The automotive industry is said to be facing a once-in-a-century paradigm shift. We recognize the establishment of corporate governance as a priority initiative for meeting the needs of the times and achieving sustainable long-term increases in corporate performance in a fast-changing global market.
In June 2015, DENSO formulated the Basic Policies on Corporate Governance, aiming for high levels of management soundness, efficiency, and transparency.
Corporate Governance System and Principal Organizations
DENSO CORPORATION has adopted a corporate auditor system. We have established statutory bodies such as the General Meeting of Shareholders, the Board of Directors, the Audit & Supervisory Board, and the Accounting Auditor. In addition, we have adopted a corporate officer system that divides and clarifies the roles between directors, who are responsible for management supervision, and executive officers, who take charge of business execution.
Under this system, members who serve concurrently as executive officers and directors ensure balance in terms of knowledge, experience, and abilities throughout the Board of Directors as a whole. In addition, DENSO CORPORATION sets the term of office for members of the Board at one year with the aim of building a flexible management structure that responds to changes in the management environment and that further clarifies management responsibilities during the business year.
Corporate Governance System
Board of Directors
The Board of Directors resolves matters stipulated by laws and regulations, as well as matters of decision-making importance for the Company. Where possible, the Board delegates authority to people in charge of business execution. This approach simultaneously accelerates execution and enables the Board to spend more time deliberating management policy and strategy.
The Board of Directors meets once each month, in principle, and is composed of 12 members: five inside directors, two outside directors, two inside Audit & Supervisory Board members, and three outside Audit & Supervisory Board members. To ensure the independence of its outside directors and outside Audit & Supervisory Board members, DENSO has selected four independent officers (two outside directors and two outside Audit & Supervisory Board members) who must satisfy the independence criteria stipulated in the Financial Instruments and Exchange Act.
To pass, resolutions must be approved by a majority of the members present at a Board of Directors’ meeting, and the meeting itself must be attended by a majority of the directors. To alleviate the disparity in access to information between inside and outside officers, as well as to maximize the performance of outside officers, the Company endeavors to provide explanations of agenda items to outside directors and outside Audit & Supervisory Board members prior to Board of Directors’ meetings, in an effort to ensure smooth operation of Board of Directors’ meetings.
Results for meetings convened in fiscal 2018
|Number of times convened||15 times|
|Attendance rate||Members of the Board: 99%
Senior Executive Director Meeting
The Committee of Senior Executive Directors deliberates matters for resolution by the Board of Directors and other important matters (Companywide business plans, investment projects, important transaction projects, collaborative projects, and other important management-related matters). Committee members include the president, vice president, the heads of business groups and functional centers, and inside Audit & Supervisory Board members, creating a structure that fosters multifaceted deliberation.
In principle, the Committee of Senior Executive Directors meets every Monday. In fiscal 2018, the committee met 35 times.
Committee of Executive Officers
The Committee of Executive Officers shares information related to business execution with officers throughout the Company, including matters for resolution by the Board of Directors and matters for deliberation by the Committee of Senior Executive Directors. The Committee of Executive Officers strives to communicate and report information on projects that require swift action.
In principle, the Committee of Executive Officers meets every month, and officers stationed overseas participate actively in committee meetings.
Management Oversight Functions
Two standing corporate auditors and three external auditors with dedicated staff are responsible for monitoring the execution of duties by directors as well as the business operations and financial conditions of DENSO Corporation and its domestic and overseas subsidiaries.
Under the Company's audit system, in addition to corporate auditors, who implement legally mandated functions, specialized internal audit departments have been established in key Group companies in Japan and overseas. These departments conduct ongoing on-site audits not only of legal compliance but also of the appropriateness of management and operational procedures. Aside from attending important meetings such as Board of Directors' meetings, corporate auditors fulfill their management oversight function by auditing directors' business execution through information exchange with internal audit departments, departments related to internal controls, and the Accounting Auditor.
Development and Reinforcement of Internal Controls
With the aim of undertaking fair and efficient business operations, we formulated the DENSO Basic Policies for Internal Control. We have stipulated basic policies for control as well as various rules and systems in areas that form the basis of our management, such as the code of conduct, management systems, risk management, and compliance. We make revisions and changes when necessary after undertaking regularly scheduled annual verifications of the status of implementation.
Activities to Date and Future Initiatives
In fiscal 2018, DENSO changed its director system, reducing the number of directors appointed and creating a separation between management and execution to realize swift decision-making and operations. To clarify the executive responsibility for each executive officer, we have changed the timing of election of officers from June to April, which is the beginning of the fiscal year. At Board of Directors’ meetings, we are attempting to transfer authority within an appropriate range so that we can dedicate discussions to the Company’s medium- to long-term key strategies.
To bolster the Board of Directors’ effectiveness, each year we interview participants, look back on results and consider plans for improvement. Every year we also survey each committee, including the Committee of Senior Executive Directors and the Committee of Executive Officers, asking participants to reflect back on the past year. These surveys provide feedback to the secretariat, which we incorporate into improvements.
Through the accumulation of such improvements, DENSO will continue working to enhance its corporate governance.