We believe that the appropriate form of governance should achieve legality, appropriateness, and efficiency of business operations by ensuring an effective supervisory framework for the Board of Directors. This is accomplished by having a mutual supervision and check mechanism among inside directors who also execute operations (three of five inside directors concurrently serve as executive officers as of June 20, 2023), and by forming a Board of Directors that consists of inside directors who also carry out business operations and non-executive inside directors and outside directors who specialize in strategy deliberation functions and supervisory functions. The structure also secures the audit function of the Audit & Supervisory Board, which is independent from the Board of Directors. Based on this belief, the Company made itself into a "company with an Audit & Supervisory Board" as provided for by the Companies Act.
The Board of Directors, through its resolution, has established a basic policy for developing a system to ensure the appropriateness 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 established by the Board of Directors and the abovementioned basic policy under the supervision of the Board of Directors and audits carried out by the Audit & Supervisory Board.
In FY 2021, the Corporate Governance Council was established under the Board of Directors to serve as a forum for facilitating unrestricted discussion while incorporating outside knowledge with respect to the general direction of the Company's corporate governance. The Corporate Governance Council is also expected to be effective in helping increase the effectiveness of the Board of Directors through its reports and advice to the Board of Directors.
We also believe that the true worth of the MOL corporate governance structure will not be achieved through the existence of the framework and organization constructed as described above. Instead, the true worth of the MOL corporate governance structure will result from whether the framework is functioning properly and effectively as described below.
As the central decision-making body of the Company, the Board of Directors deliberates and makes decisions on the basic policies and the most important matters for the management of MOL Group.
The Board of Directors consists of five (5) inside directors (as of April 1, 2023) and three (3) outside directors (as of April 1, 2023), who hold no interest in MOL. Outside directors play a major role in vitalizing the Board of Directors by checking the reasonableness of management decisions and of the status of business execution based on their respective experience and knowledge from an independent standpoint without an interest in the Company and expressing useful opinions on overall management. We have developed a supporting system for outside directors whereby agenda at the Board of Directors' meetings are explained in advance and the execution of important businesses is reported to them each time. In addition, the Board of Directors also conducts "Deliberation on Corporate Strategy and Vision" sessions during which inside and outside directors and audit & supervisory board members exchange opinions freely on management strategies, the long-term vision and other important topics related to overall management. In addition to the "Deliberation on Corporate Strategy and Vision," the "Board Member Discussion Sessions" is also held when necessary after the meetings of the Board of Directors to share and discuss a range of ongoing important issues other than the agenda items at the Board of Directors' meeting at an early stage.
The Board of Directors meets regularly about 10 times a year at appropriate intervals to formulate management plans, decide on major investments, approve budgets for each fiscal year, approve quarterly financial results, and make decisions on strengthening corporate governance, among others.
|Outline of next medium-term management plan for DAIBIRU CORPORATION and company-wide risk management deepening project (scenario analysis and evaluation of material risks)
|Direction of the next management plan
|Review of Rolling Plan 2022 and direction of new human resource strategy
|Overview of next management plan
|Company-wide risk management deepening project (emerging risk management)
Composition of Board of Directors (as of June 20, 2023)
MOL has established the Nomination Advisory Committee and the Remuneration Advisory Committee as arbitrary 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, the Chairman and the President, so that the majority are outside directors.
The Nomination Advisory Committee deliberates on the election, appointment and dismissal of directors and executive officers, as well as the necessary criteria for their determination and proposals for the next President based on the succession plan (including reappointment and dismissal of the incumbent President), thereby increasing the objectivity and transparency of the processes and strengthening accountability.
The Remuneration Advisory Committee appropriately reviews the remuneration plan for directors and executive officers, and determines appropriate levels of remuneration for directors, including incentives for long-term enhancement of corporate value from an objective standpoint, while putting a high priority on the "stakeholders' perspective."
In addition to the committee members, the outside audit & supervisory board members may also attend meetings of the respective committees in order to gain an understanding of the deliberation process and provide their opinions. The Board of Directors respects the contents of reports from both Advisory Committees and uses them to pass necessary resolutions.
The Corporate Governance Council has been established under the Board of Directors to serve as a forum for facilitating unrestricted discussion while incorporating outside knowledge with respect to the overall direction of the entire MOL corporate governance. By taking into account the perspectives from independent outside directors and independent outside audit & supervisory board members, the Council examines the status and direction of corporate governance of the entire MOL Group and verification of the effectiveness of the Board of Directors, and provides reports and advice to the Board of Directors.
The Board of Directors annually conducts a questionnaire survey, including self-evaluation by each director and audit & supervisory board member, regarding the agenda and deliberations of the Board of Directors and its subordinate committees, the Nomination Advisory Committee and Remuneration Advisory Committee and the Corporate Governance Council, the contribution of each member, and the effectiveness of their operations, etc. It then analyzes and evaluates the effectiveness of the Board of Directors as a whole, identifies issues and examines measures for improvement, and discloses a summary of the results.
In FY2022, we received responses from all directors and audit & supervisory board members in the form of a self-questionnaire in February 2023, and in March 2023, the Corporate Governance Council evaluated and analyzed the effectiveness of the Board of Directors, identified issues, formulated improvement measures, and reported them to the Board of Directors. A summary of the results will be disclosed in the Corporate Governance Report.
MOL introduced the executive officer system in 2000. Executive officers who are appointed by the Board of Directors and to whom authority is delegated by representative director work to increase the speed of management by operating business in accordance with the highest management policy determined by the Board of Directors. The Executive Committee (chaired by the President) functions as a deliberative organ to make decisions on basic management plans and important issues related to execution of business in accordance with the basic policy determined by the Board of Directors. MOL has established six (6) committees as subordinates under the Executive Committee. In addition to the members of each respective committee, officers and general managers related to each issue attend the committee meetings to examine and deliberate on various matters such as important matters submitted to the Executive Committee for discussion and matters pertinent to multiple divisions.
In FY2023, we introduced the Chief Officer system to oversee the Group's corporate functions across the board and provide strong support for integrated and strategic initiatives. Each Chief Officer is delegated with a portion of the President's authorities and responsibilities, and is tasked with directing and controlling not only the Company (headquarters), but also the entire Group in specific cross-functional areas.
Additionally, the cross-functional structure consists of three axes: corporate organizations, which are overseen by Chief Officer; business organizations, which are overseen by Director General of business headquarters; and regional organizations, which are overseen by Regional Executive Officer. Through this structure, we aim to strike the right balance between the centralization and decentralization of authority in the management of our group, as well as promote more flexible business operations and improve group governance.
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., and prepare audit reports at the end of fiscal years. Each audit & supervisory board member attends meetings of the Board of Directors and other important meetings to audit the deliberation and decision-making processes. They also audit the development and operational status of internal control systems by conducting interviews with directors, executive officers, and employees, as well as researches for Group companies. KPMG AZSA LLC, the accounting auditor, conducts accounting audits. In addition to the above, the Corporate Audit Division, which receives directions from the President and is independent from any other management body, conducts internal audits including internal audits on Group companies. Three entities-namely, the Audit & Supervisory Board, the accounting auditor, and the Corporate Audit Division-take initiatives to improve the effectiveness of audits through close coordination with each other.
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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