Environment

Initiatives to Protect the Environment
With a view to realizing an environment-friendly society, the Company will further strive to promote the reduction ofenvironmental burden, while providing more efficient products that contribute to energy conservation.

Environmental Philosophy
The Toyo Denki Group sets initiatives to protect the global environment as its priority task and contributes to the development of a sustainable society.

Action Guidelines
We will continue to provide products and services that are considerate of the burden on the global environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”
1.
2.
3.
4.

We will comply with all environmental requirements including those under the relevant laws and regulations.
We will strive to minimize environmental burden through a reduction of energy consumption and other measures at
all stages of product lifecycle, namely planning, development, design, production, sales, use and disposal.
We will establish and execute a system to continuously promote activities to protect the global environment.
We will raise environmental awareness among individuals through enlightenment activities within the Group

Aiming for Realization of a Sustainable Society

CSR Report

Environment

Governance16

25

Corporate Governance

27

Internal Control and Compliance27

Risk Management

27

Information Security

28

Business Risk

29

Data

Initiatives to Protect the Environment

Social15

19With Our Customers

20

With Our Suppliers

21With Our Shareholders and Investors

22

Contributions to Local Communities

23

With Our Employees

A sustainable society as envisaged by the Company is the combination of a “low-carbon society,” a “recycling-based society” anda “nature-symbiotic society.”
The environment technologies of the Company have produced
numerous products that contribute to energy conservation, including
high efficiency motors and inverters that capitalize on the amalgamation of our outstanding motor drive technology and other state-of-theart technologies. In the meantime, the Company has been striving toconserve resources through not only the efficient use of energy but
also the reduction of the size and weight of its products.
In addition, the Company is working on the development of
products with lower levels of noise involved in their use to makethem friendlier to the surrounding environment.
The Company will make further contribution to make society
more sustainable, fully utilizing on its environmental technologies
on a global scale, while carrying out various environmental
actions at each of its bases.

Energy conservation throughthe Company’s technologies
and products

Low-carbon society
Implementation of measuresagainst global warming

Energy conservation in
production activities
Use of sustainable energy

Recycling-based society

Improvement of logistics
efficiency

Promotion of 3Rs(reduce, reuse, recycle)

Proper treatment of wastes
Reduction of amount of final
disposal of wastes

Nature-symbiotic society

Proper management ofchemical substances

Conservation of biodiversity

Cleanup around offices

Environmental Management System
In order to tackle environmental issues on an independent and continuous basis, the Company has developed and operates an environmental management system and thereby obtained ISO 14001
certification. This certification has been acquired for all offices andthe production bases Yokohama Plant and Shiga Factory.

Years of ISO 14001 certification

Yokohama Plant
2004

Shiga Factory
2001

Extended to all offices
2010

Toyo Denki Seizo Report 201716

Environment

Notification volume for Pollutant Release and Transfer Register (PRTR) substances

Initiatives to Prevent Global Warming

Initiatives for Control over Chemical Substances

Initiatives to reduce greenhouse gas (CO2) emissions

Targeted reduction of CO2 emissions and progress status

The Company is promoting energy conservation at each of its
production bases and offices to reduce its CO2 emissions. At the
production bases in particular, we are promoting power-savingand streamlining at production facilities. In addition, the Yokohama
Plant uses solar power generation for peak shaving of power demands.

Aiming to reduce CO2 emissions per unit of production output by
1% year on year, the Company’s main production base, the Yokohama Plant, reduced emissions by approximately 0.9% in fiscal
2016.

Total energy input at Yokohama Plant (electricity and gas)
(Unit: 10,000 kWh)

800

600

Electricity

400

651.8
284.7

615.6
294.1

617.8
286.0

10,000

8,300

8,000

7,900

7,300

7,700
7,000

6,120

6,000

4,810

Total amount of shift

5,260

5,290

5,800

4,000

2,000

0
2012

2013

2014

2015

2016 (year*)

Total CO2 emissions at Yokohama Plant
Gas (Unit: 1,000 Nm3)

628.5
284.0

590.9

Volatile organic compounds (VOCs) emitted as a result of ourbusiness activities are adequately controlled and the amount ofemission is monitored under the Pollutant Release and Transfer
Register (PRTR).
We will further engage in the reduction of waste through suchmeasures including using non-VOC materials and implementing
recovery and reuse of solvents. PCB waste is also subject to adequate control, storage and disposal in accordance with Japan’s
Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.

Total amount of air emissions

(kg)

(t)

3,936.0

4,000

4,095.0
3,759.0

Initiatives for Reducing Disposed
Waste as Well as Recycling

3,734.0

3,307.3
300

3,000

200

2,000

252.0

Main actions

400

200

0
2012

2013

2014

2015

2016

100

1,000

0

0

The Company successfully reduced its landfill waste rate to 0.9%
in fiscal 2016, as a result of thoroughly implementing waste processing rules, sorting of metal waste and recycling of paper resources.
2012(year*)

2013

2014

2015

2016

(t)

General waste output

500

Total solar power generation at Yokohama Plant(kWh)Total water input/output
at Yokohama Plant
横浜製作所
水資源投入量・排出量
Based on 500 kW generator

750,000

676,000.0
600,000

408.5

400
Water input(Unit: 1,000 m3)

25

Water output

346.0

628,268.0

20

255.6

19.9

434.3

Valuable waste output

15

13.9

14.2

14.1 14.1

15.2 15.2

9.0
8

274.1

5.9

6

5.0

246.2

5.0

4

15.2 15.2
109.6

100

12.3
300,000

10

424.5

200
450,000

(t)

361.3
290.9

300

635,843.0

Volume of landfill waste

Output of general and valuable waste(year*)

2.3

2

10
0

0
2012

150,000

2013

2014

2015

2016

(year*)

2012

2013

2014

2015

2016

(year*)

5

0

0
2014

2015

2016

(year*)

2012

2013

2014

2015

2016

(year*)*The fiscal year is from April to March of the following year.

17

Toyo Denki Seizo Report 201718

SocialWith Our Customers

With Our Suppliers

The Company makes it one of our business principles to “build trust by focusing on quality first.” As such, we strive
to enhance customer satisfaction through our commitment to thorough-going quality control as we believe delivering safe and secure products and services to customers is the Company’s most important mission.

The Company responds to the needs of our customers through the strong network we have built with suppliers inline with our unique characteristics as a business based on an individual build-to-order/multi-product small lot
manufacturing model.

Quality Control– Providing Safe and High-Quality Products

Year ISO 9001 certification obtained

Yokohama Plant
1994

Shiga Factory
2000

Extended companywide
2007

Towards Just and Fair Procurement
Communication with suppliers

Basic policy on quality control
The Company’s electrical equipment for rail vehicles is installed inmany rail vehicles. These extremely important products play a
direct role in ensuring the safety of human life and property
during rail transportation. In the Industrial Systems and Information Equipment Systems segments as well, the Company’s products and services are used in customers’ production facilities,
development sites and in the field of social infrastructure, andthey form the foundation supporting the sustainable developmentof a society that is safe and comfortable to live in.
In order to ensure the high quality of our products and services, the Company has established a “Basic Policy on Quality
Control” which is deployed at all production bases as we strive tomaintain and improve our human resources education, compliance with rules, and our facilities.
Promotion framework
With regard to quality control, each fiscal year the Company develops policies and the promotion framework aimed at further maintaining and improving quality in each business unit, along withspecific policies pertaining to the reduction of flaws and other issues. The Company’s Corporate Quality Control Division works together with the quality control department or the quality assurance
department in each business unit to put together a report on thestatus of quality control and results in each unit. The report is delivered to top management at the monthly Executive Officer Liaison
Meeting where measures are debated and decided. Furthermore,in the event that a flaw is discovered after a product has been
shipped, the necessary steps are swiftly taken, mainly by the quality assurance department in each business unit, while at the sametime the causes that led to the flaw and its mechanism are investigated, and this information is put into a database so that the information can be shared in-house in an effort to prevent recurrence.

Responding to the Global Market
Proper export controls
The Export Control Department at General Affairs Division is responsible for export management as the export management
control department. We have created a system for the proper
management of exports in order to ensure compliance with thelaws and regulations concerning export management in the countries and regions where we engage in business activities as wellas to avoid involvement in transactions that could hinder the
maintenance of international peace and safety.
The Export Control Department handles cargo and technology
parameters used in determining whether or not export permits are
required, as well as investigation of transactions. In addition, theDepartment carries out employee education and guidance andsupport for Group companies.

The Company has created and operates a quality management
system at its production bases, the Yokohama Plant and the Shiga
Factory, and has obtained ISO 9001 certification.

19

The Company endeavors to maintain proper execution of operations by implementing a variety of training programs for material
procurement officers to deepen their knowledge of the Act against
Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors
and related laws and regulations and to cultivate awareness oflegal compliance.
External whistle-blower system (for suppliers)
The Company has established an external whistle-blower system
to receive consultations or reports on compliance from our suppliers. The legal compliance department handles complaints andconsultations about transactions, and the Company’s retained
lawyer resolves issues when necessary.

Acquisition of International Standards
The Company has acquired International Railway Industry Standard (IRIS)* and China Railway Certification Center (CRCC) certification.
Going forward, we will continue to acquire international standards as we aim to further promote global expansion and sales
growth.
* Acquired for the first time in Japan with our auxiliary power supply (SIV).

Formulation of “Procurement Action Guidelines” (formulated in February 2016)
Procurement Action Guidelines
These guidelines indicate the codes of conduct that the Toyo Denki Group’s executives and employees should observe in the procurementof purchased parts and outsourced parts as required for the manufacturing of products ordered by customers (“procurement transactions”).
1. Procurement transactions shall be carried out in observance of the laws of the relevant countries.

Towards Greater Customer Satisfaction
Good Relations with our Customers

Quality management system

The Company’s products possess various distinctive characteristics such as being individually built-to-order, manufactured in
multi-product small lots, and demanding high reliability. Therefore,
the Company can be affected by the performance of our suppliers
as a result of issues such as delays in supply due to fluctuationsin production quantity or delays in processing due to the quality of
products received.
In order to reduce these risks as much as possible, the Company carries out instruction and support related to quality, technology, and skills for our suppliers, as well as guidance for improvement of manufacturing sites, in order to ensure stableprocurement of even better quality products. In addition, we
actively promote information sharing through the “Toyo Denki
Cooperation Association” to which our leading suppliers belong.

Training for material procurement officers

Information based on customer opinions and requirements obtained by the sales department is periodically reported to the top
management at the executives’ briefing sessions, and that information is shared within the Company. We strive to maintain good
relations with our customers by identifying problems that need tobe solved and swiftly addressing them in order to raise customer
satisfaction.

2. Information concerning suppliers in procurement transactions shall only be obtained within the scope necessary for conducting procurement activities in accordance with contracts. Furthermore, efforts shall be made to carefully manage and observe the confidentiality of
information gained through procurement transactions.
3. Personal interests with suppliers shall be prohibited in procurement transactions, including the lending and borrowing of money.
4. Receiving of support beyond the socially accepted practices or receiving of money or inappropriate gifts or any other forms of personal
rewards from suppliers shall be prohibited in personal transactions. In addition, forceful requests for any of the above from suppliers shallbe prohibited in procurement transactions.

* Inquiries from outside are accepted via the following phone number and e-mail address:

Legal Compliance Department, General Affairs Division +81-3-5202-8121

email address for inquiries to Toyo Denki Seizo K.K.: contact@toyodenki.co.jp
Toyo Denki Seizo Report 201720

SocialWith Our Shareholders and Investors

Contributions to Local Communities

We strive to ensure transparency of management through the timely and proper disclosure of information and various modes of communication in order to receive an appropriate evaluation of the Company from our shareholders
and investors.

We are committed to various social contribution activities, to contribute to society through our business while facilitating our own co-existence with communities and to foster young people who will represent the next generation.

Towards Enhancement of Corporate Value
Basic philosophy
Through timely and appropriate disclosure of information to ourshareholders and investors, the Company accurately conveys ourmanagement policy and business conditions while making use of
IR tools such as our website to promote a full range of IR activities
that contribute to the improvement of our corporate value.
Development of IR activities
IR activities for institutional investors and securities analysts
The Toyo Denki management team holds a financial results briefing each quarterly period to provide opportunities for institutional
investors and securities analysts to understand the summary of
our financial results. The management team gives a report including the state of progress of the medium-term management plan
and an overview and forecast for each segment as well as neworders received and other topics.
In addition, we strive to deepen understanding of the Company
through individual visits to institutional investors or holding factory
tours to provide opportunities for them to actually see our manufacturing sites, as well as participating in small meetings organized by securities companies, and taking other measures.
IR activities for individual shareholders and individual investors
The Company website includes a “For Individual Investors” page
which offers a clear introduction to our business activities and our
results, as well as making available a variety of IR materials.

Dividends
Maintenance of stable dividends forms the basis of the Company’s distribution of profit, and the dividend for the fiscal year ended May 3 1, 2 0 1 7 was 3 0 yen per share (interim dividend of 0yen, fiscal year-end dividend of 30 yen).
Effective as of December 1, 2016, the Company changed thenumber of shares constituting one share unit from 1,000 sharesto 100 shares, and implemented a stock consolidation at the ratioof five shares to one share at the same time. Since the theoreticalvalue per share has increased fivefold as a result of the shareconsolidation, we increased the dividend per share from 6 yen to
30 yen.

To Convey the Mission and Appeal of ElectricalIndustry as Well as of Toyo Denki

we inform the participants of our products as well as our actions
for environmental protection and factory facilities, in an effort tobuild up relationships built on trust with local communities.

Receiving interns
We are committed to activities that raise awareness and appreciation of our manufacturing expertise by accepting interns from local technical high schools and providing them with hands-on experience at manufacturing sites. This internship system serves as
an effective means of recruiting outstanding technical staff on aconsistent basis as some students from these schools apply for
positions at the Company.
Participation in university endowment courses and hands-on courses

Dividend per share
(Yen)

40
30

(30)

(30)

(30)

(30)

6

6

6

6

FY 2012

2013

2014

2015

30

20
10
0
2016

(Share consolidation)

We participated in endowment courses sponsored by the Yokohama Green Purchasing Network so that participants can deepen
their knowledge on history of railway and the environment throughour business activities.
We conduct lectures leveraging the know-how fostered throughoperations and our business activities in on-site training courses
held by educational institutions including universities.

A factory tour

Cooperation with Yokohama Kyodo no Mori Fund
The Company cooperates in small woodlands conservation activities led mainly by the city of Yokohama by donating part of theproceeds from vending machines installed at the Engineering
Center of the Yokohama Plant to the fund.
Cleanup campaigns within the vicinity of the production bases

Record of 156th Ordinary General Meeting of Shareholders
Date held: Tuesday, August 29, 2017
Attendance: 127 people

In cooperation with neighboring companies, we conduct cleanup
campaigns within the vicinity of the Yokohama Plant and theShiga Factory.

URL “For Individual Investors”
https://www.toyodenki.co.jp/ir/individual.php
Holding of factory tour for shareholders
Friday, April 14, 2017 at the Yokohama Plant
Attendance: 32 people

Endowment course at a university

Factory tours

Cleanup campaign(Yokohama Plant)

Cleanup campaign(Shiga Factory)

We are conducting “factory tours” to provide opportunities formembers of local communities to actually see our manufacturing
facilities and products in order to develop deeper understanding
about the business operations of the Company. During these tours,
President Terashima making a presentation (at the factory tour for shareholders)

21

Toyo Denki Seizo Report 201722

SocialWith Our Employees

Creating a Pleasant Workplace

The Company seeks to cultivate a dynamic corporate culture and to create a pleasant and safe workplace where
each and every employee can unleash his or her diverse capabilities.
Education and training system

Towards the Development of Human
Resources with Competitive Strengths

Training programs at the Company
are divided into several categories
according to the employee’s yearof service, type of work and role,and training is carried out after
clarifying what part each employee is expected to play.
Training for new employees
Furthermore, for the purpose of developing human resourcesthat support global development, we offer an overseas trainee program and various language programs tailored to the level of participating employees.
To maintain high quality and pass on outstanding technologies
and skills, the Company works on education on maintenance andimprovement of expertise individually at each division and encourages employees on a company-wide basis to obtain public certifications.
Furthermore, employees with exceptional manufacturing skills or
expertise are recognized as “Technical My Star” internally and given
responsibility to instruct and train younger employees. At the Technical Training Center, established within the Yokohama Plant, training is carried out for technical staff through lectures and various
hands-on workshops.

Human resources development policy
The Company has set the following policy on human resources
development and carries out education and training under the education and training system diagram as shown below.
Human Resources Development Policy(1)	To develop human resources who understand and practiceour business principles and code of conduct and who are ofvalue both as company employees and as members of society.
(2)	To develop human resources who are professionals, eachpossessing a high degree of specialized expertise, by enhancing the knowledge, techniques, and skills they need tocarry out their duties.
(3)	To provide a variety of educational opportunities in order topromote personal development, with emphasis on a self-directed approach to study and growth.

Education and training system diagram
Level-specific education and training(Human Resources Division)

Support for acquiring certifications
necessary for operation of business andoffices as well as execution of duties

OJT

Under the “Company-Wide Safety and Hygiene Management Policy,” formulated every fiscal year, the Company holds the Safety andHygiene Committee monthly at each office, where annual plans are
drawn up and ongoing discussions are held in order to build a safe
working environment, to reduce workplace injuries to zero and tofind solutions to issues, including mental health. In addition, theCompany holds the “Company-Wide Safety and Hygiene Committee” every quarter to promote sharing of information between offices as well as between Group companies.
Acquisition of the “Kurumin” certification logo (June 2014)
In recognition of our efforts as a “company that
supports child-rearing,” which includes a substantial childcare system, educational activities concerning a work-life balance, the creation of an environment in which it iseasy to obtain childcare leave, and the acquisition record of childcare leave by male employees, we received the “Kurumin” certification logo from the Tokyo Labor Bureau in June 2014.
Initiatives for diverse work-styles
The Company has implemented a flexible work-style including a
flextime system for sales staff and those involved in development.
Furthermore, in order to encourage retention and utilization of
employees with knowledge and skills, we have put in place the“System for Rehiring Employees” for employees who have resigned due to life events that occur in the course of their career(childbirth, childcare, family care, spouse’s transfer, etc.), so thatthey can be rehired when they reach the stage when it is possible
to return to work.
As for employees who wish to be rehired after they reach themandatory retirement age (60), in principle, we continue to employ them until the age of 65.

The Company makes improvements to the workplace environmentand carries out workplace training with the aim of creating aworkplace where the disabled and those in normal health canwork together energetically. We also promote collaboration withlocal governing agencies and special-needs schools regarding
employment of the disabled.
Mental health measures
As measures to address mental health, the Company conducts“Line care training” for administrative professionals and “Self caretraining” for employees. In addition, we have partnered with an
external medical institution to set up a telephone and e-mail consultation service to provide support for prevention, treatment, andreturn to work.
Implementation of employee satisfaction survey
The Company conducts an “employee satisfaction survey”
once per year, and relevant departments work to resolve
various issues extracted from the survey results. In addition,
the company-wide “Dynamism Committee,” whose purpose
is to create a “dynamic corporate culture,” leads various
activities aimed at revitalizing internal communication.
Response to the Act on Promotion of Women’s Participation and Advancement in the Workplace
In accordance with The Act on Promotion of Women’s Participation and Advancement in the Workplace (Women’s Advancement
Promotion Act) that was enacted on April 1, 2016, the Company
is formulating an action plan to create an environment where
women can continue working with a sense of security as they advance their careers.

Work and family life balance

Other

Audit

SafetyOperation chief

Field

Skill

Technology

Sales

I am struggling every day, feeling grateful for the understanding of colleagues at work.
Chika Yamaya (China Sales Division, Transportation Business Unit)
Skill

Technology

Sales

Staff

Introductory training
Correspondence course for unofficial new hires (graduates)

Expansion toother divisions

Staff

Training in business manners

Education including
computer operation

Skill

I. Common basic course
II. Speciality basic course
III. Workplace hands-on learning

Technology

Basic technical training

Technical education
for the first year

Sales

Practical training

Division education and training
Maintenance andimprovement ofexpertise

Staff

Follow-up training (First year)

Support for correspondence training

Follow-up training (Fifth year after graduation from high school)

Follow-up training (Second year) Follow-up training (Third year after graduation from high school)

On site hands-on learning

23

Regular new hires(Clerical staff)

Support for language training (TOEIC, e-learning, sending employees to English conversation classes and others)

Non-managerial employees

Follow-up training (Third year)

Regular new hires(Technical staff)

Seminars outside the company

Job Instruction (JI), Training Within Industry (TWI)

Regular new hires(General staff)

Overseas trainees

Pre-promotion training for workplace overseers:

Training for transmission, maintenance and improvement of advanced expert skills (My Star Recognition Committee)

Mid-career hires

Training for workplace overseers:
Job Instruction (JI), Job Relations (JR), Training Within Industry (TWI)

Training for maintenance and improvement of specific technologies, common technologies and patent technologies (Engineer Development Committee)

Pre-promotion training for senior general staff

Training for improvement of innovative thinking capability

Deputydepartment heads

Comprehensive training for newly appointed senior general staff: basic financial training, coaching training

Support for acquiring certification (Chief Electricity Engineer, Electrician, Information Technology Engineer, bookkeeping, business law)

Pre-promotion training for managers

Support for fostering specialists (Doctor of Engineering, Master of Business Administration (MBA), Management of Technology (MOT) and Professional Engineer)

Training for newly appointed managers and professionals: evaluator training, basic financial training, coaching training

Inspection program for foreign affairs

Department
heads

Training for third-year managers and professionals

Mental health training

Divisionheads

Training for newly appointed division heads

Life-planning training (including DC)

Executives

Executive training

Support for
self-development andacquisition of certification(Human Resources Division)

Individual training(Human Resources Division)

Safety and hygiene initiatives

Initiatives for employment of the disabled

I returned to duties at the China Sales Division, where I had been assigned previously, in May 2017 after having taken maternity and childcare leaves of about one and a half years.
It was a natural choice for me to continue working after I had a child,probably because I had grown up looking at the back of my working
mother. However, I had a rough time in finding a day nursery, and now I
work by leaving my child in a non-certified nursery. At first, I was anxious about leaving her at a nursery for many hours. However, such anxiety was blown away as I watched my daughter pleasantly go to nurserywith a smile every day. Now, both my daughter and I live each day tothe fullest.

In fact, my husband is also an
employee of the Company. Thanks
to understanding at workplace ofeach other, we are tiding over
hard times. For example, when our daughter runs a fever, we take aleave by turns. With no relatives around to turn to, such cooperationfrom my husband is a great help as we both work. I will try my best in
confronting the work, so that I can not only fulfill my roles as a parent
but also contribute to society as a person, while continuing to cooperatewith my husband in rearing our daughter.

Toyo Denki Seizo Report 201724

Governance

External Statutory Auditors and Outside Directors

In an effort to continuously enhance its corporate value, the Company is striving to ensure transparency ofmanagement and compliance, along with the maintenance and operation of an adequate governance framework while reinforcing its risk management framework.

Business Principles

Code of Conduct
1. Respond to customers in a timely and speedy mannerPrioritize ethics and contribute to the prosperityof customers and society as a whole

2. Tackle all challenges with forethought and creativity
3.	Continuous efforts toward self-development and skill improvement
4.	Keep a broad perspective and influence each other toward growth

Encourage creativity and enterprisingspirit to meet the challenges of the future
Build trust by focusing on quality first

Corporate GovernanceOur philosophy of corporate governance
The Group’s business activities are based on the business principles that “prioritize ethics and contribute to the prosperity of customers and society as a whole.” We therefore strive to attainsound corporate management through strengthening and reinforcing corporate governance, fully appreciating the significanceof compliance based on corporate ethics. At the same time, we
review as appropriate our management monitoring system to ensure its conformity to the changes in the business environment
including social environment and relevant legislation.
Corporate governance
We have corporate bodies established in accordance with laws
and regulations as well as the Articles of Incorporation, including
the General Meeting of Shareholders, Directors and the Board of
Directors, Statutory Auditors and the Board of Statutory Auditors,
and Accounting Auditors. At its regular monthly meetings as well
as extraordinary meetings held when appropriate, the Board of
Directors, which is composed of eight Directors including two
Outside Directors, discusses and decides on important management matters such as reports on Directors’ business execution
and matters to be decided solely at the discretion of the Board of
Directors, while supervising Directors’ business execution. In addition, the Company has meeting bodies including the Manage-

25

5.	Act with awareness and pride of a good member of society andbusinessman
Established in June 2001

ment Strategy Meeting and Executive Officer Liaison Meeting.
Through these bodies, specific matters related to their executionof duties are reported to the President by the general managers
of business execution departments, and critical management
matters including those subject to the deliberation of the Board of
Directors are deliberated and discussed preliminarily. As for thematters discussed at meetings, matters subject to the deliberationof the Board of Directors are decided by the Board of Directors
and other matters are decided by employees with business execution authority through means such as circulars based on theManagement Authority Rules.
Internal audit and statutory auditor’s audit
Action plans and results of internal audits are reported to theBoard of Directors and Statutory Auditors by the Audit Division, as
part of an effort to reinforce corporate governance. Statutory Auditors hold preliminary meetings with Accounting Auditors after
the Ordinary General Meeting of Shareholders to exchange opinions regarding the audit plan. Statutory Auditors receive the results of quarterly reviews from Accounting Auditors both verballyand in writing, and confirm their action plans (if required by thereviews) to be taken at a fiscal year-end audit. Statutory Auditors
also receive the results of the reviews on the fiscal year-end audit
from Accounting Auditors in a statutory document along withverbal reviews. Furthermore, Statutory Auditors are in principle
required to be present at inventory taking or on-site inspection at
subsidiaries by Accounting Auditors.

The Company has established independence guidelines regarding independence required for a candidate for its Outside Executive, andappoints Outside Directors and External Statutory Auditors who haveexcellent insight in their areas of expertise. Currently, the Company appointed two Outside Directors and three External Statutory Auditors.
Note that each of the External Statutory Auditors is playing a role toenhance audit functions required by laws and regulations while remaining independent from the Company.
Mr. Hirokazu Chinone, our Outside Director, is qualified as a lawyer
and provides useful advice regarding management in general, drawing
on his specialized knowledge regarding corporate law and his wealthof experience developed throughout his career.
Mr. Takashi Yamagishi, our Outside Director, provides useful advice
regarding management in general, drawing on his wealth of corporate
management experience in Japan and overseas and his superior expertise.
Mr. Hiroshi Hamano and Eiichi Suzuki, our External Statutory Auditors, are engaged in the auditing activities for the Company, drawing
on their wealth of experience and knowledge of audit developed incorporate management and service at financial institutions.
Mr. Yoshinori Kawamura, our External Statutory Auditor, was newly
appointed as an External Statutory Auditor at the 156th Ordinary General Meeting of Shareholders (August 29, 2017). He serves as Professor of Faculty of Commerce, Waseda University, with experiences as
Secretary and Special Member of the Business Accounting Council of
the Financial Services Agency, and an examiner of the Certified Public
Accountant Examination, etc. We look forward to his auditing activities,

drawing on his expertise regarding corporate finance and accounting
developed thus far.
The Company has appointed Mr. Hirokazu Chinone, Mr. Takashi Yamagishi and Mr. Yoshinori Kawamura as independent directors andregistered them as such at Tokyo Stock Exchange, Inc.
Executive Remuneration
Total amounts of remuneration for Directors and Statutory Auditors are
decided by a resolution at the General Meeting of Shareholders. Basic
remuneration for Directors is a fixed salary while a bonus is payable asdetermined by each Director’s contribution to management as well as
business results of the Company. Basic remuneration for both Standing and Part-time Statutory Auditors is a fixed salary without bonus
payments.
(As of the end of May 2017)
Number of
executives
applicable

Total amount of
remuneration(Unit: Million yen)

Directors(excluding Outside Directors)

8

145

Statutory Auditors(excluding External Statutory Auditors)

1

14

Outside Executives(Outside Directors and External Statutory Auditors)

5

38

Category of executives(Note) The number of executives applicable mentioned above includes one Director who retired fromoffice at the end of the 155th Ordinary General Meeting of Shareholders held on August 26,
2016.

Corporate governance framework
General meeting of shareholders
Appointments/dismissals

Accounting Auditors

Reporting

ReportingAppointments/dismissals

Board of Statutory Auditors

Legal audit

Appointments/dismissals Reporting on business execution

Business audit

Accounting audit

President

Reporting/decisions
Instruction/reporting

Audit DivisionInternal Control Committee
Internal audit(Secretariat)
General Affairs Division(Contact for whistle-blowers)(Contact for legal consulting)
Legal counsel(Contact for whistle-blowers)

Appointments/dismissals

Directors

Statutory Auditors
Reporting

ReportingBoard of Directors

Appointments/
reporting/recommendations
Whistle-blowings
Oversight
Whistle-blowings

Management Strategy Meeting
Executive Officer Liaison Meeting
National and Global Group Company Meetings

Appointments/
dismissals

Instruction/reporting

Directors and Executive Officers
Instruction/reporting

Each business department

Instruction/
reportingInstruction/reporting

Each Group company

Toyo Denki Seizo Report 201726

GovernanceInternal Control and ComplianceInternal Control
The Company views the development and operation of an internal control system to be an important management issue, and it has developed
an efficient, legal and appropriate business execution system pursuant
to Article 362 of the Companies Act and Article 100 of the Ordinancefor Enforcement of the Companies Act. The Internal Control Committee
established under the Board of Directors reviews the operational statusof the internal control system and will revise it as necessary.
Principles of compliance
The Company has set “1. adherence to rules,” “2. observance ofconfidentiality,” “3. distinction between private and public matters,” “4. strictness with money,” “5. prohibition of side jobs,” and“6. prohibition of discriminatory and sexually suggestive statements or behavior” as principles of compliance.

Risk Management
Basic policy
The Company is engaged in developing rules and a framework for risk
management according to the Basic Rules for Risk Management established in August 2006.
Promotion framework
The Company has established the Internal Control Committee under the
Board of Directors, chaired by the President. It analyzes and assesses
all the risks that exist in the Group and develops an effective risk management framework capable of dealing precisely with the risks of thetypes and degrees that the Group is exposed to. The committee specifically reviews risk verifications and countermeasures, and periodicallyreports details of its deliberations to the Board of Directors.
Furthermore, the committee is committed to enhancing the Groupwide risk management framework in accordance with the Basic Rules
for Risk Management.

Compliance promotion framework
To focus on business principles and fulfill its social responsibility,
the Company has provided all officers and employees with a copyof the Compliance Manual (Toyo Denki Seizo Ethical Standards)
that stipulates its code of conduct. The move is part of an effort tohave the code and the basic rules of work fully known.
The Company has also introduced a whistle-blowing systemthat allows employees to provide information directly to the management. The system is aimed at ensuring that any illegal orinappropriate conduct within the Company is detected at theearliest possible stage and that adequate measures are taken
promptly and as needed so that such conduct is rectified.
Compliance education
The Company is organizing scheduled and systematic training
sessions based on a compliance training master plan to enhanceknowledge on compliance while promoting a conscious respect
for corporate ethics.

27

Information Security
Basic policy
The Company holds a vast amount of information assets including
information presented by customers related to its businessexecution and confidential information concerning the Group’s
proprietary technologies and its trade. Each Group company istaking various measures in this respect based on an awarenessof shared security under the Group’s Information Security Guidelines, which have been established to adequately manage anduse these information assets.
Information security training
The Company is conducting educational activities to develop
information security awareness among all employees including
various training sessions, some involving the use of educational
DVDs.

Risk Factors
From the perspective of proactive information disclosure, theGroup intends to disclose a wide range of recognizable risks. Major risks that may affect its earnings and financial position are set
out below. The Group aims for thorough understanding of theserisks in order to establish a necessary risk management framework designed to prevent the risks from materializing or minimize
the impact of risks if they do materialize.
(1) Business activities, business structure, economic trends, and other factors
The Group’s sales heavily rely on the Transportation Systems
and Industrial Systems segments. Its customers conduct business operations at home and overseas. As such, businessclimates and individual spending conditions in different
countries may affect the Group’s business performance.
(2) Production bases
The great majority of the Group’s production bases are locatedin the Kanto area. Production capacity may be severely affected by large-scale disasters in the area.
(3) Intensifying competition
The Japanese market for the Transportation Systems segment
has matured and thus faces intensifying competition. The Industrial Systems segment is under pressure from intensifying
competition for product development. The Group’s businessperformance may be affected by such intensifying competition.
(4) Product quality
Defects in products may link to materialization of a risk that
requires large-scale compensation for damages. The possibility exists that insurance may not be able to cover associatedcosts, which may affect the Group’s business performance.
(5) Product development
With a view to providing attractive products to customers, theGroup applies itself to gathering information about customer
needs and leverages it in the development of new products to
support its future growth. However, delays in the developmentof new products to respond to rapid technological or environmental changes may affect the Group’s performance.
(6) Material procurement
Owing to the fact that the Group’s business has various distinctive characteristics, some of the materials it procures are noteasily available due to factors such as a limited number of suppliers. Delays in supply or discontinuation in production of suchmaterials may affect the Group’s performance. In addition, disruptions to the entire supply chain caused by a large-scaledisaster or other incidents could impact the Group’s operations.

Moreover, its business may be affected by the fluctuation in
prices of raw materials, notably steel products and copper.
(7) Overseas expansion
The Group proactively pursues the expansion of overseas
operations including the Chinese market. Its performance may
be affected by major changes in situations overseas.
(8) Intellectual property rights
The Group attends to the protection of intellectual property
rights. However, amid drastically advancing technical innovations and accelerating globalization of business, the Group isinevitably exposed to potential disputes with third parties overintellectual property rights. If a dispute occurs, the Group’sbusiness may be affected.
(9) Business alliances
With the aim of business expansion and enhancing competitiveness, the Group proactively pursues various alliances withthird parties. However, if these alliances do not deliver expected results due to a failure in forging favorable relationships
with partners, the Group may face an impact on its performance.
(10) Exchange rate fluctuations
On the back of aggressive expansion into overseas markets,
the Group will inevitably face heavier impact of foreign currency exchange rate fluctuations on its earnings as itincreases foreign currency denominated transactions.
(11) Holding assets
Fluctuations in the fair value of assets held by the Group may
affect its performance.
(12) Financing
The Group’s financing programs may be affected by unexpected changes in financial conditions.
(13) Information security
The Group retains customer information related to its businessexecutions. Also, it possesses various types of confidential information concerning the Group’s proprietary technologies andoperations. If these information assets leak outside the Groupfor unforeseeable reasons, it may impact its performance.
(14) Compliance
The Group proactively pursues expansion in overseas operations, particularly the Chinese market; therefore its operations are subject to the laws and regulations of each country.
Although the Group has established and conducts a robust
compliance system, its operations are still at risk from the effects of unforeseeable events.
(15) Litigation
If the Group becomes the subject of any legal action or otherlegal procedures, its business may be affected.
Toyo Denki Seizo Report 2017

28

Data
Environmental Data

Data Concerning Personnel and Labor

Indices

Data concerning personnel and labor (at Toyo Denki Seizo K.K.)
Item

Unit

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

791

797

804

824

832

735

737

740

761

768

56

60

64

63

64

7.1

7.5

8.0

7.6

7.7

152

156

151

155

150

151

155

149

151

146

1

1

2

4

4

%

0.7

0.6

1.3

2.6

2.7

41.0

41.1

40.5

40.4

40.4

Age

41.1

41.2

40.7

40.4

40.4

Total
Men

Number of employees

Persons

Women%

Ratio of female employees
Total
Men

Number of administrative professionals

Persons

Women
Ratio of female administrative professionals
OverallMen

Average age

Women

38.9

39.0

38.7

39.5

40.1

Overall

16.1

16.3

15.8

15.4

15.2

16.3

16.5

15.9

15.5

15.2

14.5

14.5

14.5

14.1

14.8

Men

Average years of employment

Years

Women
Average annual salaryYen

5,885,559

5,750,453

5,888,577

6,024,175

5,990,250

Overturn rate (within 3 years of joining the Company)

%

3.8

7.7

0.0

3.4

2.0

Number taking childcare leave

Persons

3

4

5

7

9

Number taking family care leave

Persons

0

0

0

0

0

Number of temporary staff (including part-timers)

Persons

167

158

153

160

152

Notes

Electric power (10,000 kWh)Solar power generation (kWh)Urban gas (1,000 Nm3)

Water input (1,000 m3)

Water output (1,000 m3)CO2 emissions (t)Indices
Total amount of air emissions (kg)
Total amount of shift (kg)
Total amount of
air emissions
Ethylbenzene (kg)
Total amount of
shift
Total amount of
air emissions

Reference data I: Number of Officers (at Toyo Denki Seizo K.K.)
Unit
Total
Men

Number of Officers

Persons

Women
Notes

Xylene (kg)Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

10

11

12

13

13

10

11

12

13

13

0

0

0

0

0

Total amount ofshift

PRTR *5

Total amount of
Tetrahydromethylphthalic air emissions
anhydride(kg)
Total amount ofshift

For each fiscal year as of May 31 Executives include Directors and Statutory Auditors (including Internal and External)

Total amount of
air emissions

Reference data II: Number of employees at the Group Companies in Japan and overseas (at the 6 consolidated subsidiaries of Toyo Denki Seizo K.K.)
Item

Unit

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

Persons

1,170

1,201

1,216

1,245

1,262

Number of employees at Group companies in Japan and overseas Persons

379

404

412

421

430

Number of temporary staff on a consolidated basis(including part-timers; stated in the Annual Securities Report)

Persons

256

255

214

274

233

Number of temporary staff (including part-timers)

Persons

89

97

61

114

81

Number of employees on a consolidated basis

Notes

Toluene (kg)
Total amount of
shift

IndicesIndustrial waste (tons)

Reference data III: System for support of work-family balance (at Toyo Denki Seizo K.K.)

Maternity andchildcare related

Family care related

Other

29

Can be taken from 8 weeks prior to due date (14 weeks prior in the case of multiple births).
(6 weeks is required by law)

Maternity leave

Can be taken for up to 8 weeks after the following day of birth.

Childcare leave

In principle, childcare leave can be taken for a period as needed from the day after 8 weeks have elapsed since birth (completion of maternity leave), until
the day before the child turns 1 year old. In cases where it is difficult to find a place in daycare, etc., it is possible to apply for an extension of childcare
leave until the child is 1 year and 6 months, or until the last day of the month of March after the child has reached the age of 1 year, whichever is longer.

If an employee has taken childcare leave within 8-week period after his spouse has given birth, he may take repeat childcare leave until the
Repeat childcare leavechild reaches one year of age. Further if the employee and spouse both take childcare leave, the period of childcare leave can be extended(Mom and Dad Childcare Leave Plus)
until the child reaches 1 year and 2 months.

Fiscal 2014
684.3
651.8
32.5
30.1
67.6
284.7
284.7
14.1
14.1
0.0
14.1
14.1
0.0
4,265.0
4,095.0
170.0
180.0

Fiscal 2015
648.8
617.8
31.0
26.6
63.6
286.0
286.0
15.2
15.2
0.0
15.2
15.2
0.0
3,924.0
3,759.0
165.0
152.0

Fiscal 2016
647.2
615.6
31.6
26.7
62.8
294.1
294.1
15.2
15.2
0.0

Fiscal 2013
8,300
5,290
2,000
2,000
0
430
430
0
3,300
3,300
0
360
360
0
0
0
0
2,900
2,900
0
3,000
3,000
0
1,600
1,600
0

Fiscal 2014
7,900
6,120
2,000
2,000
0
670
670
0
3,400
3,400
0
550
550
0
0
0
0
2,500
2,500
0
2,500
2,500
0
2,400
2,400
0

Fiscal 2015
7,700
5,260
2,200
2,200
0
470
470
0
2,600
2,600
0
390
390
0
0
0
0
2,700
2,700
0
2,900
2,900
0
1,700
1,700
0

Fiscal 2016
7,000
5,800
2,400
2,400
0
600
600
0
2,100
2,100
0
400
400
0
0
0
0
2,800
2,800
0
2,500
2,500
0
2,000
2,000
0

Remarks

Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory

Fiscal 2012
7,300
4,810
1,800
1,800
0
330
330
0
2,900
2,900
0
280
280
0
0
0
0
3,000
3,000
0
2,600
2,600
0
1,200
1,200
0

Applicable premises
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory

Fiscal 2012
279.9
244.1
35.8
101.9
101.9
255.6
255.6
637.3
601.5
35.8
435.2
435.2
5.0
5.0
0.8
0.8
-

Fiscal 2013
290.3
262.0
28.3
99.3
99.3
290.9
290.9
680.5
652.2
28.3
462.4
462.4
5.9
5.9
0.9
0.9
-

Fiscal 2014
333.4
303.1
30.3
105.4
105.4
274.1
274.1
712.9
682.6
30.3
598.2
598.2
9.0
9.0
1.3
1.3
-

Fiscal 2015
355.0
335.9
19.1
98.4
98.4
246.2
246.2
699.6
680.5
19.1
584.0
584.0
2.3
2.3
0.8
0.8
-

Fiscal 2016
334.1
308.7
25.4
115.8
115.8
109.6
109.6
559.5
534.1
25.4
477.2
477.2
5.0
5.0
0.9
0.9
-

Remarks

15.2
0.0
3,895.0
3,734.0
161.0
158.0

Remarks

*1
*3

*2

*2

*4

Applicable premises

Waste Data

As of May 31 for each fiscal year

Prenatal leave

Fiscal 2013
664.8
628.5
36.3
27.9
67.5
284.0
284.0
14.2
14.2
0.0
12.3
12.3
0.0
4,122.0
3,936.0
186.0
168.0

PRTR Data* Number of regular employees including Executive Officers, and number of special employees, temporary employees, contract employees and staff on loan from other companies, etc.

Item

Fiscal 2012
624.1
590.9
33.2
31.2
43.4
252.0
252.0
19.9
19.9
0.0
13.9
13.9
0.0
3,456.3
3,307.3
149.0
169.0

Applicable premises
Production bases total
Yokohama Plant
Shiga FactoryNon-production bases total
Based on 500 kW generator Yokohama Plant
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga FactoryNon-production bases total

General waste (tons)

Valuable metal waste (tons)

WastesWaste output () (tons)

Recycled amount (tons)

Shorter working hours forchildcare

Working hours may be set at 5 hours 45 minutes or 6 hours 45 minutes per day for a period as needed from the end of childcare leave until
the child graduates from elementary school.

Volume of landfill waste (tons)

Nursing leave

Up to 5 special days off (by day or half day) may be taken per family member each leave year for nursing care for pre-elementary school age
children.

Percentage of landfill waste (%)
Yearly comparison

Family care leave

A total of up to 3 years of family care leave may be taken per subject family member, and the leave can be divided into up to 3 parts.

Family care work hours

Separately from family care leave, employees may use short working hours for family care twice or more during the 3-year period from thestarting of use (Working hours may be set at 5 hours and 45 minutes or 6 hours and 45 minutes per day).

System for Rehiring
Employees

Employees who have resigned due to marriage, infertility treatment, childbirth, childcare, family care, or spouse’s transfer, etc., may be rehired
when they are able to return to work depending on the employee’s request and workplace needs.

*6

*6

*6

*6

*The fiscal year is from April to March of the following year. *Non-production bases: Toyo Denki Seizo Head Office, Osaka Branch, Nagoya Branch, Hokkaido Branch, Kyushu Branch, Hiroshima Branch*4 Production activities at Shiga Factory recorded close to zero water output.
*1 ISO 14001 certification was obtained for non-production bases in June 2010.
*2 Production activities at Shiga Factory recorded close to zero water input.
*5 PPTR: Pollutant Release and Transfer Register*3 500 kW solar panel became operational in July 2012.
*6 The recycled amount and the volume of landfill waste at the Shiga Factory are scheduled for investigation starting in fiscal 2015.

Toyo Denki Seizo Report 201730