Putting Smiles on the Faces of Everyone Nintendo Touches
Governance and Compliance
To maintain the trust of everyone Nintendo touches, we observe the rules, prepare for risk, and implement fair and sound management.
We make concerted efforts to build transparent and robust corporate governance systems to enable continuous maximization of corporate value over the long term, while considering how to bring benefits to everyone involved with Nintendo.
Corporate Governance System
For the purpose of strengthening the supervisory function of the Board of Directors, and further promoting corporate governance, Nintendo Co., Ltd. adopts the governance structure of a Company with Audit and Supervisory Committee. Furthermore, the Company has introduced the Executive Officer System for the purpose of clarifying the responsibility for the execution of operations, and establishing a more flexible management structure which can appropriately and swiftly respond to the rapidly changing business environment. The foregoing will be enabled through separating the management decision-making and supervisory functions from the execution of operations as well as by accelerating the delegation of authority to execute operations.
The Board of Directors consists of ten Directors (including four who are Audit and Supervisory Committee Members), including four Outside Directors (including three who are Audit and Supervisory Committee Members). All the Outside Directors satisfy the standards for independent officers stipulated by Tokyo Stock Exchange, Inc.
To drive the management activities, in addition to the meetings of the Board of Directors held monthly as a general rule, meetings of the Executive Management Committee, which consists of Representative Directors and Directors who concurrently serve as Executive Officers with special titles, are held twice a month generally to make prompt and efficient decisions. Furthermore, Executive Officers appointed by the Board of Directors every year perform their respective duties under the President’s supervision and instructions.
Furthermore, as a non-mandatory advisory body to the Board of Directors, the Nomination Advisory Committee consisting of the Representative Director and President and all Directors serving on the Audit and Supervisory Committee deliberates on matters related to the nomination and compensation of Directors and reports to the Board of Directors.
The Audit and Supervisory Committee consists of one full-time Internal Director and three Outside Directors. The Audit and Supervisory Committee Members attend meetings of the Board of Directors and other important meetings, inspect important documents, have regular meetings with the President and hold monthly meetings of the Audit and Supervisory Committee as a general rule to share audit opinions.
Furthermore, the full-time Audit and Supervisory Committee Member conducts fieldwork auditing over each division of the Company, etc., based on the annual audit plan.
With respect to internal auditing, the Internal Auditing Department, under the direct supervision of the President, conducts internal auditing from a fair and unbiased perspective independent from business divisions, and works on the promotion and improvement of internal control including subsidiaries and associates.
Accounting Auditor maintains close coordination with the Audit and Supervisory Committee, as well as the Internal Auditing Department, regarding accounting auditing, including the report on the audit plan and audit results, as well as information and opinion exchanges as necessary even during the period, in order to ensure effective and efficient auditing.
Nintendo Co., Ltd. (Japan) and its domestic and overseas subsidiaries operate and maintain an internal control system according to legal and regulatory circumstances, and the actual state of each organization in the Nintendo group. For more information about our system of internal controls, please see our Corporate Governance Report.
Compensation to Directors
The compensation for the Company’s Directors who are not Audit and Supervisory Committee Members and Directors who are Audit and Supervisory Committee Members is determined within their respective upper limits which are established by resolution of the General Meeting of Shareholders.
The Company uses results of a compensation survey by an external research agency as a reference for setting compensation standards, etc. Also, matters related to the compensation for Directors are deliberated in the non-mandatory Nomination Advisory Committee mainly consisting of Outside Directors, and the deliberation results are reported to the Board of Directors.
Compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members) consists of fixed compensation, performance-based compensation as short-term incentives, and stock compensation as long-term incentives. However, compensation for Outside Directors consists solely of fixed compensation, in view of their position of providing supervision and advice on management, without engaging in business execution.
The Company has not determined specific relative proportions of fixed compensation, performance-based compensation, and stock compensation.
The amount of fixed compensation to individual Directors is decided by the Representative Director and President, under authority delegated by the Board of Directors, based on each Director’s position and responsibilities, including whether or not he or she engages in business execution. Fixed compensation is paid in the same amount monthly.
The performance-based compensation is calculated using a formula that uses consolidated operating profit as a benchmark and is determined by the Board of Directors based on points corresponding to each Director’s position within the cap set by a resolution of the Board of Directors. It is paid at a designated time each year. In addition to that, when both the average of consolidated operating profit of the most recent three fiscal years including the subject fiscal year for compensation payment and consolidated operating profit of the subject fiscal year for compensation payment exceed the amount set by resolution of the General Meeting of Shareholders, the amount calculated with a formula set by the General Meeting of Shareholders in advance is added.
Stock compensation is paid with restricted stock. The number of stocks allocated to each Director is decided according to the Director’s position by resolution of the Board of Directors, and the compensation is paid at a designated time each year. Restrictions on the transfer of shares are lifted when the Director leaves both the offices of Director and Executive Officer.
Compensation for Directors (who are Audit and Supervisory Committee Members) consists only of fixed compensation in view of the fact that they are in the position of engaging in audit and supervisory duties independently from Directors who engage in business execution. The amount of individual compensation is determined through deliberation of the Audit and Supervisory Committee Members, and the same amount is paid monthly.
Nintendo recognizes the crucial importance of adhering to and complying with laws and social standards to ensure persistent growth and expansion. To base its business operations on solid compliance, Nintendo has established and implemented region-specific codes of conduct.
Activities of the Compliance Committee
Nintendo Co., Ltd. (Japan) has established the Compliance Committee under the supervision of the Executive Management Committee, which assesses the state of compliance promotion and develops measures for its facilitation. The Compliance Committee periodically updates the Compliance Manual, which sets out the basic rules that all executive officers and employees should follow.
Compliance Code of Conduct
Abide by all laws and regulations. We strictly abide by all laws, Nintendo's internal rules and conventions, and social standards. We participate in fair and open competition. Our work rests on high ethical standards.
Strive to create a highly transparent business. We promote the appropriate disclosure of information to our shareholders and our communities as we work to create a highly transparent business.
Maintain a resolute stance against anti-social forces. Our position on anti-social forces is unwavering.
Strive to be a trusted corporate citizen. We fully recognize the social scope of our business. We strive to be a company that society, including our users first and foremost, can trust as we perform sound business expansion activities.
Excerpt from the Compliance Manual
Promotion System for Compliance in the Group
To enhance and promote compliance throughout the Nintendo group, we set up, under the Compliance Committee, the Global Compliance Conference (GCC), comprising executive management and core personnel responsible for compliance from Nintendo Co., Ltd. (Japan) and our major overseas subsidiaries. Specifically, the GCC holds global meetings twice a year for core legal personnel at the major group companies. These meetings also serve as a practical channel for the GCC to establish a common understanding and share information, while exchanging opinions about compliance-related issues and future legal risks that may affect each of our companies.
Nintendo Co., Ltd. (Japan) has established a system, called the Compliance Hotline, for the internal reporting of compliance-related issues. Using the hotline, internal staff can directly and confidentially report the occurrence or potential occurrence of illicit conduct or business activities of which they have become aware to the President, the Audit and Supervisory Committee, or both. The hotline has also been set up to accept anonymous reports and protect staff from any disadvantage. Information about the hotline is shared with new employees during orientation training.
Our major subsidiaries also have established internal reporting systems, adapted to the laws and regulations of their respective countries. There is also a system in place that enables employees of our main overseas subsidiaries to report directly to the President of Nintendo Co., Ltd. (Japan) should any misconduct involving the executive of such a subsidiary occur.
Prevention of Corruption
Nintendo Co., Ltd. (Japan) has established rules that prohibit bribery of public officials and affiliated personnel, as well as restrict hospitality and gifts. In addition, we promote an internal understanding of bribery and other forms of corruption, as well as relevant laws, regulations and the aforementioned rules by describing them in detail in relation to our business activities in the Compliance Manual. In addition to designating departments for handling corruption and working to prevent these activities, we also have measures in place to promptly investigate and prevent recurrence should we recognize such an issue. Furthermore, our overseas subsidiaries have also incorporated anti-corruption measures into their codes of conduct in accordance with local laws.
For more information on compliance, please also see our Data Sheet.
Nintendo Co., Ltd. (Japan) Code of Conduct (Excerpt)
Position on Hospitality and Gifts
As a general principle, we do not accept hospitality or gifts. However, in such cases where it is unavoidable, we strictly refuse those which exceed the appropriate scope commonly accepted by society.
We do not extort our business partners or otherwise make requests for the purpose of any individual benefit, nor do we take any action that would intimate the same.
Hospitality and gifts for our business partners are conducted in accordance with our internal standards and within the appropriate scope commonly accepted by society.
We build and maintain fair and sound relationships regarding politics (political parties) and administrations (government authorities) within and outside of Japan. We do not engage in any collusive or misleading activities. When making contributions or donations, we follow internal procedures and do not make any bribes or illegal political contributions or donations.
Prohibition of Acts that Restrict Competition
Nintendo Co., Ltd. (Japan) conducts initiatives to ensure full compliance with laws and regulations related to fair competition, such as antitrust laws. For example, we have implemented an Antitrust Law Manual that incorporates specific explanations of antitrust laws and subcontracting laws, in relation to Nintendo's business activities. The manual is revised every year. In addition to including information on the prohibition of antitrust activities in our training for new employees, we also provide training on competition law that is adapted to the work conducted in each department to further employee understanding.
For more information on compliance, please also see our Data Sheet.
Nintendo Co., Ltd. (Japan) Code of Conduct (Excerpt)
Fair and Impartial Transactions
We do not use an advantageous position to engage in any inappropriate transactions. We conduct fair and impartial transactions with our business partners and establish sound and transparent transactional relationships.
When selecting business partners, we provide broad participation opportunities and make comprehensive and logical decisions based on business benefits, including factors such as necessity, services, quality, pricing and delivery time, regardless of nationality or company size.
Protecting and Managing Information
Nintendo Co., Ltd. (Japan) has established in-house standards, including the Information Management Standards, the Personal Information Management Standards and the Information Security Policy, to ensure that various types of important information are handled appropriately. We have established the Information Security Committee with the General Manager of the Platform Technology Development Division, who also serves as a Director, as the committee chair, and conduct periodic audits in an effort to continually improve our level of information security. We employ physical and technological measures, including access controls, to facilitate proper management of confidential and personal information. In addition, we conduct internal seminars and trainings to supplement and establish employee awareness of the importance of information security. Our Information Security Committee Administration Team also fulfills an internal role similar to that of a CSIRT*1 in handling matters such as information security incidents, proactively collecting information as a member of the Nippon CSIRT Association, and collaborating as appropriate with related internal staff and similar teams at our overseas subsidiaries.
Our overseas subsidiaries also have established information management policies. Each organization employs physical and technological measures based on its policy and conducts internal training sessions for employees in order to increase awareness of information security. Training sessions on personal information management and seminars on confidential information management are held periodically at various subsidiaries' offices.
Promotion of Employee Understanding of the Code of Conduct
At Nintendo, we have established codes of conduct in each country, and take initiatives to deepen our employees’ understanding of the content.
Nintendo Co., Ltd. (Japan) trains new recruits on the Employee Etiquette guide based on our long-cherished Nintendo DNA, and the Code of Conduct that each Nintendo employee must comply with.
Nintendo of America's Code of Business Conduct sets forth clear professional and ethical guidelines for the conduct expected from all employees. In an effort to ensure that employees remain familiar with the Code of Business Conduct, all employees are required annually to complete an online Code of Business Conduct Review. After the deadline for responses has passed, the correct responses and detailed explanations are provided to employees.
In addition to employee Code of Conduct training for new recruits, Nintendo of Europe (Germany) regularly provides training for all Nintendo group subsidiaries across Europe. The training is conducted through e-learning on the company intranet.
With each reissue of the employee Code of Conduct at Nintendo Australia, the Human Resources Department sends each employee an email containing a Code of Conduct questionnaire and requires them to sign off to acknowledge their understanding and compliance with the new version. This process was undertaken in January 2022 and all employees consented to the new employee Code of Conduct.
Nintendo recognizes the importance of identifying, understanding and evaluating the various risks affecting the company and then thoroughly reducing and avoiding such risks, as well as the importance of seeking prompt resolution in the event of an incident or accident.
Risk Management System
Nintendo gives each division of the Nintendo group companies direct responsibility for the management of its own risks. Nintendo Co., Ltd.'s Internal Auditing Department (in Japan) verifies the risk-management system of divisions and subsidiaries and suggests policy changes and offers advice as needed.
Nintendo Co., Ltd. (Japan) consults outside lawyers and professionals on important legal or compliance issues to ensure that they are handled with due consideration. In addition to standard accounting audits, we consult the Accounting Auditor to discuss and investigate important accounting issues to ensure that they are handled appropriately. We have a policy of taking a resolute stand against antisocial forces which pose threats to social order and safety, and have established responsible departments as a system to act on behalf of the company.
The Compliance Committee promotes compliance measures in every department throughout the company, establishing and revising the Compliance Manual based on our Compliance Program (Legal Risk Management Policy) and conducting seminars featuring external experts for employees and Directors.
We have established internal structures such as the Product Safety Committee, which maintain the Product Safety Assurance system to prevent the occurrence of product-related incidents and facilitate prompt action should an incident take place.
Nintendo Co., Ltd. (Japan) has also established the Disaster Response Committee to prepare for natural disasters. We have developed systems in each country to be able to respond to local circumstances.
Nintendo Co., Ltd. (Japan) Crisis Management that Assumes Occurrence of Natural Disasters
In preparation for emergencies, including natural disasters, Nintendo Co., Ltd. (Japan) has created the Emergency Action Plan, which outlines the company's initial response to an emergency, and the Business Continuity Plan, which provides a strategy for business recovery and continuation. In addition, we have created and published the Crisis Management Manual for all employees (available on the company intranet), which defines the fundamental actions employees should take in the event of an emergency. Furthermore, we implement various measures that assume the occurrence of emergencies, including drills to rapidly confirm the safety of employees and evacuation drills to ensure that employees can quickly exit the building.
Our overseas subsidiaries also have created manuals for responding to emergencies in their various regions. For example, Nintendo of America has a Business Continuity Plan that takes into account regional risks and defines corresponding plans for business recovery and continuity. Employees receive periodic training on these plans and conduct evacuation drills and other exercises.
To gain and secure the trust of our shareholders and investors, Nintendo works to ensure the fair, appropriate and timely disclosure of information. We also work to improve on an environment for the exercise of voting rights.
Financial Results Briefings and Corporate Management Policy Briefings
At Nintendo, we believe that it is vital to not only provide information about our business performance but also to ensure that our corporate management policy is well understood by our shareholders and investors. After the announcement of our financial results for the second and third quarters and the full-year term, Nintendo Co., Ltd. (Japan) holds Financial Results Briefings (online) to explain the outline of the financial results and the future outlook, and conducts a Q&A session for securities analysts and institutional investors. A Corporate Management Policy Briefing is also held once a year.
To provide our shareholders with additional time to exercise their voting rights, Nintendo Co., Ltd. issues the Convocation Notice three weeks prior to the General Meeting of Shareholders (one week earlier than the legal requirement), and shareholders can vote via the internet. In addition, for our overseas shareholders, we make the Convocation Notice available in English and have adopted the Electronic Voting Platform system for institutional investors.
* Information regarding the General Meeting of Shareholders
We strive to provide everyone Nintendo touches with prompt access to content, including presentations and Q&A sessions from Financial Results Briefings and Corporate Management Policy Briefings by posting these documents on our website in both Japanese and English.
In addition, since FY 2010, we have posted the content of the Q&A sessions from the General Meeting of Shareholders on our website as part of our efforts to provide information disclosure to more people.