Konica Minolta 2009 Annual Report Download - page 23

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In order to avoid potential compromises to their independence,
the Nominating Committee’s rules limit the terms of outside
directors to, in principle, four years.
The Compensation Committee maintains a system for
directors and executive officers to attract and retain talented
people and better motivate them to consistently improve results
over the medium and long terms, thus satisfying shareholders
and optimizing Group value. Inside director compensation
comprises base salary and stock options for stock-linked
compensation to encourage long-term performance. The com-
pensation of outside directors is base salary only. The target
compensation of executive officer packages is 60% in base
salary, 20% in short-term performance-based cash bonus, and
20% in stock options for stock-linked compensation. The com-
mittee maintains a scheme in which directors and executive
officers cannot exercise stock options while serving but can
do so between one and six years after stepping down. This
system encourages a medium- to long-term management
perspective, which fosters a management orientation toward
increases in corporate value and shareholder value.
The Audit Committee evaluates whether executive manage-
ment decisions are legitimate and proper, and reviews internal
control systems. This committee comprises five non-executive
directors, of whom three are outside Board members.
Employees independent of executive management run the
Audit Committee Office, which assists this committee.
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 meet-
ings or other key gatherings as well as request executive offi-
cers overseeing the Corporate Audit Division, Risk Management
Committee, and Compliance Committee to conduct research or
prepare reports.
The Audit Committee, Corporate Audit Division, and auditors
of business companies and common function companies*
collaborate to improve their quality and efficiency without
compromising their independence.
After completing internal auditing, the Corporate Audit
Division sends its audit report to the CEO and the Audit
Committee. That 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, corporate
ethics, and internal regulations in all business activities, thereby
boosting corporate value and securing stakeholder trust. We
also have a compliance officer and supporting department,
maintain a Compliance Committee, and set up a Group
compliance hotline.
The Japanese Financial Instruments and Exchange Law
was passed in June 2006 and new rules concerning internal
controls were implemented in April 2008 in order to prevent
improper corporate accounting and ensure the reliability of
financial reporting.
The Konica Minolta Group prepared the necessary
documentation and valuation, and implemented remedial
actions in preparation for full-scale implementation of the
Japanese Financial Instruments and Exchange Law from
FY March 2009. It has already prepared a formal report on
internal controls, and has undergone an internal control audit
by external auditors.
Such efforts will equip Konica Minolta to maintain a highly
transparent corporate governance structure and thereby
enhance corporate value and shareholder value.
* All of the Group’s business companies, common function companies, and
their subsidiaries have adopted the corporate auditor system.