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Priority Theme 7: Reinforcement of Corporate Governance and Compliance

Priorities

  • Reinforcing corporate governance
  • Further spreading awareness of placing greatest priority on compliance

Stakeholders Affected by Our Activities

Directly: Employees
Indirectly: Local Communities, Shareholders and Investors, Creditors

Reasons for being Priority Issues

Aware of our responsibility to various stakeholders, the Toyo Tires Group has positioned increasing awareness that compliance being the most important issue and maintaining an appropriate management system to ensure transparency in management and pursue fairness within the organization as issues that should be addressed with priority.

Policies

We properly implement the principles of the corporate governance code in order to implement effective corporate governance. We ensure the rights and equality of shareholders, strive to establish appropriate cooperation and dialogue with stakeholders other than shareholders, and work to secure appropriate information disclosure and transparency to achieve this. Taking into consideration its accountability toward shareholders, the Board of Directors properly fulfills its roles and duties to raise profitability, increase capital efficiency, etc., in order to achieve sustainable growth and raise the Company’s corporate value in the medium- and long-term.
As for efforts to strengthen compliance required to embody this philosophy, the Toyo Tires Group compiled not only the “Toyo Tires Group Charter of Corporate Behavior” as corporate action principles applied uniformly across the Group in order faithfully conduct business activities but also the “Toyo Tires Group Code of Conduct” for each director and employee to put the charter into practice. We strive to spread these throughout the Group.

Ideal Status in 2020

Engaging in business activities with integrity while constantly improving management transparency

Goals

We will increase the transparency of management and aim to implement highly specialized, effective corporate governance by spreading awareness of the corporate philosophy and improving compliance levels.

Responsibilities

Corporate Officer of Corporate Headquarters

Activity Promotion System

Corporate Governance System

Corporate governance system of the Toyo Tire & Rubber CO., LTD. consists of the Board of Directors, which is responsible for decision-making and supervision; the Executive Committee, which serves as the decision-making body for business execution; the Special Committees, which act as deliberative and consultative bodies for their respective areas; and the Audit & Supervisory Board, which audits the performance of the Board of Directors and overall business execution. Our corporate governance structure allows these organs to effectively fulfill their respective functions and responsibilities.
The chairperson of the Board of Directors nominates candidates who are judged capable of managing the company in a manner that contributes to an increase in corporate value because of their experience, personality, and knowledge. Candidates are elected by shareholders at the annual general meeting of shareholders.
The chairperson of the Board of Directors also serves as the president, who is responsible for executing operations. At least one-third of directors are outside directors, which ensures the independence of the Board of Directors and encourages and strengthens debate. Regular independent evaluations of the Board of Directors ensure the functionality and effectiveness of the Board of Directors and various committees.
The Company’s corporate officers are prohibited from acts that result or may result in conflicts of interest with the Group.

Governance structure *As of April 2018

Governance structure

Internal Control System

In accordance with the Companies Act in Japan, the basic policy on constructing the internal control system was decided by the Board of Directors, and the internal control system was created in line with that basic policy. The basic policy is reviewed each year to reflect changes in the management environment and to ensure that our internal control system remains effective.
“Reporting Hotlines” have been established and operated as a system to enable employees to directly report and seek advice regarding their concerns, such as compliance issues that could develop into a crisis. In addition, multiple reporting routes have been secured, and a system that makes it easy for required information to rise to the governance organization has been created.
As for post-crisis response, we have established a risk management system that the risk manager (Corporate Officer of Corporate Headquarters) is responsible for as stipulated in the Risk Management Rules. A risk management officer for each material risk that could have a major impact on the Group and stipulates countermeasures for both non-emergency and emergency situations by creating a Risk Management Manual.
When a crisis occurs, the risk management officer convenes the Emergency Response Meeting, decides on the most appropriate response based on the impact the crisis will have on the Group and stakeholders, and resolve the problem.
As for the Group’s subsidiaries and affiliated companies, Affiliated Company Management Rules have been established to strengthen necessary governance in order to increase Group performance and strengthen business while all entities respect the independence of each other. In addition, the managing departments and managers are clearly indicated, operations are streamlined, and management standardized.

Role of Governance Entities in Priority CSR Themes

In order to strengthen governance related to efforts targeting the seven priority CSR themes, the Executive Committee (chairperson: President) has created a system to promote the Group’s sustainability management.
As for identifying the impacts, risks, and opportunities provided by the Group’s sustainable development goals (SDGs) and various priority themes as well as formulating an action plan (orientation, goals and targets), group-wide working groups (WG) established upon approval by the Executive Committee discusses the issues, and then the corporate officer in charge of the Corporate Headquarters compiles the information and reports it to the Executive Committee. WGs for the four themes of “supply chain”, “environment”, “human rights and labor”, and “SDGs” have already been established and discussions are underway. The effectiveness of the processes for each theme discussed by WGs is debated and evaluated when the report is made to the Executive Committee.
Based on the strategy and policy set by the WG, the related special committees develop plans for important activities, analyze the results, and formulate improvement measures, and progress in implementing the plans by the divisions responsible for execution of business operations is reported to the Executive Committee. The corporate officers in charge of the various control departments, which are responsible for the various themes, are in attendance as chairs of the related Special Committees.

Compliance Promotion System

Within our Group, compliance is deemed a matter of the highest priority in management, and the president works as the party in charge of compliance to create and improve the compliance system.
In addition to establishing the Compliance Committee, one of the special committees that debates and examines issues related to promoting compliance, we have a system of compliance officers and are striving to promote compliance, mainly by the chief compliance officer (CCO), compliance officers (CO), and compliance leaders (CL).
The CCO and COs have the authority to investigate, direct (including suspend business operations and shipping) and make compliance related proposals for the entire Group and the department they are responsible for, respectively. We have also established a system in which the CCO reports to and consults with an external profession organization regarding compliance problems that occur. As assistants to COs, CLs are responsible for promoting various activities in the workplace. CLs are also required to report to their supervisors if they become aware of compliance problems and appropriately respond in accordance with the situation.

コンプライアンス体制図

Toyo Tires Group or one of our group companies belongs to the following trade associations:

Grievance Mechanism

  • Reporting Hotline (Creating an Internal Control System)…Targets: Employees, Business Partners
  • Customer Relations Department…Targets: Customers, Local Communities
  • Inquiry Form (on the Website)…Targets: Customers, Shareholders and Investors, NGOs
  • Labor-Management Council Meetings…Targets: Employees
  • Consultation Desk for Compliance with the Antimonopoly Act…Targets: Employees
  • IR meetings…Targets: Shareholder, Investor

Main Resources

  • Total compensation for corporate officers (fiscal 2017)

    Directors (six, excluding outside directors): 179 million yen
    Audit and Supervisory Board members (one, excluding outside members): 17 million yen
    Outside corporate officers (six): 61 million yen

  • Compliance officers (as of the end of April 2018): 24
  • Compliance leaders (as of the end of April 2018): 133

Activities in 2017

ACTION FOR CSR