MOL Corporate Governance Organizational Structure
We believe that the appropriate form of governance is to ensure the legality, appropriateness, and efficiency of business operations by ensuring an effective supervisory framework for the Board of Directors. This is accomplished while securing the audit function of the Audit & Supervisory Board, which is independent from the Board of Directors, and by having, as a matter of course, a mutual supervision and check mechanism between inside directors (directors also serving as executive officers) who execute operations, and a Board of Directors that consists of inside directors who carry out business operations and outside directors who do not execute operations but specialize in supervisory functions. Based on this view, MOL has become a company with an Audit & Supervisory Board as provided for in the Companies Act.
The Board of Directors, by its resolution, has established a basic policy for developing a system to secure the properness of operations (the internal control system). The MOL Group's officers and employees, under the president serving as the chief executive officer for management, carry out business operations in accordance with the management policy set by the Board of Directors and the above-mentioned basic policy, while being subject to supervision by the Board of Directors and audit by the Audit & Supervisory Board. (For details of the business operation system, please see the descriptions given in a later section.)
We believe that the essence of corporate governance lies not in the existence of its structure or organization described in the preceding paragraph, but in whether or not it functions properly and effectively in the manner outlined in the following sections.
Board of Directors
The Board of Directors, as the Company's primary decision-making body, discusses and decides on basic policy and the most important matters connected with MOL Group management.
The Board of Directors consists of five (5) inside directors and three (3) outside directors who hold no interest in MOL. Outside directors confirm the appropriateness of management decisions and management of business operations based on their individual experience and expertise from an independent position without any interest in the Company, and at the same time play a major role in revitalizing the Board of Directors by expressing helpful opinions regarding overall management. We provide a system to support outside directors such as providing them with preliminarily explanations of proposals before a Board of Directors meeting and reports on important matters related to business operations on a case-by-case basis. The Board of Directors also holds "Deliberation on Corporate Strategy and Vision," in which we freely exchange opinions about management strategies, our long-term vision, and important themes regarding overall management, together with outside directors and outside audit & supervisory board members.
MOL's Deliberation on Corporate Strategy and Vision
At MOL, three hours are set aside for every Board of Directors' meeting, with one of the hours allotted to "Deliberation on Corporate Strategy and Vision." At the "Deliberation on Corporate Strategy and Vision," a theme is selected related to our management strategy, long-term vision or management in general. A free exchange of opinions is carried out at these deliberations which include outside directors and outside audit & supervisory board members.
FY2018 Deliberation on Corporate Strategy and Vision: Agenda Topics
|FY2018||Deliberation on Corporate Strategy and Vision: Agenda Topics|
|May||Direction and strategy for technology innovation|
|July||Business strategy for international logistics|
|September||Activity policy for Offshore Business Division|
|October||Direction of next management plan|
|December||Corporate marketing strategy for the Company|
|January||Strategies of NVOCC (Non-Vessel Operating Common Carrier) business expansion|
|February||Overall summary of Rolling Plan 2019|
In addition to the aforementioned "Deliberation on Corporate Strategy and Vision," MOL holds "Board Member Discussion Sessions" on a timely basis subsequent to meetings of the Board of Directors in order to promptly share and discuss various important matters in progress other than Board of Directors meeting proposals.
Nomination Advisory Committee and Remuneration Advisory Committee
MOL has established the Nomination Advisory Committee and the Remuneration Advisory Committee as discretionary organizations under the Board of Directors. For making the outside directors supervise the executive directors more effectively, both committees are chaired by outside directors and are composed of all three (3) outside directors and the president, with the majority of outside directors. The Nomination Advisory Committee handles matters that include deliberating and reporting related to the selection and dismissal of directors and executive officers, discussing the suitability of officer candidates as a corporate manager in terms of both their qualifications and performance with the aim of finding the right person to act as future CEO on the basis of MOL's management strategies, and considering matters with respect to successor candidates in a timely and appropriate manner. The Remuneration Advisory Committee seeks to provide an objective standpoint while putting a high priority on the "perspective of stakeholders" in order to appropriately conduct reviews of the remuneration plan for directors and executive officers, and determine appropriate levels of remuneration for directors, including incentives for long-term enhancement of corporate value. Outside audit & supervisory board members, in addition to members of each committee, may attend and express their opinions to comprehend the deliberation process. The Board of Directors respects the content of reports from both Committees, and uses it in formulating necessary resolutions.
FY2018 Main Agenda Items for Review by the Advisory Committees
- Nomination Advisory Committee
(held four times in total)
- The selection process for President and CEO succession;
- Involvement of the Nomination Advisory Committee with respect to election and dismissal of audit & supervisory board members;
- Election of officers (including outside officers) for FY2019; and other matters
- Remuneration Advisory Committee
(held four times in total)
- Bonus for directors in FY2017;
- Remuneration for directors in FY2018;
- System of remunerations for executive officers; and other matters
The Board of Directors, in accordance with the Corporate Governance Code, performs evaluations and analyses of its effectiveness each year through deliberations based on the results of self-questionnaires and questionnaires, and links the results to improvements in the operation of the Board of Directors.
Under the effectiveness evaluations for FY2018, opinions were furnished with respect to upgrading materials and explanations pertaining to matters for discussion by the Board of Directors, enhancing the quality of matters to be reported, and appropriate way of using of risk analysis results. Those points were then identified as issues to be addressed and improvements were accordingly made with respect to the operation of the Board of Directors.
In order to make effectiveness evaluations more beneficial, the Company performs a revision of the items to be evaluated every fiscal year to ensure a thorough evaluation, which may involve adding matters that are pertinent to the state of affairs of the fiscal year under review.
With regard to business operations, MOL introduced the executive officer system in 2000. The executive officers, selected by the Board of Directors and assigned to various fields of authority by the representative directors, strive to improve the speed and efficiency of management by implementing Company operations in line with the uppermost policies determined by the Board of Directors. The Executive Committee (chaired by the President), as the top decision-making authority for business operations, functions as the deliberative body for important issues related to basic management plans and the conduct of business operations, based on policies determined by the Board of Directors. Under the Executive Committee, MOL has established six (6) committees. Officers and general managers concerned, in addition to committee members, attend each Meeting and examine and deliberate matters brought up for discussion.
The Audit & Supervisory Board consists of two (2) full-time audit & supervisory board members and two (2) outside audit & supervisory board members who hold no interest in MOL. The audit & supervisory board members periodically hold Audit & Supervisory Board's meetings to draw up audit plans and report and share audit results, etc. All audit & supervisory board members attend Board of Directors' meetings, and full-time audit & supervisory board members attend Executive Committee, various committees, etc. besides Board of Directors' meetings, to audit the processes of deliberation and decision making. KPMG AZSA LLC, an accounting auditor, executes accounting auditing. In addition to the above, the Corporate Audit Division, which receives directions only from Executive Committee and is independent from any other management body, conducts internal audits including those of group companies, in collaboration with the audit & supervisory board members and accounting auditors.
The Company is aware of the crucial role that compliance plays in living up to its broad corporate social responsibilities, and that compliance with laws and regulations is at the core of this role.
We have established the Compliance Committee, which is headed by the Chief Compliance Officer, and formulated the Compliance Policy to assure strict adherence to rules and regulations. General managers of divisions are appointed as Compliance Officers. In this role, they are responsible for enforcing compliance regulations and are also required to report to the Compliance Committee in the event of a compliance breach. The Corporate Audit Division, a body that operates independently of the Company's divisions, provides an Internal Compliance Advisory Desk. The Corporate Audit Division undertakes investigations of breaches and reports the results to the Compliance Committee. In addition to the Internal Compliance Advisory Desk, we have established an External Compliance Advisory Desk, operation of which is entrusted to an outside attorney. The Desk provides anonymous consultation services.
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