Press Information

MHI Shifts to New Corporate Governance Structure
-- Number of Directors Trimmed to 12, Ratio of Outside Directors Raised to 25% --

No.1810
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Tokyo, June 26, 2014 - Effective June 26, Mitsubishi Heavy Industries, Ltd. (MHI) shifted to a new corporate governance structure. In addition to significantly scaling back the size of the Board of Directors and raising the ratio of outside directors to 25%, the number of directors having representation rights has been reduced - for example, by preventing the Chairperson from simultaneously serving as a Representative Director. The aim is to form efficient and highly transparent and trustworthy mechanisms in the company's management structure - especially within the Board of Directors - appropriate to expanding business in the global market and boosting profitability following the company's complete shift to a business domain-based structure in April.

At the ordinary general meeting of shareholders in June last year, 19 directors (most recent number is 16), including 3 outside directors, were elected. The total number of directors has now been trimmed to 12; the 3 outside directors have been retained, thereby raising the ratio of outside directors by 10 points up from 15%. Also, whereas previously the company had 8 Representative Directors, now it has 6: a CEO (president), 1 Domain CEO for each of the 4 business domains, and a CFO (Chief Financial Officer).

Until the new changes took place, all directors in the position of Executive Vice President or higher had been elected as Representative Directors; however, now, Representative Directors are limited to the directors with specific positions to further clarify their responsibility and authority. At the same time, by preventing the Chairperson from simultaneously serving as Representative Director, the Chairperson is now able to concentrate exclusively on supervising business administration as leader of the Board of Directors.

MHI has been taking steps at corporate governance reform continually for nearly 10 years. In 2004 the company had a total of 28 directors, including only 1 outside director (ratio: 3.6%). Then in June 2005 the number of outside directors was increased to 2 and the number of directors was trimmed to 17. Simultaneously, the tenure of directors was shortened from 2 years to just 1 and a system of executive officers was introduced. After that, the internal audit system was strengthened, performance-based remuneration was introduced, and the number of outside directors was increased further. Then in June 2012, the company's first non-Japanese outside director was appointed, and initiatives were launched to promote ongoing dialogue with individual shareholders and both domestic and overseas institutional investors.

Leveraging the shift to its new governance system, augmenting the launch of the Business Domains structure in April, MHI will now proceed forward even more vigorously with measures targeting realization of the company's goal to become a robust earnings-generating enterprise with a business scale of 5 trillion yen.