Last Updated 02 Aug 2020

Corporate governance at Toyota Motor Corporation

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Names and details of those who receive, in aggregate, consolidated remuneration of one hundred million Japanese yen or more will be disclosed on an individual basis in annual securities reports. Annual securities reports and business reports are also made available for public inspection on TMC’s Internet website. Existence of guidelines for the amount and calculation method of remuneration Yes Information regarding guidelines for the amount and calculation method of remuneration Director remuneration was set at 130 million yen or less per month, pursuant to the resolution of the 107th scheduled Meeting of Shareholders held on June 17, 2011.

In addition, the amount of auditor remuneration was set at 30 million yen or less per month, pursuant to the resolution of the 104th scheduled Meeting of Shareholders, held on June 24, 2008. [Support System for Outside Directors (Outside Corporate Auditors)] Full-time Corporate Auditors and Directors disclose adequate information to Outside Corporate Auditors, such as by giving prior explanations on agenda items to be proposed to the Board of Directors.

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In addition, a Corporate Auditors Department has been established as a specialized independent organization to assist the Corporate Auditors. 2. Matters pertaining to functions relating to the execution of duties, audit and supervision, appointment and decisions regarding remuneration, etc. (Outline of the current corporate governance system) TMC formulated and announced the Toyota Global Vision in March 2011, based on what it has learned from the deterioration of the business environment

following the Lehman Shock and a series of quality problems. The Toyota Global Vision, based on Toyota’s values that have guided Toyota since its founding, such as “Guiding Principles of Toyota” and “Toyota Way,” aims to exceed customer expectations by the development of ever-better cars and enriching lives of societies, and to be rewarded with a smile which ultimately leads to the stable base of business. Toyota is to keep this -6- virtuous cycle by focusing on making ever-better cars.

To fulfill the Toyota Global Vision, Toyota made some changes to its management structure in 2011, such as reducing the Board of Directors and decision-making layers. Toyota will continue to offer products and services that will satisfy evolving needs in every region. In addition TMC headquarters is to provide overall direction and furnish support for the initiatives undertaken by the regional operations. Specifically, with the aim of faster decision-making, TMC drastically reduced the number of Directors and abolished the position of Senior Managing Director.

Furthermore, TMC will replace the current three-layer arrangement – Executive Vice President, Chief Officer, and Executive responsible for the operations involved – with two layers, eliminating the executive immediately below the Chief Officer. Moving forward with this new structure will support a swifter flow of information from the divisional general managers, who are intimately familiar with their operations, to senior management.

TMC enhanced clarity in organizational responsibilities: the Board of Directors decides what Toyota will do as global Toyota, and Chief Officers decide how to implement that decision as chief executives for day-to-day operations, etc. The post of Chief Officer will be filled either by a “Senior Managing Officer” or “Managing Officer” in a flexible manner. Chief Officers responsible for the region or function conduct local operations basically at respective sites under the Executive Vice President responsible for each operational sector and vigorously reflect the voices of local customers in functions of R&D, production, and sales.

TMC has an “International Advisory Board” consisting of advisors from each region overseas, and, as appropriate, receives advice on a wide range of management issues from a global perspective. In addition, TMC has a wide variety of conferences and committees for deliberations and the monitoring of management and corporate activities that reflect the views of various stakeholders, including the “Labor-Management Council, the Joint Labor-Management Round Table Conference”, and the “Toyota Environment Committee.

” In order to manage and implement important activities for fulfilling social responsibilities, TMC has established the “CSR Committee” consisting of directors at the executive vice president level and above as well as representatives of corporate auditors, to review important issues relating to corporate ethics, legal compliance, risk management and social contribution, and also to develop action plans concerning these issues.

TMC has also created a number of facilities for employees to make inquiries concerning compliance matters, including the Compliance Hotline, which enables them to consult with an outside attorney, and takes measures to ensure that TMC is aware of significant information concerning legal compliance as quickly as possible. TMC will continue to promote the “Toyota Code of Conduct” which is a guideline for employees’ behavior and conduct for employees of TMC and its consolidated subsidiaries (together “Toyota”) all around the world.

TMC will work to advance corporate ethics through training and education at all levels and in all departments. TMC has adopted an auditor system. Seven Corporate Auditors including four Outside Corporate Auditors play a role in TMC’s corporate governance efforts by undertaking audits in accordance with the audit policies and plans determined by the Board of Corporate Auditors. In addition, TMC has secured the personnel and framework supporting the audit by Corporate Auditors.

The Outside Corporate Auditors advise TMC from a fair and neutral perspective, based on their broad experiences and insight in their respective fields of expertise. While TMC currently does not have its own standard or policy on independence in appointing Outside Corporate Auditors, TMC believes that such appointments are appropriate since various rules on independence, such as stock exchange regulations, are used as references in making such appointments. The state of internal controls and internal audits are reported to Corporate Auditors (including Outside Corporate Auditors) through the Board of Corporate Auditors and the “CSR Committee”, and the status of accounting audits is reported by independent External Auditors to the Corporate Auditors (including Outside Corporate Auditors) through the Board of Corporate Auditors.

To enhance the system for internal audits, a specialized organization made independent of direct control by the management evaluates the effectiveness of the system to secure the appropriateness of documents regarding financial calculation and other information in accordance with Section 404 of the U. S. Sarbanes Oxley Act and Article 24-4-4 (1) of the Financial Instruments and Exchange Law of Japan. In order to enhance the reliability of the financial reporting of TMC, the three auditing functions — audit by Corporate Auditors, internal audit, and accounting audit by Independent External Auditors — aid in conducting an effective and efficient audit through -7- meetings held periodically and as necessary to share information and come to understandings through discussion on audit plans and results. 3. Reason for the selection of the current corporate governance system.

With respect to our system regarding directors, we believe that it is important to elect individuals that comprehend and engage in TMC’s strengths, including commitment to manufacturing, with an emphasis on frontline operations and problem solving based on the actual situation on the site (Genchi Genbutsu). While TMC currently does not have its own standard or policy on independence in appointing outside directors and currently does not have an outside director, TMC intends to use various rules on independence such as stock exchange regulations as references and consider such appointments should there be suitable individuals.

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Corporate governance at Toyota Motor Corporation. (2018, Mar 15). Retrieved from https://phdessay.com/corporate-governance-at-toyota-motor-corporation/

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