Philosophy and Policies

Group Policy (Governance)

We here at Nomura Real Estate Holdings believe in governance that maximizes the value of the corporate group over the long term while considering the interests of its shareholders and other stakeholders. As a holding company, we manage and supervise the business activities of our subsidiaries and strive to build a more transparent management system in accordance with the "Basic Corporate Governance Policy" with the aim of improving the profitability of the entire group.

Corporate Governance Report

Corporate Governance Report
(Last updated: June 21, 2024)

Shareholder Rights and Securing Impartiality

Cross-holding Shares

Nomura Real Estate Holdings formulated the Basic Policy Concerning Strategic Shareholdings within the Basic Corporate Governance Policy for cross-held shares.

Basic Policy Concerning Strategic Shareholdings
Excerpt from “Basic Corporate Governance Policy”

Article 4

1. The Company has a Policy Concerning Strategic Shareholdings that acknowledges contributing to improving the Company’s corporate value from a comprehensive perspective of strengthening transaction relations with counterparties and strategic business tie-ups, etc.

2. When holding strategic shares, the Company regularly grasps the state of transactions with the Group and the state of management at the investee company, and every year the Board of Directors examines the rationality of continuing to hold strategic shares from the perspective of contributing to improving the Company’s corporate value. In addition, in light of the aforementioned examinations, when it is no longer rational to hold them, the Company sells said shares, taking into account market conditions and other factors.

3. The Company makes appropriate decisions when exercising voting rights relating to strategic shareholdings based on whether holdings contribute to improving the Company’s corporate value through improving the investee companies’ corporate value.

4. In the event that a company that holds the Company’s shares as strategic shareholdings (a strategic shareholder) indicates that it intends to sell or otherwise transfer said shares, the Company will respond appropriately and will not obstruct said sale in any way, such as by raising the prospect that a reduction in transactions or the like may ensue.

5. Regardless of whether a given transaction is with a strategic shareholder, it will be carried out after its economic rationality is adequately examined, as is the case with all other counterparties.

Accountability of the Board of Directors

Appointment of Directors

The directors of Nomura Real Estate Holdings are elected at the general meeting of shareholders every year in accordance with the Articles of Incorporation, differentiating directors who are Audit and Supervisory Committee members from other directors. In order to ensure the necessary balance and diversity as a holding company that oversees companies operating in a wide range of fields, directors are those with a variety of knowledge, experience and ability, regardless of nationality and gender. In order to function effectively, we have no more than 12 directors (excluding directors who are Audit and Supervisory Committee members) and no more than 6 directors who are Audit and Supervisory Committee members. The average tenure of the directors is 4.13 years (as of March 31, 2024).

Criteria for Determining Impartiality of Independent External Directors

The Company has established the following criteria for determining Impartiality of independent external directors.

Criteria for Determining the Impartiality of Independent External Directors

Excerpt from Article 14 of the Basic Corporate Governance Policy
Article 14: In addition to Independent Director impartiality criteria set by the Tokyo Stock Exchange, the Board of Directors establishes criteria concerning the impartiality of Independent External Directors and nominates Independent External Directors having confirmed that they do not correspond to any of the following items.

(1)Individuals who execute business for any other company with which the Company or our subsidiaries have a reciprocal employment relationship as each other’s External Directors;

(2)Individuals who are employees of the Company’s or our subsidiaries’ major business partners*1 or who are employees at companies that consider the Company or our subsidiaries to be their major business partner*1 (or individuals involved in the execution of business if such business partner is a corporation);

(3)Consultants, accounting experts, or legal experts who receive money, or other property gains in excess of ¥10 million in addition to Directors compensation from the Company or subsidiaries during the most recent business year;

(4) Individuals affiliated to companies, etc., that provide professional services such as law firms, accounting firms, and consulting companies that receive large sums of money or other property gains*2 from the Company or subsidiaries;

(5)Individuals who are or were involved in the execution of business at one of the Company’s major shareholders (individuals who are or were involved in the execution of business at such corporation if the major shareholder is a corporation), or lead managing underwriter; or

(6)Close relatives of individuals stated in (1) to (5).

A Major business partner means a business partner whose transactions with the Group exceed 2% of the Company’s or such business partner’s annual consolidated sales in the most recent business year.

Large sums of money or other property gains means gains that exceed 2% of the annual consolidated sales of that companies, etc., in the most recent business year.

Name Chiharu Takakura
Reason for Appointment Chiharu Takakura has great knowledge and experience and profound insights into the promotion of human capital management including human resources strategy and development, acquired during her many years executing business in important roles in the human resources division of a global company, as well as participating on specialist committees for a governmental agency. She has been selected as an external director because it is expected that by leveraging her skills and experience she will contribute to the strengthening of the supervisory function of the Board of Directors and corporate governance systems and the fair and transparent management. Furthermore, based on her attributes and relationship with NREH, we determined her as an independent director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders.
Name Yoshinori Yamashita
Reason for Appointment Yoshinori Yamashita has great knowledge, experience and profound insights concerning corporate management acquired through his many years working as a corporate manager. He has been selected as an external director because it is expected that by leveraging his skills and experience he will contribute to the strengthening of the supervisory function of the Board of Directors and corporate governance systems and the fair and transparent management. Furthermore, based on his attributes and relationship with NREH, we determined him as an independent director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders.
Name Yoshio Mogi
Reason for Appointment Yoshio Mogi has great knowledge, experience and profound insights concerning corporate management acquired through his many years working as a corporate manager. He has been selected as an external director as Audit & Supervisory Committee member because it is expected that his extensive experience and knowledge will contribute to strengthening the supervisory function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, we determined him as an independent director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders.
Name Akiko Miyakawa
Reason for Appointment Akiko Miyakawa has great knowledge, experience and profound insights as an expert at accounting and auditing acquired through her many years working as a Certified Public Accountant. She has been selected as an external director as Audit & Supervisory Committee member because it is expected that her extensive experience and knowledge will contribute to strengthening the supervisory function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure, although she has no previous experience involved in the management of a company other than as an external officer. Furthermore, based on her attributes and relationship with NREH, we determined her as an independent director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders.
Name Tetsu Takahashi
Reason for Appointment Tetsu Takahashi has great knowledge, experience and profound insights as a legal expert acquired through his many years working as a lawyer. He has never been involved in the management of a company other than as an external officer, however he has been selected as an external director as Audit & Supervisory Committee member because it is expected that his extensive experience and knowledge as a representative of a law firm and an outside director and outside audit & supervisory board member of other companies will contribute to strengthening the supervisory function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure.
Furthermore, based on his attributes and relationship with NREH, we determined him as an independent director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders.
Name Aogi Suemura
Reason for Appointment Aogi Suemura has great knowledge, experience and profound insights as an expert at accounting and auditing acquired through her many years working as a Certified Public Accountant. She has been selected as an external director as Audit & Supervisory Committee member because it is expected that her extensive experience and knowledge as a Certified Public Accountant and an external director and an outside audit & supervisory board member of other companies will contribute to strengthening the supervisory function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure, although she has never been involved in the management of a company other than as an external officer. Furthermore, based on her attributes and relationship with NREH, we determined her as an independent director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders.

Approach to Diversity of the Board of Directors

In order to ensure the necessary balance and diversity as a holding company that oversees companies operating in a wide range of fields, it is our policy to appoint diverse directors with a variety of knowledge, experience, and ability, regardless of gender, race, nationality, or cultural background.

Assessing the Effectiveness of the Board of Directors

To assess the effectiveness of the Board of Directors in the fiscal year ended March 2023, as in the previous fiscal year, the Company conducted questionnaires and interviews of all directors (including Audit & Supervisory Committee Members) utilizing a third-party evaluation organization. The results of analysis and assessment based on discussions at a meeting of the Board of Directors are outlined below.

Results of analysis and assessment
Highly regarded points Issues, future improvement measures
Members The scale of the Board of Directors and the ratio of independent external directors are broadly appropriate.
Discussions Discussions are free and lively, exceeding internal and external limits and leveraging the knowledge and experience of each director. In particular, discussions were enhanced through the opinions, etc., from external directors.
Operation Stable operation is being achieved with materials provided beforehand and the number of agenda items being balanced. Continued improvement efforts are needed to ensure more time for deliberation of important agenda items.
Matters for discussion A certain amount of substantial discussion based on the perspective of the Company’s sustainable growth and enhancement of corporate value was conducted in the deliberation of individual projects. Discussions of strategy that require a medium- to long-term perspective need to be enhanced further.
For the fiscal year ending March 2025, the Company has designated “enhancement of discussions aimed at increasing corporate value over the medium to long term” and “strengthening IR and governance function” as priority measures, and it will promote initiatives aimed at further improving corporate value and strengthening corporate governance.

Going forward, the Company will regularly discern areas for improvement by annually assessing and further enhancing the effectiveness of the Board of Directors.

Compensation Plan of Directors

Compensation for Each Category of Executive

FY2023

Directors (excluding Directors who also serve as Audit & Supervisory Committee Members) (excluding External Directors) Directors (Audit & Supervisory Committee Members) (excluding External Directors) External Directors
Total Amount of Compensation, etc. (Million Yen) 707 102 66
Base Compensation (Million Yen) 279 102 63
Bonus (Performance-based Incentives, etc.) (Million Yen) 144
Share-based Compensation (Non-monetary Compensation, etc.) (Million Yen) Performance-based Portion (Million Yen) 196
Non-Performance-based Portion (Million Yen) 86 3
Number of Directors Applicable 6 2 4

a. The number of directors (excluding directors as Audit & Supervisory Committee Members, and external directors) is five as of the end of the fiscal year ended March 2024. The difference from the “Number of Directors applicable” column above is due to the inclusion of one director who retired as of the conclusion of the Ordinary General Meeting of Shareholders held on June 23, 2023.

b. The number of directors (Audit & Supervisory Committee Members) (excluding external directors) is two as of the end of the fiscal year ended March 2024.

c. The number of external directors is four as of the end of the fiscal year ended March 2024.

d. The amount of compensation for directors is shown as the amount recorded by the Company as an expense for compensation and related items for the fiscal year ended March 2024, regardless of whether it was paid during the fiscal year ended March 2024. It should be noted that the payment amount in the “Bonus (Performance-based incentive, etc.)” column above does not include the difference (¥13 million) between the provision for bonuses for five directors (excluding directors who are Audit & Supervisory Committee Members and external directors) for the fiscal year ended March 2023 and the bonus amount paid for the fiscal year ended March 2024. In addition, regarding the performance-based portion of share-based compensation, for the fiscal year ended March 2024, there was a difference (¥4 million) between the amount recorded as an expense in prior fiscal years in the form of the number of points granted to two directors (excluding directors who are Audit & Supervisory Committee members and external directors) and the amount paid through the issuance of shares during the fiscal year ended March 2024.This difference amount is not included in the amount paid in the “Share-based compensation (Non-monetary compensation, etc.)” column above.

e. The compensation amount (“base compensation” and “bonus”) of directors has been set as no greater than ¥550 million per year for directors (excluding directors as Audit & Supervisory Committee Members) according to a resolution at the Ordinary General Meeting of Shareholders held on June 26, 2018, and at the time of the resolution, the number of directors (excluding directors as Audit & Supervisory Committee Members) was eight (of which, two were external directors). Furthermore, the compensation amount of directors (Audit & Supervisory Committee Members) is limited to up to ¥170 million per year according to a resolution at the Ordinary General Meeting of Shareholders held on June 23, 2020. The number of directors as Audit & Supervisory Committee Members at the time of the resolution was six (including four external directors). Of that compensation amount, the Company pays the compensation shown in the table above.The compensation amount of directors is shown as the amount recorded by the Company as an expense during the fiscal year ended March 2024 regardless of whether it was paid during the fiscal year ended March 2024. In addition, by resolution of the Ordinary General Meeting of Shareholders held on June 21, 2024, the compensation limit for directors (Audit & Supervisory Committee Members) has been revised to within ¥180 million per year, and the number of directors who are Audit & Supervisory Committee Members related to this resolution is six (including four external directors).

f. Separately from the compensation amount of directors shown in e. above, the Company introduced a performance-based share-based compensation plan. By the resolution of the Ordinary General Meeting of Shareholders held on June 24, 2022, the three fiscal years starting from the fiscal year ending March 31, 2023, were made the new covered period (and in the event that the extension of the period is carried out, the three subsequent fiscal years shall become the covered period), and a maximum amount of ¥1,650 million and 672,000 shares to be contributed to the trust as compensation to directors (excluding directors as Audit & Supervisory Committee Members) (including a maximum amount of ¥9.90 million and 4,030 shares for each external director for every three fiscal years). At the time of the resolution, the number of directors (excluding directors as Audit & Supervisory Committee Members) subject to the Plan is seven.

g. With respect to the performance-based compensation, the details of factors including the performance indicators that pertain to bonuses, which are monetary compensation, the calculation method of such bonuses and the reasons for selecting these indicators are as stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report. The actual results that pertain to performance indicators are as presented in the table below.

FY2020 FY2021 FY2022 FY2023
Business profit 76,448 million yen 92,765 million yen 105,172 million yen 113,665 million yen
Year-on-year change -7.7% +21.3% +13.4% +8.1%

h. With respect to the performance-based compensation, the details of factors including the performance indicators that pertain to share-based compensation, etc., the calculation method of such share-based compensation, etc. and the reasons for selecting these indicators are as stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report. The ranges of performance indicators were decided as presented in the tables below.

(The ranges for FY2023, the third year from the start of the system in FY2021)

Ranges Results
Range Performance Performance-based coefficient 0%~200% 143.0%
Business profit 83,300 million-116,700 million yen 113,665 million yen
ROE 6.5%~12.5% 10.1%

i. Non-monetary compensation, etc. consists of the Company’s shares, etc. and the conditions, etc. for delivery are as stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of Corporate Governance Report. Regarding the performance-based portion of share-based compensation, for the fiscal year ended March 2024, there was a difference (¥4 million) between the amount recorded as an expense in prior fiscal years in the form of the number of points granted to two directors (excluding directors who are Audit and Supervisory Committee Members and external directors) and the amount paid through the issuance of shares during the fiscal year ended March 2024.

j. As stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of Corporate Governance Report, the decisions on the specific details concerning the amounts of base compensation and bonuses to be paid out, which is monetary compensation for the fiscal year ended March 2024, were delegated to Satoshi Arai, who has been serving as President and Representative Director, based on a resolution of the Board of Directors. The reason for this delegation to the President and representative director is that the Company has judged the President and representative director as appropriate to conduct the individual evaluation of each director while considering, among other things, performance of the Company overall. The payment level is deliberated by the Advisory Committee Relating to Nominations and Compensation for the appropriate exercise of the decision authority delegated to the President and representative director.

Total Consolidated Compensation, etc., for Those Receiving Total Consolidated Compensation of 100 Million Yen or More

Name Director category Company category Total amount of compensation, etc. (million yen) Base compensation (million yen) Bonus (Performance-based incentive, etc.) (million yen) Share-based compensation (Non-monetary compensation, etc.)
Performance-based portion (million yen) Non-performance-based potion(million yen)
Eiji Kutsukake Director Filing company 162 64 3 52 41
Satoshi Arai Director Filing company 169 64 51 38 15
Daisaku Matsuo Director Filing company 157 57 45 41 13
Makoto Haga Director Filing company 118 42 31 35 9
Hiroshi Kurokawa Director Filing company 105 38 25 33 8

Outline of Compensation Plan of Directors

At a meeting of the Board of Directors, the Company resolved the policy for deciding the details of the compensation, etc. for each individual director excluding Audit & Supervisory Committee Members. In addition, the Company established the Advisory Committee Relating to Nominations and Compensation, where the majority of members composing that body are Independent External Directors, and the Board of Directors resolved the operation, etc. of the compensation plan for the directors, based on the deliberation by the committee and on the committee’s opinion reported to the Board of Directors.
Furthermore, the Board of Directors has judged that the compensation, etc. for each individual director in the fiscal year ended March 2024 is in line with this policy regarding decisions of compensation, etc. as it has confirmed that the method for deciding the details of compensation, etc. and the details of the compensation, etc. that were determined are consistent with this policy regarding decisions of compensation, etc.
In addition, since the fiscal year ended March 2020, the Company have incorporated initiatives for addressing environmental and social issues, including climate change, into the performance evaluation of officers.

(1)Basic policy

1. Compensation for Directors consists of a structure that is linked to the Mid- to Long-term Business Plan, etc. in order to sufficiently work as an incentive for the sustainable improvement of corporate value, and the Company’s basic policy in deciding compensation for each Director is to provide an appropriate level of compensation according to the role and position as a director.

2. Operation and revision of the compensation plan for Directors and the amount of the compensation for Directors are determined by the Board of Directors based on the deliberation by the Advisory Committee Relating to Nominations and Compensation and its opinion reported to the Board of Directors.

3. In reviewing the appropriateness of the compensation level and the content of the share-based compensation plan, the Company takes consideration of factors such as the size of the Company and business characteristics, after obtaining advice from an external compensation consultant as necessary.

4. Compensation of Directors concurrently serving as Executive Officers consists of “base compensation,” “bonus” and “share based compensation” so that it works as a clear incentive to improve performance not only for the short-term, but also for the medium- to long-term.

5. Compensation of the Chair and Director and External Directors is made up of the “base compensation” and the “restricted shares (“RS”) portion of share-based compensation,” taking into account the sharing of interests with shareholders, since the Chairman of the Board of Directors is responsible for supervising execution of business from an objective standpoint and also for enhancing long-term corporate value.

6. Compensation of Part-time Internal Directors consists only of “base compensation” due to their role of supervising the business execution from an objective standpoint.

(2)Policy regarding decisions on the percentage of each type of compensation for each Director

1. The composition ratio of each type of compensation for Directors concurrently serving as Executive Officers is decided based on 2. and 4. in (1) above.

2. The composition ratio of each type of compensation for the Chair and Director and External Directors is decided based on 2. and 5. in (1) above.

3. Compensation of Part-time Internal Directors consists only of “base compensation” based on 2. and 6. in (1) above.

(3)Policy regarding decisions on the amount of fixed compensation (base compensation) for each Director (including the policy regarding decisions on the timing and conditions for paying compensation)

1. The amount of fixed compensation (base compensation) for each Director shall be determined according to the role and position as a Director.

2. The fixed compensation (base compensation) shall be paid monthly.

(4)Policy regarding decisions on the details of variable compensation (bonus and share-based compensation) for each Director and the calculation method for the monetary amount or number of shares (including the policy regarding decisions on the timing and conditions for paying compensation)
Bonus:

1. The amount of bonus is determined according to the Company’s business performance, such as consolidated business profit, and evaluation of individuals.

2. While largely focusing on the above evaluations, the Company will also evaluate its performance using non-financial indicators (sustainability factors, etc.). The fiscal years subject to such evaluations shall be from the fiscal year ending March 2023.

3. The evaluation of individuals evaluates the progress of initiatives for single-year and the medium- to long-term, for which achievements are difficult to measure based only on the figures of financial results.

4. It shall be paid at a certain time after the end of each fiscal year.

Reference: The Company revised the policy regarding decisions of the details of the compensation, etc. for each of the directors excluding Audit & Supervisory Committee Members from the fiscal year ended March 2023, deciding that the details and calculation method for performance indicators, etc., relating to bonuses, which are monetary compensation, would retain a central emphasis on evaluation of performance in terms of consolidated business profit, etc., but would also include an evaluation by non-financial indicators (sustainability factors, etc.). The purpose of this change is to promote initiatives aimed at increasing corporate value over the medium to long term through increasing directors’ awareness of sustainability, and in the fiscal year ended March 2024, the Company conducted an evaluation based on BEI* as a non-financial indicator.
Note: The Building Energy-efficiency Index is for evaluating the energy-efficiency performance of buildings based on the energy efficiency standards under the Act on the Improvement of Energy Consumption Performance of Buildings (Building Energy Efficiency Act). It represents the primary energy consumption standard for buildings.

Share-based compensation:

1. The performance-based compensation adopts performance-sharing (“PS”) providing incentive for enhancement of medium- to long-term performance, and implements, after three years of the commencement of each business year, delivery or payment (“delivery, etc.”) of the Company’s shares and/or an amount equivalent to the proceeds of converting the Company’s shares into cash (the “Company Shares, etc.”).

2. The non-performance-based potion adopts restricted shares (“RS”) providing an incentive for long-term contributions and enhancement of corporate value by delaying delivery, etc., until retirement as an officer.

3. The share-based compensation system adopts the system of executive compensation BIP (Board Incentive Plan) trust (the “Trust”). The number of shares, etc., to be delivered, etc., is set at one Company’s share per one point, according to the number of points calculated based on the below formula.

Calculation formula of points:

●PS portion
The number of points (the “Number of PS Points”) to be granted to directors for each fiscal year during the covered period is calculated by dividing the amount of pre-determined base compensation with respect to each executive position by the share price as of the acquisition of the Company’s shares by the Trust. The number of achievement-linked points shall be calculated by multiplying the Number of PS Points granted for each fiscal year by the achievement-linked coefficient determined based on the level of performance three years after the beginning of the applicable fiscal year. For the achievement-linked coefficient, the target ranges (0-200%) are set based on the “business profit” from the viewpoint of profit growth, and return on equity (ROE) from the viewpoint of maintaining the capital efficiency, out of the management benchmarks listed in the Mid- to Long-term Business Plan.

●RS portion
The number of points (the “Number of RS Points”) to be granted to directors and added for each fiscal year during the covered period is calculated by dividing the amount of pre-determined base compensation with respect to each executive position by the share price as of the acquisition of the Company's shares by the Trust.

(5) The method for determining the details of compensation for each director, etc.

1. The determination of the specific details of the amount of base compensation and bonuses, both of which are monetary compensations, to be paid out is delegated to the president and representative director based on a resolution of the Board of Directors.

2. The payment level shall be deliberated by the Advisory Committee Relating to Nominations and Compensation for the appropriate exercise of the authority stated in (1) above by the president and representative director.

(6)Other important matters concerning individual compensation
Regarding share-based compensation, the Company formulated “share delivery regulation” to handle repayment claims at an amount equivalent to the Company Shares, etc. to be delivered, etc. in the event that specific circumstances (improper conduct, etc.) occur.

Reference: In the event of serious misconduct or violation by a director, the Company may demand the loss or forfeiture of the right to receive the Company Shares, etc., provided to the relevant director under this system (malus), or demand repayment at an amount equivalent to the Company Shares, etc., that have been delivered (clawback).

Shareholdings by Directors

The Company has a compensation plan for granting Company shares to directors (excluding Audit & Supervisory Committee members, and external directors) to provide an incentive to increase corporate value over the medium to long term and share the interests of the Company’s shareholders.

Overview of Corporate Governance

Board of Directors

The Board of Directors bears the responsibility of realizing effective corporate governance for all shareholders, and through this, achieving sustainable growth of the Company and working to maximize long-term corporate value. To fulfill this responsibility, the role of the Board of Directors is to ensure the fairness and transparency of management by fully supervising management, and make the best decisions for the Company through important business execution decisions, etc.
The Company’s Board of Directors comprises seven directors (excluding directors who serve as Audit & Supervisory Committee Members) (of which two are external directors) and six Directors who serve as Audit & Supervisory Committee Members (of which four are external directors). The Company elects diverse directors with various knowledge, experience and skills in order to ensure the necessary balance and diversity as a holding company that manages companies that conduct business in various areas.
In order to strengthen the supervisory function of the Board of Directors and realize highly fair and transparent management, six out of the 13 directors are Independent External Directors.

Board Members

Audit and Supervisory Committee

Nomura Real Estate Holdings has an Audit and Supervisory Committee that comprises a majority of external directors and is responsible for management oversight. The Audit & Supervisory Committee monitors business management and performs audits utilizing the Company’s internal control system. We have developed a system through which the Committee receives periodic reports on internal audits and results from the Internal Audit Dept., and has the authority to ask directors, executive officers, and operating divisions of the Company and Group companies to report such matters when necessary. Audit & Supervisory Committee Members can attend the Company’s important meetings, including those of the Management Committee, gather information on the business execution, and express their opinions so that an effective system for audits and supervision is secured.

Audit & Supervisory Committee (6 Members, Including 4 Independent External Directors)
Name Attribute
Hiroyuki Kimura (Chairman) Full-time
Yasushi Takayama Full-time
Yoshio Mogi Independent External Director
Akiko Miyakawa Independent External Director
Tetsu Takahashi Independent External Director
Aogi Suemura Independent External Director

Advisory Committee Relating to Nominations and Compensation

The Company has set up an Advisory Committee Relating to Nominations and Compensation, the majority of which are Independent External Directors, as an advisory organization to strengthen the impartiality, objectivity and accountability of the functions of the board of directors in relation to decisions on director and executive officer nominations and compensation. The committee will discuss matters relating to the nomination of and compensation for directors and executive officers, successor plan, policy for training, etc. and shall report the outcome of discussions to the Board of Directors.

Advisory Committee Relating to Nominations and Compensation (4 Members, Including 3 Independent External Directors)
Name Attribute
Eiji Kutsukake Chair and Director
Tetsu Takahashi Independent External Director and Audit & Supervisory Committee Member
Yoshio Mogi Independent External Director and Audit & Supervisory Committee Member
Yoshinori Yamashita Independent External Director

The chairman will be selected from among the independent external directors.

Management Committee

The Company has introduced a system of executive officers with an aim to strengthen Group management by separating and enhancing the business execution function from the management decision-making and supervisory functions. Each executive officer appointed by the Board of Directors is delegated management authority based on the Company’s internal rules and other stipulations to execute business under the direction of the president and representative director and policies approved by the Board of Directors of the Company.
The Management Committee, which is comprised of the chief executive officer, the executive vice president and executive officers, determines certain matters regarding the execution of business at overall Group companies. The chairman of the Board of Directors and Directors who are Audit & Supervisory Committee Members attend meetings of the Committee, where they express their opinions as necessary.

Other Committees

Under the Management Committee, there are the following committees that discuss the Group’s management policies, issues to be coped with, etc.

a. Budget Committee
For the compilation of budgets, preparation of Mid-to Long-term Business Plan, and other matters, the Committee discusses the planning, exercise, and other matters regarding budgets and Mid-to Long-term Business Plan as a subordinate organization of the Management Committee.

b. Risk Management Committee
With the aim of securing the continuity and stable development of business through the exercise of risk management, the Committee discusses matters in connection with internal controls, risks in the Group’s management, and other matters.

c. Sustainability Committee
The committee discusses matters on the promotion of sustainability and others for the purpose of establishing policies and plans and managing results regarding the promotion of sustainability, deepening Group employees’ understanding, and disclosing various information thereof.

d. DX Strategy Committee
The Committee discusses matters on DX strategy and investment plans for preparing the ICT base and establishing information systems with the aim of establishing policies and plans regarding the promotion of DX and improving the ICT environment and its effective use.

e. Human Resource, Wellness, D&I Committee
With the aim of promoting human capital strategies that are linked to business strategies and carrying out other measures, the Committee discusses matters related to Group-wide issues in terms of human resources and the placement of the right persons in the right positions in each Group company (placement and promotion, development, and recruitment), matters related to developing working environments (wellness and D&I), and other matters.

Internal control system

Internal control system

Nomura Real Estate Holdings has established the Board of Directors, the Audit and Supervisory Committee, and the Advisory Committee Relating to Nominations and Compensation for internal control.

Risk management system

Nomura Real Estate Holdings established a Risk Management Committee to promote risk management activities within the Group. The committee is made up of directors and executive officers of the Company and Group companies, and deliberates matters relating to risk management, compliance, and information security for the entire Group, and discusses countermeasures for when risks occur.

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Compliance System

The Group regards compliance, including the observance of laws and regulations and corporate ethics, as one of our most important management issues. As a set of relevant guidelines, the Company has formulated the Nomura Real Estate Group Code of Action. We have established the Risk Management Committee and Group Legal & Compliance Department in the Company to promote continuous education and enlightening activities for the executives and employees of the entire Group, and to provide advice, guidance, and support to Group companies.
Furthermore, based on our priority of collecting information regarding risks, the Company has set up the Nomura Real Estate Group Helpline as a point of contact for internal reporting by Group employees. The Company imposes confidentiality obligation on employees who are involved in the helpline business and prohibits unfair treatment for reporting an incident using the helpline.

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Internal Audit System

With the exception of some small companies, the Group has an internal audit department in each company. These departments maintain organizational independence by setting up officers under the direct control of the president or directors who do not hold additional office in other business divisions.
In addition, the Company established the Group Internal Audit Department, which, in cooperation with the accounting auditor, oversees, monitors, and evaluates the internal audit function of the entire Group and conducts audits of each department within the Company. The details of the internal audit plan are reported to the Audit & Supervisory Committee and for its consent. The committee also gives recommendations or instructions on changes to the internal audit plan, additional audits, investigations, and related matters, as necessary. In formulating the internal audit plan, the Company establishes a common internal audit policy for the Group, and each company then formulates its own three-year medium-term plan in accordance with this policy. The Company also strives to maintain and improve the quality of internal audits through information exchange, joint training, joint audits, personnel exchanges, and other means, with the Group companies. The results of internal audits are in principle reported monthly to the Audit & Supervisory Committee and to the representative director and the Board of Directors on a quarterly basis. The Group Internal Audit Department has several personnel with professional qualifications, such as certified internal auditors, and directors are required to consult with the Audit Committee before appointing the head of this department.

Audit and Supervisory Committee Audit System

The Audit & Supervisory Committee is comprised of six members, two Audit & Supervisory Committee Members (full-time) and four Audit & Supervisory Committee Members (Independent External Directors). In addition, one of the Audit & Supervisory Committee Members (Independent External Directors) was newly appointed at the 20th Ordinary General Meeting of Shareholders held on June 21, 2024. The two full-time members were elected to strengthen the effectiveness of audit and supervision functions through the collection of information from directors (excluding directors who are Audit & Supervisory Committee Members), executive officers, employees, etc., attendance at important meetings and close cooperation with the Internal Audit Dept. The Audit & Supervisory Committee holds regular meetings prior to monthly Board of Directors meetings with all Members attending the meetings. It also holds irregular meetings as necessary. During the fiscal year ended March 2024, the Committee held 12 meetings.
Each of the monthly meetings took approximately three hours. After receiving audit reports from the Internal Audit Dept., reports on important meetings, including those of the Management Committee, from the full-time Audit & Supervisory Committee Members, semiannually reports of the operation status of internal reporting systems from the Group Legal & Compliance Dept. and quarterly financial reports from the Finance & Accounting Dept., the members of the Audit & Supervisory Committee, among other activities, exchanged opinions with Group CFO, executive officer and supervisor of Management Division on a regular basis, received reports of what was discussed at meetings of the Advisory Committee Relating to Nominations and Compensation, and confirmed the details of those discussions.
The Company also adopts measures to enhance the effectiveness of audits, having established an Audit & Supervisory Committee Dept. to support the execution of duties by the Audit & Supervisory Committee and appointed full-time staff dedicated to the department.

Results

Meetings in FY2023

Types of Meetings Number of meetings held Types of Meetings Number of meetings held
Board of Directors 13 Budget Committee 9
Audit & Supervisory Committee 12 Risk Management Committee 7
Advisory Committee Relating to Nominations and Compensation 7 Sustainability Committee 3
Management Committee 46 DX Strategy Committee 12

Reporting scope: Nomura Real Estate Holdings

Attendance rate at meetings of the Board of Directors and the Audit & Supervisory Committee

FY2020 FY2021 FY2022 FY2023
Board of Directors (%) 100 99.6 99.4 100
Of which are external directors (%) 100 99.0 98.2 100
Audit & Supervisory Committee (%) 100 100 100 100
Of which are external directors who serve as Audit & Supervisory Committee members (%) 100 100 100 100
Advisory Committee Relating to Nominations and Compensation (%) 100 100
Of which are external directors (%) 100 100

Reporting scope: Nomura Real Estate Holdings

Attendance of external directors at meetings of the Board of Directors and the Audit & Supervisory Committee held in FY 2023 (current external directors only)

Board of Directors Audit & Supervisory Committee
Chiharu Takakura* Attended all 10 meetings -
Yoshio Mogi Attended all 13 meetings Attended all 12 meetings
Akiko Miyakawa Attended all 13 meetings Attended all 12 meetings
Tetsu Takahashi Attended all 13 meetings Attended all 12 meetings

The number of Board of Directors held in the fiscal year ended March 2024 after being appointed as Board of Directors Member on June 23, 2023 is presented.


For more details, see the ESG Data (Governance).

Accounting Audits

1. Name of auditing firm Ernst & Young ShinNihon LLC
The Company appointed Ernst & Young ShinNihon LLC as the Accounting Auditor pursuant to the Companies Act.

2. Continued auditing period Since June 2004

3. Certified Public Accountants involved in auditing
Certified Public Accountant/Designated and Engagement Partner Toshihiro Morishige Certified Public Accountant/Designated and Engagement Partner Kenji Sato
Certified Public Accountant/Designated and Engagement Partner Masahiro Yawata
Ernst & Young ShinNihon LLC takes measures to ensure that Engagement Partners do not continue their involvement in NREH accounting audits for more than seven consecutive accounting periods (five accounting periods for Head Engagement Partners at listed companies).

4. Assistants involved in auditing
Certified Public Accountants: 8, Part-qualified Accountants, etc.:8, Other: 13

5. Policy and reasons for selection of Accounting Auditor
The Audit & Supervisory Committee has appointed an auditing firm based on the regulations stipulated by the Audit & Supervisory Committee and the criteria for evaluation and appointment of the Accounting Auditor. If the Accounting Auditor is recognized as falling under any of the items listed in Article 340, Paragraph 1 of the Companies Act, the Accounting Auditor shall be dismissed with the unanimous consent of all Audit & Supervisory Committee Members. In addition, notwithstanding the above, if it is recognized that the Accounting Auditor’s fulfilment of appropriate auditing would be difficult due to the occurrence of reasons that compromise the eligibility or independence of the Accounting Auditor, the Audit & Supervisory Committee shall propose the dismissal or non-reappointment of the Accounting Auditor, and the appointment of a new Accounting Auditor at a General Meeting of Shareholders. The Audit & Supervisory Committee ensures the appropriateness of the procedures for evaluation and appointment of the Accounting Auditor, and prepares for the cases where the Company needs to appoint the new Accounting Auditor. On a regular basis, the Company requests business proposals for accounting audits from the major auditing firms, and evaluates each business proposal through interviews, questions, etc., focusing on the quality control system and independence of the auditing firm, the audit implementation system, etc., and the estimated amount of audit fees.

6. Evaluation of the Accounting Auditor by the Audit & Supervisory Committee
The Audit & Supervisory Committee discusses and determines the appropriateness of reappointment of the Company’s Accounting Auditor and the team engaged in the audit each year after it obtains necessary information and receives reports from the Accounting Auditor and considers the execution conditions of its duties (including the execution conditions in the previous fiscal years). Based on the criteria for evaluation and appointment of the Accounting Auditor, the Audit & Supervisory Committee judges it proper to reappoint the current auditing firm after having performed an evaluation from the aspects of the auditing firm’s quality management conditions, independence of the audit team in charge of the Company and expression of its professional skepticism, appropriateness of audit fees, effectiveness of communication between management and the Audit & Supervisory Committee and response to fraud risks.

Corporate Governance System

Chart of Corporate Governance System (as of June, 2024)

Integrated Report 2023

Details of the corporate governance system are provided in the Integrated Report.

Integrated Report 2023