The Toyota Boshoku group has stated as the first part of its corporate philosophy 'the desire to promote corporate growth while fulfilling its responsibilities as a good corporate citizen'. To realise this, in accordance with the five basic items : (1) Securing the rights and equal treatment of shareholders; (2) Appropriate cooperation with stakeholders other than shareholders; (3) Ensuring appropriate information disclosure and transparency; (4) Appropriate execution of the roles and responsibilities of the Board of Directors; (5) Engaging in constructive dialogue with shareholders, the Company recognises the importance of maintaining and improving management efficiency, fairness and transparency as a global company alongside efforts to maintain its ethical values and ensure sustainable corporate activities, and will strive to expand and enhance its corporate governance. We have also defined our basic stance towards compliance and risk management, and act accordingly.
Response to the Corporate Governance Code
Toyota Boshoku has determined that it is in compliance with all principles of the Corporate Governance Code. We submitted the Corporate Governance Report to the Tokyo Stock Exchange.
Corporate governance system
Toyota Boshoku is working to strengthen corporate governance with the aim of increasing corporate value.
The Board of Directors, the decision-making body for business management, resolves legal matters and important management-related matters and oversees business execution. Such matters are deliberated upon extensively prior to submission to the Board of Directors at the Corporate Planning Meeting, which shares information and makes decisions on important management issues, and the Corporate Strategy Meeting, which debates such items as company-wide management strategy. This serves to quicken response to management challenges. In addition, efforts are made to regularly monitor and follow-up on the status of business execution at the Management Meeting, where information is shared among internal directors, standing Audit & Supervisory Board members, and organisational heads from the different fields.
Initiatives for improving corporate governance
Toyota Boshoku appoints four outside directors with extensive experience and broad views in such areas as corporate management. From an objective standpoint, the outside directors serve to ensure the legality and appropriateness of decision-making by the Board of Directors and the execution of duties by directors.
Toyota Boshoku adopts a corporate auditor system, in which a four-person structure that includes two outside Audit & Supervisory Board members audits the management of directors. Audit & Supervisory Board members attend key meetings, make visiting audits, and speak with personnel in each division, as well as audit the business execution of directors and the business and financial condition of subsidiaries in Japan and overseas. Such initiatives including assigning dedicated staff to the Audit & Supervisory Board Office help strengthen the functions of the Audit & Supervisory Board.
Ratio of internal and outside directors and Audit & Supervisory Board members
Ratio of outside officers
Establishment of Management Advisory Council
The Management Advisory Council was established as a forum for the candid exchange of opinions related to such matters as key management strategies, management issues, appointment and dismissal of management, nomination of candidates for director and Audit & Supervisory Board member and compensation for management and directors. The council consists mainly of outside directors and is separate from organisations under the Companies Act.
Management Advisory Council
Policy and procedure for nominating candidates for director and Audit & Supervisory Board member
A decision is made on the appointment and dismissal of directors and Audit & Supervisory Board members following debate and discussion by the Management Advisory Council.
The policy on appointment to management and nomination of candidates for director takes into account the fields he/she can cover. This also includes a comprehensive examination to ensure the right person is assigned to the right position so that decision-making is fast and accurate.
The policy on nomination of candidates for Audit & Supervisory Board member involves a comprehensive examination of whether the person has knowledge regarding finance and accounting, a general understanding of the Company’s business and diverse perspectives on corporate management.
Reasons for election of outside officers
|Classification||Name||Independent Officer||Supplementary explanation regarding suitability items||Reasons for election||Number of Board of Directors, Audit & Supervisory Board attended in fiscal 2020|
|Directors||Takeshi Ogasawara||Advisor, MUFG Bank, Ltd., business partner of the Company||Mr. Ogasawara was elected as a director because it was deemed that he could reflect his extensive experience and broad insight as a manager in the management of the Company and contribute to the maintenance and strengtening of the Company’s corporate governance.||Attended 10 of 12 Board of Directors|
|Akihiro Koyama||Professor, Faculty of Economics, Gakushuin University||Mr. Koyama was elected as a director because it was deemed that he could reflect his research into such areas as corporate finance and corporate governance and also his expert knowledge acquired over many years in corporate management from a global perspective in the management of the Company and contribute to the maintenance and strengthening of the Company’s corporate governance.||Attended 12 of 12 Board of Directors|
|Kazue Sasaki||Executive Vice President, Toyota Industries Corporation, business partner of the Company||Mr. Sasaki has many years of experience as a manager and he was elected as a director because it was deemed that he could reflect his extensive experience and broad insight in the management of the Company and contribute to the maintenance and strengthening of the Company’s corporate governance.||Attended 12 of 12 Board of Directors|
|Hiroyuki Ina||Senior Executive Officer, DENSO Corporation, business partner of the Company||Mr. Ina was elected as a director because it was deemed that he could reflect his many years of experience and broad insight into business management of the electronic components that form the backbone of an automobile and contribute to the maintenance and strengthening of the Company’s corporate governance.||Attended 9 of 10 Board of Directors
|Audit & Supervisory Board members||Hiroyuki Yokoyama||Executive Advisor, Daihatsu Motor Co., Ltd., busiess partner of the Company||Mr. Yokoyama was elected as an Audit & Supervisory Board member because it was deemed that he could reflect his experience in the Quality Assurance Division and at overseas locations at Toyota Motor Corporation, as well as his extensive experience and insight gained at Daihatsu, in the audit system of the Company and contribute to the maintenance and strengthening of the Company’s corporate governance.||Attended 10 of 10 Board of Directors Attended 10 of 10 Audit & Supervisory Board
|Masakazu Aida||－||Mr. Aida was elected as an Audit & Supervisory Board member because he has many years of experience as a manager and it was deemed that he could reflect his extensive experience and the broad insight he has gained in the audit system of the Company and contribute to the maintenance and strengthening of the Company’s corporate governance.||Attended 12 of 12 Board of Directors Attended 13 of 13 Audit & Supervisory Board|
- *1 Director Hiroyuki Ina was elected as an outside director at the 94th Ordinary General Meeting of Shareholders held on June 12, 2019, and following his selection, Board of Directors was held 10 times.
- *2 Audit & Supervisory Board member Hiroyuki Yokoyama was elected as an outside Audit & Supervisory Board member at the 94th Ordinary General Meeting of Shareholders held on June 12, 2019, and following his selection, Board of Directors was held 10 times, and Audit & Supervisory Board was held 10 times.
Policy for deciding the amount of officers’ compensation and the calculation method
Compensation is comprised of monthly compensation (fixed amount), bonuses (amount dependent on results), and transfer-restricted stock compensation. In particular, bonuses are determined based on consolidated operating profit for each business year and upon giving comprehensive consideration to such factors as the degree of enhancement of corporate value (social value and economic value) over the mid-to-long-term, dividends, company member bonus levels, trends at other companies, and actual past bonus payments.
In order to encourage shareholding by directors, promote further sharing of value with shareholders, and advocate sustained enhancement of corporate value by directors, we introduced a transfer-restricted stock compensation system in 2020. Since outside directors, standing Audit & Supervisory Board members, and outside Audit & Supervisory Board members fulfil the roles of supervising and monitoring management from an independent position, no bonuses or transfer-restricted stock compensation are paid.
On June 17, 2020, the General Meeting of Shareholders passed a resolution regarding the compensation of directors. According to the resolution, the total amount of monthly compensation and bonuses for all directors shall be within 600 million yen per year (of which the amount for all outside directors shall be within 70 million yen per year). The total amount of transfer-restricted stock compensation for all directors excluding outside directors shall be within 100 million yen per year. On June 14, 2012, the General Meeting of Shareholders passed a resolution regarding the compensation of Audit & Supervisory Board members. According to the resolution, the total amount of compensation shall be within 8 million yen a month for all Audit & Supervisory Board members. The compensation limit for each officer is determined within the total amounts.
Compensation for officers is decided by the Board of Directors after deliberation at the Management Advisory Council, which is composed of a majority of outside officers.
Executive compensation system
The amount of compensation is determined based on the different ranks and positions in line with the role and work responsibilities as director and operating officer. The amount of monthly compensation is determined in a reasonable manner by multiplying the standard total amount of compensation for the officers by a set percentage depending on work responsibilities.
Outside directors and Audit & Supervisory Board members are paid fixed monthly compensation, with the amount set depending on respective roles rather than basic compensation with salary increase.
Consolidated operating profit and the increase in corporate value over the medium term are the indices used to determine bonuses. Bonuses based on these indices total at least 35% of the compensation amount.
The evaluation of bonuses reflects company-wide results for the fiscal year that is the amount of consolidated operating profit as well as the degree of achievement of fiscal year hoshin (policy) at the individual level, and also incorporates the extent to which corporate value has been enhanced over the medium and long terms.
Transfer-restricted stock compensation
The Board of Directors is scheduled to decide on the specific payment period and allocation using the stock compensation limit (within 100 million yen per year) defined at the General Meeting of Shareholders held on June 17, 2020. The transfer-restricted stock compensation limit is approximately 15% of the total compensation limit.
|Classification||Amount paid||Number of officers paid|
|Directors||331 million yen (43 million yen)||134 million yen (-)||12 officers (5 officers)|
|Audit & Supervisory Board members||94 million yen (18 million yen)||-||5 officers (3 officers)|
|Total||425 million yen (61 million yen)||134 million yen (-)||17 officers (8 officers)|
The above table includes the portions for two directors and one Audit & Supervisory Board member who retired at the conclusion of the 94th Ordinary General Meeting of Shareholders held on June 12, 2019.
Board of Directors
The Board of Directors convenes at least once a month, and as the management decision-making body, decides on important management matters such as legal matters, corporate hoshin (policy), business plans and capital expenditure plans, and also monitors business execution.
Key agenda items for Board of Directors in FY2020
|Matters concerning Ordinary General Meeting of Shareholders||
|Matters concerning executive officers and organisation||
|Matters concerning shares, etc.||
|Matters concerning general management||
Support structure for outside directors and Audit & Supervisory Board members
Internal directors and standing Audit & Supervisory Board members provide explanations about required knowledge pertaining to areas such as the Company’s businesses, financial affairs and organisations when outside directors and outside Audit & Supervisory Board members assume office. The Company also sends materials of the Board of Directors beforehand to outside directors and outside Audit & Supervisory Board members and provides them with prior explanations on the important matters of agenda items submitted to the Board of Directors. Furthermore, directors and Audit & Supervisory Board members are reported on the progress of global hoshin, and tour plants and offices.
The Company has assigned Audit & Supervisory staff to the Audit & Supervisory Board Office as part of a structure for supporting the business duties of Audit & Supervisory Board members. Audit & Supervisory staff support the daily auditing activities of standing Audit & Supervisory Board members while also supporting the auditing activities of outside Audit & Supervisory Board members through the operation of the Audit & Supervisory Board.
Evaluation results of the effectiveness of the Board of Directors
Toyota Boshoku analyses and evaluates the effectiveness of the Board of Directors as follows.
- Analyse operational status and response to challenges identified in the past and report to the Board of Directors in January.
- Segment Chief in charge of the administrative office of the Board of Directors interviews all directors and Audit & Supervisory Board members, including outside members, in February.
- Evaluation results and the direction to be taken to resolve issues are summarised and reported to the Board of Directors in March for discussion.
[Overview of fiscal 2020 evaluation results]
- The effectiveness of the Board of Directors in making important management decision and monitoring business execution was confirmed as a result of continued improvement including streamlining the Board and bolstering advance explanations provided to outside officers.
- On the other hand, although it was possible to narrow down the agenda items regarding individual businesses, opinions indicated that there are still many discussions on details, and lack of discussion on main direction (overall strategy, etc.) and risks.
- In order to further augment effectiveness, it is necessary to assign priority to improvement measures and then to speed up execution.
[Key challenges and improvement measures]
Toyota Boshoku will strive to make the following improvements to ensure even greater effectiveness of the Board of Directors.
- Enrich discussions on business plans and major direction
Strive to secure the time required for discussions and systematically report on the mid-term business plan and global hoshin.
- Enhance information provided to outside officers
Provide materials prepared for preliminary discussion on the agenda items of the Board of Directors, and augment reporting on risks and compliance.
- Ensure member diversity
Hold reviews for experience and expertise required for the Board of Directors.