The 2023 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, over 20% of companies have moved to a supervisory committee structure in the eight years since the revised Companies Act.
- There are in total 1,102 external directors on the boards of Nikkei 225 companies and 540 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. Independent external directors are now the mainstream.
- Foreign directors are increasing year by year, and now make up 29% of Nikkei 225 company boards, and 44% of TOPIX 100 company boards. The ratio of foreign nationals on boards is showing a slight increase over last year, at 5% for Nikkei 225 companies and 9% for TOPIX 100 companies. However, figures for Japan are low compared with the United Kingdom (35%) and France (37%).
- Women are on the boards of 98% of Nikkei 225 companies and 99% of TOPIX 100 companies. Representation is increasing steadily each year, and is approaching the almost 100% level for France, the United Kingdom and the United States. However, the ratio of women among all directors is 17% for Nikkei 225 companies and 19% for TOPIX 100 companies, well below France (45%), the United Kingdom (40%) and the United States (33%). Furthermore, the ratio of companies whose boards have over 30% female representation remains low, at 7% of Nikkei 225 companies and 10% of TOPIX 100 companies.
- When looking at the backgrounds of external directors, around half on the boards of Nikkei 225 and TOPIX 100 companies come from the private sector, and just under 70% of these directors have business experience as president, chairman or CEO.