F O C U S

6Corporate Governance
At Toyota Industries, we are making independent efforts tomake corporate governance function effectively. These
independent efforts are in addition to those legally required

Committee. Issues arising, when necessary and appropriate,such as the shareholders’ meeting and the formation ofare presented for discussion by the Board of Directors, whichbodies for oversight purposes, including the board ofis charged with supervising the business performances of thedirectors, board of corporate auditors and others.

directors. Five corporate auditors must attend the board

Although amendments to Japan’s Commercial Codemeetings, and have the legal responsibility of preventing any(effective as of April 1, 2003) allow selective introduction of

unlawful or inappropriate resolutions. The corporate auditors

U.S.-style, committee-based corporate governance, we opted

are charged with auditing the execution of the directors’

to retain the Japanese conventional auditing system because

duties.

we deemed it fully capable of doing the job. Aside from what

The main decision-making and deliberative bodies ofis required by the law, Toyota Industries is constantly

Toyota Industries are the Board of Directors, the Management

exploring the best possible way of practicing good corporate

Committee and the Business Operation Committee. The

governance, and reviewing its internal systems as needs arise.

Management Committee and the Business Operation

This section covers the corporate governance system ofCommittee have fewer directors than the Board of Directors,

Toyota Industries as of July 1, 2003.

making it possible to conduct thorough deliberations as wellas make quick and efficient decisions in response to changes

Decision-Making and Supervisionin the management environment.

Other than matters that come under the authority of thebasically made by the Board of Directors. In order to raise

Corporate Auditors(Board of Corporate Auditors)

management efficiency, however, day-to-day operations are

The Board of Corporate Auditors is composed of fiveentrusted to division managers or an in-house company

corporate auditors, including two standing corporate auditorspresident. The establishment of divisional and company-wide

and three outside corporate auditors. The corporate auditors,

business goals and strategic management matters regarding

appointed at the Shareholders’ Meeting, conduct operations

overall and individual businesses are discussed by theaudits as well as accounting audits. For this purpose, the law

Management Committee and the Business Operation

grants corporate auditors a great deal of authority andShareholders’ Meeting, all management decisions areShareholders’ Meeting
Corporate Auditors
MonitorBoard of Corporate Auditors

Board of Directors
MonitorManagement Committee*
ChairmanPresident
Business Operation Committee**32

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

* The Management Committee deliberates upon
important matters concerning all aspects ofmanagement, such as company-wide strategy andallocation of management resources. The Committee
is composed of directors above Executive VicePresident level. When he deems it necessary, thePresident calls in certain other directors andmanagers.
** The Business Operation Committee deliberates upon
important matters regarding each business segment.
The Committee is attended by the President, directors
in charge of corporate planning and directors
assigned to oversee divisional operations (divisionmanagers, etc.).

responsibility. In the operations audit, they investigate

Information Disclosure

whether ordinances and articles of incorporation are being

At Toyota Industries, we areobserved by the directors in the execution of their duties.

making independent efforts

Regarding the accounting audit, they review the audits madeto ensure that we adhere toby external auditors. In order to prevent illegal or improper

the spirit as well as the letter

resolutions from being made at meetings of the Board ofof the law, in Japan andDirectors, the corporate auditors must attend the meetings

overseas, conducting ourand give their opinions if necessary. When any violation of an

business affairs fairly andordinance or articles of incorporation is made by a director ortransparently. Accordingly,

the prospect of such a violation is identified, it is reported to

we intend to conform to thethe Board of Directors.

highest possible standards

Compliance and Good Corporate
Citizenshipwith respect to disclosure of
information andaccountability to

Toyota Industries considers compliance with the law the very

shareholders and otherfoundation of good corporate governance. In the early 1990s,

stakeholders. We are also

we established a Code of Conduct Council for the purpose ofaiming for an even higher

promoting awareness of ethical, legal, social anddegree of managementenvironmental issues. The Council is chaired by an Executivetransparency. As part of these efforts, we are gradually

Vice President with attendance by those above Managing

expanding the volume and contents of information available

Director, and held as necessary to monitor overall corporate

to the public through enhancement of the Investor Relations

activities from the legal and ethical viewpoints. In 1998, the(IR) section of our Web site.

Council published a guide for employees containing specificguidelines on good conduct and compliance with the law. The

http://www.toyota-industries.com/ir/

We plan to start releasing quarterly financial reports fromfiscal 2004.

Council liaises closely with the Legal Department, the Global
Human Resources Department and the Audit Office, among

Stock Option Incentive Planothers, which in turn conduct regular checks of each

In June 2003, the Ordinary General Meeting of Shareholders

department and promote educational activities.

of Toyota Industries Corporation approved a grant of share

Further, we plan to set up a corporate ethics hotline inacquisition rights in a total of 900,000 shares to board

September 2003, in addition to other such existing lines andmembers and designated key employees as a stock option

counseling desks, for the purpose of early detection andincentive plan. The purpose of this plan is to further motivate

handling of important compliance-related information.

senior management in enhancing shareholder value by

Aside from these systems, we have unveiled the Fivealigning them with investors. Recipients may not exercise theValues*, laying down our basic philosophy and forming anoption within the first two years. Subsequent to the initialaction guide for our employees. We run the Company with aperiod, the option must be exercised or waived within theshared standard of high morals, from top management down.

next four years.

* Please refer to page 16 for details.

Toyota Industries intends to continue to explore ways toachieve the best possible corporate governance, not only
through a legal framework but also through independentefforts.

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

33