The 2024 Japan Spencer Stuart Board Index provides a detailed picture of the current state of corporate governance and trends in Japan. The survey is an overview of the Japanese companies listed on the TOPIX 100 and Nikkei 225 indexes, and the year-by-year data enables comparisons and observations that over time reflect the true state of the Japanese companies surveyed. Both are made up of representative Japanese companies, but those listed on the TOPIX 100 index have a higher market capitalization and liquidity, and those listed on the Nikkei 225 index represent a broader cross-section of industries. We also make comparisons with other countries when needed, to bring a global perspective to the situation in Japan.
Highlights of this year’s index include:
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The revised Companies Act of May 2015 introduced a third oversight body, the “company with supervisory committee” for the purpose of enhancing the board supervisory function. Companies now have a choice of three board structures: “company with kansayaku board,” “company with three committees” and “company with supervisory committee.” While over half of Nikkei 225 and TOPIX 100 companies still have kansayaku board structures, today over 20% of companies have moved to a supervisory committee structure.
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There are in total 1,177 external directors on the boards of Nikkei 225 companies and 566 on the boards of TOPIX 100 companies, and the upward trend is continuing in both indexes. Among the external director group, the ratio of independent directors with no conflict of interest is high, at 98% for Nikkei 225 companies and 99% for TOPIX 100 companies, and independent external directors are now the mainstream.
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Foreign directors are increasing year by year, and now make up 29% of Nikkei 225 company boards and 45% of TOPIX 100 company boards. The ratio of foreign nationals on boards is little changed from last year, at 5% for Nikkei 225 companies and 8% for TOPIX 100 companies. However, figures for Japan are low compared with the United Kingdom (37%) and France (36%).
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The number of companies with women board members is increasing steadily each year, and has reached almost 100% for both Nikkei 225 and TOPIX 100 companies. However, the ratio of women among all board members is 20% for Nikkei 225 companies and 22% for TOPIX 100 companies, well below France (47%), the United Kingdom (42%) and the United States (34%). Furthermore, the ratio of companies whose boards have over 30% female representation remains low, at 16% of Nikkei 225 companies and 20% of TOPIX 100 companies. While there has been a significant increase over last year, the figures remain low compared to Western countries.
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When looking at the backgrounds of external directors, around half of those on the boards of Nikkei 225 and TOPIX 100 companies come from the private sector, and over 60% of them have business experience as president, chairman or CEO.