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Hitachi

Hitachi Transport System

CSR Management

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 June 18, 2019

Corporate Governance System

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 five years.
(b)
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 commitee

  • Nominating Committee…Elects candidates for director (elects appropriate candidates, considering all relevant factors including their past performance and personality)
  • Audit Committee…Performs 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 Committee…Determines 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 and process for determining the amount of compensation, etc. of directors and executive officers

  1. Decision-making on policy
    In accordance with the Companies Act as pertains to a company with a Nominating Committee, etc. System, the Compensation Committee determines compensation levels for individual directors and executive officers.
  2. Basic policy
    The Compensation Committee deliberates and determines compensation level, etc. for each position commensurate with the ability and responsibilities required of HTS executives and the Company's performance, taking into consideration the compensation level of other companies.
  3. Director compensation, etc.
    Director compensation levels are comprised of a combination of a monthly salary and an end-of-term bonus (full-time directors only). The monthly salary reflects executive-level performance and whether or not the individual is full or part-time. The end-of-term bonus is determined as the base amount predetermined at approximately 10% of the individual's annual income based on the monthly salary with an adjustment reflecting the Company's performance, subject to the Compensation Committee's deliberation. Directors who also serve as executive officers do not receive additional compensation as directors.
  4. Executive officer compensation, etc.
    Executive officer compensation levels are comprised of a combination of a monthly salary and a performance-based compensation, and determined by reflecting executive's performance review in a base amount commensurate with his/her position. Performance-based compensation is determined as the base amount set at roughly 30% to 40% of annual income with an adjustment reflecting the performance evaluation with reference to year-on-year comparison of revenues and adjusted operating income* and the results of the business operation under his/her responsibility, subject to the Compensation Committee's deliberation. We clarified our responsibility toward improvement of shareholder value by setting adjusted operating income having strong correlation with market capitalization as one of the determinant factors.
    ※.FY2018 (Results) Revenues: 708,831 million yen (1% increase YoY),
                   Adjusted operating income: 31,192 million yen (5% increase YoY)

      FY2018 (Plan)   Revenues: 710,000 million yen (1% increase YoY),
                   Adjusted operating income: 31,000 million yen (4% increase YoY)

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

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
Retirement benefits
Directors
(Excludes Outside Directors)
-
-
-
-
-
Executive Officers
530
348
183
-
15
Outside Directors
86
82
4
-
7
  1. Excludes 2 Directors who serve concurrently as Executive Officer from number of Directors paid compensation, etc.
  2. The compensation based on the resolution of the Compensation Committee for FY2018 of Directors and Executive Officers who served from April 1, 2018 to March 31, 2019 is stated.
  3. Includes compensation, etc. for the FY2018 of 1 Outside Director who retired at the conclusion of the 59th Annual General Meeting of Shareholders held on June 19, 2018.
  4. There is no one whose total amount of consolidated compensation, etc. is over 100 million yen.

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