Friday, October 23, 2009

Toyota’s Corporate Governance

Basic Perspective of Corporate Governance

Toyota Industries believes that it is of utmost importance to enhance the long-term stability of corporate value and maintain society's trust by implementing the Basic Philosophy of “Respect for the Law,” “Respect for Others,” “Respect for the Natural Environment,” “Respect for Customers” and “Respect for Employees,” and earnestly fulfilling our corporate social responsibilities. Together with contributing to the enrichment of society through our business activities, we also believe it is important to build an amicable relationship with all stakeholders, starting from shareholders and customers to business partners, local communities and employees. Acting on this conviction, we are striving to maintain and enhance management efficiency and the fairness and transparency of our corporate activities by building a corporate governance structure that can respond quickly and flexibly to changes in the business environment. At the same time, we are bolstering management supervision and emphasizing the timely disclosure of accurate information as part of efforts to upgrade our corporate governance.

Implementation Structure

Toyota Industries convenes monthly Board of Directors meetings to discuss and resolve important management matters and monitor the execution of the duties by directors. Important matters such as corporate vision, management policies, medium-term business strategies and major investments are discussed at meetings of the Management Committee composed of directors above the executive vice president level, corporate auditors and other relevant directors. The committee thoroughly discusses a variety of matters before such matters are passed on for debate at Board of Directors meetings, in addition to deliberating on responses to a broad range of management issues. In addition to delegating significant authority to each business division under the divisional organization system, we have established the Business Operation Committee to enable the president to meet with heads of each business division regularly to monitor and follow the status of execution of the business policies in each division. At meetings of the Management Council, which are held after Board of Directors meetings, directors, managing officers and corporate auditors convene to share management information with regards to matters resolved at respective Board of Directors meetings as well as the monthly status of the operations of each business. Furthermore, specialized committees are set up to discuss and follow through on such themes as compliance, quality, safety, the environment, human resources, export transaction controls and information disclosure.

Corporate Auditor System

Toyota Industries has adopted a corporate auditor/board of corporate auditors system. Two standing corporate auditors and three external corporate auditors attend meetings of the Board of Directors to monitor the execution of duties by directors. Meetings of the Board of Corporate Auditors are held once a month to discuss and make decisions on such important matters as auditing policy. The standing corporate auditors collect management information by attending primary meetings including those of the Management Committee and receiving reports directly from directors. This also enables the standing corporate auditors to monitor the execution of duties by directors. Additionally, the Corporate Auditor's Office has been established with a staff of dedicated personnel who are independent from the chain of command of directors to assist in the auditing tasks of corporate auditors and reinforce the auditing of duties carried out by the directors. The corporate auditors also exchange opinions and cooperate with independent auditors and the Audit Department to ensure the legality, soundness and efficiency of management.

Emergency Profit Improvement Committee

In response to the rapid downturn in our business environment, Toyota Industries has established the Emergency Profit Improvement Committee on December 1, 2008 directly under the president. Under the Emergency Profi t Improvement Committee, we have set up 14 different subcommittees, such as the General Expenses Subcommittee, and are actively working on profit improvement activities throughout the Company.
To the present, together with management and all employees, we have focused on thoroughly implementing cost reduction activities. We will also enhance planning and the execution of measures to increase sales and income.

Timely Information Disclosure

Toyota Industries has established the Information Disclosure Committee to provide all stakeholders with important corporate information, even if the information is unfavorable, to ensure management transparency and accountability. The committee discusses and determines the comprehensiveness and appropriateness of timely disclosure of information in such documents as the securities report.

Aim here was to give a picture of corporate governance and the various systems which work with it in an organization.