We asked Director Matsuda...
President Kajiya was appointed in June this year. Please tell us about what you expect and want from the new management system.
In the current Medium-term Business Plan, in order to optimize product composition and strengthen the profitability of existing businesses, we must set the cash allocation to each business area with a focus on capital efficiency and push forward with transforming the product portfolio based on this. I think this is a way to bring the Business Philosophy, which has been passed on for 70 years since the Company was first founded, to the next generation. I would like the new President and the rest of the Company management to address this theme quickly and earnestly. Changes in the external environment can happen, but responding to these changes in a flexible way and taking on bold challenges is another management issue. As Outside Directors, I hope we can each bring our own knowledge and give good advice about responding to the changing environment, helping to show the Company the right path to take.
Please tell us what changes you have noticed in the effectiveness of the Board of Directors through management and discussions in FY2024.
It is 10 years since the Corporate Governance Code was established in 2015. The Company’s Board of Directors has undergone great changes during this time. In particular, the Outside Officers’ Meeting has been established since then, and has now become an important forum for communication between the business execution side and the internal Directors and Corporate Auditors. Companies often struggle with how to bridge the information gap between Corporate Auditors and Outside Directors, but I believe the Outside Officers’ Meeting has resolved this issue here at the Company. Details about what has been discussed between internal Directors at the Management Committee are now explained at the Outside Officers’ Meeting. It is commendable that progress is being made in making management more transparent. I hope we can move forward together toward achieving the Medium-term Business Plan through continued communication with the business execution side.
To “optimize product composition and strengthen the profitability of existing businesses” is the first strategy in our current Medium-term Business Plan. We are implementing measures after setting a new cash allocation. Please tell us what you think of these efforts, and your advice about future challenges.
The Medium-term Business Plan from FY2025 sets clear targets, both financial and non-financial. The level to which these targets have been achieved is linked to the evaluation of Directors’ bonuses. Cash allocation was done as planned with stakeholders in mind, and a large share buyback has been implemented during the first fiscal year. One of the important strategies in this Medium-term Business Plan is to “optimize product composition and strengthen the profitability of existing businesses.” The product portfolio is being reformed with an emphasis on capital efficiency. SB-ROIC, the Company’s own indicator to measure capital efficiency, has been set as a new management indicator for each business division from FY2025. This is a step toward reforming the product portfolio. In the process of applying this Company-wide indicator to individual business divisions, it will become more important for each business division to see how this indicator relates to them. From my perspective as an Outside Director, I want to closely monitor the process of how SB-ROIC functions autonomously in each business division.
