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Hitachi

Corporate InformationInvestor Relations

Hitachi and its listed subsidiaries are companies with Nominating Committee, etc., under the Companies Act of Japan. By demarcating responsibilities for management oversight and those for the execution of business operations, Hitachi is working to create a framework for quick business operation, while making management highly transparent.
In addition, Hitachi is executing business strategies formulated to enable the Group to demonstrate its collective strengths. Moreover, some of Hitachi’s Directors and Executive Officers serve concurrently as Directors and Executive Officers at Group companies, thereby strengthening integrated management of the Group and improving management oversight of Group companies. In these ways, Hitachi is working to increase corporate value.

Board of Directors

The Board of Directors approves basic management policy for the Hitachi Group and supervises the execution of the duties of executive officers and directors in order to sustainably enhance corporate value and shareholders’ common interests. The basic management policy includes the medium-term management plan and annual budget compilation. The Board of Directors focuses on strategic issues related to the basic management policy as well as other items to be resolved that are provided in laws, regulations, the Articles of Incorporation, and Board of Directors Regulations. As of June 21, 2017, the Board of Directors was made up of 13 Directors, and two of them concurrently serve as Executive Officers. Hitachi aims to reinforce the oversight function of the Board of Directors, of which nine outside Directors, including non-Japanese, account for the majority, reflecting their global and diverse viewpoints. Furthermore, Hitachi formulated and published Corporate Governance Guidelines outlining the framework of corporate governance, such as the function and composition of the Board of Directors, qualifications for Directors, and criteria for assessing the independence of outside Directors.
Within the Board of Directors, there are three statutory committees— the Nominating Committee, the Audit Committee, and the Compensation Committee—with outside Directors accounting for the majority of members of each committee. The Board of Directors meetings were held 8 days during the fiscal year ended March 31, 2017, and the attendance rate of Directors at these meetings was 99%. To assist with the duties of the Board of Directors and each committee, staffs who are not subject to orders and instructions of Executive Officers are assigned.

(1) Nominating Committee*

The Nominating Committee has the authority to determine particular proposals submitted to the general meeting of shareholders for the election and dismissal of Directors. The Nominating Committee consists of four Directors, three of whom are outside Directors.
The Nominating Committee meetings were held 10 days during the fiscal year ended March 31, 2017.

(2) Audit Committee*

The Audit Committee has the authority to audit the execution of duties of Directors and Executive Officers and to determine on proposals submitted to the general meeting of shareholders for the election and dismissal of accounting auditors. The Audit Committee consists of five Directors, including three outside Directors and one standing Audit Committee members.
The Audit Committee meetings were held 16 days during the fiscal year ended March 31, 2017.

(3) Compensation Committee*

The Compensation Committee has the authority to determine remuneration policies for Directors and Executive Officers and remuneration for individuals based on them. The Compensation Committee consists of four Directors, three of whom are outside Directors.
The Compensation Committee meetings were held 4 days during the fiscal year ended March 31, 2017.

  • *Each committee is composed of the following members (Chairs are marked by ※) (Directors are listed by position and in Japanese alphabetical order within each grouping.)
    Nominating Committee: Harufumi Mochizuki ※, Cynthia Carroll, Sadayuki Sakakibara, Hiroaki Nakanishi
    Audit Committee: Hiroaki Yoshihara ※, Harufumi Mochizuki, Takatoshi Yamamoto, Kazuyuki Tanaka, Toyoaki Nakamura
    Compensation Committee: Harufumi Mochizuki ※, Sadayuki Sakakibara, Takatoshi Yamamoto, Toshiaki Higashihara

Executive Officers

Executive Officers decide on matters delegated to them by the Board of Directors and execute Hitachi’s business affairs within the scope of assignments determined by the Board of Directors. As of June 21, 2017, Hitachi had 36 Executive Officers.

Senior Executive Committee

The Senior Executive Committee is a council to ensure that President deliberately decides on important managerial matters, which may affect the business of Hitachi or the Hitachi Group, through discussing from diverse viewpoints. This committee consists of ten members as of June 21, 2017: President & CEO, six Executive Vice President and Executive Officers and three Senior Vice President and Executive Officers.

Compensation for Directors and Executive Officers

The Company's Compensation Committee, the majority of which consists of outside Directors, sets forth the remuneration policies for Directors and Executive Officers and remuneration for individuals based on them pursuant to applicable provisions of the Companies Act.

Policy on the determination of Compensation of Directors and Executive Officers

Method of Determination of Policy

The Company's Compensation Committee sets forth the policy on the determination of the amount of compensation, etc. of each Director and Executive Officer pursuant to applicable provisions of the Companies Act.

Basic Policy

Compensation for Directors and Executive Officers shall be determined in accordance with following basic policy.

  • Compensation shall be such that it enables the company to attract necessary personnel to achieve an improvement in corporate value through global business growth.
  • Compensation shall be commensurate with roles and responsibilities of each Directors and Executive Officers.
  • Compensation for Directors shall be such that it enables them to exercise functions of supervision of management effectively.
  • Compensation for Executive Officers shall be such that it enables them to contribute to sustained improvement in corporate value through the execution of business and employs an appropriate balance between short-term performance and medium and long-term performance.
  • The level of compensation shall be determined taking into account compensation levels at other companies as well as economic and market trends.
  • The Compensation Committee utilizes external experts to gain expert advice and an objective viewpoint, if necessary, for considering the details and amounts of compensation.

Compensation Structure

Matters relating to Directors

Compensation for Directors will consist of a basic remuneration and a year-end allowance.

  • Basic remuneration will be decided by adjusting basic amount that reflect full-time or part-time status, committee membership and position, travel from place of residence, etc.
  • Year-end allowance will be a pre-determined amount equivalent to about 20% of the Director's annual income based on basic remuneration, although this amount may be reduced depending on financial results. A Director concurrently serving as an Executive Officer will not be paid compensation as a Director.

Matters relating to Executive Officers

Compensation for Executive Officers will consist of a basic remuneration, a performance-linked compensation and a medium and long-term incentive compensation. The higher position Executive Officers hold, the higher proportion of variable pay (the sum of performance-linked compensation and medium and long-term incentive compensation, except basic remuneration as fixed pay) will be set to the total annual compensation.

  • Basic remuneration will be decided by adjusting a basic amount to reflect the results of an assessment. The basic amount is set in accordance with the relevant position.
  • Performance-linked compensation will be decided within the range of 0 to 200% of a basic amount by adjusting that amount to reflect financial results and individual performance. The basic amount is set within the range of about 25 to 35% of the total annual compensation of each Executive Officer in accordance with the relevant position.
  • Medium and long-term incentive compensation will be stock options as stock-based compensation with share price conditions (stock acquisition rights with the strike price of one yen), the number of which to be granted will be determined within the range of about 10 to 40% of the total annual compensation of each Executive Officer in accordance with the relevant position. The number of stock acquisition rights that may be exercised will be determined within the range of 0 to 100% of the stock acquisition rights granted in accordance with the conditions. As for expatriates, cash award based on the value of the Company's share price with the similar conditions will be substituted for the stock options.

Miscellaneous

It was decided at the Compensation Committee meetings held on December 18, 2007 and March 26, 2008 that the compensation structure for Directors and Executive Officers will be re-examined starting with the compensation for fiscal 2008 and that the retirement allowance will be abolished. The payment of retirement allowance to Directors and Executive Officers due to the abolition of the retirement allowance system will be in an amount determined by the Compensation Committee at the time of the retirement of a relevant Director or Executive Officer.

Amount of compensation

Compensation for Directors and Executive Officers for the fiscal year ended March 31, 2018, is as follows:

Category Total amount of compensation, etc.
(Millions of yen)
Total amount of each type
(Millions of yen)
Number
of
persons
Medium and long-term incentive compensation
Basic remuneration Year-end allowance and performance-linked compensation
Directors
(excluding
outside
directors)
75*1 69*1 6 4*2
Outside directors 308*2 290*2 17 10
Executive officers 2,569 1,386 982 200 33
Total 2,953 1,747 1,005 200 47
  • *1 The amount of compensation to Directors (excluding outside Directors) includes the basic remuneration for two Directors, who retired due to expiration of their term of office at the close of the 147th Annual General Meeting of Shareholders held on June 22, 2016.
  • *2 The amount of compensation to Outside Directors includes the basic remuneration for one outside director, who retired due to expiration of his term of office at the close of the 147th Annual General Meeting of Shareholders held on June 22, 2016
  • *3 The number of Directors indicated excludes two Directors who concurrently serve as Executive Officers.

In addition, Directors or Executive Officers whose compensation from the Company and its subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:

Name Company Category Total amount of each type (Millions of yen) Total amount of compensation, etc.
(Millions of yen)
Basic remuneration Incentive Year-end allowance
Short-term Medium and Long-term*5
Toshiaki
Higashihara
Hitachi, Ltd.
(The Company)
Executive Officer*6 102 70 37 - 209
Ryuichi
Kitayama
Hitachi, Ltd.
(The Company)
Executive Officer 57 40 10 - 110
Hitachi High-Technologies Corporation
(Consolidated subsidiary)
Director 1 - - -
Hitachi Capital Corporation
(Consolidated subsidiary)*7
Director 1 - - -
Yutaka
Saito
Hitachi, Ltd.
(The Company)
Executive Officer 49 39 10 - 113
Hitachi Kokusai Electric Inc.
(Consolidated subsidiary)
Director 7 - - 1
Hitachi Construction Machinery Co., Ltd.
(Consolidated subsidiary)
Director 5 - - 1
Koji
Tanaka
Hitachi, Ltd.
(The Company)
Executive Officer 57 40 10 - 112
Hitachi Chemical Company, Ltd.
(Consolidated subsidiary)
Director 3 - - 0
Toshikazu
Nishino
Hitachi, Ltd.
(The Company)
Executive Officer 61 41 10 - 113
Alistair Dormer*8 Hitachi Rail Europe Ltd.
(Consolidated subsidiary)*9
Executive Chairman and CEO 67 40 38 - 146
Hiroaki
Nakanishi
Hitachi, Ltd.
(The Company)
Executive Officer*6 97 67 24 - 189
  • *4 Compensations from the Company and consolidated subsidiaries paid depending on financial results and individual performances in the short term are collectively called.
  • *5 Medium and long-term incentive compensation for Executive Officers of the Company is stock options as stock-based compensation.
  • *6 Although concurrently serving as Director for the fiscal year ended March 31, 2017, Messrs. Toshiaki Higashihara and Hiroaki Nakanishi did not receive compensation as Director.
  • *7 The amount of compensation from Hitachi Capital Corporation is only for the period for which the company was a consolidated subsidiary of the Company in the fiscal year ended March 31, 2017.
  • *8 Although concurrently served as Executive Officer of the Company for the fiscal year ended March 31, 2017, Mr. Alistair Dormer did not receive compensation as Executive Officer of the Company.
  • *9 The basic remuneration paid in Sterling pounds is converted into yen using average exchange rate for each quarter of the fiscal year ended March 31, 2017. The incentives paid in Sterling pounds are converted into yen using average exchange rate for the fiscal year ended March 31, 2017.

Internal Control over Financial Reporting

To ensure the reliability of the financial reporting for the Group as a whole, the Hitachi Group has documented control procedures, from company-level controls to process-level controls, in accordance with policies determined by the J-SOX Committee. In regard to assessment of the internal control over financial reporting, Hitachi is advancing the establishment of systems for objective assessment at each business unit and major Group company. The J-SOX Committee’s office summarizes the assessment results of each company to confirm the effectiveness of internal control on a Group-wide, consolidated basis.

Hitachi Group Internal Control Assessment Framework (As of April 1, 2017)

Corporate Governance Guidelines