Advisory Bodies to the Board of Directors(after 2024 Ordinary General Meeting of Shareholders held in June 2024)
Since the scope and content of matters to be deliberated at the Governance, Nomination & Compensation Committee have expanded and deepened over the years, the Governance, Nomination & Compensation Committee will be split into two committees, the Corporate Governance and Nomination Committee and the Compensation Committee, in order to enhance deliberations.
Corporate Governance and Nomination Committee
For the purpose of strengthening corporate governance on an ongoing basis, enhancing the objectivity and transparency of the nomination process undertaken by the Board of Directors, and ensuring the fairness of this process, the Corporate Governance and Nomination Committee shall deliberate and monitor the matters below with the participation of all Independent Directors.
Main Discussion Themes (Plan)
- Basic framework and fundamental policy of corporate governance
- Matters about the appointment and dismissal of the Board of Directors
- Matters about the nomination etc.
Composition of the Committee (As of July 1, 2024)
- Independent Members(7):
Shunichi Miyanaga, Independent Director
Sakie Akiyama, Independent Director
Mari Sagiya, Independent Director
Mari Kogiso, Independent Director
Tsuneyoshi Tatsuoka, Independent Audit & Supervisory Committee Members
Rieko Sato, Independent Audit & Supervisory Committee Members
Takeshi Nakao, Independent Audit & Supervisory Committee Members - In-house members (3):
Takehiko Kakiuchi,* Chairman of the Board
Katsuya Nakanishi, Director, President & Chief Executive Officer
Mitsumasa Icho, Full-time Audit & Supervisory Committee Member
(notes)
*Percentage of Independent Outside Directors among Corporate Governance and Nomination Committee:70% (7/10)
Compensation Comittee
For the purpose of enhancing the objectivity and transparency of the policy for setting Directors’ and Executive Officers’ remuneration and the remuneration amount, both determined by the Board of Directors, and ensuring fairness throughout the determination process, the Compensation Committee shall deliberate, monitor and/or determine the matters below.
Main Discussion Themes (Plan)
- Fundamental policy for the remuneration for Directors and Executive Officers: the policy for setting Directors’ and Executive Officers’ remuneration, the appropriateness of remuneration levels and composition, and the operation status of remuneration system
- The evaluation of sustainability factors tied into Executive Officers’ remuneration
- The evaluation of President’s performance
Composition of the Committee (As of July 1, 2024)
- Independent members (3):
Sakie Akiyama, * Independent Director
Mari Kogiso, Independent Director
Tsuneyoshi Tatsuoka, Independent Audit & Supervisory Committee Members - In-house members (1):
Takehiko Kakiuchi, Chairman of the Board
(notes)
*Percentage of Independent Outside Directors among Compensation Committee:75% (3/4)
International Advisory Committee
The Committee comprises overseas experts from various backgrounds, including industry, government, and academia, and provides recommendations and advice from an international perspective through exchange of opinions and discussions on the external environment with a focus on world affairs.
Main Discussion Themes (FY2024)
- Geopolitical Situation
- Interventionism
- Climate / Energy
International Advisory Committee
Please check the link below for data on International Advisory Committee.
Overseas Members(5) (As of September 30, 2024)
Domestic members(4) (As of September 30, 2024)
Takehiko Kakiuchi* (Chairman of the Board),
Katsuya Nakanishi (Director, President & Chief Executive Officer),
Kotaro Tsukamoto (Director, Senior Executive Vice President),
Tsuneyoshi Tatsuoka (Independent Director)
Initiatives to Enhance the Effectiveness of the Board of Directors
To ensure that Directors (excluding Directors who are Audit & Supervisory Committee Members) and Directors who are Audit & Supervisory Committee Members are able to perform their monitoring function and audit functions adequately, the Board of Directors’ Office and the Audit & Supervisory Committee’s Office (herein referred to collectively as the “Support Offices”) have been established, and have been providing necessary information and support appropriately and in a timely manner for Directors (excluding Directors who are Audit & Supervisory Committee Members) and Directors who are Audit & Supervisory Committee Members to perform their own duties.
For Independent Directors, the Support Offices provide below measures to ensure that they can effectively participate in the discussion fully and to enhance the Board’s monitoring function.
Briefing Sessions Before Board of Directors’ Meetings
Prior to each Board of Directors meeting, opportunities are created for the management executives of the Corporate Staff Section and Business Groups to provide explanatory summaries of the agenda items for which they are responsible to Independent Directors in order to facilitate substantive deliberations at the meetings. The sessions are also utilized to appropriately share timely information that helps enhance deliberations.
Overview of the session (FY2023)
- Times of sessions :13 times
- Length of sessions : 2.5 to 3 hours for a meeting (total : 33 hours)
Meetings of Independent Directors
Meetings are held regularly to provide a forum for free discussion amongst Independent Directors on a wide range of topics.
Main discussion themes (FY2023*)
- Items Discussed at the Business Strategy Committee
- Human Capital and Work Styles
- Audit and Activities of the Audit & Supervisory Board Members
- Initiatives for Next-Generation Energy
Discussion between Independent Members of the Board and Officers and Employees
MC has set up dialogues with the Business Group CEOs and Business Division COOs, small-group discussions with Executive Vice Presidents, and dialogues with mid-level and young employees to strengthen interaction between Independent Directors and officers and employees.
Dialogues and Site-Visits to Business Subsidiaries and Affiliates
For further understanding of MC’s wide-ranging businesses, every year, the Independent Directors visit business sites of subsidiaries and affiliates and hold dialogues with their management and executives. In the fiscal year ended March 31, 2024, Independent Members of the Board visited Quellaveco copper mine in Peru, which develops copper as a key to the transition to a decarbonized society and salmon farming sites of Cermaq, which is one of the major growth drivers of Food Industry Group. Through dialogues with the top managements of those companies, the visitors confirmed the business strategies and progresses, including initiatives aimed at harmony with local communities, environmental considerations and status of operational digitalization. Dialogues were also held with mid-career and younger employees stationed in the countries.
- Site visit to Quellaveco copper mine(October, 2023)
- Site visit to salmon farming sites of Cermaq Chile S.A.(October, 2023)
Orientation upon Assumption of Office
In order to deepen the understanding regarding the Company of new Independent Directors, orientation sessions are held by each division and group.
Evaluation of the Effectiveness of the Board of Directors
Initiatives on Corporate Governance
Based on theBasic Policy of Corporate Governance, MC is working to strengthen corporate governance on an ongoing basis, thus it is implementing all the principles of the Japan’s Corporate Governance Code.
(For more information, please see the Corporate Governance Report on MC’s website.)
MC’s Stance on Acquisition, Holding, and Reduction in Listed Stocks
MC may hold shares, acquired for purposes other than pure investment, as a means of creating business opportunities and building, maintaining and strengthening business and partner relationships. When acquiring these shares, MC confirms necessity of its acquisition based on the reason and economic rationale of the purchase in accordance with internal rules. Also, MC annually reviews the rationality of continuing to hold these shares at the Board of Directors and aims to reduce holdings of shares with decreased reason.
[ Verification policy for holding individual shares ]
The Board of Directors verifies all of the listed shares held by MC from the perspectives of both economic rationale and qualitative reason of continuing to hold them every year.
The economic rationale is confirmed by whether or not the related earnings from each share such as dividends and related business profits on transactions, exceed MC’s target capital cost (Weighted Average Cost of Capital) for the market price of each individual share.
The qualitative significance is confirmed by the achievement or status of progress of the expected purpose for holding the share, etc.
[ Reduction in holdings of listed stocks ]
Based on the results of the verification process described above, In the Fiscal Year ended March 31, 2024, MC sold approximately 66 billion yen of its shareholdings (including 19.6 billion yen in deemed holding shares), a decrease of approximately 10% from the previous fiscal year.
(Market value basis and including deemed shareholdings)
[ Matters verified by the Board of Directors ]
Verification was conducted by the Board of Directors for all listed shares held by MC as of March 31, 2024 (market price was approximately 0.7 trillion yen). As a result of verification from the perspectives of both economic rationale and qualitative reason of holding them, numerous shares were identified as candidates for reduction due to a decreased importance of the expected purpose and reason for holding them, etc.
[ Stance on Exercising Voting Rights Relating to Listed Stocks ]
MC attaches great importance to dialogue and communication with its investment destinations through various channels, aiming to create business opportunities and build, maintain and strengthen businesses and partner relationships, and from the perspective of continuous increase of corporate value of MC and these companies. MC considers exercising voting rights to be one of the important approaches for the dialogue and communications with its investment destinations. For this reason, when exercising voting rights relating to an investment destination including the listed shares acquired for purposes other than for pure investment purposes, the department responsible for the oversight of the company reviews its business conditions (earnings, capital efficiency, etc.) from both quantitative and qualitative standpoints in accordance with internal rules. These rules stipulate matters to be considered, etc., when determining whether to vote for or against proposals such as appropriation of surplus, election of Directors and Audit & Supervisory Board Members, and revision of executive remuneration. Then MC exercises its voting rights appropriately for individual matters for resolution. Furthermore, with regard to the proposals for the election and dismissal of Independent Directors and Independent Audit & Supervisory Board Members of listed subsidiaries, MC’s internal rules also stipulate that their independence from MC is to be examined before exercising voting rights.
MC's Pension Management Structure
In an effort to utilize personnel with experience in markets and investment, those responsible for pension management are appointed from the Finance Department of MC and serve concurrently as employees of the Mitsubishi Corporation Pension Fund. The basic policy and management guidelines for safe and efficient management of the reserve are drafted and issued to institutions contracted to undertake management, which are then monitored constantly. Marked with the responsibility for autonomous allocations it holds, the fund has announced its acceptance of Japan’s Stewardship Code and requires the institutions entrusted with management of the assets to perform stewardship activities.
Board Policies and Procedures in the Appointment/Dismissal of the Management Executive and the Nomination of Directors and Audit & Supervisory Committee Members Candidates
For the appointment of the President and CEO, the Corporate Governance and Nomination Committee, where Independent Directors have a majority (7 Independent Directors out of 10 Committee Members), shall deliberate and review the requirements for the roles associated with this position and the basic policy on appointment, as well as candidates, then the Corporate Governance and Nomination Committee shall propose appointments to the Board of Directors, which shall finally be resolved by the Board of Directors. The Board of Directors shall also deliberate and determine appointments of Executive Officers and their respective duties.
Based on the appointment policy, the President and CEO shall prepare a proposal for the election of candidates for Directors (excluding Directors who are Audit & Supervisory Committee Members), which shall be deliberated by the Corporate Governance and Nomination Committee, and shall be submitted to the general meeting of shareholders after being resolved by the Board of Directors as a proposal for the election of Directors (excluding Directors who are Audit & Supervisory Committee Members).
The President and CEO, in consultation with Full-time Audit & Supervisory Committee Members, based on the appointment policy, shall prepare a proposal for the appointment of candidates for Directors who are Audit & Supervisory Committee Members. After deliberation by the Corporate Governance and Nomination Committee, and with the consent of the Audit & Supervisory Committee, a proposal for the election of candidates for Directors who are Audit & Supervisory Committee Members shall be resolved by the Board of Directors and submitted to the general meeting of shareholders.
[ President and CEO selection process in April, 2022 ]
Since Former President Kakiuchi took office in April 2016, the Governance, Nomination & Compensation Committee, an advisory committee to the Board of Directors, carefully implemented a successor selection process, including the discussion of the requirements for the President. In addition, Independent Directors and Independent Audit & Supervisory Board Members and successor candidates engaged in thoroughgoing dialogue and discussion outside of committee meetings. This process led to the selection of President Nakanishi.
Status of Persons who have retired as Representative Directors and President, etc
MC appoints, as necessary, retired executives (President and CEO) to the position of Corporate Advisory. Currently, one Corporate Advisory is appointed. The Corporate Advisory does not serve as a Director. He does not participate in internal management meetings and is not involved in the Company’s decision-making process. He mainly engages in external activities that carry high social significance based on requests to the Company.
With effect from July 2020, the Honorary Chairman executes his duties on a part-time basis, with no remuneration.
Policy for Dialogue with Shareholders
(a) Basic Policy
In addition to the ordinary general meeting of shareholders, MC establishes various types of informational meetings and interactive forums, to actively engages in dialogue with shareholders and investors for the purpose of deepening their understanding of MC’s corporate philosophy and principles, fundamental management policies, targets and strategies, and others.
(b) Persons in Charge and Promoting System
To strengthen communication with shareholders and investors, MC has appointed a Chief Stakeholder Engagement Officer (CSEO) as of April 2023. The CSEO manages the Corporate Communications Department, the Sustainability Department, and the Investor & Shareholder Relations Department to meet the growing needs of stakeholders in an integrated manner. The Investor & Shareholder Relations Department is responsible for dialogue with shareholders and investors, and serves as a link between the Business Groups and the Corporate Staff Section.
With respect to information disclosure, MC prepares documents in line with the Financial Instruments and Exchange Act and Companies Act, among others, and discloses information in a timely and appropriate manner in line with the rules defined by the Financial Instruments Exchange. In addition, MC has established a sub-committee of the Executive Committee called the Disclosure Committee that deliberates and confirms the appropriateness of the content included in the Annual Securities Report and related disclosure documents.
(c) Policy of Dialogue with Shareholders and Investors and Results of Activities
To continually increase corporate value over the medium to long-term, MC promotes constructive communication with shareholders and investors as follows.
i. Ordinary General Meeting of Shareholders
MC shall position the general meeting of shareholders as MC’s highest decision-making body and the place to communicate with shareholders constructively. In addition to proactively disclosing information via the notice of general meeting of shareholders (issued in both Japanese and English), MC shall fulfill its accountability to MC’s shareholders by respectfully responding to the questions they raise at the general meeting of shareholders.
ii. Communication with Individual Investors
MC holds regular meetings for individual investors.
<Activities Conducted in the Fiscal Year Ended March 31, 2024>
Individual investor briefing sessions: 2 times (of these, 1 included the participation of the President, CFO, etc.)
In addition to the above, short explanatory videos are created for individual investors and made available on MC’s website as well as the websites of securities firms.
iii. Dialogue with Institutional Investors
In addition to quarterly financial results briefings, MC hosts briefing sessions and meetings for domestic and foreign institutional investors. In addition, one-off briefings and investor days called “MCSV Creation Forum”.
<Activities Conducted in the Fiscal Year Ended March 31, 2024>
Financial results briefings*: 4 meetings
MCSV Creation Forum*: 5 meetings (4 business briefing sessions, 1 ESG Briefing)
IInterviews with domestic and foreign institutional investors and analysts: approximately 600 meetings (of these, approximately 30 included the participation of the President and CEO, CSEO, etc.)
Interviews with domestic and foreign institutional investors: approximately 40 meetings (of these, 3 included the participation of the CSEO, Independent Directors, etc.)
-
*
Depending on the purpose and content, Independent Directors, the President and CEO, CSEO, CFO, CAO, and Business Group CEOs participated.
(d) Feedback to the Management and Control of Insider Information
If MC maintains double-digit ROE, one of the quantitative targets of Midterm Corporate Strategy 2024, then ROE will exceed the cost of equity. MC believes that recent stock prices reflect the expectation that medium to long-term ROE will exceed 10%. In order to achieve the quantitative targets in Midterm Corporate Strategy 2024, MC steadily operate the initiatives based on the business management systems and enhance disclosure and dialogue with shareholders and investors for generating positive market expectations for sustainable earning growth and creation of shared values. Furthermore, MC aims to increase corporate value over the medium to long-term by reflecting the feedback obtained through these IR/SR activities in our management approach.
Reference:
- In Investor Information on the Company’s website, MC posts various types of IR information in addition to the documents listed below. Details are available on the Company’s website at the following URL.
- https://www.mitsubishicorp.com/jp/en/ir/
- Presentation Materials
- Earnings Release
- Integrated Reports
- Financial Statements
- Quarterly Reports
- Investors’ Note
- Corporate Brochure
- Sustainability Website
(e) Action to Implement Management that is Conscious of Cost of Capital and Stock Price
If MC maintains double-digit ROE, one of the quantitative targets of Midterm Corporate Strategy 2024, then ROE will exceed the cost of equity. MC believes that recent stock prices reflect the expectation that medium to long-term ROE will exceed 10%. In order to achieve the quantitative targets in Midterm Corporate Strategy 2024, MC steadily operate the initiatives based on the business management systems and enhance disclosure and dialogue with shareholders and investors for generating positive market expectations for sustainable earning growth and creation of shared values. Furthermore, MC aims to increase corporate value over the medium to long-term by reflecting the feedback obtained through these IR/SR activities in our management approach.
<Reference>
The progress of the quantitative targets set forth in the Midterm Corporate Strategy 2024 are disclosed on MC’s investor relations website (Results of FY2023 and Forecast for FY2024 Presentation Materials) under the heading “(Reference) Progress of Quantitative Targets”.
https://www.mitsubishicorp.com/jp/en/ir/