TDK sees ensuring the effectiveness of the Board of Directors as a crucial issue and takes measures to enhance the functioning of the Board
The structure and function of the Board of Directors were highly evaluated. It was also pointed out, however, that establishing governance systems that can complete structural reforms accelerate the pace of globalization, as well as increase shareholder value over the long term. Based on strategies that pursue growth, more time will be needed for deliberations by the Board on medium- to long-term management issues and major risks in growth strategies. In addition, further strengthening of systems will be needed to enable such deliberations.
TDK reviewed the Board of Directors agendas and provided additional time for deliberating on medium- to long-term issues and major risks. The Board's schedule was also reviewed, and the following measures were implemented:
A Board of Directors meeting will be held at the beginning of each fiscal year to provide an overview of the business of each business company and to explain medium- to long-term policies.
Board of Directors meetings will be held twice annually to allow each business company to report on the subsequent progress of its business plans.
TDK reorganized its head office functions and established the Corporate Strategy HQ to reinforce strategic functions. The Corporate Strategy HQ comprises legal affairs, management planning, human resource development, and public relations functions, and is responsible for Board of Directors operations, legal responses, formulating and managing business strategies, organizational structures, human resource development, internal and external communications, and carrying out companywide business strategies.
In fiscal 2016 some directors and Audit & Supervisory Board Members were replaced, and the Chairman of the Board of Directors was also replaced. TDK also adopted a Medium-Term Plan with fiscal 2016 as its first year and is working to increase corporate value even further through continuous growth based on this plan. In light of the changes to the composition of the Board of Directors and the current status of the transition to a new management stage, TDK determined that comprehensive verification of the effectiveness of the Board of Directors under the new system is necessary, and an external evaluation was conducted in fiscal 2016, as in the previous fiscal year.
A questionnaire on the effectiveness of the Board of Directors as a whole, as well as of each committee, director, and Audit & Supervisory Board Member was prepared based on the results of the fiscal 2015 evaluation and the current status of TDK's Board of Directors and business. Each director and Audit & Supervisory Board Member prepared written answers in response to a questionnaire. Based on the responses, a third-party organization conducted detailed interviews of each director and Audit & Supervisory Board Member with a focus on matters of particular importance to the Board. The third-party organization submitted a report to the Board based on the responses to the questionnaire and the results of the interviews. The Board of Directors verified and evaluated the current status of the Board based on the report and identified issues. The main items of the evaluation of the Board's effectiveness were as follows:
In fiscal 2016, new members joined the Board of Directors and Advisory & Supervisory Board, and a new Chairman was appointed to the Board of Directors. Under the leadership of the Chairman, who is an independent outside director, the culture of serious and open discussion was maintained, and substantive deliberations were actively conducted. In addition, confirmation was made that the audit functions of the Board of Directors were enhanced by focusing even more on medium- to long-term growth strategies. Confirmation was also made that appropriate measures were undertaken to address the issues identified in the prior evaluation as discussed in the previous item.
TDK became aware that under a climate of extreme change and a rapid pace of business, accelerating growth under the “true globalization policy” set forth in the Medium-Term Plan will require even further change in response by the Board of Directors and management systems. It was also confirmed that (1) enhanced deliberations on medium- to long-term issues; (2) development of a long-term succession plan; and (3) reinforcement of corporate functions in response to globalization are topics for continued deliberation over the medium to long term.
The Board of Directors discussed how it should respond to these issues. The following are matters regarding which action has already been taken or will be continued into the future:
Review of the Board of Directors composition
Further enhancement of deliberations by the Board of Directors
The status of these measures will be confirmed in the next Board of Directors evaluation. TDK will verify the effectiveness of the Board of Directors each year and will continuously raise its effectiveness.
View the full text of “Corporate Governance” on the PDF version.Corporate Governance