Corporate Governance System（as of July 1, 2024）
Since the 2000’s, MC has been promoting corporate governance reforms under the basic policy set forth in the preceding paragraph. To realize management and business execution that promotes growth while anticipating changes and transforming and strengthening businesses, MC continuously strives to increase corporate value while ensuring sufficient deliberation and effective oversight by the Board of Directors.
While MC continues to enhance the function of corporate governance under its current corporate governance system “a Company with an Audit & Supervisory Board”, MC transitioned to a Company with an Audit & Supervisory Committee upon approval at the 2024 Ordinary General Meeting of Shareholders to be held in June 2024 in order to further enhance our ability to respond to accelerating changes in the current external environment surrounding MC’s businesses. In addition to expediting decision-making through the delegation of authority, this transition has enhanced and improved the monitoring function of the Board of Directors by enhancing deliberations centered on management policies and strategies at the Board of Directors meetings, thereby increasing corporate value.
The Board of Directors deliberates on important management issues, and supervises business execution through reports on major items in Midterm Corporate Strategy 2024, the business strategy of Business Groups, and so on. In addition, matters requiring resolution in accordance with laws and regulations, and loan and investment proposals exceeding a monetary threshold standard set by the Company are deliberated and resolved with an emphasis not only on the economic aspects, but also on sustainability perspectives. MC has also constructed appropriate internal control systems, and checks their operational status every year in order to work toward their continuous improvement and strengthening.
Business execution other than these matters for resolution by the Board of Directors is entrusted to Executive Officers by appointing the President as the Chief Executive Officer responsible for business execution, and the Executive Committee (meets twice monthly) as a management decision-making body.
| Board of Directors | Audit & Supervisory Committee | |
|---|---|---|
| Roles and Responsibilities | Based on its fiduciary responsibility and accountability to shareholders, the Board of Directors shall fulfill the roles and responsibilities listed below to promote Mitsubishi Corporation (MC)’s sound and sustainable growth and continuous increase of corporate value, and to help enrich society, both materially and spiritually while also realizing transparent, fair, timely and decisive decision-making and highly effective oversight of the management.
|
he Audit & Supervisory Committee, as a statutory independent body tasked with auditing the directors’ performance of their duties with a mandate from shareholders, is responsible for establishing a high-quality corporate governance system through the appropriate performance of its duties and for playing a role in the monitoring function of MC in cooperation with the Board of Directors. Through these roles and responsibilities, the committee shall support the maintenance and development of MC’s corporate governance, consider the interests of its various stakeholders, and strive to work with them to achieve MC’s sound and sustainable growth and continuous enhancement of corporate value and social credibility. |
| Size and Composition | In order to fulfill the roles and responsibilities of the Board of Directors as set forth above, MC’s Board of Directors shall be of an appropriate size and composition to ensure diversity, and at least one-third of its members shall be Independent Directors who meet MC’s Standards for Independent Directors*. | In order to fulfill the roles and responsibilities of the Audit & Supervisory Committee as set forth above, MC’s Audit & Supervisory Committee shall be of an appropriate size and composition to ensure diversity, and a majority of the members shall be Independent Audit & Supervisory Committee members who meet MC’s Standards for Independent Directors*. |
| Roles and Responsibilities | Directors (excluding Directors who are Audit & Supervisory Committee members) | Directors who are Audit & Supervisory Committee Members |
|---|---|---|
| In-house Directors | ||
| Chairman of the Board | Full-time Audit & Supervisory Committee Members | |
| Aim to ensure MC’s sound and sustainable growth and continuous increase of corporate value by enhancing deliberations and ensuring that the Board of Directors fulfills its roles and responsibilities. To this end, strive to maintain and develop corporate governance, and as Chairman of the Board of Directors, lead discussions at Board of Directors meetings in a neutral manner by appropriately eliciting the opinions of Outside Directors, while taking into account the actual situation the executives are confronting. | Based on their companywide management experience within MC and their knowledge and experience in finance, accounting, legal affairs, risk management, etc., Full-time Audit & Supervisory Committee Members will (1) together with the Chairman of the Board, fulfill the roles and functions of the Board of Directors as non-executive In-house Directors. They are also (2) responsible for the timely and accurate assessment of the status of management execution, as well as for creating an environment for effective auditing and oversight by the Audit & Supervisory Committee, and cooperating with other Audit & Supervisory Committee members to conduct audits and provide oversight from an objective and broad perspective. They will also directly deliver unfettered opinions to the executives with conviction when necessary, with the aim of ensuring MC’s sound and sustainable growth and enhancement of corporate value and social credibility. | |
| Executive Directors | ||
| Carry out business operations in accordance with the basic management policies approved by the Board of Directors, report on the status of business execution to the Board of Directors, and aim to ensure MC’s sound and sustainable growth and continuous increase of corporate value by executing day-to-day business operations based on the deliberations of the Board of Directors. | ||
| Outside Directors | Outside Audit & Supervisory Committee Members | |
| With a practical, objective and professional perspective on corporate management, Outside Directors will oversee the execution of management strategies proposed by the executives. Based on their own experience and insight gleaned from their networks, Outside Directors will provide advice on broad direction in a medium- and long-term perspective as they participate in appropriate decision-making within the Board of Directors, with the aim of ensuring MC’s sound and sustainable growth and continuous increase of corporate value. | In addition to the roles and responsibilities of Outside Directors described on the left, Outside Audit & Supervisory Committee Members will audit and oversee MC from a neutral and objective standpoint based on their diverse and abundant knowledge and experience in corporate management as well as their own expertise, aiming for MC’s sound and sustainable growth and continuous enhancement of corporate value and social credibility. | |
| Appointment Policy | Directors (excluding Directors who are Audit & Supervisory Committee members) | Directors who are Audit & Supervisory Committee Members |
| Based on the roles and responsibilities set forth above, and in accordance with the following policy, overall character will be considered during the appointment process. | ||
| In-house Directors | Full-time Audit & Supervisory Committee Members | |
| In addition to the Chairman of the Board of Directors and the President, who serves as the Chief Executive Officer in charge of business execution, In-house Directors are appointed from among the Executive Officers (Senior Executive Vice Presidents and Executive Vice Presidents) in charge of companywide management. | Appointed from among persons with knowledge and experience in companywide management, finance, accounting, legal affairs, risk management, and other areas. | |
| Outside Directors | Outside Audit & Supervisory Committee Members | |
| 1. Outside Directors are appointed from those who possess a practical perspective based on experience as a corporate executive and those who possess an objective and professional perspective with a deep insight on global dynamics and socio-economic trends. | 1. Appointed from among persons with diverse and abundant knowledge and experience in corporate management and expertise that contribute to auditing and oversight. | |
| 2. To enable Outside Directors to fulfill their appointed task, attention is given to maintain their independency*; individuals not ensuring this independency will not be appointed as Outside Directors. | ||
| 3. MC’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 appointed as an Outside Director. MC appropriately copes with this potential issue by preserving a variety of viewpoints through the appointment of numerous Outside Directors. | ||
| Appointment Process | Directors (excluding Directors who are Audit & Supervisory Committee members) | Directors who are Audit & Supervisory Committee Members |
| Based on the above appointment policy, the President & 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 & CEO, in consultation with Full-time Audit & Supervisory Committee Members, based on the above appointment policy, prepares 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. | |
(Note)
*MC’s Standards for Independent Directors
To make a judgment of independence, Mitsubishi Corporation (MC) checks if the person concerned meets the conditions for Independence Criteria prescribed 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.
If a person is still judged by MC to be effectively independent despite one or more of the below items (1) to (7) applying, MC will explain and disclose the reason for their appointment as an Independent Director.
Board Skills Matrix is shown on page 33,34 of MC’s Integrated Report.
Please check page 34 of MC's Integrated Report and the link below for data on Composition of the Board of Directors.
The Board of Directors deliberates on important management issues, and supervises business execution through reports on major items in Midterm Corporate Strategy 2024, the business strategy of Business Groups, and so on.
The results of the deliberations in FY2023 are as follows.
<Agenda of the Board of Directors FY2023>
・Management Strategy and Sustainability-related items
Business Strategy Committee report/ Management Strategy Meeting report/ EX progress report/ Business Execution reports (risk management, human resources strategy, regional strategy, stakeholder engagement and sustainability-related measures including discussion for Shareholder Proposals)
・Governance-related and corporate-related items
Governance, Nomination and Compensation Committee report/ International Advisory Committee report/ Evaluation of the effectiveness of the Board of Directors/ Appointments of the Board and Audit & Supervisory Board Members, Appointments of the Chairman and President, Appointments of Executive Officers/ Remuneration for Directors and Audit & Supervisory Board Members/ Organizational structure/ Rules and regulations/ Financial Statements/ Share Repurchase and Cancellation Policy/ Fundraising policy/ Verification of holding policy for listed share/ Ordinary General Meeting of Shareholders related items/ Compliance report/ Internal control systems/ Company indemnification agreements/ Items related to directors and officers (D&O) liability insurance
・Investment and finance proposals
Chiyoda Corporation/ Iron Ore Company of Canada/ Mitsubishi Development Pty Ltd/ Anglo American Sur/ Mitsubishi HC Capital Inc/ Cermaq Norway Salmon/ Mitsubishi Motors Corporation/ GAC Mitsubishi Motors Co., Ltd./ Lithium Energy Japan/ Integrated Coal Gasification Combined Business/ Nexamp/ HERE Technologies/ Princes Limited/ Lawson, Inc/ Diamond Realty Investments/ Onahama Petroleum Co., Ltd. Distribution Terminal etc.
International Advisory Committee
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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.
Please check the link below for data on International Advisory Committee.
| Member | Origin | Title | Principal area of specializationand background |
|---|---|---|---|
| Professor Joseph S. Nye | United States of America | Harvard University Distinguished Service Professor | Professor Nye is a globally renowned scholar in the field of geopolitics. He has held important positions in multiple administrations, including Chairman of the National Intelligence Council of the United States. He is well known for proposing and establishing "Soft Power" as the foundation of a stable world order. |
| Mr. Niall FitzGerald, KBE | Ireland | Former Chairman, Unilever | Mr. FitzGerald, KBE has served as Chairman of several major global companies such as Unilever, as well as the British Museum. He has outstanding knowledge and expertise at the intersection of both industry and geopolitics in both emerging and developed countries. |
| Mr. Natarajan Chandrasekaran | India | Chairman, Tata Sons | Mr. Chandra brings an immense knowledge of myriad industries around the world in addition to his many years of management experience within the Tata Group, India's largest conglomerate. Having led TCS as CEO for nearly a decade, Mr. Chandra has served as Chairman since 2017. |
| Ambassador Bilahari Kausikan | Singapore | Former Permanent Secretary, Ministry of Foreign Affairs Singapore | Ambassador Kausikan has a wealth of diplomatic experience, having held senior positions such as Ambassador to the Russian Federation, Permanent Representative to the United Nations, Ambassador-at-Large etc. for geopolitically sensitive Singapore. |
| Mr. Victor L.L. Chu | Hong Kong | Chairman, Hong Kong-USA Business Council | Based
in Hong Kong, Mr. Chu is implementing many investment projects in various
fields with a focus on China, and has vast experience in the East Asian region. He is also familiar with Japan, having been appointed as external director of Peach Aviation and Nomura Holdings, and has also served as chairman of the Hong Kong-USA and Hong Kong/Europe Business Council, and therefore has outstanding knowledge of industries in China and around the world. |
Takehiko Kakiuchi*The Committee Chair* (Chairman of the Board),
Katsuya Nakanishi (Director, President & Chief Executive Officer),
Kotaro Tsukamoto (Director, Senior Executive Vice President),
Tsuneyoshi Tatsuoka (Independent Director)
Since its establishment in 2001, the Governance Committee has evolved in form and the matters it deliberates in response to changes in the internal and external environment. Since 2015, it has collectively deliberated on the three themes of governance, nomination, and compensation.
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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.
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.
Meetings are held regularly to provide a forum for free discussion amongst Independent Directors on a wide range of topics.
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.
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.
In order to deepen the understanding regarding the Company of new Independent Directors, orientation sessions are held by each division and group.
Based on the Basic 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 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.
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.
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.
| FY2021 | FY2022 | FY2023 |
|---|---|---|
| ￥85.2 billion | ￥39.6 billion | ￥66.0 billion |
(Market value basis and including deemed shareholdings)
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.
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.
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.
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.
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.
| Name | Job title/position | Responsibilities | Terms and Conditions of Employment (Full/part time, with/without remuneration, etc.) |
Date when former role as president/CEO ended*Date of retirement from Chairman of the Board* | Term |
|---|---|---|---|---|---|
| Ken Kobayashi | Corporate Advisor | External affairs | Part-time, no remuneration | March 31,2022 | March 2028 |
| Number of Persons Holding Advisory Positions (Sodanyaku, Komon, etc.) After Retiring as Representative Director and President, etc. | 1 |
|---|
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.
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.
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.
To continually increase corporate value over the medium to long-term, MC promotes constructive communication with shareholders and investors as follows.
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.
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.
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*Depending on the purpose and content, Independent Directors, the President and CEO, CSEO, CFO, CAO, and Business Group CEOs participated.*: 4 meetings
MCSV Creation Forum*Depending on the purpose and content, Independent Directors, the President and CEO, CSEO, CFO, CAO, and Business Group CEOs participated.*: 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.)
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.
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/
