Next Generation 03：
Next-Generation Management Structure
First Tandem CEO and COO Structure in the Industry
At the Board of Directors’ meeting held on January 18, 2018, the Company decided to shift to a management structure on April 1, 2018 in which the chairman will serve concurrently as Chief Executive Officer (CEO) and the Company President will serve concurrently as Chief Operating Officer (COO). The Board also resolved to make former president Masahiro Okafuji Chairman & CEO and former ICT & Financial Business Company President Yoshihisa Suzuki President & COO.
Chairman Okafuji will continue to formulate management strategies and plans for the entire Group, including its major Group companies, and take charge of maintaining relationships with important customers as CEO. Additionally, President & COO Suzuki will oversee overall execution based on those management strategies and plans. In particular, he will utilize his extensive expertise and wide-ranging experience in the information and communications technology fields to focus on promoting reinvented business by creating new business models. This is the first change in president for ITOCHU in eight years and also the first attempt by a sogo shosha at a tandem CEO and COO structure. We have conducted an extensive review regarding these decisions that includes discussion in the Governance and Renumeration Committee, an advisory committee to the Board of Directors that took place before the Board’s meeting on January 18, 2018. In addition to this discussion, the Nomination Committee convened five times for deliberation.
Compatibility between Management Continuity and Response to Change
We have been consecutively recording record-high profits and also recorded our highest-ever stock prices. We also received a credit rating of A from Moody’s for the first time in approximately 20 years and have a rating of A or higher from all four major credit rating agencies. Furthermore, our work-style reform initiatives are receiving high praise from the corporate world and in political and business circles. On the other hand, we need to consider issues such as synergy creation with CITIC and think about integrated management of the Group, including FamilyMart UNY Holdings Co., Ltd. One of the reasons we approached the management change as we did was out of concern that a sudden shift in CEO would have a negative impact on our share price, given that former president Masahiro Okafuji’s management skills are highly regarded in the stock market. For this reason, a number of members in the Nomination Committee called for Mr. Okafuji to remain in the office, saying that we should “focus on management continuity” and that a structural change at the current stage was unnecessary. However, Mr. Okafuji realized that changes were occurring on a completely different scale and at completely different speeds due to new next-generation technologies such as AI and IoT. He felt a strong sense of crisis due to these changes, thinking that sogo shosha business models might soon reach their limits and therefore, also strongly felt that ITOCHU must convert to a new management structure in order to respond to a radically changing world by evolving and creating business models. After extensive discussion, we decided to adopt a structure that simultaneously achieves management sustainability and responds to rapid changes in the world. This conclusion led to the recent executive appointments and change in president.
In recent years, rapid technological innovation has been causing large changes in the market to occur in a short period of time. With this in mind, we will promote the new medium-term management plan, “Brand-new Deal 2020,” under our new structure and aim for sustainable growth while building new general trading company business models.
Comments from the Incoming and Outgoing Chairmen of the Governance and Nomination Committee
Chikara Kawakita
We endeavored to make the deliberation process for our recent executive appointments highly objective and transparent, based on the fact that the selection of management executives is an extremely important strategic decision for the Company. We have been discussing succession planning in the Nomination Committee. The committee has deliberated about what the ideal president should be like many times and has also deliberated about the pros and cons of a change in president without the former president present. Additionally, outside directors conducted interviews with management executives to hear their thoughts regarding current issues and future goals. We are confident that our new structure is the best structure that we can use to achieve our ideal form under the new medium-term management plan and that we can fully satisfy stakeholders’ expectations with it.
FYE 2019 Nomination Committee Chairman
Harufumi Mochizuki
As a Nomination Committee member, I have high praise for the plans that Chairman Kawakita formulated to increase objectivity and transparency in the deliberation process. I think that they greatly evolved our succession planning. It has been decided that I will serve as the new chairman of the Nomination Committee after the General Meeting of Shareholders. We will aim for sustainable growth that extends into the future, well beyond the length of our new medium-term management plan, to reliably achieve the plans’ goals, which are aimed at establishing new business models. As chairman, I plan to conduct proper supervision of succession planning and operate the Nomination Committee through a fair and highly transparent process.