This report was produced using non-VOC inks. All electricity to print this booklet was generated by green energy. (250 kWh) Editorial Policy In FY2012/13, we began publishing the Nomura Report, an integrated version of our annual report and our citizenship report, which detailed our CSR initiatives. We hope that this integrated report helps readers gain a broader understanding of our activities Contents Highlights Highlights of the Fiscal Year .................................. 1 Financial Highlights (US GAAP) ............................. 2 Message from the CEO ......................................... 4 to support sustainable development and aim to grow and develop Message from the COO ........................................ 8 together with our stakeholders, including our shareholders and Message from the CFO ....................................... 10 customers, as Asia’s global investment bank. Feature: | Report Period April 1, 2013 to March 31, 2014 (Some content may be outside this time frame.) | Previous Report September 2013 | Next Report August 2015 | Entities Covered Nomura Holdings, Inc. and its major subsidiaries and affiliates (http://www.nomuraholdings.com/company/group/) Numerical data are presented alongside information on the scope of companies covered. | Reference Guidelines • Sustainability Reporting Guidelines of the Global Reporting From Savings to Investme nts — Drawing on Our Full Capabilities to Promote NISA ............ 12 Review of Operations Company Segments ............................................. 14 Retail .................................................................... 16 Asset Management .............................................. 20 Wholesale ............................................................. 24 Global Research ................................................... 28 Contributing Solutions to Social Issues through Our Business ......................................... 30 Initiative (GRI) This report contains information regarding the standard Governance disclosure items contained in the fourth edition of the GRI Corporate Governance ......................................... 32 Sustainability Reporting Guidelines. Please access the following URL on our corporate website for our GRI Guidelines Index. http://www.nomuraholdings.com/csr/gri/ • Environmental Reporting Guidelines (2012 Version) of Japan’s Ministry of the Environment • Charter of Corporate Behavior of Keidanren External Recognition Nomura’s CSR initiatives and its ESG (Environmental, Social, and Governance) information disclosure practices have been widely recognized outside the Company. Nomura Holdings has been selected for inclusion in the Dow Jones Sustainability Indices and the Directors ............................................................... 36 Interview with Masahiro Sakane, Outside Director ................................................. 38 Executive Management Structure ........................ 40 Compliance .......................................................... 41 Risk Management ................................................ 44 CSR Management ................................................ 46 Society and Environment Our People ........................................................... 48 Our Community .................................................... 51 FTSE4Good Index, both socially responsible investment (SRI) indexes. Our Environment .................................................. 54 Involvement in External ESG Initiatives • Principles for Responsible Investment (UN PRI) • Principles for Financial Action towards a Sustainable Society (Principles for Financial Action for the 21st Century) • Banking Environment Initiative • CSR Asia Data Section Six-Year Financial Summary (US GAAP) .............. 56 CSR Key Facts ..................................................... 58 Independent Assurance on Environmental Reporting ............................... 63 Global Network ..................................................... 64 Nomura Securities Domestic Network ................. 65 Corporate Data ..................................................... 66 Website Information ............................................. 67 This report was produced using non-VOC inks. This report was produced using non-VOC inks. All electricity to print this All electricity to print this booklet was generated by booklet was generated by green energy. (250 kWh) green energy. (250 kWh) About Nomura Group Nomura Is a Global Financial Services Group Based in Asia The Community Global Markets Global development of sales and trading in bonds, stocks, foreign exchange, and derivatives businesses for institutional investors in Japan and overseas• Strong client base • Product syndication capabilities drawing on sophisticated financial technology The Nomura Group, through Group-wide collaboration, is taking the initiative in creating new value and services that it shares with its stakeholders by drawing on its core skill of “finance” and its “network.” Nomura Personnel Wholesale Clients Asset Management Investment Banking Development of services that include underwriting of bonds and stocks, M&A advisory, and offering solutions tailored to client needs • Top-level syndication and execution capabilities • Strong network Retail Nomura offers a broad range of financial services to its individual and corporate customers through its 159 branches and other offices in Japan, its call center, and its Internet services. • Sophisticated consulting capabilities • Abundant lineup of products Nomura’s asset management business, centered around Nomura Asset Management Co., Ltd., is global in scope. Individual investors and institutional investors in Japan and overseas entrust the management of their assets to Nomura, and Nomura responds through investment advisory, investment trust, and other related services. • Japan’s largest asset management company • Offering creative products • High-quality portfolio management capabilities • Supported by the Nomura Group systems Stockholders and Investors The mother market of the Nomura Group is in Asia, including Japan, and it offers financial services through its global network. With three main segments-Retail, Asset Management, and Wholesale-the Nomura Group offers high value added services to its clients in Japan and the rest of the world through an international network that covers more than 30 countries. Environment Nomura Group Approach to CSR Responsible Business Corporate Governan ce Compliance Business for Sustainability Contributing to society through its main businesses Citizenship As a member of communities and society as a whole History of the Nomura Group Around 1872 Tokushichi Nomura founded the “Tokushichi Nomura Money Exchange Office” 1904 Tokushichi Nomura II inherited the family business and expanded intermediary services for spot securities transactions 1906 Began to issue research reports entitled Osaka Nomura Store Bulletin 1925 The Securities Department of Osaka Nomura Bank split off into a separate company: Nomura Securities Co., Ltd. 1927 Established a representative office in New York 1930 Nihonbashi Nomura Building completed 1949 Became a full member of the Tokyo Stock Exchange 1959 Founded Nomura Securities Investment Trust Management Co., Ltd. (currently incorporated into Nomura Asset Management Co., Ltd.) 1961 Nomura Securities listed its shares on the Tokyo Stock Exchange, Osaka Securities Exchange, and Nagoya Stock Exchange 1969 Began operations of U.S. subsidiary Nomura Securities International (NSI) 1972 Established Nomura Europe NV in the Netherlands 1980 Nomura Group developed and began sales of the “Medium-Term Japanese Government Bond Fund” 1990 Relocated portion of headquarters’ functions in the Urbanet Otemachi Building 1981 Established Nomura Investment Advisory Co., Ltd. (currently incorporated into Nomura Asset Management Co., Ltd.) Established U.K. subsidiary Nomura International Limited (NIL) 1993 Established Nomura Trust and Banking Co., Ltd. Overall Issues and Prospects Going Forward • Social implications of Japan’s declining birthrate and aging of the population • Responding properly to the regulatory environment surrounding global financial institutions • Contributing to the community and to society as a member of regional societies 2001 Separation of roles of Nomura Holdings and Nomura Securities with the transition to a holding company structure Nomura Holdings stock listed on the New York Stock Exchange 2008 Absorbed the personnel of Lehman Brothers Asia Pacific and Lehman’s European and Middle Eastern divisions 2011 Started “Nomura Net & Call” after the combination of “Hot Direct” and “Nomura Joy” 1920 Early development of Japan’s securities transactions 1940 1950 Economic recovery 1960 Period of rapid economic growth 1970 Period of stable economic growth 1980 Bubble economy 1990 Post-bubble era 2000 Era of structural reforms 2010 L Began to transmit economic information based on the reputation of “Nomura Research” L Provided support for fund-raising of Japanese companies L Offered a series of new products and services following the financial “Big Bang” in Japan L Took initiatives to offer clients solutions through the use of differentiated financial functions and services 1878 Tokyo Stock Exchange began floor trading 1882 Bank of Japan established 1920 Japanese Government Bond (JGB) market began operations separately from the Tokyo Stock Exchange 1944 Operation of the fixed exchange rate system began 1952 Japan joins the IMF Principal Economic Developments 1965 First issues of deficit finance bonds by the Japanese government 1973 Transition to floating exchange rates First oil crisis 1979 Second oil crisis 1985 Plaza Accord 1989 Nikkei stock price average peaks at ¥38,915.87 1999 Bank of Japan’s zero interest rate policy 2002 Secondary market trading in the euros began 2013 Monetary easing policy adopted under “Abenomics” 2007 World financial crisis EEE Highlights of the Fiscal Year Income before income taxes: compared with the previous fiscal year 1.5 times ¥361.6 billion EPS*1 Net income per share ¥55.81 Attained target of ¥50 set for March 2016 Retail client assets ¥91.7 trillion Assets under management of the Asset Management Division ¥30.8 trillion Nomura’s share*2 of revenue among the 10 leading global financial institutions expands to 5.1% Fitch upgrades Nomura Holdings and Nomura Securities to A- Percentage of women in managerial positions*3 13% Initiatives in financial and economic education (Number of participants in courses from primary schools through universities) 13,675 CO2 emissions reduction (Compared with FY2009/10) -28.1% *1 Net income per share attributable to Nomura Holdings shareholders after full dilution *2 Share of wholesale revenue of the nine plus Nomura: Bank of America, Barclays, Citi, Credit Suisse, Deutsche, Goldman Sachs, J.P. Morgan, Morgan Stanley, and UBS *3 Includes persons in managerial and key positions as well as persons with the positions of Managing Director, Executive Director, and Vice President (As of March 2014) “Place Clients at the Heart of Everything We Do” Nomura Report 2014 1 EEE Highlights of the Fiscal Year Income before income taxes: compared with the previous fiscal year 1.5 times ¥361.6 billion EPS*1 Net income per share ¥55.81 Attained target of ¥50 set for March 2016 Retail client assets ¥91.7 trillion Assets under management of the Asset Management Division ¥30.8 trillion Nomura’s share*2 of revenue among the 10 leading global financial institutions expands to 5.1% Fitch upgrades Nomura Holdings and Nomura Securities to A- Percentage of women in managerial positions*3 13% Initiatives in financial and economic education (Number of participants in courses from primary schools through universities) 13,675 CO2 emissions reduction (Compared with FY2009/10) -28.1% *1 Net income per share attributable to Nomura Holdings shareholders after full dilution *2 Share of wholesale revenue of the nine plus Nomura: Bank of America, Barclays, Citi, Credit Suisse, Deutsche, Goldman Sachs, J.P. Morgan, Morgan Stanley, and UBS *3 Includes persons in managerial and key positions as well as persons with the positions of Managing Director, Executive Director, and Vice President (As of March 2014) “Place Clients at the Heart of Everything We Do” Nomura Report 2014 1 Highlights Financial Highlights (US GAAP) For the fiscal years beginning April 1 and ending March 31 of the following year FY2009/10 FY2010/11 FY2011/12 FY2012/13 FY2013/14 Net revenue Segment income (loss) before income taxes MAJOR FINANCIAL DATA Net revenue Income before income taxes Net income*1 Total assets Shareholders’ equity*2 Short-term unsecured debt Long-term unsecured debt Total risk-weighted assets*3 PER SHARE DATA Net income—diluted Shareholders’ equity Cash dividends MAJOR MANAGEMENT INDICATORS ROE Gross leverage (times) Leverage after adjustments (times)*4 Consolidated capital adequacy ratio*3 Tier 1 ratio*3 1,150.8 1,130.7 1,535.9 1,813.6 1,557.1 105.2 67.8 93.3 28.7 85.0 11.6 237.7 107.2 361.6 213.6 Billions of yen 32,230.4 36,693.0 35,697.3 37,942.4 2,126.9 2,082.8 2,107.2 2,294.4 43,520.3 2,513.7 2,153.5 6,024.6 2,634.3 6,466.9 3,009.1 6,373.0 2,293.3 6,457.3 2,969.3 6,218.6 11,525.7 11,629.5 14,681.0 17,546.7 17,425.9 21.59 579.70 8.0 7.86 578.40 8.0 3.14 575.20 6.0 28.37 618.27 8.0 3.7 15.2 9.3 24.3 17.3 1.4 17.6 10.3 22.2 16.4 0.6 16.9 10.4 16.5 14.2 4.9 16.5 10.4 13.9 11.9 Yen 55.81 676.15 17.0 % 8.9 17.3 10.4 15.6 13.2 *1 Net income attributable to Nomura Holdings, Inc. shareholders *2 Total Nomura Holdings, Inc. shareholders’ equity *3 Figures for FY2009/10 and FY2010/11 were based on Basel II capital adequacy standards. Figures for FY2011/12 were prepared under Basel 2.5, and figures for FY2012/13 were prepared under Basel III standards. *4 Total assets minus securities purchased under agreements to resell and securities borrowed, divided by Nomura Holdings shareholders’ equity. FY2009/10 FY2010/11 FY2011/12 FY2012/13 FY2013/14 (Billions of yen) 2,000 (Billions of yen) 400 1,500 1,000 500 0 -500 300 200 100 0 -100 -200 -300 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) L Retail L Asset Management L Wholesale L Other L Retail L Asset Management L Wholesale L Other Total assets Unsecured debt (Trillions of yen) 50 (Billions of yen) 10,000 40 30 20 10 0 8,000 6,000 4,000 2,000 0 INCOME (LOSS) BEFORE INCOME TAXES BY REGION Billions of yen 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) Americas Europe Asia-Pacific Sub-total Japan Consolidated 3.6 19.0 13.0 35.6 69.7 105.2 4.4 (43.6) (16.3) (55.5) 148.8 93.3 (24.6) (91.5) (12.9) (129.1) 214.1 85.0 25.7 (93.1) (12.1) (79.4) 317.2 237.7 29.5 (48.9) (5.2) (24.7) 386.3 361.6 * Region information is based on US GAAP. Revenues and expenses are allocated based on the country of domicile of the legal entity providing the service. This information is not used for FY2009/10 FY2010/11 FY2011/12 FY2012/13 FY2013/14 26,374 15,053 4,369 1,781 5,171 26,871 14,918 4,353 2,348 5,252 34,395 21,609 4,014 2,420 6,352 27,956 16,030 3,618 2,271 6,037 People 27,670 16,037 3,461 2,281 5,891 business management purposes. NUMBER OF EMPLOYEES Total Japan Europe Americas Asia-Pacific 2 Nomura Report 2014 L Long-term unsecured debt L Short-term unsecured debt Total risk-weighted assets and Tier 1 ratio* Income (loss) before income taxes by region (Billions of yen) 20,000 16,000 12,000 8,000 4,000 0 (%) 20 16 12 8 4 0 (Billions of yen) 500 400 300 200 100 0 -100 -200 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) LLL Total risk-weighted assets (left scale) L P R Tier 1 ratio (right scale) * Please refer to note *3 on page 2. L Japan L Asia-Pacific L Europe L Americas Nomura Report 2014 3 Highlights Highlights Message from the CEO Placing clients at the heart of everything we do: Continuing to evolve with the changing needs of our clients We are working to improve stakeholder satisfaction while contributing to economic growth and social development as Asia’s global investment bank. FY2013/14 Performance Sustainable Growth All three divisions—Retail, Asset Management, Promoting the shift from savings and Wholesale—reported solid growth in to investments FY2013/14 with firm-wide net income As Japan transitions from deflation to inflation, increasing 99% from FY2012/13, to ¥213.6 retail investors are expected to move their billion, representing earnings per share (EPS) personal financial assets from savings and of ¥55.81. deposits to investments. We see it as our role to When I was appointed Group CEO in support this shift and drive further momentum in August 2012, I set a target of achieving EPS of Japan’s capital markets through the uptake of ¥50 by the year ending March 2016. Since the Nippon Individual Savings Account (NISA) then, we have worked to further strengthen scheme introduced in January 2014. our domestic businesses, improve the A s t h e p o p u l a t i o n a g e s , J a p a n i s profitability of our Wholesale Division, and experiencing growing demand from retail ensure resources are allocated optimally. As a investors for accurate investment advice due to result, we achieved our EPS target of ¥50 two concerns over the public pension system and years ahead of target and remain focused on worries related to inheritances. In response, we driving sustainable growth. are further developing our consulting-based sales approach to provide each client with advice matched to their individual requirements. We do this through our traditional offering of equities, bonds, investment trusts, and other products backed by a broad range of services related to insurance, inheritance, and business succession planning. 4 Nomura Report 2014 Nomura Report 2014 5 Highlights Message from the CEO Global strategy expanded our business in Japan through a In April, we appointed a woman as We also aim to address social issues Our global franchise grew significantly after the successful business model that integrates our President of Nomura Trust and Banking, the through our core business. In FY2013/14, we acquisition of Lehman Brothers’ operations in Retail and Wholesale operations. We believe first time a female has been appointed to run a distributed social bonds issued by the Asian Europe and Asia. We repositioned our we can reap the benefits of economic growth bank in Japan. We have also expanded our D e v e l o p m e n t B a n k a n d o t h e r p u b l i c business on the back of the ensuing global across Asia by rolling out a new integrated management training program to offer mid- organizations in which the proceeds were economic slowdown, and have since worked business model aligned to each market to level managers a wide range of training used for projects that address social and to improve profitability by focusing on connect the funding needs of corporates with opportunities. businesses with client needs and areas where the investment needs of investors in the East we have a competitive advantage, while and West. reducing expenses by $2 billion. As some of our competitors are being forced to exit highly profitable businesses due Diverse Workforce to regulatory reforms, we are also focusing on To continue meeting the changing needs of businesses where our robust, highly liquid our clients, it is important to raise client balance sheet gives us a competitive satisfaction levels by leveraging the diverse advantage. Looking ahead, we will continue to backgrounds of our people in terms of age, meet the needs of our clients and grow our gender, and nationality to create new value for global market share with the aim of returning our clients. all international regions to profitability by March We currently have over 1,000 female 2015. managers working for Nomura globally, Asia is expected to continue growing including an Outside Director and senior strongly over the long term and account for managing directors. In recognition of this, half of global GDP by 2050. As countries in the Japan’s Ministry of Economy, Trade and region develop, we can expect to see Industry and the Tokyo Stock Exchange jointly increased demand for funding among the granted Nomura the “Nadeshiko Brand” corporate sector coupled with an expansion of designation in March 2014, which is awarded personal financial assets as the middle class to companies that encourage women to play grows. We have generated synergies and active roles in the workplace. Corporate Responsibility through our Core Business Corporate responsibility at Nomura is embedded in our core business. We believe in contributing to the sustainable development of society over the medium-to-long term. In Japan, it is particularly important to ensure the effective flow of personal financial assets through the economy. We have offered various financial and economic education programs for a broad section of the community in Japan since the 1990s with a focus on improving financial literacy and helping people make financial decisions for themselves. As of March 2014, we had taught a total of 630,000 students through Nomura-sponsored lectures at universities and classes for elementary and junior high school students. environmental challenges. We also put our financial expertise to work in the agribusiness and medical industries and helped incubate n e w i n d u s t r i e s i n c o l l a b o r a t i o n w i t h universities. We will continue to use our strengths to contribute to sustainable development and grow together with all our stakeholders. We see increasing opportunities to contribute to economic growth and social development. Under our philosophy of placing our clients at the heart of everything we do, we aim to establish a dominant position as Asia’s global investment bank by our 100th anniversary in 2025. Group CEO Koji Nagai 6 Nomura Report 2014 Nomura Report 2014 7 HighlightsHighlights Message from the COO Establishing dominant position as Asia’s global investment bank through closer cross-divisional and cross-regional collaboration Retail and Asset Management delivered solid earnings in FY2013/14 on the back of the market rally in Japan. Our Wholesale Division also reported stronger revenues across all regions and business lines, and significantly higher pretax income. Meeting the Diverse Needs of Our Clients Wholesale Profitability on the Rise Positioned for Long-Term Growth Since I was appointed Wholesale CEO and Group We regard Asia including Japan as our home COO in August 2012, we have repositioned our market. Our aim is to grow in step with the region, Wholesale strategy and taken out an additional expanding our client franchise and product $1 billion of costs from the international business offerings, and acting as the gatekeeper for flows on top of a previous $1 billion cost reduction in into and out of Asia. To this end, we have taken a response to the challenging environment. number of steps to build up our Asian operations. In To enhance collaboration, we integrated our April 2014, we acquired the local asset Fixed Income and Equities businesses in December management unit of the ING Group in Taiwan, and 2012 to create Global Markets. In Investment in May we entered into a joint venture agreement Banking, we narrowed our global sector coverage with Shanghai Lujiazui Development (Group) Spurred on by the Abenomics rally in Japan, Retail reported to drive greater efficiencies. We also revised Company Limited, with a view to entering the its best set of results in eight years. With the start of the occupancy, IT system, and other expenses. As a wealth business in the Shanghai Free Trade Zone. Nippon Individual Savings Account (NISA) in January 2014, result, we were able to complete our $2 billion cost In June, we converted Capital Nomura Securities in we have worked across the Group on initiatives such as reduction program six months ahead of schedule. Thailand into a consolidated subsidiary. holding a total of over 3,000 seminars nationwide since last As costs steadily decline on a U.S. dollar basis, Under our philosophy of placing our clients at the year. As a result of these efforts, we had recorded 1.29 revenues have improved substantially, particularly in heart of everything we do, our Retail business aims million NISA applications as of the end of March. global fixed income and Japanese equities, to win client trust while expanding its business, Our clients’ needs are becoming increasingly positioning us well to achieve our FY2014/15 target which means further developing our Retail client sophisticated and complex as the environment changes. We of returning all international regions to profit. franchise through an intent focus on providing believe it is important to provide services tailored to the We have seen well-balanced growth across our clients with consulting services. Asset Management exact needs of each client for every stage of life. That is why Fixed Income franchise from Rates and Credit to FX aims to improve client satisfaction levels by we emphasize asset planning and investment support for and Securitized Products, contributing to market enhancing its investment management and product retail clients. For company owners, we advise on a broad share gains and more-consistent earnings. In development capabilities, while meeting the needs range of issues from M&A to succession planning. addition, we have enhanced our M&A advisory of its clients amid the constantly changing In addition to retail clients, our Asset Management business and built a track record in EMEA and the e n v i ro n m e n t . W h o l e s a l e i s c o m m i t t e d t o Division continued to win investment mandates from Americas in multi-product services, including establishing the Nomura brand as a leader in Asia international institutional investors and sovereign wealth financing and FX hedging associated with advisory by moving swiftly to understand the evolving needs funds during FY2013/14. Total assets under management at transactions. of our clients to ensure repeat business and by the end of March 2014 were ¥30.8 trillion. We will continue In light of the progress our international working with new clients around the world. to focus on being a trusted partner to institutional investors Wholesale business has made to improve Looking ahead, we will continue to respond around the world by providing products matched to their profitability, I handed over the Wholesale CEO accurately to the needs of our global clients and needs backed by detailed service, while further enhancing position to Tetsu Ozaki in April this year. As the establish a dominant position as Asia’s global our investment processes. Group COO, I will continue to focus on overseeing investment bank. all divisions and addressing Group-wide issues to create business opportunities through closer cross- Group COO divisional and cross-regional collaboration. Atsushi Yoshikawa 8 Nomura Report 2014 Nomura Report 2014 9 HighlightsHighlights Message from the CFO Allocating resources in line with the changing environment to build on our strengths as a global financial services group Financial institutions increasingly require a robust financial position to stay competitive in today’s changing environment. We are working to efficiently allocate management resources and improve communication with shareholders, counterparties, rating agencies, regulatory authorities, ESG research organizations,* and other stakeholders in order to formulate and implement a broad financial strategy. offerings in 2009, before the full effects of the of a financial crisis, a factor behind Fitch’s decision European sovereign debt crisis emerged. We then to upgrade the long-term ratings of Nomura lowered our cost base, reduced less liquid assets, Holdings and Nomura Securities to A- in September and took other steps to improve capital efficiency. 2013. This has helped us expand our client By consolidating our financial position ahead of the business and will potentially lower our funding competition, we are now well positioned to costs. capitalize on new business opportunities arising out of the ongoing regulatory reforms. In FY2013/14, we made considerable progress in delivering consistent earnings. Our domestic businesses drove revenues on the back of the Abenomics market rally in Japan, and our international client franchise continued to grow as the regulatory reforms reshape the competitive landscape. As of the end of March 2014, we had total assets of ¥43.5 trillion and shareholders’ equity of ¥2.5 trillion. Our gross leverage was 17.3 times. Our Tier 1 ratio under Basel III was 13.2%, or 12.2% on a fully loaded 2019 basis, which places among the industry leaders. The liability side of our balance sheet is dominated by long-term debt, and we have diversified our sources of funding across currencies. Shareholder Returns We aim to deliver stable dividends using a full-year consolidated payout ratio of 30% as a key indicator. In determining dividend payments, we take into account a comprehensive range of factors, including our consolidated financial performance and global regulatory reforms, such as the new Basel regulations. Based on this policy, we paid an annual dividend of ¥17 per share in FY2013/14. In addition, we conducted a share buyback program as part of our efforts to raise capital efficiency and ensure a flexible capital management policy. Looking ahead, we will invest in businesses with strong earnings and growth potential and deliver appropriate returns for our shareholders, taking into account our share price and regulatory We also held a high quality liquidity portfolio of ¥6.1 capital requirements. trillion as of the end of March 2014. This allows us to continue operations for one year without the need for additional unsecured funding, including refinancing or asset liquidation even under stressed market conditions. The cost reduction program we introduced in July 2011 targeting a total of $2 billion was completed ahead of schedule in September 2013. This helped us achieve our FY2015/16 EPS target of ¥50 ahead of schedule. To build on this momentum, we will focus on maintaining our robust financial position * Organizations that provide information to investors and others on the performance of corporations in the areas of ESG (Environmental, Social, and Governance). Chief Financial Officer Shigesuke Kashiwagi Robust Financial Position and Revenue Growth some of our peers have been forced to rethink their This robust financial position is a competitive business strategy. advantage that directly benefits our clients by and further expand our earnings capacity. After acquiring parts of the Lehman Brothers allowing us to deliver the best products and Regulatory reform of global financial institutions has business in Europe and the full franchise in Asia, we services tailored to their specific requirements. In been on the agenda since the 2007 financial crisis. were one of the first in the industry to enhance our addition, amendments to the Deposit Insurance Act As the tougher regulations start to be phased in, financial position by raising capital through public of Japan mean that Nomura is covered in the event 10 Nomura Report 2014 Nomura Report 2014 11 HighlightsHighlights Feature From Savings to Investments Drawing on Our Full Capabilities to Promote NISA The Nippon Individual Savings Account (NISA), which is small investment accounts that are tax-exempt up to a specified limit, was introduced in early 2014 to provide support to individual investors in Japan who wish to build their asset portfolios in the medium-to-long term. The NISA is expected to encourage the transition from savings deposits to securities investments and lead to a virtuous circle in the economy. At Nomura, the whole firm is working to promote the uptake of the NISA among individuals. Prior to the introduction of the NISA system, we held about 3,000 seminars and conducted other activities to promote the use of this system among as many clients as possible. As of the end of March 2014, Nomura clients had opened a total of 1,290,000 of these accounts. Financial Issues in Japan Nomura’s Initiatives How will the NISA system contribute to addressing financial issues in Japan? Tomoo Sumida, Tatsuya Yoshikawa Nomura Asset Management Research To encourage the proactive efforts of individuals to build their asset portfolios, we considered ways of promoting the system and made suggestions to related parties in many areas. We also conducted research on the system and did an awareness survey covering several tens of thousands of respondents. We also made suggestions to companies marketing the accounts and held training sessions, provided information, and conducted seminars for investors. Promotion and product design Internal marketing Investor education Client proposals Companies marketing NISA Research Proposals for company employees Internal marketing Promotion and product design Clients Promotion and product design Kanae Ikeda, Maiko Mochimaru, Yuka Kasuya Nomura Securities, Retail Strategy Dept. Research (NISA Team) Investor education Client proposals Proposals for company employees NISA seminar sponsored by Nomura Research Sachiko Miyamoto Nomura Institute of Capital Markets Research We conducted research on similar systems overseas, including the Investment Savings Account system in the United Kingdom. We then provided information to the relevant government agencies in Japan and to industry associations. We also jointly sponsored seminars with specialists from various related groups. Internal marketing Investor education Client proposals We are making a range of practical approaches regarding the NISA system to persons who lack experience in investing, including holding seminars and events. Proposals for company employees Internal marketing Promotion and product design Research Toyoko Kurosaka, Satoshi Kimura Kawagoe Branch Office, Investor Nomura Securities education Client proposals Internal marketing Research We received many inquiries from interested clients, and felt that people really expected a lot from us. As the entranceway to securities investing, we are encouraging families to diversify their medium- to long-term investments. Investor education Motohiro Kamijima Corporate Finance Dept. I, Nomura Securities Promotion and product design Proposals In discussions with persons in charge in for company corporations, we inquired about the employees needs of employees, and are seeking to make use of this information to differentiate ourselves from other companies through our proposals Client for funds and other products. proposals Proposals for company employees Internal marketing Promotion and product design Takenobu Yoshitani Retail Strategy Dept., Nomura Securities To bring about a movement from savings deposits to securities investments through the introduction of the NISA system, we brought together the internal planning functions and other initiatives. Investor education Client proposals Proposals for company employees Yoko Nishide Workplace & Life Planning Services Dept. Nomura Securities We are taking particular care to explain the merits from the perspective of employee benefits and taxation, and by giving easy-to-understand explanations of methods for building asset portfolios as part of life plans. Naoyuki Yoshino, Ph. D. Professor Emeritus of Keio University and Dean of the Asian Development Bank Institute To draw fully on the abundance of personal financial assets in Japan, which is one of the strengths of the Japanese economy, it will be important for these resources to be channeled to provide growth capital. In other words, it will be necessary to induce flows of funds by encouraging individuals to build asset portfolios that reflect risk taking appropriate to their respective life stages. The policy of directing flows of funds that went formerly into savings deposits into capital markets through the introduction of the NISA will provide opportunities for changing the risk-averse consumer behavior that has been caused by the prolonged period of deflation. Accordingly, improving the performance of funds that have been channeled into capital markets through the NISA will be an important task for investment managers. Individuals who are increasing their holdings in the NISA are looking for higher rates of return than on savings deposits by having their funds invested in growth areas and in countries and regions where growth is expected. Therefore, attaining a higher return than on savings deposits means that funds will be channeled into growth areas, and this will help the Japanese economy grow. As the Japanese population ages, how to channel the financial assets that seniors have accumulated into high-yield investments will be a key to increasing consumer spending and realizing an economic recovery. To establish a flow of funds where household funds are channeled to provide growth capital, investment management companies and securities firms will be expected to provide investment products that respond to the asset formation requirements of people at various life stages. 12 Nomura Report 2014 Nomura Report 2014 13 Highlights Review of Operations Company Segments Retail L L Net revenue (after interest expense) (left scale) L L Non-interest expenses (left scale) L Income before income taxes (right scale) (Billions of yen) 600 Income before income taxes ¥192.0 billion 91% increase year on year (Billions of yen) 240 400 200 0 160 80 0 (Fiscal year) 2009/10 2010/11 2011/12 2012/13 2013/14 Asset Management L L Net revenue (after interest expense) (left scale) L L Non-interest expenses (left scale) L Income before income taxes (right scale) (Billions of yen) 90 Income before income taxes ¥27.1 billion 28% increase year on year (Billions of yen) 30 60 30 0 20 10 0 p. 16 Value Creation Flow E Summary Nomura offers high-quality investment information and a diverse range of financial products and services through its domestic branch network, call center, Internet website, and other media to meet the increasingly diverse and sophisticated needs of its individual and corporate customers. With the objective of unified operation of the wealth management business in Japan and the rest of Asia, Nomura set a business line of Wealth Management in Retail on July 1, 2014. • Number of offices: 159 (including head office and branches) • Retail client assets: ¥91.7 trillion (As of March 31, 2014) Human capital Intellectual capital Employees and human resources Products and research Social capital Global and local Capital inputs Individuals Corporations p. 20 Markets Retail Asset Management E Summary With Nomura Asset Management as its core, Nomura’s asset management business operations are global in scope. • Assets under management: Approximately ¥30.8 trillion (as of March 31, 2014) • Investment trusts business: Offers a wide lineup of products to meet diverse clients’ needs through a broad range of channels, including securities companies (including Nomura Securities), banks, Japan Post Bank, and post offices. 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) • Investment advisory business: Provides high-quality asset management Wholesale L L Net revenue (after interest expense) (left scale) L L Non-interest expenses (left scale) L Income (loss) before income taxes (right scale) (Billions of yen) 800 Income before income taxes ¥111.8 billion 56% increase year on year (Billions of yen) 180 600 400 200 0 120 60 0 -60 services to a broad spectrum of institutional investors, including pension funds in Japan and overseas, government organizations, central banks, commercial banks, and insurance companies. p. 24 E Summary Wholesale comprises the Global Markets and Investment Banking, which provide a wide spectrum of services to such customers as domestic and overseas industrial corporations, government organizations, and financial institutions. • Global Markets: Provides research; syndication, sales, and trading in various financial products; and other services on a global scale mainly to domestic and overseas institutional investors. • Investment Banking: Provides various investment banking services, 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) including underwriting services for bonds, equities, and other Nomura Holdings Wholesale Industrial and other companies Domestic and overseas institutional investors Place Clients at the Heart of Everything We Do Outputs Human capital Intellectual capital Social capital Employees and human resources Products and research Global and local • Human resources that can think and act on their own initiative and produce results • Create systems that support career development throughout the Group and develop networks that stretch across the Group through participation in training that transcends the organizational and region frameworks • Provide a wide range of investors and issuers with financial products and services as well as investment banking services. Engage in syndication, sales, and trading • With a view to the future, contribute to sustainable development of society through our main businesses and through employee participation in many activities that create social value • Make available effective, actionable information on financial markets that are changing 24 hours a day based on research that covers about 90%* of the world’s economic and financial indicators 14 Nomura Report 2014 Nomura Report 2014 15 securities; proposals for risk solutions; and M&A advisory services to a wide range of clients in Japan and overseas. * Please refer to page 28 Review of Operations Retail The Retail Division is working to ensure that the Nomura Group will remain a trusted partner to its clients. Our initiatives include strengthening consulting-based sales, expanding service and product lineups to respond to diversifying client needs, and further enhancing the capabilities of our personnel. Nomura Securities 23% 5,144 thousand accounts All accounts held at securities companies in Japan (22,076 thousand accounts) (As of March 31, 2014) Source: Japanese Securities Dealers Association website Toshio Morita Retail CEO 16 Nomura Report 2014 Market Environment in FY2013/14 During FY2013/14, the market environment improved, particularly in the first half of the fiscal year. A supporting factor was the Bank of Japan’s bold quantitative monetary easing policy, which resulted in the depreciation of the yen and improvement in corporate performance. In the second half of the year, the market became less active and transaction volume declined. Although there were periods of more robust activity before the security tax break was abolished, investors’ risk appetite decreased as a result of the potential tapering of quantitative easing in the United States, the emergence of geopolitical risks, as well as other factors. Amid this operating environment, Retail reported ¥511.9 billion in net revenue in FY2013/14, an increase of 29% year on year. Income before income taxes amounted to ¥192.0 billion, the highest level since FY2005/06 (¥197.2 billion), and the second highest level since Nomura began to disclose financial data by operating segment in FY2001/02. Our clients’ values and interests have been evolving. The aging population and changes to the tax system in Japan have increased the desire for families to transfer financial assets to future generations smoothly. As such, the need for tailored Retail client assets (Trillions of yen) 100 91.7 83.8 73.5 70.6 72.0 80 60 40 20 0 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) L Equities L Foreign currency bonds L Domestic bonds*1 L Stock investment trusts L Bond investment trusts L Overseas mutual funds L Other*2 *1 Includes CBs and warrants *2 Includes variable annuity insurance Accounts with balances (Millions) 5.5 5.0 4.5 4.0 0 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o Nationwide Contests for Financial Service Section’s OTC Services In January and February 2014, we held our first contest for the Financial Service (FS) Section’s over-the-counter services. We selected 125 people from around the country who are responsible for providing face-to-face services to customers to participate in the contest. The competition included a “role-play” where participants were asked to act out their consulting techniques, with the goal of identifying the most effective techniques for interacting with customers. Each participating branch representative had six months to prepare and was instructed to consider questions including, but not limited to, “What do we really have to communicate to Contest photo of the top selected personnel customers?” and “What questions should we ask our customers?” Nomura Directors and external consultants judged the contest. Going forward, we intend to hold similar competitions to help consultants share best practices, respond to customer needs, and build relationships as trusted advisors. Retail CEO Morita (center) and the selection panel Nomura Report 2014 17 Review of OperationsReview of Operations Retail consulting advice has grown, and Nomura has External Defibrillators in 159 branches. We have also As a supplement to our face-to-face consulting broaden our investor base and contribute to their refocused its consulting efforts to help clients meet assigned assistants to nearly 80% of branches to help services, clients are also provided with “Asset wealth accumulation. In accordance with a client’s their individual objectives. In addition, beginning in our elderly and physically challenged clients. Going Design Services” that help them identify their needs, assets contributed to NISA accounts are August 2012, we reformed our business model to forward, we expect our CS Improvement Meetings to specific needs. In addition, our periodic “Asset allocated to stocks, investment trusts, or Nomura’s target an expansion of client assets and recurring continue to benefit our customers and community. Portfolio Reports” enable our clients to understand “Fund Ruito.*” revenues with the goals of “winning client trust” and “business expansion.” Client accounts with balances increased by CS Survey Since January 2011, Nomura has periodically the performance of their assets. Our salespeople distribute web-based timely information to our clients through their tablet terminals both on and off 120,000 during FY2013/14, to 5.14 million at the surveyed our Financial Services Specialists’ clients. Nomura premises. end of March 2014. Net asset inflows during the The survey asks clients to rate employee attitudes fiscal year were ¥870.0 billion, and Retail client and the quality of service as well as the assets, supported by good market conditions, rose comprehensibility of product explanations. A total of to ¥91.7 trillion as of March 31, 2014. 85,357 clients who had visited Nomura branches in The Nippon Individual Savings Account (NISA) December 2013 were surveyed by mail. For results program, which encourages individuals to establish of the survey, please refer to page 58. We are aiming to increase the balance of client assets through initiatives aimed at targeting the client experience. Asset growth is a barometer of client trust, which will result in increasing recurring revenues and build an even stabler earnings base. Through our principal business activities, Nomura Please refer to Nomura’s NISA. http://www.nomura.co.jp/nisa/ * An investment vehicle that invests in stocks and investment trusts in predetermined amounts on a regular schedule Special Article about NISA p.12–13 Further Expansion of Products and Services for an Aging Society Retail is endeavoring to strengthen its lineup of tax-free investment accounts, was launched in In February 2013 and February 2014, we also management and staff intend to contribute to our investment products for senior citizens, including January 2014. As of March 31, 2014, Nomura had conducted a CS survey of our individual sales staff. customers’ experience, the communities in which annuity insurance, which provides periodic received 1.29 million NISA account applications, the Those staff members whose clients held with we conduct operations, and society. insurance payments, whole life insurance, which largest number of any Japanese financial institution. particularly high regard received awards within the Despite the favorable market conditions of the past Retail Division and were introduced on the Nomura year, the percentage of Japan’s household financial Securities website. assets in securities investments increased marginally to 16%, from 14% at the end of the previous fiscal year-end, implying that Nomura’s desired role in accelerating the transition “from savings to investments” is large. Enhancing Client Satisfaction Since FY2010/11, Retail has held a monthly Customer Satisfaction (CS) Improvement Meeting, chaired by the Retail CEO and attended by Please refer to our corporate website. http://www.nomura.co.jp/service/consulting/ consultant/ All client surveys are taken seriously by management, Nomura headquarters, and Nomura branches and are used as a way to effect change and provide even better overall service. Approach to Nippon Individual Savings Account (NISA) The NISA is an opportunity for individuals to start or responds to customer concerns about inheritance, and relatively low-risk investment trusts. To help earn the trust of seniors, we offer “Fund Wrap*” and “Inheritance and Gift” seminars, which provide to more actively participate in the securities markets education and advice to clients through face-to- and, therefore, is also an opportunity for Nomura to face discussions. We also hold “Happy Life” seminars to assist senior citizens in planning for the future. These seminars are held in cooperation with companies that provide products and services targeted toward seniors. In addition, we offer a “Gift Raku Raku Service” that is intended to simplify the wealth transfer process. * Discretionary account Directors. During these meetings, Retail works to Looking Forward Customer’s Asset Portfolio Report improve products, services, and systems based on complaints, opinions, and requests received by Nomura’s Customer Help Desk Department, call centers, and website. As a result of the initiative to enhance client satisfaction, we remodeled and installed Automated We will continue to work toward the dual objectives of winning greater trust among clients and expanding business activities by offering high- quality consulting based services. We currently offer medium-to-long-term diversified investment portfolios that include investment trusts, SMAs (Separately Managed Accounts), and “Fund Wraps” designed to match each specific client’s risk profile. We have also expanded our offerings to include global asset allocation products, and, for those more risk averse clients, we are enhancing our lineup of lower risk products, such as JGBs for individuals and insurances. P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o Morning Pitches In FY2012/13, Retail initiated “Morning Pitches,” a once-a-week meeting at seven in the morning where we invite start-up businesses to make presentations to roughly 100 representatives of companies interested in identifying new business opportunities and have lively discussions. The objective of these meetings is to promote the development of young entrepreneurs and to encourage the alliance between venture businesses or small to mid- sized companies and large organizations. Through these activities, we are aiming to promote the growth and development of small businesses and to encourage “open innovation,” where companies looking to expand their business opportunities can listen to new, entrepreneurial ideas. Morning Pitches are currently being held in Tokyo and Nagoya. Going forward, we hope to provide customers with other similar value-added services. Nomura’s Keio Shinjuku Branch 18 Nomura Report 2014 Nomura Report 2014 19 Review of OperationsWEBWEBReview of Operations Asset Management To provide optimal investment performance, the Asset Management Division is working to strengthen its portfolio management and marketing capabilities and is responding nimbly to changing client needs. Differentiated by having its base in Asia, we aim to retain and increase the trust of investors around the world with its various products and services. Assets under management* (Trillions of yen) 32 24 16 8 0 2010/11 2011/12 2012/13 2013/14 (Fiscal year) * Net after deduction duplications from total assets under management of companies that belong to the Asset Management Division Share of public investment trust market in Japan (As of March 31, 2014) Nomura Asset Management 22.9% Market Environment in FY2013/14 The investment climate continued to improve mainly in developed countries in FY2013/14. Factors supporting this were the Bank of Japan’s bold monetary easing policy, implemented in April 2013, and maintained expectations of economic recovery overseas. As a consequence, the balance of investments in Japan’s public investment trust m a r k e t g r e w 1 0 % o v e r F Y 2 0 1 3 / 1 4 , t o approximately ¥80 trillion. Our investment trust business offers a range of products to meet client needs, and we made efforts to expand the balance of investments in existing funds during the fiscal year. Funds flowed especially into our “Selectable currency typed fund,” which combines investments in global equities and Japanese stocks with FX transactions. We also listed new exchange-traded funds (ETFs) in the “NEXT FUNDS” family, including the JPX-Nikkei 400 ETF, which is linked to the JPX-Nikkei 400 ETF, and the R/N Fundamental Index ETF. This brought the total number of ETFs to 42, and the balance of assets under management in ETFs rose 52% year on year, to ¥4.0 trillion. At fiscal year-end, Nomura Asset Management’s share (net asset basis) of Japan’s public investment trust market stood at Source: The Investment Trusts Association, Japan 22.9%. Sales of privately placed investment trusts, which meet clients’ needs, sold principally through regional financial institutions, also rose. Kunio Watanabe Asset Management CEO P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o Providing Support for Earthquake-Devastated Areas through the “East Japan Revival Support Bond Fund 1105” NAM established an investment trust fund in May 2011 and is managing it with the aim of providing support for the recovery of the areas devastated by the Great East Japan Earthquake. In FY2013/14, we donated ¥63 million from a portion of the trust fees received in the fourth and fifth periods of the fund’s operation (about 0.2% of total fund assets per year) for recovery work in the areas affected by the megaquake. In addition, Nomura is making continuous donations to the “Iwate Educational Aspiration Fund,” the “Great East Japan Earthquake Scholarship Fund for Children in Miyagi,” and the “Great East Japan Earthquake Fukushima Children’s Donation Fund” to provide assistance for the children orphaned by the earthquake disaster to find the opportunity to choose their life and career paths to provide for themselves. Donations will be made 10 times over the five-year period of the “East Japan Revival Support Bond Fund 1105.” 20 Nomura Report 2014 Nomura Report 2014 21 Review of OperationsReview of Operations Asset Management I n i n v e s t m e n t a d v i s o r y, a s s e t s u n d e r management meeting clients’ needs is to be management, mainly of institutional investors in c o m p l i a n t w i t h t h e v i e w p o i n t o f E S G Shariah-compliant asset management services, which have high growth potential, and smart beta Europe and Asia, in Japanese equities, high-yield (Environmental, Social, and Governance). About type fundamental index fund management. bonds, and other investment products increased. NAM’s policy related to ESG issues, Nomura’s ESG We also won mandates for managing Japanese Committee, chaired by the Chief Investment Officer equities from two leading asset management (CIO), meets twice yearly for discussions. In May companies overseas and increased assets by 2014, Nomura expressly accepted the “Principles Encouraging the Shift from Savings to Investments through Investment Trusts In investment trust business, we will deliver diverse Further Expansion in Investment Advisory and Services for Overseas Funds In investment advisory, we are offering proposals for management strategies that respond appropriately to national and regional characteristics and to the investment policies and objectives of differing clients. In Japan, as the conditions surrounding the providing UCITS*-compliance funds investing in for Responsible Institutional Investors: Japan’s investment opportunities to meet a broad range of National Welfare Pension Fund System are Japanese equities and U.S. high yield bonds to high Stewardship Code,” prepared by Japan’s Financial retail investor needs to further strengthen our undergoing change, we will respond to a diversity of net worth individuals overseas. Services Agency. As a responsible institutional presence in the home market. We will also promote investment management needs and fulfill our * UCITS: Undertakings for Collective Investment in Transferable Securities. UCITS is based on unified criteria for Group investment trust businesses investing in transferable securities as defined in European Committee Directives. investor, Nomura encourages the sustainable growth of its investee companies, and maintains a continuing dialogue with these companies to expand returns to clients and beneficiaries in the A t f i s c a l y e a r- e n d , t o t a l a s s e t s u n d e r medium-to-long term. management reached ¥30.8 trillion, up ¥2.9 trillion year on year. Net revenue, after deduction of interest expense, of ¥80.5 billion, rose 17% year on year. Income before income taxes was ¥27.1 billion, an increase of 28% year on year and the highest level since FY2007/08. Seminars for Distributors and Telephone Support Services In the branches of Nomura Securities nationwide, as well as companies in securities marketing channels, including other securities companies, banks, and the Japan Post Bank, we hold seminars and organize study groups for retail investors and other securities dealers handling investment trusts. About 8,000 of these meetings are held annually, Please refer to Responsibility Investment. http://www.nomura-am.co.jp/corporate/service/ responsibility_investment/index.html Japan’s Stewardship Responsibility: “Japan’s Stewardship Code” “Stewardship responsibility refers to the responsibilities of institutional investors to enhance the medium- to long-term return for their clients and beneficiaries (including ultimate beneficiaries) by improving and fostering the investee companies’ corporate value and sustainable growth through constructive engagement, or purposeful dialogue, based on an in-depth knowledge of the companies and their business environment.” “This code defines principles considered to be helpful for institutional investors who behave as responsible institutional investors in fulfilling their stewardship responsibilities with due regard both to their clients and beneficiaries and to investee companies. By fulfilling their stewardship responsibilities properly in line with the Code, institutional investors will also be able to contribute to the growth of the economy as a whole.” Source: Sections in quotation marks were quoted from the Financial Services Agency (Council of Experts Concerning the Japanese Version of the Stewardship Code), Principles for Responsible Investors, page 1, version as of February 26, 2014. and our aim is to acquaint investors with the Looking Forward contents and risk of investment trust products and gather information on investor needs and interests. Nomura Asset Management (NAM) provides a dedicated, toll-free telephone support service to respond to questions from investors and marketing companies. Opinions and requests obtained through this service are shared within NAM and used as inputs in product and service development. Responsible Investment NAM is a signatory of Principles for Financial Action towards a Sustainable Society (Principles for Financial Action for the 21st Century) and the United Nations-backed Principles for Responsible Investment (UN PRI), and its investment Delivering Highly Competitive Performance Drawing on its active portfolio management capabilities, Asset Management is able to offer highly competitive performance. Capabilities include Japanese and other Asian equities with superior experience and performance, Asian bonds, emerging market equities with reinforced investment and research functions, J-REITs with good track records, and other investments. We also strive to provide a wider range of investment solutions with an edge, including management of high yield and inflation-linked bond funds, which require advanced financial expertise, high alpha bond funds that seek absolute returns, the shift from “savings to investments” by improving fiduciary responsibilities. collaboration between sales channels, conducting Outside Japan, we are continuing to expand our high-quality marketing activities and providing assets under management entrusted from customer support, and expanding the customer base Sovereign Wealth Funds, central banks, large as well as the investment trust market as a whole. pension funds, and other major investors. By Especially with the launch of the Nippon utilizing funds that meet UCITS criteria, we are Individual Savings Account (NISA) program in working to expand our fund business overseas, January 2014, we offer investment products and e s p e c i a l l y i n E u ro p e . O u r a s s e t s u n d e r services in line with the objectives of the NISA management in UCITS funds expanded about 66% program, drawing on the results of our past surveys year on year in FY2013/14, and we are endeavoring of retail investors. We are also working toward the to increase these further as we develop new funds further expansion and development of defined to follow our UCITS flagship funds. contribution (DC) pension plans, and substantially In Asia, where demand for asset management expanding our lineup of investment products. Also, services from a wider range of income levels is in April 2014, we realigned our investment trust expected to accelerate, we are aiming to raise our sales system from by sales channel to by region. To presence in the Taiwanese market using the base be more responsive to changing customer needs we purchased from the ING Group in April 2014. and offer support suited to the needs of differing We will also work to expand other overseas regions, in April 2014, we reorganized our business increasing our staffs in Australia, South marketing system from a channel orientation to a Korea, and Dubai, including Shariah-compliant regional framework. services, principally in Malaysia. Special Article about NISA p.12–13 P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o Our Funds Received Awards from Outside Organizations Investment trust funds managed by NAM have received high appraisals from outside fund assessment organizations. In the “R&I Fund Awards 2014,” our “J-REIT Open (with four closings per year)” and other funds received best awards, and we received 13 awards in 10 divisions. Similarly, our “J-REIT Open (with four closings per year)” was selected for the best fund award presented by Morningstar’s “Fund of the Year 2013” in the alternative and balanced category. In the “Lipper Fund Award Japan 2014” competition, we were selected to receive an award as the Best Management Company in the mixed-asset division, and seven of our funds received best awards. http://www.nomura-am.co.jp/corporate/awpub/award/ 22 Nomura Report 2014 Nomura Report 2014 23 Review of OperationsWEBReview of Operations Wholesale We are committed to focusing on our areas of competitive advantage and offering high value added products and services to meet the wide-ranging needs of our clients around the world. Our aim is to deepen client trust by providing optimal solutions developed through close cross-divisional and cross-regional collaboration. Tetsu Ozaki Wholesale CEO 24 Nomura Report 2014 Wholesale Global Markets Market Environment and Results of FY2013/14 Market Environment and Results of FY2013/14 Wholesale net revenues were strong at ¥765.1 FY2013/14 saw the start of a bear market in Fixed billion in FY2013/14, 18.6% higher than last year, Income, while Equities rebounded driven by signs of with balanced contributions from all regions, economic recovery and abundant liquidity from the resulting from our focus on providing services and large central banks. The year ushered in a period products best suited to client needs. Income before of increased market volatility driven first by the income taxes rose a sharp 56.0%, to ¥111.8 billion, announcement by the Bank of Japan of its record as cost restructuring lowered the breakeven point. quantitative easing (QE) program, followed by the In the first quarter, Japan drove revenues on the Federal Reserve (Fed) indicating a possible tapering back of improved market conditions. Beginning with of its QE program in the latter part of the year, and the second quarter, revenues in Japan weakened, exacerbated by rising geopolitical tensions. This set but overseas revenues picked up, with all regions of events dampened investor sentiment, and, in showing increases year on year, thus giving particular, affected Rates, Emerging Markets, and Wholesale stable revenues overall for the year. Securitized Products. Looking Forward In Wholesale, to diversify and expand revenues, we are continuing to optimize allocation of resources toward our areas of competitive strength, while observing changes in the macro and regulatory environments. We are paying particular attention to strengthening collaboration among divisions and regions to create business opportunities that offer new value added to clients and generate additional earnings. FY2013/14 Wholesale net revenues by region (Billions of yen) 200 194.6 183.3 188.7 198.5 150 100 50 0 1Q 2Q 3Q 4Q L Japan L EMEA* L Americas L AEJ** * EMEA=Europe, Middle East, and Africa ** AEJ=Asia except Japan P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o Sponsoring the Nomura Investment Forum Asia to Bring Companies and Investors Together Global Markets holds the “Nomura Investment Forum Asia” (NIFA) each year in Singapore. By providing opportunities for networking, the conference enables leading companies in Asia to join with investors. Beginning with the 2013 conference, we have expanded asset classes to include both Equities and Fixed Income, and the name of this event was changed to reflect this. The 2013 forum, which was held with the theme “Globally Asia,” focused on Abenomics. During the forum, a total of 3,326 meetings were held among representatives of 130 companies and 949 institutional investors. Also, during this event, individuals who have made outstanding social contributions in the region were presented with the “Nomura CARES Award.” Minoru Shinohara, Regional CEO, Asia ex-Japan giving a presentation at the forum Nomura Report 2014 25 Review of OperationsReview of Operations Wholesale In Fixed Income, the overall industry fee pool investment bank, we are rightly placed to leverage In the M&A advisory business, we played major strong funding needs. For global offerings, foreign declined due to uncertain macroeconomic cross-border flows between various regions. We roles in many deals. These included advising bond issues, and other fund-raising activities, we conditions driven by central bank policies and remain committed to providing enhanced services to Spanish company Grifols in its acquisition of the will continue to use our global platform to instability in Emerging Markets. Despite these clients and generating higher retur ns to blood transfusion inspection division of Novartis intermediate between issuers and investors. conditions, Nomura Fixed Income remained firm shareholders, while optimizing costs and financial International AG, of Switzerland, and working with driven by the strength of our client franchise and resources. effective risk management, and delivered revenues at the same level as in FY2012/13. Among regions, Investment Banking Japan led revenue growth while overseas business remained steady amid market headwinds. In Equities, revenues increased over the previous year, and we expanded our market share. Both Japan and overseas regions delivered growth, with Japan taking the lead in monetizing opportunities from Abenomics. Our client franchise strengthened further, generating nearly 20% higher client revenue over the previous year. We consolidated our execution capabilities with our subsidiary Instinet, offering our clients a seamless execution platform and associated services. Looking Forward Market Environment and Results of FY2013/14 The fiscal year saw a series of initial public offerings (IPOs) globally in a wide range of industries. In the U.S. and other markets, issues of equities and high- yield bonds were quite active, and the level of fund- raising in capital markets reached a high level. Amid this operating environment, Investment Banking revenues (gross) were ¥184.3 billion. We encouraged cross-divisional and cross-regional collaboration and were successful in providing a diversity of financial solutions. In fund-raising activities, Nomura acted as bookrunner for major issues by industry-leading In Fixed Income, the persistence of the recent companies. Major deals included a global IPO for the Yue Xiu corporate group, of China, in its acquisition of Chong Hing Bank, of Hong Kong. Looking Forward We are working to expand our market share and enhance profitability by offering clients high value added solutions and focusing our resources in businesses such as the following. M&A Advisory We will continue to concentrate on major industrial realignment activities in Japan and overseas and on assisting Japanese companies in entering overseas markets through the promotion of collaboration among regions. We will also continue to provide advisory services as well as related financing and foreign exchange services for cross-border M&A deals including those involving fast-growing Asian decline in volatility and flattening of the yield curve Suntory Beverage and Food Limited and the global companies. Expansion of Solutions, New Products, and Other Businesses We will continue to meet the diverse financial needs of our clients by offering a range of new services. These will include solutions for clients arranging interest rate hedges in connection with their bond issues; providing tailor-made financing, such as rights issues and a new type of share options subject to the issuer’s instruction on exercise; mezzanine finance in collaboration with Nomura ICG K.K.; and other new services. Broadening the Business Platform in the Americas The Americas offer the world’s largest fee pool, and a continuing high level of investments and exits by business corporations or PE funds are expected in the region. Nomura aims to expand its business platform in the Americas from a medium- to long- term perspective. Specific strategies will include strengthening our cross-border M&A advisory and leveraged financing services as well as our client base among corporations in the region. are likely to further dampen client activity. On the public offerings of Mitsubishi Motors Corporation other hand, the ongoing “soft” rotation to equities is and Sharp Corporation. Major bond deals included expected to continue as economic recovery takes underwriting the U.S. dollar and euro bond issues of root especially in the developed world. As the new SoftBank Corp. and the samurai bond issue of the regulatory landscape evolves further, market European Financial Stability Facility. We also participants will be faced with challenges as well as expanded our financial solutions business and deals new opportunities. With our integrated Global during the year, including interest rate hedges Markets platform, in December 2012 we are well accompanying arrangements for bond issuance positioned to take advantage of the shift in market and rights issues. dynamics across asset classes, and maximize the In businesses overseas, we utilized our domestic return on our resources. As Asia’s leading retail distribution network to act as joint global coordinator and joint bookrunner for the global IPO and sole bookrunner for POWLs (public offerings without listing) of the Belgium Post. We also acted as joint bookrunner of the IPO of major apparel manufacturer Moncler of Italy, and secured the mandate as sole bookrunner for its POWL. Global Fund-Raising We will continue to expand our fund-raising business. The market environment is gradually improving globally, and both financial institutions and corporates are expected to continue to have P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o Sponsoring the Nomura World Environment Conference In November, Nomura Securities and Nomura Research & Advisory Co., Ltd., jointly sponsored the Nomura World Environment Conference 2013. We offered excellent opportunities for about 200 participants from a broad range of industries to actively exchange views, discover new business ideas, and explore the possibilities for business alliances. This program opened with a keynote speech by Mr. Yuko Yasunaga, planning coordinator of the Electric Power Reform Promotion Office of METI*. This was followed by presentations by five environmental and energy companies covering such topics as offshore wind power generation systems and bio-fuels. We, as one means of expanding our finance business Conference reference materials activities, are considering ways to contribute to the growth of the environmental energy industry through the transmission of accurate information, supporting the start-up of new businesses, and acting as intermediary to encourage collaboration between companies. * METI: Ministry of Economy, Trade and Industry 26 Nomura Report 2014 Nomura Report 2014 27 Review of OperationsReview of Operations Global Research The strength of Nomura’s global research lies in its detailed, in-depth analyses and forward-looking insights that assist investors in making timely decisions. Our research analysts cover many topics and asset classes, Award-Winning Research including politics, economics, foreign exchange, interest rates, equities, credit, and quantitative strategies, Nomura’s research is highly regarded in the market Offering a Broad Range of Investment Strategies and Indexes which are essential for the business we conduct. About 400 professionals in 15 countries and regions around the world conduct Nomura’s research, and they collaborate closely across regions and disciplines to track changes and spot trends that may shape the future. Leading Global Money Flows The Nomura’s researchers analyze over 40 economies, over 30 currencies, and all of the world’s major stock price indexes and government bond markets. The breadth of our research allows us to cover 90% of global economic and financial indicators and enables us to provide value-added information on developments in the ever changing financial markets. In FY2013/14, we set up a research team for strategic global asset allocation to provide investment strategies that encompass a broad range of asset classes, and Nomura is now even better positioned to influence global money flows. We launched a full-fledged research initiative in U.S. equities in October 2010 and built teams focused on major sectors such as Finance, Telecommunications, Technology, Consumer goods, Services, Automobiles, and the Internet. Our research professionals now cover approximately 250 stocks in the U.S., 1,100 in Japan and the rest of Asia, and approximately 400 stocks in Europe. The outcome from macroeconomic and individual stock research is also utilized in giving information to Japanese retail investors who are diversifying their portfolios globally. Global Coverage (As of May 2014) 87%*1 90%*2 Global Strategy Outlook (Covering indexes of six world stock exchanges) 85%*3 and was ranked number one in the Institutional In our quantitative strategy research, we respond to Investor All-Japan Equity Research Team survey the needs of our clients for investment strategy four years in a row. In addition, Nomura ranked proposals and prepare benchmark indexes for number one in the U.S., number two in Asia, and pension and other fund managers. “Nomura-BPI” number three in Europe, according to the and “Russell/Nomura Japan Equity Indexes,” in Institutional Investor survey for foreign exchange particular, are widely used by institutional investors research. We also placed first in the bond analyst as benchmark indexes for domestic bonds and and economist ranking, according to a survey stocks. The quantitative research team also helps conducted by Nikkei Veritas, the leading finance clients optimize their portfolios by providing magazine in Japan. bespoke investment advice and helping to create investible products. In-Depth Equity Research and Insights into the Emerging Asian Markets and Economies High-Quality ESG Information in Line with Global Trends A cornerstone of Nomura’s equity research is its In FY2013/14, Nomura published a series of in-depth analysis of core global sectors. We focus research reports on topics including, but not limited on leveraging our Japanese and other Asian to, cross-border M&A, shale gas, the tapering of insights while looking for opportunities and quantitative easing in the U.S., the crisis in the identifying risks in sectors from a global Ukraine, and corporate governance. As interest in perspective. For example, our research know-how organizational sustainability has risen, we have in Japan and the U.S. provided a foundation for the expanded research areas on environmental issues, completion of an in-depth analysis of recent trends such as “smart grids,” which can link renewable within China’s fast-growing Internet sector. energy sources to the electric power grid. We also accurately forecasted the direction of I n v e s t m e n t p u t t i n g t h o u g h t i n t o E S G global competition within the Automobile sector, (Environmental, Social, and Governance) issues has stating in a report that “There is little possibility that begun to take root in recent years, especially in The countries and regions surveyed are shown in blue. price competition led by Japanese automobile Europe. In Japan also, the Ministry of the *1 Ratio to total world GDP *2 Ratio of the forecast GDP of countries covered to total world GDP *3 Ratio of the market value of stocks included in the indexes to the total market value of world stock exchanges manufacturers will occur.” Environment issued its Principles for Financial In addition to sector research, we conduct Action towards a Sustainable Society in 2011, and m a c r o e c o n o m i c a n a l y s e s o f e c o n o m i c in February 2014, the Financial Services Agency developments over the medium-to-long term. Our published Japan’s Stewardship Code, which early projection of the impact that Abenomics would provides “principles for responsible institutional have on the Japanese Yen is an example of how investors.” Along with these ESG-related our research team develops themes that come to developments and expansion in ESG investments, influence broad investor behavior. Other examples we issue reports, make proposals for using ESG include “Japan Medium-Term Macroeconomic information, and provide investment ideas. We have Outlook 2014,” a study of Japan’s growth potential, recently published reports documenting the and “China’s Property Sector over Investment,” a domestic trend and spread of ESG-related scenario analysis of the structural market investment in Japan and an analysis of the JPX oversupply and the implications for economic Nikkei 400 Index from an ESG perspective. Going growth in China. This type of research has attracted forward, we will continue to offer useful ESG considerable attention. information to investors, including the development of an ESG-related stock index. 28 Nomura Report 2014 Nomura Report 2014 29 Review of OperationsGlobal Economic Outlook(Covering the GDPs of 40 countries and regions)Global Forex Weekly(Covering 32 currencies)Review of Operations Contributing Solutions to Social Issues through Our Business The Nomura Group, through its products and services, facilitates appropriate flows of funds, and believes its social role as a financial services company is to contribute to economic growth and sustainable development of society. By providing financial services based on the needs of customers and society and through dialogue with its stakeholders, Nomura contributes to the solution of many social issues around the world. Nomura Brings Issuers and Investors Together to Finance Activities that Contribute to Society Assisting the World’s Sustainable Growth The world today faces many social issues that demand solutions, such as global warming and obtaining sufficient water resources. To help provide these solutions, the Nomura Group acts as a conduit for financial resources by meeting the funding needs of projects that promote solutions to these issues by acting as a channel for funds from investors who want to contribute to society. Helping to Prevent Global Warming The World Bank Issues “Green Bonds” Investors Investors NOMURA The World The World Bank Bank Green Bonds Solar and wind power generating facilities Financial support for technologies to substantially reduce greenhouse gas emissions Providing for protection against flooding (reforesta- tion, watershed management, and other measures) Sustainable forest management and measures to avert the destruction of forestlands Global warming is a factor behind many environmental issues, including rising s e a l e v e l s a r o u n d t h e w o r l d , desertification, and abnormal weather conditions. In the developing countries, it is necessary to address global warming and economic development issues at the same time. In May 2014, Nomura acted as underwriter and distributor of the “Green Bonds” issued by the World Bank. The funds invested in these bonds are being lent to a range of projects related to the prevention of global warming. These will include developing renewable energy sources, increasing the efficiency of energy use, and applying new technologies to agricultural systems. These projects are expected to provide relief to developing countries that are suffering from the effects of global warming. Supporting Revitalization of Regional Economies for the Future Solutions for Making Japan “Healthy” Again To revitalize Japan’s regional areas, the Nomura Group is drawing on its network and specialized know-how and is undertaking innovative projects in areas that include agriculture and medical services. Nomura identifies projects where funds are needed and supports the growth of industries that will promote sustainable development in the medium-to-long term. Agribusiness Offering Active Support to Development of “Sixth Sector” Industries Support for agribusiness projects and contributing to revitalization of regional areas Nomura Group’s broad network Know-how in structuring financial schemes Knowledge and know-how obtained through test farm projects 30 Nomura Report 2014 Drawing on the information obtained through Nomura’s nationwide network and its financial know-how, Nomura Agri Planning & Advisory Co., Ltd., is supporting the transition toward the development of an agricultural industry in Japan with close ties to regional communities. In December 2013, with the support of the Ministry of Agriculture, F o re s t r y a n d F i s h e r i e s , N o m u r a s p o n s o re d t h e “ S y m p o s i u m f o r Promoting Development of the Sixth Sector Industries,” and prizes were awarded to examples of superior corporate activities. Left: Senior Vice Minister of Agriculture, Forestry and Fisheries, Taku Eto, presents the Minister’s Prize to Toshiyuki Yamada, President of Koto Kyoto Co., Ltd. Right: Presentation by award-winning companies at the symposium Dealing with Water- Related Issues Asian Development Bank Issues “Water Bonds” The number of people living in the emerging countries who have access to safe water supplies is limited, and solving issues related to water is important. In December 2013, Nomura underwrote an issue of “Water Bonds” for the ADB. The proceeds will be provided to finance many water-related projects in the Asia-Pacific region. These will include improving the efficiency of water usage, the management of water resources, and management of effluents from sewage treatment plants. Improving Educational Programs African Development Bank Issues “Education Support Bonds” I n S e p t e m b e r 2 0 1 3 , N o m u r a underwrote an issue of Edu ca tion Support Bonds for the AfDB. The funds are being used to provide support for various education-related projects in Africa. These include investments in human capital today to build the necessary skills required to support infrastructure investments tomorrow, thereby supporting countries in their move up the global value chain. Development Assistance JICA Bonds In December 2013, Nomura underwrote and distributed an issue of bonds for the Japan International Cooperation Agency (JICA), which is Japan’s government agency providing official development assistance. These bonds were issued as part of initiatives to broaden JICA’s funding sources and to make JICA’s roles and activities—which include improving the infrastructure in emerging and developing countries and providing various development assistance— better known to the general public. © The World Bank © ADB Photo Library © African Development Bank Medical Services Contributing to Regional Medical Services through Consulting Services for Hospitals N o m u r a H e a l t h c a r e C o . , L t d . , contributes to the revitalization of communities and the creation of jobs and to guaranteeing the peace of mind of communities and the confidence that regional residents place in their medical services by offering solutions, including consulting and finance in the medical and nursing fields. Collaboration between Industry and Academia Matching Services for Linking Industrial Needs and Academic Ideas Nomura Holdings and Nomura Securities were selected as “business promoters” for the “University-Generated Industry Creation Center Project” in April 2013. In this capacity, Nomura Holdings and Nomura Securities are taking initiatives to create new industries based on intellectual assets of universities. Urban railway project in India (Photo graph provided by Shinichi Kuno) A child receiving a polio vaccination in Pakistan Support for Disaster Recovery Project for Supporting Revitalization in Fukushima The Fukushima Branch is providing many kinds of assistance to local governments as well as universities and other interests. The aim of these activities is to promote recovery from the 2011 earthquake disaster and revitalize the regional economy. In FY2013/14, Nomura began to cooperate with Fukushima Pre fecture in disseminating related information, and has assisted local governments in preparing economic revitalization plans. A consulting assignment was received for construction of a new health facility, the Nishi Memorial Port Island Rehabilitation Hospital in Kobe. Screen of the “Nomura Innovation Market Web,” which is facilitating the matching of corporate needs and academia’s intellectual assets The slogan of Fukushima Prefecture, “Future from Fukushima” on display in the Fukushima Branch Nomura Report 2014 31 Review of Operations Governance Corporate Governance Approach to Corporate Governance Nomura Holdings recognizes that the enhancement of corporate governance is one of the most important issues in terms of achieving the management’s goal of enhancing corporate value by deepening society’s trust in the firm and increasing the satisfaction, beginning with clients, of stakeholders. The basic thinking concerning the governance of Nomura Holdings is as set forth below. • Nomura Holdings has strengthened the supervisory function by separating management’s supervisory and executive functions and has adopted the “Company with Committees” structure, a highly transparent governance structure, which has the following three committees: the nomination, compensation, and audit committees, each made up of a majority of Outside Directors. • The Board of Directors will have a sufficient number of members/ composition that enables active discussion from diverse perspectives and will supervise effectively. A Director who does not concurrently serve as an Executive Officer will serve as the chairman, and, as a general rule, the majority of the Board of Directors will be Outside Directors meeting the “Independence Criteria for Outside Directors” established by the Company. Business execution decisions will be made flexibly and efficiently by Executive Officers to whom authority has been delegated by the Board of Directors. • The Nomination Committee will, referencing the opinions of external evaluation institutions and others, strive to assess talented individuals and will decide on candidates for the office of Director based on certain election standards. For the election of candidates for the office of Outside Director, in addition to corporate management experience and expertise in law and accounting, diversity, including nationality and gender, will be considered. • The Compensation Committee, in deciding the compensation of Directors and Executive Officers, will, on the basis of the general rule of paying compensation commensurate with business performance, seek to enhance objectivity and transparency based on analysis performed by external evaluation institutions and others. Moreover, by utilizing deferred compensation, such as equity-related compensation with a certain exercise limitation period, the interests of the Directors and Executive Officers will be matched with the interests of shareholders, and long-term incentives will be increased. However, business performance-based bonuses and equity-based compensation will not be provided to Outside Directors. • The Audit Committee will include at least one member who is a financial expert and transparency will be increased by having an Outside Director serve as chairman. To raise the effectiveness of legality/adequacy audits performed by the Audit Committee, a full- time Director who does not concurrently serve as an Executive Officer from within the Company, who is well-versed in the affairs of the Company, will be a member of the Audit Committee or an Audit Mission Director, and a full-time support organization will be put in place. • Regarding the internal control system, it will be developed based on resolutions adopted by the Board of Directors, and the effectiveness/ adequacy of the system will be secured through activities such as audits by the Audit Committee and activities of the Internal Audit Department that is independent from business execution. With a focus on the Internal Controls Committee in which both Audit Committee members and business execution managers participate, Nomura Holdings will strive to strengthen/enhance the internal control system. • Regarding risk management, high standards are constantly pursued, and the Group Integrated Risk Management Committee has been put in place to heighten management effectiveness and will appropriately submit reports/recommendations to the Board of Directors. • Regarding matters concerning a company’s social responsibility beginning with compliance, the Code of Ethics of Nomura Group has been established as the rules of conduct that all Directors, officers, and employees of the Nomura Group must comply with, and the Nomura Group will strive to carry out its responsibilities to all stakeholders. Measures for Reinforcing Governance When we adopted a holding company structure and listed on the New York Stock Exchange (NYSE) in 2001, we installed Outside Directors and established an Internal Controls Committee, a Compensation Committee (the majority of the members are Outside Directors), and an Advisory Board of distinguished persons from outside the Company, and further improved our information disclosure system, as part of our commitment to ensure management transparency. In addition, in 2003, we further strengthened and increased the transparency of our oversight functions and expedited the Nomura Group’s decision-making process by adopting the C o m m i t t e e S y s t e m , a s y s t e m i n w h i c h management oversight and business execution functions are clearly separated. In 2004, we established the “Code of Ethics of Nomura Group,” which specifies matters to be observed by each Director, officer, and employee of the Nomura Group with respect to corporate governance and corporate social responsibility, and are making a thoroughgoing effort in this regard. Moreover, our Code of Ethics is in line with the Universal Declaration of Human Rights and the OECD Guidelines for Multinational Enterprises. For 32 Nomura Report 2014 further information on the Code of Ethics of Nomura transparency. We emphasize the independence of Group. Please refer to the Code of Ethics of Nomura Group. http://www.nomuraholdings.com/company/basic/ ethics.html Board of Directors In order to achieve effective oversight of business execution functions from multiple perspectives, we place importance on diversity within the Board of Directors. Each Director has a diverse background in terms of nationality, gender, professional experience, etc., and by utilizing their extensive experience in their respective fields, such as business manager, legal/accounting professional, Outside Directors from the Nomura Group, and in order to maintain such independence, we have established the “Independence Criteria for Outside Directors.” As none of the Outside Directors fall under the categories for which independence is considered suspect, and since none of the Outside Directors have any conflicts of interests with the shareholders, we have reported that each of the six Outside Directors are independent Directors in our submission to the Tokyo Stock Exchange. Please see our Annual Securities Report for more information on the Independence Criteria for Outside Directors. Please refer to 6-k. http://www.nomuraholdings.com/investor/library/ sec and public servant, the Directors assist with the Board of Directors (As of June 25, 2014) determination of important managerial matters and oversee business execution. Outside Directors Additionally, six of the eleven Directors making up our Board of Directors are Outside Directors, and based on supervision with an emphasis on the external perspective, we are aspiring to put in practice management with a high level of Non-Japanese Directors Female Directors 54% (6 of 11) 27% (3 of 11) 9% (1 of 11) Management Structure Shareholders’ Meeting Board of Directors Nomination Committee • Three Directors, including two Outside Directors • Determines the details of proposals on the election and dismissal of Directors for submission to a meeting of shareholders in accordance with a set criteria for character, insight, experience, and independence • Directors concurrently serving as Executive Officers are not members Audit Committee • Three Directors, including two Outside Directors • Audits the execution of duties by the Directors and Executive Officers, prepares audit reports, and determines details of proposals regarding the election, dismissal, and non-reelection of the Independent Auditor for submission to a meeting of shareholders • All committee members satisfy requirements for independent Directors as defined in the Sarbanes-Oxley Act of 2002 Compensation Committee • Three Directors, including two Outside Directors • Determines policy with respect to the particulars of compensation for each Director and Executive Officer, as well as the individual compensation • Directors concurrently serving as Executive Officers are not members Group CEO Executive Management Board Deliberates on and determines important management matters, such as the management strategy for the Nomura Group, business plans, budgets, and allocation of management resources Advisory Board Established as a consulting body to the Executive Management Board, with the aim to bring an external perspective to the formation of our management strategy Group Integrated Risk Management Committee Deliberates on and determines important matters concerning the integrated risk management of the Nomura Group Internal Controls Committee Deliberates on and determines matters concerning the establishment and assessment of internal control of the Nomura Group and promoting proper corporate behavior Nomura Report 2014 33 WEBWEBGovernance Corporate Governance Business Execution Internal Controls The Board of Directors has broadly delegated We are committed to strengthening and improving decision making authority for business execution our internal controls system to promote proper functions to the Executive Officers to ensure that corporate behavior throughout the Nomura Group, they can execute the Company’s business with from the viewpoints of ensuring management speed and efficiency. Among the matters delegated transparency and efficiency, complying with laws to the Executive Officers by resolutions adopted by and regulations, controlling risks, ensuring the the Board of Directors, the most important matters reliability of business and financial reports and of business must be deliberated and decided by fostering the timely and appropriate disclosure of specific management bodies within the Company, information. including the Executive Management Board, the Furthermore, in order to ensure effective and Group Integrated Risk Management Committee, adequate internal controls, the Group Internal Audit the Head of the Internal Audit Division require the 1. Base Salary consent of the Audit Committee. Audit Committee Base salary is determined based on factors such as members may recommend changes to the p ro f e s s i o n a l b a c k g ro u n d , c a re e r h i s t o r y, implementation plan, etc., to Executive Officers. responsibilities, and compensation standards of Compensation for Directors and Executive Officers As Nomura has adopted a committee system for corporate gover nance, the Compensation Committee has prepared and approved the Compensation Policy of Nomura Group and Compensation Policy for Directors and Officers of related business fields. A portion of base salary may be paid in the form of equity-based compensation with a certain non-exercise period to ensure that the interests of Directors and Executive Officers are closely aligned with those of shareholders. 2. Annual Bonus Annual Bonuses of Directors and Executive Officers are determined by taking into account both quantitative and qualitative factors. Quantitative factors include performance of the Group and the division results, while qualitative factors include achievement of individual goals and subjective assessment of individual contributions. Depending on the level of bonus payment, a portion of payment in cash may be deferred. In addition, a portion of deferred bonus may be paid in equity- based compensation with a certain non-exercise period in lieu of cash. Such deferred bonus may be unpaid or forfeited under specific circumstances. and the Internal Controls Committee. These Department, which is independent from the Nomura Holdings, Inc. management bodies are required to report to the business execution functions, and other similar Board of Directors on the status of their audit sections placed in major subsidiaries, conduct deliberations at least once every three months. internal audits of the Company and its subsidiaries. In order to further bolster our business execution The implementation status of internal audits is also framework for financial operations that are reported to the Board of Directors and the Audit b e c o m i n g i n c re a s i n g l y s o p h i s t i c a t e d a n d Committee. specialized, we utilize a system whereby the In addition, to strengthen the independence of Executive Officers delegate a part of their authority the internal audit sections from the business for business execution decisions to Senior execution functions, implementation plans and the Compensation Policy of Nomura Group To enable us to achieve sustainable growth, realize a long-term increase in shareholder value, deliver added value to our clients, compete in the global market and enhance our reputation, Nomura has developed the Compensation Policy of Nomura Group applicable to regular employees, including senior management. The policy is broadly divided Managing Directors (SMDs), who focus on formulation of the budget of the Internal Audit into six key themes. individual business line activities. Divisions, as well as the election and dismissal of Nomura Internal Controls Internal Controls Committee Agrees on IA’s audit plan, human resources and budget Audit Committee • Deliberates on and determines matters concerning the maintenance and assessment of internal controls and promoting proper corporate behavior • Made up of the Group CEO, the Group COO, two Audit Committee members, and persons appointed by the Group CEO. • Audit plan and budget Report approval • Appointment and dismissal of IA head Report Internal audits Report • Consists of two Outside Directors, and one Director not concurrently serving as an Executive Officer Assists the Audit Committee with its duties Office of Audit Committee Internal Audit (IA) Management Business Risk Management Compliance 1. Align with Nomura values and strategies 3. Long-Term Incentive Plans 2. Reflect firm, division, and individual performance Long-term incentive plans may be awarded to 3. Establish appropriate performance measurement Directors and Executive Officers, depending on their individual responsibilities and performance. Payments under long-term incentive plans are made when a certain degree of achievements is accomplished. Payments are made in equity-linked awards with appropriate vesting periods to ensure that medium- to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders. Please refer to Form 20-F. http://www.nomuraholdings.com/investor/library/ sec/ with a focus on risk 4. Align employee and shareholder interests 5. Establish appropriate compensation structures 6. Ensure robust governance and control processes Please refer to our corporate website. http://www.nomuraholdings.com/investor/cg/ compensation.html Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc. The compensation of Directors and Executive Officers comprises base salary, an annual bonus, and a long-term incentive plan. The Compensation Committee has approved the following matters related to compensation of Directors and Executive Officers: 34 Nomura Report 2014 Nomura Report 2014 35 GovernanceWEBWEBGovernance Directors (As of June 25, 2014) Nobuyuki Koga Chairman of the Board of Directors, Chairman of the Nomination Committee, Chairman of the Compensation Committee Apr. 1974 Jun. 1995 Apr. 1999 Jun. 2000 Oct. 2001 Apr. 2003 Joined the Company Director of the Company Managing Director of the Company Director and Deputy President of the Company Director and Deputy President of the Company (concurrently Director and Deputy President of Nomura Securities Co., Ltd.) Director and President of the Company (concurrently Director and President of Nomura Securities Co., Ltd.) Jun. 2003 Apr. 2008 Jun. 2008 Jun. 2011 Director, President & CEO of the Company (concurrently Director and Executive Officer and President of Nomura Securities Co., Ltd.) Director and Representative Executive Officer of the Company (concurrently Director and Chairman of Nomura Securities Co., Ltd.) Director and Chairman of Nomura Securities Co., Ltd. Director and Chairman of the Company (concurrently Director and Chairman of Nomura Securities Co., Ltd.) (Current) Masahiro Sakane Outside Director, Member of the Nomination Committee, Member of the Compensation Committee, Former Representative Director and President of Komatsu Ltd. Apr. 1963 Jun. 2001 Jun. 2003 Jun. 2007 Joined Komatsu Ltd. Representative Director and President of Komatsu Ltd. Representative Director and President & CEO of Komatsu Ltd. Representative Director and Chairman of Komatsu Ltd. Jun. 2008 Jun. 2010 Apr. 2013 Jun. 2013 Outside Director of the Company (Current) Director and Chairman of Komatsu Ltd. Director and Councilor of Komatsu Ltd. Councilor of Komatsu Ltd. (Current) Mr. Sakane has held a number of significant positions, including Representative Director and President of Komatsu Ltd. and Vice Chairman of Nippon Keidanren (Japan Business Federation), and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his extensive experience with respect to management, Mr. Sakane contributes to the Company as an Outside Director. Takao Kusakari Outside Director, Member of the Nomination Committee, Member of the Compensation Committee, Former President of NYK Line Joined Nippon Yusen Kabushiki Kaisha (NYK Line) Apr. 1964 Aug. 1999 President of NYK Line Apr. 2002 Apr. 2004 President, Corporate Officer of NYK Line Chairman, Corporate Officer of NYK Line Apr. 2006 Apr. 2009 Jun. 2010 Jun. 2011 Chairman, Chairman Corporate Officer of NYK Line Director and Corporate Advisor of NYK Line Corporate Advisor of NYK Line (Current) Outside Director of the Company (Current) Dame Clara Furse Outside Director, Former Chief Executive of the London Stock Exchange Group Feb. 1983 Joined Phillips & Drew (currently UBS) Jun. 1990 Non-Executive Director of the London International Financial Futures Exchange (“LIFFE”) Deputy Chairman of LIFFE Group Chief Executive of Credit Lyonnais Rouse Jun. 1997 May 1998 Jan. 2001 Jun. 2010 Apr. 2013 Chief Executive of the London Stock Exchange Group Outside Director of the Company (Current) External Member of the Bank of England’s Financial Policy Committee (Current) Dame Clara Furse has held a number of significant positions, including Chief Executive of the London Stock Exchange Group, and she was also made Dame Commander of the Order of the British Empire. Her achievements and insights have been evaluated highly both within and outside of the Company. Applying her global and extensive experience with respect to financial businesses, Dame Clara Furse contributes to the Company as an Outside Director. Michael Lim Choo San Outside Director, Former Executive Chairman of PricewaterhouseCoopers, Singapore Aug. 1972 Joined Price Waterhouse, Singapore Jan. 1992 Oct. 1998 Managing Partner of Price Waterhouse, Singapore Member of the Singapore Public Service Commission (Current) Executive Chairman of PricewaterhouseCoopers, Singapore Jul. 1999 Jun. 2011 Nov. 2011 Chairman of the Accounting Standards Council, Outside Director of the Company (Current) Apr. 2013 Singapore (Current) Chairman of the Singapore Accountancy Commission (Current) Sept. 2002 Chairman of the Land Transport Authority of Singapore (Current) Mr. Lim has held a number of significant positions, including Executive Chairman of PricewaterhouseCoopers (Singapore) and was also awarded with national honors by the Government of Singapore three times. His achievements and insights have been evaluated highly both within and outside of the Company. Applying his global and extensive experience and his high degree of expertise with respect to international accounting systems, Mr. Lim contributes to the Company as an Outside Director. David Benson Feb. 1997 Joined Nomura International plc Jul. 1999 Head of Risk Management, Nomura International plc Chief Operating Officer (“COO”) of Nomura International plc Mar. 2005 Jan. 2011 Apr. 2011 Jun. 2011 Senior Managing Director of the Company, Vice Chairman, Risk and Regulatory Affairs Vice Chairman of the Company (Senior Managing Director) Director of the Company (Current) Mr. Kusakari has held a number of significant positions, including President of NYK Line and Vice Chairman of Nippon Keidanren (Japan Business Federation), and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his extensive experience with respect to management, Mr. Kusakari contributes to the Company as an Outside Director. Aug. 2007 Resigned from Nomura International plc Nov. 2008 Chief Risk Officer (“CRO”), Senior Managing Director of the Company Tsuguoki Fujinuma Outside Director, Chairman of the Audit Committee, Certified Public Accountant, Former Chairman and President of the Japanese Institute of Certified Public Accountants Joined Horie Morita Accounting Firm Joined Arthur & Young Accounting Firm Apr. 1969 Jun. 1970 Nov. 1974 Registered as a Certified Public Accountant May 1991 Jun. 1993 Managing Partner of Asahi Shinwa Accounting Firm Managing Partner of Ota Showa & Co. (Ernst & Young ShinNihon (currently, Ernst & Young ShinNihon LLC)) May 2000 Jul. 2004 Jun. 2007 Jul. 2007 Jun. 2008 President of the International Federation of Accountants Chairman and President of the Japanese Institute of Certified Public Accountants Retired from Ernst & Young ShinNihon Advisor of the Japanese Institute of Certified Public Accountants (Current) Outside Director of the Company (Current) Mr. Fujinuma has held a number of significant positions, including President of the International Federation of Accountants, and his achievements and insights have been evaluated highly both within and outside of the Company. He is well-versed in international accounting systems and applying his high degree of expertise corresponding to a Sarbanes-Oxley Act of 2002 financial expert and extensive experience, Mr. Fujinuma contributes to the Company as an Outside Director. Toshinori Kanemoto Outside Director, Member of the Audit Committee, Attorney-at-Law, Of-Counsel, City-Yuwa Partners, Former President of ICPO-INTERPOL Apr. 1968 Apr. 1992 Joined National Police Agency Kumamoto Prefecture Police Headquarters, Director-General Aug. 1995 Director General of the International Affairs Department, National Police Agency President of ICPO-INTERPOL Oct. 1996 Aug. 2000 President, National Police Academy Apr. 2001 Jan. 2007 Director of Cabinet Intelligence, Cabinet Secretariat, Government of Japan Registered as Attorney-at-Law (Dai-ichi Tokyo Bar Association) Feb. 2007 Of-Counsel, City-Yuwa Partners (Current) Outside Director of the Company (Current) Jun. 2011 Mr. Kanemoto has held a number of significant positions, including President of ICPO-INTERPOL, and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his sophisticated expertise and extensive experience as a currently active attorney, Mr. Kanemoto contributes to the Company as an Outside Director. Hiroyuki Suzuki Member of the Audit Committee Apr. 1982 Apr. 2005 Joined the Company Senior Managing Director of Nomura Securities Co., Ltd. Oct. 2008 Senior Managing Director of the Company Dec. 2008 Senior Managing Director of Nomura Securities Co., Apr. 2009 Ltd. Senior Corporate Managing Director of Nomura Securities Co., Ltd. Jun. 2010 Apr. 2011 Apr. 2013 Jun. 2013 Senior Corporate Managing Director of the Company (concurrently Executive Managing Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd.) Senior Corporate Managing Director of the Company (concurrently Executive Vice President of Nomura Securities Co., Ltd.) Advisor of the Company Director of the Company (Current) Koji Nagai Representative Executive Officer, Group CEO Apr. 1981 Apr. 2003 Jun. 2003 Apr. 2007 Oct. 2008 Apr. 2009 Apr. 2011 Joined the Company Director of Nomura Securities Co., Ltd. Senior Managing Director of Nomura Securities Co., Ltd. Executive Managing Director of Nomura Securities Co., Ltd. Senior Corporate Managing Director of Nomura Securities Co., Ltd. Executive Managing Director and Executive Vice President of Nomura Securities Co., Ltd. Co-COO and Deputy President of Nomura Securities Co., Ltd. Apr. 2012 Senior Managing Director of the Company (concurrently Director and President of Nomura Securities Co., Ltd.) Aug. 2012 Representative Executive Officer & Group CEO of the Company (concurrently Director and President of Nomura Securities Co., Ltd.) Director, Representative Executive Officer & Group CEO of the Company (concurrently Director and President of Nomura Securities Co., Ltd.)(Current) Jun. 2013 Atsushi Yoshikawa Representative Executive Officer, Group COO Apr. 1978 Jun. 2000 Oct. 2001 Jun. 2003 Apr. 2004 Apr. 2005 Apr. 2006 Apr. 2008 Oct. 2008 Joined the Company Director of the Company Director of Nomura Securities Co., Ltd. Senior Managing Director of Nomura Securities Co., Ltd. Senior Managing Director of the Company (concurrently Executive Managing Director of Nomura Asset Management Co., Ltd.) Senior Managing Director of the Company (concurrently Executive Vice President of Nomura Asset Management Co., Ltd.) Executive Vice President of Nomura Asset Management Co., Ltd. Director and President of Nomura Asset Management Co., Ltd. Executive Managing Director of the Company (concurrently Director, President & CEO of Nomura Asset Management Co., Ltd.) Jun. 2011 Executive Vice President of the Company (concurrently CEO and President of Nomura Holding America Inc.) Jun. 2013 Aug. 2012 Representative Executive Officer & Group COO of the Company (concurrently Chairman of Nomura Holding America Inc.) Director, Representative Executive Officer & Group COO of the Company (concurrently Chairman of Nomura Holding America Inc.) Director, Representative Executive Officer & Group COO of the Company (concurrently Director and Representative Executive Officer of Nomura Securities Co., Ltd., Chairman of Nomura Holding America Inc.) (Current) Apr. 2014 36 Nomura Report 2014 Nomura Report 2014 37 GovernanceGovernance Interview with Masahiro Sakane, Outside Director Raising corporate value by working together as a group to place clients at the heart of everything the firm does Build out the international franchise with a distinct business model -Q1- What is most important for increasing continually improve its strengths, and maintain an Nomura’s corporate value? advantage in the workplace. Komatsu Ltd., where I spent most of my career, Internationally, Nomura is growing stronger, defines corporate value as the sum total of the and it must now focus on further developing its trust placed in the company by society and international strategy. customers, first, and then shareholders, business In Asia, Nomura should be able to leverage the partners, and employees. Customers are the traditional Japanese strengths found in its Retail most-important factor to increase corporate business, such as attention to detail, teamwork, value as their trust translates directly into sales and focus on face-to-face client relations to and profit, which is distributed to other deliver results. Nomura has made steady stakeholders. progress in developing its operations in Asia, When Koji Nagai became CEO of Nomura, he alongside other Japanese companies, and Outside Director Masahiro Sakane Born in Shimane Prefecture in 1941, Mr. Sakane graduated from the faculty of engineering at Osaka City University in 1963 and joined Komatsu Ltd. in the same year. He became a member of the Komatsu Board of Directors in 1989. In 1991, he was appointed COO of Komatsu Dresser Company (currently, Komatsu America Corp.), and in 2001 he became President of Komatsu Ltd. After subsequently serving as the Chairman of the Board, he became Councilor of Komatsu Ltd. in April 2013. He has been Outside Director of Nomura Holdings since 2008 and is a member of the Nomination and Compensation committees. adopted a philosophy of placing clients at the offering financial services that respond to their conditions at the time were challenging, some -Q4- How can companies contribute to the heart of everything the firm does, emphasizing needs. very talented professionals joined Nomura development of society? the importance of clients. To further increase the As financial markets continue to evolve in Asia, through the integration. The decision to It is better for companies to contribute to society Company’s corporate value, Nomura must put Nomura’s business model will come under strengthen Nomura’s overseas operations was through their core businesses or by leveraging more emphasis on society as a major increasing scrutiny. That is why we have the right one. The lessons from this experience their expertise. Komatsu focuses on contributing stakeholder group. As a financial services discussed this issue extensively in board will be useful in the future. to agriculture and forestry to revitalize primary c o m p a n y, N o m u r a m u s t re c o g n i z e t h e meetings. By tying up with local financial In my experience, managers who are not industries in its home prefecture of Ishikawa. importance of its role in society and demonstrate institutions and offering services based on local exposed to external views and opinions tend to Nomura has been offering financial education to clients the high value added offered by its needs, Nomura will need to create a business become overconfident. So, it is essential to bring to students in primary school, junior high school, products and services. Nomura’s corporate value model suited to the local markets. an outside view to board meetings. Despite this, and universities for some time now. This is close will rise as it responds to change and gains the many people are reluctant to speak out. But, as to Nomura’s core business and brings specific trust of society and clients. -Q3- What is your view of Nomura over the an Outside Director of Nomura, I don’t hesitate benefits for society. Nomura has also provided six years since you became an Outside to speak my mind. consulting and other services to help advance -Q2- What does Nomura need to do to be Director in 2008, and what are some of the For example, I expressed strong views on the “Sixth Sector” development model in Japan, Asia’s global investment bank? specific events that have stood out during dealing with bad news. You can’t avoid bad which uses financing arrangements and In Komatsu’s case, the percentage of its that time? news when managing a large company. In integrates primary industries, such as agriculture business in emerging markets increased from the In the six years since I became an Outside today’s world, the economy and accepted social with the manufacturing and service sectors to early stages. The company’s business model Director, the objectives of Nomura’s strategy norms are constantly changing. Many things that maximize value. I would like to see Nomura calls for it to be the runaway leader in the have remained clear, which has created a sense were not viewed as problems previously have continue to contribute to society in this way. industry. If you are the industry leader, all you of unity internally. become compliance issues today. It is important need to succeed is employee motivation and One event that stands out for me was the to report bad news to management as quickly as teamwork. Teamwork is essential and is an area integration of Lehman Brothers. Opportunities for possible, ensure that management understands where Japan excels. So, for Nomura to succeed, Nomura’s globalization were emerging, and we it, and then disclose it without trying to suppress it must have a leading business model, had to make decisions involving risk. Although it. This will help the company maintain trust. 38 Nomura Report 2014 Nomura Report 2014 39 GovernanceGovernance Executive Management Structure (As of July 1, 2014) Group CEO President and Group COO Retail Retail CEO Wealth Management Head of Wealth Management Asset Management Asset Management CEO Wholesale Wholesale CEO Global Markets Head of Global Markets Co-Head of Global Markets Investment Banking Head of Investment Banking Americas EMEA AEJ Banking Regional CEO, Americas Regional Co-CEO, Americas Regional CEO, EMEA Regional Co-CEO, EMEA Regional CEO, Asia ex-Japan Banking (Concurrently Director and President of Nomura Trust & Banking) Chief of Staff Chief Financial Officer Koji Nagai Atsushi Yoshikawa Toshio Morita Juntaro Kimura Kunio Watanabe Tetsu Ozaki Steven Ashley Naoki Matsuba Kentaro Okuda David Findlay Toshiya Hasegawa Jeremy Bennett Yasuo Kashiwagi Minoru Shinohara Chie Shimpo (Toriumi) Shoichi Nagamatsu Shigesuke Kashiwagi Deputy Chief of Staff & Chief Legal Officer (CLO) Noriaki Nagai Chief Risk Officer (CRO) Deputy CRO Global Head of Human Resources Lewis O’Donald Yuji Nakata Kenji Kimura Head of Group Compliance and Wholesale Compliance Head Hisato Miyashita Corporate Group Strategy & Executive Office Yo Akatsuka Group CAO (Wholesale IT, Global Operations, Facility Management) Paul Spanswick CIO Co-CIO Masahide Nakamura Naohiro Sako Chairman of AEJ and Wealth Management, Asia Hiromasa Yamazaki Compliance Fundamental Approach Compliance Framework Compliance is a top management priority for the We work to eliminate behavior that could result in Nomura Group, and the Nomura Group Code of legal or regulatory violations. Should such Ethics represents our fundamental policy on suspicions arise, corporate structures and systems compliance. Once each year, the management and have been put into place to effectively handle them, employees of the Group pledge to abide by the including the prompt delivery of all related rules stated in this code. Also, Nomura Securities information without exception to management. conducts an ethics training course once a year for Specifically, we have appointed a Group management and employees. This course is Compliance Head to oversee compliance for the intended to give all employees a substantially Group as a whole along with a Group Compliance heightened understanding of workplace ethics Department that provides support. A Wholesale through the exchange of views by employees and Compliance Head has also been designated to other means. Our management and employees strengthen our internal controls in response to always set their challenges related to professional global business expansion. ethics and compliance as part of the issues they Compliance Officers who report on compliance- plan to address determined at the outset of each related issues under the direction of the Head of fiscal year. If problems are found, the assessor Group Compliance are also assigned to each Group provides proper guidance and reflects evaluation company, including overseas offices, to develop results in their pay scale. and maintain their respective compliance structures. Compliance Framework Nomura Holdings Board of Directors Audit Committee Executive Management Board Group Compliance Head Direction Report Wholesale Compliance Head Direction Report Group Compliance Department Direction Report Compliance Officers Direction Report Departments Asia Strategy (China) (Concurrently President of Nomura Institute of Capital Markets Research) Internal Audit Asia Strategy (China) Group Internal Audit Toshihiro Iwasaki Noriaki Miyano Junko Nakagawa Nomura Group companies 40 Nomura Report 2014 Nomura Report 2014 41 GovernanceGovernance Compliance Nomura Securities’ Compliance Structure In addition to Group-wide initiatives, Nomura Compliance Hotline Employees in Japan who have become aware of Securities has established a Compliance Program potential legal or regulatory violations are able to as a detailed action plan, and put into place a report their concerns to persons designated by compliance framework based on this program. Nomura Holdings, including Outside Directors and A Compliance Committee chaired by the outside legal counsel, through the Compliance President oversees company-wide initiatives and is Hotline (persons reporting have the option of in charge of establishing and deliberating on remaining anonymous). important issues related to internal controls. In addition, the Company has assigned an Internal Administration Supervisor to monitor compliance Compliance Training We conduct comprehensive compliance training for issues and set up the Compliance Division. all Executive Officers and employees on topics such The Compliance Division strengthens and as the prevention of money laundering and insider improves legal and regulatory compliance as well as trading, firewall regulations, and guidelines for the internal controls system by formulating internal managing customer information. rules and disseminating them throughout the Company. It also monitors the status of compliance Nomura Securities’ Primary Initiatives with respect to these rules in each department and branch office. Should any problems arise, the division takes remedial action, such as increasing awareness of the rules or revising them as needed. Nomura Securities’ Primary Initiatives • Protocols for preventing money laundering, including the identification and reporting of suspicious transactions • Protocols for eliminating all transactions a s s o c i a t e d w i t h c r i m i n a l o r u n e t h i c a l organizations or activities in violation of applicable laws, such as not allowing organized crime groups to participate in trading with Nomura Securities • Managing conflicts of interest and insider information from a global perspective by concentrating information in the Group Compliance Department of Nomura Holdings • Training for sales officers, internal controls officers, and employees of internal controls departments, as well as quality improvement training for securities sales representatives • Training for branch managers, general administration managers, new employees, newly appointed personnel, and others, aimed at increasing knowledge and deepening the understanding of compliance • Supplementary compliance education and drills during various training sessions and meetings • Training for Compliance Officers • Monthly Compliance Hour* at branch offices and departments * To ensure that each and every employee throughout the Company understands the need for full compliance, training sessions are held once a month in the branches and offices of Nomura Securities. Enhancing the Quality of Financial Products and Services Nomura Securities seeks to enhance the quality of financial products and services offered to customers under the Guidelines for Financial Instruments Business Supervision. Some of its initiatives include rigorous screening of account openings and securities underwriting practices as well as the provision of accurate and easy- to- understand information. Nomura Securities’ Primary Initiatives • Appointing officers to oversee internal controls, compliance, etc., and developing systems to ensure compliance and the appropriateness of operations Fair Business Practices The Nomura Group works to ensure fair business practices that are fully complied with by all management and employees as regards the • Thoroughly screening account openings and prohibition of transactions with anti-social forces c o n d u c t i n g p ro p e r e x a m i n a t i o n s w h e n and also in reference to guidelines related to gifts to underwriting securities • Carefully reviewing product details and taking action to provide accurate and comprehensive information • Conducting sales and solicitation activities in compliance with the Financial Instruments and Exchange Act and laws and regulations governing each operation with an overall and entertainment of public officials and private- sector groups. These guidelines reply both to instances of responses where Nomura personnel are the recipients and to cases where they are the providers of such benefits. Information Security understanding of the customer’s knowledge of The Nomura Group Information Security Policy is financial instruments and financial status the basic document governing the effective • Structure systems that establish guidelines for protection of clients’ personal information and other sales to senior customers and require information assets of the Group. compliance with these guidelines • Ensuring thorough compliance with laws, regulations, and inter nal rules through compliance training Customer-related personal information is handled under stringent standards set out in the Nomura Group Privacy Policy and other information security- related rules, and in full compliance with personal information-related laws and regulations. Please refer to Nomura Group Privacy Policy. http://www.nomuraholdings.com/policy/privacy. html Building Trust Following the series of insider trading incidents related to public offerings, Nomura Securities prepared and issued a series of business improvement measures to address these incidents on June 29, 2012, and these have now been fully implemented. Under these preventive measures, the personnel system and performance appraisals scheme now emphasize “Business Ethics/Compliance” as an important assessment criterion that ranks as more important than “Achievements and Results” and “Potential.” Results of these qualitative assessments are reflected in the year- end assessments and compensation (bonus). By thoroughly implementing the improvement measures and functioning effectively, we are working to prevent such incidents from occurring again and are striving to regain the public’s trust. Looking ahead, to ensure that our efforts are maintained and sustained, each and every Executive Officer and employee must have the high level of business ethics that is demanded of professionals in the financial services industry. By working to prevent the occurrence of issues related to improper behavior in transmitting information to clients and recommending transactions, we are taking steps that will reinforce and improve our internal control systems. 42 Nomura Report 2014 Nomura Report 2014 43 GovernanceWEBGovernance Risk Management Fundamental Approach The business activities of the Nomura Group are exposed to various risks such as market risk,*1 credit risk,*2 operational risk,*3 model risk,*4 and other risks caused by external factors. We have established a risk management framework to provide comprehensive controls, monitoring and reporting of these risks in order to maintain financial soundness and the Company’s corporate values. applied its own internal model for measuring general market risk, specific risk, incremental risk, and comprehensive risk with the aim of more accurately calculating increasingly complex and diverse risks. To measure the amounts corresponding to credit risks in counterparty transactions, the Group applies the expected exposure method. Moreover, to increase the effectiveness of internal controls, including the risk management systems, the Internal Audit Department, which is independent from business lines, conducts audits and makes assessments and then makes recommendations Risk Management Systems and proposals. The fundamental policy of the Nomura Group is to control risks arising in the course of business operations within the limits of its risk appetite (according to criteria based on the Group’s business strategy, business targets, and financial position). In accordance with this policy, the Executive Management Board has delegated to the Group Integrated Risk Management Committee*5 the responsibility of deliberating and determining important matters pertaining to integrated risk management. The Chief Risk Officer (CRO) is responsible for maintaining the effectiveness of the risk management framework. Under the CRO, the risk management departments, which are independent Please refer to Form 20-F http://www.nomuraholdings.com/investor/library/ar/ *1 Market risk: Risk of losses arising from fluctuations in values of financial assets and debts (including off-balance sheet items) due to fluctuations in market risk factors (interest rates, foreign exchange rates, prices of securities and others) *2 Credit risk: Risk of losses arising from the decrease of asset values (including off-balance sheet items) due to deterioration in creditworthiness or default of an obligor or counterparty *3 Operational risk: Risk of losses arising from inadequate or failed internal processes, people, and systems or from external events *4 Model risk: Risk of losses arising from errors in the model or from illicit or inappropriate use of the model *5 The Group Integrated Risk Management Committee is chaired by the Group CEO and comprised of the Group COO, business division CEOs, the Chief Risk Officer, the Chief Financial Officer, the Chief Legal Officer, the Deputy CRO, and other members appointed by the chairman. Social and Environmental Risk Management from the business lines, work together globally to We believe that considering the social and build Group-wide risk management frameworks and environmental risks that may arise from various comprehensively manage risk through the use of transactions is key to managing our reputational stress testing and other methods. risk. As such, in executing our business operations In addition, to respond to higher-level financial we focus on these risks in the same way we are regulations under Basel III, the Nomura Group has careful about legal compliance. Risk Management Structure For example, for equity underwriting businesses, we review and confirm the issuer’s awareness of Board of Directors any associated potential risks to society and the Internal Controls Committee Executive Management Board Report Group Integrated Risk Management Committee Group Internal Audit Department CFO CRO Risk Management Departments Report Check environment and that the issuer has taken appropriate steps to address such risks, including the disclosure of information about those risks. Assessment process Assessment of transaction • Regulations • Environmental and social issues • Market risk management • Credit risk management • Operational risk management • Other Audit Individual Business Units Decision Impact on the environment and society, as well as East Japan Earthquake in order to be fully prepared for financial condition, operating results, and other other natural disasters, such as a major earthquake aspects, are included in the overall guidelines that may strike directly below the Tokyo area or in the applied by relevant departments during the Nankai Trough off the coast of Nagoya. We are also assessment process as vital items that must be strengthening our organizational disaster preparedness confirmed when taking on underwriting deals. measures on a global basis. In FY2012/13, we Crisis Management focused efforts on the following initiatives. 1. Increased supply stockpiles • Maintenance of supplies of water, food, and other items at the head office and branch offices The Nomura Group has established the Crisis • Provided additional supplies to branch offices located in Management Committee, comprised of crisis areas likely to be damaged by a tsunami following the management officers of each Group company Nankai Trough Earthquake that experts think may occur worldwide, to address any crisis that may occur. 2. Strengthened collaboration between Group Chaired by an Executive Officer nominated by the Group CEO, this committee has established a system for managing crises and ensuring business companies in Japan and overseas • Bolstered the system to collect and share information with overseas branch offices • Enhanced information sharing with domestic Group continuity in the event of an emergency. companies Under the crisis management system, the Crisis Management Committee reports to the Board of 3. Conducted training drills • Conducted drill based on the scenario of an earthquake Directors regarding matters related to crisis striking directly beneath Tokyo management. In addition, this committee’s secretariat regularly conducts employee safety verification drills, disaster prevention drills, and business continuity drills, in order to be fully prepared to check the status of all Nomura employees during • Performed drills to verify the safety of employees • Performed drills in accordance with the business continuity plan (BCP) 4. Increased awareness of crisis management among management and staff • Implemented training for countermeasures for the an emergency. As part of these efforts, the Nankai Trough Earthquake secretariat is also tasked with fostering greater • Implemented training for initial measures to be taken in awareness of crisis management as well as maintaining and strengthening our ability to respond to emergencies. This system and these measures are stipulated in the Nomura Group Crisis Management Policy. This policy covers a wide range of risks facing the Company, including natural disasters, fires, serious crimes committed against the the event of the occurrence of a large-scale earthquake directly beneath the Tokyo metropolitan area. 5. Business continuity plan • Analyzed degree of impacts on business operations • Revised BCP in conjunction with changes in core systems Company or its Executive Officers and employees, Security Measures for Online Services system interruptions, transmittable diseases, and the leakage of information assets. We have delegated In order to accommodate the diverse needs of its significant authority to crisis management officers to clients, the Nomura Group provides a wide range of ensure they can promptly make decisions on-site its services over the Internet. These services use the should a crisis occur. The above policy dictates that latest, most advanced encryption technologies to crisis management officers be able to take the most ensure that important client information is always appropriate actions necessary to ensure people’s safeguarded. Furthermore, we have strengthened safety and minimize the spread of damage. Strengthening Our Response to Disasters The Nomura Group has revised the risk scenarios it surveillance of our in-house systems and implemented new security systems in order to prevent illegal access from external parties or information leakages caused by cyberattacks, which uses based on the lessons learned from the Great have become increasingly threatening in recent years. 44 Nomura Report 2014 Nomura Report 2014 45 GovernanceWEBGovernance CSR Management Fundamental Approach CSR Framework Communication with Stakeholders The Nomura Group believes that corporate social The CSR Committee is the management-level The Nomura Group works to understand the Material CSR Issues Material Issues* Goals Progress in FY2013/14 responsibility (CSR) is an important factor decision-making entity for the corporate social expectations and needs of society, and, to reflect Responsible Business influencing corporate value and that CSR can responsibility program. Chaired by the Group CEO, these in its business activities and make further become a source of both opportunities and risks. the committee comprises six Executive Officers, improvement, emphasizes communication with We recognize that appropriate CSR management and its roles include formulating policies for Nomura stakeholders inside and outside the Group. can contribute to the creation of corporate value in Group CSR initiatives as well as approving, Internally, we strive to raise awareness and the medium-to-long term, and we are taking steps reporting, and monitoring progress of these educate our employees on corporate social to incorporate it into our management decision activities. Reports are made to the Board of responsibilities through messages and information making, business processes, and community Directors on the activities of the CSR Committee. provided by senior management through our affairs. The Corporate Citizenship Department serves as its intranet system. In March 2010, we formulated “For Future secretariat, and, based on dialogue with Externally, in addition to disseminating information Generations” as our key focus area to be shared stakeholders, after careful fact finding and via reports, our website, and other media, we also among all of our Executive Officers and employees. consideration regarding the interests and undertake stakeholder dialogue through interactive The core role of any financial institution, and expectations of society, it presents proposals communication via social media, such as Nomura Nomura, in particular, as a capital market player, is regarding Group activities to the CSR Committee. Securities’ Twitter account and Facebook pages. to contribute to economic growth and the The Corporate Citizenship Department also works Also, to communicate with external stakeholders sustainable development of the economy and closely with regional offices globally to ensure that directly, we participate in initiatives of various Corporate Governance We are working to strengthen and improve systems aimed at promoting Group management that is transparent and responsive. Compliance Risk Management CSR Management Client We position compliance as a top management priority for the Nomura Group, and the Nomura Group Code of Ethics represents our fundamental policy on compliance. To provide comprehensive controls, monitoring and reporting of various risks, such as market and credit risks, in order to maintain financial soundness and the Company’s corporate values We recognize CSR as an important factor influencing corporate value and incorporate it into our management decision making, business processes, and community affairs. With the basic focus of “placing clients at the heart of everything we do,” we are working to provide high value added products and services to our customers. society by promoting sound capital markets through business divisions maintain a consistent and organizations in Japan and overseas with the aim of Business for Sustainability its products and services. As we look to the proactive approach to their community affairs contributing to society and the environment. development of society into the future, we are activities in line with their operations as well as the Through this dialogue with stakeholders, we working to play this role through our business needs of the local community. In these activities, the review, as necessary, the activities that we should activities and our initiatives that contribute to society. Corporate Citizenship Department collaborates with be undertaking and information we should be Please refer to “For Future Generations,” our corporate citizenship. http://www.nomuraholdings.com/csr/group/ Group offices in Japan, the rest of AEJ, EMEA, the disseminating related to the economy, the Americas, and elsewhere and promotes a environment, and society (human rights, labor comprehensive range of activities. During issues). Similarly, for material issues, as specified by FY2013/14, the CSR Committee held two meetings. the CSR Committee, we conduct annual reviews Citizenship To build relationships of trust with local communities, society, and stakeholders as good corporate citizens and to contribute to developing a sustainable society for future generations CSR Framework Board of Directors Reporting and Approvals CSR Committee Chairman: Group CEO Secretariat Corporate Citizenship Department Business for Sustainability To provide innovation through our products based on market mechanisms to deliver long-term solutions for the changing needs of clients and society Japan AEJ EMEA Americas based on dialogue with stakeholders. Please refer to Stakeholder Dialogue. http://www.nomuraholdings.com/csr/dialogue/ Examples of Dialogues with Stakeholders Themes External Groups Outline of dialogues Human rights Caux Round Table-Japan Human rights due diligence workshop Discussions with human rights related NGOs of human rights issues that corporations should be aware of ESG ESG Principles for Financial Action for the 21st Century Participation in working groups related to asset management, securities, and investment banking Banking Environmental Initiative Participation in green energy working groups ESG CSR Asia Conducted exchanges of opinions regarding ESG issues within the Asian region Business Activities Citizenship Diversity & Inclusion Community Investment Environmental Footprint Worked to enhance the professionalism of all divisions and promote as well as expand business, while also maximizing the sum total of business for the Group as a whole through strengthening teamwork among regions and departments To respond to increasingly diverse and complex client needs and offer high value added services, we are promoting diversity and inclusion based on a high-level awareness of our work content. Under the motto “For Future Generations,” we contribute to the sustainable development of society through business activities and take initiatives with the participation of employees. Based on our Environmental Philosophy and our Environmental Policy, which are founded on the Nomura Group Code of Ethics and Our Approach to Environmental Issues, we work to reduce the impact of our activities on the environment through the Group, as a whole. * Items considered and approved by the CSR Committee in 2008 Responsible Business To build value for clients through responsible business practices that respond to client needs 46 Nomura Report 2014 Nomura Report 2014 47 GovernanceWEBWEBP32-35P41-43P44-45P46-47P12-13P14-29P12-13P14-31P48-50P51-53P54-55Governance Society and Environment Our People Furthermore, we have Company-wide training programs aimed at raising the awareness of workplace ethics, programs to support employees in obtaining licenses or other certifications, and similar support for training that will assist personnel in attaining their career objectives. We are also helping to build internal networks by enabling employees from different divisions and geographic regions to take part in the same training programs. Diversity and Inclusion at Nomura Our aim for Diversity and Inclusion* at Nomura is simple— it is essential that we encourage various points of view and ways of thinking among our people to win the trust of increasingly diverse and complex needs of clients and to offer highly value added services to them. Nomura is committed to fostering an inclusive work environment through our employee networks that transmit information as well as plan events related to women’s career work/life management and understanding other diverse cultures. * At Nomura, “Diversity and Inclusion” means “drawing on diverse ways of thinking and points of view to increase our competitiveness.” Fundamental Approach Today, the Nomura Group’s workforce includes employees of more than 70 different nationalities. This diverse group of personnel is our most important asset, and, as such, we strive to offer equal opportunities to all personnel to enable each and every one of them to develop their capabilities and strengths as individuals to the fullest and perform as Nomura professionals. Nomura’s Code of Ethics strictly forbids discrimination on the basis of nationality, ethnic origins, race, gender, age, religion, beliefs, social status, sexual orientation, gender identity disorders, or physical disabilities. Personnel Development The Retail Division encourages the personal growth of its employees through various educational programs that develop capabilities for independent thinking, acting, and delivering results. Group training for the first three years of employment, training at given career milestones (new hires, appointment, and promotion), and training for managerial-level personnel provide the specific knowledge and skills required while also reinforcing personal qualities and strengthening compliance awareness. The Wholesale Division offers training to personnel to meet the standards needed to enable them to become leaders in the Group’s global operations and to satisfy the needs of the division. Training aims to develop especially capabilities for taking action, developing creative solutions, and mastering communication skills. Specifically, training programs offer a selection of courses aimed at developing individual abilities and leadership as well as mentoring programs that are offered selectively to develop the next generation of leaders. Participants in the International Women’s Day event sponsored by the “Women in Nomura,” or WIN, network at the Hong Kong Office P l a c e C l i e n t s a t t h e H e a r t o f E v e r y t h i n g W e D o First Female Bank Head for Japan Ms. Chie Shimpo appointed President of the Nomura Trust & Banking The Nomura Trust and Banking offers both banking services, including deposits and loans, to clients of Nomura Securities and also trust services. The Nomura Trust and Banking is, in fact, uniquely positioned as a trust bank within the investment banking group. Looking ahead, we are committed to further strengthening synergies with other Group companies so as to respond even more effectively to the requirements of clients. The Nomura Group is committed to diversity and believes that an inclusive and welcoming working environment, regardless of gender, national origin, or other characteristics, directly contributes to greater creativity and collaboration. As the foundation of its robust esprit de corps and competitiveness, The Nomura Trust and Banking will rededicate itself to diversity in the full meaning of the word, thereby contributing to the optimization of the corporate value of Nomura Holdings and to the vibrancy of Japan’s economy and society. Chie Shimpo (Toriumi) President & CEO The Nomura Trust and Banking Co., Ltd. Supporting Women through Their Career Nomura offers opportunities for a wide range of activities Initiatives in FY2013/14 We have developed a range of tools to realize to female employees. By carrying out various policies, employee-friendly work environments: Nomura also assists female employees in building their careers and is promoting their advancement to managerial positions. Nomura’s initiatives have been favorably recognized, and in March 2014, Nomura was selected by the Tokyo Stock Exchange and the Ministry of Economy, Trade and Industry as one among 26 companies whose stocks are classified as “Nadeshiko Brand.*1” In July 2013, the Keidanren (Japan Business Federation) 1. To deepen understanding of employees who conduct their work in diverse ways and provide support throughout the workplace, we distribute a program entitled “Caring for Mental Health during Pregnancy: What Everyone Can Do to Assist.” 2. To provide for the better monitoring of the health of employees who work long hours, in addition to the annual health checkup for all employees, additional medical examinations are conducted prior to established a subcommittee on Gender Diversity (currently consulting with physicians. planning subcommittee of the Committee on Gender Diversity) to accelerate efforts to promote the active utilization of women’s skills in Japanese enterprises. Junko Nakagawa, an Executive Officer of the Nomura Group, Listening and Heeding the Voices of Employees The Nomura Group implements employee satisfaction chaired the subcommittee and summarized an “Action surveys, and the results are used to make improvements Plan for Women’s Activities: Enhancing Corporate in the workplace as well as create employee-friendly work Competitiveness and Achieving Sustainable Economic Growth.*2” In line with this Action Plan, the Nomura Group has posted its autonomous action plan for appointing women to Board-level and managerial positions on the Keidanren website.*3 *1 Nadeshiko Brand, or Nadeshiko stocks, are selected by the Tokyo Stock Exchange and the Ministry of Economy, Trade and Industry because the companies issuing these stocks are widely recognized as “promoting the careers of women” and “supporting women in achieving a good work and household life balance.” The objective of this selection is to give recognition to companies that are proactively promoting the activities of female employees with the aims of contributing to revitalization of the Japanese economy in ways that include improving the working environment for women. *2 https://www.keidanren.or.jp/en/policy/2014/029.html *3 https://www.keidanren.or.jp/policy/woman/ap12461.html environments, including improving employee satisfaction. Safety and Health Initiatives Based on the Industrial Safety and Health Act, the Nomura Group has formed a Health Committee, which meets once a month and comprises persons in overall charge of safety and health matters, officers responsible for health and safety, occupational health physicians, and employees. This committee discusses issues related to the workplace environment and health and gives its attention to preventing all employees, including temporary and contract workers, from injuring their health. In addition, when the committee considers it necessary to make improvements, its role is to make suggestions to Group companies. Employee-Friendly Work Environments Relationships with Labor Unions More than half of the employees of Nomura Securities are We support working conditions that allow each employee members of the Nomura Securities Employees Union, and to fully concentrate on his or her work in a healthy Nomura has standing labor agreements with the union. To condition, with both good physical and mental health. We maintain sound and healthy relationships between labor have shifted our emphasis to early discovery and and management, discussions are conducted with the intervention. Our occupational health physicians periodically union on a wide range of topics, including not only visit our worksites for health monitoring and conduct face- changes in various systems, such as employee welfare to-face interviews with supervising managers. Improvement benefits and personnel management, but also on day-to- measures are being introduced to departments where day issues, including respect for employee rights and many employees work long hours, and employees who management issues. work such extended hours are recommended to consult with and receive the guidance of physicians. Mental Healthcare To safeguard the mental health of employees, we provide access to psychiatrists and an employee counseling room Realizing Work Practices that Allow for Flexibility and Diversity Reducing Long Working Hours and Providing for Flexibility in Work Styles Management and labor are monitoring hours that staffed by a dedicated professional. We also offer employees work to reduce excessively long hours and, consultation services provided by medical staff at our thereby, maintain the physical and mental health of Health Management Center. Furthermore, we are employees and enable them to conduct work efficiently. committed to helping employees who have overcome mental illnesses return to the workplace. 48 Nomura Report 2014 Nomura Report 2014 49 Society and Environment Our People Our Community Specific initiatives include not only abiding by the provisions of the Japanese Labor Standards Act but also Employment of Handicapped Persons The Nomura Group offers a wide range of employment setting the joint management and labor objectives of opportunities for the handicapped. Efforts are made to having employees leave work at the set time on respond flexibly to find work suited to the individual skills Wednesday and no later than 8 pm on other weekdays. and aptitudes of candidates and provide proper motivation Also, in some departments, since the nature of the work by discussions with the persons in the workplaces where may require working into the night hours and on holidays, they will work. At Nomura Securities, each year, Nomura is working to optimize total hours worked by employment opportunities offered to handicapped giving consideration to the actual conditions in each persons exceed the legal requirements, and handicapped department and having managerial staff exercise flexibility persons are contributing actively in a wide range of regarding hours worked, including such measures as departments. adopting a work shift system and encouraging employees to use their allotted vacation days. Moreover, Nomura provides for flexibility in work styles to provide employees with work security for the long term. Respecting Human Rights In specific terms, Nomura has endeavored to provide We have established various mechanisms to prevent improved arrangements that allow employees to take half- discrimination and harassment, in accordance with the day paid vacation time, takes leaves for childbirth and Nomura Group Code of Ethics. Specifically, we set up the rearing children, and time off for providing nursing care for Nomura Group Human Rights Committee to debate and seniors and others. In fact, all of the benefits provided by determine human right initiatives as well as to share Nomura are above the legally requirement minimum. information across the Group from its secretariat. These include leave for giving birth to children and In addition, we continue to hold human rights training aftercare, leave time for rearing children, time off when a for all Nomura people, including members of the Board of dependent gives birth to children, time off for child rearing, Directors, to create greater awareness about human rights time for nursing sick children, supplements for child day issues and make everyone aware of our consultation care center expenses, and time off as well as leaves for contacts for these matters. nursing family members back to health. Employment Reinstatement System Beginning in 2006, the Nomura Group introduced a All types of consultation contacts are available both within and outside the Company through our Sexual Harassment/Power Harassment Hotline to help prevent all types of harassment in the workplace. In addition, the re-employment system for personnel who have passed Human Rights Awareness Office provides similar advisory the regular retirement age of 60 or the age limit in their functions for other human rights issues. employment contracts. Nomura reinstates all senior staff members who express a desire to continue working and concludes contracts with them that can be renewed annually up to age 65. Nomura Securities expects that Making Efforts to Resolve Human Rights Issues through Multi-Stakeholder Dialogue Since FY2012/13, as part of our human rights initiatives, these arrangements will provide support for the quality of we have participated in the Nippon CSR Consortium, life of senior employees after regular retirement and enable which approaches human rights through dialogue. them to make contributions based on their skills and In the Human Rights Due Diligence Workshop, which is experience. As these comments suggest, Nomura one of these initiatives, companies and NGOs are considers the abilities, aptitudes, and record of continuing discussions regarding the theme “Human accomplishments of employees and then offers work and Rights Issues that Companies Should Be Aware of and terms of employment that are suited to each individual. Consider.” Nomura has also designed systems that provide flexible In FY2013/14, companies and various NPOs and NGOs options for working that make possible a diversity of work as well as specialists and others assembled to review styles and lifestyles after regular retirement. Please note major human rights issues by industry and determine their that the organizational unit in Nomura Securities in charge importance as well as discuss measures that should be of planning, formulating, and implementing the taken. These discussions deepened the understanding of re-employment system is the Work Life Support Section of human rights issues. Looking ahead, the Nomura Group the Personnel Planning Department. This section will move forward with its initiatives to address human responds to the needs of individual employees rights issues. approaching retirement and voluntary re-employment as well as their social welfare, life planning, and other needs. Going forward, further improvements will be made in related systems to provide for smooth operation. Fundamental Approach With its goal of “For Future Generations,” the Nomura Group is contributing to a sustainable tomorrow by investing in young people through its core businesses as well as through a diverse range of employee-led volunteer activities. A core focus for our work is to support educational activities, which vary depending on the needs of each region. Employees participate proactively in initiatives such as financial and economics education programs, basic education activities in the developing countries, and employment training programs for young people. Financial and Economics Education Programs Since as early as the 1990s, the Nomura Group has been active in providing education in finance and economics for a wide range of age-groups. Our principal activities in this area have included the Milestones in Nomura’s Activities distribution of textbooks, offering courses for university students in Japan and overseas, off-site employee lectures by Nomura employees for elementary and junior high school students, and a stock education contest for junior and senior high school and university students sponsored with the Nikkei Stock League. All told, more than 630,000 students have taken part in these programs. Our sponsored financial education lectures at universities, which began in 2001, have been conducted annually, mainly by finance professionals from branches of Nomura Securities. Over this period, about 450 Group employees have participated as lecturers. During the 13-year period of this program, more than 190,000 university students have attended the lectures. Similarly, for adult members of society, Nomura offers its “Lifelong Learning Venues” program in regional communities and workplaces. The aim of this program is to provide participants with knowledge of finance and securities that will enable them to live affluent “second lives.” 1990s 2000 2001 2004 2006 2008 2010 2011 2014 Nikkei Stock League Sponsored lectures at universities Lectures on securities for adult members of society Provided textbooks to junior high schools nationwide Cumulative participants Provided textbooks to and off-site lectures to primary schools nationwide Financial education seminars for instructors Actual working experience Lectures for middle and high school students =2,000 =100 856 participants Instructors Held 37 times Seminars for instru c t o r s Practical Financial and Economic Education 4,814 participants 195,000 participants 190 participants High schools Held 6 times 86,312 participants Let’s Learn abou t L i Planning: “A Talk o n Y o u r Future and Mon e y ” f e Let’s Learn about “the Future” and “Money” Universities 784 participants Primary schools Sponsored Lecture: “The Role o f C a p i Markets and Securities Invest m e n t s ” t a l Actual Wor k i n g Experienc e Held at 1,440 universities Held 38 times Held 66 times “Let’s Learn Classroom” L e a r n i n about Foreign Exchange a n d S t o g c Let’s Learn about “Living Economic Activities” from a Practical Perspective! k s Junior high schools High schools Universities Held 14 times Stock Education Co n t e s t “Nikkei Stock Leag u e ” 1,737participants Junior high schools Held 29 times Investor Experien c e : “What Is Investin g ? ” Let’s Learn about the Meaning of “Investment” Nomura Report 2014 51 50 Nomura Report 2014 “Let’s Become Familiar with ‘Money’” Society and EnvironmentSociety and Environment Our Community Global CSR Initiatives The Nomura Group engages in business activities around the world. As a member of the local communities where its offices are located, Nomura participates in dialogue with its stakeholders to attain objectives that include contributing to regional revitalization and environmental protection. 1 1 4 4 2 2 3 3 5, 6 5, 6 1 Europe In London, Nomura engages in activities that help eliminate social differences. These include reducing unemployment among young people and supporting the rehabilitation of ex-offenders. These activities aim to encourage young people to increase their aspirations, employability potential, and educational attainment. Specific employee engagement activities include student mentoring, hosting employability workshops, and taking part in community team challenges. 2 Asia-Pacific In Asia (excluding Japan), an employee volunteer network was established in 2011 enabling employees to give back to communities and build a corporate culture of philanthropic giving within the firm. Nomura is committed to contributing to society, especially through initiatives benefiting disadvantaged children and the environment. Recent initiatives include partnerships with the Hands On Network and Ecovision (founders of the Hong Kong Cleanup), disaster relief fund-raising, and a range of team-building volunteering initiatives. 3 Powai, India Nomura’s activities in Powai include initiatives for improving quality of education for lesser-privileged children through events with our partner NGOs; providing assistance to lesser-privileged communities through donations and fund-raising; promoting general health care and well-being of local communities via various activities; and focusing on “environmental” issues via initiatives towards caring for our Earth, the environment, and our habitat; conducting environment awareness sessions and monitoring in-house consumption, wastage of energy, paper, and water; and organizing tree plantation drives with NGOs. 4 Japan To assist areas affected by the Great East Japan Earthquake, in 2012, Nomura began to provide support for “Sakura Project March 11,” which aims to turn areas devastated by the disaster into cherry blossom viewing spots. Nomura employee donations are being used to purchase cherry tree saplings, and, for the last five times, Nomura employees have helped plant them. Other activities include support for charity concerts and school athletic events in the area. Jeremy Bennett, CEO, EMEA, greets HRH The Duke of Cambridge at Action Summit event at St Giles Trust. Nomura beach cleanup in Hong Kong Young cancer patients and a team of Nomura employee-volunteers at learning activities Nomura employee-volunteers planting cherry trees Nomura works to help children study in an effort to positively impact their lifestyles. Nomura partners with Everybody Wins! in New York, providing mentorship and literacy support for local children. Our program continues to encourage employees to become involved in monthly initiatives, focused on benefitting the younger generation and local community. 5 Americas 6 Americas: Instinet Instinet’s* activities aim to reduce income disparities among young people, motivating them to study and providing support for life planning. Instinet employees work in partnership with Elevate New York and actively mentor New York high school students. Additionally, Instinet partners with Operation Backpack to provide disadvantaged youngsters with essential school supplies. * Instinet, a Nomura subsidiary, is headquartered in New York. Children celebrating during Nomura’s “Take Our Daughters & Sons To Work Day” “Kevin Singleton, Founder & CEO of Elevate New York, with Elevate students on Instinet’s trading floor Nomura Foundation The Nomura Foundation is a public interest incorporated association that was established by the Nomura Group. The activities of the Nomura Foundation include supporting research and education in the social sciences; providing scholarships to foreign students majoring in social sciences and liberal arts in Japan; conducting research related to the world economy, including the global macroeconomy, capital markets, and other subjects. The Nomura Foundation also provides assistance to promising young artists from around the world, and sponsors international artistic and cultural exchanges. In FY2013/14, the Nomura Foundation provided support totaling ¥212.7 million to 141 such projects. Also, beginning in FY2014/15, the Nomura Foundation began a major new undertaking to sponsor research in the fields of finance and securities. Through these various activities, the Nomura Foundation will continue to contribute to advancing academic activities and the world economy, cultivating the arts and culture, fostering international talent, encouraging international understanding, and supporting the progress of human society. For further information, please access http:// www.nomurafoundation.or.jp/ 52 Nomura Report 2014 Nomura Report 2014 53 Society and EnvironmentSociety and Environment Our Environment Fundamental Approach The Nomura Group Code of Ethics states, “The Nomura Group is committed to acting in an environmentally responsible manner and should, therefore, approach environmental issues positively.” Based on this commitment, in 2009, we created both our Environmental Statement and Environmental Policy and are proactively working to reduce the environmental impact of our business activities. activities. Also, the Head of Environmental Affairs conducts reviews of these activities, confirms and assesses progress toward reaching objectives, and aims for continuing improvements. Moreover, reports are made to the CSR Committee regarding risks and opportunities related to environmental issues. In addition, our offices around the world are implementing environmental initiatives, which include our London headquarters building, which obtained ISO 14001 certification in 2007 following an audit performed by a local accreditation body and has maintained its certification to the present. Environmental Management Environmental Targets In Japan, we have established an environmental management system (EMS) and are implementing comprehensive environmental preservation activities to deal with environmental risks and issues. Our Environmental Activities Working Group, which is a Group-wide organization, meets once a month to monitor the progress of environmental preservation We set environmental goals for each year and closely manage the progress of our environmental preservation activities. Environmental goals are set for each region, and the Environmental Activities Working Group checks to see if these targets are met. FY2013/14 environmental objectives and progress, FY2014/15 targets (Japan) Reduction of greenhouse gas emissions Promotion of green purchasing FY2013/14 targets Assessments FY2014/15 targets Reduce domestic Nomura Group CO2 emissions per square meter of floor space by 15% from FY2009/10 levels q 28.1% reduction Reduce domestic Nomura Group CO2 emissions per square meter of floor space by more than 20% from FY2009/10 levels Increase ratio of fuel-efficient, low- pollution vehicles to 90% of the fleet q Switchover ratio: 91.6% Increase ratio of fuel-efficient, low- pollution vehicles to 95% of the fleet Raise waste recycling rate at Nihonbashi Head Office to 90% and at Nagoya Branch to 88% T Nihonbashi: 89.3% Nagoya: 88.4% Raise waste paper recycling rate at principal offices to 90% Green products to account for 75% of supplies request system items q Purchase ratio: 76.5% Among general office supplies, have green products account for 85% of supplies request system items Reduce use of copy paper per person bought through supplies request system to 30% below the FY2006/07 level q Reduction: 45.1% Reduce use of copy paper per person bought through supplies request system by 2% from the previous year Reduction of paper usage Encourage electronic document delivery service q Accounts accepting electronic transfers: 1.32 million Further promote electronic delivery Reduce use of paper for internal forms by promoting electronic documentation q 209 types of forms digitized on the application and approval system (Savings of 70,000 sheets of paper) — Promotion of environment- related businesses Increase the number of financial products and services that help resolve social issues q Expand lineup of “social contribution investment products,” that provide financing for resolving social issues, such as global warming and water- related issues Increase the number of financial products and services that help resolve social issues offices, we make use of electric power generated b y re n e w a b l e e n e r g y s o u rc e s , i n c l u d i n g hydroelectric power. Going Paperless and Promoting Recycling We are making efforts to more effectively use limited natural resources and reduce the environmental impact of our activities and assist in the creation of a recycling-oriented society. As part of our commitment to reducing paper usage, we continue to digitize prospectuses, reports, forms, and other documents. Beginning in 2012, we provided all of our sales staff tablet devices featuring digitized sales and marketing tools to enhance the quality of our services and further reduce paper usage at the same time. We also use these devices for human resource training and internal meetings. We are also continuing to expand the range of documents that are distributed electronically for our Nomura Home Trade service. During FY2013/14, a total of approximately 10.29 million documents were delivered electronically. In our offices, we are working to raise employee awareness of the amount of paper they use as part of our campaign to reduce paper consumption. Going forward, we will continue to promote reductions in paper usage and strive to raise awareness about paper usage across the entire Group. Nomura Group Environmental Management Framework Board of Directors Reporting and Approvals CSR Committee Chairman: Group CEO The Head of Envi- ronmental Affairs Secretariat Environmental Activities Working Group Nomura Securities Head Office and branch offices Nomura Group companies To ensure the effectiveness of the Group environmental management system, we have conducted an annual environmental training program for all Nomura Group employees since 2009. In FY2013/14, 91% of employees in Japan participated in this program. With each department a n d G ro u p c o m p a n y c o n d u c t i n g a s e l f - administered Environmental Efforts Status Review every year, a new system was introduced whereby initiatives appropriate to each unit will be stipulated. Moreover, we stream information over the Group a n d h o s t e v e n t s t o r a i s e a w a re n e s s o f environmental matters. Efforts to Address Climate Change The Nomura Group addresses climate change from the standpoint of both risk and opportunity that impact corporate value and recognizes it as an important issue to tackle. As a multinational corporation with offices around the world, we are making every effort to help resolve climate change issues through our business activities (see pages 30 to 31) and to reduce the impact of our business activities on the environment. W e c o l l e c t a n d d i s c l o s e G r o u p - w i d e environmental information, and, since FY2011/12, we have introduced third-party assurance verifications to ensure the reliability of this information. In each region, based on the regulations established by local governments, we prepare plans for dealing with global warming and submit these to the government authorities. Please refer to address climate change. http://www.nomuraholdings.com/csr/citizenship/ environment/climate.html The Nomura Group is working to lighten the impact of its activities on the environment through the purchase of green power (such as biomass generation) certificates. Our purchases of green power began domestically in FY2006/07, and these reached a cumulative total of 46.76 million kWh, including 5.4 million kWh purchased in FY2013/14. In FY2014/15, we have set a goal of continuing these purchases of green power for three years, and it will be allocated to our principal domestic offices (located in Nihonbashi in Tokyo, Osaka, and Nagoya). In addition, in our Swiss and German 54 Nomura Report 2014 Nomura Report 2014 55 Society and EnvironmentWEBSociety and Environment Data Section Six-Year Financial Summary (US GAAP) For the fiscal years beginning April 1 and ending March 31 of the following year Note: This financial summary is prepared solely for convenience. Readers are recommended to refer to the Form 20-F. FY2008/09 FY2009/10 FY2010/11 FY2011/12 FY2012/13 Operating Results: Revenue: Commission Fees from investment banking Asset management and portfolio service fees Net gain (loss) on trading Gain (loss) on private equity investments Interest and dividends Gain (loss) on investments in equity securities Other Total revenue Interest expense Net revenue Non-interest expenses: Compensation and benefits Commissions and floor brokerage Information processing and communications Occupancy and related depreciation Business development expenses Other Total non-interest expenses Income (loss) before income taxes Income tax expense (benefit) Net income (loss) Less: Net income (loss) attributable to noncontrolling interests Net income (loss) attributable to NHI shareholders Balance Sheets (Period End): Cash and cash deposits Loans and receivables Collateralized agreements Trading assets and private equity investments Other assets Total assets Short-term borrowings Payables and deposits Collateralized financing Trading liabilities Other liabilities Long-term borrowings Total liabilities Total NHI shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity Cash Flows: Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents ¥ 306,803 54,953 140,166 (128,339) (54,791) 331,356 (25,500) 39,863 664,511 351,884 312,627 491,555 73,681 154,980 78,480 31,638 262,558 1,092,892 (780,265) (70,854) (709,411) (1,219) ¥ (708,192) ¥ 1,422,709 1,643,007 8,412,618 11,672,612 1,686,902 ¥24,837,848 ¥ 1,183,374 1,242,318 10,157,954 4,752,054 467,574 5,483,028 23,286,302 1,539,396 12,150 1,551,546 ¥24,837,848 ¥ (712,629) (98,905) 999,760 (81,896) ¥ 106,330 ¥ 395,083 121,254 132,249 417,424 11,906 235,310 6,042 37,483 1,356,751 205,929 1,150,822 526,238 86,129 175,575 87,806 27,333 142,494 1,045,575 105,247 37,161 68,086 288 ¥ 67,798 ¥ 1,352,244 2,071,714 12,467,213 14,700,282 1,638,975 ¥32,230,428 ¥ 1,301,664 1,528,419 11,216,481 8,356,806 494,983 7,199,061 30,097,414 2,126,929 6,085 2,133,014 ¥32,230,428 ¥ (1,500,770) (269,643) 2,176,530 964 ¥ 407,081 ¥ 405,463 107,005 143,939 336,503 19,292 346,103 (16,677) 43,864 1,385,492 254,794 1,130,698 518,993 92,088 182,918 87,843 30,153 125,448 1,037,443 93,255 61,330 31,925 3,264 ¥ 28,661 ¥ 2,150,453 2,227,822 15,156,318 15,241,931 1,916,466 ¥36,692,990 ¥ 1,167,077 2,103,608 13,686,438 8,688,998 552,316 8,402,917 34,601,354 2,082,754 8,882 2,091,636 ¥36,692,990 ¥ (235,090) (423,214) 1,284,243 (26,246) ¥ 599,693 ¥ 347,135 59,638 144,251 272,557 25,098 435,890 4,005 563,186 1,851,760 315,901 1,535,859 534,648 93,500 177,148 100,891 48,488 496,227 1,450,902 84,957 58,903 26,054 14,471 ¥ 11,583 ¥ 1,953,677 2,211,423 13,742,646 14,123,594 3,665,972 ¥35,697,312 ¥ 1,185,613 2,437,370 12,519,274 7,495,177 1,165,901 8,504,840 33,308,175 2,107,241 281,896 2,389,137 ¥35,697,312 ¥ 290,863 9,942 (844,311) (6,314) ¥ (549,820) ¥ 359,069 62,353 141,029 367,979 8,053 394,007 38,686 708,767 2,079,943 266,312 1,813,631 547,591 91,388 179,904 91,545 49,010 616,463 1,575,901 237,730 132,039 105,691 (1,543) ¥ 107,234 ¥ 1,652,752 2,629,875 14,115,257 17,124,349 2,420,206 ¥37,942,439 ¥ 738,445 2,413,801 15,409,383 8,491,296 978,163 7,592,368 35,623,456 2,294,371 24,612 2,318,983 ¥37,942,439 ¥ 549,501 (160,486) (701,623) 47,175 ¥ (265,433) Millions of yen FY2013/14 ¥ 474,557 91,301 167,247 476,356 11,392 416,350 15,156 179,485 1,831,844 274,774 1,557,070 570,058 111,849 192,168 80,142 38,485 202,754 1,195,456 361,614 145,165 216,449 2,858 ¥ 213,591 ¥ 2,189,310 2,570,678 17,347,001 18,714,314 2,699,011 ¥43,520,314 ¥ 602,131 2,836,873 17,111,999 11,047,285 1,141,750 8,227,063 40,967,101 2,513,680 39,533 2,553,213 ¥43,520,314 ¥ 457,426 (103,195) 289,385 41,089 ¥ 684,705 56 Nomura Report 2014 Nomura Report 2014 57 Data Section Unit June 30, 2011 June 30, 2012 June 30, 2013 June 30, 2014 No. of people No. of people Ratio (%) No. of people Ratio (%) No. of people Ratio (%) 14 8 57 4 29 1 7 11 7 64 3 27 1 9 11 6 54 3 27 1 9 11 6 54 3 27 1 9 Our Community Community contribution expenditures Total Education Arts, culture, and sports Unit April 1, 2011 April 1, 2012 April 1, 2013 April 1, 2014 Science and academic achievement CSR Key Facts Corporate Governance Members of the board Board of Directors Outside Directors Non-Japanese Directors Female Directors Officers (Executive Officers and Senior Managing Directors) Men Women Ratio of women Board of Directors meetings No. of times held Average attendance rate No. of people No. of people % Unit No. of times % 30 1 3 41 2 4 23 2 8 27 2 6 FY2010/11 FY2011/12 FY2012/13 FY2013/14 10 96 10 95 11 97 10 98 * Numbers of Board of Directors meetings and member attendance are actual figures from April 2013 to March 2014. Client Focused Unit FY2010/11 FY2011/12 FY2012/13 FY2013/14 Caseload at Customer Help Desk Department (Retail Division) Total Complaints Inquiries Opinions and requests Other No. of cases No. of cases No. of cases No. of cases No. of cases 5,189 2,359 2,408 256 166 5,005 3,012 1,836 13 144 *1 The increase in the caseload in FY2013/14 was due to a rise in the number of incoming calls and heavy demand on telephone circuits. *2 Of the total, 69 calls were related to the handling of customer information. Branches that are barrier-free and have equipment for responding to emergencies (Retail Division) Certified universally accessible Toilets accessible in wheelchairs Elevators accessible in wheelchairs With steps removed from entrances and exits (with ramps, elevators, or no steps) With installations to mitigate entrance and exit steps (railings or step heights reduced) No. of branch offices No. of branch offices No. of branch offices No. of branch offices No. of branch offices 30 78 53 136 15 30 80 54 140 14 5,693 3,409 2,119 23 142 30 81 57 139 13 7,010*1 4,023*2 2,730 55 202 30 78 66 129 13 Results for survey of customer satisfaction with branch office service (Retail Division) Extremely satisfied/satisfied Neither satisfied nor dissatisfied Extremely dissatisfied/dissatisfied Unit % % % * This survey was conducted at 126 offices, and the response rate was 26.1%. Social Contribution Type Bonds Number of issues Issue proceeds Unit Number Millions of yen June 2012 September 2012 December 2013* 76.6 20.0 3.4 77.0 19.1 3.9 85.1 10.6 4.3 FY2012/13*1 FY2013/14*2 FY2014/15 (April–June)*3 9 47,966 5 53,574 3 50,151 *1 ADB Clean Energy Bonds (AUD, TRY, BRL), Green IFC Bonds (AUD, TRY, BRL), ADB Clean Energy Bonds (NZD, TRY, ZAR) *2 ADB Clean Energy Bonds (MXN, BRL), AfDB Educational Support Bonds (BRL), ADB Water Bonds (TRY, BRL) *3 World Bank Green Bonds (TRY, BRL), AfDB Guaranteed Food Security Bonds (BRL) Unit FY2010/11 FY2011/12 FY2012/13 FY2013/14 Amount (Millions of yen) 1,400 1,235 1,348 1,323 Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) Amount (Millions of yen) Ratio (%) No. of projects No. of projects No. of projects No. of projects No. of projects — 623 44.5 71 5.0 162 11.6 138 9.8 55 3.9 25 1.8 27 1.9 121 8.6 182 13.0 173 40 83 31 19 — 582 47.1 106 8.6 83 6.7 200 16.1 49 3.9 43 3.4 3 0.2 71 5.7 103 8.3 370 27 196 107 40 — 556 41.2 81 6.0 129 9.5 199 14.7 79 5.8 47 3.4 4 0.2 88 6.5 171 12.6 423 24 195 151 53 — 604 45.6 66 4.9 117 8.8 190 14.3 39 2.9 84 6.3 20 1.5 78 5.9 129 9.7 299 17 78 114 90 Community contribution Welfare and health Environment Human rights and labor Disaster relief Other Number of community development projects implemented Total Japan Europe Americas Asia-Pacific Assistance provided to groups that contribute to society No. of groups assisted No. of groups 200 243 274 257 Unit FY2010/11 FY2011/12 FY2012/13 FY2013/14 Cumulative total Participants and materials in financial and economics education Visiting classes (elementary, junior, senior high schools, teachers) Since 2008 Finance courses for universities Since 2001 Financial courses for the general public Since 2003 Nikkei Stock League Since 2000 Teaching material for elementary schools (The Economics Classroom) Since 2008 Teaching material for junior high schools (The t-shirt shop) Since 2006 No. of schools No. of participants No. of schools 10 734 108 22 1,087 115 31 1,865 114 56 2,825 112 162 8,997 1,440 No. of participants 10,000 12,000 11,000 11,000 195,000 No. of courses 630 536 444 531 6,568 No. of participants 28,659 27,839 21,696 23,897 341,054 No. of teams No. of members No. of schools No. of copies No. of schools No. of copies 1,565 6,331 200 30,000 400 1,420 5,741 120 5,000 180 1,287 5,120 396 17,422 387 1,484 5,699 227 21,710 86,312 2,943 14,639 237,061 215 4,482 50,000 17,200 17,326 12,162 426,688 58 Nomura Report 2014 Nomura Report 2014 59 Data SectionData Section Unit FY2010/11 FY2011/12 FY2012/13 FY2013/14 CSR Key Facts Our People Education and training expenses Total Japan Europe Americas Asia-Pacific Participation in education and training (in-house training) Total Japan Europe Americas Asia-Pacific Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants 2,455 1,573 489 257 136 272,528 13,146 207,458 8,255 3,790 407 — — 61,280 4,484 2,033 1,468 133 280 153 225,184 21,928 169,385 11,965 2,766 977 7,390 1,182 45,643 7,804 * The increase in the number of participants in Europe and Asia was due to the increased precision of information and the number of training sessions. Composition of employees 26,871 62 38 14,918 56 44 4,353 70 30 2,348 74 26 5,252 68 32 100 55 16 9 20 27,168 62 38 15,145 56 44 4,014 70 30 2,420 74 26 5,589 66 34 100 56 15 9 20 Total Japan Europe Americas Asia-Pacific No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) Ratio of employees by region Total Japan Europe Americas Asia-Pacific % % % % % Composition by employment contract (Japan) Full-time regular employment Part-time regular employment No. of employees No. of employees 60 Nomura Report 2014 14,918 788 15,145 766 15,004 606 15,062 586 2,441 1,907 108 233 193 254,117 22,048 208,087 12,081 1,732 647 7,204 1,794 37,094 7,526 26,242 62 38 15,004 57 43 3,618 70 30 2,271 74 26 5,349 65 35 100 57 14 9 20 2,515 1,978 81 262 194 406,602 89,657 284,920 12,325 26,117 21,822 7,811 5,598 87,754 49,912 26,019 62 38 15,062 56 44 3,461 71 29 2,281 74 26 5,215 64 36 100 58 13 9 20 Unit FY2010/11 FY2011/12 FY2012/13 FY2013/14 Number of new hires Total Japan No. of employees Men (No. of employees) Women (No. of employees) Europe Americas Asia-Pacific * As a result of increased precision in data compilation, data pertaining to Japan from FY2010/11 to FY2012/13 was revised. No. of employees No. of employees No. of employees 3,631 548 439 754 638 1,252 Composition of managers Total Japan (Nomura Holdings, Nomura Securities) Europe Americas Asia-Pacific Men Women Ratio of women (%) Men Women Ratio of women (%) Men Women Ratio of women (%) Men Women Ratio of women (%) Men Women Ratio of women (%) Use of childcare and family nursing care support plans (Nomura Securities) Pre- and post-natal leave Childcare leave Leave to care for sick or injured children Childcare time Assistance with daycare expenses Family nursing care leave Reduced working hour plan for family nursing care Paid leave for family nursing care No. of employees No. of employees No. of employees No. of employees No. of employees No. of employees No. of employees No. of employees Post-childcare leave reinstatement and retention rates (Nomura Securities) Reinstatement rate Retention rate Men (%) Women (%) Men (%) Women (%) 6,643 898 12 3,474 173 5 1,553 317 17 786 159 17 830 249 23 233 338 435 104 332 13 0 30 100 96 100 95 3,359 573 495 663 478 1,150 7,299 1,064 13 3,623 205 5 1,693 325 16 1,060 243 19 923 291 24 237 367 478 148 365 6 0 33 100 99 100 98 2,554 446 581 307 361 859 7,024 1,055 13 3,549 219 6 1,557 315 17 1,016 234 19 902 287 24 249 392 529 175 390 11 2 43 100 98 50 98 2,920 507 522 503 418 970 6,913 1,031 13 3,480 218 6 1,507 290 16 1,028 234 19 898 289 24 273 414 571 223 408 10 3 48 100 93 100 98 Human rights training (Nomura Securities) Sessions Participants Status of other personnel and labor-related issues Employee turnover rate (Japan) Number of seniors (aged 60 years and over) rehired (Japan) Percentage of employees with disabilities (Nomura Securities) Average number of annual paid leave days used (Nomura Securities) Percentage of employees with labor union memberships (Nomura Securities) Average annual salary (Nomura Securities) No. of sessions No. of participants 32 13,827 20 9,823 16 14,129 28 15,220 % No. of employees % Days % 5 713 1.86 9.7 53.8 6 763 2.00 9.9 52.8 Thousands of yen 10,869 10,660 7 727 2.02 10.0 53.0 9,990 6 719 2.09 9.2 53.5 11,187 Nomura Report 2014 61 Data SectionData Section Unit FY2010/11 FY2011/12 FY2012/13 FY2013/14 Independent Assurance on Environmental Reporting CSR Key Facts Our Environment GHG Emissions Scope 1: Direct emissions*1 Scope 2: Indirect emissions*1 Nomura Group companies in Japan Main EMEA offices Main AEJ offices Main American offices Nomura Group companies in Japan Main EMEA offices Main AEJ offices Main American offices t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 Nomura Group companies in Japan t-CO2/FTE Scope 1, 2 Emissions per employee*1 Main EMEA offices Main AEJ offices Main American offices Nomura Group companies in Japan Scope 3 Emissions from employee travel*2 (Air, rail, and automobile travel) EMEA AEJ*3 Americas Energy Consumption t-CO2/FTE t-CO2/FTE t-CO2 t-CO2 t-CO2 t-CO2 Direct energy consumption (Natural gas, etc.)*4 Nomura Group companies in Japan MWh Main EMEA offices Main AEJ offices Main American offices MWh MWh MWh Nomura Group companies in Japan MWh Indirect energy consumption (Purchased electric power)*4 Main EMEA offices Main AEJ offices Main American offices MWh MWh MWh MWh Including, Green electric purchase power*5 (Purchased cooling and heating power) Environmental Resource Efficiency Water consumption*6 Copy paper consumption*7 Amount of waste generated*8 Nomura Group companies in Japan MWh Main EMEA offices Main AEJ offices Main American offices MWh MWh MWh Nomura Group companies in Japan Thousand m3 Main EMEA offices Main AEJ offices Main American offices Thousand m3 Thousand m3 Thousand m3 Tons Tons 2,673 1,256 101 — 41,953 22,408 16,816 — 3.0 6.4 5.7 — 12,407 — 2,595 — 14,275 6,783 406 — 89,674 47,830 17,813 — 5,900 26,740 0 0 — 204 101 36 — 746 1,450 2,373 1,299 76 0 34,214 21,629 24,357 15,235 2.4 6.9 5.0 6.3 18,505 9,446 11,883 6,060 12,664 6,981 272 0 74,648 50,091 27,474 23,197 7,424 20,550 0 2,352 10,047 188 136 33 4 820 1,223 2,247 1,318 76 0 38,988 16,842 24,323 14,507 2.8 6.2 5.4 6.5 17,919 9,728 11,057 5,124 11,948 7,025 800 0 74,293 38,679 28,012 22,665 6,329 17,523 0 1,907 7,924 178 124 45 4 759 1,904 1,917 979 143 46 42,300 17,334 21,601 13,912 2.9 6.0 4.9 6.1 18,729 9,253 9,552 5,561 10,147 5,235 608 225 74,117 41,164 26,942 24,147 6,317 15,258 0 1,731 2,220 177 124 45 14 746 2,659 Among data disclosed for FY2013/14, third-party assurance is applicable to the Nomura Group companies in Japan, main EMEA offices, and main AEJ offices. The scope 1, 2, and 3 classification follows The Greenhouse Gas Protocol (GHG Protocol): http://www.ghgprotocol.org/ *1 Totals for our main AEJ offices only included the India office in FY2010/11. Regarding scope 2, as a result of improvements in data collection precision, data for FY2011/12 and FY2012/13 were revised. See http://www.nomuraholdings.com/csr/data/ for details about the emissions factors applied. *2 Data compiled on domestic and international flights and long-distance railway transportation tickets purchased through designated firms. In AEJ, totals include only the India office in FY2010/11. Data for regular automobile usage by the Nomura Group companies in Japan, in EMEA, and, out of the Nomura Group companies in AEJ, India and Hong Kong offices are included in the totals. See http://www.nomuraholdings.com/csr/data for details about the emissions factors applied. *3 In AEJ offices, data compiled for major offices in FY2013/14 came to a total of 8,278 t-CO2. *4 Totals for our main AEJ offices only included the India office in FY2010/11. *5 In FY2010/11, data applied only to the Nomura Group companies in Japan. From FY2011/12, however, in addition to the Nomura Group companies in Japan, from among main offices in main EMEA offices, the Frankfurt and Zurich offices were included. From FY2013/14, the Milan office was also included. *6 Totals for our main EMEA offices only included the London office in FY2010/11. Totals for our main AEJ offices only applied to the India office in FY2010/11 and FY2011/12. As a result of improvements in data collection precision, data for principal offices in AEJ for FY2012/13 were revised. *7 Among main offices, Nomura Securities purchased items through designated firms, and data for such items were compiled in the London, India, and Hong Kong offices. As a result of improvements in data collection precision, historical data were revised. *8 Among main offices, totals include the Tokyo main offices (Nihonbashi Head Office building and the Dai-ni Edobashi Building); the Osaka Branch; the Nagoya Branch; the London, Paris, Frankfurt, Zurich offices; and the India Office. From FY2013/14, the following were added: the Tokyo main office (Urbannet Otemachi Building), the Kyoto Branch, the Okayama Branch, and the Hong Kong office. Our main EMEA offices are located in London, Paris, Frankfurt, Zurich, Madrid, Milan, and Luxembourg.* Our main AEJ offices are located in Hong Kong, Singapore, India, and Dalian in China. Our main American offices are located in New York and include the INSTINET offices. * Offices to which the scope of aggregation was expanded. The following is an English translation of an independent assurance statement prepared in Japanese and is for information and reference purposes only. In the event of a discrepancy between the Japanese and English versions, the Japanese version will prevail. Translation Independent Assurance Report To Mr. Koji Nagai Group CEO Nomura Holdings, Inc. Date: 22 July, 2014 Kenji Sawami Representative Director Ernst & Young Sustainability Co., Ltd. Tokyo We, Ernst & Young Sustainability Co., Ltd. have been commissioned by Nomura Holdings, Inc. (hereafter the “Company”) to provide limited assurance on the Key Environmental Performance Indicators of Nomura Group companies in Japan, Main EMEA offices and Main AEJ offices (hereafter the “Indicators”) for the year ended March 31, 2014 included in “Data Section - CSR Key Facts - Our Environment” in the Nomura Report 2014 (hereafter the “Report”). 1. The Company's Responsibilities The Company is responsible for the preparation of the Report in accordance with the Company's policies and standards found at the footnote of “Data Section - CSR Key Facts - Our Environment” as criteria. 2. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. 3. Our responsibilities Our responsibility is to express a limited assurance conclusion on the Indicators for the year ended March 31,2014 included in the Report based on the procedures we have performed and the evidence we have obtained. We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements - Assurance Engagements Other than Audits or Reviews of Historical Financial Information (ISAE 3000), issued by the International Auditing and Assurance Standards Board, Practical Guidelines for the Assurance of Sustainability Information, revised in December 2012 by the Japanese Association of Assurance Organizations for Sustainability Information and, in respect of CO2 emissions, the International Standard on Assurance Engagements 3410, Assurance Engagements on Greenhouse Gas Statements (ISAE 3410), issued by the International Auditing and Assurance Standards Board. The summary of the procedures we performed for our assurance engagement is as follows: • Reading relevant documents with regard to the Company’s Reporting Standards and the Company’s policies and standards and inquiring of personal responsible thereof; • Reading relevant documents with regard to the design of the Company’s internal control of the Indicators and inquiring of personal responsible thereof at the headquarters and the sites visited; • Performing analytical procedures of the Indicators at the headquarters and the sites visited ;and • Agreeing to supporting documents and recalculating with part of the Indicators at the headquarters and the sites visited on a test basis. The procedures performed in a limited assurance engagement are more limited in nature, timing, or extent than a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is not as that obtained had we performed a reasonable assurance engagement. 4. Conclusion Based on the assurance procedures performed, nothing has come to our attention that caused us to believe that the Indicators for the year ended March 31, 2014 included in the Report were not measured and reported in accordance with the Company’s policies and standards in all material respects. 62 Nomura Report 2014 Nomura Report 2014 63 Data SectionData Section Global Network Nomura Securities Domestic Network (As of August 31, 2014) Europe Americas The Nomura Group has offices in 13 countries in this In addition to nine offices in this region that provide region, with the London Office, which marks the 50th wholesale services, Nomura has an asset management anniversary of its establishment in FY2014/15, as the company with the advantage in high-yield bond core of operations. Drawing on the strengths of its global i n v e s t m e n t a n d o t h e r c o m p a n i e s . N o m u r a i s network, Nomura provides services that include concentrating its corporate resources in business fields underwriting and trading in bonds and equities as well as where it can attain competitive superiority. Also, by financial solutions, with the aim of further expanding tapping into its global network to respond to a diverse client revenue and enhancing the profitability of the range of client needs, Nomura is working to expand its Nomura Group. market share in the Americas which is home to the largest Number of personnel: 3,461 fee pool in the world. Number of personnel: 2,281 Hokuriku Fukui Branch Kanazawa Branch Niigata Branch Toyama Branch Kinki Akashi Branch Daito Branch Gakuenmae Branch Higashiosaka Branch Himeji Branch Hirakata Branch Ibaraki Branch Kawanishi Branch Kishiwada Branch Kobe Branch Kyoto Branch Nanba Branch Nara Branch Nishinomiya Branch Chugoku Fukuyama Branch Hiroshima Branch Kurashiki Branch Matsue Branch Okayama Branch Okamoto Branch Osaka Branch Otsu Branch Sakai Branch Senri Branch Takarazuka Branch Takatsuki Branch Tennoji Branch Toyonaka Branch Tsukaguchi Branch Uehonmachi Branch Umeda Branch Wakayama Branch Shimonoseki Branch Tokuyama Branch Tottori Office Yonago Branch Asia–Pacific Japan The headquarters functions of the Nomura Group, which is expanding its business activities on a global scale, are located in Japan. Nomura’s strengths include the largest This is the only major region where Nomura offers share of client assets and sales of investment trusts. services to retail customers in addition to its Nomura is also differentiated by its position as an wholesale and asset management services. independent securities company with a broad customer Tailoring its approach to specific market base as well as capabilities for providing services conditions, Nomura offers integrated retail and through its global business platform in wholesale wholesale services and is structuring an original business. business model for the region, where rapid economic growth is expected. Number of personnel: 5,891* * Includes personnel in offshore offices in India Number of personnel: 16,037 Shikoku Kochi Branch Matsuyama Branch Takamatsu Branch Tokushima Branch Kyushu Fukuoka Branch Fukuoka Branch, Amu Plaza Hakata Office Kagoshima Branch Kitakyushu Branch Kumamoto Branch Kurume Branch Miyazaki Branch Nagasaki Branch Oita Branch Saga Branch Sasebo Branch Okinawa Naha Branch Hokkaido Asahikawa Branch Hakodate Branch Kushiro Branch Tohoku Akita Branch Aomori Branch Fukushima Branch Hachinohe Branch Iwaki Office Tokyo metropolitan area Chofu Branch Denenchofu Branch Fuchu Branch Gotanda Branch Hachioji Branch Head Office Ikebukuro Branch Ikebukuro Metropolitan Plaza Branch Jiyugaoka Branch Kamata Branch Keio Shinjuku Branch Kichijoji Branch Koiwa Branch Kokubunji Branch Machida Branch Mita Branch Nakameguro Branch Nakano Branch Nerima Branch Ogikubo Branch Omori Branch Seijo Branch Senju Branch Shibuya Branch Shinbashi Branch Sapporo Branch Tokachi Obihiro Office Koriyama Branch Morioka Branch Sendai Branch Yamagata Branch Shinjuku Branch Shinjuku Nomura Building Branch Shinjuku-eki Nishiguchi Branch Tachikawa Branch Tamagawa Branch Tanashi Branch Tokyo Branch Toranomon Branch Ueno Branch Kanto Aeon Mall Funabashi Office Aobadai Branch Atsugi Branch Chiba Branch Fujisawa Branch Funabashi Branch Hiratsuka Branch Ichikawa Branch Kamakura Branch Kashiwa Branch Kawagoe Branch Kawaguchi Branch Kawasaki Branch Chubu Gifu Branch Hamamatsu Branch Kanayama Branch Kariya Branch Kasugai Branch Matsumoto Branch Kofu Branch Koshigaya Branch Kumagaya Branch Matsudo Branch Mito Branch Musashikosugi Branch Odawara Branch Omiya Nishiguchi Branch Ota Branch Sagamihara Branch Saitama Branch Saitama Branch, Omiya Higashiguchi Office Shinyurigaoka Branch Takasaki Branch Tama Plaza Branch Tokorozawa Branch Totsuka Branch Tsukuba Branch Tsurumi Branch Urawa Branch Utsunomiya Branch Yokohama Bashamichi Branch Yokohama Branch Yokosuka Branch Nagano Branch Nagoya Branch Nagoya-ekimae Branch Numazu Branch Okazaki Branch Shizuoka Branch Toyohashi Branch Toyota Branch Tsu Branch Yokkaichi Branch 64 Nomura Report 2014 Nomura Report 2014 65 Data SectionData Section Corporate Data E Corporate Data Company name Nomura Holdings, Inc. President & CEO Koji Nagai Date of incorporation December 25, 1925 Business description Investment and financial services E Share Data Common stock issued 3,822,562,601 shares (As of March 31, 2014) Listing The common shares of Nomura Holdings, Inc. are listed on the Tokyo, Nagoya, and Singapore stock exchanges. The shares are also listed on the NYSE in the form of American Depositary Shares (ADSs) evidenced by American Depositary Receipts (ADRs). Each ADS represents one share of common stock. (As of March 31, 2014) Securities code 8604 (Tokyo Stock Exchange) NMR (New York Stock Exchange) Paid-in capital ¥594.5 billion (As of March 31, 2014) Head office 1-9-1, Nihonbashi, Chuo-ku, Tokyo 103-8645, Japan Group employees 27,670 (As of March 31, 2014) Number of shareholders 476,079 (Unit shareholders: 453,407) (As of March 31, 2014) Transfer agent and registrar Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Department: +81 (3) 5391-1900 Depositary for American Depositary Receipts (ADRs) The Bank of New York Mellon Depositary Receipts Division: +1 (866) 680-6825 http://www.adrbnymellon.com Ratio: 1 ADR = 1 ordinary share Major shareholders (Top 10)*1 Component ratio of shareholders (%) 100 80 60 40 20 0 2009/10 2010/11 2011/12 2012/13 2013/14 (Fiscal year) L Financial Institutions L Other Legal Entities L Foreign Legal Entities L Individuals and Others Names of shareholders Number of shares (thousands) Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) The Bank of New York Mellon SA/NV 10 The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders State Street Bank West Client-Treaty Japan Trustee Services Bank, Ltd. (Trust Account 6) Japan Trustee Services Bank, Ltd. (Trust Account 5) Japan Trustee Services Bank, Ltd. (Trust Account 1) Japan Trustee Services Bank, Ltd. (Trust Account 3) Japan Trustee Services Bank, Ltd. (Trust Account 2) 162,108 128,994 124,073 44,659 43,994 42,067 42,022 41,720 41,440 41,337 Percentage (rounded to two decimal places) 4.24 3.37 3.25 1.17 1.15 1.10 1.10 1.09 1.08 1.08 *1 The Company has 103,784,258 shares (2.72%) of treasury stock as of March 31, 2014, which is not included in the major shareholders list above. Date of record for dividend payments*2 Second quarter-end September 30 March 31 Year-end *2 Under Article 459-1 of the Company Act, the Company has set the base dates for the payment of dividends from retained earnings on June 30, September 30, December 31, and March 31, under its Articles of Incorporation through a decision by the Board of Directors. However, in principle, the Company pays dividends twice yearly (with base dates of September 30 and March 31). E Other Credit rating*3 Standard & Poor’s Moody’s Investors Service Fitch Ratings R&I JCR *3 As of July 31, 2014 *4 Placed on watchlist for possible upgrade on July 7, 2014 66 Nomura Report 2014 Nomura Holdings Nomura Securities Long-term Short-term Long-term Short-term BBB+ Baa3*4 A- A+ AA- A-2 — F1 a-1 — A- Baa2*4 A- A+ AA- A-2 P-2 F1 a-1 — Website Information B Nomura Holdings Website http://www.nomura.com/ At the Nomura Group, we are continuing to strive to make our corporate website broadly accessible by eliminating difficulties people may have in accessing information and services due to visual, hearing, speech, or other physical impairments. http://www.nomuraholdings.com/ C Corporate Citizenship Site http://www.nomuraholdings.com/csr/ C Investor Relations Site http://www.nomuraholdings.com/investor/ Delivers detailed information on the Nomura Group’s CSR initiatives in a timely manner. The site also offers video clips of financial and economic education materials, a GRI Guidelines Index, CSR related information and data, as well as other materials. Provides various investor relations information for the Nomura Group, including earnings presentations, financial data, the Nomura Report, notices for shareholders, and information pertaining to corporate governance. About the Front Cover The logo of the Nomura Group is based on our Company badge. This badge design is an arrangement of an ivy leaf, which appears on the crest of the Nomura family, and the original Nomura trade name in Japanese, yamato. The yama portion of the trade name, which means “mountain,” was restyled in the shape of a mountain, and this combination of symbols is immediately recognizable today as synonymous with “NOMURA.” The cover design of this report is based on the “M” motif. Inquiries Nomura Holdings, Inc. Investor Relations Urbannet Otemachi Building, 2-2-2, Otemachi, Chiyoda-ku, Tokyo 100-8130, Japan Tel. +81 (3) 5255-1000 (Main switchboard) Corporate Citizenship Otemachi Nomura Building, 2-1-1, Otemachi, Chiyoda-ku, Tokyo 100-8170, Japan Department Tel. +81 (3) 5255-1000 (Main switchboard) e-mail: csr@jp.nomura.com Nomura Report 2014 67 Data Section This report was produced using non-VOC inks. All electricity to print this booklet was generated by green energy. (250 kWh) Printed in Japan