Corporate Governance

Through these means, the Mitsui Chemicals Group recognizes that it is better placed to achieve sustainable growth and increased corporate value over the medium to long term.
Accordingly, Mitsui Chemicals positions efforts to upgrade and expand its corporate governance as a key management issue and will persevere with the efforts outlined above.

Publicly released since the fiscal year ended March 31, 2016, the Mitsui Chemicals Group Corporate Governance Guidelines outline the Group's fundamental policies and efforts in relation to corporate governance.

We have continuously instituted reforms since the founding of the Mitsui Chemicals with the aim of raising the effectiveness of our corporate governance to an even higher level.

At the Mitsui Chemicals, the Board of Directors including Outside Member of the board independent of business execution makes material management decisions and supervises the execution of duties by each member of the board and the duties of other executive officers, etc. As a company with a Board of Corporate Auditors, the status of each member of the board’s performance of his or her duties is audited by the corporate auditors and the Board of Corporate Auditors independently from the Board of Directors.

Within this framework, the Company strives to realize smooth and efficient management, undertaking initiatives aimed at, for example, clarifying official authority and decision-making procedures in light of Company rules, clarifying management supervision and business execution roles by introducing an executive officer system, ensuring that important matters are referred to the Management Committee for discussion, and ensuring a broad range of perspectives inform strategic discussions undertaken at the Group-wide Strategy Commitee. In addition, as part of its internal control system the Company’s corporate auditors conduct audits to ensure the propriety of business operations while the Internal Control Division works to ensure sound risk management.

As being independent from the Board of Directors, corporate auditors have conducted audits on such matters as the directors’ performance of duties, internal corporate control, business performance, and financial status through such means pursuant to law and ordinance as requesting reports on MCI’s businesses, exercising its authority in the election and dismissal of accounting auditors, and investigating the status of operations and assets. Precisely, the full-time corporate auditors attend not only the meetings of the Board of Directors but important meetings of MCI such as Management Committee, have regular meetings with the president and others to exchange opinions and officially receive and check the final-decision documents of executive directors and records of important meetings. Furthermore, the three outside corporate auditors periodically exchange opinions with the president and others, and auditor audits are attended by three outside corporate auditors, as necessary, who make statements based on their extensive experience and broad knowledge. Outside Corporate Auditor SHINBO Katsuyoshi has been widely experienced as an attorney for many years and has extensive knowledge and insights on compliance and risk management. 

Outside Corporate Auditor GOTOH Yasuko has been widely experienced as a manager and CFO of a listed company and has extensive knowledge and insights on finance and accounting. Outside Corporate Auditor ONO Junshi has been widely experienced as a certified public accountant for many years and has extensive knowledge and insights on finance and accounting. The Board of Corporate Auditors met on 17 occasions in fiscal year of 2022, with particular audit focus on the following matters:

- initiatives to achieve VISION 2030

- ESG key issues, initiatives, and stance

- status of risk management and the status of the development and operation of the Whistleblowing System

Furthermore, meetings of the Board of Corporate Auditors are, in principle, held once a month, and attendance and key matters for consideration for each corporate auditor in fiscal 2021 are as follows.

MCI has established the Internal Control Division as an internal organization consisting of nineteen members. Based on the yearly audit plan discussed and formulated in advance at Management Committee, the division audits the accounts and business of the Mitsui Chemicals Group, including affiliated companies, and reports the results to the Management Committee.
Furthermore, corporate auditors also exchange opinions with accounting auditors and the Internal Control Division regarding annual audit plans and audit results, and coordinate with one another and conduct audits, whilst ensuring that their respective auditing activities remain independent.
When necessary, MCI’s corporate auditors conduct audits of affiliated companies based on the results of audits by the Internal Control Division and each company’s corporate auditors, and they also exchange information and otherwise coordinate with each company’s corporate auditors.

The Company strives to review and implement necessary measures as appropriate to enhance the oversight functions of the Board of Directors in light of the results of the annual effectiveness evaluations.

To create a compensation structure that is easy to understand and strengthen governance, the existing fixed compensation is divided into three portions. The structure is composed of fixed compensation (representation portion + supervision portion + execution portion) + bonus + restricted stock compensation. The execution portion of the fixed compensation and bonus and restricted stock compensation are the remuneration for execution. For example, for a Representative Director, Member of the Board, and Senior Managing Executive Officer; a Member of the Board and Senior Managing Executive Officer; and a Senior Managing Executive Officer, the differences in the compensation items are the representation and supervision portions, while the execution portion of the fixed compensation, bonuses, and restricted stock compensation are the same amount.

This will be paid as a fixed monthly amount. The execution, supervision, and representation portions of the existing fixed compensation are separated to strengthen governance. The amount paid for the execution portion differs according to each position. The amounts paid for the supervision and representation portions are uniformly the same regardless of position, and are set based on MCI’s approach to representation and supervision, and data from an external research organization.

The overview of the Bonus System is as described in the following table. Compared to previous years, the Company implemented (1) "Revision of Formula (Calculation)." (2) "Introduction of Evaluation of Non-financial Indicators," and (3) "Introduction of Maximum and Minimum Profit Limits in relation to Bonus Payments."

The restricted stock-based compensation shall be monetary compensation claims for the grant of restricted stock, the overview of which is as described in the following table. Compared to previous years, the Company implemented (1) "Revision of Formula (Calculation)." (2) "Introduction of ROE (Return on Equity Attributable to Owners of the Company) and TSR (Total Shareholder Return) as evaluation indicators," (3) "Introduction of Maximum and Minimum Profit Limits in relation to Restricted Stock-based Compensation Payments," and (4) "Revision of the Period of Restriction on Transfer of Shares."

Mitsui Chemicals believes that management’s accountability and transparency is best served by obtaining opinions from independent outside directors and corporate auditors at meetings of the Board of Directors. The Company also believes that appropriate decision making at meetings of the Board of Directors is made possible by obtaining advice from persons with specialized knowledge.
To ensure that these objectives are achieved, the content of materials presented at Board of Directors meetings is explained to outside directors and outside corporate auditors in advance. In addition, the Company provides newly elected outside directors and outside corporate auditors with opportunities to deepen their understanding of the Company’s business. These opportunities include explanations of the Company’s business activities and tours of business locations.
When selecting candidates for outside directors and outside corporate auditors, the Company considers each individual based on the selection criteria set out in the Company’s Corporate Governance Guidelines. Moreover, all the outside directors and outside corporate auditors of the Company not only satisfy the selection criteria but also meet the criteria for independence set by the financial instruments exchange and the Independence Standards for Independent Outside Directors and Independent Outside Corporate Auditors provided as an Appendix to the Company’s Corporate Governance Guidelines. All the outside directors and outside corporate auditors also put themselves in the position of a stakeholder, and provide beneficial and candid advice regarding improving the corporate value of the Mitsui Chemicals Group. As outside directors and outside corporate auditors have no risk of a conflict of interest with general shareholders, even from a practical standpoint, the Company regularly submits a notice to the Tokyo Stock Exchange to this effect stating that all its outside directors and outside corporate auditors are independent officers. Furthermore, there are no special interests between the Company and any of its outside directors and outside corporate auditors.