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Outside Director Round Table Discussion

 

FUJIFILM Holdings enhances a corporate governance structure that serves as a foundation for contributing to the sustainable development of society with the aim of sustaining growth and increasing corporate value.
On June 28, 2018, Ms. Makiko Eda became a new outside director at the Company, bringing the total to four outside directors. In this round table discussion, the outside directors talked about the effectiveness of the Board of Directors, issues or their expectations for the future and other related matters.

Deliberations of the Board of Directors

——Having participated on the Board of Directors as an outside director for the past year, what are your thoughts about the meetings? Were they engaging and meaningful?

Kawada: I believe the role of outside directors on the Board of Directors is to consider the appropriateness of management policies, risks that may have been missed internally, and identify issues that should be examined, all from a thirdparty perspective. In this context, outside directors must have an accurate understanding of the workings of the entire company, including each business, but in reality it is nearly impossible to know every last detail. Matters deliberated by the Board of Directors are explained in detail beforehand so that we outside directors are as informed as possible when attending meetings, including background information. With my experience as a manager, I check to make sure important decisions are being made appropriately for the Fujifilm Group.

Kaiami: I feel the same way. The most important responsibility of outside directors is to supervise management from a third-party perspective. From this standpoint, I have posed questions about points that draw my attention during the deliberations of the Board of Directors, no matter how minor. If my questions make other directors aware of an issue, then it is all for the better. Such questions may also lead to a more open conversation. Also, as an outside director with a legal background, I am especially scrupulous when it comes to checking matters concerning compliance.

Kitamura: I have made every effort to fulfill my duty as a supervisor of the Board of Directors based on the Corporate Governance Code. According to my own experiences, a manager tends to be interested in the earnings side of the business. I concentrate on taking a holistic view of the company across business divisions from the perspective of a shareholder or an investor. When evaluating the effectiveness of the Board of Directors, I requested more qualitative information about management plans in addition to figures with regards to materials provided before meetings of the Board of Directors. These requests were promptly addressed, leaving me with a positive impression of the speed with which things are accomplished inside the Company. Thanks to the information provided before meetings, I have been able to add more to the discussions of the Board of Directors.

Kaiami: As Mr. Kitamura said so well, the information about specific topics prior to meetings has become more sufficient and briefings about businesses were enhanced over the past year. During discussions, I also ask for further explanations on the matters brought internally before the Board of Directors in order to have more meaningful conversations.

——The number of outside directors was increased to four with the appointment of Ms. Eda at the general meeting of shareholders this year. Ms. Eda is Fujifilm’s first female director, with international experience and an extensive background as a manager. Please tell us your thoughts about being appointed an outside director of the Company.

Eda: Based on my experience, I believe I can offer new discussions while checking conditions and asking questions from a perspective that differs from an insider. As a woman I do not have any special opinions on the matter. The Fujifilm Group engages in business activities through “an open, fair and clear” approach on the global market. I believe my role is to make sure the Company is accurately moving in this direction from my unique standpoint of having so many opportunities to interact with people and organizations overseas.

——Ms. Eda, I hear you are also working to solve social issues through the World Economic Forum Japan.

Eda: The Fujifilm Group aims to be a company that helps to solve social issues through its business activities. The world is dealing with many serious issues on a global scale, and contributing to the resolution of social issues is an essential aspect of the sustainable growth of corporations. With limited natural resources around the world, companies must do more than pursue profits by making every effort to understand conditions facing the human race on a global scale. Shareholders and other stakeholders in society strictly examine companies whether they conduct business in a way that helps solve these issues or not. I aim to contribute to the growth of the Fujifilm Group by providing advice and guidance based on these global situations.

[photo]Mr. Kitamura

——The Company is concentrating management resources in the healthcare field in a bid to accelerate growth while reinforcing its business foundation through M&A. Mr. Kitamura, with your experience and knowledge gained at financial institutions, what is your opinion of debate about matters regarding M&A at the Company?

Kitamura: The Company has a long track record in strategic M&A based on clear business goals in its medium-term management plan. In my opinion, internal discussions are based on extensive experience in this area. In healthcare, especially the pharmaceuticals and regenerative medicine fields, it usually takes time for specific outcomes to emerge, making it difficult to assess the suitability of deals. With M&A, it is important to remember while examining a deal that sealing the deal in itself is not the objective. At the Company, in addition to the Board of Directors, an independent organization called the M&A Investment Committee examines risks as a part of a balanced control structure. I expect this structure to continue functioning well into the future.

Initiatives to Strengthen Corporate Governance

[Photo]Mr. Kaiami

——When improper accounting practices were discovered at a subsidiary of Fuji Xerox, the Fujifilm Group took it as an opportunity to further strengthen corporate governance and reinforce the management of business processes. What is your assessment?

Kaiami: After the improper accounting incident came to light, Fujifilm set up the Committee for Strengthening Governance on the advice of the Independent Investigation Committee, and began discussions on this matter in a substantially short time. I believe management rapidly took the right steps, coming up with various measures to strengthen governance. One of these was improving its internal notification system. A system was introduced in a short time where all employees inside and outside Japan can directly notify the parent company (the Company). I believe this incident served to underscore the drive that the Fujifilm Group has for making itself a stronger company.

——What are your views on initiatives to reinforce compliance?

Kaiami: Fujifilm has a nearly 100% response rate for a compliance awareness survey of all employees, underscoring the thoroughness of its efforts on this front. I believe it is necessary to truly push for greater awareness of compliance now that employee awareness is on the rise. Matters that come through the internal notification system are also reported to us, the outside directors. It is my intention to get involved in the examination and debate of such matters so that we will not miss even a small sign of potentially greater risks.

Nomination and Remuneration Advisory Committee

——In June 2018, the Company established the Nomination and Remuneration Advisory Committee as an advisory body to the Board of Directors, and appointed Mr. Kawada as the head of the committee. What kind of debate will take place in this committee?

[Photo]Mr. Kawada

Kawada: The Company’s Nomination and Remuneration Advisory Committee aims to improve corporate governance by increasing the transparency of CEO succession plans and procedures related to determining director remuneration. The committee has just begun to debate these matters in detail. CEO succession planning is a conversation that must take place from a long-term perspective. Personally, I believe companies should make preparations in five-year and ten-year increments depending on their traditions, culture and management policies, screen candidates from a wide pool of people with flexible thinking, and then groom them for the position. I aim to have more substantive conversations with Mr. Kitamura and Chairman Komori, who are members of the committee. I think remuneration levels and calculation methods should be decided based on a variety of factors, including the industry to which a company belongs and its positioning within it, as well as business models and unique corporate cultures. The committee will debate these matters while referring to examples at other companies in the industry. Once opinions on remuneration come together, we will work to increase the transparency of the remuneration calculation process.

Issues and Expectations for the Fujifilm Group

——What issues confront the Fujifilm Group, and what are your expectations?

Kawada: The Fujifilm Group faced a moment of crisis that threatened its existence with the emergence of digital technologies that decimated demand for photographic film, its core product since its foundation. However, the Fujifilm Group underwent a massive business transformation and has continued to grow as a company. I believe there are few examples of successful transformations on this scale around the world. As an outside director, I can sense the strong vitality that runs through the Company, and I expect the Fujifilm Group to continue growing into the future. However, there is the potential for unexpected problems that may inhibit growth and expansion. I think it is essential for companies to examine the potential for various risks from even more diverse perspectives than before, including specific contributions to earnings. As an outside director, I will do my best to contribute in this area.

Kitamura: I have been involved with the Fujifilm Group as an outside director for the past year, and am impressed with the free-spirited atmosphere at the Fujifilm Group and the unique individuality of its employees. When someone decides to do something on their own initiative, they are likely to put three times more effort into it than being told by someone else to do it. I believe this organizational culture was fostered by the bold business transformation undertaken in the past, and I expect further growth from the Fujifilm Group.

[Photo]Ms. Eda

Eda: The more I learn about the Fujifilm Group, the more I feel excited and I become happier to have become a member of this exciting company, which is creating a better future by providing new value through business activities. I have only just arrived, but I already am impressed with the speed things are accomplished internally. I was also impressed with the open nature of employees asking questions and expressing opinions. In order to prosper amid rapid changes in the business environment, companies must continue to take on new challenges without being stuck in the past. This is quite an undertaking, in my opinion. Regardless, I believe if each and every employee takes a proactive approach to these challenges as opportunities for self-development, it will lead to growth for the Fujifilm Group.

Kaiami: I believe working with passion every day is important. Being able to work with passion largely depends on whether the work will contribute to society in the end, in my opinion. The Fujifilm Group has undergone a huge transformation from a company centered on photographic film into a company with operations in a broad range of business fields centered in the field of healthcare. Nonetheless, the Fujifilm Group continues to create new value in the photographic field where its roots were laid. Nowadays, the Fujifilm Group aims to contribute greatly to society by creating new value in the healthcare field. I am confident the Fujifilm Group will continue to grow as its employees engage in business activities with confidence and passion.

Related Information

Compliance and risk management at Fujifilm Group are comprehensive and unified by our belief that they are two sides of the same coin.

Five principles for conducting fair corporate activities.

Our rules with openness, fairness and clarity as the foundation.



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