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”.

2019 Report on the Corporate Governance Code (438KB)

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

Back Number

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)

In March 2016, the Company transitioned to the “Company with Nominating Committee, etc.” model and has a system that enhances the separation of management and operational responsibilities and allows the directors and the Board of Directors to focus more effectively on overseeing the execution of business operations. At the Annual Shareholders’ Meeting held on March 22, 2019, 11 directors (nine male and two female) were elected, including eight outside directors (six male and two female). The Chairman of the Board, who is selected from among the directors in accordance with the Articles of Incorporation and the Board of Directors’ Rules, serves as the chairperson of both Board of Directors’ meetings and the General Meeting of Shareholders.

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 deliberates on such matters as standards and policies for the fair, transparent appointment and dismissal of directors. The Audit Committee has six members, consisting of five outside directors and one internal director. This committee conducts audits regarding the business execution of executive officers and directors. The internal director on the Audit Committee is a full-time member 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 order 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 of the committees are composed of eight outside directors. One internal director, who is a member of the Audit Committee, participates as an observer.

The various operating divisions—consisting of eight 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 top executive management. This committee serves to strengthen the checks and balances capabilities of the Group by debating and discussing management strategy and issues from a global perspective, which improves transparency of the decision-making process. In addition, each operating division 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.

In accordance with audit policies determined by the Audit Committee, the Committee works in cooperation with the Internal Auditing Office and other bodies to audit the execution of business duties by executive officers and directors. These auditing activities include attendance at important meetings, such as the Global EXCO and the Executive Operational Committee; interviews to ascertain the status of operations; reviews of important business documents; and on-site audits of business offices. Moreover, information and opinions are exchanged with the representative executive officers, and meetings are held with such persons as the corporate auditors of major subsidiaries in Japan. 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. Decisions to select and replace this corporate officer require the agreement of the Audit Committee.

The Internal Auditing Office and internal auditing departments within the Company’s operating divisions and major subsidiaries conduct internal accounting and operational audits of the Company and Group companies. The Internal Auditing Office makes annual audit plans and conducts on-site audits of each function, operating division, and subsidiary.

n 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 Office, and the independent 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 2018)

Note: The figures above include remuneration paid to one Member of the Board who retired during the current period and one Executive Officer who resigned during the current period.

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 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 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.

Also, in 2018 the Board revised the planning process for the mid-term management plan and delegated some of its managerial authority to executive management resulting in the enhanced speed of business execution. Concurrently, information sharing between the Board and the operating divisions, including the communication of priority issues related to business execution and reporting by Representative Executive Officers regarding deliberations of the Global EXCO has been further improved, 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.