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Hitachi

Hitachi Transport System

Corporate Governance

Our corporate governance philosophy is that, along with efforts to increase management transparency and efficiency, we must improve corporate value and achieve sustainable development through business activity based on compliance and ethical conduct. We will follow these ideas as we establish a healthy, highly transparent corporate governance system that will enable us to nimbly respond to changes in the business environment. As part of this effort, the Company has been using "Nominating committee, etc. system" in which management oversight and business execution functions are separate.
Under the system, substantial authorities related to business execution are delegated from the Board of Directors to executive officers, who make prompt decision making about business restructuring and strategic investments. Executive Committee meeting consisting of all executive officers is held once a month in general to discuss material subjects which have impacts on the Company and the entire Group and clarify responsibilities and authorities of the executive officers. Three committees, Nominating Committee, Audit Committee, and Compensation Committee are set up within the Board of Directors, with majority of members consisting of outside directors, to segregate duties and strengthen oversight function. We enacted our "Corporate Governance Guidelines" to provide the basic views, framework and charter of our corporate governance.

Corporate Governance System

As of April 1, 2022

Board of Directors and Committees

Board of Directors determines the Company's basic management policy and supervises execution of duties by directors and executive officers (also passes a resolution by focusing on specific discussions on the Mid-term Management Plan and fiscal budget in addition to matters to be resolved stipulated by laws and regulations, the Articles of Incorporation and the Board of Directors regulations). The management supervision function, Board of Directors considers the subjective opinions of outside directors facilitates both monitoring of the Board of Directors and transparency of management, we have also established three committees overseeing nomination, auditing, and compensation respectively.

[Standards for Appointment Outside Directors]

Outside directors to whom none of the undermentioned standards applied will be appointed as independent officer without the possibility of any conflict of interest with general shareholders.

[Criteria for Independence of Outside Directors]

(a)
A director, corporate auditor, accounting advisor, executive officer, corporate officer, manager and any other person equivalent thereto of a corporation or organization that holds 10% or more of the outstanding shares of the Company, either directly or indirectly, as of the end of the previous fiscal year (collectively, "Related Party"), or those who had been a Related Party in the last ten years.
(b)
(a)A Related Party of subsidiaries of corporation or organization described in (a).
(c)
A Related Party of a corporation or organization where 10% or more of its outstanding shares are owned, either directly or indirectly, by the Company as of the end of the previous fiscal year.
(d)
A Related Party of a company whose transaction volume with the Company accounts for 2% or more of the Company's consolidated service revenues for the previous fiscal year, or those who had been a Related Party in the last five years of such company.
(e)
A Related Party of a business partner that receives payments from the Company and its consolidated subsidiaries that account for 2% or more of such company's consolidated service revenues for the previous fiscal year, or those who had been a Related Party in the last five years of such business party.
(f)
A Related Party of a financial institution from which the Company borrows the amount that accounts for 2% or more of the Company's consolidated total assets, or those who had been a Related Party in the last five years of such financial institution.
(g)
A consultant, or accounting or legal professional who receives cash or other economic benefits equal to 10 million yen or more per year (average annual amount if the payment covers multiple fiscal years) in the last five years in addition to Director's remuneration from the Company.
(h)
A person who received donation or financial assistance equal to 10 million yen or more per year from the Company during the previous fiscal year, or those who belong to the recipient organization.
(i)
A Related Party of a company that accepts director(s) or auditor(s) from the Company or its consolidated subsidiaries, or its parent company or consolidated subsidiaries.
(j)
Spouses or relatives by blood or affinity within the second degree of kinship of those described in (a) through (i) (excluding those who are not in an important position such as officer).
(k)
Spouses or relatives by blood or affinity within the second degree of kinship of an executive director, executive officer, corporate officer, or manager or employees of the Company or its consolidated subsidiaries ("Executive"), or those who had been an Executive in the last ten years, and a Related Party of the Company or its consolidated subsidiaries.

Roles of each committee

Nominating CommitteeElects candidates for director (elects appropriate candidates, considering all relevant factors including their past performance and personality)
Audit CommitteePerforms audit of execution of duties by directors and executive officers and prepares an audit report (performs audit of execution of duties by directors and executive officers from the viewpoint of legal compliance and appropriate performance of duties in cooperation with independent auditors and internal audit department, with an aim of establishing a high-quality corporate governance system to maintain social trust)
Compensation CommitteeDetermines compensation, etc. of directors and executive officers (determines the compensation level, etc. for each position commensurate with the ability and responsibilities required of the Company's directors and executive officers and the Company's performance, taking into consideration the compensation level of other companies.)

Executive Committee

Executive Committee investigates important matters concerning operational execution affecting on the Company and the entire group. Executive committee consists of all executives and those who are especially nominated by president and is held regularly (held monthly in principle, additional sessions held as necessary).

Executive Officers

Executive officers execute operations except those Executive Committee considers. Authority has largely being transferred from the board. This has enabled rapid decision-making.

Compensation, etc. of Directors and Executive Officers

Compensation Committee's Policy for Determining the Amount of Compensation, etc. of Directors and Executive Officers

As the HTS Group positions officers' compensation, etc. as one of the important pillars underpinning corporate governance, we have in place the following compensation governance to ensure that our officers will work toward our brand slogan "Taking on the Future" and our business concept "LOGISTEED" under our corporate philosophy and operate the compensation program according to our basic policy on the compensation plan for officers to deliberate and decide their compensation, etc.

  1. Basic policy on the compensation plan for officers
    • Ensure that the plan is designed to reflect the evaluation for the Company's social position while always keeping in mind the corporate philosophy "to deliver high-quality services that will help make the world a better place for people and nature for generations to come"
    • Ensure that the plan is designed to reflect the evaluation for aggressive challenges to create "new value" and realize "dynamic growth" based on Smart Logistics and collaborative innovation strategies under our business concept "LOGISTEED"
    • Ensure that the plan is designed to appropriately reward highly capable management personnel who can contribute to the Company's sustainable development and an increase in long-term corporate value
    • Ensure that the plan is designed to motivate officers to achieve performance targets, reflect potential risks associated with efforts for such achievement and function as a sound incentive toward the Company's sustainable growth
    • Ensure that the plan is designed to encourage the management to work together toward increasing corporate value and achieving the targets of the company-wide strategies
  2. Policy on the determination of the composition ratio of performance-linked compensation and other compensation
    We determine the composition ratio of performance-linked compensation and other compensation in accordance with the basic policy on the compensation plan for officers. We benchmark our compensation levels against those of peer companies with similar business size based on the "management compensation database" compiled by the external compensation consultant every year to verify the appropriateness of our compensation levels and then determine the compensation levels, etc. for officers commensurate with the ability and responsibilities, etc. required for each position.
  3. Director compensation, etc.
    Director compensation levels are comprised of basic compensation which is fixed monetary compensation. Basic compensation reflects factors such as full-time or part-time service and position and is determined based on the deliberation at the Compensation Committee and is paid at a certain time every month. Directors who also serve as executive officers do not receive additionalcompensation, etc. as directors.
  4. Executive officer compensation, etc.
    Executive officer compensation levels are comprised of a combination of basic compensation and performance-linked compensation (annual bonus and stock compensation), and determined by reflecting executive's performance review in a base amount commensurate with his/her position. Basic compensation is paid at a certain time every month, and annual bonus is paid once a year at a certain time, and stock compensation is paid at a certain time after the evaluation period of three fiscal years. The composition ratio of executive officers' compensation, etc. by type reflects the level of management responsibility with higher ratio of performance-linked compensation for senior officers.

The amount of compensation, etc. of Directors and Executive Officers

Relationship between actual compensation and performance

Total compensation amount by officer category and total amount by type of compensation

Officer category Total amount of compensation, etc.(million yen) Total amount by type of compensation, etc.
(million yen)
Number of applicable officers
(person)
Fixed compensation Performance-based Compensation Non-monetary compensation, etc.
Directors
(Outside directors)
109
(109)
109
(109)
-
(-)
-
(-)
7
(7)
Executive Officers 799 504 187 108 19
Total 908 613 187 108 26

(Note)

  1. The number of eligible officers for directors' compensation, etc. excludes two directors who serve concurrently as executive officers.
  2. The amount of non-monetary compensation, etc. is based on the Performance-based Compensation for executive officers recorded in the current fiscal year.
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