We aim to further enhance the functions of the Board of Directors in order to achieve sustainable growth and rising corporate value of IDEC

■ 【Outside Director : Michiko Kanai】
      Appointed as outside director in June 2016, Kanai hasbeen a Director and Audit & Supervisory Committee Member since 2018.
■ 【Outside Director : Yasuo Himeiwa】
     Appointed as outside director (Audit & Supervisory Committee Member) in 2020, Himeiwa has also served as Chairman of the Audit & Supervisory Committee since 2021.

A highly transparent governance system ensuring extensive discussions that satisfy the outside directors

―IDEC has appointed outside directors from an early stage, and they represented a half of the directors back in 2012. At IDEC’s Board of Directors’ meetings, outside directors freely express questions and opinions. How do you evaluate our governance systems and our structure and management of the Board of Directors?

（Himeiwa）
I agree that IDEC has a transparent governance system as outside directors represent a majority of the Board of Directors, as well as the Audit & Supervisory Committee and the Nominating Committee. I also find that IDEC has been making progressive efforts, such as clearly showing a skills matrix of the directors in the notice of shareholders’ annual general meeting from early on.

（Kanai）
You are right. From the beginning of my appointment, outside directors represented a majority and I had the impression of IDEC being an advanced company. In particular, I felt the presence of the strong will of the CEO when IDEC appointed management veterans of a bigger, more advanced global manufacturer as an outside director and asked for their advices.
The Board of Directors would be easily managed if internal directors represented a majority. However, IDEC intentionally has outside directors as a majority of the Board, receives their questions and suggestions, responds to each of these, and listens candidly regarding what needs to be said. I saw that the outside directors functioned effectively since my first day and I have always been impressed with the will of the management to make the Board of Directors function well.

（Himeiwa）
In order to enhance the discussion at the Board of Directors meetings, I would appreciate to receive meeting materials in advance, for preparation.

（Kanai）
Since the agenda items and materials are prepared based on the discussions of the Top Management Meeting, it might be difficult timewise. However, it would certainly be nice if the key points and additional information of new or important agenda items are included in the materials beforehand.

Valuing what only outside experts can see and say

―The range of activities of outside directors is increasing, including provision of opinions on individual matters and participation in the Audit & Supervisory Committee and the Nominating Committee, in addition to the Board of Directors. What do you have in mind when working as an outside director, while keeping an eye on improving governance?

（Himeiwa）
I am an accounting expert, so I am conscious of giving advice from an accounting standpoint. Advice coming from outside accounting experts may be easier for the management to understand and listen to. I am particularly conscious of whether governance is working properly, and I always try to ask questions if there is any uncertainty. This is based on my view that accounting fraud can occur at any company. I also find it important that the Audit & Supervisory Committee detects and reports potential risks to management at an early stage.

（Kanai）
At the Board of Directors meeting, I keep it in mind to ask questions if I don’t understand or am not satisfied, and I make sure to understand the facts. Concerning the legal aspect, it is important whether the directors make sufficient discussions in making big decisions, seek the opinions of experts, and reach the best business judgements as the Board of Directors. When IDEC acquired APEM, the outside directors gave various opinions, had numerous discussions, and spent a long time studying the matter. From the legal perspective, I want to make sure whether such a process is being taken properly.

（Himeiwa）
I agree with you. I can see that the management is not merely following formalities but is earnestly trying to listen to the opinions of outside directors and to engage in extensive discussions.

Development of next-generation management and ESG activities in the core operations being positioned as challenges for realizing sustainable growth

―The post-COVID-19 future outlook is so uncertain, and companies have to cope with constantly changing issues, including the response to ESG and other non-financial matters. What do you see as the current challenges of IDEC and will you give us advice on how we can raise corporate value going forward?

（Himeiwa）
Successor planning is one major issue. Since the current management team cannot last forever, the next team must be established and ready when the time comes. In that sense, nurturing successors is the current priority issue and that is why a Nominating Committee has been established to tackle it.

（Kanai）
This is also an area of interest to institutional investors and many other stakeholders. We should also think about how to announce it so that it will be positively received.

（Himeiwa）
The current management team has strong leadership, and is actively taking action to improve corporate value, as we can see in the case of flexible share buybacks. Analysts must also be interested in how the next-generation management team would be shaped. Companies function under a strong leadership system or under a group leadership system. In either case, it would be important to make the next generation visible soon.

（Kanai）
In my view, it is important that each of the next-generation management team to proactively think of themselves as the final decision maker in their area of expertise.

Offering to society IDEC’s products that contribute to sustainability

（Kanai）
IDEC’s products are also highly related to sustainability, such as safety. I believe IDEC can appeal to society more strongly regarding such aspects.

（Himeiwa）
Although the CSR Committee and others have been engaged in ESG activities, we will need a viewpoint of linking ESG activities with businesses. Products that protect human safety will be increasingly needed in society to prevent accidents and industrial disasters. This will be a tailwind for IDEC. I would like to think about ESG activities as a contributing factor to profitability, not as a cost-raising factor.

（Kanai）
Indeed. That point of view will become more and more important. When IDEC started CSR activities, it was hard to link them to business. Even if the idea of the activity itself is good, it would not become sustained unless generating profit. Let’s engage in more core business activities which link to ESG issues.

Importance of communication among directors outside the meetings

― Finally, do you have any wish concerning themes to be covered at the outside directors’ exchange session or how information should be provided?

（Kanai）
Mainly due to the COVID-19 pandemic, we have had few opportunities to meet and talk with each other over the past few years. I hope that we will get to meet with each other more often, especially as we are welcoming new directors.

（Himeiwa）
At the exchange session in 2020, I was grateful to learn about some IDEC products from the executive officers and department heads. The opportunity to be informed about the latest products and businesses is so precious.

（Kanai）
I really understood the products better when they were explained while I was looking at the actual products.

（Himeiwa）
It may not be easy for presenters to be prepared but that would be a great training for presentation, too, and they may have new discoveries or be encouraged by receiving questions and opinions from outside directors. I would appreciate to have such an opportunity again. A factory visit will be also useful.

（Kanai）
Outside directors’ own awareness also increases when they exchange information on various aspects of the company’s situation and management, not only at the meetings of the Board of Directors, but also by having opportunities for directors to get together and candidly speak with each other. I think such an opportunity would be worthwhile.