Canon 2004 Annual Report Download - page 8

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6
Canon has been implementing various measures to improve its corporate governance. In addition
to our board of directors and board of corporate auditors, Canon Inc. has also upgrated its
system for internal auditing to promote the further development of its corporate governance.
Corporate Directors and Cross-
Company Management Strategy
Advisory Committee
There are 27 directors on the Company’s
board, as of the end of December 2004.
In order to realize a more streamlined
and efficient management decision-making
process, Canon has not adopted an
outside director system. Under the
current system, as a general rule, all
matters of importance are decided at
board and management meetings
attended by all directors. Moreover,
various cross-company management
strategy advisory committees have been
established to address important
management themes. Each committee
serves to accelerate and rationalize
the decision-making process while
supplementing and checking the
business-operations system.
Canon’s Management Systems: Our
Corporate Governance Structure
Canon, recognizing the extreme impor-
tance of bolstering management supervi-
sion functions aimed at increasing
management transparency and achieving
management objectives, has been imple-
menting various measures to improve its
corporate governance. In this manner, we
are striving to continuously elevate the
Company’s corporate value.
In creating our corporate governance
structure, we have not adopted the approach
of appointing independent, external direc-
tors for a number of reasons.
Chief
among
these is that since its founding, Canon
has
relied on Guiding Principles focusing on the
“Three Selfs” concept, known as the
“Three Js” in Japanese: Ji-hatsu, or self-
motivation to do every job right; Ji-chi,
or self-management; and Ji-kaku, or self-
awareness of one’s working environment
and responsibilities. Group employees
understand these forward-looking concepts
and put them into practice daily in their work.
We therefore believe that appointing
directors from among Canon personnel,
who have followed the same codes of
behavior and have been subject to close
scrutiny within
the Company
over many
years,
allows these carefully chosen
members
of management to implement corporate
governance effectively. Also, to assure the
functions commonly associated with outside
directors, we require all directors to undergo
a thorough program of compliance education.
Implementation of Corporate
Governance Measures
In addition to our board of directors and
board of corporate auditors, Canon Inc.
has also created an original system of
internal audit for the further development
of its corporate governance.
How Canon Is Evaluated
Canon is evaluated highly around the world. For example, Canon placed 30th in the
Fortune magazine ranking of the world’s most respected companies, issued in February
2005. This was the second consecutive time for Canon to be included among the top 50
companies in the Fortune ranking, having ranked 34th in 2004.
Canon also placed among the world’s top 100 companies in the Business Week magazine
ranking of the world’s top 1,000 companies, which was issued in July 2004. Business Week
listed Canon’s corporate value at $36.6 billion and ranked Canon as number 89. Among
Japanese companies in this ranking, we have moved from 16th in 2002 to 9th in 2003, and
then to 4th in the most recent ranking for 2004. In the ranking of the world’s most respected
companies and top managers issued by the Financial Times in November 2004, Fujio Mitarai,
President and CEO of Canon, placed 10th and Canon received a ranking of 25th.
Canon has also received high evaluations from international and domestic financial rating
agencies. Standard and Poor’s has upgraded its rating of Canon’s long-term debt to AA,
as shown at right, and Moody’s Investors Services reviewed and increased its long-term
rating from Aa3 to Aa2 in 2004.
CORPORATE MANAGEMENT
Current ratings are as follows: