Konica Minolta 2008 Annual Report Download - page 31

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Priorizing corporate governance as an important management
matter, Konica Minolta has separated management supervision
and execution while reinforcing these roles to ensure fairness,
transparency, and efficiency.
We separated oversight and implementation by deploying
a company-with-committees system that includes the Audit,
Nominating, and Compensation committees, which are integral
to the Board of Directors. These bodies help us operate more
transparently and fairly and accelerate decision-making.
We have seven non-executive directors on the 13-person
Board to ensure proper supervision. These directors include four
outside directors. Of the three internal non-executive directors,
two also serve on committees and the third chairs the Board.
The other six Board members have executive positions, including
the President and CEO, executive officers in charge of corpo-
rate strategy, accounting and finance, technology strategy, and
compliance, and the Group’s largest operating company.
All committee chairs are outside directors, rounding out a very
advanced and transparent governance structure. Attendance
among the four outside directors at the 12 Board meetings and
three committees in the fiscal year ended March 2008 averaged
more than 90%.
The Nominating Committee chooses outside director
nominees for the Board, assessing their professional records
and visions, ensuring that they have done no material busi-
ness with the Group and are strictly independent from the
Company. Other requirements are that candidates can devote
sufficient time to Board and committee duties. The Nominating
Committee’s rules encompass independence standards for
outside directors and a principle limiting their terms.
We have nominated outside directors with top corporate
management experience to date, as we consider such people
ideal for monitoring executives and for being able to make
important management decisions on the Board.
The Compensation Committee maintains a system for direc-
tors and executive officers to attract and retain talented people
and better motivate them to consistently improve results over
the medium and long terms to satisfy shareholders and opti-
mize Group value. Inside director compensation comprises
base salary and stock compensation to encourage long-term
performance. The remuneration of outside directors is base
salary only. Executive officer incentives intentionally exceed
the average for Japanese companies. The target composition
of executive officer packages is 60% in base salary, 20% in
short-term performance-based cash bonus, and 20% in stock
compensation. We maintain a guideline on own shareholdings
for internal directors and executive officers.
The Audit Committee evaluates whether executive man-
agement decisions are legal and efficient, reviews internal
control systems, and assesses and chooses accounting auditors.
The Audit Committee Office provides assistance and functions
as a secretariat.
The Corporate Audit Division, Risk Management Committee,
and Compliance Committee are integral to the internal control
system. Each body reports regularly to the Audit Committee.
Each must swiftly inform the committee of pressing issues
and responses and otherwise act at the committee’s behest.
The Audit Committee can send representatives to executive
meetings or other key gatherings. Those people can request
executive officers overseeing the Corporate Audit Division,
Risk Management Committee, and Compliance Committee to
conduct research or prepare reports.
Company auditors at all Group business companies and
common function companies keep in close contact with the
work of the Audit Committee.
The Audit Committee, Corporate Audit Division, and all the
other company auditors collaborate to improve their quality and
efficiency without compromising their independence.
After completing company internal auditing, the Corporate
Audit Division sends its audit report to the CEO and the Audit
Committee. The Audit Committee, the Corporate Audit Division,
and company auditors convene a quarterly Konica Minolta Group
Audit Liaison Conference to share information, knowledge, and
experiences to enhance auditing accuracy.
The Audit Committee can require the Corporate Audit Division
to audit a specific subject.
We instituted the Konica Minolta Group Compliance
Guidelines to ensure adherence to laws, regulations, corpo-
rate ethics and internal regulations in all business activities,
thereby boosting corporate value and securing stakeholder
trust. We also have in place a compliance officer and supporting
department, maintain a Compliance Committee, and set up a
Group compliance hotline.
Other initiatives to ensure transparent governance and
improve corporate and shareholder value include directors’
annual reviews of all Board and committee activities and discus-
sions between outside directors, the Chairman of the Board,
and the President and CEO.
Corporate Governance