Mazda is working to enhance corporate governance and strengthen internal control in order to improve the transparency of management and expedite decision-making.
Mazda respects the purport of the Corporate Governance Code formulated by the Tokyo Stock Exchange and, while working to build a good relationship with its stakeholders, including shareholders, customers, suppliers, the local community and its employees, the Company strives to sustain growth and enhance its corporate value over the medium and long term through transparent, fair, prompt and decisive decision-making and to continue to enhance its corporate governance.
Corporate Governance Framework
* Company-wide Safety and Health Committee Meeting, Quality Committee Meeting, Risk Compliance Committee, Human Rights Committee, Security and Export Control Committee, etc.
For detailed information, please see the following.
Corporate Governance Framework
The Board of Directors is made up of eight directors, two of whom are highly independent outside directors. (as of June 30, 2016). The outside directors are expected to help strengthen oversight of the Board of Directors and further boost the transparency of management by offering advice on Mazda’s management activities based on their knowledge, experience, and insights, and by taking part in the decision-making process.
The Audit & Supervisory Board is made up of five members, including two full-time corporate auditors and three highly independent outside corporate auditors (as of June 30, 2016). The Audit & Supervisory Board members audit the directors in the execution of their duties in accordance with an annual audit plan formulated by the Audit & Supervisory Board. Accounting audits are conducted by KPMG AZSA LLC.
In addition to the general meeting of shareholders and meetings of the Board of Directors, Audit & Supervisory Board and other bodies designated by law, Mazda holds executive committee meetings to convey information necessary for debate on important company-wide policies and initiatives and business management as well as advisory bodies that contribute to decision-making by the president. The Company has also introduced an executive officer system. By separating execution and management, the effectiveness of the oversight of the Board of Directors is enhanced, and decision-making is speeded up through expanded debate by the Board of Directors and by delegating authority to executive officers. In this way, the Company is working to further managerial efficiency.
Enhancing Transparency and Fairness in the Nomination and Appointment of Officers and Determination of their Remuneration
Mazda has established an Officer Lineup Advisory Committee to discuss the make-up of the officer lineup and policies for the development and selection of candidates for nominating and appointing directors, Audit & Supervisory Board Members and executive officers.
The Company has established an Officer Remuneration Advisory Committee to discuss remuneration policy and a structure and process based on the policy to enable its continued growth and to enhance its corporate value over the medium and long terms.
The Officer Lineup Advisory Committee is composed of eight internal directors and two outside directors, while the Officer Remuneration Advisory Committee is composed of three internal directors and two outside directors. Both committees are advisory bodies to the president and are chaired by an outside director.
The policies for the nomination and appointment of officers and the policies for determining remuneration are disclosed in the Corporate Governance Report.
Support for Outside Directors and Outside Audit & Supervisory Board Members
The Company provides explanations of matters to be brought before the Board of Directors as necessary so that outside officers can freely state their opinions at board meetings. The Company also arranges for outside officers to interview executive officers and provides opportunities for them to inspect facilities and participate in events both inside and outside the Company. The full-time Audit & Supervisory Board members provide outside directors and outside Audit & Supervisory Board members with information they have obtained through attending important internal meetings and through their audit activities. Relevant departments cooperate in providing information and support to outside directors and outside Audit & Supervisory Board members.
Analysis and Evaluation of the Effectiveness of the Board of Directors
Mazda analyzes and evaluates the effectiveness of the Board of Directors in order to steadily advance measures for the further enhancement of the board’s efficiency. In this initiative, based on a survey prepared by the board’s secretariat, all of the directors and members of the Audit & Supervisory Board evaluate the board’s effectiveness. After the results are compiled by the secretariat, an analysis of the current situation is shared at a board meeting, and the ideal to be pursued and improvements are discussed.
In FY March 2016, it was found that members of the Board of Directors share the Company’s vision and business strategy, that the outside directors express their opinions from an independent perspective after gaining an understanding of the Company’s situation by receiving explanations of resolutions in advance and other forms of support, and that the oversight function of the execution of operations has been ensured. It was also found that corporate governance is being appropriately discussed.
On the other hand, it was found that there is a need to monitor the execution of the business strategy more effectively and to further strengthen the analysis of risks when debating individual resolutions, and the company will work to make these improvements.
The Company will analyze and evaluate the board’s effectiveness annually and continue to make improvements in order to enhance corporate value over the medium and long term.
Cooperation among Parties Responsible for Auditing
Audit & Supervisory Board members (full time), the auditing company, and the Global Auditing Department hold the meetings below on a regular basis to exchange information mainly on issues related to internal controls.
- ■ Meeting between Audit & Supervisory Board members (full time) and the auditing company
- ■ Meeting between Audit & Supervisory Board members (full time) and the Mazda’s auditing department
- ■ Three-party meeting among Audit & Supervisory Board members (full time), the auditing company, and the Mazda’s auditing department
Auditing for Group Companies’ Management
In the Mazda Group, each Group company has established a corporate governance framework with the aim of enhancing cooperation between Mazda and the Group companies.
Group companies in Japan set the corporate auditors. Through the Group Audit & Supervisory Board Members’ Meetings attended by the audit & supervisory board members (full time) of the Group’s large companies and appointed part-time corporate auditors from among the Mazda employees, Mazda aims to strengthen ties between Mazda and its Group companies.
Major overseas Group companies have the Audit Committee*1 to discuss matters relating to internal control. Executives and internal auditing-related departments of each overseas Group company, as well as Mazda’s related departments and the auditing department, participate in each company’s Audit Committee meetings and exchange opinions. Mazda’s Executive Officers and full-time Audit & Supervisory Board members also attend the meetings at the Group companies in Europe, North America and Australia.
*1 Committees are set and operated independently for each overseas group company for the purpose of gathering information and exchanging opinions on internal control.
Internal audits are conducted in Mazda and its Group companies in Japan and overseas, for the purpose of ensuring sound and efficient management.
The Mazda’s auditing department is staffed with those qualified as Certified Internal Auditor (CIA), Certified Information System Auditor (CISA), etc. Members of the department are continuously encouraged to improve their auditing skills, acquire specialized qualifications, and participate in outside training programs and internal workshops.
Internal auditing in Group companies
- ■ Major Group companies (North America, Europe, China, Thailand, Australia, etc.): The internal auditing department of each company conducts audits and reports the results to Mazda. To ensure high auditing quality, Mazda’s auditing department conducts audits advises on annual audit plans and audit results, and provides information related to auditing, and various other support.
- ■ Other Group companies in Japan and overseas, and Mazda: Mazda’s auditing department conducts audits.
I am in charge of all aspects of the internal audit function in Mazda Australia, which includes J-SOX audits, operation audits and Control Self- Assessment reviews. Our company is at a mature stage of internal control in all key processes. Our present challenge is working around system limitations to design and implement system controls at the new Parts Distribution Centre.
I will continue to widen and raise my knowledge of the business and to be a reliable person in charge, based on the latest information about internal controls and audit services as well as important issues identified in the Mazda group provided by Mazda Head Office.
IT System Auditing
The Mazda’s auditing department and the internal auditing departments of overseas Group companies conduct audits on overall IT control concerning financial reports and IT security for individual operations and systems, with the aim of reducing IT-related risks.
Working to Further Enhance Corporate Governance
As a member of the secretariat for the general shareholders’ meetings and Board of Directors’ meetings, I provide support to ensure that important matters are deliberated and decided on lawfully and properly. In FY March 2016, we reviewed the running of the Board of Directors and general shareholders’ meetings in accordance with the Corporate Governance Code*2, outlined their future direction, and submitted our findings to the board for discussion. Some of this content was released in the Corporate Governance Report. I will work to steadily enhance the running of board meetings by analyzing and evaluating their effectiveness.
*2 Guidelines for the corporate governance of listed companies released by the Tokyo Stock Exchange in June 2015. Corporate governance is a mechanism for transparent, fair, prompt and decisive decision-making from the standpoints of shareholders, customers, employees and the local community.
Corporate Secretary Group,
Office of General & Legal Affairs