Message from an Outside Director

The ideal role of an outside director

I have experience working in a number of companies with different corporate structures: as a top executive in a listed company with a nomination committee; as an outside director in a company with an Audit & Supervisory Board; and in an unlisted company. Based on this experience, I have come to believe that executives and non-executives are not in opposition to each other; instead, they are in a symbiotic (collaborative) relationship in which they complement each other’s roles and increase corporate value. The most important part of the collaboration is to develop strategies and to successfully repeat (100%) the cycle of accomplishing the strategies. I believe that the role of an outside director is not to restrict the executive, but to clarify the scope of the execution and then let the executive drive it.

Current status and evaluation of Kansai Paint

Through the four years in my position, I have come to see that Kansai Paint excels in making changes based on the advice of its outside directors. The current executive is working hard to implement lasting, far-sighted measures, such as strengthening the management infrastructure, reorganization, and executive development as part of its strategies. In my first year as a director, the executives presented many progress reports and success stories and I felt the Board of Directors’ meetings were somewhat formal. Recently, however, fundamental discussions have been held repeatedly in informal settings outside of the Board of Directors’ meetings, as “off-site discussion,” and this has fostered a sense of trust between executives and nonexecutives, with more communication taking place. I believe that the effectiveness of the Board of Directors has gradually improved as the diverse experience and knowledge of outside directors have come to be reflected in management. For example, to boost the incentive for executives to achieve the medium-term management plan, the executive remuneration system has been revised to create a new performance-linked system that is benchmarked against more than 150 leading companies in Japan and overseas

The company’s outside directors have a diverse range of qualities in terms of both gender and nationality, as well as experience in corporate management. I have been involved in the management of a number of companies, but I believe that Kansai Paint’s current structure—comprising outside directors, the Board of Directors, in the framework of a company with an Audit & Supervisory Board—is the best structure for the present situation.

Future challenges

For the company to achieve further sustainable growth based on the Group’s founding spirit and in accordance with its Corporate Philosophy, I feel that there are two issues related to organizational capabilities and global expansion that need to be addressed. The first is to complete the strengthening of the management infrastructure, which is the goal of the current plan. The other challenge is to instill management with a global perspective that looks beyond the medium-term management plan. We must address challenging issues such as establishing global bases, seeking out and appointing human resources (including from overseas), optimizing supply chains, speeding up digital transformation with, for example, materials informatics and smart factories, and ESG measures. To this end, I believe that it will become more important than ever for executives to fully utilize the experience of outside directors and to increase substantive discussions with an eye to the future. This can be done by getting fundamental information from non-executive members in advance, to enhance the off-site discussions that are already taking place.

To create a “Great” future for the company and to continuously expand corporate value, we need people with the right knowledge about the things that need to be done for the future as mentioned above. For this reason, I believe it is necessary to create a system over the medium to long-term by using a skills matrix. But above all, for Kansai Paint to become a true global company, I believe the time has come to think about a system that treats talented people properly, including those from overseas. All of the current directors have two to four years of experience and are quite stable in their positions, so there is an environment where good discussions can take place. Taking advantage of this strong foundation, I will continue to fulfill my role as an outside director.