CSR Report > CSR Report2018 - Reliable and Trustworthy Business Practices

CSR Report

Reliable and Trustworthy Business Practices / To gain and secure the trust of our stakeholders, we exercise fair and sound judgment  when running our business, and emphasize corporate compliance and risk management.

Reliable and Trustworthy Business Practices

To gain and secure the trust of our stakeholders, we exercise fair and sound judgment when running our business, and emphasize corporate compliance and risk management.

Corporate Governance

Corporate Governance

 We make concerted efforts to build transparent and robust corporate governance systems, and strengthen corporate ethics to enable optimization of corporate value over the long term and continuously, and to continue 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 enhancing the corporate governance system, Nintendo Co., Ltd. has chosen the governance structure of a Company with an Audit and Supervisory Committee. We adopt 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 five Directors (excluding Directors who are Audit and Supervisory Committee Members) and four Directors who are Audit and Supervisory Committee Members (including three Outside Directors). The term of office of Directors (excluding Directors who are Audit and Supervisory Committee Members) is one year, and the term of office of Directors who are Audit and Supervisory Committee Members is two years.
 In addition to the meetings of the Board of Directors, which are generally held monthly, Nintendo Co., Ltd. also holds meetings of the Executive Management Committee consisting of the Directors (excluding Directors who are Audit and Supervisory Committee Members) twice a month in principle, in order to strongly drive management activities and thereby ensure prompt and efficient decision-making. Furthermore, Nintendo Co., Ltd. maintains the system where Executive Officers appointed by the Board of Directors every year perform their respective duties under the President's supervision and instructions.
 The Audit and Supervisory Committee consists of one full-time Internal Director and three Outside Directors; all of the Outside Directors are designated as independent officers. 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 that of subsidiaries and affiliates.
 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.

Internal Controls

 Nintendo Co., Ltd. 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 on our system of internal controls, please refer to the following link.

Corporate Governance System

Corporate Governance System Status (as of the end of June 2018)
Organizational Structure Company with Audit and Supervisory Committee
Board of Directors (excluding Audit and Supervisory Committee Members) Number of Directors 5 persons
Term 1 year
Implementation of Incentives to Directors Performance-based compensation
Directors (Audit and Supervisory Committee Members) Number of Internal Directors who are Audit and Supervisory Committee Members 1 person
Number of Outside Directors who are Audit and Supervisory Committee Members 3 persons (Independent Officers as provided by Tokyo Stock Exchange, Inc.)
Term 2 years
Implementation of Incentives to Directors

Compensation to Directors

 Compensation for each Director (excluding Audit and Supervisory Committee Members) and Audit and Supervisory Committee Members is determined by resolutions of the General Meeting of Shareholders. Compensation for Directors (excluding Audit and Supervisory Committee Members) consists of base compensation, which is a fixed component of compensation, and variable compensation, which is a performance-based component of compensation designed to raise incentives for higher performance. The compensation for Directors who are Audit and Supervisory Committee Members consists only of fixed compensation.

Compliance

Compliance

 As a company with the goal of persistent growth and expansion, Nintendo realizes the importance of building and maintaining trust, which requires adherence and compliance to laws, social norms, and Nintendo's internal rules and conventions. To base its business operations firmly on compliance, Nintendo has established and implemented region-specific codes of conduct.

Activities of the Compliance Committee

 Nintendo Co., Ltd. has established the Compliance Committee, under the supervision of the Executive Management Committee, to develop measures and policies for facilitating compliance. The Compliance Committee periodically updates the Compliance Manual, which sets out the basic rules that all employees are expected to follow.
 Although no legal or other violations were found in fiscal year 2016 audits, the Compliance Committee stays informed about current global issues and makes appropriate improvements to foster a firmly rooted awareness of compliance.

Compliance Code of Conduct
  • Abide by all laws and regulations.
    We strictly abide by all laws, Nintendo's internal rules and conventions, and social norms. We participate in fair and open competition. Our work rests on high ethical standards.
  • 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.
  • Eliminate anti-social forces.
    Our position on anti-social forces is unwavering.
  • Be a trusted corporate citizen.
    We fully recognize the social scope of our business. We strive to be a company that society, including first and foremost our users, can trust as we perform sound business expansion activities.

Extract 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 Committee (GCC), comprising executive management and core personnel responsible for legal affairs and compliance from Nintendo Co., Ltd. and our major overseas subsidiaries. Specifically, this Committee holds global meetings twice a year for core personnel at the major group companies, as a practical channel for establishing a common understanding and sharing information, while exchanging opinions about compliance-related issues and future legal risks that may affect each of our companies.

Employee Comment

Tammo Godel

Tammo Godel

Legal Department

Nintendo of Europe GmbH
(Germany)

Global Cooperation for Legal Compliance

 As a global company, with our products and services being distributed and offered in many countries around the world, we are required to comply with each of these country's laws and regulations.
 At Nintendo, we appreciate an excellent and close cooperation between our legal teams in the different group companies to coordinate compliance matters, ensure our products and services are compliant, and sense and tackle any upcoming potential risks.
 Beside steady communication on a daily basis among our different Nintendo group companies all over the world in legal, regulatory and compliance matters, we hold global meetings twice a year with legal colleagues from all major group companies, in which we share the latest relevant legal developments that might affect Nintendo and discuss current and future plans and legal strategies. For particular global legal topics, which require stronger coordination and education, we hold additional global meetings with legal experts from the group companies together with stakeholders of the affected business departments.
 Compliance is essential for business and an important part of our work!

Compliance Hotline

 Nintendo Co., Ltd. has established a system, called the Compliance Hotline, for the internal reporting of compliance-related issues. Using the Hotline, employees can confidentially report suspected illegal actions or other misconduct directly to the President, the Audit and Supervisory Committee, or both if desired. It is established to protect employees from any disadvantage when they use this Hotline. Information about the Hotline is shared with new recruits during orientation training.
 Our major overseas subsidiaries also have established similar reporting systems, adapted to the laws and regulations of their respective regions. In the unlikely event that employees at one of our subsidiaries become aware of any misconduct by a member of their executive management, the system in place enables any employees to report the incident directly to the President of Nintendo Co., Ltd.

Protecting and Managing Information

 Nintendo Co., Ltd. has established in-house standards, including the Information Management Standards and 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 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 self-learning tests to supplement and establish employee awareness of the importance of information security.
 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 in order to increase awareness of information security. Training sessions on personal and confidential information management are held periodically at various subsidiaries' offices.

Nintendo Co., Ltd.

Working with the Social Security and Tax Number System

 Nintendo Co., Ltd. revised policy and internal guidelines to implement controls that would allow it to work with the social security and tax number system that was introduced in fiscal year 2015. Part of this effort has been to limit the addition of employees who need to handle social security and tax numbers as a part of our business. Non-related personnel are unable to interact with the systems we created. Data is encrypted and stored on trusted, dedicated servers external to the company, and there are new terminals designed to exclusively access those servers. Users of those terminals are also limited, and our safety protocols include the use of dedicated lines for connecting to and exchanging data with those servers. We also created an internal bulletin to brief employees for a proper understanding of the social security and tax number system with an overview and cautions on handling national identity numbers.

Internal Seminars

 Nintendo Co., Ltd. focuses heavily on compliance training. In fiscal year 2017, a total of 56 new recruits took part in compliance training as part of the orientation training program. Each department is given a questionnaire requesting suggested topics for the seminar; seminar planning is based on departmental needs and the results of these surveys.
 To further raise employee awareness of the importance of compliance, we created a newsletter to disseminate compliance information through our corporate intranet.
 Our overseas subsidiaries work to provide compliance seminars based on regional requirements and employee requests.

Compliance Seminar Data of Nintendo Co., Ltd. (FY 2017)

Nintendo of America Inc.Nintendo of Europe GmbH (Germany)Nintendo Australia Pty Limited

Promotion of Employee Understanding of Code of Conduct

 Nintendo of America's Code of 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 Conduct, all employees are required annually to complete an online Code of Conduct Review.
 In addition to Code of Conduct training for new recruits, Nintendo of Europe regularly provides training for all European subsidiaries. The training is mainly conducted through intranet e-learning; however, live training seminars are held in certain circumstances. Nintendo of Europe most recently carried out Code of Conduct training during fiscal years 2016 and 2017.
 With each reissue of the 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 September 2017 and all employees consented to the new Code of Conduct.

Risk Management

Risk Management

 Nintendo recognizes the importance of identifying, understanding and evaluating the various risks surrounding the company in order to thoroughly reduce and avoid such risks, and the importance of seeking prompt resolution in the event of an incident or accident.

Risk Management

 Nintendo gives each division of the Nintendo Group direct responsibility for the management of its own risks. Nintendo Co., Ltd.'s Internal Auditing Department verifies the risk-management system of each division and Group company and, as needed, suggests policy changes and offers advice.
 We consult outside lawyers and professionals on important legal or compliance issues to ensure that they are duly handled. In addition to standard accounting audits, we consult the Accounting Auditor to discuss and investigate important accounting issues. We have a policy of taking a resolute stand against antisocial forces which pose threats to the social order and safety, and have established responsible departments as a system to act on behalf of the company.
 Based on our risk management policy, the Compliance Committee promotes compliance measures throughout the company by maintaining the Compliance Manual and conducting seminars for employees and Directors. The Product Safety Committee maintains the Product Safety Assurance system to prevent product-related problems, and to facilitate prompt action in the event a problem should occur.

Risk Management for Potential Emergencies

 In preparation for emergencies, including natural disasters, Nintendo Co., Ltd. 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 restoration. In addition, Nintendo Co., Ltd. has created and published the Crisis Management Manual for all employees, which defines the fundamental actions employees should take in the event of an emergency. Furthermore, Nintendo Co., Ltd. has introduced a system for confirming employee safety in the event of an emergency. We periodically conduct drills to administer the system in addition to carrying out fire drills to ensure that employees can quickly flee from the building.
 Our overseas subsidiaries also have created manuals for responding to emergencies in their various regions. For example, Nintendo of America has defined basic actions for employees at each of its branch offices and conducts periodic training, evacuation drills and other exercises.

The Crisis Management Manual

The Crisis Management Manual is the size of a business card so that employees can carry it at all times.

Utilization and Protection of Intellectual Property

Utilization and Protection of Intellectual Property

Utilization of Intellectual Property

 Nintendo announced that starting in fiscal year 2014, it would move toward an approach of actively utilizing its abundance of character IPs, such as Mario. We aim to further increase the value of our character IP so they are loved for a long time, by creating new connections and having them come into contact with more consumers in places other than video game platforms.
 Under this approach we seek to create new connections with consumers with the global launch of game-compatible character IP figures called amiibo, distribution of smart-device applications such as Super Mario Run in various regions throughout the world, and collaborations with Universal Studios.

Intellectual Property Protection

 Intellectual property is the fruit of Nintendo's research and development, and serves as the foundation of Nintendo's business. Recognizing the critical importance of protecting our intellectual property, Nintendo takes anti-counterfeiting protection measures in cooperation with industry groups, and customs and investigative agencies in many regions. We continue to take legal action against those who infringe upon our intellectual property. We also educate the public about the importance of intellectual property protection.
 To improve the ability of consumers and other stakeholders to help us identify and pursue counterfeit products, each major company in the Nintendo Group has a page on its website that enables individuals to provide information on the sale and distribution of counterfeit products. We have been able to act on information received to combat piracy by taking actions such as sending out warning letters to infringers, requesting the removal of counterfeit products listed on Internet auction sites and filing import suspension petitions with customs. Moreover, for malicious cases, we file civil litigation and criminal complaints.
 For example, Nintendo Co., Ltd. won a lawsuit in February 2009 in which it sought to make the importation and sales of game copying devices, such as Magicom, illegal in Japan. Subsequently, suits based on Japan's Unfair Competition Prevention Act were filed, seeking injunctions and compensation from businesses importing and selling those devices. Japan's Supreme Court decided in January 2016 that Nintendo Co., Ltd. was entitled to receive a total of more than 95 million yen as compensation for losses from the defendants.
 We are determined to continue to pursue legal action, both civil and criminal, in the future against not only Magicom, but also against illegal devices, or products that infringe our intellectual property rights.

Nintendo Co., Ltd.

Seminars on Intellectual Property

 At Nintendo Co., Ltd., it is increasingly important for each employee involved in product development to be equipped with knowledge about intellectual property. Therefore, we hold a few seminars for employees a few times per year to cover related topics.
 We believe these efforts let our employees take a more active role in applying and protecting intellectual property rights. This prevents cases where the product ideas that we work so hard to produce might be used by a third party because we failed to protect them, as well as cases where we might unknowingly use intellectual property that belongs to a third party.

Information Disclosure

Information Disclosure

 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 to also make sure that our corporate management policy is well understood. After the announcement of our financial results for the second and third quarters, and the full-year term, Nintendo Co., Ltd. holds Financial Results Briefings hosted by the President for securities analysts and institutional investors. A Corporate Management Policy Briefing is also held once a year at the same time.

Financial Results Briefings and Corporate Management Policy Briefings

Financial Results Briefing

Smooth Operation of Shareholders' Meetings

 To provide our shareholders with even more 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 enables shareholders to vote via the Internet. In addition, for the benefit of our foreign investors, we have made the Convocation Notice available in English and have adopted the Electronic Voting Platform system for institutional investors.

* Information regarding the General Meeting of Shareholders
https://www.nintendo.co.jp/ir/en/stock/meeting/

Nintendo Co., Ltd.

Information Disclosure

 We strive to provide all stakeholders with prompt access to information provided at these meetings by posting reports from the meetings, including the Q&A sessions, on our website in both Japanese and English. In addition, since fiscal year 2010, we have posted summaries of the Q&A sessions from the General Meeting of Shareholders on our website as a part of our efforts to achieve broader disclosure.

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