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Amended as of December, 2020
The Corporate Governance Guidelines are adopted by the Board of Directors ("the Board") and related Committees of Hitachi, Ltd. ("the Company"), to provide the framework for the corporate governance of the Company in addition to the Board of Directors Regulations and the Regulations of each Committee.
The Board and the Committees continue to assess the appropriateness and effectiveness of these guidelines and amend them when necessary.
The Board shall seek to sustainably enhance corporate value and the shareholders' common interests.
In order to achieve the objective above, the Board shall approve basic management policy for the Hitachi Group and supervise the execution of the duties of executive officers and directors.
"Basic management policy" includes medium-term management plan and annual budget compilation. The Board shall focus 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.
Each director has a duty of loyalty and a duty of confidentiality to the Company inside and outside the Board in order to enable the Board to fulfill the function above.
Given the need for diversity of the Board views and efficiency of the Board, the number of directors shall be no more than 20.
The Nominating Committee shall consider the optimal size of the Board following the policy described above in deciding the matters relating to a proposal concerning election and removal of directors to be submitted to the General Meeting of Shareholders.
In nominating a director candidate, the Nominating Committee shall consider:
In principle, a person will not be nominated as a director candidate after his or her 75th birthday. However, in special circumstances, a person over 75 years old may be nominated as a director candidate if the Nominating Committee approves. Also, in principle, the Nominating Committee will not nominate a person as an independent director candidate if a person has reached 10 years of total tenure. However, in special circumstances, a person with the total tenure of 10 years or more may be nominated as an independent director candidate, but even in this case, a person with the total tenure of 12 years or more can no longer be nominated as an independent director candidate.
In nominating a director candidate, the Nominating Committee shall consider that:
The Nominating Committee considers an outside director to be independent unless:
Directors are encouraged not to serve as more than 4 listed companies' directors, corporate auditors, or executive officers in addition to the Company's director because they are expected to invest the time necessary to understand the Company's business, participate in and prepare for the Board's meetings.
Directors shall advise the director as set forth in the Article 8 when receiving an invitation to serve as an officer from other companies.
Directors are encouraged to hold the Company's stock through Hitachi Group Directors' and Officers' Shareholding Association after being elected as directors.
By resolution of the Board, a director who convenes and presides over the meeting of the Board shall be selected.
The director as set forth in the preceding paragraph shall aim to enhance the quality of debates among the Board and to operate the Board effectively and efficiently.
Documents related to agenda items will be distributed sufficiently in advance to enable directors to actively participate in discussion at the meeting. Very sensitive subjects may be discussed without distribution of the materials in advance.
Directors shall observe strict confidentiality with regard to the content of discussions and documents.
The Board and the Committees may seek the advice from independent advisors when necessary.
The Company shall provide directors with an orientation upon assuming office as well as other opportunities, when necessary, in order for them to acquire knowledge, such as of the Hitachi Group's business, necessary for discharging their duties as directors.
The Board shall evaluate its effectiveness annually.
The Compensation Committee shall set forth the policy on the determination of the amount of compensation, etc. of each director and executive officer.
The above-mentioned policy is periodically reviewed by the Compensation Committee.
The Board shall continuously supervise the succession planning of the Chief Executive Officer.
The Board shall, after careful deliberation, determine the selection and removal of the Chief Executive Officer, based on the proposal by the Nominating Committee, in consideration of the following matters:
All directors and executive officers shall not pursue interests of themselves or third parties that would constitute a real or perceived conflict of interest with the Company.
Even without intentions to pursue interests described above, all directors and executive officers shall obtain approval by the Board resolution to conduct any transactions that would constitute a conflict of interest or competition with the Company stipulated by the Companies Act of Japan.
Directors and executive officers who have their personal or professional interests in the above-mentioned transactions may not participate in the vote in the Board resolution.