appoi | Background | positions | |||||||||
Nomi | Com | orate | natio | untin | ||||||||
ntme | natio | pens | Audit | man | nal | rities | g/Fin | /Reg | other than | |||
indus | ulatio | |||||||||||
nt | Nomura | |||||||||||
n | ation | age | busin | try | ancia | ns | ||||||
Group | ||||||||||||
ment | ess | l | ||||||||||
Ms. Sono has a high degree of expertise with respect to corporate | ||||||||||||
accounting based on many years of experience as a Certified Public | ||||||||||||
Mari Sono | Outside | Jun. | 〇 | ✔ | ✔ | Accountant and has held positions such as External Comprehensive | - | |||||
Director | 2017 | Auditor, Tokyo, and Member of "Business Accounting Council," Ministry of | ||||||||||
Finance. Further, after retiring from the Audit Firm, she served as | ||||||||||||
Commissioner of the Securities and Exchange Surveillance Commission | ||||||||||||
Michael | Outside | Jun. | ✔ | ✔ | Mr. Lim is well-versed in international accounting systems and has held | |||||||
Lim Choo | positions, including Executive Chairman of PricewaterhouseCoopers | 1 | ||||||||||
Director | 2011 | |||||||||||
San | (Singapore) and public service roles in Singapore | |||||||||||
Laura | Outside | Jun. | ✔ | Ms. Unger, by serving as a Commissioner and as Acting Chairman of the | ||||||||
Simone | 2 | |||||||||||
Director | 2018 | SEC, etc., is well-versed in finance-related legal systems | ||||||||||
Unger | ||||||||||||
Koji Nagai | Executive | Jun. | ✔ | ✔ | ✔ | - | ||||||
Officer | 2013 | |||||||||||
Shoichi | Executive | Jun. | ✔ | ✔ | ✔ | - | ||||||
Nagamatsu | Officer | 2018 | ||||||||||
1. ◎: Chairman of the Committee,〇: Member of the Committee
14
Evaluation of effectiveness of Board
- Conducting evaluations on the effectiveness of the Board of Directors since FY2015/16
- Each Director assesses management of Board, including quantity and quality of information offered and discussions by Board, sharing findings at Board and learn from the results in order to continue strengthening their oversight function.
PDCA cycle to ensure effectiveness of Board
1
Each Director evaluates own | ||
execution of duties and | 2 | |
effectiveness of the entire | ||
Board | ||
Board analyzes and | ||
evaluates effectiveness of | ||
the entire Board based on | ||
evaluations of each Director | ||
4
Discuss results of evaluation including proposal to address issues
Evaluation Items
- Constitution and management of the Board of Directors
- Information provision to the Board of Directors
- The Board of Directors' involvement in management goals and strategy
- The Board of Directors' function ability to oversee management
- Constitution and management of the Nomination, Audit and Compensation Committees
- Monitoring of the state of dialogues with stakeholders
- Management of Outside Directors Meetings, etc.
Response to results
- In response to the growing global interest in preventing money laundering, Nomura Group substantially increased its compliance reporting, including these initiatives at the Board of Directors.
- At the Executive Officers' and Executive Officers' Meeting, where outside directors also attend, the SDGs were taken up as a theme, and discussions were held on the relationship with Vision C&C, the sustainable growth model that Nomura should aim for, priority issues, and measures to solve them.
3
Discuss issues that can be
addressed on executive
side and propose to Board
Next schedule
- Evaluation for the current fiscal year will start around December 2019, and will be disclosed in the Corporate Governance Report in early April 2020
15
Remedial action plan on improper communication of information, and its progress
1. | Embed mindset of "Conduct" | Reflect the concept of conduct risk in 2019 "Nomura 'Founding Philosophy and Corporate Ethics Day'" | |
"Code of Conduct (Nomura Group Code of Conduct)" enacted and announced in Dec. 3 | |||
2. | Review of performance evaluation system | | Implemented incentives to facilitate good conduct adhered to "Code of Conduct" into performance |
evaluation systems | |||
| Registered Obtained its whistleblowing system under Japan's Consumer Affairs Agency's | ||
3. | Enhance recognition / credibility of | "Whistleblowing Compliance Management System | |
Compliance Hotline | | Disseminate and disseminate information on the operation of the whistle-blowing system to the entire | |
company | |||
4. | Review of organization structure and | Reorganized Wholesale Equities business and Research | |
establishment of new evaluation regime | |||
5. | Establishment of systems for information | | Established basic rules around exchange of information between GM and Research |
protection and proper management | | Checking broad disseminations of emails and determining necessity | |
6. | Stricter management of important non- | ||
Establish a framework to | public information obtained from public | ||
tightly control not only | | Introduction and implementation of new rules and implementation of training | |
organizations, etc., and re-enforcement of | |||
corporate confidential | |||
existing rules | |||
information, but also non- | |||
public information that could 7. | Handling of information dissemination by | | Establishment of the "Guidelines on the Handling of Information Related to Members of Public External |
materially affect investment | other internal and external experts | Organizations" | |
decisions | |||
8. | Review of outsourcing agreements | | Review of contracts with third party, including confidentiality clauses |
9. | Verification by third-parties | Develop plans to conduct governance and framework audits for conduct risk management and conduct | |
follow-up reviews of other key remedial actions | |||
10. Management efforts to complete | | Continue efforts to instill "Code of Conduct" | |
improvement measures | | Top management visits departments and branches to continue dialogue with employees | |
11. Clarity of responsibilities | | Announced punitive actions to individuals on 24 May press release |
16
Corporate Culture and Ethics
- Shared values to realize our social mission andlong-term strategic goals
- Creating optimal value for customers and society by making the most of individual capabilities and their diversity, while all officers and employees are conscious of their thoughts and actions based on common sense and Code of Conduct
Missions
Long-term Goals
Corporate
Culture
Value
Entrepreneurial LeadershipWith passion and courage, we continually innovate to meet the needs of our stakeholders TeamworkTo build our values and 'Deliver Together', we promote diversity and collaboration across divisions and regions IntegrityPersonal integrity is paramount to us. We act honestly, fairly and openly
Capable individual
- Since its foundation, Nomura believes the most valuable assets are our "people"
- We are striving to hire capable individuals globally
Co-existence of "capable
individuals" and
"diversity"
To our customers and
society,
deliver optimal value
Ethics, principles
Diversity
- People from approx. 90 courtiers working at Nomura
- Diversity is source of Nomura'slong-term competitiveness as it accurately responds to clients' needs and changes in society and contributes to improving quality of decision-making and productivity of services
- Implementing flexible human resource management that emphasizes diversity so that various human resources can fully demonstrate their abilities and individuality and play active roles
Announce "Code of Conduct",standards for all employees to make appropriate decisions and actions based on ethics
17
Announcement of "Code of Conduct"
Aim
- As we work to realize our mission and vision, everyone at Nomura is expected to uphold the values of entrepreneurial leadership, teamwork and integrity that underpin us as a firm. This Code of Conduct sets out guidelines to help us translate our values into actions.
- Declaration of Nomura's commitment to customers, society and ourselves
Outline
What does the Code mean? | How do we implement the Code? | Five questions to ask when in | Our conducts |
doubt | |||
Explanation of the positioning | Responsibility of managers | Basic questions to ask oneself | Each items in detail |
of the Code of Conduct | |||
Guidelines for | |||
translating the | |||
values of | |||
"entrepreneurial | |||
leadership", | |||
"teamwork" and | |||
"integrity" into | |||
concrete actions |
18
Instill Business Practices, Professionalism;
Training programs for Employees
Compliance training
Nomura Securities provides officers and employees with training on compliance in a planned manner on such themes as anti-money laundering and terrorist financing, conflict of interest management, prevention of insider trading, compliance with firewall regulations, and thorough management of customer information. The purpose of this training is to raise the level of knowledge of relevant laws and regulations of officers and employees, to raise their awareness of compliance, and to foster a corporate culture that pursues appropriate business practices
Training required by the regulations
of the Japan Securities Dealers
Association
Training mandated by the compliance
program
Training to create a corporate culture that pursues appropriate conduits
Other Training
Training for sales managers, internal control managers, and employees engaged in internal control activities Training to improve the quality of sales representatives
Training for branch managers, general affairs managers, new employees, new managers, etc.
Business Manager*1Training
Compliance Hours at Sales Departments and Offices*2
- Professional ethics training
- Conduct ethics training to help employees better understand social responsibilities in order to further raise awareness of professional ethics
- Implementation in FY 2019, conducted training in conjunction with "Nomura 'Founding Philosophy and Corporate Ethics' Day"
- "Nomura 'Founding Philosophy and Corporate Ethics' Day" Initiatives
- Based on a deep remorse for the misconduct caused in the past, August 3 has been designated "Nomura 'Founding Philosophy and Corporate Ethics' Day" since 2015.
- Since then, in August every year, we have reconfirmed our corporate culture and corporate ethics based on spirit of our founding, and reaffirm the lessons learned from past scandals
- Implement the following measures to reaffirm our resolutions to prevent the recurrence of misconduct and to earn and maintain trust of society
- Viewing of video materials (2) Holding of opinion exchange meetings (3) Submission of a statement of intent on preventing the weathering of scandals
- Compliance training for all employees
- Compliance training for Investment Banking, Global Markets, Global Research, and Fiduciary Services Research Center
- Regular training for head office managers and business managers
- Knowledge Improvement Training for General Affairs Division of Branches
- Lectures on compliance at various training and meetings
1. | The system was established after the second scandal involving an extortionist that was found to have provided profits and compensated for losses. This is a system unique to Nomura, and appointed by appointment. | 19 |
2. | In order to ensure thorough compliance throughout all employees, we hold monthly seminars for Nomura Securities sales departments and branches. |
Whistleblowing systems:
Nomura Group Compliance Hotline
Whistleblowing systems ~ Nomura Group Compliance Hotline
Purposes
Established for fostering a sound corporate culture and corporate ethics through an early detection and correction of illegal acts and scandals
Structure
- Nominated a total of 4 information counselors: 2 internal directors (Compliance, IA) and 2 external lawyers
- Two methods are prepared: one to provide information directly to internal directors, and the other to via a tool provided by an external contractor
- Type of information recipient and methods can be freely selected by a reporter.
Trend in number of users
Substantial increase in fiscal 2019 | Number of reports | |||||
Background of the increase; use of the tools | ||||||
provided by external vendors to enhance | 84 | |||||
anonymity and an implementation of publicity | 31 | |||||
campaigns | ||||||
FY17/18 | FY18/19 | |||||
Initiatives to enhance credibility of system
- Registration system
- On November 15, 2019, registered as a registered operator of "Internal Reporting System Certification (Self- Declaration of Conformity Registration System; WCMS)1" under the jurisdiction of the Consumer Affairs Agency.
- Deliver messages to employees
- Messages are distributed periodically to all employees on promotion of use of the hotline.
- In addition to scope of reportable matters and prohibition of disadvantageous treatment, flow of information from the receipt of reports and points for responding to investigations is also disseminated
1. Certification of the whistleblowing system (Self-Declaration of Conformity to Registration System): A system under which a designated registration organization registers the results of a business operator's verification of its
whistleblowing system based on an application from the business operator and permits the use of the designated WCMS mark if the business operator evaluates its internal reporting system and complies with the standards for | 20 |
the whistleblowing system certification based on the "Guidelines for Private Business Operators on the Development and Operation of the Internal Reporting System Based on the Whistleblower Protection Act" (Established on |
December 9, 2016) established by the Consumer Affairs Agency.
Agenda
1
2
3
4
Introduction
Nomura's ESG (Environment, Society and Governance)
Strengthening the Corporate Governance System
Activities of the Board of Directors
21
Main items discussed by the Board of Directors
- The Board of Directors discussed the following matters in FY2018/19.
- In addition, Outside Directors Meetings were held four times this year.
FY2018/19 1H | ||
Main agenda | Content of the discussion | |
FY17/18 results, | Company overview, performance and market | |
environment by division and region, situation of | ||
dividend payouts | ||
competitors, etc. | ||
Changes to the basic | Specifying total return ratio of 50% or more in the basic | |
polity on dividends, etc. | policy | |
Business execution | Current status of the Wholesale Division and future | |
report | measures | |
1QKey Performance | ||
Indicators (KPIs) for | KPIs for realizing client-oriented business operations in | |
client-oriented business | Nomura Securities and Nomura Asset Management | |
operations | ||
Risk management | Operational status of risk appetite and unauthorized | |
reports | access to the systems of overseas subsidiaries | |
Compliance reporting | Recent issues, money laundering and counter-terrorism | |
financing measures | ||
FY18/19 1Q results | Company overview, situation by division and region, | |
situation of competitors, etc. | ||
Business execution | Establishment of a securities company in China and the | |
report | outlook for business performance in the second quarter | |
2Q | Report on audit activity | Responses from the executive side to recommendations |
findings | from the audit committee | |
Risk management | Status of risk appetite management | |
reports | ||
Compliance reporting | Recent issues, money laundering and counter-terrorist | |
financing measures | ||
FY2018/19 2H
Main agenda | Content of the discussion | |
FY18/19 2Q results, | Company overview, situation by division and region, | |
dividend payouts | situation of competitors, etc. | |
Business execution | Strategies in Wholesale Division and Retail Division to | |
report | address megatrends | |
Revision of Corporate | Company's response to the revision of the Corporate | |
3Q | Governance Guidelines | Governance Code |
Verification of the | Review of the results of discussions by the Policy | |
appropriateness of | ||
Shareholding Review Committee | ||
strategic shareholdings | ||
Risk management reports | Status of Brexit compliance and risk appetite | |
Compliance reporting | Recent issues, money laundering and counter-terrorist | |
financing measures | ||
FY18/19 3Q results | Company overview, situation by division and region, | |
situation of competitors, etc. | ||
Business execution | Current status of each division and future measures | |
report | ||
Strategy for non-face-to- | Collecting new clients using digital technology | |
face sales | ||
4Q | HR related report | Introduction of new personnel system |
Business platform | Review of matrix management structure and corporate | |
restructuring | restructuring | |
Selection of conduct risks, system risks, geopolitical | ||
Risk management reports | events, and risks related to climate change as themes | |
to be addressed in the Risk Appetite Statement for | ||
FY19/20 |
22
Composition and role of Nomination / Compensation /
Audit Committee
- To ensuring and improving the independence and transparency, Chairman of all three committees are Outside Directors
Composition and role of the three committees
Composition | Role |
Nomination Committee
Compensation
Committee
Audit
Committee
Hiroshi | Outside Director |
Kimura | (Chairman) |
Ishimura | Outside Director |
Kazuhiko | |
Nobuyuki | Inside Directors |
Koga | (Non-executive) |
Noriaki | Outside Director |
Shimazaki | (Chairman) |
Mari Sono | Outside Director |
Hisato | Inside Directors |
Miyashita | (Non-executive) |
- Determine the particulars of a proposal concerning the election and dismissal of Directors to be submitted to a general meeting of shareholders
- Determine the independence criteria for Outside Directors
- Determine the reasons why each person was designated as a Director nominee
- Establish the policy with respect to the determination of the compensation and other remuneration of Directors and Executive Managing Directors
- Determine the individual compensation and other remuneration of each Director and Executive Officers
- Audit the execution by the Directors and Executive Officers of their duties and prepare audit reports
- Determine the content of proposals concerning the election and dismissal of the accounting auditors to be submitted to a general meeting of shareholders
23
Election of Directors and Management
Nomination Committee Calendar for election of directors
Ad-hock | March | April | June | ||||
Election of Directors | |||||||
Determination of | Determination of | ||||||
Discussion for | candidates to be | grounds of | at Shareholders | ||||
submitted to | appointments | Meetings | |||||
outside director | Appointment of | ||||||
Ordinary General | Determination of | ||||||
candidates | Nominating | ||||||
Meeting of | contents of their | ||||||
Committee Members | |||||||
Shareholders | disclosure | ||||||
by Board of Directors | |||||||
Consideration in election of directors | |||||||
Succession plan for Group CEO and others
Determination of | Determination | ||||||||
candidates for | |||||||||
of GCEO | |||||||||
directors | |||||||||
Succession plan | |||||||||
(GCEO to draft proposal) | |||||||||
Establish concept | Review of | ||||||||
execution | Discussion | Nomin | Report | ||||||
of quality | Decision on | Board of | |||||||
systems | |||||||||
ation | Directors | ||||||||
a | Commi | ||||||||
proposed | |||||||||
Fostering through | ttee | ||||||||
successor | |||||||||
business execution | |||||||||
Selection criteria based on personality, insight, ethics,
deep knowledge and experience in
ones area of expertise
As a general rule, majority of the board is composed of outside directors
Outside directors are required to comply with independence criteria
Including experts in finance,
corporate management, law, etc.
Number of outside directors can hold concurrent positions at other listed companies up to 3.
In principle, there is 1 internal
director (non-executive).
The term of outside directors is
expected to be six years
As a general rule, the Group CEO and COO serve concurrently as directors
- Candidates from current GCEO are presented to Nomination Committee and elected by Board of Directors.
- The Nominating Committee and Board assess appropriateness of candidates at various angles such as audit hearings and board meetings
- The succession plan includes the concept of qualities required of Group CEO, business execution system that incorporates management environment and perspective of fostering successors, evaluation of the status of business execution under the business execution system, and specific succession proposals
24
Compensation policy, framework for senior management
Compensation policy
Framework for senior management, method of determination for each component
- Human resources are Nomura Group's greatest asset in establishing a strong position as a globally competitive financial services group
- Established the "compensation policy" for Group officers and employees to secure, maintain, motivate, and develop excellent human resources.
- This will enable the Group to achieve sustainable growth, achievelong-term growth in shareholder value, provide added value to customers, demonstrate global competitiveness, and enhance Nomura's reputation.
1. Align with Nomura's values and strategies
Total compensation1
Variable
compensation
Deferred | |||
compensation | |||
A portion of variable | |||
remuneration is paid as | |||
(Exception) | NSU3 | deferred remuneration | |
to directors who receive | |||
a certain level of | |||
remuneration and | |||
RSU2 | bonuses. The higher | ||
the compensation and | |||
bonus, the lower the | |||
ratio of cash bonuses. | |||
Cash(Part of) variable compensation paid in bonuscash after the financial year end
6. Ensure robust | 2. Reflect group, divisional |
governance and control | |
and individual performance | |
processes | |
5. Appropriate | 3. Establish appropriate |
performance measurement | |
compensation structures | |
with a focus on risk | |
4. Align employee and shareholder interests
Stock-basedPaid for executive officers, determined by compensationindividual responsibilities
Fixed
compensation
Base | Determined by reflecting |
individual role, responsibilities, | |
salary | |
etc. | |
1. | This figure does not indicate the percentage of each remuneration, but shows the breakdown of remuneration. | 2. Restricted Stock Unit | 25 |
3. | Right to choose either RSU and phantom stock is given to certain individuals. |
Disclaimer
- This document is produced by Nomura Holdings, Inc. ("Nomura").
- Nothing in this document shall be considered as an offer to sell or solicitation of an offer to buy any security, commodity or other instrument, including securities issued by Nomura or any affiliate thereof. Offers to sell, sales, solicitations to buy, or purchases of any securities issued by Nomura or any affiliate thereof may only be made or entered into pursuant to appropriate offering materials or a prospectus prepared and distributed according to the laws, regulations, rules and market practices of the jurisdictions in which such offers or sales may be made.
- The information and opinions contained in this document have been obtained from sources believed to be reliable, but no representations or warranty, express or implied, are made that such information is accurate or complete and no responsibility or liability can be accepted by Nomura for errors or omissions or for any losses arising from the use of this information.
- All rights regarding this document are reserved by Nomura unless otherwise indicated. No part of this document shall be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Nomura.
- This document contains statements that may constitute, and from time to time our management may make"forward-looking statements" within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Any such statements must be read in the context of the offering materials pursuant to which any securities may be offered or sold in the United States. These forward- looking statements are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risk factors, as well as those more fully discussed under Nomura's most recent Annual Report on Form 20-F and other reports filed with the U.S. Securities and Exchange Commission ("SEC") that are available on Nomura's website (https://www.nomura.com) and on the SEC's website (http://www.sec.gov); Important risk factors that could cause actual results to differ from those in specific forward-looking statements include, without limitation, economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, and the number and timing of transactions.
- Forward-lookingstatements speak only as of the date they are made, and Nomura undertakes no obligation to update any forward- looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.
- The consolidated financial information in this document is unaudited.
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www.nomura.com/
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Nomura Holdings Inc. published this content on 09 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 December 2019 14:35:03 UTC