Corporate Governance

Related ESG: G SDGs16
Corporate governance

Management Approach

Basic approach

To respond to the changing times and continually enhance corporate value, the Toyobo Group endeavors to strengthen group governance based on the policies of enhancing timeliness and accuracy in decision-making, ensuring transparency in management, and emphasizing fairness.

Corporate governance structure

Toyobo is a company with internal auditors and, under this governance system, has adopted the corporate officer system. In the corporate officer system, which is defined in our management regulations, the Board of Directors oversees the business execution of Corporate Officers. Under Toyobo’s governance framework, a clear separation is made between the role of the Board of Directors—which oversees decision-making and performs management oversight—and the Corporate Officers who are in charge of business execution. This system enables rapid decision-making and efficient business execution.

Corporate Governance Structure (as of June 2020)

Corporate Governance Structure (as of June 2020)

Meetings Convened in FY2020

Number of meetings held
Board of Directors 19
Board of Corporate Auditors 15
Nomination Committee 2
Advisory Board on Compensation 2
Outside Officer Liaison Meeting 7
Board of Corporate Executive Officers and Controlling Supervisors 31
Corporate Planning Committee 10
Financial Management Committee 20

Attendance Record of Outside Directors (attendance rate) (FY2020)

Board of Directors Board of Corporate Auditors Nomination Committee Advisory Board on Compensation
Taketoshi Oka (Director) 18/19 (95%) 2/2 (100%) 1/2 (50%)
Masaru Nakamura (Director) 19/19 (100%) 2/2 (100%) 2/2 (100%)
Takafumi Isogai (Director) 16/19 (84%) 2/2 (100%)
Kimie Sakuragi (Director) 15/15 (100%) 2/2 (100%)
Shiro Takenaka (Corporate Auditor) 19/19 (100%) 15/15 (100%) 2/2 (100%)
Hiroyuki Sugimoto (Corporate Auditor) 18/19 (95%) 15/15 (100%) 2/2 (100%)

Board of Directors

The Board of Directors has 10 directors, including four outside and Controlling Supervisors directors. A director’s term of office is set at one year to ensure a swift response to changes in the business environment and to clarify the responsibilities.

At the General Shareholders’ Meeting held in June 2019, one outside director (female) was appointed in order to increase diversity and strengthen the supervisory function. Moreover, at the General Shareholders' Meeting held in June 2020, we adopted a modified system aimed at further separating decision-making and supervision from business execution. For example, the Board is elected from outside directors and corporate officers who oversee departments that are engaged in operations with a company-wide scope. This system makes it easier for corporate officers, who are responsible for specific businesses, to concentrate on their respective businesses and fields.

In fiscal 2020, the Board of Directors made decisions on matters stipulated in laws and the Articles of Incorporation, and on important investment deals including acquisitions. In addition, the Board received reports on each business and conducted appropriate supervision.

In order to further optimize the functions of outside officers (both directors and auditors), important issues are shared beforehand. In addition, Toyobo periodically holds liaison meetings that consist of representative directors and outside officers, to share their viewpoints and exchange opinions on management issues.

Board of Corporate Auditors

The Board of Corporate Auditors has four members, two of whom are outside corporate auditors. Their responsibilities include attending meetings of the Board of Directors and other important meetings, stating their opinions when necessary, and auditing each department’s operation in order to audit directors’ execution performance.

KPMG AZSA LLC has been appointed to conduct the Toyobo Group’s independent audits required under Japan’s Companies Act. The Board of Corporate Auditors receives auditing plans and reports from the independent auditor and meets with the independent auditor periodically to exchange information. The Board of Corporate Auditors also exchanges information with the internal audit department, which monitors the effectiveness of internal control.

Board of Corporate Executive Officers and Controlling Supervisors

There are 20 corporate officers, including some who serve concurrently as directors. The Board of Corporate Executive Officers and Controlling Supervisors deliberates in advance on matters to be resolved by the Board of Directors, and determines matters related to business execution, which has been entrusted by the Board of Directors. The Corporate Planning Committee and the Financial Management Committee are established under the Board of Corporate Executive Officers and Controlling Supervisors. They deliberate on important investments and new projects, important borrowing, etc. from their respective realms of expertise, thereby managing business risk.

A working group comprised of directors was also established to discuss issues including the future vision of the Toyobo Group.

Nomination Committee / Advisory Board on Compensation

The Nomination Committee and Advisory Board on Compensation deliberate and report to the Board of Directors from the perspective of ensuring transparency and fairness in the determination of nomination and compensation of directors and other officers.

The Nomination Committee comprises the two representative directors and six outside officers. It reports on the appointment of directors and executive officers from the perspective of fairness and transparency in response to inquiries from the Board of Directors. The Advisory Board on Compensation comprises the two representative directors and three outside directors. It deliberates and verifies the system, level, and method of calculation of compensation for officers from an objective and fair point of view based on the results of surveys by outside organizations.

Targets and KPI


The Toyobo Group is building a fair and highly transparent governance structure through compliance with the Corporate Governance Code and proactive information disclosure.

<Targets and Results>

Initiatives KPI Targets Results (FY2020)
  • Strengthen corporate governance
  • Strengthen information disclosure
  1. No. of meeting of the Board of Directors/committees
  1. Disclose results
  1. Board of Directors’ meetings: 19, Other meetings*: 4
  1. Attendance rate of officers at meetings in 1.
  1. Disclose results
  1. Share on the Company website
  1. Disclosure of details of evaluation of Board of Directors’ effectiveness
  1. Disclose details of effectiveness evaluation
  1. Equivalent of the Corporate Governance Report
  • * Nomination Committee and Advisory Board on Compensation

Progress in system enhancement

The Toyobo Group has worked continuously to strengthen corporate governance.

Initiatives to Strengthen Corporate Governance

Year Initiative & Objective
  • Established the Ethics Committee (the current Sustainability Committee)
    To promote companywide compliance activities as a key element of management
  • Appointed one outside director, shortened the term of office for directors to one year
    To clarify management accountability by strengthening the supervisory function and shortening the term of office
  • Established an Advisory Board on Officer Provisions, etc. (the current Advisory Board on Compensation)
    To ensure transparency and fairness in procedures for determining officer compensation
  • Introduced a corporate officer system, reduced the number of directors
    To split the decision-making/supervisory and executive functions
  • Increased number of outside directors to two
    To strengthen the supervisory function by multiple appointments
  • Established an outside officer liaison meeting
    To hold regular information exchange meetings to optimize the functions of outside officers
  • Established the Nomination Committee
    To ensure transparency and fairness in procedures for nominating/dismissing directors
  • Made an analysis/evaluation of the overall effectiveness of the Board of Directors
    Will annually identify issues and make improvements
  • Increased number of outside directors to three, raising their ratio to one third of all directors
    To ensure diversity among members of the Board of Directors, as well as strengthen governance
  • Increased number of outside directors to four (adding a female director)
    To further promote diversity among members of the Board of Directors
  • Revised the officer compensation system (introduced compensation in the form of restricted stock units)
    To offer longer term incentives and realize greater sharing of value with shareholders
  • Implemented further separation between decision-making/supervision and business execution in regard to election of directors

Director skill matrix

The directors who execute business are elected from among the directors based on whether they have the requisite experience and qualities for the area of responsibility and whether they have a company-wide perspective.

Director Skill Matrix (as of June 2020)

Age Gender Within the expertise required by the Company, skills that are particularly beneficial
(3 for inside directors and 1 for outside directors)
R&D Sustain
& Quality
Inside Seiji Narahara 63 Male
Masaru Watanabe 63 Male
Ikuo Takeuchi 57 Male
Hiroshi Otsuki 59 Male
Yoshio Araki 60 Male
Masakatsu Shirai 57 Male
Outside Masaru Nakamura 66 Male
Takafumi Isogai 71 Male
Kimie Sakuragi 61 Female
Masaaki Harima 69 Male

Evaluating the effectiveness of the Board of Directors

From January to March 2020, in order to further enhance the functions of the Board of Directors, an overall analysis and evaluation of the effectiveness of the Board in fiscal 2020 was carried out with the support of a third-party organization.

Method of analysis and evaluation of effectiveness

We have conducted a survey on our directors and corporate auditors. As in the previous fiscal year, the responses to this survey were provided directly to the external organization. Analysis and evaluation were carried out by the Board of Directors based on the aggregated survey reported by the external organization.

Summary of evaluation results

  1. The survey results gave a broadly positive assessment regarding matters including the number of Board members, the ratio of internal and outside officers, its composition including the diversity of members, and management of meetings procedures. This confirms the overall effectiveness of the Board of Directors.
  2. In order to further enhance discussion concerning long-term business strategy, the Board of Directors is promoting initiatives aimed at sustainable growth, which involves reviewing the criteria for selecting items on the agenda and delegating the appropriate authority to subordinate meeting bodies, etc.
  3. As well as continuing last fiscal year’s initiatives, the Board aims to further strengthen its Group management functions.

Officer compensation

Toyobo’s system of officer compensation is designed in line with basic policy, within the monetary amount of officer compensation by the Advisory Board on Compensation and resolved at the General Shareholders’ Meeting. Our basic policy is as follows: (1) provide incentives that lead to Toyobo Group’s sustained growth and enhance corporate value over the longer term; (2) secure highly talented management personnel; (3) set determination procedures that are objective and highly transparent.

Based on the above policy, in fiscal 2020 we reviewed the compensation system for directors, including the introduction of a stock compensation scheme.

Details of Officer Compensation (FY2020)

Position Total compensation, etc. (¥ mn) Total compensation by type (¥ mn) Number of officers
Monthly compensation Stock compensation
Directors (excluding outside directors) 340 312 28 6
Corporate auditors (excluding outside corporate auditors) 51 51 - 2
Outside officers 55 55 - 6

Training programs for officers

For our newly appointed directors and corporate auditors, we provide orientation concerning their roles and duties, as they undergo an external training program upon their appointment, in order to acquire the necessary knowledge.

In addition, newly appointed outside directors and outside corporate auditors also attend orientations regarding the Company’s operations, finances and organization, and more.

They are also encouraged to continue participating in external training programs and lectures to continuously build on their managerial literacy.

Message from an Outside Director

Contributing my BtoC experience

Kimie Sakuragi Outside Director

Kimie Sakuragi
Outside Director

“Toyobo is actually a BtoBtoC (business-to-business- to-consumer) company,” President Seiji Narahara told me prior to my appointment as outside director. “Many people view us as a BtoB company, but the materials we provide to our client companies would eventually become products for the general consumers.” I had also thought of Toyobo as a BtoB company and anticipated adding my expertise from working at a BtoC company. However, the insight I gained from that discussion with Mr. Narahara made it crystal clear what Toyobo needed from me.

In experience serving as a business ethics and compliance officer and Audit & Supervisory Board Member, my general assessment criteria have been to ask, Are the company’s actions in line with its philosophy? Is the company meeting the expectations of stakeholders, or are they falling short? and Do the words match with the deeds? After working for a BtoC company, I am also aware of the duty of an outside director to evaluate our operations from the perspectives of the consumer and society.

Reforming corporate governance

Over the past year, the Toyobo Group made significant progress promoting strategies for medium- and long-term growth, such as reorganizing the corporate philosophy and reforming the corporate structure.

In terms of corporate governance, we further separated business supervision and the execution of duties by shifting more decision-making authority to the people at the business site and reorganizing the board of directors to focus on planning and monitoring of medium to long-term growth initiatives.

Now that we have established a corporate structure for generating steady and stable profit flow, our top priority for the Board of Directors is to set a roadmap towards attaining consolidated sales of ¥500 billion in fiscal 2026.

Promoting the participation and advancement of women in the workplace

I believe, promoting and appointing more women to management positions is major area the management needs to address. Despite initiatives advanced by the Women Empowerment Promotion Group, in fiscal 2020 the percentage of women management was still a low 4.3%.

Soon after I was appointed as outside director, I was given an opportunity to share my own career experiences and meet with a few of the women in management positions. My impression was that they were an exceptionally capable group. I believe that the management would do well to take a moment to reflect on the real benefits that will come from developing and using the full potential and skills of its female workforce.

I would think it is reasonable to believe that in most households, women make most of the purchasing decisions related to consumer goods. Toyobo is presently reforming its business model and shifting towards a market centric approach. The management would be missing a major opportunity if it does not leverage the significant insight its female managements and employees could bring to identifying market needs creating business and making business decisions.

Research shows that the active participation and advancement of women in the workforce is proportionate to corporate performance. I believe Toyobo needs to do more to develop, promote, and encourage women in the workplace.

Toyobo in the future

Our future society after the COVID-19 pandemic is uncertain, but I expect there will be a drastic change in people’s values in relation to lifestyle and health. Toyobo has been providing PCR test reagents and detection kits, mask materials, and medical face shield materials to help prevent the spread of the virus. The Company needs to continue to accelerate “creating solutions for people and the earth.”

The reconfigured TOYOBO spirit consists of three values of the TOYOBO PVVs corporate philosophy system–challenge, reliability, and collaboration. Toyobo is an outstanding company that is credible and dedicated to its purpose. Toyobo is building customer trust with its advanced technologies and actively communicating with stakeholders. However, I believe more can be done to take on new challenges. The Company needs to change how we interact with customers and the market, be more flexible in generating ideas, and fulfill society’s expectations by proactively taking on more challenges to create new values. Right now, I believe that is the greatest priority for the Toyobo Group.