Corporate Governance

Continually revise management systems, strengthen internal controls as part of efforts to fulfill the company’s social responsibilities.

Basic Approach

From the outset, one of Toray Group's managerial principles has been that the purpose of a company is to contribute to society. The Group has developed the Toray Philosophy that incorporates this principle.
The Toray 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 practice sincere and trustworthy management,” and the Corporate Guiding Principles stipulate the Group's commitment to “Acting with fairness, high ethical standards and a strong sense of responsibility while complying with laws, regulations and social norms to earn trust and meet social expectations.”
In establishing its corporate governance structure, the Group seeks to fulfill these philosophies as its basic policy.

Policies

• Toray Philosophy
• Basic Policy on Corporate Governance

Structure

Toray Industries, Inc. operates as a company with a Board of Corporate Auditors and Board of Directors. The Board of Directors, which includes outside directors, decides on the business execution and supervises the execution of duties by the directors. The Board of Corporate Auditors includes outside auditors and independently audits the execution of duties by the directors, separately from the Board of Directors and the executing organization. This framework is designed to secure the transparency and fairness of decisions made by the Board of Directors. In addition, there is a Governance Committee, which serves as a voluntary advisory body to the Board of Directors. The Governance Committee deliberates on all matters relating to corporate governance, enhancing the effectiveness of governance by the Board of Directors.
Toray Group operates in a broad spectrum of business fields at a global level. Business management and decision-making, as well as oversight, require assessment of a wide variety of risks from multiple perspectives based on expertise related to the day-to-day operations of the Group’s 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. Meanwhile, outside directors are elected to the Board to ensure transparency and fairness, to ensure oversight from an even broader perspective, and to obtain appropriate managerial advice from a medium- to long-term perspective. The Board of Directors strives for appropriate balance in the number of members and structure based on laws and regulations, important guidelines and rules, as well as diversity-related perspectives of gender, international experience, work experience, age, and other factors, with members who widely cover the fields of the corporate activities of the Group in terms of knowledge, experience and ability.
The Board of 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. The Governance Committee consists of the chairman, the president, and all outside directors, and an outside director serves as a chairperson. In fiscal 2024, the Board of Directors held 14 meetings, the Board of Corporate Auditors held 11 meetings, and the Governance Committee held 11 meetings¹. The attendance rate for all 14 Board of Directors meetings was 99%.

1. 1 For the attendance of each director, please refer to pages 9-18 of the Notice of the 144th Ordinary General Meeting of Stockholders (1.47MB)PDF. All corporate auditors attended every board meeting. (See page 28 of the Corporate Governance Report (547KB)PDF.)

General Meeting of Stockholders

Independent
Auditor

Board of Corporate
Auditors

Board of Directors

Governance
Committee

Auditing
Department

President

Executive Committee

● Security Trade Administration
　Committee
● Ethics and Compliance
　Committee
● Risk Management Committee,
　etc.

Divisions, departments,
subsidiaries

Departmental committees
and meetings

Decision-making &
Oversight Functions

Business Execution
Functions

Conference Organs

Company Committees

Election

Election

Election

Audit

Report

Cooperation

Audit

Audit

Internal Audit

1. * The skills matrix above is not an exhaustive list of all the knowledge and experience held by the individuals, but presents up to three major skills among those that the Company expects of them to promote management strategies.
2. * Click here for a brief biography of each director and corporate auditor.

CSR Roadmap 2025 Targets and Results

Looking to the Future

Toray Industries’ Board of Directors conducted a “Questionnaire Survey to Evaluate the Effectiveness of the Board of Directors in the Fiscal Year Ended March 31, 2025.” The survey had among 17 respondents, comprising all of the Board members and corporate auditors. Additional interviews were also conducted with eight outside directors and outside corporate auditors to hear their opinions in relation to their responses to the questionnaire. In order to ensure transparency and objectivity, the Company contracted a third-party organization to collect and tabulate the questionnaires and conduct the interviews.
Analysis and evaluation of the effectiveness of the Board of Directors based on the above process concluded that in fiscal 2024, the Company's core values—contributing to society through business activities, people-centric management, and management from a long-term perspective— help raise medium- to long-term corporate value. In addition, the Board of Directors continued discussions concerning improving capital efficiency that is conscious of PBR and returns to stockholders and others as an initiative under “Action to Implement Management That is Conscious of Capital Cost and Stock Price”. It also maintained ongoing dialogue among outside directors and executive officers, and created an environment that supports appropriate risk-taking to respond to the changing business environment. As such, it was determined that the Board had generally fulfilled its roles and responsibilities. With regard to the matter of “diversity on the Board of Directors,” discussions continue to be held on the issue of appointing human resources who will contribute to the realization of the Toray Philosophy, based on the premise of ensuring quality. In terms of “further activating Board of Directors discussions,” specific measures for improvement are being taken in fiscal 2025 and beyond, continuing from fiscal 2024, to further improve the effectiveness of the supervisory function of the Board of Directors.
With respect to the opinions, etc., received from the members of the Board and corporate auditors in the course of evaluating the effectiveness of the Board of Directors, the Governance Committee will hold in-depth discussions based on those opinions with a view to further improving the effectiveness of the Board of Directors, as necessary.
In addition, with respect to the executive compensation system, the proportion of performance-linked bonuses within total compensation has been increased starting in fiscal 2025 to further strengthen incentives for improving business performance. To further enhance value-sharing with shareholders, a restricted stock remuneration plan has also been adopted. From fiscal 2026, which marks the first year of the next Medium-Term Management Program, the Company will consider incorporating non-financial indicators such as sustainability metrics, alongside financial indicators such as ROIC, as evaluation criteria for determining executive compensation.

CSR Activity Report