Mitsubishi Corporation

Approaches to Corporate Governance
- Mitsubishi Corporation's Corporate Governance System Supporting Sustainable Growth

Basic Policy

Mitsubishi Corporation's corporate philosophy is enshrined in the Three Corporate Principles. Through corporate activities rooted in the principles of fairness and integrity, Mitsubishi Corporation strives to continuously raise corporate value. Mitsubishi Corporation believes that by helping to enrich society, both materially and spiritually, it will also meet the expectations of shareholders, customers, and all other stakeholders.
In order to achieve these goals, Mitsubishi Corporation recognizes strengthening corporate governance on an ongoing basis as its important subject concerning management since it is a foundation for ensuring sound, transparent and efficient management. Mitsubishi Corporation, based on the Audit & Supervisory Board Member System, is thus working to put in place a corporate governance system that is even more effective. This includes strengthening management supervision through such measures as appointing Outside Directors and Outside Audit & Supervisory Board Members who satisfy the conditions for the conditions for independence, and establishing advisory bodies to the Board of Directors where the majority of members are Independent Directors, Independent Audit & Supervisory Board Members and other experts from outside Mitsubishi Corporation. At the same time, Mitsubishi Corporation uses the executive officer system etc. for prompt and efficient decision-making and business execution.

Corporate Governance Framework (as of June 24th, 2022)

Board of Directors and Board of Directors' Advisory Bodies

Board of Directors

The Board of Directors is responsible for making decisions concerning important management issues and overseeing business execution. In-house Directors utilize their rich experience of working within Mitsubishi Corporation, and Independent Directors utilize their practical, objective, and professional perspectives to ensure appropriate decision-making and management oversight.

Composition and Size of the Board of Directors and the Policy and Process for Appointing Nominated Directors

Composition and Size The composition and size of the Board of Directors is appropriately determined to help it maintain transparent, fair, timely and decisive decision-making and carry out effective oversight, with one third or more being made up of Independent Directors.
Appointment Policy To ensure decision-making and management oversight are appropriate for Mitsubishi Corporation which is involved in diverse businesses and industries in a wide range of fields, and from the perspective of ensuring diverse standpoints, several Directors are appointed from both within and outside Mitsubishi Corporation with the depth of experience and high levels of knowledge and expertise needed for fulfilling their duties.
In house Directors In addition to Chairman of the Board and President & CEO, Mitsubishi Corporation’s in-house Directors are elected from Executive Officers (Senior Executive Vice Presidents & Executive Vice Presidents) responsible for companywide management so that they can fully leverage their abundant business experience to ensure appropriate decision making and robust management supervision by the Board of Directors.
Independent Directors Independent Directors are appointed from those who possess a practical perspective of highly experienced company officers and those who possess an objective and professional perspective with a deep insight on global dynamics and socio-economic trends. These individuals thus contribute to appropriate decision making and robust management supervision by the Board of Directors as they bring diverse perspectives into its deliberations.
Appointment Process In line with policies described above, the President & CEO proposes a list of nominated Directors, which is then deliberated at the Governance, Nomination and Compensation Committee and resolved by the Board of Directors before being presented at the Ordinary General Meeting of Shareholders.

Skills Matrix of Directors and Audit & Supervisory Board Members

Directors and Audit & Supervisory Board Members are selected in light of their experience, knowledge, expertise and overall character. At the Board of Directors, these individuals deliberate based on diverse perspectives to ensure appropriate decision making and robust management supervision. The areas of experience, knowledge and expertise judged to be important for MC’s Board of Directors and the reasons for their adoption are shown below. The matrix below shows the areas in which each Director and Audit & Supervisory Board Member has experience, knowledge or expertise.

(Notes)
  • The table below does not represent all the experience, knowledge or expertise of the Director or Audit & Supervisory Board Members.
  • The applicability of each skill area in the table below is judged based mainly on the individuals’ experience in former positions, their current positions and their formal qualifications.

Board of Directors' Advisory Bodies

Governance, Nomination and Compensation Committee

The committee meets at least three times a year and a majority of its members are Independent Directors and Independent Audit & Supervisory Board Members. It deliberates on matters related to governance, nomination and compensation.

<Main Discussion Themes>
  • Policies on securing conformity with the Revised Corporate Governance Code
  • Requirements for the President and CEO and basic policies concerning the appointment and dismissal of the President and CEO, as well as personnel proposal of the President and CEO*
  • Review of the remuneration package including the policy for setting remuneration and appropriateness of remuneration levels and composition
  • Evaluation of the effectiveness of the Board of Directors
<Composition of Committee (*Committee Chairman)> (as of June 24, 2022)
Outside members (5):
  • Akitaka Saiki, Independent Director
  • Tsuneyoshi Tatsuoka, Independent Director
  • Shunichi Miyanaga, Independent Director
  • Sakie Akiyama, Independent Director
  • Mari Sagiya, Independent Director
Inhouse members (3):
  • Takehiko Kakiuchi,* Cairman of the Board
  • Katsuya Nakanishi, Director, President & CEO
  • Hajime Hirano, Full-time Audit & Supervisory Board Member

President's Performance Evaluation Committee

The President's Performance Evaluation Committee has been established as a subcommittee to the Governance, Nomination and Compensation Committee, comprising the same Chairman and Independent Directors as the parent committee to deliberate the assessment of the President's performance. The President is not a member.

International Advisory Committee

The committee comprises overseas experts of various backgrounds, including government, business and academia, and provides recommendations and advice from an international perspective.

<Main discussion themes>
  • Impact of the COVID-19 pandemic by country (Europe, the United States, China, emerging countries)
  • Geopolitics stemming from U.S.-China relations (Supply chain reshuffling, the Taiwan problem)
  • Global challenges and trends (Climate change, digital currency)
<Composition of Committee (*Committee Chairman)> (as of June 24, 2022)
Overseas members (6):
  • Ambassador Richard Armitage, Former United States Deputy Secretary of State (U.S.A.)
  • Professor Joseph S. Nye, Harvard University Distinguished Service Professor (U.S.A.)
  • Mr. Ratan N. Tata, Chairman, Tata Trusts (India)
  • Mr. George Yeo, Former Chairman of Kerry Logistics Network (Singapore)
  • Mr. Niall FitzGerald, KBE, Former CEO & Chairman, Unilever (Ireland)
  • Mr. Jaime Augusto Zobel de Ayala II, Chairman, Ayala Corporation (The Philippines)
Japanese members (5):
  • Takehiko Kakiuchi,* Chairman of the Board
  • Katsuya Nakanishi, Director, President & CEO
  • Yasuteru Hirai, Director, Executive Vice President
  • Akitaka Saiki, Independent Director
  • Tsuneyoshi Tatsuoka, Independent Director

Audit & Supervisory Board

The Audit & Supervisory Board comprises all of the Audit & Supervisory Board Members responsible for auditing the decision-making processes and management performances of Directors in compliance with the Companies Act and other laws / regulations as well as Mitsubishi Corporation's Articles of Incorporation and internal rules / regulations. Full-time Audit & Supervisory Board Members and Independent Audit & Supervisory Board Members ensure the soundness of the management by executing audits with abundant working experience at the Company, and with various experiences in their particular field as well as a neutral and objective perspective, respectively. In addition to resolutions of matters required by law and other important issues, the Audit & Supervisory Board strives to enhance information-sharing among the Members through briefings on key matters and reporting status on the auditing activities of each of the Members.

Composition and Size of the Audit & Supervisory Board and the Policy and Process for Appointing Nominated Audit & Supervisory Board Members

Composition and Size In principle, the total number of Audit & Supervisory Board Members is 5, with more than half their number being made up of Independent Audit & Supervisory Board Members.
Appointment Policy To ensure Mitsubishi Corporation's sound business development and improve its social credibility through audits, several Audit & Supervisory Board Members are appointed from within and Independent Mitsubishi Corporation with the depth of experience and high level of expertise needed for conducting audits.
Full-Time Audit & Supervisory Board Members Full-Time Audit & Supervisory Board Members are appointed from those with knowledge and experience in corporate management, finance, accounting, risk management, or other areas.
Independent Audit & Supervisory Board Members Independent Audit & Supervisory Board Members are appointed from those with rich knowledge and experience across various fields.
Appointment Process Having consultations with the Full-Time Audit & Supervisory board Members, the President & CEO creates a proposal for nominated Audit & Supervisory Board Members, which is then deliberated by the Governance, Nomination and Compensation Committee and approved by the Audit & Supervisory Board before being resolved by the Board of Directors and presented at the Ordinary General Meeting of Shareholders.

Main Activities of Audit & Supervisory Board Members (Audit & Supervisory Board)

  1. 1. Dialogue with Executive Officers

    Opportunities are created for all Audit & Supervisory Board Members, including the Independent Audit & Supervisory Board Members, to engage in dialogues with the Chairman of the Board, President and CEO, Corporate Functional Officers, Business Group CEOs, Business Division COOs, General Managers of Administrative Department, General Manager of Auditing Department, General Manager of the Corporate Strategy & Planning Department and General Managers of the Corporate Staff Section.

  2. 2. Attendance at Important Meetings

    Besides the Audit & Supervisory Board meetings, Full-time Audit & Supervisory Board Members attend meetings of major internal management bodies, including Board of Directors, Governance, Nomination and Compensation Committee, Executive Committee, and Business Strategy Committee, and provide opinions as necessary. Besides the Audit & Supervisory Board meetings, the Independent Audit & Supervisory Board Members attend meetings of the Board of Directors after being briefed on discussions in the Executive Committee and lower conference bodies, and provide opinions as necessary.

  3. 3. Onsite Audits and Observations

    Amid ongoing restrictions on movement due to the COVID-19 pandemic, the Audit & Supervisory Board fulfilled its duties while adapting to the situation by enhancing onsite audits and observations in Japan and conducting remote audits of overseas sites using a variety of tools. In the fiscal year ended March 31, 2022, the Audit & Supervisory Board Members met with the CEOs and executive officers of three MC Group companies in three locations overseas and 15 domestic MC Group companies, as well as the regional chiefs of 11 overseas and domestic offices. The Audit & Supervisory Board Members reported on the results of their onsite audits to the Chairman of the Board, the President and CEO, and relevant executive officers.

  4. 4. Reinforcement of Group Corporate Governance

    In addition to dialogues with the CEOs and other executive officers of the MC Group companies, opportunities are arranged for the exchange of information every quarter with the Audit & Supervisory Board Members of 39 major Group companies in Japan, and Audit & Supervisory Board Members of the MC Group companies also hold subcommittees to provide opportunities to share information and exchange opinions. We also provide assistance in training for those who will be assigned to the MC Group companies as full-time Audit & Supervisory Board Members. We will continue working to strengthen the Group corporate governance through regular monitoring.

  5. 5. Enhancing the Effectiveness of the Audit & Supervisory Board and Its Members

    To increase the effectiveness of the audits performed by Audit & Supervisory Board Members, in the year ended March 31, 2022, we further enhanced the reviews of the activities of the Audit & Supervisory Board conducted in previous years. Specifically, the secretariat held mid-year and year-end hearings with each of the Audit & Supervisory Board Members to identify insights about overall auditing activities and things to improve in the coming year respectively. The results were shared and discussed among the Audit & Supervisory Board Members. At these hearings, the participants also discussed the progress of auditing in the key audit areas designated at the start of the fiscal year, and insights from these discussions were then fed back to executives. Through such new processes and other means, we sought to improve auditing methods.

Selection Criteria for Independent Directors and Independent Audit & Supervisory Board Members

To make the function of Independent Directors and Independent Audit & Supervisory Board Members stronger and more transparent, Mitsubishi Corporation has set forth Selection Criteria for Independent Directors and Independent Audit & Supervisory Board Members as follows, after deliberation by the Governance & Compensation Committee, which is composed with a majority of Independent Directors, Independent Audit & Supervisory Board Members and Outside Members.

<Selection Criteria for Independent Directors>

  1. Independent Directors are elected from among those individuals who have an eye for practicality founded on a wealth of experience as corporate executive officers, as well as an objective and specialist viewpoint based on extensive insight regarding global conditions and social and economic trends. Through their diverse perspectives, Independent Directors help ensure levels of decision-making and management oversight appropriate to the Board of Directors.
  2. To enable Independent Directors to fulfill their appointed task, attention is given to maintain their independency*; individuals incapable of preserving this independency in effect will not be selected to serve as Independent Directors.
  3. Mitsubishi Corporation's operations span a broad range of business domains; hence there may be cases of conflict of interest stemming from business relationships with firms home to a corporate executive officer appointed as Independent Directors. Mitsubishi Corporation appropriately copes with this potential issue through the procedural exclusion of the director in question from matters related to the conflict of interest, and by preserving a variety of viewpoints through the selection of numerous Independent Directors.

<Selection Criteria for Independent Audit & Supervisory Board Members>

  1. Independent Audit & Supervisory Board Members are selected from among individuals who possess wealth of knowledge and experience across various fields that is helpful in performing audits. Neutral and objective auditing, in turn, will ensure sound management.
  2. To enable Independent Audit & Supervisory Board Members to fulfill their appointed task, attention is given to maintain their independency*; individuals incapable of preserving this independency will not be selected to serve as Independent Audit & Supervisory Board Members.

(Note) Independency for the purpose of Selection Criteria for Outside Directors and Outside Audit & Supervisory Board Members

To make a judgment of independence, Mitsubishi Corporation checks if the person concerned meets the conditions for independent directors and independent auditors as specified by the Tokyo Stock Exchange, Inc., and whether the person concerned is currently any of the following items (1) to (7) and whether they have been at any time in the past 3 fiscal years.

(1) A major shareholder of Mitsubishi Corporation (a person or entity directly or indirectly holding 10% or more of the voting rights), or a member of business personnel of such shareholder (*1).

*1A member of business personnel refers to a managing director, corporate officer, executive officer, or other employee of a company (Hereinafter the same).

(2) A member of business personnel of a creditor of Mitsubishi Corporation exceeding the threshold set by Mitsubishi Corporation (*2).

*2Creditors exceeding the threshold set by Mitsubishi Corporation refer to creditors to whom Mitsubishi Corporation owes an amount exceeding 2% of Mitsubishi Corporation's consolidated total assets.

(3) A member of business personnel of a supplier or a customer of Mitsubishi Corporation exceeding the threshold set by Mitsubishi Corporation (*3).

*3Suppliers or customers exceeding the threshold set by Mitsubishi Corporation refer to suppliers or customers whose transaction amounts with Mitsubishi Corporation exceed 2% of Mitsubishi Corporation's consolidated revenues.

(4) A provider of professional services, such as a consultant, lawyer, or certified public accountant, receiving cash or other financial benefits from Mitsubishi Corporation, other than directors' or audit & supervisory board members ' remuneration, where the amount exceeds ¥10 million per fiscal year.
(5) A representative or partner of Mitsubishi Corporation's independent auditor.
(6) A person belonging to an organization that has received donations exceeding a certain amount (*4) from Mitsubishi Corporation.

*4Donations exceeding a certain amount refer to donations of more than ¥20 million per fiscal year.

(7) A person who has been appointed as an Outside Director or Outside Audit & Supervisory Board Member of Mitsubishi Corporation for more than 8 years.

If a person is still judged to be effectively independent despite one or more of the above items (1) to (7) applying, Mitsubishi Corporation will explain and disclose the reason at the time of their appointment as an Independent Director or Independent Audit & Supervisory Board Members.

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