Corporate Governance Policy
The Ube Group, consisting of Ube Industries, Ltd. and its affiliates, recognizes its basic mission is to stably and continuously enhance shareholder value. To achieve the mission, the Ube Group will maintain good corporate governance as the basis for appropriate and sustainable business activities in order to fulfill its responsibilities to and earn the trust of all stakeholders including shareholders, customers, suppliers, local communities and employees.
Overview and Organizational Chart of Corporate Governance Structure
1. Outline
The Ube Group instituted an executive officer system in 2001 to separate the governance and management functions and changed the management structure of the Board of Directors.
Introduction of the executive officer system has enabled executive officers to concentrate exclusively on business management, thus speeding up decision-making processes. The Company also clarified the Board of Directors' responsibility to shareholders as guardians of shareholder value, thereby ensuring that the Company's actions are geared to maximizing shareholder value in the medium to long-term. The Board of Directors supervises executive officers in the execution of their duties to ensure propriety and efficiency, increase transparency, maximize shareholder value and minimize risk. In accordance with these measures, the Company has reduced the membership of the Board of Directors to seven members.
Although the Company has not switched to a board committee system, it has introduced internal committees responsible for director nomination, and for evaluation and compensation.
Also, in 2005, the Company introduced two outside directors as a way to add a third-party perspective to management decision-making and thereby ensure greater transparency and objectivity. As for auditors, two of Ube's four corporate auditors are external auditors.
The Company will continue to study new ways to improve corporate governance structures as it strives to strengthen and speed up the management function, enhance the strategic decision-making and corporate governance functions and thereby improve the operation of the company.
2. Management Structure for "Group Management" and "Company Consolidated Management"
- (1) Group Management
- It is the duty of the Company CEO (President), who has been delegated the authority to manage the business of the Ube Group by the Board of Directors, to clearly define Group business management policy, set specific targets for each member company and allocate the necessary management resources (including human, material and financial) needed to achieve those targets. The Company CEO is also responsible for decisions on the most important issues which exceed the authority of any given company.
- (2) Company Management and Business Activities
- Companies are expected to take the initiative in working toward their individual targets using the management resources allocated to them on the basis of policies established in accordance with group management policy.
- (3) Group Service Units
- The group service units are responsible for such duties as providing support for the group management and company management strategy formulation and business performance monitoring functions, procuring management resources (human, material and financial) and providing highly specialized functions and functions common to business divisions in an integrated and efficient way.
3. Decision-Making System
The Ube Group has taken steps to separate the governance function from the management function in order to promote more transparent and efficient company management. The following committees have been established to assist in the decision-making process.
- (1) Board of Directors
- Comprised of all company directors, the Board of Directors serves as the guardian of sharholder value. Its role is to discuss issues from the medium to long-term perspective and implement decisions concerning items covered by the commercial code, articles of incorporation and key business matters. Meetings of the Board of Directors are led by the Chairman of the Board, and are held as needed, or at least once every three months.
To achieve more flexible management, the Nominating Committee and Evaluation and Compensation Committee, comprised of several members of the Board, have been established as subordinate entities to assist the Board of Directors. - (2) Group Management Committee
- The Group Management Committee is responsible for discussing and making decisions on key matters concerning resource allocation, items that need to be adjusted from the overall group perspective (preliminary financial results and forecasts, medium-term management plans, plans for capital investment and financing loans) and other key matters that affect the group as a whole, in accordance with the Group Management Guidelines and the Group Management Committee Rules.
The Group Management Committee is comprised of some committees including The Group CSR Committee for discussing and making decision on corporate social responsibilities, the Group Environment and Safety Committee and the Group Product Safety Committee, mentioned in article 5. In addition, the Group CSR Committee has as subordinate entities, the Compliance Committee, the Information Security Committee, the Restricted Cargo and Export Management Committee and the Crisis Management Committee, mentioned in article 5 (1) through 5 (4). - (3) Company/Division Steering Committee
- The Company/Division Steering Committee is responsible for discussing and making decisions on key matters, such as business strategy, at the company or division level for Ube Industries and other companies in the group in accordance with the Group Management Guidelines and the Company/Division Steering Committee Rules.
4. Internal Auditing and Corporate Auditors
Internal auditing duties for the Company are performed by the Auditing Department, an independent unit that reports directly to the president. The Auditing Department is responsible for monitoring internal controls and compliance with laws, regulations, ordinances and designated procedures, in order to discern risk with regard to overall management activities for the Ube Group including foreign affiliates. The Head of the Auditing Department is a member of such organizations as the Compliance Committee and the Information Security Committee, which provide company-wide risk management. This enables the department to work in close cooperation with the various committees to strengthen the risk management system.
The corporate auditing organization is comprised of four corporate auditors (of which two are external auditors) and the Corporate Auditor's Office, which provides the auditing staff. Audits are performed in accordance with audit policy and audit plans, which are renewed every year. Auditors attend key corporate meetings and audit the execution of duties by directors and executive officers based on meetings with and reports from directors and related personnel. Corporate auditors meet regularly with staff from the Corporate Auditor's Office to exchange information, and they maintain close cooperation with the Office to ensure that staff from the Corporate Auditor's Office support their actual audit activities. They also hold regular meetings with independent auditors as well as auditors from group companies to receive audit plans and progress reports, and hold training seminars and briefings to exchange views in order to improve audit quality.
5. Enhancement to Risk Management System
Examples of efforts to enhance the risk management system include establishing the Group Environment and Safety Committee and the Group Product Safety Committee under the aegis of the Group Management Committee. Responsible for safety and environmental protection and product safety, respectively, these committees formulate and implement various measures for the entire Ube Group. They have also established the following group-wide organizations as part of the system of risk management.
- (1) Compliance Committee
- The Company has established Personal Action Guidelines for corporate ethics for the Ube Group. These guidelines set the standards for and scope of its corporate activities, as well as the compliance practices to which its executives and employees must adhere. For its compliance system, the Company has established the position of compliance officer and the Compliance committee, which includes a consulting attorney, as an advisory body to this officer. In addition, the Company has established a notification channel named Ube C-line that allows executives and employee to directly report compliance issues without going through the normal chain of command, for rapid detection and correction of problem.
- (2) Information Security Committee
- The Information Security Committee was set up to formulate information security policies, thoroughly educate employees and monitor compliance. It also implements various policies with regard to security rules and regulations.
- (3) Restricted Cargo and Export Management Committee
- In accordance with basic Ube Group export management policy, this committee is responsible for preventing illegal export or supply of all types of cargo and technology controlled in accordance with export management regulations, including foreign exchange and foreign trade legislation, designed to maintain international peace and security. Duties include making employees thoroughly aware of policy.
- (4) Crisis Management Committee
- The Crisis Management Committee was established to formulate policy for and implement measures against crisis and emergency that occurs in domestic and foreign countries, strengthening crisis management system unified in the Ube Group.
