System
Guided by its three basic management policies,
which are to achieve consistently profitable
growth, develop its business globally and
strengthen Group management in an increasingly
borderless world economy, the Teijin Group
strives constantly to raise corporate value.
To support these efforts, the Group has created
a strong management foundation based on an
innovative corporate structure and globally
oriented approaches to corporate governance,
marketing, human resource development
and finance.
Corporate Governance
❯❯❯38
Marketing
❯❯❯40
Human Resources
❯❯❯41
Why corporate governance?
Any company that secures capital from shareholders is expected to create consistent, profitable growth through its business activi-ties and achieve steadily increasing returns to shareholders on their investments. The first duty of management is to respond to this expectation. In addition, management must also fulfill its responsibilities to other stakeholders, which include employees, creditors, customers, suppliers, and local residents and communities.
Conducting business in a manner that enables a company to fulfill these responsibilities requires the establishment of effective corporate governance. In line with this policy, since April 1999 we have implemented a series of management reforms, including establishing an Advisory Board and a corporate officer system. In April 2003, we published the Corporate Governance Guide, with the aim of enhancing transparency, ensuring fairness and objectivity, and accelerating decision making by delineating:
• management decision-making processes; • supervisory and monitoring/auditing functions; • roles of compliance and total risk management in
regulatory practices;
• accountability to stakeholders and social responsibility.
An amendment to Japan’s Commercial Code—which was intro-duced concurrent with our adoption of a holding company system on April 1, 2003—has made it possible for companies in Japan to adopt a “Company with Committees” system. We believe that we have already achieved a level of corporate governance comparable to that sought by this amendment. Accordingly, we do not plan to adopt a “Company with Committees” system at this time, but rather to focus on ensuring the firm establishment of our holding company system while maintaining the general framework of the aforementioned management reforms. In addition to ensuring a system compatible with the purposes and spirit of the Code, we will continue to monitor changes in the social and legal environ-ments and revise our corporate governance system as necessary to ensure absolute effectiveness.
Separating and reinforcing decision making,
front-line management of operations and
monitoring/auditing functions
We have set the number of directors on Teijin’s Board of Directors at a maximum of 10 to expedite decision making and clarify accountability. We have also introduced a corporate officer
Corporate Governance System
Holding Company System
Advisory Board
Nomination and Remuneration CommitteeShareholders’
Meeting
Board of Directors
10 members (of which three are external)TRM Committee (CEO, CSO, CSRO, CTO, CHO)
Board of Auditors
Five members (of which three are external)
Group Board of Auditors
CEO
Management Committee (Heads of Business Groups
and Chief Officers*)
Seven Business Gr
oups
Majority of members are external
Management System
Corporate
Governance
*Chief Officers
CEO: Chief Executive Officer CSO: Chief Strategy Officer CSRO: Chief Social Responsibility Officer CTO: Chief Technology Officer CMO: Chief Marketing Officer CFO: Chief Financial Officer CHO: Chief Human Resources Officer The Teijin Group’s Corporate Governance System
system and delegated considerable authority and responsibility to corporate officers. Three directors are independent individuals appointed from outside the Group and engaged by Teijin under limited responsibility agreements.
To ensure the appropriate separation of responsibility for monitoring/auditing and internal, front-line management of operations, the chairman is in charge of the Board of Directors.
We have assembled a Board of Auditors comprising five members, three of whom are external, thereby ensuring transparency and the effective monitoring/auditing of management. The independence of external auditors is guaranteed.
We have also installed a Group Board of Auditors comprising auditors from Group companies, which is charged with monitoring/ auditing the Teijin Group with respect to consolidated management, thereby ensuring the fairness of auditing.
Compliance and total risk management
The Teijin Group operates on the principle that effective corporate governance depends on strict compliance and comprehensive risk management.
We define “compliance” as the ability of every Teijin Group employee to act in accordance with relevant laws, ordinances and rules and to observe a strict code of corporate ethics. To ensure compliance on both levels, we established Group standards of conduct and work tirelessly to promote greater awareness of corporate ethics among employees.
We also established a Total Risk Management (TRM) Committee within the Board of Directors to counter the various uncertainties facing the Teijin Group. We are also developing a risk management system that will accelerate Groupwide decision making.
Advisory Board
We have established an Advisory Board that includes experts from Japan and overseas to advise on management issues and evaluate the performance of top executives, thereby enhancing the effectiveness and transparency of management. The Advisory Board comprises five or six external members, of which three are Japanese and two or three are non-Japanese, as well as the chairman and president and CEO of Teijin. Teijin’s chairman serves as chairman of the Advisory Board, which meets twice annually.
Within the Advisory Board, we have created a Nomination and Remuneration Committee, which is charged with deliberating the appointment and retirement of presidents and the selection of successors, as well as appraising the remuneration systems, salary levels and performance of directors, auditors and corporate officers. Issues pertaining to the CEO and/or the chairman are deliberated without the participation of these two individuals.
Makoto Okitsu
Chairman of Teijin
Rob Margetts
Former vice-chairman of ICI
John W. Himes
Former senior vice-president of DuPont
Katsunari Suzuki
Former ambassador of Japan to Vietnam and Brazil
Yuzaburo Mogi
Chairman of the Board and CEO of Kikkoman Corporation
Hajime Sasaki
Chairman of NEC Corporation
Toru Nagashima
President and CEO of Teijin Advisory Board meeting
Advisory Board Members
Promoting Groupwide Market Development Efforts
Marketing activities for the Teijin Group’s various businesses are conducted by dedicated groups and overseen by the Chief Marketing Officer (CMO). Our marketing approach is customer-oriented and global, aiming to reinforce our ability to tailor services to customer needs and to cultivate new markets that maximize Group synergies.
Stronger Groupwide marketing
Encouraging a greater sense of unity within the Teijin Group and strengthening Groupwide marketing capabilities have taken on new importance in recent years with the creation of new Group companies. To these ends, our marketing groups are working together closely with the Chief Technology Officer (CTO) and Group companies to promote a variety of marketing activities. These include organizing comprehensive technological demon-strations and seminars aimed at key prospective customers in the promising fields of automobile manufacturing and IT, as well as promoting coherent, strategic marketing to customers of multiple Group companies and participating in the development of new products.
Environment-oriented new businesses that
exemplify the Teijin brand
To realize the potential of our brand statement, “Human Chemistry, Human Solutions,” we are expanding our operations through Groupwide efforts to strategically cultivate environmental busi-nesses. Our marketing program places a high priority on activities that promote public awareness of these businesses, including
public tours of factories and involvement in recycling, environmental education programs for children, and participation in the planning and execution of exhibitions that showcase various ecological products.
Expansion of business in the PRC
We are moving swiftly to cultivate new markets and reinforce our presence in the PRC, which continues to offer outstanding promise. With the aim of strengthening Groupwide marketing in China, we established the Shanghai Branch of our China Marketing Office, augmenting the Office’s original branch in Beijing. These branches not only support business groups establishing operations in the PRC, but also gather information and build a critical base of market knowledge and expertise that will enable us to provide comprehensive assistance on both the manufacturing and marketing fronts.
Teijin Group Operations in the PRC
(As of July 2005)
The Teijin Group’s booth at Eco-Products 2004 exhibition in Tokyo
Management System
Marketing
China Marketing Office (Beijing Branch)
DuPont Hongji Films Foshan Co., Ltd. (Films Business Group) FoshanFoshanFF Beijing Beijing Nantong N Shanghai Zhapu Hong Kong Nantong Teijin Co., Ltd. (Textile Fibers Business Group)
China Marketing Office (Shanghai Branch)
Teijin Twaron Asia Co., Ltd. (Industrial Fibers Business Group) Toho Tenax Co., Ltd., Shanghai Office (Industrial Fibers Business Group) Shanghai Teijin Kasei Trading Co., Ltd. (Plastics Business Group) Teijin Chemicals Plastic Compounds Shanghai Co., Ltd. (Plastics Business Group) N.I. Teijin Shoji (Shanghai) Co., Ltd. (Fiber Products Marketing Business Group)
Teijin Polycarbonate China Ltd. (Zhapu)
Teijin Hong Kong Limited (Textile Fibers Business Group)
DuPont Teijin Advanced Papers (Asia) Limited (Industrial Fibers Business Group) DuPont Teijin Films China Limited (Films Business Group)
Teijin Kasei Hong Kong Limited (Plastics Business Group)
The Teijin Group is committed to translating the Group’s philosophy of growing with its employees into concrete action. This necessitates the creation of a personnel system that enables the Group to fulfill this important responsibility within the framework of its holding company scheme, that is, a system that responds to the demands of Group and global management. This system must be flexible, enabling it to embrace diversity within the Group, and progressive, ensuring it is acceptable to employees worldwide.
Cultivating core human resources through training and skill-development programs remains another priority task. To this end, we have introduced a universal training system designed to cultivate human resources in a manner that ensures effective Group and global management.
Training for core Group human resources
The approximately 160 companies of the Teijin Group currently employ around 19,000 people worldwide. Recognizing that strong future leaders will be essential to ensure its ability to withstand global competition, the Teijin Group established the Core Group Human Resources Training System, a program to select candidates for future Group director positions, provide training to develop necessary management expertise and provide a career rotation that ensures crucial front-line experience.We have also introduced a training program for Group employees in their late 30s whereby such individuals are seconded to other
Promoting Human Resource Development to Ensure Effective
Group and Global Management
companies in the same or different industries, enabling them to broaden their experience and perspective as well as enhance their skills.
Efforts to promote the advancement of female
employees
Teijin has established the Diversity Development Section, which aims to make work environments more conducive to maximizing the capabilities of female employees. We have also taken steps to increase the number of women in the workplace. These include amending our personnel system to protect employees before and after childbirth and make it easier for them to balance the demands of work and family; requiring that at least 30% of university graduates recruited each year be female; and launching the WIND (Women’s Intensive Development) program, which aims to foster management skills.
In Japan, the Teijin Group is formulating and implementing action plans designed to ensure compliance with the Law for Measures to Support the Development of the Next Generation, which endeavors to address the nation’s declining fertility by mobilizing local governments and businesses to cooperate in creating an environment conducive to the bearing and raising of children. In particular, we are introducing initiatives designed to encourage employees to take maternity and child-care leave and provide support for employees with pre-school age children.
Teijin’s Fuji Training Center together, an internal publication aimed
at female employees
A two-pronged approach
In line with its commitment to ensuring profitable growth, the Teijin Group has pursued an ambitious program of M&A and alliances with other firms that have transformed it into a multinational organi-zation. Driven by internal and external factors—namely, the rapid expansion of its businesses and regulatory changes, that is, the introduction of consolidated accounting, accounting standards for retirement benefits and market-value accounting—Teijin, like other Japanese companies, is under increasing pressure to bring its financial practices into line with internationally accepted principles. In addressing these changes, we have adopted a two-pronged approach focusing on global and Groupwide issues.
A solid global financial system
One of the most crucial tasks facing any corporate entity is to secure access to low-cost funds and establish a system to facilitate their efficient use. To these ends, the Teijin Group has established financial holding companies in the United States, Europe and Japan, which are responsible for procuring funds in their respective markets. These financial holding companies invest in local Group companies, thereby positioning themselves to receive and reinvest dividend payments. In addition to procuring funds, the financial holding companies also hold idle funds in reserve on behalf of Group companies, thereby helping them achieve greater financial efficiency.
Teijin also intends to establish financial holding companies in the Association of Southeast Asian Nations (ASEAN) region and the PRC, where rapid regulatory change and improvements in financial infra-structures are creating an environment conducive to such a step.
Key financial measures and timely and
appropriate disclosure
In keeping with its commitment to its shareholders, the Teijin Group has adopted two key financial ratios as indicators of management effectiveness: ROA and debt-to-equity ratio. As part of its current medium-term management plan, the Group also introduced TSVA,
an original, value-based performance measure of its worth to shareholders. The basic calculation of TSVA is Net income – (Total shareholders’ equity x Cost of capital).
Teijin recognizes that ensuring timely and appropriate disclosure depends on an effective investor relations (IR) program. Top Group executives have taken the lead in ensuring that ongoing, constructive communications are maintained with the investment community and that the Group lives up to its obligations in terms of transparent, fair and swift disclosure. In practice, this means guaranteeing the transparent and fair disclosure of accurate information to share-holders. It also means swiftly communicating strategic efforts to respond to changes in the Group’s operating environment and competitive positioning. Teijin was earlier than many companies to issue detailed reports of its quarterly results. Today, the Group is also working to accelerate the release of its full-term results.
Building a World-Class Financial Organization
Management System
Finance
Total Assets, Interest-Bearing Debt, ROA and Debt-to-Equity Ratio 1,250 1,000 750 500 250 0 6.0 4.8 3.6 2.4 1.2 0 ’02 ’01 ’03 ’04 ’05 379 429 444 357 1,059 1,105 1,037 915 4.2 1.18 2.7 1.38 3.3 1.59 4.0 5.9 1.21 277 852 0.95
(Billions of yen) (%, Times)
