Analysis and evaluation of the effectiveness of the Board of Directors
Issues for FY2020 based on effectiveness assessment and initiatives for FY2021
In FY2021, when the Company transitioned to the Co-President structure on April 28, 2021, we took the following actions on the four main issues that we identified for improvement on the basis of our FY2020 effectiveness assessment.
Issues that require stronger initiatives in FY2021 / Main initiatives in FY2021
| Upgrading the monitoring model | At the time of the Group’s transformation, when the Co-President structure was launched, we focused on establishing a structure that would enable us to avoid information asymmetry and fulfill our respective roles toward the achievement of MSV, our sole mission, while further separating execution and supervision as “a Company with a Nominating Committee, etc.” structure. In addition, assuming that the meetings would be held remotely due to the pandemic, the duration of each meeting was shortened, and regular Board of Directors meetings, along with non-regular Board meetings, were generally held twice a month (22 meetings during the FY2021 term). Furthermore, discussions with Global Key Persons (GKPs), the Group’s key management personnel, were held at the Independent Director meetings (17 times during the same period), leading to deliberations at Board of Directors meetings based on an accurate understanding of the situation regarding execution. |
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| Enhancement of discussion of important agenda items | For M&A projects such as DuluxGroup’s acquisition of Cromology and JUB, the Board of Directors deliberated from the initial consideration stage and provided timely support for the implementation of growth strategies through appropriate risk-taking by the Co-Presidents. In the transfer of the European automotive business and the India businesses to Wuthelam Group a special committee of Independent Directors was established to ensure a highly professional and objective decision-making process, thereby expanding the discussion and improving transparency and fairness, as well as protecting the interests of minority shareholders. |
| Further reinforcement of audit | We have introduced “Audit on Audit” as the auditing system for the Group, which is rapidly globalizing, establishing an effective auditing system that is in line with the actual conditions of each partner company, which are growing autonomously under the Co-President structure. |
| Reinforcement of nominating function | In the transition to the Co-President structure, we have achieved a speedy and smooth Presidential succession. Furthermore, based on the skills matrix, two additional Independent Directors have been appointed, Mr. Peter M. Kirby and Ms. Lim Hwee Hua, who have management experience in global paint and investment companies. Also, by appointing both Co-Presidents as Directors, we have evolved to a Board of Directors structure that will contribute to further advancing MSV. Furthermore, by increasing opportunities for direct communication with GKP, we have gained an understanding of the current status of the “human capital” of our senior management and strengthened the foundations for the evaluation of Group management by the Co-Presidents, who unite the GKPs. |
Evaluation for FY2021 and issues for FY2022
- Guidelines for making evaluations
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Target Group
All Directors in FY2021: 8
Representative Executive Officers & Co-Presidents: 2
Managing Executive Officer and GC: 1Method
Selected a third-party organization, Board Advisors Japan, Inc. (BAJ), and conducted questionnaire and individual interviews
Content of Questions
- Status of progress in resolving issues identified in the FY2020 Effectiveness Assessment of the Board of Directors
- Issues for the Board of Directors and various Committees following a transition to the Co-President Structure
Evaluation process
- Distribute questionnaires to Directors
- Conduct separate interviews with each Director based on the results of questionnaire
- Summarize and analyze the results of questionnaire and individual interviews
- Report and deliberate of the effectiveness evaluation at the Board of Directors meetings
- Overview of evaluation outcome
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Based on the following evaluation by the BAJ and the Board of Directors’ discussion that followed in response, the Board of Directors has assessed that the overall effectiveness of the Board of Directors for FY2021 is generally assured.
BAJ’s assessment summary
- The Board of Directors has been proactively and positively responding to the evolution of the Company’s management since the transition to the Co-President structure.
- The agenda setting and facilitation by the new Board Chair have greatly contributed to the effectiveness of the Board of Directors.
- By significantly increasing the number of Board of Directors meetings and holding them flexibly, deliberation on important matters has been enhanced.
- In order to improve the functions of the Board of Directors, steps are being taken to enhance the composition of the Board of Directors (such as inviting CEOs with experience overseas).
- Some progress has now been made in addressing the issues identified in FY2020, including measures to strengthen the audit function.
- Issues requiring stronger initiatives in FY2022
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各取締役から、下記の点について課題指摘があり、2022年度に取り組みを強化すべき課題として設定しています。
- Enhance Growth Strategy discussions
Further increase opportunities for strategic discussions and make the Board of Directors a place to concentrate more on growth discussions - Streamline Board of Directors operations
Minimize time spent on regular agenda and other usual proceedings, and focus on discussions that truly contribute to the achievement of MSV* - Further contributions by Independent Directors
Improve each Director’s contribution by posing more constructively challenging questions to the management team - Strengthen the Board of Directors secretariat functions
Enhance support functions for Directors to further expand strategic discussions, and for secretariat functions to respond to the globalization of the Board of Directors
* Ten regular Board of Directors meetings are planned for FY2022.
- Enhance Growth Strategy discussions