The 2022 Japan Spencer Stuart Board Index provides a clear and detailed picture of the state of corporate governance in Japan. The board index is an overview of the composition and governance practices of Japanese companies listed on the TOPIX 100 and Nikkei 225 indexes. The year-by-year data enables comparisons and observations over time, reflecting the evolving state of governance among the Japanese companies surveyed. The TOPIX 100 and Nikkei 225 indexes are both 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 governance data from other countries, when needed, to bring a global perspective to the situation in Japan.
Highlights of this year’s index include:
-
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 there are still a large number of Nikkei 225 and TOPIX 100 companies with kansayaku board structures, 20 percent of companies have moved to a supervisory committee structure in the seven years since the Revised Companies Act.
-
There are in total 1,055 external directors on the boards of Nikkei 225 companies, and 522 on the boards of TOPIX 100 companies, and the number is increasing in both indexes. Among the external director group, the ratio of independent directors with no conflict of interest is high, at 97.7 percent for Nikkei 225 companies and 98.5 percent for TOPIX 100 companies. Independent external directors with no conflict of interest are establishing a stronger presence.
-
Foreign directors have been appointed at 27.1 percent of Nikkei 225 companies and at 41.0 percent of TOPIX 100 companies, both showing an increase over 2021. The ratio of foreign nationals on boards has increased slightly over last year, at 5.0 percent for Nikkei 225 companies and 7.7 percent for TOPIX 100 companies. However, figures for Japan remain low compared with the United Kingdom and France at 36.0 percent.
-
Women are on the boards of 94.2 percent of Nikkei 225 companies and 93.0 percent of TOPIX 100 companies. The ratio is increasing steadily each year, and is approaching the almost 100 percent level for France, the United Kingdom and the United States. However, the ratio of women among all directors is 14.5 percent for Nikkei 225 companies and 16.4 percent for TOPIX 100 companies, which is well below 45.4 percent for France, 39.0 percent for the United Kingdom and 31.7 percent for the United States. Furthermore, only 7.6 percent of Nikkei 225 companies and 12.0 percent of TOPIX 100 companies have achieved 30 percent female representation on their boards, almost doubling in the past year, but still low compared to the West, where France is at 98.0 percent, the United Kingdom at 92.0 percent and the United States at 60.2 percent.
-
When looking at the backgrounds of external directors, around half of the directors at Nikkei 225 and TOPIX 100 companies come from the private sector, and approximately 70 percent of these directors have business experience as president, chairman or CEO.