Held posts including president of the Gas Turbine & Machinery Company, senior vice president and senior executive vice president at Kawasaki Heavy Industries, Ltd.
Serving in the current post since June 2017.
Held posts including managing director of NIPPON STEEL CORPORATION and representative director and president of OSAKA STEEL CO., LTD.
Serving in the current post since June 2019.
Q:What roles do you think you should play as outside directors?
Iki:
The main role of outside directors is to supervise management, but it is equally important to provide advice on business execution. Both Director Uchida and I have experience in business execution at other companies. We would like to contribute to Glory’s management by sharing the knowledge and experience we have gained, not only with the Board of Directors but also in various interactions with employees.
Uchida:
The fundamental role of outside directors is to supervise the execution of management as a monitoring body. Another important role, I believe, is to raise issues that further revitalize the Board of Directors and help the Company achieve its medium- to long-term growth.
Q:Looking back on fiscal 2021, tell us about discussions at Board meetings that left an impression on you.
Iki:
For me, the most memorable issues discussed were the impact of COVID-19, the shortage of parts, and the Group’s response to the emergence of cashless payments.
The spread of COVID-19 and the shortage of parts were problems that the Group could not handle alone, so it was a difficult year for management to navigate. The Board of Directors discussed how to address this uncertain situation and what preparations are necessary, considering both short-term and medium- to long-term perspectives.
When it comes to payment methods, people generally refer to only two categories: cash and cashless. In practice, however, the situation is slightly different. At our company, we believe that business opportunities exist in the areas ‘around cash’ and ‘beyond cash.’ In addition, payment systems also differ by region and country, so it is important to allocate resources and build organizational structures that take these factors into account.
Uchida:
The concept of Glory’s 2023 Medium-Term Management Plan is ‘Core and new businesses powering growth together.’ A material challenge under this concept is to accelerate the development of new businesses. However, we cannot grow such businesses overnight. At Board meetings held in fiscal 2021, we reanalyzed the strengths of our core business, which underpin the foundation the Group has built over the years. After numerous discussions, we now share the view that we need to leverage the synergies of these strengths to advance into new businesses.
I think we are making investments that align well with our overseas business strategy. These include our acquisitions of Acrelec in France and Revolution Retail Systems in the United States.
In Japan, we are also making future-oriented investments, including in our Data Management Platform (DMP) business, and we will closely monitor the progress of these investments.
Q:What are the key factors for Glory to achieve medium- to long-term growth?
Uchida:
To achieve growth in both core and new businesses, we need to reaffirm our key strengths in recognition/identification technologies and use these strengths to develop new customers and uncover potential customer needs. Our challenge is to create new businesses by aligning these strengths with customer needs. Here, marketing and software development capabilities will play a critical role, so we need to further strengthen such capabilities.
Iki:
The most important factor for medium- to long-term growth is the speed of management decision-making. To expedite such decision-making, we need to create a climate in which a sense of urgency is shared by both management and individual employees. I would like to stimulate internal communication to make this happen.
Uchida:
In addition to the speed of decision-making, it is important to create more dynamism in our constant pursuit of innovation. To this end, we should foster a culture in which employees, regardless of national or international frameworks or divisions, can spearhead more active interactions and exchanges of opinions.
Iki:
To achieve this, we need to further increase engagement. In fiscal 2021, we were pleased to have opportunities to engage in discussions with employees who are potential candidates for our next generation of leaders. Taking advantage of these opportunities, I’d like to serve as a catalyst to foster the revitalization of the Group. Flexible and resilient management is also key to adapting to the uncertain times ahead. We cannot grow if we are always apprehensive about risk. I believe it is important to make choices that dare to take risks while minimizing the impact of such risks.
Uchida:
It might be easier to understand risk by comparing it to the sport of soccer. In Japanese soccer, some teams seem to choose only safe passes to keep possession of the ball. With this kind of game management, a team cannot win and its players cannot grow. A more forward-thinking attitude is needed.
Iki:
Indeed, the real appeal of sports lies in the attitude of players who constantly challenge their opponents and move forward while considering the inherent risks. It’s the same in business.
Q:To conclude, what are your expectations for Glory?
Iki:
I feel that Glory is at a major turning point and is undergoing a positive transformation. The driving forces behind this are our overseas business and our new businesses. The entire Group is about to undergo a major change, and I have very high hopes.
Uchida:
I believe that the power of Glory lies in its spirit of tackling things that other companies do not challenge. We achieved success in product development during our early years and business expansion, including overseas, in recent years. This was the result of our spirit of challenge in confronting unknown areas.
I hope that all employees will again take this spirit to heart and actively embrace challenges.
President of Satoshi Hamada Accounting Office. Holds post of outside director at other companies, including NISHIMATSUYA CHAIN Co., Ltd. and WDB Holdings Co., Ltd. (Audit & Supervisory Committee Member).
Appointed Outside A&SB Member of the Company in June 2015. Serving in the current post since June 2020.
Registered as an Attorneyatlaw in October 2003. Attorney-at-law and partner at the Harima Law Office. Apart from serving as an Outside Corporate Auditor at Sanyo Color Works Ltd., Mr. Kato has extensive experience serving as an outside member of local government committees. Appointed Outside A&SB Member of the Company in June 2019.
Serving in the current post since June 2020.
Q:Tell us your thoughts on the role of outside directors.
Hamada:
I believe that the main role of outside directors should be to supervise management. Another role is to reflect the voices of shareholders and other stakeholders in the Company’s management. Our shareholders range from individuals to institutional investors and we must recognize that their values differ. With regard to shareholder return, for example, some focus on the dividend payout ratio and some on dividends on equity (DOE).
Kato:
I am aware of my position as an ‘outsider’ and value the perspective of stakeholders. Even in Board discussions, the ‘internal’ perspective alone can lead to complacency. When discussing proposals related to new business areas, for example, I try to think about the timing of market entry, as well as exit strategies after entry, from an outsider’s point of view. I also use my perspective as a legal professional to advise on each case and its potential risks. How about you, Mr. Hamada?
Hamada:
My material role is to provide advice based on my accounting knowledge and check for conflicts of interest in the execution of business operations.
Q:Looking back on fiscal 2021, what challenges did the Company face?
Hamada:
The biggest challenge was a case of embezzlement committed by a former employee of our consolidated subsidiary. In addition to the amount of money involved, we regret that we could not identify this misconduct for 13 years.
Kato:
I feel the same way. The details of this matter have been revealed in an investigation report by our internal investigation committee. From a perspective of corporate governance, we have an internal control system in place for the entire Glory Group. However, there was inadequacy in the management of details. For example, a single person was managing cash and book balance.
Hamada:
Despite having an internal control system in place, this operational problem arose at a Group company. It was not organized fraud but rather an individual act with a simple methodology. The fact that it was not discovered for 13 years suggests that there was a problem with the checking function, as well as the operational aspect of the internal control system.
Kato:
Although Glory’s Audit Department conducted periodic internal audits, there were superficial checks in accordance with checklists, and the depth of such checks was inadequate. Going forward, the Audit Department will take the lead in formulating measures to improve the effectiveness of audits, but it is also important to be more vigorous, for example, by digging deeper into areas that could become issues.
At the same time, I feel the Company was effective in enforcing governance to handle the situation after the incident was discovered. We were swift to act, from establishing an internal investigation committee consisting of outside attorneys and CPAs to executing the investigation. Going forward, an important role of the Audit & Supervisory Committee will be to verify the implementation and effectiveness of measures to prevent recurrence, and to continue ensuring thorough Group governance.
Hamada:
We need to use the incident as an opportunity to meticulously reexamine governance at Group companies both in Japan and overseas.
Q:In recent years, there has been a growing focus on the importance of non-financial information.
What are your thoughts on this trend?
Kato:
Although they are viewed separately, the value of financial and non-financial information in a company is fundamentally close. We should consider both when making management decisions for corporate growth over the medium to long term.
Hamada:
The International Integrated Reporting Framework defines six types of capital related to corporate value. Among them, investments in intellectual capital and human capital have a trade-off relationship with earnings in the short term from an accounting perspective. For example, investments in R&D and education and training do not translate into revenue in the same fiscal year, but they are crucial for sustainable growth. When evaluating the effectiveness of these investments, therefore, we need to take a medium- to long-term perspective.
Q:As Audit & Supervisory Committee members, what should you focus on in the future?
Hamada:
To accurately grasp the value of the Group, we need to look at our financial figures from a medium- to long-term perspective, not just from a short-term perspective, such as year-on-year changes. For example, it is important to compare five years’ worth of financial statements to verify that previous management targets have been achieved.
Recently, I have spoken at Board meetings with this perspective in mind. I would like to continue providing new insights like this to the executive side.
Kato:
The aforementioned incident reaffirmed to me the importance of narrowing the focus and depth of audits. I will continue making improvements while sharing issues in cooperation with the Internal Audit Department and the corporate auditors of each group company to enhance the quality of Group-wide governance.