St

MC’s Basic Policy on Corporate Governance

MC’s Basic Policy on Corporate Governance

MC strives to continuously raise corporate value through corporate activities rooted in the principles of fairness and integrity with the Three Corporate Principles for a corporate philosophy. MC believes that by helping to enrich society, both materially and spiritually, it will also meet the expectations of its shareholders, customers, and all other stakeholders.

In order to achieve these goals, MC recognizes strengthening corporate governance on an ongoing basis as an important subject concerning management since it is the foundation for ensuring sound, transparent, and efficient management. Therefore, MC is working to put in place a corporate governance system that is even more effective based on the Audit & Supervisory Board System. This includes strengthening management supervision through such measures as (i) appointing Independent Members of the Board who satisfy MC’s Selection Criteria for Outside Directors and Outside Audit & Supervisory Board Members, and (ii) establishing advisory bodies to the Board of Directors where the majority are Independent Members of the Board and other experts from outside MC. At the same time, this also includes implementation of MC’s prompt and efficient decision-making and business execution through enhancing the monitoring function of the Board of Directors.

Corporate Governance Framework (As of June 23, 2023)

Corporate Governance Framework

MC SIM事務局, 総務部(PH)

Board of Directors

Board of Directors

The Board of Directors deliberates on important management issues, and supervises business execution through reports on major items of the current Midterm Corporate Strategy, the business strategies of Business Groups, and so on. In addition, matters requiring resolution in accordance with laws and regulations, and investment and finance proposals exceeding the quantitative standards set by MC are deliberated and resolved with an emphasis on not only the economic aspects, but also on ESG 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 those matters for resolution by the Board of Directors, is entrusted to the 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.

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 MC, 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 MC 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 the President and Chief Executive Officer, MC'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 the policies described above, the President and Chief Executive Officer 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.

  • *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.

Composition of the Board of Directors

Board of Directors’ Structure (As of June 23, 2023)

Total 9
Number of non-executive and non-independent Directors (Chairman of the Board) 1
Number of Executive Officers 4
Number of Independent Directors (number of women) 4 (2)

Operation of the Board of Directors (As of June 23, 2023)

The Board of Directors includes Audit & Supervisory Board Members in addition to Directors. The Board operates as follows:

Position Director Audit & Supervisory
Board Member
Total
Chairman (Non-executive, non-managerial) 1 - 1
Number of Executive Officers/Number of Full-time Audit & Supervisory Board Members 4 2 6
Number of Independent Directors/Independent Audit & Supervisory Board Members (Number of women) 4 (2) 3 (2) 7 (4)

Board of Directors Structure (As of June 23, 2023)

In-house Directors Job History, Positions and Responsibilities Attendance at Board of Directors Meetings (FY2022) Attendance at Governance, Nomination & Compensation Committee Meetings
(FY2022)
Number of meetings attended/held Attendance rate Number of meetings attended/held Attendance rate
Takehiko Kakiuchi Apr. 1979 Joined MC
Apr. 2010 Senior Vice President, Division COO, Foods (Commodity) Div.
Apr. 2011 Senior Vice President, General Manager, Living Essential Group CEO Office,
Division COO, Foods (Commodity) Div.
Apr. 2013 Executive Vice President, Group CEO, Living Essentials Group
Apr. 2016 President & CEO
Jun. 2016 Director, President & CEO
Apr. 2022 Chairman of the Board (present position)
Regular:10/10
Extraordinary:4/4
100% 5/5 100%
Katsuya Nakanishi*1Indicates a Representative Director.*1 Apr. 1985 Joined MC
Apr. 2016 Senior Vice President, Regional CEO, Middle East & Central Asia
Apr. 2018 Senior Vice President, Division COO, New Energy & Power Generation Div.
Apr. 2019 Executive Vice President, Group CEO, Power Solution Group
Apr. 2020 Executive Vice President, Group CEO, Power Solution Group,
Power & Retail DX Task Force Leader
Apr. 2021 Executive Vice President, Group CEO, Power Solution Group,
Power & Retail DX Task Force Leader,
EX Task Force Leader
Apr. 2022 President & CEO
Jun. 2022 Director, President & CEO (present position)
Regular:7/7
Extraordinary:3/3*3Indicating attendance after appointment as a Director on June 24, 2022.*3
100% 5/5 100%
Norikazu Tanaka*1Indicates a Representative Director.*1 Apr. 1982 Joined MC
Apr. 2014 Senior Vice President, Deputy Division COO, Mineral Resources Investment Div.
Apr. 2015 Senior Vice President, Division COO, Mineral Resources Investment Div.
Apr. 2018 Executive Vice President, Group CEO, Metals Group
Apr. 2019 Executive Vice President, Group CEO, Mineral Resources Group
Apr. 2022 Executive Vice President, Group CEO, Mineral Resources Group,
EX Task Force Leader
Jun. 2022 Director, Executive VicePresident, Group CEO, Mineral Resources Group, EX Task ForceLeader
Apr. 2023 Director, Senior Executive Vice president, SEVP, Energy Transformation (present position)
Regular:7/7
Extraordinary3/3*3Indicating attendance after appointment as a Director on June 24, 2022.*3
100% - -
Yutaka Kashiwagi*1Indicates a Representative Director.*1 Apr. 1986 Joined MC
Apr. 2018 Senior Vice President, Division COO, Environmental Business Div.
Apr. 2019 Senior Vice President, General Manager, Power Solution Group CEO Office
Apr. 2021 Executive Vice President, Corporate Functional Officer, Business Development for Japan, General Manager, Kansai Branch
Jun. 2021 Director, Executive Vice President, Corporate Functional Officer, Business Development for Japan, General Manager, Kansai Branch
Apr. 2022 Director, Executive Vice President, Corporate Functional Officer, CDO, CAO, Corporate
Communications, Corporate Sustainability & CSR
Jul. 2022 Director, Executive Vice President, Corporate Functional Officer, IT, CAO, Corporate
Communications, Corporate Sustainability & CSR
Apr. 2023 Director, Executive Vice President,
Corporate Functional Officer, IT, CAO (Concurrently) Chief Compliance Officer, Officer for Emergency Crisis Management Headquarters (present position)
Regular:10/10
Extraordinary:4/4
100% - -
Yuzo Nouchi*1Indicates a Representative Director.*1 Apr. 1987 Joined MC
Apr. 2019 Senior Vice President, General Manager, Corporate Accounting Dept.
Apr. 2022 Executive Vice President, Corporate Functional Officer, CFO
Jun. 2022 Director, Executive Vice President, Corporate Functional Officer, CFO (present position)
Regular:7/7
Extraordinary:3/3*3Indicating attendance after appointment as a Director on June 24, 2022.*3
100% - -
Independent Directors Job History, Positions and Responsibilities Attendance at Board of Directors Meetings (FY2021) Attendance at Governance, Nomination & Compensation Committee Meetings
(FY2021)
Number of meetings attended/held Attendance rate Number of meetings attended/held Attendance rate
Tsuneyoshi Tatsuoka*2Indicates the fulfillment of the conditions for Outside Directors as provided for in Article 2, Item 15 of the Companies Act. Also indicates the fulfillment of the conditions for Independent Directors / Auditors as specified by Tokyo Stock Exchange, Inc. as well as selection criteria for Independent Directors specified by MC.*2 Apr. 1980 Joined the Ministry of International Trade and Industry (currently Ministry of Economy, Trade and Industry (METI))
Held the position of:
Counsellor, Cabinet Secretariat (Office of Assistant Chief Cabinet Secretary), Deputy Vice-Minister of
Economy, Trade and Industry, and Vice Minister of METI
Jul. 2015 Retired from METI
Jan. 2018 Corporate Adviser, MC (resigned in Jun. 2018)
Jun. 2018 Director, MC (present position)
Regular:10/10
Extraordinary:3/4
93% 5/5 100%
Shunichi Miyanaga*2Indicates the fulfillment of the conditions for Outside Directors as provided for in Article 2, Item 15 of the Companies Act. Also indicates the fulfillment of the conditions for Independent Directors / Auditors as specified by Tokyo Stock Exchange, Inc. as well as selection criteria for Independent Directors specified by MC.*2 Apr. 1972 Joined Mitsubishi Heavy Industries, Ltd. (“MHI”)
Apr. 2006 Senior Vice President, MHI
Apr. 2008 Executive Vice President, MHI
Jun. 2008 Director, Executive Vice President, MHI
Apr. 2011 Director, Senior Executive Vice President, MHI
Apr. 2013 Director, President, MHI
Apr. 2014 Director, President and CEO, MHI
Apr. 2019 Chairman of the Board, MHI (present position)
Jun. 2019 Director, MC (present position)
Regular:10/10
Extraordinary:4/4
100% 4/5 80%
Sakie Akiyama*2Indicates the fulfillment of the conditions for Outside Directors as provided for in Article 2, Item 15 of the Companies Act. Also indicates the fulfillment of the conditions for Independent Directors / Auditors as specified by Tokyo Stock Exchange, Inc. as well as selection criteria for Independent Directors specified by MC.*2 Apr. 1987 Joined Arthur Andersen & Co. (currently Accenture PLC) (resigned in Apr. 1991)
Apr. 1994 Founder and CEO, Saki Corporation
Oct. 2018 Founder, Saki Corporation (advisor) (present position)
Jun. 2020 Director, MC (present position)
Regular:10/10
Extraordinary:2/4
86% 5/5 100%
Mari Sagiya*2Indicates the fulfillment of the conditions for Outside Directors as provided for in Article 2, Item 15 of the Companies Act. Also indicates the fulfillment of the conditions for Independent Directors / Auditors as specified by Tokyo Stock Exchange, Inc. as well as selection criteria for Independent Directors specified by MC.*2 Apr. 1985 Joined IBM Japan, Ltd.
Jul. 2002 Director, IBM Japan, Ltd.
Jul. 2005 Senior Vice President, IBM Japan, Ltd. (resigned in July 2014)
Jul. 2014 Executive Vice President, SAP Japan Co., Ltd. (resigned in December 2015)
Jun. 2016 Executive Vice President, Salesforce.com Co., Ltd. (currently Salesforce Japan Co., Ltd.) (resigned in August 2019)
Jun. 2022 Director, MC (present position)
Regular:7/7
Extraordinary:3/3*3Indicating attendance after appointment as Director on June 24, 2022.*3
100% 4/4 100%

Matters Deliberated by the Board of Directors

The Board of Directors deliberates important management issues, and supervises business execution through reports on major items of Midterm Corporate Strategy 2024, each Business Group's business strategy, etc. The results of the deliberations in FY2022 are as follows.

<Agenda of the Board of Directors in the FY2023>

・Management Strategy and Sustainability-related items
Formulation of Midterm Corporate Strategy 2024/ Business Strategy Committee report/ Management Strategy Meeting report/ EX progress report/ Business Execution reports (non-financial and financial risk management, HR strategy, regional strategy, 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/ Remuneration for Directors and Audit & Supervisory Board Members/ Organizational structure/ Rules and regulations/ Financial Statements/ Fund procurement policy/ Verification holding policy for listed shares/ 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, etc.

・Investment and finance proposals
Donations for the establishment of incubation program with Kyoto University/ HERE Technologies/ EX funds/ Sakhalin 2 project/ Onahama Petroleum Co., Ltd. Distribution Terminal/ Chiyoda Corporation/ N.V. Eneco offshore wind power generation business / Mitsubishi Auto Leasing Corporation, etc.

MC SIM事務局, 総務部(PH)

Board of Directors’ Advisory Bodies

Board of Directors’ Advisory Bodies

Governance, Nomination and Compensation Committee

The majority of the Committee's members are Independent Directors. It deliberates on matters related to governance, nomination and compensation.

Composition of the Committee (As of July 1, 2023)

  • Independent Members (4):
    Tsuneyoshi Tatsuoka (Independent Director), Shunichi Miyanaga (Independent Director), Sakie Akiyama (Independent Director), Mari Sagiya (Independent Director)
  • In-house Members (3):
    Takehiko Kakiuchi*Committee Chairman* (Chairman of the Board), Katsuya Nakanishi (Director, President & CEO), Mitsumasa Icho (Full-time Audit & Supervisory Board Member

Percentage of Independent Directors among Governance, Nomination and Compensation Committee Members(%)

Main Discussion Themes

  • The corporate governance system (roles, functions and selection methods of the Directors and Audit & Supervisory Board Members, etc.)
  • Evaluation of the effectiveness of the Board of Directors
  • Successor requirements and basic policies concerning the appointment and dismissal of the President and Chief Executive Officer
  • Review of the remuneration package including the policy for setting remuneration, appropriateness of remuneration levels and composition, and linkage to sustainability factors

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 evaluate the President’s performance. The President is not a member of the Committee.

International Advisory Committee

The International Advisory Committee comprises experts with a wide range of backgrounds in industry, government, and academia. Committee members offer advice from a global standpoint through exchange of opinions and discussions on the external environment, with a focus on international affairs. Since its establishment in 2001, the International Advisory Committee has fulfilled a crucial role in enabling in-depth and informed discussions among the Board of Directors.

International Advisory Committee

Total 10
Number of in-house committee members 3
Number of independent committee members (Independent Directors) 1
Number of independent committee members (overseas) 6

Overseas Members (As of December 1, 2023)

Member Origin Title Principal area of specialization and background
Mr. Jaime Augusto Zobel de Ayala The Philippines Chairman, Ayala Corporation Mr. Zobel has vast experience in growing a global business launched from the ASEAN region, and therefore has thorough knowledge of various geopolitical and industry trends through the lens of Asia, with particular expertise in the ASEAN region.
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.
Sir Rod Eddington Australia Former CEO, British Airways As CEO, Sir Eddington successfully steered Cathay Pacific and British Airways through reformative and challenging periods. He has a wealth of experience in this and other infrastructure industries, having led major shift projects.
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.

Japanese Members (As of December 1, 2023)

Chairman of IAC

Takehiko Kakiuchi

Chairman of the Board

Katsuya Nakanishi

Director, President and CEO

Norikazu Tanaka

Director, Senior Executive Vice President

Tsuneyoshi Tatsuoka

Independent Director

Main Discussion Themes (FY2023)

  • The Year of Disruptive Choices – Global Elections in 2024
  • The sudden rise of AI – Risks and Rewards
  • Soft Power in the Global South – Leveraging Influence and Prosperity
MC SIM事務局, 総務部(PH), 地域戦略部(PM)

Independent Directors and Independent Audit & Supervisory Board Members

Independent Directors and Independent Audit & Supervisory Board Members

Independent Directors and Independent Audit & Supervisory Board Members are as follows (as of July 1, 2022).

Independent Directors

Independent Directors

ndependent Audit & Supervisory Board Members

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

To make the function of Outside Directors and Outside Audit & Supervisory Board Members stronger and more transparent, MC has set forth Selection Criteria for Outside Directors and Outside Audit & Supervisory Board Members as follows, after deliberation by the Governance, Nomination and Compensation Committee, which is composed with Independent Directors in the majority. Each of the four Outside Directors and three Outside Audit & Supervisory Board Members satisfy the requirements for independent Directors and Audit & Supervisory Board Members as stipulated by Japanese stock exchanges, such as the Tokyo Stock Exchange, Inc., and MC's Selection Criteria for Outside Directors and Outside Audit & Supervisory Board Members.

[Selection Criteria for Outside Directors]

  1. Outside 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, Outside Directors help ensure levels of decision-making and management oversight appropriate to the Board of Directors.
  2. To enable Outside Directors to fulfill their appointed task, attention is given to maintain their independency*; individuals not ensuring this independency in effect will not be selected to serve 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 Officer appointed as Outside Directors. MC 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 Outside Directors.

[Selection Criteria for Outside Audit & Supervisory Board Members]

  1. Outside Audit & Supervisory Board Members are selected from among individuals who possess a 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 Outside Audit & Supervisory Board Members to fulfill their appointed task, attention is given to maintain their independency*; individuals not ensuring this independency will not be selected to serve as Outside Audit & Supervisory Board Members.
  • *Independency for the purpose of Selection Criteria for Outside Directors and Outside Audit & Supervisory Board Members
    To make a judgment of independence, MC checks if the person concerned meets the conditions for Independent Directors and Independent Audit & Supervisory Board Members 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 three fiscal years.
    1. (1) A major shareholder of MC (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.
    2. (2) A member of business personnel of a creditor of MC exceeding the threshold set by MC*2.
    3. (3) A member of business personnel of a supplier or a customer of MC exceeding the threshold set by MC*3.
    4. (4) A provider of professional services, such as a consultant, lawyer, or certified public accountant, receiving cash or other financial benefits from MC, other than Directors’ or Audit & Supervisory Board Members’ remuneration, where the amount exceeds ¥10 million per fiscal year.
    5. (5) A representative or partner of MC’s independent auditor.
    6. (6) A person belonging to an organization that has received donations exceeding a certain amount*4 from MC.
    7. (7) A person who has been appointed as an Outside Director or Outside Audit & Supervisory Board Member of MC for more than eight years.
    1. *1 A member of business personnel refers to a managing director, corporate officer, Executive Officer, or other employee of a company.
    2. *2 Creditors exceeding the threshold set by MC refer to creditors to whom MC owes an amount exceeding 2% of MC’s consolidated total assets.
    3. *3 Suppliers or customers exceeding the threshold set by MC refer to suppliers or customers whose transaction amount with MC exceed 2% of MC’s consolidated revenues.
    4. *4 Donations exceeding a certain amount refer to donations of more than ¥20 million per fiscal year.

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

MC SIM事務局, 総務部(PH), 監査役室(PK)

Initiatives to Enhance the Effectiveness of the Board of Directors

Initiatives to Enhance the Effectiveness of the Board of Directors

To ensure that the Directors and Audit & Supervisory Board Members are able to perform their management supervision and audit functions adequately, the Board of Directors’ Office and the Audit & Supervisory Board Members’ Office have been established, and have been providing necessary information and support appropriately and in a timely manner for them to perform their duties.
For Independent Directors and Independent Audit & Supervisory Board Members, the 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 and Independent Audit & Supervisory Board Members in order to facilitate substantive deliberations at the meetings. The sessions are also utilized to appropriately share timely information that helps enhance deliberations.

Briefing Sessions Before Board of Directors’ Meetings

Meetings of Independent Directors and Independent Audit & Supervisory Board Members

Meetings are held regularly to provide a forum for free discussion amongst Independent Directors and Independent Audit & Supervisory Board Members on a wide range of topics.

■Main Discussion Themes (FY2022)

  • Midterm Corporate Strategy 2024
  • Business portfolio analysis
  • Future issues and initiatives based on evaluation of the effectiveness of the Board of Directors

Discussion between Independent Members of the Board and Officers and Employees

MC has set up dialogues with the General Managers of the Corporate Staff Section, Business Group Heads, 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 Members of the Board and officers and employees.

Dialogues with and Site Visits to Business Subsidiaries and Affiliates

Every year Independent Directors and Independent Audit & Supervisory Board Members participate in site visits to business subsidiaries and affiliates both in Japan and overseas, and hold dialogues with their management.

<FY 2022 Visits>

  • October 2022, Metallurgical coal mines and silica mines in Australia
  • November 2022, Dialogue with management executives of Automotive-related business companies in Thailand and Indonesia
  • March 2023, Shonan Health Innovation Park (Shonan iPark)
BMA Metallurgical Coal Mining Site (October, 2022)
BMA Metallurgical Coal Mining Site (October, 2022)
Cape Flattery Silica Mines Pty., Ltd. (Australia) (October, 2022)
Cape Flattery Silica Mines Pty., Ltd. (Australia) (October, 2022)
Tri Petch Isuzu Sales Co., Ltd (Thailand) (November, 2022)
Tri Petch Isuzu Sales Co., Ltd (Thailand) (November, 2022)

Orientation upon Assumption of Office

To deepen understanding of MC, the entire Corporate Staff Section and Business Groups conduct orientation sessions for newly appointed Independent Directors and Independent Audit & Supervisory Board Members.

The Evolution of MC's Corporate Governance

 

Since the 2000s, MC has engaged in building the foundations of its corporate governance. In recent years, MC has been steadily advancing measures to strengthen the monitoring functions of the Board of Directors, incorporating the results of annual evaluations of the effectiveness of the Board of Directors.

Evaluation of the Effectiveness of the Board of Directors

MC SIM事務局, 総務部(PH)

Initiatives on Japan’s Corporate Governance Code

Initiatives on Japan’s Corporate Governance Code

MC has long worked to implement corporate governance as the foundation of sound, transparent and efficient management. We have determined that MC is implementing all principles set forth in Japan’s Corporate Governance Code. (For more information, please see the Corporate Governance Report on MC’s website.)

Reference:
Corporate Governance Report (Translation of report filed with the Financial Instruments Exchange)
Corporate Governance Report | Mitsubishi Corporation

MC’s Stance on Acquisition, Holding, and Reduction in Listed Shares

MC may acquire and hold shares acquired for 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 significance and economic rationale of the purchase. Also, MC periodically reviews the rationality of continuing to hold the shares and promotes reducing holdings of stocks with decreased significance.

[Verification policy for holding individual shares]

The Board of Directors verifies all of the listed shares (excluding pure investment) held by MC from the perspectives of both economic rationale and qualitative significance of holding them every year.
The economic rationale is confirmed by whether or not the related earnings from each stock, 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 stock, etc.

[Reduction in holdings of listed stocks]

Based on the results of the above verification, in FY2022, MC sold approximately 39.6 billion yen of its shareholdings (including 13.8 billion yen in deemed holding shares), a decrease of approximately a 10% from the previous fiscal year. As of FY2022, the total market value was approximately 0.5 trillion yen (including deemed shareholdings).

FY2020 FY2021 FY2022
¥91.5 billion ¥85.2 billion ¥39.6 billion

(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, 2023 (market price was approximately 0.5 trillion yen, including deemed shareholdings). As a result of verification from the perspectives of both economic rationale and qualitative significance of holding them, numerous shares were identified as candidates for reduction due to a decreased importance of the expected purpose and significance 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 business and partner relationships, and from the perspective of raising the mid- and long-term corporate value of MC and these companies. MC considers exercising voting rights to be an important approach. 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 regulations. These regulations 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 regulation 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 MC 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.

Policy and Procedures for Appointment and Dismissal of Management Executive and Appointment of Nominated Directors and Audit & Supervisory Board Members

Ensuring Objectivity and Transparency through Deliberation at the Governance, Nomination and Compensation Committee, Where Independent Directors and Independent Audit & Supervisory Board Members Have a Majority

For the appointment of President and CEO, the requirements of the role, the basic policy on appointment, and selection of individual candidates are deliberated and reviewed by the Governance, Nomination and Compensation Committee where Independent Directors have a majority (4 Independent Directors out of 7 Committee Members). Appointments are then decided by the Board of Directors, which also appoints and assigns duties to Executive Officers. Moreover, the policy and process for appointment and all appointment proposals of Directors and Audit & Supervisory Board Members and each appointment proposal are deliberated by the Governance, Nomination and Compensation Committee and resolved by the Board of Directors, before being presented at the Ordinary General Meeting of Shareholders. See II 2. in this report for details. Furthermore, the Company’s policy is to take a flexible approach to determining and dealing with dismissal of President and CEO. The matter is deliberated by the Governance, Nomination and Compensation Committee before being resolved by the Board of Directors.

Details of Retired Executives Currently Serving in Advisory Positions

Name Position Area of Assignment Work Conditions
(full/part-time, remunerated, etc.)
Date of Retirement as President, etc.*Date of retirement from Chairman of the Board* Term Ends
Ken Kobayashi Honorary Chairman External affairs Part-time, no remuneration March 31,2022 March 2028
Number of retired executives currently serving in advisory positions 1

Mitsubishi Corporation appoints, as necessary, retired executives (President and CEO) to the position of Honorary Chairman. Currently, one Honorary Chairman is appointed. The Honorary Chairman 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 of Dialogue with Shareholders

(a) Basic Stance

MC’s corporate philosophy is enshrined in the Three Corporate Principles. Through corporate activities rooted in the principles of fairness and integrity, MC strives to continuously raise corporate value over the medium to long term, which MC believes that it will also meet the expectations of all stakeholders. In order to achieve these goals, MC is committed to fulfill accountability as a corporate enterprise that gains credibility and reputation from stakeholders, including shareholders and investors, by proactively engaging in dialogue with them and by appropriately and timely communicating the Company's management and business strategies to the stakeholders while simultaneously communicating those stakeholders' expectations to the management. Namely MC is leading mutual feedback with stakeholders and the Company’s management.

(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 diversifying needs of stakeholders in an integrated manner. The Investor & Shareholder Relations Department is responsible for dialogue with shareholders and investors, and the Investor & Shareholder Relations Department led to build a cross-sectional company structure, by organically linking business groups to corporate staff departments.

Furthermore, with respect to information disclosure, on which dialogue with shareholders and investors is premised, MC prepares documents in line with the Financial Instruments and Exchange Act, Companies Act, and 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 the Disclosure Committee, a sub-committee of the Executive Committee, and deliberates and confirms the appropriateness of the content of the Annual Securities Report disclosure documents. The CSEO leads the way in disclosing proactive, highly transparent information through the MC website, Sustainability Website, Integrated Reports, Investors’ Note, and newspaper ads, etc. As a policy for its information disclosure system, MC developed and disclosed Information Disclosure Regulations to keep all officers and employees fully informed.

(c) Policy of Dialogue with Shareholders and Investors and Results of Activities

To continually raise corporate value over the medium to long term, MC is promoting constructive communication with shareholders and investors as follows.

i. Ordinary General Meeting of Shareholders

MC positions the Ordinary General Meeting of Shareholders as the place to fulfill accountability to shareholders. In addition to proactive information disclosure in the Notice of Ordinary General Meeting of Shareholders, MC tries to respond to questions raised by shareholders in a respectful manner.

ii. Communication with Individual Investors

MC holds regular meetings for individual investors.

<Activities Conducted in FY2022>
Individual investor briefing sessions: 9 times (of these, 1 included the participation of the President, CFO, etc.)

iii. Dialogue with Institutional Investors

In addition to quarterly financial results briefings, briefing sessions and meetings are held for domestic and foreign institutional investors.In addition, briefing and dialogues called "MCSV Creation Forum" are held.

<Activities Conducted in FY2022>

Financial results briefings*Depending on the purpose and content, the President and CEO, CSEO, CFO, CAO, Business Group CEOs, and Independent Directors participated.*: 4 meetings
MCSV Creation Forum*Depending on the purpose and content, the President and CEO, CSEO, CFO, CAO, Business Group CEOs, and Independent Directors participated.*: 3 meetings (2 business briefing sessions, 1 ESG Briefing)
Interviews with domestic and foreign institutional investors (operations departments) and analysts: approximately 430 meetings (of these, approximately 30 included the participation of the President and CEO, CSEO, CFO, etc.)
Interviews with domestic and foreign institutional investors (responsible investment departments): approximately 70 meetings (of these, 3 included the participation of the CSEO, CAO, etc.)

(d) Feedback to Business Management and Control of Insider Information

MC has developed a system by which the opinions from shareholders and investors and business challenges obtained through IR and SR activities are adequately reported to the management including the President and CEO, Board of Directors, and the Executive Committee. In addition, to help improve business management, the responsible departments feed the opinions obtained through communication with shareholders and investors across financial results briefings and other means back into the Company.
To prevent insider information from being leaked during communication with shareholders, either deliberately or accidentally, MC has set forth the Standard for the Prevention of Unfair Stock Trading in accordance with the Code of Conduct for MC’s Officers and Employees. MC keeps all officers and employees fully informed of this requirement.

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
MC SIM事務局, 総務部(PH)