Interview with Chairman of the Board
Independent External Officer
"The Board of Directors should always keep an eye on such signs of changes in the business environment and their effects on the essential business structure of the Group. By discussing them comprehensively, it can supervise towards the right direction."
Q1 : As the newly appointed Chairman of the Board of Directors, which welcomed three new External Directors in July this year, what are your aspirations for how you will operate the Board of Directors going forward.
A1 : It has been four years since I became a Director of the Company, which has adopted the committee-based governance structure. The Board of Directors consists of nine members, six of which are External Directors and the chairman of which is an Independent External Director. I feel that the Directors have had very frank and open discussions over the past four years, led by the External Directors and we should not change the good practice significantly.
While we tend to think that only our company has problems, actually it is often not the case. There are many problems and issues that are common to other companies and industries. The Board of Directors is in a good position to recognize the issues of the Company from a broader and more comprehensive perspective and discuss them openly.
The members of the Board have diverse backgrounds, including those with corporate management experiences, academic experts, and two non-Japanese. Being able to have proper discussions among these diverse members bolster its supervision of global businesses. I believe such operation of the Board should remain unchanged.
Q2 : You mentioned common problems in the world and the current issue of Covid-19 pandemic should be exactly one of them. The Group is being significantly affected by it and uncertainties in the business environment are expected to persist for some time to come. How does the Board of Directors view the current situation and challenges the Group is facing now?
A2 : Of course, the impact of the pandemic on our business cannot be ignored, and it is imperative for us to take countermeasures to address the current situation, such as ensuring the safety and health of our people by putting infection prevention measures in place and quick recovery of business performance.
However, paying attention only to short-term responses is not sufficient. In the construction and automobile industries, the main business areas of the Group, demand had been showing downward trends even before the pandemic. The Board of Directors should always keep an eye on such signs of changes in the business environment and their effects on the essential business structure of the Group. By discussing them comprehensively, it can supervise the executives to recognize issues and take appropriate steps to reform the Group towards the right direction.
Q3 : Please tell us how the Board of Directors intends to improve the effectiveness of the Group's corporate governance.
A3 : I think there are two important pillars of corporate governance. The first pillar is internal control of the executive branch led by the CEO. We are a global company with operations all over the world. It is important for us to unite people with diverse cultures, languages, ways of thinking and ways of working through communication. In other words, whether opinions and information from employees in the frontline of the business are being communicated well to the top; whether the ideas of the top are being properly cascaded down and permeated to the employees; and whether necessary discussions are being held between them. I believe it is essential that the Group maintain functioning organizations and systems to ensure vigorous communications.
Complementing this is the second pillar, where the Board as well as the Nomination, Audit and Compensation Committees, led by Independent External Directors, manage and supervise whether the internal control system is properly operated and functioning.
When it comes to corporate governance, people tend to focus on creating a "formal structure" like the second pillar, but without a robust first pillar of internal control, the effectiveness of the Board would not improve.
At our Group, I think that the first and the second pillars are well-balanced. The organization of the Board of Directors and each Committee is solid, and there are no factors that hinder free exchange of opinions and discussions. Therefore, I think the supervisory system is well established. More than 10 years have passed since the acquisition of Pilkington, and the internal control system for execution has improved not only in structure but also in effectiveness. However, I believe there is still room for improvement and efforts are needed. On a day-to-day business, it is necessary for the Group to make efforts to shorten the distance between the top management and employees in the frontline of the business. It should be the role of the Board of Directors to keep bringing up the areas for improvement and monitoring them.
Q4 : Medium-term Plan (MTP) Phase 2 ended in the fiscal year ending March 2020. In the final year, the financial targets were not achieved due to the deterioration of the market environment, as well as the spread of the new coronavirus infection. How does the Board of Directors evaluate and summarize MTP Phase 2?
A4 : In an era of such drastic changes in the environment, I think it is difficult for a company to accurately forecast the business environment for three years and make a plan with set numerical targets. It is very disappointing and regrettable that our MTP Phase 2 failed to reach the financial targets, but we must not evaluate that what we did was wrong or that everything went wrong.
The most important factor in evaluating MTP Phase 2 is how much structural reform actions were taken over the three years. From that point of view, it should be evaluated that the efforts to achieve the plan should be recognized, but the level of achievements did not reach what had been expected by the Board and further improvement efforts are required.
Because of its business structure, the Group is easily affected by changes in the demands in the construction and automobile industries. We are still addressing the issue of reforming the business structure, including how to approach it. In implementing structural reforms, while it is important to work on growth areas, including the development of new businesses, it is the most critical for the Group to keep making patient efforts in order to produce positive results in the existing main business areas. I think we should incorporate a reform plan to solve such issues as the basis of the next medium-term management plan.
Q5 : Lastly, please tell us your thoughts on the direction the Group should aim for in the future.
A5 : Glass will continue to be needed in the world and therefore, its markets will not suddenly disappear. With sensible corporate strategy, there should be ways to sustain the business.
However, we should not only be just seeking to survive as a conventional material supplier but also develop new applications and markets for the material. The inorganic material has diverse functionality such as controlling light and heat, conductive with coating and recyclable and has potential applications in information technology, medical, environmental and other fields.
As I said earlier, against the backdrop of pandemic, the first priority is to take counteractions immediately and improve business performance but the new medium-term management plan should incorporate essential structural reforms, particularly in the main business fields as well as a new growth strategy based on the technologies related to the wonderful material, glass. The Board of Directors will also actively work to achieve sustainable growth and increase corporate value of the Group through discussions with the executives.