Feature

Interview with Independent Directors:

Effective Governance for Sustainable Value Creation

Scott Trevor Davis

Yuri OKINA

Kenichi MASUDA

Member of the Board
Chairperson of the Board of Directors
Member of the Nominating Committee
Member of the Compensation Committee
Chairperson of the Governance Committee

Member of the Board
Chairperson of the Compensation Committee
Member of the Nominating Committee

Member of the Board
Chairperson of the Nominating Committee
Member of the Compensation Committee
Chairperson of the Compliance Committee

Discussions for the 24MBP and the Board’s
Awareness of Challenges

For example, with sustainability one key concern iswhether we are meeting the demands and expectations ofour stakeholders with particular attention to the—What kind of discussions took place within the Board ofdevelopment and sourcing of sustainable raw materials. In

Directors in formulating the 24MBP? Please also tell us what

addition to improving the productivity of current sources ofyou try to be mindful of during discussions.

natural rubber, Bridgestone is also promoting thedevelopment of alternative crops such as guayule. The

Davis: In formulating the 24MBP the Board set the agenda

expectation of both the Board and investors here is thatseveral years in advance and engaged in thorough discussions,

Bridgestone will achieve sustainability through innovation.

including those taking place within the Global EXCO.

Sustainably sourced raw materials often incur higher costs.

Bridgestone’s strategic direction is to transform from being a

We know that the market demand is not for sustainability as

world-leading tire company into becoming a global sustainablea luxury. This is not what we mean by premium. Bridgestonesolutions provider. In order to enable this seemingly subtle

is committed to pursuing both sustainability and economic

but significant qualitative shift in strategy, a wide range ofrationality. This means the provision of solutions thatissues must be considered in order to make clear what mustcombine high-value services with premium performanceand must not be done in order to achieve a business defined

products that are both produced sustainably and promoteby the keywords of both “premium” and “sustainable.”sustainability for our customers. The word used atDue to Bridgestone’s wide global presence and long value
chain, requirements at each level vary greatly, from raw

Since technological superiority is essential to providing

material such as natural rubber, through development,sustainable premium solutions centered on Dan-Totsu

production, retail and up to value-added solutions such as

products, the Board often invites the heads of R&D to discuss

retreading and maintenance. The Board’s primary concern isplans for product and production technologies in order towhether Bridgestone has the necessary strengths to adapt tofully explore the future potential of major new innovations

change. We need to clearly understand what this means andsuch as ENLITEN and other manufacturing technologies that

requires in terms of sustainability and premium quality and toenable cost advantages.

be prepared to make the changes and investments necessary.

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Bridgestone to refer to this is Dan-Totsu.

At the same time the Board is keenly aware of the issues

To this end, we often seek the input from divisional andinvolved in Bridgestone’s premium solutions strategy.

department heads and from personnel working on the front

One key issue is the challenge of creating and maintaining

lines of business (“Genba” in Japanese) to further enhance

the infrastructure to enable solutions that utilize informationour understanding of where Bridgestone currently stands.

both efficiently and securely. The Board actively monitors

the policies and procedures to build and maintain strongin understanding internal terminology, technical terms, orsystems that can protect customer information, resist

who to consult with, which could lead to a problem of not

cyberattacks, along with the contingency plans for response

fully being able to absorb internal information. The presencein the event of cyber incidents.

of non-executive directors with an internal background who

Global CEO has repeatedly emphasized the importance ofunderstand and support both standpoints, adds breadth andadapting to change in terms of both potential value and risk.

depth to the oversight by outside directors and enables

In discussions with the Board, and investor meetings, hethem to function more efficiently and effectively. We also

openly acknowledges any areas where Bridgestone falls

expect the executives to understand the supervisory

short and clearly articulates his plans to address them. The

perspective of the Board and approach their duties

Board mirrors this stance. We aim to be clear about what weaccordingly as directors.

do and do not expect. We make clear that our concern is toWith regard to the appointment of Independent Directors,

see whether or not Bridgestone has the strategy, the ability

we value diversity. By bringing together individuals withand the strength to accomplish what it has set out to do anddifferent areas of expertise, knowledge, experience and tenure,keep going.

etc., the same issues can be evaluated from multiple
perspectives, allowing for more substantive questions andThe Board of Directors’ Portfolio and Agenda
Setting Process to Enhance Board Effectivenessvigorous discussion. It also creates awareness and synergy bylistening to opinions from different perspectives. As an attorney
myself, I have a legal background. I have learned a lot from—Based on the Board’s awareness of challenges, is there

the different angles and perspectives of different areas ofanything you keep in mind to ensure effective discussions atexpertise, such as corporate management, finance, andBoard meetings?

economics, and from hearing opinions from different angles.

Davis: Setting the appropriate agenda is critical to ensuring

complementing each other’s strengths and functioning as athe quality of discussions at Board meetings. Because of thiscohesive whole, enabling the Board of Directors to operate

I regularly seek input from all Board members in selecting

as a unified team. We believe that this is the most importantand scheduling items for deliberation and in reviewing theand best way for the Board of Directors to fulfill its expected

effectiveness of previous reports and deliberations. It is alsosupervisory role and strive for excellence.

Diversity does not mean being fragmented, but rather

important for the Chair to ensure that information andpresentations of proposals from the executive fully address—It seems that the discussions at the Board are being

the concerns and interests of the Independent Directors,

prepared and have progressed quite diligently, but werewhile at the same time ensuring that the Independent

there instances where a proposal was rejected by the Board?

Directors have all the information they require on eachagenda item and are able to maintain a shared awareness of

Masuda: Since Independent Directors represent shareholders

the expectations and concerns of the Board as a whole.

and external stakeholders, we need to use our respective

One way we do this is by holding information sharing

expertise, understand as much as possible about themeetings for non-executive directors. To gain more concreteCompany, and frankly express our opinions when we deem

information and deeper insight of critical issues such as

it necessary to change course from an external stakeholder’scybersecurity, investment in talent and advanced humanperspective. For example, in a recent case, the shareholder

resources and business quality innovation, we often seek

return policy was rejected once by the Board of Directors

explanations from personnel working at Genba withand approved at the next Board meeting after further

firsthand knowledge and experience of these issues. Thesediscussions. The policy had been thoroughly developed by thesessions allow the Independent Directors to understandexecutive team and presented to the Board of Directors. The

each other’s perspectives and concerns as experts in their

Board sincerely considered a proposal that there might be arespective fields and therefore further promote insightful

more appropriate way of wording it that would not cause

and comprehensive discussions that make full use of themisunderstanding even when read by external stakeholders.

Board’s own portfolio of skills, knowledge and experience.

This is a good example of how a suggestion from the Board
was taken seriously and led to improvements.

Masuda: We believe that a diverse and balanced portfolio ofmembers is important for the Board of Directors to perform

Davis: Global CEO Ishibashi is a leader who takes governanceits functions effectively. As a company with a Nominating

very seriously. He respects having an Independent Director as

Committee, etc., the Board of Directors oversees thethe Board’s Chair and the role of the Board itself and its

execution of business operations. However, if the Board

importance. As Chair I have access to the Global CEO and weconsists solely of outside directors, there may be challenges

maintain a monthly one-on-one meeting where I can discuss

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Interview with Independent Directors

the content of upcoming Board reports and deliberations and—Please tell us about your intention to include the E8 andraise any concerns. At these meetings Mr. Ishibashi often

investment in human resources in the sustainability

remarks that if he can gain the agreement and understanding

incentives, and what you emphasize in the design of aof the Board on some proposal, he can discuss it with any

compensation system.

stakeholder outside the Company with confidence knowingthat it has already passed a rigorous and objective multi-Okina: The most fundamental idea behind the compensation

stakeholder review.

of top executive management is that it should be an incentive

As with the shareholder return policy, the Board members
are clearly aware of their roles as the representatives of

to enhance corporate value.
The Global CEO says that results are everything, and I

external stakeholders and are committed to voicing any issues

believe he thinks that way in terms of responsibility rather

or concerns on their behalf without reservation. This approachthan compensation. Therefore, we focused on designing aof the Board and the CEO combined enables Board meetings tocompensation structure that emphasizes results, where theserve as a forum where business strategy can be discussed in amore effort you put in, the higher the rewards curve rises.

manner which combines the perspectives of both theFrom the beginning, we have incorporated into ourcorporation itself as a business and that of its investors andremuneration design the ability to reflect actual earnings inother stakeholders in order to make better decisions.

the short term, and the degree of achievement of ROIC, ROE,and other targets in the medium to long term.

Genbutsu-Genba, Bridgestone DNA, and theDesign of Compensation System

Promoting sustainability and transformation may not
immediately contribute to profits in the short term, but it isextremely important for the enhancement of corporate value—In the 24MBP business shaping scenario, there is also anin the medium to long term. To support and encourage theseemphasis on Genbutsu-Genba (improvement of operational

diligent efforts that sow the seeds for the future, we allocate

capabilities). What kind of discussions were held behind this?

half of the long-term incentives as sustainability incentives.

Davis: Bridgestone’s business is supported by proud andcreation, investment in and development of human resources,

highly skilled employees who represent the best of theand on the environmental side, a commitment to natureindustry both globally and in Japan. The Board is therefore

positivity and a circular economy. Sustainability incentives

very concerned with how effectively the executive istend to focus on environmental aspects such as

conveying its vision and plans for change with the workforce,

decarbonization, but in addition to these, we also emphasize

and whether the people who support the actual products

investment in human resources and the establishment of theand workplaces, the employees who are essential forE8 as a compass for transformation.

Specifically, we have included E8 establishment and value

successfully achieving any change, are aware of their role

Another characteristic and important aspect of ourand engaged in its accomplishment. The Board appreciates

sustainability incentives is to have the executives thoroughly

the fact that the Global CEO and two Joint Global COOs

consider and commit to what they are going to accomplish in

actively hold town hall meetings with employees in order tothe next year in advance. We discuss and decide based on thepromote strategic alignment and engagement. In recognition

proposals, have them self-evaluate the results on an annualof the importance of this form of internal communication andbasis, and make decisions through the Compensation

engagement, objective measures of employee engagement

Committee. We place importance not only on the progress oflevels have been included as criteria for executive evaluation

indicators but also on the extent to which the committedand remuneration.

efforts have been achieved as the target of evaluation.

Okina: As Dr. Davis mentioned, the Company engages in—How do you see the progress of the initiatives for humanmanufacturing operations, so we also focus on job satisfaction

capital and women’s empowerment during the 21MBP?

of employees at Genba and sense of fulfillment in theirwork. In particular, corporate culture changes through theOkina: I feel that the Company is particularly enthusiastic

widespread adoption of the Bridgestone E8 Commitment

about improving the workplace environment at factories(“E8”), investment in human resources, and employee

and other Genba, and creating fulfilling workplaces.

engagement are incorporated into the sustainability

Although the representation of women in managerial

incentives for executive compensation and evaluated bypositions is still low, the Company’s approach in addressing

the Compensation Committee.

women-specific health issues, such as introducing the use ofFemTech is progressive and highly appreciated, given that
health management is generally focused on mental healthand male-centered health issues like metabolic syndrome.

106Furthermore, various trials have been initiated, including

leadership positions, but also those in charge of businessefforts to foster the development of the next generation ofdivisions and those who work at Genba, I hope that I can beleaders and encourage a culture of innovation and challenge.

of service to them.

We are hopeful that the effects of these initiatives will bereflected in employee engagement.

On top of that, Bridgestone manufactures and sells tires,
which are essential products that support the mobility society,and contributes to society in that field, including through ourExpectations for Bridgestonesolutions business. I am motivated partly by my own love ofcars, but also by my desire to support the efforts of everyone—Please tell us what you feel are the Company’s strengths

who works hard at the Company that plays such an important

and what motivates you to support the Company.

role in our society.

Okina: Having served as an outside director at several

Davis: As an Independent Director, I believe that it iscompanies, including a trading company and a shipping

important not to get attached to the people or the Company.

company, I feel that our company demonstrates solid

Instead of personal feelings or empathy, I try to think in terms

management practices with detailed mid-term business plansof why it is that I can entrust important projects to theseand meticulous management including the control of direct

people and what makes them exceptional.

material loss ratios. Above all, I am fascinated by theI often engage in discussions with institutional investors,

manufacturing industry’s ability to innovate through Genba

and I recognize that they are not just buying Bridgestone’s

capabilities, technology, and manufacturing, and it is appealing

stock, but rather investing in Bridgestone’s growth story ofthat through such capabilities, we can support people’s lives.

premium and sustainable solutions. I am always thinking

I visited various factories and was shown the manufacturing

about what I can do as Chair of the Board to ensure theand inspection processes firsthand, and was pleasantly

realization of this story.

surprised by many aspects revealing that our company is

Bridgestone continues to set ambitious goals. Not all havesupported by the power of Genba, both in terms of technology

been achieved but I am constantly impressed by Bridgestone’sand passion. I listened with great interest to discussions about

relentless efforts to make up for whatever may be lacking, tointellectual property at Board meetings. I think the Company’s

capitalize on what is good and to constantly continue tointellectual property strategy is unique, such as turning ainnovate and improve. My motivation is based on my desire

collection of technologies like ENLITEN into a business model.

to see where Bridgestone’s story of premium and sustainable

There is a wide range of possibilities for diverse value creation insolutions for mobility can lead us.

pursuit of business sustainability, such as promoting thecombination of manufacturing and DX and the use of AI. It will
be very interesting to see how tires will evolve, as mobility
undergoes significant changes in the future.
Masuda: The profession of an attorney involves providing
support to those who seek advice and assistance when they
are in need. When I see someone working hard, it is naturalfor me to want to help and assist them in any way possible.
Although it is not limited to our company, when I see thededication and hard work of not only those who are inInterviewer

Naoyuki Sone
Sustainability Communication
Strategy Department(This is an English translation of the original dialogue which was conducted in Japanese.)
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