We believe that the appropriate form of governance should achieve legality, appropriateness, and efficiency of business operations by ensuring an effective supervisory framework for the Board of Directors. This is accomplished by having a mutual supervision and check mechanism between inside directors, who also serve as executive officers and execute operations, and by forming a Board of Directors that consists of inside directors who carry out business operations and outside directors who do not execute operations but specialize in supervisory functions. The structure also secures the audit function of the Audit & Supervisory Board, which is independent from the Board of Directors. Based on this view, MOL has become a company with an Audit & Supervisory Board as provided for in the Companies Act.
The Board of Directors, by its resolution, has established a basic policy for developing a system to secure the properness of operations (internal control system). The MOL Group’s officers and employees, under the president serving as the chief executive officer for management, carry out business operations in accordance with the management policy set by the Board of Directors and the above-mentioned basic policy, while being subject to supervision by the Board of Directors and audits by the Audit & Supervisory Board. (For details of the business execution system, please see the descriptions given in a later section.)
We also believe that the true worth of corporate governance will not be achieved by the existence of the framework and organization constructed as described above, but will be put to the test by whether such a framework actually works properly and effectively as described below.
As the central decision-making body of the Company, the Board of Directors deliberates and make decisions on the basic policies and the most important matters for the management of MOL Group.
The Board of Directors consists of five (5) inside directors and three (3) outside directors who hold no interest in MOL. Outside directors play a major role in vitalizing the Board of Directors by checking the reasonability of management decisions and of the status of business execution based on their respective experience and knowledge from an independent standpoint without an interest in the Company and expressing useful opinions on overall management. We have developed a supporting system for outside directors whereby agenda items at the Board of Directors’ meetings are explained in advance and the execution of important businesses is reported to them each time. In addition, the Board of Directors also conducts the “Deliberation on Corporate Strategy and Vision”, during which the directors exchange opinions freely with outside directors and outside Audit & Supervisory members on management strategies, the long-term vision and other subjects related to overall management.
MOL’s "Deliberation on Corporate Strategy and Vision"
At MOL, three hours are set aside for every Board of Directors’ meeting, with one of the hours allotted to "Deliberation on Corporate Strategy and Vision." At the "Deliberation on Corporate Strategy and Vision," a theme is selected related to our management strategy, long-term vision or management in general. A free exchange of opinions is carried out at these deliberations which include outside directors and outside audit & supervisory board members.
FY2019 "Deliberation on Corporate Strategy and Vision": Main Agenda Items
|July||Activity policy for LNG carrier business|
|October||Direction of next management plan|
|December||Corporate marketing strategy for the Company|
|January||Latent customer needs and digitalization|
|February||Overall summary of Rolling Plan 2020|
In addition to the aforementioned "Deliberation on Corporate Strategy and Vision," the "Board Member Discussion Sessions" is also held when necessary after the meetings of the Board of Directors to share and discuss a range of ongoing important issues other than the agenda items at the Board of Directors meeting at an early stage.
MOL has established the Nomination Advisory Committee and the Remuneration Advisory Committee as arbitrary organizations under the Board of Directors. For making the outside directors supervise the executive directors more effectively, both committees are chaired by outside directors and are composed of all three (3) outside directors and the President, so that the majority are outside directors. The Nomination Advisory Committee deliberates matters related to the selection and dismissal of directors and executive officers. Also, the Committee reports to the Board of Directors upon deliberation on the proposal for the next President (including reappointment and dismissal of the current President) based on the succession planning for the next President with the aim of finding the right person to act as future President and CEO (hereinafter collectively called “President” in this section) in a timely and appropriate manner. The Remuneration Advisory Committee appropriately reviews the remuneration plan for directors and executive officers, and determines appropriate levels of remuneration for directors, including incentives for long-term enhancement of corporate value from an objective standpoint, while putting a high priority on the “stakeholders’ perspective.” In addition to the committee members, the outside audit & supervisory board members may also attend meetings of the respective committees in order to gain an understanding of the deliberation process and provide their opinions. The Board of Directors respects the contents of reports from both Advisory Committees and uses them to pass necessary resolutions.
The Board of Directors, in accordance with the Corporate Governance Code, performs effectiveness evaluations and analyses each year through deliberations based on the results of self-questionnaires and questionnaires, and uses the results to improve the operation of the Board of Directors.
In the effectiveness evaluations for FY2019, there were opinions on enhancing the quality of explanations pertaining to the matters deliberated by the Board of Directors, ensuring enough time for deliberation according to the difficulty level of the matter to be deliberated, and making improvements on “Deliberation on Corporate Strategy and Vision,” such as increasing the number of times held and the number of topics set. These points were then identified as issues to be addressed and improvements to the operation of the Board of Directors were implemented accordingly.
In order to make effectiveness evaluations more beneficial, the Company reviews the evaluation items every fiscal year to ensure an adequate evaluation, which may involve adding matters that are pertinent to the actual condition of the fiscal year.
MOL introduced the executive officer system in 2000. The executive officers, who are appointed by the Board of Directors and to whom the authority is delegated by representative directors work to increase the speed of management by operating business in accordance with the highest management policy determined by the Board of Directors. The Executive Committee (chaired by the President), functions as a deliberative organ to make decisions on basic management plans and important issues related to execution of business in accordance with the basic policy determined by the Board of Directors. MOL has established six (6) committees as subordinates under the Executive Committee. In addition to the members of each respective committee, officers and general managers related to each issue attend the committee meetings to examine and deliberate on various matters such as important matters submitted to the Executive Committee for discussion and matters pertinent to multiple divisions.
The Audit & Supervisory Board consists of two (2) internal audit & supervisory board members and two (2) outside audit & supervisory board members who hold no interest in MOL. The audit & supervisory board members periodically hold Audit & Supervisory Board’s meetings to draw up audit plans and report and share audit results, etc, and prepare audit reports at the end of fiscal years. Each audit & supervisory board member attends meetings of the Board of Directors and other important meetings to audit the deliberation and decision-making processes. They also audit the development and operational status of internal control systems by conducting interviews with directors, executive officers, and employees, as well as by making on-site visits to Group companies. KPMG AZSA LLC, the accounting auditor, conducts accounting audits. In addition to the above, the Corporate Audit Division, which receives directions from the President and is independent from any other management body, conducts internal audits including internal audits on Group companies. Three entities?namely, the Audit & Supervisory Board, the accounting auditor, and the Corporate Audit Division?take initiatives to improve the effectiveness of audits through close coordination with each other.
The Company is aware of the crucial role that compliance plays in living up to its broad corporate social responsibilities, and that compliance with laws and regulations is at the core of this role.
We have established the Compliance Committee, which is headed by the Chief Compliance Officer, and formulated the Compliance Policy to assure strict adherence to rules and regulations. General managers of divisions are appointed as Compliance Officers. In this role, they are responsible for enforcing compliance regulations and are also required to report to the Compliance Committee in the event of a compliance breach. The Corporate Audit Division, a body that operates independently of the Company’s divisions, provides an Internal Compliance Advisory Desk. The Corporate Audit Division undertakes investigations of breaches and reports the results to the Compliance Committee. In addition to the Internal Compliance Advisory Desk, we have established an External Compliance Advisory Desk, operation of which is entrusted to an outside attorney. The Desk provides anonymous consultation services.
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Corporate Governance Report[530KB/31Pages]
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