The View From Outside

Osamu Nagayama divides his time between pharmaceutical company Chugai, where he holds both the CEO and Chairman posts, and electronics giant Sony, where he is an independent director and Chairman of the board. In an interview in a conference room in Chugai’s Tokyo headquarters, he says that while the two businesses are very different, the responsibilities of their boards are the same, making the transfer of his skills from one to the other a natural step. In addition, working with the leadership of the two companies has allowed him to enhance his own experience and expertise, to the benefit of both businesses. Sony and Chugai are both international companies and have governance structures that require external directors on their boards. Traditionally however, Japanese boards have been almost exclusively comprised of executives and insiders. Nagayama sees that changing quickly, despite cultural resistance, spurred in part by governance reforms instituted by Prime Minister Shinzo Abe’s administration.Contrary to what most people might think, Nagayama says the main function of a board is not to make money for the company. Instead, it is to create transparency. The relationship between the board and executive management provides an important set of “checks and balances” to the benefit of all stakeholders, including shareholders. In light of the board’s oversight function, Nagayama makes the case that the CEO and chairman should be on good terms, but says a close friendship is “dangerous.”


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