Upload
goshi-fujimoto
View
1.357
Download
5
Embed Size (px)
DESCRIPTION
Citation preview
1 Team 05
Corporate Governance Group 5
Corporate Governance - Did TEPCO’s corporate governance function? -
05/10/2012
2 Team 05
0. Outline
BackgroundWhat happened in TEPCO after 311?
ObjectivesWhy did we choose TEPCO incident as a case?What would we like to clarify?
Problems of the past corporate governanceWhat were likely to be problems?
The changes after the incidentWhat changed?How is the structure of present corporate governance?
How to evaluateWould we like to invest as a fund manager?
3 Team 05
1. Background
Company profileTokyo Electric Power Co., Ltd.TEPCO is the biggest electric companyFounded in 1951# of Employees is 38,701 (as of March, 2012)Revenue: 5,349 billion yen (FY2011)
5,016 billion yen (FY2009)Net profit: -781 billion yen (FY2011)
133 billion yen (FY2009)
4 Team 05
1. Background
What happened in TEPCO after 311?
The disaster on 311
The highest Tsunami to Fukushima
Nuclear power plant down!
Referred to Japan Meteorological Agency
5 Team 05
1. Background
What happened in TEPCO after 311?It is said that disaster was caused by human error
with no pre-disaster effortsThen…
51% of Input of public fund
Much compensations
Responsibility to electric
supplyImport of the
expensive fuels
Bankruptcy
6 Team 05
2. Objectives What is the problem of this incident?
This incident has the complex problem Many causes to bankrupt of TEPCO
Clarify the problems by focusing on corporate governance and evaluate the updated structure
TEPCOPlant protection actionCorporate governance
NATURAL DISASTER
Tsunami / Earthquake
GOVERNMENTSupervision TEPCO
7 Team 05
3. Problems of the past corporate governance The past corporate governance
Committees
Internal Auditors
External Auditors
Referred to Financial report FY2009
Board
Ownership
8 Team 05
3. Problems of the past corporate governance The past corporate governance
Board of director
Board Members 20[Internal] 18[External] 2
Tomijiro Tomita, Daiichi life insuranceYasushi Aomori, MEIJI University
One tier structure, the chair is presidentMonthly board of directors meeting &
extraordinary meeting
9 Team 05
3. Problems of the past corporate governance The past corporate governance
Auditor system
Auditors 7[Internal] 3[External] 4
Sadayuki Hayashi, ex. Advisor to the Ministry of Foreign Affairs of Japan (MOFA)
Koichi Takatsu, LayerHiroshi Komiyama, ex. Chancellor of the
university of TokyoKazuko Oya, Shiseido
10 Team 05
3. Problems of the past corporate governance The past corporate governance
Main part of committeesRemunerationInternal controlCSR, Human rights
477 460
661 669 654 648 698 700
170
62 62
62125
0 00 0
0
0
100
200
300
400
500
600
700
800
900Remuneration of
internal board membersbonus
remuneration
119104
148 155133 141
98 98
39
1212
12 0
00
0 0
0
0
20
40
60
80
100
120
140
160
180Remuneration ofinternal auditorsbonus
remuneration
11 Team 05
3. Problems of the past corporate governance The past corporate governance
Ownership structureVery dispersed
Top share : Japan Trustee Services Bank, Ltd. (4.47%)
4%4% 4
% 4%
3%
3%
2%2%1%
1%73%
Japan trusty serviceDaiichi insuranceNihon insuranceJapan master trustTokyo MetropolitanMitsui Sumitomo bankMizuho bankInsideJapan trusty serviceMitsubishi UFJ bankothers
Stock share of foreigner: 17%
12 Team 05
3. Problems of the past corporate governance The past corporate governance
TEPCO said Board with committee & auditor system…enhances Smart discussion from a neutral standpoint of viewdrives adequate supervisionorganizes managing directors meeting & other meetingspromotes framework of quick decision-makingenterprises project management and maintains a stable
supply of electric power: internal control, CRS, system security
enrolls internal audit system: Quality and Safety Systemsestablishes nuclear safety quality assurance meeting
Perfect?
13 Team 05
3. Problems of the past corporate governance Problems of the past CG
were…no diversified members, especially no outside
views to corporate governancemerely comprised members from TEPCO
employeesto be monopolist without the supervision from
product markets and public
The checking function had not worked…
15 Team 05
4. The changes after the incident
Before
Shareholder’s meeting
Board of Directors
Outside Auditors
Operating Officers
Committee
After
Shareholder’s meeting
Operating Officers
ExternalInternal
Internal Auditors
The changes of CG structureTEPCO recruited many of outside members for its governance.
Board of Directors
16 Team 05
4. The changes after the incident The changes of structure of CG
Background of Outside Board Members
Chair SHIMOKOUBE KazuhikoAudit & compensation committee
Lawyer
2 SUDO FumioNominating committee
Advisor , JFE Holdings
3 NOUMI KimikazuCompensation committee
Representative Director & President, Innovation Network Corporation
4 KOBAYASHI YoshimitsuCompensation committee
CEO of Mitsubishi chemical holdings
5 KASHIYA ToshioAudit committee
Chartered Public Accountant (CPA)
6 FUJIMORI YoshiakiCompensation committee
CEO of Living life (LIXIL)
2-tier
Background of Outside AuditorsTAKATSU Kouichi Lawyer
KOMIYAMA Hiroshi Outside board member , JX Holdings
OHYA Kazuko Special Adviser, SHISEIDO
17 Team 05
4. The changes after the incident The changes of structure of C G
Compensation for board members
Total(Million Yen)
Detail (Million Yen) Number of members
Basement Bonus
Board member 170 170 - 19
Auditor 39 39 - 5
Outsider 47 47 - 6
477 460
661 669 654 648 698 700
170
62 62
62125
0 00 0
0
0
100
200
300
400
500
600
700
800
900Remuneration of
internal board membersbonus
remuneration
2011
18 Team 05
4. The changes after the incident
Other important changes : a lot of business alliancesThey will not consider only companies with
committees but also business partnersThe new structure of corporate governance for
TEPCO from the point of business partners’ view
Referred to Yomiuri
19 Team 05
5. How to evaluate
Item DetailStructure Transit over to a “In-house Company System
(Committee System)” ✔
Introduce a governance system with a majority of its board members from outside
Tire Separation of management and owner to be 2-tier ✔
Transparency Total compensation for board members and auditors is open to public △
Supervision The strict supervision from business partners and public by starting alliance business ✔
Key criteria observation
They obviously changed to be a company with good governance!
Would you like to invest in TEPCO?
20 Team 05
5. How to evaluate
TEPCO estimated and recorded as an expense compensation for nuclear damages in an amount totaling \2.5 trillion.
\128
\2400
2010 20122011
Key criteria observation stock price
Not invest in TEPCO at this moment. Keep watching its change.
21 Team 05
Thank you for your attention.
Tokyo Electric Power Company (2012). Financial report FY 2011 Tokyo Electric Power Company (2012). Annual report FY 2011 Tokyo Electric Power Company (2010). Financial report FY 2009 Forbes (2011). Did management problems at TEPCO cause Japan’s $15B radiation
leak? Bob T. and Chris M. (2011). Tokyo Electric Power and the disaster at Fukushima
Daiichi The Wall Street Journal (2011). The Fukushima Warning, Mismanagement at TEPCO
is a symptom of deeper governance problems in corporate Japan Japan Center for Economic Research (2011). Crisis offers change to cure economic
ills GMI Ratings (2011). Japan in focus: Why risk management matters Yomiuri Shimbun (2012). Tokyo Gas eyes electricity business / Tie-up with TEPCO to
rebuild thermal plants signals newcomers' entry into market
References
23 Team 05
Appendix
24 Team 05
Appendix
25 Team 05
Appendix
26 Team 05
Appendix 3) Optimal Leveraging of Present Management
Resources Increasing the quality of Power Grids (smart meter installations)
and establishing an environment that provides new business opportunities to various industrial players.
The promotion of know-how in the areas of construction/operations of high efficient power units and high quality grid management has been at a standstill.
Global Business Development with other Partners. 4) A New Mindset
“Reluctance to Seek Outside Support”, “Over-sectionalism”, “Lack of Transparency” and “Unwillingness to Compete”, etc.
It is of utmost importance that each employee adopts the new mindset so that all efforts will be harmonized and the quality of human resources will be enhanced.
27 Team 05
Appendix