Since June 2018, the TOMY Group elects three independent outside directors, over one third of the total seven directors on the board, in order to further strengthen the Group’s corporate governance system and increase its corporate value.
We asked three outside directors: Shigeyuki Mito and Kakuei Miyagi, who have a long tenure on the board, and newly elected Mariko Mimura, about a wide range of issues relating to corporate governance and sustainable growth for the TOMY Group.
Joined Braun Moriya, Hoashi & Kubota Law Firm
Joined Takaishi Law Firm
Joined Nishimura Sanada Law Firm (currently Nishimura & Asahi)
Joined GE Yokogawa Medical Systems Ltd. (currently GE Healthcare Japan Corporation)
Executive Officer of GE Yokogawa Medical Systems Ltd.
Director of Novartis Holding Japan K.K.
Director of GlaxoSmithKline plc
Board Director (outside) of the Company (to present)
Of Counsel of Nishimura & Asahi (to present)
Can you give us some insight into your past experience, trials and successes?
After working as a lawyer in Japanese law firms for approximately 13 years, I became an in-house corporate lawyer, which was not so common at the time in Japan. I have always been interested in business and gave advice not only on legal issues but business activities as well. For instance, when I was working as an in-house lawyer at a startup firm for implant medical devices in California, I worked with the engineers to improve the factory and helped implement technical training. That experience sparked my interest in corporate management even further. I also managed a corporate scandal case and attended a press conference to apologize the corporate misconduct. At the time, not many women bowed their heads in apology in front of TV cameras, but I believe it was an extremely valuable experience as an attorney-at-law. I have faced many difficult challenges, but, on reflection, I am grateful for all those experiences.
In June 2018, I became an outside director for TOMY Company, Ltd. To be entirely honest, I really love toys and games. Once I start a game, I could play it all night. So, naturally, I was delighted when I got offer from TOMY for this position!
What is your impression of the TOMY Group’s corporate governance?
Even for me who is used to serving on the board of multi-national companies, it was exciting to see the healthy, lively debate by outside directors and auditors of TOMY. In the few months since my appointment in June, I have attended board meetings and various other management meetings and now I understand TOMY Group business better. I look forward to providing as strong advice as other outside directors and auditors to help guide the TOMY Group in the future.
I was also impressed by the exhibition room with full of historical toys from the time of Group’s foundation. After visiting the exhibition room, my (and other outside directors’) loyalty to TOMY became much stronger.
How do you see your role as TOMY’s first female outside director?
Of course, I must fulfill my role as a regular outside director, but I also feel a great responsibility to promote diversity as the company’s first female outside director. I want to communicate with female employees as much as possible and help build a corporate culture that enables more and more women to work at management level. If you compare companies with and without female managers, some data suggest that companies with female managers enjoy higher profitability and various other benefits. I feel that there are many highly talented women in the TOMY Group, so I would like to become a role model for those women, and convey the importance and the rewards of becoming a female manager.
You have served on the board of multi-national healthcare companies. What similarities or differences have you noted between that and the entertainment industry?
Considering the key differences first, it takes between 10 and 15 years to develop a pharmaceutical product. That gives substantial time to pharma companies to develop future product lines and make long-term plans. By contrast, the toy industry is heavily influenced by the latest trends, so it is harder to form long-term plans, and requires many different measures to be taken at relatively short notice.
The similarity is a focus on safety and quality management. In the pharmaceutical industry, product quality has a direct influence on the health of human beings, and can even be a matter of life or death. In the toy industry we always have to imagine every possible unforeseen action by children. Thus, to ensure product safety and quality is our important mission. For that reason, I will pay attention to product manufacturing processes. For example, use of forbidden chemical substances or child labor at some companies outside Japan had been a huge issue. Those cases are absolutely unacceptable because our aim is to create toys to make children happy. I appreciate TOMY Group employees are keenly aware of such issues, and I want to play my part in helping promote further activities. Today, supplier due diligence and information disclosure are common practice among multi-national companies, but there are still few companies in Japan that adhere to such similar standards. I want TOMY, as a company that seeks to be friends with children around the world, to be able to state with pride that it has a proper procedure in place. My mission as an outside director is to help nurture a corporate culture that is committed to robust governance and compliance as well as to the spirit of the United Nations Guiding Principles on Business and Human Rights, and SDGs.
Based on your business experience, what does the TOMY Group need to do to become the “outstanding global company” advocated by company president Kazuhiro Kojima?
I am aware that the TOMY Group has just started to build a framework for implementing its global strategy. The multi-national companies that I have worked in the past have strong control on individual local business by maintaining robust report lines between the employees of local business and headquarters in the United States or Europe. For instance, local lawyers in the legal affairs directly reported to the General Counsel of the headquarters, so that robust control was well maintained to avoid any significant divergence from head office policy. In contrast, the headquarters of many Japanese companies tend to leave the management of individual local business up to overseas subsidiaries, and exert little control over them. Since TOMY’s headquarters in Japan has significantly large sales among the group and a lot of experience in the business, I believe the headquarters can exert stronger leadership over international subsidiaries, not only in operational matters but also in compliance, legal affairs and corporate responsibility. I personally have huge respect for Japanese-style management practices, but Japanese “intuition” may not necessarily work in global markets. That is why I think systematic management control will become increasingly important as TOMY develops its global operations further. I believe TOMY’s future global strategy will be extremely successful.
Director; Head of Corporate Secretariat of the Sakura Bank, Limited (currently Sumitomo Mitsui Banking Corporation)
Managing Director; Senior Executive Officer; General Manager of Tokyo Corporate Sales Division III of Sumitomo Mitsui Banking Corporation
President and Representative Director of Yoei Holding Co., Ltd.; Director and Vice President of Yoei Housing (currently Yoei Co., Ltd.)
President and Representative Director of Yoei Holding Co., Ltd.; President and Representative Director of Yoei Housing (currently Yoei Co., Ltd.)
Outside Corporate Auditor of Mitsui Mining & Smelting Co., Ltd. (currently Nippon Coke & Engineering Co., Ltd.)
Board Director (outside) of the Company (to present)
Can you give us some insight into your past experience, trials and successes?
I have worked in banking and have been involved in management, in both internal and external positions, of a wide variety of businesses from real estate to commerce, hotel operations and the coal mining industry. In that sense, I am probably more of a generalist than an expert in a specific field. During my banking career, I worked in the human resource planning and business development departments, and regional head offices, but my time in the general planning department left the most lasting impression. I will never forget when I was suddenly assigned to head the disaster recovery promotion unit following the 1995 earthquake in western Japan, and we all worked tirelessly together to provide emergency support to the victims, prepare for business reopening and help finance post-quake reconstruction. Having had that special experience myself, I was very impressed by how TOMY responded to the 2011 earthquake and tsunami in Japan by immediately seeking to support children, and how it also continues to support child victims of natural disaster today. I sense that the Group has become more acutely aware of the need for a solid crisis response, swiftly shifting core systems into the cloud as part of their focus on disaster preparedness.
How do you evaluate the TOMY Group’s approach to corporate governance?
TOMY has invited outside directors onto the board since the 1990s and has always placed great weight on corporate governance. The TOMY board was made up of highly knowledgeable and experienced experts in a variety of fields, including lawyers, certified public accountants and learned corporate managers. Moreover, the new addition this year of Mariko Mimura, with her experience as an executive of an international company, creates an even richer, more diverse management approach. Our board meetings are venues for passionate concrete debate on business plans, potential investments and new product development. The role of outside directors is to improve quality governance by offering supervision and advice, and enhance corporate value. As it approaches its 100th anniversary in 2024, the TOMY Group is striving to transform itself into an outstanding global company, and lively debate within the firm is increasingly focused on international society.
You also serve on the Remuneration, and the Risk/Compliance committees. Are there any elements of those committees that require attention?
TOMY is not a company with a committee governance structure, but it does have a Board Director Nominating Committee and a Remuneration Committee. The Remuneration Committee is a body that creates remuneration proposals for presentation to the board. Given their direct links to corporate profit, remuneration levels are determined based on executive officer remuneration rules and in consideration of individual business performance, level of contribution, comparative remuneration levels at other firms, and overall balance within the company, with special attention to ensuring fairness.
Meanwhile, the Risk/Compliance Committee holds a monthly meeting on the activities of the Internal Control & Audit Group, as an organization under the direct jurisdiction of the company chairman, and, when necessary, receives reports on corporate risks to Group companies and their countermeasures, and implementation of compliance training programs. Unfortunately, in 2014, improper accounting for external transactions occurred at one of the Group companies. To ensure this kind of thing never happens again, we put in place preventive policies, reviewed our internal rules, and transformed our organizational structure. In particular, we created stronger management supervisions and business executive support systems, and minutes of major Group company meetings are sent to all independent directors almost every other week. I make a point of always looking through these reports and offering my opinion or advice on any issues I pick up on. Letting even the slightest mistake or risk go unnoticed can jeopardize a company’s future. The internal reports on major Group company meetings are extremely useful tools for helping outside directors gain a full grasp of management conditions and check if there are any unforeseen elements requiring attention, or any risks or mistakes that might have gone unnoticed.
Based on your experience, what does the TOMY Group need to do to become the “outstanding global company” advocated by company president Kazuhiro Kojima? And how do you think the TOMY Group can best contribute to sustainable society through the toy-making business?
I believe there are five conditions to becoming a successful outstanding global company:
1. Having a clear, solid corporate philosophy
2. A company that is useful to, and respected by, society
3. A company with a superior core business in its industry
4. Having the foresight and flexibility to respond swiftly to social change
5. Company employees who all share that awareness and perception
I believe the TOMY Group still has further work to do to fully satisfy these conditions, but I think they have the power to do so.
I also think that the Group should exploit its inherent strengths to help solve social problems in its specialist areas, as a way to contribute to sustainable society through its core toy-making operation. For instance, in its strong field of toy development, TOMY started working early on accessible-design toys that are adapted to enable children with visual or hearing disabilities to join in and play. In terms of the present and the future, the global market for intellectual and educational toys for children worldwide is large, and there are many other possible fields in which TOMY can contribute such as providing robotic toys to help make elderly people living alone feel more comfortable. We can also think about supporting developing countries through manufacturing and helping protect the environment by developing new materials for toys.
I want TOMY to be the company that various stakeholders select for its outstanding effort on its journey towards becoming an outstanding global company, and I want to help the company on that journey.
Registered as Attorney at Law of Dai-Ichi Tokyo Bar Association
Participated in the Establishment of TMI Associates
Partner of TMI Associates (to present)
Outside Corporate Auditor of Takara Co., Ltd
Outside Corporate Auditor of TYO Inc.
Audit & Supervisory Board Member (outside) of the Company
Instructor of Waseda University Graduate School of Sport Sciences (to present)
Outside Corporate Auditor of Broccoli Co., Ltd. (to present)
Outside Corporate Auditor of Yoshimoto Kogyo Co., Ltd.
Director of Shonan Bellmare Co., Ltd. (to present)
Instructor of University of Tsukuba Graduate School of Business Sciences (Business Law) (to present)
Board Director (outside) of the Company (to present)
Outside director of Yoshimoto Kogyo Co., Ltd. (to present)
Outside auditor of Nippon Columbia Co., Ltd.
Visiting professor of Musashino University School of Law (to present)
Outside director of Faith, Inc. (to present)
Could you share some of your past experience and specialist field with us?
I have served for TOMY as an outside auditor since 2006 and an outside director since 2015. I use my specialist knowledge as a lawyer to help not only the TOMY Group but other companies in the entertainment and sports businesses. Both businesses impress people and need special attention to contract-related items. In the entertainment business, protecting intellectual property is extremely important, so I offer the companies specialist advice on copyright and trademarks from a legal perspective. In the sports business, I conduct contract negotiations with baseball teams on behalf of professional players and advise a J-League soccer club on their management. I also need to know how the league works, and about the rules of the sports world, such as the draft system and free agents, etc.
Looking back, how have governance-related elements changed over your tenure?
I feel that we have managed to establish firm systems and approaches that make it easier for outside directors to voice aggressive opinions, and create a freer, more open company. Today, we have an active exchange of diverse views even on newly proposed items. We outside directors use our external experience and individual expertise to voice their concerns and suggest alternative plans. Now, this year, we welcome the addition of Mariko Mimura as a female outside director. From a diversity perspective, I am sure she will bring a breath of fresh air to the proceedings. I also want to be learning something new, not just repeating what I have done so far.
Based on your experience, what does the TOMY Group need to do to become the “outstanding global company” advocated by company president Kazuhiro Kojima?
Toys tend to strongly reflect local culture, and so developing toys for international markets is no easy feat for any company in the industry. In that sense, Japanese culture is relatively similar to other Asian countries, so there is a greater chance that our toys will be more readily embraced in Asia. We are already pursuing a symbolic global IP strategy, but it would be better to have a greater volume and variety of toys to work with. It isn’t easy, but we encourage the young employees to challenge themselves to come up with many new interesting ideas for toys.
As the Group’s operations becoming increasingly global, I think diversity is one of the most significant keywords. I feel that social awareness of diversity is changing rapidly. It might be difficult to hastily transform all internal systems, but we should seek to repeatedly transform awareness. It is important to encourage discussion and boost awareness within the company of such issues as how to empower people of different nationalities, ethnicities, genders including LGBT, and abilities and disabilities, and to keep a close eye on social attitudes toward these issues.
What strengths should the TOMY Group draw on and what issues should they address in order to contribute to society through toys?
The TOMY Group’s strength is in its ability to deliver toys that children enjoy to many places around the world. Thanks to their design prowess and brand power as a toy manufacturer, many children recognize the company name. Another entertainment company, where I also serve as an outside director, actively uses brand awareness and comedy performance to raise public awareness on the UN’s sustainable development goals (SDGs) and revitalize local communities. They consider it as an investment in the future by getting both children and adults involved. The TOMY Group is already involved in regional development projects in its founding area of Katsushika, Tokyo, but I think we could promote further collaboration by utilizing the brand power to help solve social problems. I believe this would lead to more solid, deep-rooted business development in individual countries and regions.*esports is short for electronic sports. According to the Japan esports Union (JeSU) official site, in the broad sense, esports refers to all entertainment, competition and sports games played on electronic devices, and also includes battles played on computer games and video games.
At the same time, in addition to the IP strategy I mentioned earlier, we also need to promote digital business. It is vital that we provide products and services that suit the latest generation of children who have been immersed in IT through smartphones and other devices since a very young age. Furthermore, companies that are not direct competitors right now might become potential rivals. For instance, competitive sport was defined as rule-based physical activity, but that does not apply to the esports* that have become extremely popular of late. Up until now, many people might have thought of esports as not a real sport but something more along the lines of chess or go. However, those activities are now defined as intellectual sports, broadening the sports market. When it comes to toys, while we might consider original analog toys as the fundamental base, maybe we should attempt to expand the toy market more avidly by including digital and other innovative features. I believe venturing into wider realms could help further develop their prized free thought and design prowess.