Announcement on changes in management structure

March 5, 2021

Kobe Steel, Ltd.

Kobe Steel, Ltd. announces that, at its Board of Directors meeting held today, it has adopted a resolution to make changes to its management structure on April 1, 2021, with the aim of strengthening sustainability management.

1. Background and Purpose

Kobe Steel has been studying ways to strengthen corporate governance and promote sustainability management*1). In order to respond to the transformation of industrial structures and the progress of digital transformation (DX) toward the realization of a green society, as well as other important issues such as ESG and SDGs, Kobe Steel has decided to reorganize its management structure to take the current efforts a step further.

  • *1) Sustainability management: The Kobe Steel Group, also known as the KOBECLO Group, aims to realize the vision set forth in the Group Corporate Philosophy and achieve sustainable growth of the Group by setting key issues and goals for each of two categories: (1) a management foundation area that prevents damage to corporate value and supports sustainable growth and (2) a value creation area that realizes business growth.

2. Details of the Changes

2.1 Functional Improvements of the Board of Directors

The Board of Directors will shift to a body that focuses on determining important management directions and monitoring management activities including risk management.

The current number of Directors is 16 (6 of which are independent outside directors), but it will be reduced to 13 (6 of which will be independent outside directors).

In the new composition of the Board of Directors, non-executive directors, including audit and supervisory committee members, will form a majority (with 8 non-executive directors among 13 directors).

Changes in the Composition of Directors

Members Current From April
1, 2021
President and CEO 1 1
Materials, machinery, and electric power businesses 3 0
Companywide corporate planning 1 1
Companywide governance 1 1
Companywide safety, quality management, and environmental control 1 1
Companywide R&D 1 1
Outside Directors 3 3
Audit & Supervisory Committee members External 3 3
Internal 2 2
Total 16 13
The number of Independent Outside Directors 6 6

2.2 Changes to Strengthen and improve Business Operation Systems

(1) Reorganizations of Committees to Assist the Executive Council

Company-wide committees will be reorganized in order to effectively promote (1) Enhancement of ESG strategies (promoting sustainability management and strengthening risk management) and (2) Reinforcement of Head Office’s strategic functions (strengthening business portfolio management and investment management), which are key management issues of the company.

New Committees Description
Sustainability Management Committee Current CSR Committee to be renamed for enhancing functions
Risk Management Committee To be newly established for:
  • Improving effectiveness through integrated risk management
  • Integrating the current Information Security Committee into this committee and further strengthening the information security system through the Information Security Subcommittee.
Business Portfolio Management Committee To be newly established for enhancing Head Office’s strategic functions
Investment and Loan Committee
DX Strategy Committee Current IT Strategy Committee to be renamed for enhancing DX strategies

(2) Reorganizations of Head Office Departments

With respect to the functions of the Head Office, we will integrate similar functions, streamline operations that come into contact with business divisions, and transfer some functions to business divisions, with a view to further improving the effectiveness of the risk management system to promote company-wide strategies and strengthen corporate governance.

Division Current From April 1, 2021
Head Office 19 departments and 1 section 13 departments and 2 sections

(3) Changes in Title of Executive Officers

In light of the growing need to flexibly and promptly allocate human resources in response to the rapidly changing business environment, the positions of Senior Managing Executive Officer and Managing Executive Officer will be abolished.

According to this change, the basic compensation stipulated for each position will be changed to compensation based on roles and responsibilities.

2.3 Changes in the Advisory Committees to the Board of Directors

The Corporate Governance Committee (majority of members are independent outside directors) chaired by an independent outside director will be established as an advisory body to the Board of Directors. The committee is responsible for studying the ideal management system on a continuous basis in response to changes in the business environment from an independent and objective perspective and reporting to the Board of Directors.

2.4 Organizational Changes to Implement Business Strategies

(1) Reorganization of the Technical Development Group

Research and development of element technologies necessary for monozukuri improvement activities will be integrated into the Technical Development Group’s Materials Processing Technology Center.

In addition, in order to strengthen and accelerate technology development and business application in the fields of ICT and AI toward digital transformation (DX) in the KOBELCO group, the Digital Innovation Technology Center will be newly established for consolidating functions.

With this reorganization, the Company’s business divisions will be jointly supported by the three centers: Materials Processing Technology Center; Digital Innovation Technology Center; and Application Technology Center.

(2) Reorganization of Company-wide Structure for Automotive Projects

Taking the opportunity of major changes in the needs of the automobile industry, such as the development of CASE and MaaS, including the shift to electric vehicles, our corporate automobile strategy will be restructured based on our technological capabilities in materials, parts, manufacturing know-how, and solution technologies.

New section/unit Scheduled reorganization Function
Automotive Materials Planning Section Automotive Materials Planning Section to be integrated into the Steel and Aluminum Business To carry out planning for company-wide automobile projects and transfer to business divisions with business responsibility
Aluminum Extrusion & Suspension Unit Aluminum Suspension Unit and Aluminum Extrusion & Fabrication Unit to be integrated into the new unit To provide a single point of contact for customers

(3) Establishment of Specialized Planning Departments for New Business

In addition to the establishment of the Business Development Department under the Head Office, specialized departments will be established within the business divisions to promote planning and implementation of new business initiatives on a company-wide basis.

Kobe Steel launched the Trust Rebuilding project in 2018 for steadily implementing recurrence prevention measures, regaining the trust of stakeholders, and remembering the quality misconduct. We will continue to strengthen and develop our efforts as the Trust Improvement project, positioning it as an important issue directly under the President.

Our Group will work to create new value to build the social infrastructure necessary for a green society with a view to realizing a world in which people, now and in the future, can fulfill their hopes and dreams while enjoying safe, secure, and prosperous lives as we envision in KOBELCO’s View of the Future.

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