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2021 Japan Spencer Stuart Board Index

March 2022

Japan Board Index The Japan Spencer Stuart Board Index 2021 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 “supervisory committee” for the purpose of enhancing the board supervisory function. Companies now have a choice of three board structures: “kansayaku board,” “three committees” and “supervisory committee.” In the six years since the Revised Companies Act, there has been a gradual increase in the number of companies adopting supervisory committee structures, while there are still a large number of Nikkei 225 and TOPIX 100 companies with kansayaku board structures.
  • In total, there are 1,027 external directors on the boards of Nikkei 225 companies and 499 on the boards of TOPIX 100 companies, and the number of directors is increasing in both indexes. The ratio of independent directors among external directors, at 97.5% for Nikkei companies and 98.4% for TOPIX 100 companies. Independent external directors with no conflicts of interest are establishing a stronger presence.
  • Foreign directors have been appointed at 24.4% of Nikkei 225 companies and at 39.4% of TOPIX 100 companies, both showing an increase over last year. The ratio of foreign nationals on boards increased slightly from 2020 to 4.4% for Nikkei 225 companies and 6.7% for TOPIX 100 companies. However, the representation of foreign directors on Japanese company boards remains low compared with countries such as the United Kingdom, at 34.0%, and France at 36.0%.
  • Women are on the boards of 91.1% of Nikkei 225 companies and 92.9% of TOPIX 100 companies. The ratio is increasing steadily each year and is approaching the almost 100% level seen in France, the United Kingdom and the United States. However, the ratio of women among all directors is 12.8% for Nikkei 225 companies and 14.2% for TOPIX 100 companies, which is well below the more than 29% female representation seen in those three countries. Furthermore, just 4.0% of Nikkei 225 companies and 6.1% of TOPIX 100 companies have 30% or more female directors, compared with France at 97%, the United Kingdom at 67% and the United States at 50.3%.
  • When looking at the backgrounds of external directors, around half of the directors on Nikkei 225 and TOPIX companies come from the private sector, and approximately 70% of these directors have business experience as president, chairman or CEO.