Target pressure and the committee's findings on NIDEC executives

analysisThe Third-Party Committee concluded in its report of 27 February 2026 that every instance of improper accounting it identified was carried out against a backdrop of excessive pressure to meet performance targets, above all operating-profit targets. For many years, it found, Shigenobu Nagamori set the targets top-down from the perspective of the growth investors expected; they exceeded what business units and subsidiaries could achieve, and his considerable pressure on headquarters executive officers and CFOs passed down to unit and subsidiary executives. The committee said it did not dispute his philosophy of setting high targets as such but found that it failed in actual management practice; its investigation was voluntary and did not seek to establish individual legal liability. Nagamori told it he had repeatedly said it was 'perfectly acceptable to fail to meet targets if they cannot be met without resorting to improper conduct.' At a press conference on 1 October 2026 NIDEC's new president, asked about Nagamori's influence and the culture the committee described, said that no business is without pressure, that 'excessive' is a qualitative word and that many group units had acted correctly under the same pressure, adding that NIDEC must ensure this does not happen in future. NIDEC's annual securities report for the year ended 31 March 2026 restates the committee's conclusion and says that, under rules introduced in June 2026, each business unit and domestic group company formulates its own mid-term plan and is responsible for executing it after formal approval, to prevent plans being set or changed arbitrarily by some members of management. ^{1 2 3 4}

analysisAccording to the committee, until fiscal 2023 (year ended 31 March 2024) NIDEC's performance targets were ultimately decided by Nagamori, who frequently rejected draft business plans as 'too conservative' and had them raised. In late March 2016 he rejected a draft with consolidated operating profit of ¥130 billion ('I am enraged!') and set minimum internal targets of net sales of ¥1.25 trillion, operating profit of ¥150 billion and a 12% margin, with lower figures for external announcement. For fiscal 2023 he instructed consolidated operating profit of ¥330 billion against ¥227.2 billion submitted by the business units, and the plan was finalised at ¥307.5 billion. The committee found no facts indicating that Nagamori instructed or directed the improper accounting and did not dispute high targets as such. Nagamori told it that 'a company can achieve growth only when it sets ambitious targets and works desperately to achieve them', and that those who tried would grow even when targets were missed. ²

analysisThe committee called the targets 'unrealistic' for three reasons: they were set on the basis of what performance should be from investors' perspective rather than the businesses' capabilities, unit and group-company executives unanimously described them as unrealistic, and many units regularly missed them despite relentless pressure and, at times, improper accounting. Its table of consolidated figures, in units of ¥100 million, shows internal operating-profit targets above the forecasts NIDEC announced publicly: for fiscal 2022 (year ended 31 March 2023) an internal target of 2,370, a public forecast of 2,100 and an actual result of 899, and for fiscal 2023 an internal target of 3,075, a public forecast of 2,200 and an actual result of 1,619. The internal targets in the table are final figures reflecting changes during the year, and the committee acknowledged that it is not directly involved in NIDEC's business operations. ²

analysisThe committee found that the Group Companies Business Management Department allocated targets to domestic group companies that were inflated above the plan presented by the Performance Management Department, so that some companies could cover others' shortfalls, often far above the companies' own plans and without explanation. For fiscal 2023 (year ended 31 March 2024) the domestic group companies' own plans of January 2023 totalled operating profit of ¥103,020 million, while ¥166,000 million (161%) was presented to them in April 2023: Nidec Precision's ¥6,812 million became ¥11,000 million, and Nidec OKK's ¥943 million became ¥3,987 million (423%). Many group-company presidents and CFOs regarded the targets as unrealistic, and in many cases the Executive Officer Responsible for Group Companies did not approve changes. The figures come from the department's compiled plans and are targets, not results. ²

analysisThe committee traced the pressure to Nagamori himself. It found that he regularly and severely reprimanded executives who missed targets at monthly meetings, harshly reprimanded the presidents and CFOs of underperforming domestic group companies and e-mailed them that their roles would end unless they produced results, and frequently pressed executives, including presidents Jun Seki and Mitsuya Kishida and founding member Hiroshi Kobe, while dangling his authority over executive appointments. In practice, executives were repeatedly demoted or forced to leave for failing to meet targets. These are findings on management practice: the committee found no facts that Nagamori instructed or directed the improper accounting. Nagamori wrote that he had 'consistently developed people by reprimanding them', and in a May 2023 e-mail to executives he acknowledged that his management style had created an atmosphere in which unfavourable reports were difficult to present. ²

analysisThe committee's report states that, although the details varied over time, until August 2025 Nagamori was the decision-maker for significant matters requiring approval in the NIDEC group, including appointments and transfers of headquarters officers, executive appointments, pay and bonuses at domestic group companies, and disposals of fixed assets, including impairment write-downs above set thresholds (at domestic group companies, ¥1 million or more). The approval authority of presidents Hiroyuki Yoshimoto (from June 2018), Jun Seki and Mitsuya Kishida was limited. Nagamori's authority was transferred to Kishida in August 2025, although a headquarters circular of 20 August 2025 kept certain pay and personnel matters at domestic group companies with Nagamori until he indicated in September 2025 that he would delegate them. ¹

analysisThe committee's report, using its own English renderings of the titles, records that Hiroyuki Yoshimoto became representative director, president and COO in June 2018, the first president other than Nagamori, who kept the CEO post. Jun Seki joined in January 2020, became president and COO in April 2020, when Yoshimoto was demoted, and representative director, president and CEO in June 2021. Nagamori returned as representative director, chairman and CEO in April 2022; in September 2022 Seki resigned to take responsibility for deteriorating results and was succeeded by Hiroshi Kobe. After a Nomination Committee process, Mitsuya Kishida became president and CEO on 1 April 2024, with Nagamori becoming what the report calls founder and executive chairman and Kobe chairman; NIDEC's own notice of 14 February 2024 gives their new titles as representative director and Global Group Representative, and as director and chairman, respectively. From fiscal 2024 (year ended 31 March 2025) Kishida formulated the performance targets as the person with ultimate responsibility, and measures were taken so that Nagamori did not issue instructions to raise them. ^{1 2}

analysisThe report also records how the accounting and performance-management lines were organised. In June 2019 NIDEC created the post of chief performance officer (CPO) on the recommendation of the outside law firm that had investigated improper accounting found in the second half of fiscal 2018 (October 2018–March 2019), in order to separate the accounting line from the performance-management line. From June 2021 the CFO handled accounting, tax, finance and investor relations, and the CPO oversaw performance management. The Accounting Department and the Group Performance Management Department were merged under the CFO on 1 May 2024 and split again into an Accounting and Tax Department and a Corporate Management Department on 1 May 2025. ¹

analysisWhen Kishida became president and CEO in April 2024, a 'Three-Party Meeting' of Nagamori, Kobe and Kishida, the top three executives on the business side, was set up as a deliberative body on business progress, management issues and risk responses, according to the committee's report. Called the 'NKK Meeting' after their surnames, it met weekly on Mondays. It stopped meeting after Nagamori became non-full-time chairman emeritus on 19 December 2025, and he resigned as chairman emeritus effective 26 February 2026. ¹

analysisThe committee found no facts indicating that Nagamori instructed or directed the improper accounting it uncovered. It concluded, however, that because he knew from the special-audit reports that improper accounting which should have been corrected immediately was being handled in a planned manner, and accepted this, 'the conclusion that Mr. Nagamori condoned some improper accounting cannot be avoided'. It further found that all of the improper accounting was caused by excessive performance pressure originating with Nagamori, of which he was well aware, that he nevertheless kept demanding excessively high targets, and that in fiscal 2024 (year ended 31 March 2025) he rejected recommendations to deal with 'legacy liabilities' separately. He 'should bear the greatest responsibility' for the improper accounting discovered, the committee said, while stating that its investigation was not performed to pursue the liability of specific officers and does not guarantee any decision by courts or other authorities. ^{1 2 3 4 5 6}

analysisNagamori told the committee that problem assets should in his view be dealt with immediately, but that he 'accepted this sometimes' when Mr. A, as the report refers to him, asked for planned handling out of compassion for struggling group companies; he had also repeatedly told staff it was perfectly acceptable to miss targets that could not be met without resorting to improper conduct. On resigning as representative director in December 2025 he said, according to a press report, that now that NIDEC's revival was the most important issue, he had decided to withdraw from its management; headlines of other press reports said he had apologised over the suspected improper accounting. Asked at a press conference on 4 September 2026 whether Nagamori had failed to give an account of the problems, NIDEC's then president said, according to a press report, that he himself was now the group's chief executive and that it was he who should be accountable for everything happening in the company. ^{1 2 3 4 5 6}

analysisNagamori resigned from the post the committee calls founder and executive chairman of the board on 19 December 2025, while the investigation was under way, becoming non-full-time chairman emeritus, and resigned that post effective 26 February 2026. On 13 March 2026 NIDEC set up an Executive Responsibility Investigation Committee to examine the possible legal liability of current and former officers; according to a press report of 21 August 2026, Nagamori is among those under investigation. On 9 September 2026 an individual shareholder filed a derivative action in the Kyoto District Court against Nagamori and another former director, claiming that certain acquisitions of treasury shares and a dividend exceeded distributable amounts. ^{1 2 3 4 5 6}

analysisHiroshi Kobe, a founding member of NIDEC who served for a period as representative director and president, had long been in charge of sales and was never responsible for accounting, the committee noted; it found no facts that he directed or led the improper accounting and no evidence establishing that he specifically was aware of or condoned it. It nevertheless found it 'reasonable' to conclude that Kobe was 'at least generally' aware of and condoned the planned handling of improper accounting that should have been rectified immediately, because he received special-audit reports from Mr. A, less frequently and in less detail than Nagamori, and so knew that Mr. A was dealing with misconduct in secret. This is an inference, not a finding of specific knowledge, from a voluntary investigation not aimed at individual liability, and not a court decision. Kobe resigned from all his positions, including as director and chairman, on 3 March 2026, which NIDEC presented among its responses to managerial responsibility after the report. On 9 September 2026 an individual shareholder filed a derivative action in the Kyoto District Court against Kobe and Nagamori, claiming that certain acquisitions of treasury shares and a dividend exceeded distributable amounts; NIDEC said it would examine its measures on the basis of the Executive Responsibility Investigation Committee's reports and recommendations. ^{1 7 8 5}

analysisThe committee found no facts indicating that Mitsuya Kishida instructed, directed or condoned the improper accounting it uncovered, and considered that in fiscal 2024 (year ended 31 March 2025) he made reasonable efforts to rehabilitate NIDEC's finances by repeatedly recommending structural reforms that excluded the cost of disposing of 'legacy liabilities' from unit evaluations. In its view, which it did not present as a finding of misconduct, he should nonetheless have examined those liabilities personally and recommended disposing of any that required it, even against Nagamori's intentions; it found his concerns understandable to some extent because the earlier successor candidates Hiroyuki Yoshimoto and Jun Seki had been forced to leave after being held responsible for deteriorating performance, and it did not seek to establish individual liability. Kishida told it that he had left accounting treatment to experts such as the headquarters CFO while aware of the risk in the receivables of Nidec Automotive Motor Americas (NAMA), that he needed to gain Nagamori's trust in his first year as president, and that, looking back, he should have scrutinised the 'legacy liabilities', including NAMA's overdue receivables, himself and discussed them frankly and openly with Nagamori. He stayed on as president and CEO, according to a press report forgoing his monthly pay from March 2026, until NIDEC announced on 29 September 2026 that he had resigned as representative director, president and CEO after it confirmed that he had on certain occasions made statements or engaged in conduct in relation to financial reporting that could not necessarily be regarded as appropriate; on 1 October 2026 its representatives said the board had examined this separately from the committee's evaluation and that he was subject to the Executive Responsibility Investigation Committee's investigation and could, depending on its outcome, be held legally liable. ^{1 2 3 4 5}

analysisThe committee likewise found no facts indicating that Hiroyuki Yoshimoto or Jun Seki, both once considered Nagamori's successors and both former representative directors and presidents of NIDEC, ever instructed, directed or condoned the improper accounting it uncovered. The finding covers the improper accounting discovered in the committee's own investigation, which spanned fiscal 2020 to the first quarter of fiscal 2025 with earlier periods examined where needed; the report separately describes Yoshimoto's role in the fiscal 2018 matters at the appliance, commercial and industrial motor business (ACIM) examined by the 2019 outside law-firm investigation. According to a Japanese business magazine report of 31 July 2026, a shareholders' rights lawyers group formally decided on 30 July 2026 to ask NIDEC to bring a damages suit against nine former directors, naming Yoshimoto and Seki among them; such a request is a pre-suit step, not a finding. ^{1 6}

analysisNIDEC set out its own cause analysis after the committee's reports of 27 February and 17 April 2026. Its annual securities report for the fiscal year ended 31 March 2026 states that, as set out in its revised improvement plan and status report of 27 April 2026 submitted to the Tokyo Stock Exchange, it considers that the accounting irregularities arose from six overlapping structural factors: excessive share-price primacy to keep showing growth; a culture that put short-term profit first and did not tolerate missed targets; concentration of authority in Nagamori and a culture of prioritising his wishes; and weaknesses in governance, in internal control and in group-company management. This is the company's own assessment, not a finding by a court or regulator. At its press conference of 3 March 2026 on the committee's report, NIDEC's president said, according to a press report, that the company took the serious accounting misconduct extremely solemnly, had disclosed inaccurate information and betrayed the trust of shareholders, investors and market participants, and apologised to all concerned. To review the influence of Nagamori's management philosophy, NIDEC reports that it abolished morning group readings of 'The Path to Challenge' and removed internal posters strongly reflecting his values at its sites in Japan and abroad. ^{1 2}

analysisThe revised improvement plan of 27 April 2026, as the annual report summarises it, attributes both the improper accounting and the internal-control deficiencies to these six factors, from an excessive focus on the share price to show continuous growth to weak management of group companies. It is NIDEC's own cause analysis in a remediation document, not a finding of the exchange, a regulator or a court, and the passage attributes no specific act to Nagamori. Nagamori's own account, given in interviews with the Third-Party Committee before the plan and not as an answer to it, was that setting very high targets and striving to meet them was how he had built NIDEC into a global motor manufacturer and that, if this approach were rejected, no trillion-yen company could emerge from Japan; he also said he had repeatedly told officers and employees it was perfectly acceptable to fail to meet targets that could not be met without resorting to improper conduct. On 30 April 2026, three days after the revised plan, the Tokyo Stock Exchange decided to require NIDEC to pay a listing agreement violation penalty of ¥91.2 million, stating among its grounds that compliance had been neglected because of excessive performance pressure from top management. ^{1 3 4}

analysisA separate company-appointed committee of outside experts on quality misconduct, whose report NIDEC received on 2 September 2026 and published on 4 September 2026, found no fact that NIDEC's management, including Nagamori, instructed or was involved in quality misconduct aimed at meeting performance targets, and said that the performance-management practices it described were not the direct cause of all of that misconduct. It nevertheless described how, in at least some business units and sites, high targets and short-cycle performance management constrained the time, staff and equipment needed for change procedures, inspection and correcting quality problems, contributing to an 'unhealthy state'. Its report concerns quality misconduct, not accounting, and is not a court decision. In its notice of 4 September 2026 NIDEC said it took the findings very seriously and regarded the issues of management stance and culture that the quality misconduct shared with the accounting misconduct, such as excessive performance pressure and a culture in which people could not speak up, as fundamental issues to be addressed as a whole in its revival, through continued and strengthened culture reform. ¹

analysisThe quality committee's report describes NIDEC's business planning. Business units' plans often fell below headquarters guidelines; the Performance Management Department pressed them to add to their figures and submitted the raised plans to Nagamori, who often rejected them, at times forcing still higher plans, until he stopped giving such instructions for fiscal 2024 (year ended 31 March 2025) onward after Kishida became CEO on 1 April 2024. For fiscal 2024 and 2025 the units' combined operating-profit answers of 2,416 and 3,443 (in units of ¥100 million) faced group guidelines of 2,800 and 4,200, derived backward from investor consensus, debt repayment through fiscal 2025 and the announced margin target; the units' objections were not sufficiently reflected and the guidelines were not revised. The report says this is consistent with the Third-Party Committee's accounting report, under which a 10% operating margin was long treated as mandatory and internal targets exceeded public forecasts. It describes business-plan practice, not an instruction to commit misconduct. ¹

analysisThe same report states that under his 'federal management' approach Nagamori generally kept the organisation and officers of acquired companies and did not sufficiently strengthen governance as the group grew, and that until August 2025 the group's major approval matters, including personnel, were reserved to him. Quoting the Third-Party Committee's accounting report, it describes NIDEC as 'Mr. Nagamori's company' with all authority concentrated in him, and says it seemed undeniable that the strain of his 'micromanagement' led to expanding 'legacy liabilities', delayed disposal and new accounting misconduct. This is the quality committee's own description and assessment, partly quoting the accounting report, and not a court decision. Nagamori told the quality committee that staffing of quality and other control functions had not kept pace with the company's growth, that the CFO and legal functions in particular had been weak, and that he had got the order of reinforcing staff wrong. ¹