Corporate Governance

Bridgestone Corporation submitted the report on the “Corporate Governance Code” to the Tokyo Stock Exchange, with verification concerning the state of correspondence to all principals. The “Corporate Governance Code” was added to the listing rules of the Tokyo Stock Exchange in 2015 to contribute to the realization of effective “Corporate Governance” as the KEY principals. The Company publishes “Corporate Governance Code Report” and published them on its website.

Through the explanation of the Company’s idea of the “Corporate Governance” and introducing efforts towards it, Bridgestone Corporation is aiming to promote greater understanding of its “Corporate Governance”.

2020 Report on the Corporate Governance Code (413KB)

Guidelines for Determining the Independence of Board Members (86KB)

Back Number

2019 Report on the Corporate Governance Code (438KB)

2018 Report on the Corporate Governance Code (announced in December 2018)(402KB)

2018 Report on the Corporate Governance Code (announced in May 2018)(291KB)

2017 Report on the Corporate Governance Code (269KB)

2016 Report on the Corporate Governance Code (252KB)

As one facet of initiatives to strengthen its corporate governance system, to achieve both further strengthening of its internal control system and heightened speed in execution, the Company transitioned to the “Company with Nominating Committee, etc.” model of corporate governance in March 2016. This structure allows for greater separation between management and execution, and establishes a system that allows directors and the Board to supervise business execution with greater clarity. At the Annual Shareholders’ Meeting held on March 24, 2020, 13 directors (11 men and two women) were elected, including eight outside directors (six men and two women). The Chairman of the Board, selected from the group of directors in accordance with the Articles of Incorporation and the Board of Directors’ Rules, serves as the chairperson of both the Board of Directors’ meetings and the Shareholders’ General Meeting.

In addition, items related to decisions on basic management policies, important business execution matters, and other matters that must be determined by the Board of Directors are stipulated in the Articles of Incorporation, the Board of Directors’ Rules, and Administrative Authority Rules. These matters are determined after careful deliberations by the Board of Directors.

The Company has established and maintains a corporate governance system that functions through appropriate, active performance of duties by the Nominating Committee, the Audit Committee, and the Compensation Committee, in conjunction with oversight of the executive officers and directors by the Board of Directors. The Nominating Committee has three members, all of whom are outside directors. This committee determines standards and policies for the fair and transparent appointment and dismissal of directors and makes appropriate proposals to the Board of Directors for the appointment and dismissal of the representative executive officers under a fair and transparent succession plan. The Audit Committee has seven members, consisting of five outside directors and two internal non-executive directors. This committee conducts audits regarding the business execution of executive officers and directors. The two internal non-executive directors on the Audit Committee are full-time members of the Audit Committee. The Compensation Committee has three members, all of whom are outside directors. This committee deliberates on such matters as the details of compensation for directors and executive officers.

In addition, to further increase the transparency of corporate governance, the Governance Committee and the Compliance Committee have been established as advisory committees to the Board of Directors. These committees deliberate on the corporate governance system and related matters and on compliance activities as a whole and submit reports to the Board of Directors. Both committees are composed of eight outside directors. Two internal non-executive directors, who are members of the Audit Committee, participate as observers.

The various operating divisions involved in business execution—consisting of six executive officers, including three representative executive officers—make decisions on the execution of operations delegated by the Board of Directors and assume responsibility for the execution of those decisions. In addition, these divisions have adopted a system in which members are collectively responsible for management. Moreover, the CEO and COO have been placed in charge of each unit of the SBUs (Strategic Business Units), which comprise domestic and overseas Group companies as well as internal companies, and employ a system of mutual checks. These executive officers, as well as persons responsible for major business entities, comprise the Global Executive Committee (Global EXCO), which has been established as an organizational body for senior management. This committee aims to strengthen the checks and balances capabilities of the Group by debating and discussing management strategy and issues from a global perspective (including sustainability as it pertains to climate change and other factors), which improves transparency of the decision-making process. In addition, each operating division involved in business execution maintains a reporting system to the appropriate representative executive officer of that division regarding the execution of duties. This information is also regularly and promptly reported to the Board of Directors in order to aid in their deliberations, and these actions ensure that the Group maintains an effective supervisory function.

Corporate governance structure (as of March 22, 2019)

With regard to Bridgestone’s internal controls system for ensuring that the company carries out its business appropriately, decisions on improvement strategy are made by the Board of Directors, and the Representative Executive Officer is then entrusted with the carrying out of these decisions; the Representative Executive Officer receives reports on the status of the improvements and related operations, and monitors implementation, to realize further improvement.

At the Company's Board of Directors' meeting held on March 23, 2018, the policies for internal control systems were resolved pursuant to the provisions of Items (i)(b) of Paragraph (1) of Article 416 of the Japan's Companies Act.

Policies for Internal Control Systems

The Company implements audits through cooperation among the Audit Committee, the Internal Auditing Office, and the independent auditors.

The Audit Committee audits the execution of duties by directors and corporate officers as well as the internal control systems. These duties are performed under the auditing policy and audit plans determined by the Audit Committee, and, among other actions, involve inquiry into the status of business execution (including risk management), reviewing reports from the Internal Auditing Office and the full-time members of the Audit Committee, engaging in opinion exchange with corporate officers, attending meetings of the Global EXCO and other important meetings, holding on-site visits at major Group companies and business locations in Japan and overseas, and conducting interviews with members of the respective audit committees and corporate auditors at these sites. The Audit Committee also receives reports and explanations on audit plans, audit methods, and results from the accounting auditor, and then verifies the results. In addition to the duties above, the full-time members of the Audit Committee engage in daily information gathering in cooperation with the Internal Audit Department in order to improve audit effectiveness. Other members of the committee also attend Global EXCO and other meetings, and conduct audits at major domestic and Group companies. In addition, the Company has assigned a corporate officer with full-time responsibility for auditing to assist the operations of the Audit Committee. Under the supervision of this corporate officer, dedicated staff have been assigned to assist with audits by the committee. The selection and replacement of this corporate officer are decided through the agreement of the Audit Committee. Moreover, the evaluation of this corporate officer is also determined based on the evaluation of the Audit Committee.

The Internal Auditing Office and internal auditing departments within the Company’s operating divisions and major Group companies conduct internal audits of the Company and Group companies. The Internal Auditing Office receives direction and reports directly to the Audit Committee, independent of any operating divisions involved in business execution, from the perspective of ensuring effective auditing function. The Internal Auditing Office formulates an annual audit plan which it reports to the Audit Committee, evaluates the effectiveness and efficiency of internal control systems, and conducts internal audits of each function, operating division, and Group companies in Japan and overseas. In addition, the Internal Auditing Office works with the internal audit departments at each operating division and at major Group companies on activities toward establishing an optimal internal Group audit system.

In cooperation with the Audit Committee, Deloitte Touche Tohmatsu LLC performs the accounting audit of the Company’s financial statements.

The Audit Committee, the Internal Auditing Department (comprising the Internal Auditing Office and internal auditing departments within the Company’s operating divisions and major subsidiaries), and accounting auditors exchange information and opinions as necessary and generally maintain close contact, thereby working to further increase audit efficiency and effectiveness.

Bridgestone, in deciding on executive compensation, will determine an appropriate amount of compensation in light of Bridgestone’s business performance and scale of business, based on the four “Principles of Compensation” of (1) retaining and cultivating superior human resources, (2) remaining competitive, (3) motivating the implementation of the global business strategy and (4) motivating an increase in shareholder value, in view of the remuneration levels of other major global companies in Japan, which were selected for comparison from the point of view of sales volume, overseas sales ratio, and operating profit ratio, and the roles and responsibilities of directors and executive officers.

Remuneration for Members of the Board

(a) remuneration for Members of the Board who hold concurrent positions as Executive Officers is comprised of fixed and variable components.

• Fixed remuneration: Fixed remuneration is made up of base remuneration for duties and remuneration based on the roles and responsibilities of the Members of the Board and Executive Officers.
• Variable remuneration: Variable remuneration is comprised of the group-wide performance based bonus and the Performance Share Unit (PSU) Plan, which is a performance-based stock compensation plan.

(b) Remuneration for Members of the Board who do not hold concurrent position as Executive Officers is fixed and comprised of base remuneration and allowance for Members of the Board. The policy is structured to consider their contributions towards mid- to long-term business performance and enhancement of corporate values by overseeing the management and operation of the Company without actually being involved in day-to-day operations.

Remuneration for Executive Officers

Remuneration for Executive Officers is comprised of fixed and variable components

• Fixed remuneration: Fixed remuneration is made up of the base remuneration for their duties and remuneration based on the roles and responsibility of the Executive Officer.
• Variable remuneration: Variable remuneration is comprised of the group-wide performance-based bonus, performance-based bonus in their responsible area, and PSU.

Remuneration for Members of the Board and Executive Officers(January-December 2019)

Note 1: The figures above include remuneration paid to three Members of the Board who retired during the current period and one Executive Officer who resigned during the current period.
Note 2: Compensation for Members of the Board who hold concurrent positions as Executive Officers is divided into compensation for their Board Member role and compensation for their Executive Officer role. Each type of compensation is included in the above figures.

In order to strengthen its corporate governance and promote the speed of business execution the Company has regularly reviewed its governance performance and continually implements reforms to its governance systems and processes (as a part of this process the Company introduced Independent Directors in 2010, and between 2013 and 2014 established Nominating, Compensation, Governance and Compliance committees as advisory committees to the board, and adopted the “Company with Nominating Committee, etc.” model of corporate governance in 2016).

Building upon these enhancements the scope for the evaluation of Board effectiveness has been taken to include not only the Board and the committees required under the “Company with Nominating Committee, etc.” Model (Nominating, Auditing and Compensation Committees) but also the advisory committees (Governance and Compliance Committees). With the objective of strengthening corporate governance, the entire scope of board functions (the Board and all five committees –both legally required and advisory) is subject to annual evaluation in a process which involves a review of all board deliberations and their outcomes and self-evaluations of all directors.

The annual Board evaluation process requires the Board and each Committee to complete a formal self-evaluation process the results of which are then submitted to the Board where the overall effectiveness of the Board's operation and governance performance level is evaluated.

As a result of this Board evaluation in 2019, it has been determined that decision-making ensures transparency and that the oversight functions of the Board are being carried out through timely reports to the Board for deliberation, productive discussions among members of the Board, active deliberations at Board meetings taking the various perspectives of external independent directors into account and the ongoing efforts of the legally- required and advisory committees to create an organization of global awareness.

In addition the pace of business execution was steadily enhanced throughout 2019 and the Representative Executive Officers reported regularly to the Board on strategy implementation and status. In addition, based on each board member’s request, operating divisions reported the progress of their activities on specific themes. As a result, information sharing between the Board and the operating divisions has been further strengthened, and the Board is able to put even greater focus on deliberations concerning management strategy. From now on the Board, in efforts to improve the Company ever further, is addressing the enhancement of governance and continuous improvement of all the functions of the Board of Directors.