Corporate Governance and Management Transparency
Continually revise management systems, strengthen internal controls and strive for timely and appropriate information disclosure as part of efforts to fulfill the company's social responsibilities
Fifth CSR Road Map goals
- Enhance management transparency, continually reflect stakeholder feedback in management, and fulfill responsibilities to explain corporate activities
- Perform monitoring based on the Basic Policy for Internal Control Systems, in accordance with Japan's Companies Act
- Establish a group-wide management system for social responsibility, and stimulate initiatives by expanding training and education, etc.
From the outset, one of the Toray Group's managerial principles has been that the purpose of a company is to contribute to society. The Group has developed a Management Philosophy that incorporates this principle.
The Group's Management Philosophy is structured with the following components: the Corporate Philosophy, Corporate Missions, and Corporate Guiding Principles. The Corporate Missions specify the Group's commitment "To provide our shareholders with dependable and trustworthy management," and the Corporate Guiding Principles stipulate the Group's commitment to "Obtaining the trust of society and meeting the expectations by acting fairly while maintaining high ethical standards and a strong sense of responsibility and maintaining transparency in management."
In all of its corporate governance efforts, the Group's basic policy is to live up to these philosophies.
Toray's Management Structure
Toray's Board of Directors is made up of 25 members (two of whom are outside directors). The Toray Group operates in a broad spectrum of business fields at a global level. Business management and decision-making, as well as oversight, require expertise related to the day-to-day operations of Toray worksites. To that end, the composition of the Board of Directors is designed to ensure that members bring a diverse range of perspectives to management oversight and decision-making based on their expertise in the Group's businesses.
The Board of Corporate Auditors (four auditors, two of whom are outside corporate auditors) is entirely independent of the Board of Directors. Based on professional expertise in finance, accounting, and law, as well as an understanding of the Group's businesses, the Board of Corporate Auditors exercises oversight over directors' execution of their duties.
Toray operates a Governance Committee to advise the Board of Directors on important governance issues for the medium- and long-range future. The committee met twice in fiscal 2016 and comprises the chairman, president, and all outside directors, with one of the outside director heading the committee.
Remuneration for directors consists of monthly remuneration, a bonus and stock acquisition rights in the form of stock options; meanwhile remuneration for corporate auditors consists of monthly remuneration. The purpose of this structure is to ensure management transparency and fairness, and to provide enhanced incentives for the improvement of financial performance and corporate value in the short-, medium- and long-term perspectives. Furthermore, the amount of remuneration paid to directors and auditors is determined while taking into account the results of research conducted by a third-party organization to ensure an objective perspective.
Toray Group's Corporate Governance System
Ensuring Proper Business Conduct and Transparency
Percentage of matters subject to disclosure requirements that are disclosed via website
Reporting scope: Toray
Fiscal 2016 target:
Toray operates a Basic Policy on Corporate Governance based on Japan's Corporate Governance Code, and regularly publishes a Corporate Governance Report, which also summarizes the status of internal control systems.
In fiscal 2016, Toray centrally surveyed the internal controls for business operations at each worksite, and established a system for self-inspection and mutual assessment. These changes were aimed at further enhancing risk management awareness at group companies in and outside of Japan, and improving the self-monitoring of internal controls. Toray will continue to comprehensively implement internal controls as a way to ensure legal compliance, efficient job execution, information preservation and management, and exercise control over risk of loss.
Toray employs internal guidelines on information disclosure and strives to secure management transparency, using its own indicators to measure information disclosure. As shown above, Toray reported a 78% achievement rate in fiscal 2016, up two percentage points from fiscal 2015 but short of the target of 85% online disclosure.
Dialogue with Labor Unions
Toray holds meetings of the Central Labor and Management Council twice a year. The meetings are attended by directors at the senior vice president level and higher and labor representatives at the union head level and above. In addition to briefing the union on management information about the Toray Group, the meetings facilitate ongoing dialogue with the union. Resolution of labor issues is undertaken at separate Labor and Management Council meetings. As of March 2017, Toray Workers' Union membership stood at 8,416 workers.