Hitachi 2009 Annual Report Download - page 30

Corporate Governance
Hitachi, Ltd. (the “Company”) and its 16 publicly owned group
companies have adopted the Committee Systems under the
Company Law of Japan. By demarcating responsibilities for man-
agement oversight and those for the execution of business opera-
tions, Hitachi is working to create a framework for quick business
operation, while making management highly transparent by having
outside directors on the Board of Directors. In terms of the basic
policy for corporate governance of the Hitachi Group, Hitachi,
Ltd.’s Standards of Corporate Conduct is positioned as the basis
for the Hitachi brand and CSR activities. Underpinned by this basic
policy, Hitachi aims to foster shared values throughout the group
as well as a shared understanding of the social responsibilities a
corporation must fulfill. In accordance with this policy, some of
Hitachi’s directors and executive officers serve concurrently as
directors and committee members at group companies. In addi-
tion, through the Hitachi Group Headquarters, Hitachi is strength-
ening integrated management of the group, improving
management oversight of group companies and executing busi-
ness strategies formulated to enable the Hitachi Group to demon-
strate its collective strengths. The goal is higher corporate value.
Board of Directors
The Board of Directors determines basic management policies and
supervises executive officers in the performance of their duties
while entrusting to executive officers considerable authority to
make decisions with respect to Hitachi’s business affairs. As of
June 23, 2009, the Board of Directors was made up of 12 direc-
tors, five of whom are from outside Hitachi. Two directors serve
concurrently as executive officers. The Chairman of the Board
does not concurrently serve as an executive officer. Executive
officers execute Hitachi’s business affairs and decide on matters
pertaining to the same in accordance with the division of duties
stipulated by resolutions of the Board of Directors.
Within the Board of Directors, there are three statutory commit-
tees—the Nominating Committee, Audit Committee and Compen-
sation Committee—with outside directors accounting for the
majority of members of each committee. The Board of Directors
met on 9 separate occasions during the fiscal year ended March
31, 2009, and the attendance rate of directors at those meetings
was 96%. Full-time staff, who do not take orders from executive
officers, have been assigned to assist the activities of the Board of
Directors and these committees.
(1) Nominating Committee
The Nominating Committee has the authority to decide on the
particulars of proposals submitted to the General Meeting of
Shareholders for the appointment and dismissal of directors. The
Nominating Committee consists of four directors, three of whom
are outside directors.
The Nominating Committee met 6 times during the fiscal year
ended March 31, 2009.
(2) Audit Committee
The Audit Committee audits the performance of directors and
executive officers and has the authority to decide on proposals
submitted to the General Meeting of Shareholders for the appoint-
ment and dismissal of accounting auditors. The Audit Committee
consists of five directors: three outside directors and two other
directors who are full-time Audit Committee members.
The Audit Committee met 12 times during the fiscal year ended
March 31, 2009.
(3) Compensation Committee
The Compensation Committee has the authority to determine remu-
neration policies for directors and executive officers and remunera-
tion for individuals based on them. The Compensation Committee
consists of four directors, three of whom are outside directors.
The Compensation Committee met 8 times during the fiscal
year ended March 31, 2009.
Director and Executive Officer Compensation
The compensation of directors and executive officers is set com-
mensurate with the ability required of, and the responsibilities to be
borne by these executives, after taking into consideration compen-
sation packages at other companies.
The compensation of directors consists of a monthly salary and
a year-end allowance. The year-end allowance is a pre-determined
amount equivalent to about 20% of the director’s annual income
based on the monthly salary, although this amount may be
reduced depending on the Company’s performance. Directors
serving concurrently as executive officers are not paid compensa-
tion as directors.
The compensation of executive officers consists of a monthly
salary and a performance-linked component. The performance-
linked component is set within a range equivalent to about 30% of
the executive officer’s annual income, adjusted based on Company
and individual performance.
The compensation structure for directors and executive officers
was re-examined starting with the compensation for the fiscal year
ended March 31, 2009 and the retirement allowance was abolished.
Director and executive officer compensation for the fiscal year
ended March 31, 2009 was as follows:
Compensation for Directors and Executive Officers
Number Amount
(Millions of yen)
Directors
(Outside directors)
13
(5)
408
(95)
Executive officers 26 1,133
Total 39 1,542
Notes 1. The number of directors excludes the two directors who serve concurrently as
executive officers.
2. The compensation of directors includes the monthly salary of the two directors who
retired due to the expiration of their terms in office at the close of the 139th Ordinary
General Meeting of Shareholders held on June 20, 2008, for their terms of office in
the fiscal year ended March 31, 2009.
CORPORATE GOVERNANCE
28 Hitachi, Ltd.
Annual Report 2009