Corporate Governance

Corporate governance structure

The Toyo Tires Group has established an effective corporate governance structure, comprising the “Board of Directors,” which is responsible for managerial decision-making and supervision, the “Executive Committee,” which serves as the supreme decision-making body for business execution, the “Strategic Managing Committee,” which discusses medium- to long-term strategies, investment activities and other important matters, “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 Board of Directors, which comprises seven members (including three outside directors [one female director]), makes decisions on important matters, such as management policies, goals, and strategies, and supervises the execution of duties by the directors.

The Executive Committee comprises 20 members (including four corporate officers concurrently serving as directors). As the supreme decision-making body for business execution, the committee discusses and decides upon important matters. It also receives reports on the status of business execution and on the decisions made by the Board of Directors. Of the matters presented to the Executive Committee, the matters requiring consideration by the Board of Directors will be referred to the Board.

The Strategic Managing Committee comprises the heads of the Administrative Divisions, the Quality Assurance Division and the planning departments of each Business Group Headquarters. Under the chairmanship of the head of the Corporate Planning Division, the Committee discusses medium- to long-term strategies, investment activities and other important matters of the Company and its Group companies. The matters referred to the Strategic Managing Committee will be discussed by the Committee and then submitted, together with the discussion contents, to the Executive Committee for deliberation.

There are six Special Committees: Compliance Committee, Quality Assurance Committee, Safety & Environment Committee, R&D Committee, Financial Risk Management Committee, and Human Resources Committee. Each Committee meets regularly, or as needed, to deliberate and decide on matters that have been delegated by the Board of Directors.

The Audit & Supervisory Board, which comprises four members, three of whom are outside auditors, reports, discusses and decides on important matters concerning audits, checks whether business is executed appropriately, and works to improve the effectiveness of audits.

The outside directors and outside auditors make proposals from an objective and knowledgeable perspective, thereby fulfilling their supervisory and checking functions from an external standpoint.

To further promote business expansion and global business development, it is increasingly important to enhance our corporate governance. We will strive to further strengthen our Group governance, in cooperation with the Group companies in Japan and overseas.

(All the numbers of people indicated above are as of July 1, 2016)

Corporate governance structure (as of April 1, 2016)

Corporate Governance Structure

Establishment and improvement of the internal control system

The Toyo Tires Group has established the Toyo Tires Group Charter of Corporate Behavior and the Toyo Tires Group Code of Conduct as principles of action to ensure that all Group members act in accordance with applicable laws and regulations, the Articles of Incorporation, and ethical standards. We also provide compliance training and education to all directors, officers, auditors and employees to ensure their full understanding and compliance with the Charter and Code of Conduct.

We have also introduced a compliance officer system, under which the Chief Compliance Officer (CCO) is responsible for overseeing all compliance-related matters for the Group and developing and implementing various compliance programs. To establish an effective compliance promotion system, the Compliance Committee has been established as an advisory body to CCO. In addition, Compliance Officers (COs) have been appointed to each organization, and Compliance Leaders (CLs) have been appointed to handle compliance-related matters under instructions from the CO.

We have also reviewed “Reporting Hot Lines,” which have been set up and operated to enable employees to directly report and consult on compliance matters, and made some improvements, including securing multiple reporting routes, to facilitate reporting of compliance-related issues and concerns.

Based on the Companies Act, the basic policy on the development of internal control system has been resolved by the Board of Directors, and in accordance with the basic policy, an internal control system has been established and continuously improved. The basic policy is reviewed each year to reflect changes in the management environment and to ensure that our internal control system remains effective. In August 2015, we reviewed our internal control system in accordance with the partial amendment of the Ordinance for Enforcement of the Companies Act and to reflect recurrence prevention measures of non-compliant seismic isolation rubber issues.

Furthermore, following the publication of the industrial anti-vibration rubber issues, in December 2015 we examined the content of the basic policy and confirmed that it has no deficiencies.

Dialogue with shareholders and investors

Financial results briefing sessionFinancial results briefing session

The Company holds financial results briefing sessions for institutional investors and securities analysts twice a year—at the time of releasing the second-quarter and full-year financial reports. In the briefing sessions, our top executives communicate detailed business information, including financial results, the future business outlook, the business environment, and market trends. In fiscal 2015, in response to high interest in our response to the seismic isolation rubber and industrial anti-vibration rubber issues and their impact on business results, we held a briefing session at every quarterly settlement and provided an in-depth explanation as to what could be disclosed at that time.

In addition, at the end of each quarter, we hold individual interview sessions (as communication opportunities) for institutional investors and securities analysts, in which our IR staff answer questions from them to help deepen their understanding of our Group’s business activities and management. With the increase in the foreign investor shareholding ratio, we receive an increased number of requests from foreign institutional investors. To respond to such requests, we also hold individual interview sessions for foreign institutional investors.

The opinions and requests obtained through these activities are communicated to senior management and relevant departments within the company to enable them to understand stakeholders’ viewpoints and improve communication activities.

Participation in IR seminars for individual investors, organized by securities companies

To increase its recognition in the stock market, Toyo Tire & Rubber Co., Ltd. participated in IR seminar for individual investors organized by securities companies in January 2015. We explained our Group’s business strategies and management policies to about 70 individual investors attended. Following the explanation session, we answered various questions from them in a Q&A session. We are actively considering the participation in IR events to increase individual investors’ understanding and interest in our Group.

Strengthening of the risk management system

In addition to appointing a Chief Risk Management Officer to oversee the risk management of the entire Group, the Toyo Tires Group has established the Risk Management Committee, under which subcommittees and special committees are organized to respond to each specific area of risk.

We have also established the Risk/Crisis Management Rules, in which the scope of crisis events that the Group should manage is clearly specified as those that are major. In accordance with the Risk/Crisis Management Manual, we are working to develop manuals for individual major crisis events, describing measures and action to be taken in ordinary times and during an emergency.

Emergency response system (for Group-wide emergency situations)

Emergency Response System (for Group-wide emergency situations)

BCP development and BCM training

The Toyo Tires Group promotes the development of business continuity plans (BCPs) and conducts business continuity management (BCM) training sessions in a systematic and comprehensive manner.

In fiscal 2014, the development of BCPs was completed for 17 operations bases, including all production bases, and from fiscal 2015 BCM training sessions have been conducted to verify the effectiveness of BCPs. The Kuwana Plant conducted a BCM training session based on a scenario in which a huge Nankai Trough earthquake occurs during the daytime on a weekday, causing human suffering, collapse of plant buildings, and damage to equipment. In the training session, on the assumption that damage information kept coming in from the worksites in rapid succession, each team practiced the emergency response procedures. Specifically, after receiving information, each team discussed, involving all members, how to respond, and reported to the Emergency Headquarters for instructions.

In future, we will hold BCP training regularly at each business base. By incorporating the problems and issues that have been identified through training sessions into the procedure manuals and checklists, we will strive to improve the effectiveness of BCPs and to strengthen our capability to respond to emergency situations.

BCM training at Kuwana Plant

Information security sfforts

In accordance with our information security policy and information security management regulations, we implement various measures to prevent information leakage, computer virus infections that can lead to computer system failure, and other information security incidents. We continually strive to raise employee awareness, to develop a system for preventing information leakage, and to ensure compliance with information security guidelines and automatic application of security update programs, in order to maintain and continuously improve the level of information security so as to effectively respond to changes in the environment.

As part of internal awareness-raising programs, we provide e-learning training to raise employee awareness of information security.