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Corporate Governance

Basic Approach

Our basic approach to corporate governance is as described below.

  • We have, based on the corporate philosophy of the Group, vision, values, code of conduct, mission and the Basic Policy on Corporate Governance(*) established by the Board of Directors, developed trust with all stakeholders related to the Company and its subsidiaries (hereinafter, the “Group”), such as shareholders and investors as well as employees, customers, client or supplier companies, creditors and local communities, and also develop our corporate governance.
  • Among the governance systems under the Companies Act, we have chosen to be a Company with a Nomination Committee, and by separating supervision and execution, will strengthen the Board of Directors’ management supervisory functions, improve the transparency and fairness of management and accelerate business execution and decision making.
  • We acknowledge the enhancement of corporate governance to be one of the most important management issues, and continuously make efforts to improve our corporate governance.

As the Group is an integrated business entity supplying basic materials and elements indispensable to the world, and is involved in recycling business and renewable energy business, we adopted an in-house company system so as to facilitate and appropriately execute business operations.

  • (*) We have prepared the “Basic Policy on Corporate Governance,” which is disclosed on the Company’s website, as a compilation of the basic approach to and framework of corporate governance.

Overview of Corporate Governance

(Board of Directors)

The functions and duties of the Board of Directors shall be as follows:

  • Upon delegation by shareholders, the Board of Directors shall indicate the direction of its management and make an effort to enhance the Group’s medium- to long-term corporate value by, for example, engaging in freewheeling and constructive discussion on management policies and management reforms;
  • The Board of Directors shall determine matters that may have a serious impact on management, such as management policies and management reforms, in accordance with the provisions of laws, the Articles of Incorporation and the Board of Directors Rules;
  • The Board of Directors shall accelerate decision-making in business execution by delegating the authority over business execution to an appropriate extent to Executive Officers in accordance with the provisions of the Board of Directors Rules, etc. so that Executive Officers may assume the responsibility and authority to make decisions and execute business in response to changes in the business environment; and
  • The state of Group Governance and the progress of the execution of duties, including the progress of the management strategy, shall be reported by Executive Officers to and supervised by the Board of Directors on a periodic basis. The Board of Directors is comprised of 10 Directors (including six Outside Directors), and the Chairman of the Board of Directors is performed by the Chairman of the Company.

Overview of Corporate Governance System

Overview of Corporate Governance System

(Nomination Committee)

The Nomination Committee determines the policy for the nomination of candidates for Director, the content of proposals, etc. concerning the election and dismissal of Directors to be submitted to General Meetings of Shareholders. In addition to this, the Nomination Committee reviews and responds to inquiries from the Board of Directors concerning the election and dismissal, etc. of Executive Officers.
The Nomination Committee is comprised of five Directors (including three Outside Directors), and the Chairperson of the Nomination Committee is performed by an Outside Director.

(Audit Committee)

The Audit Committee audits the legality and validity of duties performed by Directors and Executive Officers, via audits either using internal control systems or directly by the Audit Committee member selected by the Audit committee.
The Audit Committee is comprised of five Directors (including three Outside Directors), and the Chairperson of the Audit Committee is performed by an Outside Director. The Audit Committee also elects two full time Member of the Audit Committee in order to improve the effectiveness of audits conducted by the Audit Committee

(Remuneration Committee)

The Remuneration Committee establishes policies for determining individual remuneration for Directors and Executive Officers, and determines the individual remuneration to be received by Directors and Executive Officers based on such policies.
The Remuneration Committee is comprised of five Directors (including three Outside Directors), and the Chairperson of the Remuneration Committee is performed by an Outside Director.

(Executive Officer)

Executive Officers execute business in accordance with the prescribed segregation of duties, based on the delegation of authority from the Board of Directors. The Company has 11 Executive Officers, of which the Chief Executive Officer Naoki Ono, and the Executive Vice President and Executive Officer Yasunobu Suzuki, are elected as Representative Executive Officers upon the decision of the Board of Directors.

(Executive Officer’s Meeting)

Following the delegation of authority from the Board of Directors, Executive Officers’ Meetings review and determine important matters concerning the management of the entire Group. Executive Officer’s Meetings are attended by all 11 Executive Officers, and the Chairman of the Executive Officer’s Meeting is performed by the Chief Executive Officer.

Nomination of Candidates for Director and the Election and Dismissal of Executive Officers

Policy for Nomination of Candidates for Director

Our basic approach to the structure of the Board of Directors, which fulfills the roles of determining the direction of management and exercising supervision over the progress of business execution, is to ensure that it comprises a diverse range of human resources with different expert knowledge, experience, and other qualities. In particular, the Nomination Committee will consider candidates for Outside Director to ensure that they comprise individuals who possess experience in corporate management (business similar to or different from the Group’s business, etc.) and individuals who possess broad and advanced expert knowledge and extensive experience in relation to finance and accounting affairs, legal matters, administrative affairs, science and technology, or international relations, etc.
In light of the basic policy on the structure mentioned above, the Nomination Committee will nominate and select individuals who satisfy the following requirements as candidates for Director, regardless of individual attributes concerning gender, nationality and race, etc.

  • An individual of exceptional insight and character;
  • An individual with a strong sense of ethics and a law-abiding spirit; and
  • An individual who can properly fulfill his or her duties concerning the exercise of supervision over the management of the Company and the determination of the direction of management.

Further, with respect to candidates for Independent Outside Director, the Nomination Committee will nominate and select individuals who satisfy the following requirement in addition to the above requirements:

  • An individual who has no material interest in the Group and who can remain independent.

The specific selection of personnel shall be decided after deliberation by the Nomination Committee. Provided that the Company considers that an Outside Director is not independent if he or she falls under any of the conditions listed below in addition to meeting the standards for independence established by Tokyo Stock Exchange, Inc.

1.An individual who falls under or has fallen under any of items (1) or (2) below, either presently or in the past:

  1. An executive or non-executive Director of the Company; or
  2. An executive or non-executive Director of the Company’s subsidiary.

2.An individual who falls under any of items (1) through (5) below:

  1. An executive of a client or supplier company of the Company, whose value of transactions amounted to 2% or more of the consolidated net sales of the Company or the client or supplier company as of the end of the previous fiscal year;
  2. A person who received, as a professional or consultant, etc., consideration of not less than 10 million yen from the Company in the previous fiscal year, excluding his/her consideration as a Director;
  3. An executive of an organization that received a donation of not less than 10 million yen from the Company in the previous fiscal year;
  4. A shareholder who directly or indirectly holds at least 10% of the total number of voting rights of the Company or an executive of such shareholder; or
  5. The Company’s Accounting Auditor or its employee, etc.

3.An individual who has fallen under any of items (1) to (5) of 2 above at any time in the past three (3) years:

4.A close relative of any of the persons listed in item (1) or (2) of 1 above, items (1) to (5) of 2 above, or 3 above (excluding unimportant persons); or

5.A person who has served as the Company’s Outside Director for a period of more than eight (8) years.

Policy for Election and Dismissal of Executive Officers

In electing Executive Officers responsible for the execution of business tasks, the Nomination Committee will elect individuals who satisfy the following requirements, regardless of individual attributes concerning gender, nationality and race, etc.:

  • An individual of exceptional insight and character;
  • An individual with a strong sense of ethics and a law-abiding spirit; and
  • An individual well-versed in management and the business activities of the Group.

In relation to the election process, the Chief Executive Officer will first draft a proposal for the election of Executive Officers after consulting with relevant officers as necessary. The Chief Executive Officer will then submit a proposal for the election of Executive Officers to the Board of Directors based on the deliberations and responses to inquiries at a Nomination Committee meeting, and Executive Officers will be elected by resolution of the Board of Directors based on a comprehensive review of the candidates’ personal history, achievements, specialist knowledge, and other capabilities.
In addition, if any event occurs that makes an Executive Officer highly ineligible in light of these standards, the Executive Officer shall be dismissed by resolution of the Board of Directors following a review by the Nomination Committee.

Policy on Determining Remuneration for Officers

With the aim of creating an attractive remuneration system for outstanding management personnel that will drive improvements in the Group’s corporate value from a medium- to long-term viewpoint and establishing remuneration governance that will enable the Company to fulfill its accountability to stakeholders, including shareholders, the Company shall establish a policy on determining the remuneration for Directors and Executive Officers (hereinafter, “Officers”) and a remuneration system as follows:

Policy on Determining Remuneration for Officers
  1. A system shall be created that provides competitive standards for remuneration compared with companies of a business category and size similar to the Group
  2. The performance of the functions and duties assumed by each Officer and contributions to the improvement of medium- to long-term corporate value shall be evaluated in a fair and equitable manner, and the evaluation results shall be reflected in remuneration.
  3. In order to have remuneration function as a sound incentive to improve the Group’s medium- to long-term corporate value, remuneration shall consist of basic remuneration, an annual bonus based on performance evaluations in each fiscal year, etc. and stock-based compensation, which is a medium- to long-term incentive linked to medium- to longterm performance and corporate value. The remuneration composition ratio shall be determined appropriately in accordance with one’s job position. Provided, however, that for Directors (excluding those who concurrently hold the posts of Director and Executive Officer), only basic remuneration shall be paid in cash, in light of their function and role of supervising the performance of job duties by the Executive Officers.
  4. An annual bonus shall be determined based on an appropriate evaluation of the performance in each fiscal year as well as the status of the implementation of medium- to long-term management strategies, etc., and reflected in remuneration.
  5. A medium- to long-term incentive shall be stock-based compensation that enables Officers to share awareness of profits with shareholders in order to enhance corporate value from a medium- to long-term viewpoint.
  6. The policies for determining remuneration and the amount of individual remuneration shall be deliberated and determined by the Remuneration Committee composed of a majority of Independent Outside Directors.
  7. Necessary information shall be disclosed actively so that stakeholders including shareholders can monitor the relationship between performance, etc. and remuneration.
Remuneration System for Officers
  1. Directors (excluding those who concurrently hold the posts of Director and Executive Officer)
    The remuneration system for Directors shall be determined so that only basic remuneration shall be paid in cash, taking into consideration an individual Director’s job position, whether he/ she is a full-time/part-time Director, etc. and referring to the standards for remuneration of other companies based on the research of outside experts.
  2. Executive Officers
    The remuneration payable to Executive Officers shall consist of basic remuneration, which is fixed remuneration, and an annual bonus and stock-based compensation, which are performancelinked remuneration. The remuneration composition ratio shall be in line with “Basic remuneration/Annual bonus/Stock-based compensation = 1.0/0.6/0.4” (*In the case where the annual bonus payment rate is 100%) as to the Chief Executive Officer, and for other Executive Officers, the ratio of performance-linked remuneration to basic remuneration shall be set lower than that for the Chief Executive Officer. Further, the standards for remuneration shall be determined by referring to the standards of peer companies (similar-sized companies determined by the Remuneration Committee) based on the research of outside experts.

<Basic Remuneration>

Basic remuneration shall be paid in cash as fixed remuneration in accordance with one’s job position.

<Annual Bonus (Short-term Incentive Remuneration)>

The annual bonus shall be determined based on the evaluation of consolidated operating profit growth rate compared with other companies, as well as a performance evaluation and nonfinancial evaluation, on a single-year basis.
The specific evaluation items shall be as follows:

<<Evaluation Items>>
  1. (i)Current net profit attributable to owners of parent, which is the final result of management and by which common profit awareness is shared with shareholders
  2. (ii)Consolidated operating profit (or, in the case of an Executive Officer in charge of business activities, operating earnings from the relevant business sector), based on which the earning capacity of one’s main job is evaluated
  3. (iii)Non-financial evaluation that evaluates the value of efforts aimed at the improvement of medium- to long-term corporate value, which is less likely to be represented in a short-term performance
  4. (iv)Consolidated operating profit growth rate compared with other companies, as a final adjustment factor to give an impression of growth greater than market growth (comparison with 6 non-ferrous metal companies and similar-sized manufacturing companies)
<<Calculation Formula>>

With the amount to pay when targets are achieved (base annual bonus) as 100%, the amount for each individual is calculated based on the following formula.
Annual bonus = base annual bonus×performance evaluation payment rate(*)

  • (*)The performance evaluation payment rate varies within a range of 0% to 200%, based on the level of performance achievement.
<<Evaluation Weight>>

Based on the evaluations of each portion of 40%, 40% and 20% of the base amount, which depends on one’s job position, in terms of current net profit attributable to owners of parents, consolidated operating profit (or, in the case of an Executive Officer in charge of business activities, operating earnings from the relevant business sector) and non-financial factors, respectively, the annual bonus shall be determined by using consolidated operating profit growth rate as an adjustment factor.

Evaluation Weight

<Stock-based compensation (Medium- to Long-term Incentive Remuneration)(*)>

Stock-based compensation shall be a system that utilizes a trust for the purpose of achieving the sharing of common profit awareness with shareholders, which shall be used as an incentive for the improvement of the medium- to long-term corporate value of the Group and under which Company shares or an equivalent amount converted to money shall be delivered or paid, in accordance with one’s job position, upon retirement from the post of Officer. No performance conditions nor stock price conditions shall be set with respect to the shares to be delivered. Please note that in the case of a non-resident staying in Japan, different treatment may be applied under laws or for any other relevant circumstances.

  • (*)The stock-based compensation system is a system for using a BIP trust to deliver Company shares to Officers, etc. The BIP trust shall award and accumulate points according to the position of Officers, etc. in each fiscal year, for three consecutive fiscal years (initially fiscal 2021 to 2023). After Officers retire, the incentive plan delivers or pays them Company shares or an equivalent amount converted to money as executive remuneration, according to the corresponding number of points that have accumulated.

Remuneration of Directors, Audit & Supervisory Board Members and Executive Officers

Position Total Amount of Remuneration
(Millions of yen)
Remuneration by Type (Millions of yen) Number of Executives (persons)7)
Basic5) Bonus6)
Directors
(of which Outside Directors)
273 3)
(99)
273
99
14
(6)
Audit & Supervisory Board Members 1)
(of which Outside Audit & Supervisory Board Members)
33 4)
(15)
33
(15)
5
(3)
Executive Officers2) 275 275 10
  • Note 1: The Company made the transition from being a Company with a Board of Auditors to a Company with a Nomination Committee upon approval at the 94th Ordinary General Meeting of Shareholders held on June 21, 2019. Accordingly, the total amount of remuneration to Audit & Supervisory Board Members and the number of executives to be paid described on the above table refer to those in the fiscal year under review for Audit & Supervisory Board Members who served between April 1 and June 21, 2019.
  • Note 2: The total amount of remuneration paid to executives who served as Director and Executive Officer concurrently is described in the Executive Officers column.
  • Note 3: It was resolved at the 91st Ordinary General Meeting of Shareholders held on June 29, 2016, that the amount of remuneration to Directors prior to the transition to being a Company with a Nomination Committee should not exceed ¥49 million per month, including remuneration not exceeding ¥6 million per month to Outside Directors.
  • Note 4: It was resolved at the 82nd Ordinary General Meeting of Shareholders held on June 28, 2007, that the amount of remuneration to Audit & Supervisory Board Members prior to the transition to being a Company with a Nomination Committee should not exceed ¥17 million per month.
  • Note 5: Of the basic remuneration for Directors, stock-based remuneration (paying a fixed monthly amount used for purchasing the Company’s shares) is ¥6 million. Of the basic remuneration for Executive Officers, stock-based remuneration is ¥27 million. Based on a resolution at the Remuneration Committee, the Company revised a remuneration system for Directors and Executive Officers from fiscal 2021 onward and has adopted stock-based remuneration using a trust instead of the current stock-based remuneration system.
  • Note 6: It was resolved at the 81st Ordinary General Meeting of Shareholders held on June 29, 2006, that the amount of bonuses for Directors other than Outside Directors prior to the transition to being a Company with a Nomination Committee should not exceed ¥170 million per annum.
  • Note 7: The number of executives to be paid includes three (3) Directors and five (5) Audit & Supervisory Board Members who resigned during the fiscal year under review. There are eleven (11) Directors and ten (10) Executive Officers as of the end of the fiscal year under review. The number of Executives to be paid include those who resigned as Directors and then were appointed as Executive Officers, and those who resigned as Audit & Supervisory Board Members and then were appointed as Directors at the time of the transition to a Company with a Nomination Committee, as well as those who serve as Directors and Executive Officers concurrently. There are overlaps in the total.

Evaluation of the Effectiveness of the Board of Directors

The Company analyses and evaluates the effectiveness of the Board of Directors based on the evaluation by each Director on an annual basis.
The method applied to evaluate the effectiveness of the Board of Directors in fiscal 2019, and a summary of the results of such are outlined below.

Method of Analysis/evaluation

Answers to a questionnaire distributed to all 11 Directors in December 2019 were retrieved. Based on the results of this questionnaire, a review of the effectiveness of the Board of Directors was conducted at a meeting of the Board of Directors held in February 2020, with a resolution reached on evaluations of the effectiveness of the Board of Directors in fiscal 2020 at a meeting of the Board of Directors held in March 2020.
This questionnaire was implemented by revising the questions, taking into consideration the change to a Company with a Nomination Committee after the approval at the 94th Ordinary General Meeting of Shareholders held on June 21, 2019 and other factors.

Fiscal 2020 Questionnaire Items

The core questionnaire items are as follows.

  1. Matters concerning the change to a Company with a Nomination Committee
    • Matters pertaining to the confirmation of the status of achievement of the purpose of such change, supervision of the status of execution of job duties by each of the Nomination Committee, Audit Committee and Remuneration Committee, etc.
  2. Matters considered particularly important for improving corporate value
    • Matters pertaining to management strategies, digital transformation, etc.
  3. Matters pertaining to the effectiveness of management monitoring
    • Matters pertaining to supervision of the reduction of the Strategic Share Holdings, supervision of Group governance, etc.
  4. Matters pertaining to the operation of the Board of Directors
    • Matters pertaining to the composition of the Board of Directors, the frequency of meetings, proposals and discussion materials, etc.
Summary of Fiscal 2020 Evaluation Results

As a result of deliberations by the Board of Directors, the Board of Directors was able to verify that it achieved a sufficient level of effectiveness for fiscal 2020. A summary of questionnaire responses and discussions within the Board of Directors is provided below.

  1. Matters pertaining to the change to a Company with a Nomination Committee
    Although the objectives of the change to a Company with a Nomination Committee, that is, “acceleration of decision making in business execution,” “strengthening of management supervisory functions,” and “improvement of management transparency and fairness”, are in the process of being effectively achieved, the view was raised that improvements would need to be made continually going forward as it has not been long since such change was made. In particular, as for the “strengthening of management supervisory functions,” some opined that there was still room for improvement of the manner of supervision, including the content of reports made by the Executive Officers.
    In view of this feedback, the Board of Directors will consider how to appropriately manage the Company as a Company with a Nomination Committee.
  2. Matters considered particularly important for improving corporate value
    While the view was raised that thorough discussions took place in establishing the Medium-term Management Strategy, some opined that there was still room for improvement of method and content, etc. of reporting so as to effectively fulfill the supervisory function for the management strategies, including the measures taken based on the Medium-term Management Strategy.
    In view of this feedback, the Board of Directors will review the appropriate means of supervising the management strategies, including the Medium-term Management Strategy, etc.
  3. Matters pertaining to the effectiveness of management monitoring
    While the view was raised that in-depth discussions took place with respect to the policy, etc. for reduction of the Strategic Share Holdings, some opinions were raised that the status of reductions to be made hereafter would need to be overseen continually going forward.
    While the evaluation of the supervision of Group governance, etc. had improved compared with last year, and the view was raised that sufficient reports and instructions had been provided, some opinions were raised that further discussions and consideration would be required so as to achieve a higher level of Group governance.
    In view of this feedback, the Board of Directors will look at taking further steps to improve the effectiveness of management monitoring measures.
  4. Matters pertaining to the operation of the Board of Directors
    The evaluation of the proposals to be submitted to the Board of Directors had improved compared with last year, and some opined that it had become organized to a certain extent as a result of the change to a Company with a Nomination Committee and the delegation of authority to the Executive Officers.
    As for the materials for the Board of Directors, while the view was raised that some ideas had been devised therefor and the materials had become more efficient, some opinions were raised that there was still room for improvement as to the volume and the content thereof.
    In view of this feedback, the Board of Directors will review the form that the materials should take in order to facilitate smoother discussions.
    Looking ahead, the Board of Directors will keep making continuous efforts toward further effectiveness improvements, including in relation to the above matters.

Status of Audits

Status of audits performed by the Audit Committee

In addition to attending meetings of the Executive Officer Committee and other important meetings, members of the Audit Committee conduct interviews with Directors, Executive Officers, departments in charge of internal audits and other departments in charge of internal control concerning progress on the execution of their duties, and view important approval documentation, etc. Select members of the Audit Committee investigate the state of business and assets at the Company headquarters and important business sites according to the audit standards and audit plans, etc. of the Audit Committee as established by the Audit Committee, and conduct visiting audits of subsidiaries, etc. as needed, as well as forming a framework for conducting audits of the state of the execution of duties by Directors and Executive Officers. Additionally, the Audit Committee holds regular meetings with Corporate Auditors at major Group companies as part of efforts to enhance coordination of audit systems in line with Group management measures in place. An organization has been set up within departments responsible for internal audits to assist the Audit Committee in its duties concerning such audits performed by members of the Audit Committee.

Status of internal audits

The Internal Audit Dept., which is consisted of the General Manager and other 24 employees as of June 30, 2020, responsible for conducting internal audits works on the instructions of the Chief Executive Officer in cooperation with the Audit Committee to investigate whether internal control systems are configured and applied in an appropriate manner, and audit the effectiveness and efficiency of company operations across the Group, the credibility of financial reports, the state of asset preservation and use, the risk management status, and the state of compliance with laws and regulations, and internal rules and standards, based on internal audit plans approved by the Chief Executive Officer and the Audit Committee.
Further, in addition to conducting joint audits with the Audit Committee after conferring on the audit plans for both at the beginning of the term, the department responsible for internal audits engaged in audits in close cooperation with the Audit Committee, reports to said committee on audit results on a regular basis, and shares this information, etc.
Additionally, the Audit Committee regularly receives reports from independent accountants on audit results, shares this information, and engages in audits in close cooperation with said independent auditors after conferring on the audit plans for both with independent auditors.

Internal Control

Since the establishment of the Internal Control System Management Committee in January 2006, we have taken steps such as developing a set of basic principles for improving the Group’s internal control systems, and ensuring compliance with the requirements to introduce internal control evaluation and disclosure systems in relation to financial reporting, in an effort to ensure compliance with the Companies Act, the Financial Instruments and Exchange Act, and other relevant legislation, and to establish the optimal internal control systems for both Mitsubishi Materials and the Mitsubishi Materials Group companies.
Evaluations conducted during fiscal 2020 found our internal control systems in relation to financial reporting to be sufficient and effective, with no material weaknesses identified. The results were then submitted in June 2020 in the form of an Internal Control Report with the qualified opinion of an auditing firm.

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Toward the Enhancement of Group Governance

Future Group governance enhancement initiatives
In light of the recent quality issues the Group has caused, we recognize the need to further enhance our Group governance, including quality control, and are implementing several measures, with which we are aiming at resolving the concerns with the Group that led to the recent quality issues and avoiding the same situation repeating itself in the future, These measures have been steadily progressing and desired results are obtained.
Up until now, the Committee for Monitoring of Measures to Enhance Governance confirmed and supervised reports on the performance and results of our activities, and this committee was disbanded on May 13, as our efforts over these two years have ensured that the various measures were executed properly and led to the expected results.
Hereafter, the Sustainable Management Office established at the Company will supervise and promote the enhancement of Group governance including quality control. We will also continue the Governance Deliberative Council which reviews and checks the progress of governance plans at each of our business sites.
Business sites will continue autonomous activities regarding quality control and governance enhancement, following the Group policy formulated by organizations such as the Sustainable Management Office and the governance plan approved by the Governance Deliberative Council. As we have done until today, we will continue our efforts to enhance Group governance including quality control, report the status of those efforts to the Board of Directors, and continue monitoring them at Board of Directors meetings. We are committed to ensure that the various measures we have implemented do not become a mere facade, and continue to remind the whole Group of the strong will of management to uphold the SCQDE priority, even when various environmental changes cause difficulty.

Susumu Sasaki, Managing Executive Officer

Future Group Governance Enhancement Initiatives

The Sustainable Management Office established within Mitsubishi Materials will oversee and promote the enhancement of the Group’s governance, including quality control. In addition, the Governance Deliberative Council will continue to meet and discuss the governance plans of sites and inspect their progress, and each site will continue to implement initiatives to enhance governance formulated by the Sustainable Management Office and others. Corporate divisions will continue to support the initiatives taken at each site.
In this way, we will continue our initiatives to enhance the Group’s governance, including quality control, and report the status of the initiatives’ implementation to the Board of Directors.
 

figure

The Target of Group Governance that the Mitsubishi Materials Group Aims to Achieve

figure

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Group Governance Framework Enhancement Measures

We have formulated and executed measures for enhancing the Group governance framework in order to solve issues regarding the governance of the entire Group that were identified based on the background of quality issues and an analysis of their causes. A summary of our activities over the past two years, which we promoted based on advice and monitoring of Outside Directors and outside experts, is indicated below.
Having achieved what we expected from these efforts over the past two years, we have concluded the monitoring of Outside Directors and outside experts. As we move forward, we will continue autonomous efforts.

Group Governance Framework Enhancement Measures
Concrete Measures
FY2019 to FY2020 Performance
Effect/Future Measures
Enhancement of Framework for Discussion, Reporting and Followup of Governance-Related Matters
Improvement of Functions of Management Divisions and their Collaboration with Operating Divisions
  • Development of group governance reporting system
  • Governance Deliberative Council: Held twice a year
  • Operated plan for the conduct of governance and progress reports
  • Identified and handled governance issues and considered resource allocation as a group
  • Improvement of the management/assistance function of the corporate divisions concerning governance-related matters
  • Selected the locations for prioritized support and enhanced support (approx. 20 sites)
  • Strengthened the assistance function of overseas regional management companies and assisted their education function
  • Measures are still needed at small-scale overseas sites with weak governance systems
  • Operation of new risk management system
  • Constructed a new risk management system
  • Conducted training sessions on the new system for managers and people in charge
  • Improved the new system
  • Critical risks over the entire Group have been identified and handled; countermeasures for three of them (labor shortage and equipment deterioration and obsolescence) should be continued
Improvement of Human Resources Training and Encouragement of Active Interaction
  • Governance training for directors
  • All 290 Group directors
  • All 59 newly-appointed Group directors
  • Improved management awareness on roles and responsibilities
  • Enhance communication and improve compliance awareness in all levels
  • Conducted training sessions for CSR managers: Approx. 220 attendants
  • Communication workshop: Approx. 1,000 frontline leaders and approx. 2,500 managers
  • Deployed CSR training sessions and small group compliance activities for the entire Group
  • Published an employee handbook (for the entire Group, both in Japan and overseas)
  • Ensured compliance awareness and a policy of reporting bad news first
  • Despite better communication between Mitsubishi Materials Corporation and Group companies having been achieved, further improvements are needed in the workplace
  • Expand target levels for communication workshop
  • Compliance awareness surveys
  • Conducted once every six months (once a year overseas) approx. 90% of Group employees, or about 20,000 employees, answered
  • Change frequency to once a year and continue to conduct
  • Encouragement of active interaction
  • Conducted personnel exchange of approx. 30 employees between Mitsubishi Materials Corporation and Group companies
  • Expand the scope as exchange is not happening at each level of management
Internal Audit Strengthening
  • Governance audits/quality audits
  • Changed the audit frequency from once every five to six years to once every two years, and conducted for approx. 200 companies
  • Continue to conduct
Studies with a Business Optimization Focus
  • Categorizing Group companies from the perspective of governance
  • Disclosed the concept of business portfolio optimization in the Medium-term Management Strategy
  • Promote optimization according to the concept
MMC