Roundtable Discussion with Outside Directors

The Company has grown steadily under President & CEO Oi, who took office in June 2022, and in fiscal 2023, both sales and profits reached record highs for the third consecutive year. This time, we asked President & CEO Oi and three outside directors to share their frank opinions on what is needed to further expand business and to strengthen the governance system.

June 2024

Strengthening corporate governance and translating technological and human resources capabilities into growth

Oi: First of all, how would you honestly evaluate our Board of Directors?

Terashima: Although the agenda is comprehensive, we receive sufficient explanations in advance, so I am always able to attend Board of Directors' meetings with a thorough understanding of the content. The directors are people responsible for each field, so I think the overall balance is good.

Yomo: I feel a sense of integrity in the Board of Directors. Outside directors sometimes give opinions that are difficult for the Company to hear, but the Board responds sincerely to those opinions. I feel that there is a great atmosphere at Board of Directors' meetings, as there is great respect for our specialized knowledge and insight.

Kanno: I feel that it is a very open forum where discussion can take place freely and frankly. Each director attends Board of Directors' meetings not just as a spokesperson for a business division but as a representative of each function within the Company, such as R&D and sales, and I believe that this allows for Company-wide discussions.

Oi: I also believe that all of the directors take the comments made by the outside directors seriously and that there is extremely good communication. You all have a wide range of experience. What do you think about your role as an outside director?

Yomo: I have mainly worked in human resources and organizational reform at foreign-affiliated companies. Although lines of business and industries may differ, there are many common issues faced in terms of human resources and organizations, and I would like to utilize my experience and knowledge to help solve issues the Company faces on that front. Another distinctive feature of the outside directors is that they can judge from an external perspective. Having diverse perspectives, including the one of shareholders, I would like to contribute to the sustainable growth of the Company.

Kanno: I did business with the Company when I was working for a chemical analytical equipment manufacturer, and I was aware of the Company's high level of technology. After becoming an outside director, I was once again amazed by its value and potential for growth. I would like to raise awareness of this value and contribute to the Company's further development.

Terashima: I also had a relationship with the Company's Medical Equipment Business Operations before taking up my position. This division currently remains on a plateau, but its technical and human resources capabilities are excellent. I feel it is also my duty to help further develop this division. The outside directors here have experience in different corporate cultures. I believe that our advice will also contribute to the development of the Company's corporate culture.

Oi: Our Company has a technological competitive advantage, and our engineers are highly motivated. What's important is how to increase the added value of that technology as a business. I believe it is my responsibility to utilize your advice and suggestions to help our Company grow.

Facing various risks and growing globally

Oi: Fiscal 2024 is the final year of our medium-term management plan, Evolving Growth Plan. How do you feel about progress?

Kanno: We expect to achieve the current medium-term management plan numerically, thanks in part to favorable exchange rates. As such, I believe that non-financial aspects will become even more important. The question now is how we will improve our capabilities in areas such as governance and human resources development. When formulating the next medium-term management plan, an important theme will be how to bring about changes in these areas.

Yomo: I think what's important is not just the financial figures but also how employee awareness has changed at the end of the medium-term management plan and whether there have been any improvements in the way work is done, so I feel that we need to verify that as well.

Oi: I also recognize that the theme of our medium- to long- term management strategy is a very important point. Regarding reporting of financial and non-financial information, we are currently continuing to hold discussions, but I would like to have more substantial discussions at future Board of Directors' meetings, such as the future direction of our business and the domains we should develop.

Terashima: We need to gain experience in risk hedging and risk management at the same level as overseas manufacturers and to make this part of our corporate culture. I also believe it is important to make risks visible and deepen discussions in order to solve them at the fundamental level.

Yomo: The Company is made up of a group of people who truly work honestly, and our domestic business partners and customers are likewise conscientious. I don't want to lose the culture that has been cultivated in this business environment. However, when expanding globally, there will be times when the assumption that people are fundamentally good won't hold. It is important to carry out risk management while taking into account diverse values, ways of thinking, living environments, and so on.

Oi: We acquired a U.S. start-up in 2020. Its team is made up of extremely creative and talented engineers, and even now, four years after the acquisition, not a single employee has left the company. I believe this is because, as engineers, they resonate with our Company's spirit of inquiry when it comes to science. However, as you point out, I strongly feel that in order to improve business performance, it is necessary to face risks more effectively, including not only risk-taking but also risk management. If we can develop both technology and business, we will become even stronger.

What's important is showing a vision from a long-term perspective as a CEO

Oi: Our Company aims to become a global top niche company under our Evolving in the 70th Year vision and the YOKOGUSHI strategy. Please tell us about your future prospects and expectations, including the formulation of the new medium-term management plan.

Yomo: In formulating the new plan, as concrete measures other than numerical targets, I think a key point is how to help employees grow and make progress over the next three years. To achieve this, I believe we need to carefully consider what we need to prepare and how we need to change the system.

Terashima: In a medium-term management plan, the most important thing is the future vision for how to grow the Company. It is the CEO's role to decide what to do to achieve this. In aiming to be a global top niche company, it is necessary to be the top not only in terms of technological capabilities and product performance but also as a business. I look forward to seeing you, as President & CEO, bring your own unique style to the forefront and paint a vision for the Company.

Oi: The Evolving in the 70th Year vision aims for substantial growth based on the technology that we have built up thus far, and I think this is a very good concept. However, to break through as a business rather than just as a R&D effort, we need policies and measures to accelerate growth. With regard to human resources as well, I recognize the need to create a system that allows employees to grow on their own by gaining a wide range of experiences.

Kanno: President Oi achieved great results as COO up to the middle of 2022. Since June 2022, as CEO, he has been bearing even greater expectations. In any type of business, there are parts that are an extension of what has been done up until the current time and parts that are discontinuous and pose new challenges. It is an important role of the CEO to show how to aim for new growth in such discontinuous domains with appropriate strategies. In the next medium-term management plan, as the second phase of the YOKOGUSHI strategy, we need to deepen YOKOGUSHI from the customers' perspective and further advance portfolio management, and now is the time for that. I am passionate about the transformation being promoted by President Oi as CEO, and I have high expectations.

Oi: As you have said, I am convinced that our Company has potential. With our business performance now strong, this is a perfect opportunity for transformation and growth. Based on your advice and recommendations, we will carry out management that will lead to increased corporate value.

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