Roundtable Meeting of Outside Directors

Business Management and Philosophy to “Touch the Heart and Make Society Better”

Showa Denko has three outside directors: Masaharu Oshima, Kiyoshi Nishioka, and Kozo Isshiki, who newly assumed the position in March 2019. We held a roundtable meeting of these three outside directors, where they expressed opinions informed by their different viewpoints.

Corporate Culture and Impression of Showa Denko

Photo:Roundtable meeting Being free from excessive formality, it has an established culture of allowing people to call it as they see it. Nishioka

Nishioka: I think Showa Denko is a company that is very flat and open. Within the company, colleagues call each other by their names, not by their job titles.
In particular, at Showa Denko I have found Board of Directors meetings to be not overly formal, unlike at many other companies. Showa Denko has established a culture that allows its people to call things as they see them.

Oshima: Yes, indeed. I also feel comfortable discussing issues at the meetings. Chairman Ichikawa worked to create such an open atmosphere when he was president of the company and, as Mr. Nishioka has said, the culture of calling each other by their names seems to have contributed to creating that atmosphere. At Board meetings, I myself can also freely express my opinions based on my experience as a researcher and engineer.

Isshiki: I was in charge of the Showa Denko relationship at the development bank, at which time the company impressed me with its sober atmosphere as a prestigious enterprise. However, upon assuming the position of outside director of Showa Denko in March 2019, I found that the atmosphere had changed substantially. I agree with what you both have said. I have indeed found that the level of the Q&A session held by the Board at its meetings is truly high and I think that Showa Denko could be a model for listed companies in this regard.

Oshima: However, it would be even better if we were provided with information about what was discussed as well as what was decided at Management Committee meetings in a balanced manner with regard to the items to be deliberated at Board of Directors meetings. But I might be hated if I start nosing into the Management Committee (laughs).

Isshiki: I agree with you. We need to know both pros and cons in order to have discussions and make well-grounded decisions. I was also impressed to hear top executives utter the word “compliance” repeatedly at Board meetings.

Nishioka: Yes, indeed. They are highly aware of the importance of compliance. However, compliance issues could arise in regard to various aspects. I experienced a series of operations including R&D, manufacturing, and sales at a steel company, and found it necessary to pay attention to everything, including safety, quality, and the environment to ensure compliance in business. Also, all employees need to have compliance awareness as compliance issues could occur anywhere in the company. I expect that the company will devise and implement even more measures to make all employees aware of the top management’s commitment to compliance.

Isshiki: Personally, I cannot help thinking that compliance provides the basis for human resource development. To put it simply, compliance means integrity. Both employees and organizations are expected to take actions based on this value. By acquiring the ability to do this, individual employees could help their company ensure its sustainability, even if the company changes its core business in the future, being influenced by the rapidly changing society.

Relationships with and Contributions to Society

Photo:Roundtable meeting The company can make even more contributions to society if all employees are well aware of the corporate philosophy of maintaining harmony with society and using the power of chemistry to solve issues. Isshiki

Oshima: As its business philosophy, the Showa Denko Group is committed to “providing products and services that are useful and safe and exceed its customers’ expectations” and to “contributing to the sound growth of international society as a responsible corporate citizen.” In fact, the graphite electrodes produced by Showa Denko are used in electric steelmaking furnaces, in which iron scraps are recycled into steel. Showa Denko also engages in the recycling of waste plastics into chemical materials and is further adding value to such business. The company is thus implementing an ESG initiative but is not very good at publicizing this fact. I also expect that R&D conducted by the company through open innovation will contribute to the attainment of the SDGs.

Isshiki: Showa Denko now focuses on communicating with society as closely as possible to remain in harmony with it toward the future. The company is striving to meet the social needs identified in this effort by using the power of chemistry, sometimes by fusing it with technologies in other industries. The top management team explains this through various media, and I have the impression that the number of employees supporting that idea is increasing. If it is entrenched across the board as a corporate philosophy, the company will be able to enhance its corporate strength and make even more contributions to society. I hope that this movement will progress toward the future.

Nishioka: The company makes it clear that it values relationships with society in the new medium-term business plan, “The TOP 2021,” which was announced in December 2018. Moreover, for the successful implementation of the Group’s business philosophy, the company newly set the Group’s Mission (meaning of its existence), Vision (its goal), and Value (means to realize the Vision). Specifically, the company defines “Maximization of CUSTOMER Experience” as the Group’s shared concept to be called“Value.”This means to understand customers in a true sense. Although everyone thinks that they understand their customers, more than a few of them do not truly understand their customers. The value of the “CUSTOMER Experience” shows the company’s commitment to deepening relationships with society and providing customers with products that are truly needed by them.

Oshima: I think the Mission, Vision, and Value show the key concepts of the company very clearly. Moreover, all employees seem to be making a concerted effort for the achievement. I also think that “organized chaos,” which President Morikawa talks about, shows how Showa Denko should conduct business in this age of great changes.

Isshiki: Compared with when I was dealing with Showa Denko 30 to 40 years ago, it has grown into a different company, which I get a strong sense of when I see its Vision, “KOSEIHA Company,” and its corporate message, “Act!” For me, it seems that by using these simple but clear words, the company is giving repeated instructions to make all employees aware of the company’s commitments so they that can share them across the board. The company has nurtured among employees a mindset that encourages them to share the commitments. The powerful wording links the company with local communities and brings it to the dimension of social contribution. This is indeed Showa Denko’s unique strength, which competitors do not have.

Nishioka: Companies can make contributions to society in any business domain and I hope that Showa Denko will proactively make contributions, giving priority to providing products that are unique and useful to society.

Oshima: In line with the R&D strategies, in which the company upholds the concept of “Fusion,” Showa Denko is conducting R&D on a higher level by fostering open innovation in cooperation with universities and other research institutes. I have the impression that the company is implementing this initiative quite skillfully. The R&D department has lots of excellent human resources, who are doing very well. However, the number of R&D staff and the budget are still not sufficient for the company to foster R&D in response to rapid changes in society. I expect that it will focus more on R&D to become an R&D-oriented company.

Showa Denko Group’s Mission, Vision and Valu
Corporate message: “Act!”

Roles of Outside Directors

Photo:Roundtable meeting One of our missions is to develop ther next generation of leaders and support the generational change of leaders. Oshima

Isshiki: The major responsibility to be fulfilled by outside directors is to speak on behalf of individual shareholders. Unlike institutional investors, financial institutions, and large shareholders, who have sufficient contact with the company and can express their opinions easily, individual shareholders have only limited opportunities to speak to the company. Outside directors therefore need to speak to the company on behalf of individual shareholders. This is important, and we must keep doing it. As I have already said, we cannot deny the possibility that the company will change its main business in the future. For the sustainable development of the company, I would like to help it employ and retain excellent human resources who can pioneer new fields and become a company with a treasury of human resources.

Nishioka: There are so many things that you cannot see if you are an insider, while outside directors can give advice from external viewpoints, which I regard as my duty. When you are working inside the company, you tend to think and take actions in a routine way. I want to help those inside make new findings and think outside the box. Moreover, we are given opportunities to visit the company’s bases across the regions to have dialogue with on-site workers. At a base, I will listen to the workers’ opinions, feel out what they think and the level of their interest in various issues, check whether the top management’s commitments and corporate philosophy are well understood by them, and give feedback to the management team.

Oshima: As both of you have said, we outside directors monitor, oversee, and give advice on behalf of shareholders from an independent and objective standpoint. This is our mission. I also deem it one of our important roles to develop successors and find future leaders. We support, from an objective viewpoint, the generational change of executive managers, who are tasked with promoting sustainable management. This is an important role expected of us. I would also like to focus on finding candidates for leaders, not limited to top executives, as part of my role as outside director.

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