Bridgestone : 2022 Report on the Corporate Govrnance Code (591KB)

On the Release of Bridgestone's

Corporate Governance Code Report

The Bridgestone Corporation, under the mission of "Serving Society with Superior Quality," has since 2020 defined a vision of "continuing to provide social value and customer value, as a sustainable solutions company towards 2050," and has been managing our business in line with a mid-long term business strategy formulated to realize this vision. As part of its efforts in working towards the achievement of this vision, the company is in the process of further enhancing its corporate governance.

This process of enhancement and reform has been implemented on an ongoing basis since the company was first established in order to respond to changing conditions and emerging issues, and to ensure that the quality of management and the transparency of decision making processes was constantly improved. In recent years, although the business environment has changed rapidly, due to an unprecedented series of changes including geopolitical risks, natural disasters and COVID-19, we have and will continue to work towards further improving our corporate governance in order to enhance our management. In March 2022, we established the "Bridgestone E8 Commitment" to serve as a core in our efforts to manage our businesses in a way that can earn the trust of future generations and guide us as we accelerate transformation to realize our vision.

Based on this process and the "Bridgestone E8 Commitment," we have formulated a mid-long term business strategy that positions sustainability as a central concern of management and aims to gain competitive advantage by creating value both for our customers and society as a whole. Also, by creating a globally consistent strategic view under the "Bridgestone E8 Commitment" and implementing the mid-long term business strategy in each region while adapting to local and business characteristics and requirements, we can contribute to the realization of a sustainable society that will in turn provide opportunities to enable the continuing development of our society, partners, customers, and our business. It is our intention to fully employ our governance structure in order to further strengthen internal controls, evolve into a sustainable solutions company to be able to proactively address the changing business environment, and continue to implement the ever more effective and efficient planning and execution of our business activities.

Since our first report in 2016, Bridgestone has been using the Corporate Governance Code as a tool for evaluating our governance policies and systems and continuously communicating our approach and progress in their achievement to our stakeholders.

On behalf of everyone here at Bridgestone, I thank you for your ongoing support and understanding and look forward to hearing your response to this report and your evaluation of our efforts to date as we strive to create a company that we can all be proud of.

May 2022

Shuichi Ishibashi

Member of the Board

Global CEO and Representative Executive Officer

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2022 Report on the Corporate Governance Code

1. Changes in Corporate Governance and Our Governance Structure (As of May 2022)

An overview of the development and current structure of Bridgestone's corporate governance are shown diagrammatically here in (1) our changes in the corporate governance system and (2) corporate governance structure diagram.

Ongoing enhancement of governance performance

Year

2022

Oversight		Management and operational execution
	Bridgestone	Formulate "Bridgestone E8 Commitment"
	E8 Commitment	Introduce 2 Joint Global COOs system in Bridgestone Corp.

2021

2020

2018

2017

2016

2014

2013

2012

2011

2010

2006

Abolish the full-time position of "Chairperson" Nominate Board Chair from among independent directors

Separate roles of CEO and Chairman of the Board

Restructuring of the Board' s authority (Authority delegation to executive management)

Adopt new corporate structure:

"Company with Nominating Committee, etc."

Establish Compliance Committee

Establish 3 discretionary board advisory committees (Governance, Nomination & Compensation)

Introduce independent members of the Board of Directors

Global CSR Commitment

"Our Way to Serve"

Quality Mission Statement

Safety Mission Statement

Environmental Mission Statement

The Bridgestone Essence

Commence Mid Term Business Plan

Redefine CEO and COO roles as "Global CEO" & "Global COO" respectively

Commence Mid-Long Term Business Strategy

Establish "Global Sustainable Procurement Policy," "Global Human Rights Policy" and "Code of Conduct"

Integrate Olympic and Paralympic related business with sports and cycle businesses

Formulate "Our Way to Serve" Global CSR Commitment

Refine Mid-term Management Plan formulating process

Establish Global Mining & Agricultural Solution Company

Formulate "Quality Mission Statement"

Restructure SBUs: BSCAP China + Asia Pacific

BSEMIA Europe + ME, Africa, Turkey, & Russia+ India (2020-)

Global EXCO

Refine "Safety Mission Statement"

Introduce CEO, COO system in Bridgestone Corp.

Refine "Environmental Mission Statement"

Refine "The Bridgestone Essence

Introduce CEO, COO system in Bridgestone Americas. Introduce Executive Committees

Establish Strategic Business Unit (SBU) organization structure

(Followed by a progressive, continuous review of the operational structure)

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2. About This Year's Report

This year's report (released in May 2022) outlines the status of enhancement and improvement efforts since the previous revisions announced by the Company in December 2021. The key enhancements are listed as follows:

	O u r m a i n i m p ro v e m e n t s s i n c e p r e v i o u s r e p o r t		P r i n c i p l e s o f J a pa n ' s C o r p o ra t e G o v e r n a n c e C o d e
			Introduction of this report: Changes in Corporate Governance
（1）	Formulating "Bridgestone E8 Commitment," the corporate commitment		2.1	Business Principles as the Foundation of Corporate Value
	Creation Over the Mid-toLong-Term
			2.2	Code of Conduct
（2）	Investing in human capital		3.1.3	Full Disclosure
(promoting the talent development program for next-generation management)
（3）	Implementing the remuneration plan to promote sustainability and transformation		4.2
		Roles and Responsibilities of the Board (2)
and encourage the achievement of the long-term business strategies
	4.2.1
（4）	Result of the Board effectiveness evaluation in 2021		4.11.3	Preconditions of Board and Audit Committee
	Effectiveness

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3. Current Status of Our Enhancement and Improvement Efforts Reported in Accordance with Japan's Corporate Governance Code

Section 1: Securing the Rights and Equal Treatment of Shareholders

General Principle 1

Companies should take appropriate measures to fully secure shareholder rights and develop an environment in which shareholders can exercise their rights appropriately and effectively.

In addition, companies should secure effective equal treatment of shareholders.

Given their particular sensitivities, adequate consideration should be given to the issues and concerns of minority shareholders and foreign shareholders for the effective exercise of shareholder rights and effective equal treatment of shareholders.

The Company recognizes that it is essential for the sustainable development of the business to collaborate with various stakeholders and that our shareholders constitute our primary stakeholder. Based on this understanding, the Company strives to develop an environment wherein shareholders can adequately exercise their rights by providing them with a wide variety of information and opportunities to exercise their rights.

Moreover, the Company endeavors to secure the rights of minority and foreign shareholders and thereby seeks to secure the substantive equality of the rights of all shareholders.

Principle 1.1 Securing the Rights of Shareholders

Companies should take appropriate measures to fully secure shareholder rights, including voting rights at the general shareholder meeting.

The Company endeavors to ensure the rights of shareholders by managing operations in order to ensure timely disclosure of not only statutory disclosure documents but also of other information in both Japanese and English, by conducting the Annual General Shareholders' Meeting in a manner such that the voting rights of all shareholders can be exercised effectively, and by ensuring adequate time and opportunity for dialogue between management and shareholders.

Supplementary Principle 1.1.1

When the board recognizes that a considerable number of votes have been cast against a proposal by the company and the proposal was approved, it should analyze the reasons behind opposing votes and why many shareholders opposed, and should consider the need for shareholder dialogue and other measures.

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Based upon the understanding that the Annual General Shareholders' Meeting is the Company's highest decision-making body, the Company takes the results of shareholders' execution of their voting rights as an important indication of their intent. The Board of Directors therefore formally analyses the reasons and causes for proposals where the total votes in opposition exceed 20%. At the annual shareholders' meeting held on March 23, 2022 opposing votes did not exceed 4% for any proposal.

Supplementary Principle 1.1.2

When proposing to shareholders that certain powers of the shareholders' meeting be delegated to the board, companies should consider whether the board is adequately constituted to fulfill its corporate governance roles and responsibilities. If a company determines that the board is indeed adequately constituted, then it should recognize that such delegation may be desirable from the perspectives of agile decision-making and expertise in business judgment.

In order to further promote the separation between the executive and supervisory functions and further strengthen the supervisory role of the board, the Company has adopted the "Company with Nominating Committee, etc." model of corporate governance. Moreover, in addition to establishing the committees legally required under this model, the Company has established a Governance Committee comprised entirely of Independent External Directors, all of whom meet the Company's benchmark for independence (hereinafter referred to as"Independent Directors"). The Governance Committee serves as an advisory body to the Board of Directors with the objective of ensuring that the Company maintains the structures and processes needed to ensure appropriate levels of governance.

The Articles of Incorporation currently stipulate that the Board of Directors is responsible for decisions such as determining the level of interim dividend payouts. In the event of further such delegations of authority by the General Shareholders' Meeting to the Board of Directors, the Company will continue to enhance its structures and procedures of governance in order to discharge these responsibilities while ensuring the necessary levels of expertise in, and timeliness of, its decision making.

Supplementary Principle 1.1.3

Given the importance of shareholder rights, companies should ensure that the exercise of shareholder rights is not impeded. In particular, adequate consideration should be given to the special rights that are recognized for minority shareholders with respect to companies and their officers, including the right to seek an injunction against illegal activities or the right to file a shareholder lawsuit, since the exercise of these rights tend to be prone to issues and concerns.

The Company has established a "Share Handling Regulations" which formally stipulates procedures for the exercising of the rights of minority shareholders and any other procedures in relation to shares in order to ensure that shareholders are able to exercise their rights in full.