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Hitachi and its listed subsidiaries are "Companies with Nominating Committee, etc." defined 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 nimble operations, 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.
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 Mid-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 20, 2018, the Board of Directors was made up of 12 Directors, and two of them concurrently serve as executive officers. Hitachi aims to reinforce the oversight function of the Board of Directors, of which eight independent 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 independent outside directors.
Within the Board of Directors, there are three statutory committees- the Nominating Committee, the Audit Committee, and the Compensation Committee-with independent outside directors accounting for the majority of members of each committee. The Board of Directors meetings were held on 9 days during the fiscal year ended March 31, 2018, and the attendance rate of Directors at these meetings was 97%. 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.
The Nominating Committee has the authority to determine 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 independent outside Directors.
The Nominating Committee meetings were held on 8 days during the fiscal year ended March 31, 2018.
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 six directors, including four independent outside directors and one standing Audit Committee member.
The Audit Committee meetings were held on 14 days during the fiscal year ended March 31, 2018.
The Compensation Committee has the authority to determine remuneration policies for directors and executive officers and remuneration for individuals (including amounts of remuneration) based on them. The Compensation Committee consists of four Directors, three of whom are outside Directors.
The Compensation Committee meetings were held on 4 days during the fiscal year ended March 31, 2018.
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 20, 2018, Hitachi has 35 executive officers.
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 discussion from diverse viewpoints. This committee consists of 12 members as of June 20, 2018: President & CEO, five executive officers serving as executive vice presidents, five executive officers serving as senior vice presidents, and one executive officer serving as vice president.
The Compensation Committee, of whose members more than half are independent outside directors, sets forth the policy on the determination of compensation details for directors and executive officers and, based on this policy, the amount of compensation, etc., of each director and executive officer, pursuant to applicable provisions of the Companies Act.
Compensation for directors and executive officers shall be determined in accordance with following basic policy.
Compensation for directors consists of a basic remuneration and a year-end allowance.
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 the executive officers holds, the higher proportion of variable pay (the sum of the performance-linked compensation and the medium- and long-term incentive compensation, not including basic remuneration as fixed pay) is as a portion of total annual compensation.
The compensation structure for directors and executive officers was re-examined starting with compensation for the fiscal year ended March 31, 2009, and that the retirement allowance was abolished.
To ensure the reliability of the financial reporting, the Group develops and uses control documents ranging from company-level to business process controls based on the guidelines determined by our J-SOX Committee.
Business units within Hitachi, Ltd. and major Group companies have developed mechanisms to objectively perform assessments. The J-SOX Committee office collects the results of the assessments performed by each business unit and company, and assessed the effectiveness of internal control across the entire Group.