I laud TDK Corporation for conducting a variety of advanced initiatives over time in the name of strengthening corporate governance. During fiscal 2016 as well, the Company has become one of the first to implement a third-party evaluation system for its Board of Directors, which discusses issues based on the results of those evaluations. This and other efforts show that TDK Corporation is by no means settling for its current state of corporate governance, and is instead further pushing forward with initiatives aimed at strengthening it.
At TDK Corporation, three out of the company’s seven Directors are Outside Directors. These Outside Directors also serve in the posts of Chairman of the Board and Chairmen of the Nomination Advisory Committee and Compensation Advisory Committee. With 13 years having passed since TDK Corporation first invited Outside Directors into its organization in 2002, the Outside Director system has taken root at the company in a viable form. It is clear to me that the company’s Outside Directors and Outside Audit & Supervisory Board Members are taking advantage of their respective insight and making their voices heard, and that their opinions are exerting a considerable influence on the management of the Company.
While there may be differences in their position and approach, those Outside Directors and Outside Audit & Supervisory Board Members share the common purpose of elevating TDK Corporation’s corporate value as they freely pit their opinions against each other. From my perspective, this relationship between the two is akin to a “coalition cabinet.”
Still, no matter how much something might be actively discussed by the Board of Directors, if that agenda is not sufficiently incorporated in the Company’s business activities, there is no point to that discussion. In further elevating the viability of corporate governance, I believe that two-way communication through which Outside Directors and Outside Audit & Supervisory Board Members also increase their opportunities to interact with members of the business execution side and endeavor to diffuse that agenda on the frontlines while also relating the actual status of those frontlines to management is essential. Additionally, while seven out of our 19 Corporate Officers at TDK Corporation are non-Japanese, my view is that it is soon time for us to promote non-Japanese to Outside Director posts as well as we continue striving to
become a truely global company.
The pursuit of short-term profit growth targets by corporations as they boost indexes such as earnings efficiency, profitability, investment efficiency, and human productivity is something that should be conducted as a matter of course in order to meet the expectations of investors. One of the attributes that defines the electronic components industry is that it takes time for the products of investment to blossom. Even when introducing the development or manufacturing of new materials or products, without gestating over a long period of time an end result that truly achieves differentiation will not come about. At the same time, the electronic components industry also easily succumbs to the impact of changes in the market environment. For precisely that reason, I sense that there are often differences in how that industry is perceived compared to a market that changes over a short period of time. Where that point is concerned, in the context of the introduction of the Corporate Governance Code of Japan and the Japanese Stewardship Code, I believe the current trend of investors and businesses with differing measures for investment and growth coming closer together is a desirable one, and that in fulfilling the key role that it has, management needs to aggressively arrange forums for dialogue with investors and patiently issue persuasive explanations even more than before.
During fiscal 2015, TDK Corporation showed increased momentum in the recovery of its business performance as exemplified by its net sales surpassing ¥1 trillion, a first for the Company. However, this does not mean that its underlying essential value has changed. Rather, I think that the current momentum is the by-product of the increasing penetration of the “TDK WAY” that has been in place since the Company’s founding, namely taking materials and leveraging their attributes to bring forth unique, competitive products with magnetics technology at their core, among our customers globally as well as inside Japan.
In the future as well, the incorporation of electronic components in large numbers will go beyond electronic products to take place across multiple industries, starting with automobiles. While it is impossible to foresee the future 10 to 20 years down the road, no matter how our flagship products may shift or how our customers may exhibit dynamic change, as long as TDK Corporation continues to evolve upon the “TDK WAY,” I am confident that the Company will remain highly recognized by greater society. Additionally, accommodating the requests of that society through value that leads to improved security and comfort in the form of environment-friendly products, products that feel good to use, and products that match consumer sensibilities is also an essential component of the company’s long-term sustainable growth. As TDK Corporation approaches its 100th anniversary, I believe its management will be called upon to fulfill the mission of continuing to communicate the founding spirit and values of TDK on a worldwide scale and share them across generations.