Nikon 2012 Annual Report Download - page 23

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NIKON CORPORATION ANNUAL REPORT 2012
CORPORATE GOVERNANCE AND
CSR INITIATIVES
Corporate Governance Organization
• Management System
Nikon manages its business through an in-house company
system that provides an integrated business structure
incorporating the Group companies. Nikon adopted the
Operating Officer system to allow management to be more
responsive to changes in the business environment. A
performance evaluation system was also brought in to
conduct a results-based evaluation and to strengthen the
relationship between performance and remuneration.
• The Board of Directors and Executive Committee
The Board of Directors makes prompt decisions on matters
of importance to the Nikon Group and monitors the exercise
of duties by directors. Two independent outside directors
have been invited to sit on the Board in order to further
strengthen the supervisory function.
The Executive Committee deliberates on and resolves
major issues regarding the general operation of company
business, internal controls, and management, in accordance
with the basic management policies as determined by the
Board of Directors. This body also receives reports from
each department regarding critical matters.
• Compensation Committee
The Compensation Committee, which includes prominent
figures from outside the Nikon Group, was set up to raise
the objectivity and transparency of matters related to
directors’ compensation and to ensure that decisions on
remuneration are linked to the corporate financial results.
The obligations of this committee include examining and
proposing guidelines for directors' compensation and other
related systems.
• Corporate Auditors and the Board of Corporate Auditors
The members of the Board of Corporate Auditors periodically
attend important meetings, such as those of the Board of
Directors and the Executive Committee, in order to supervise
the execution of duties by the directors, and to monitor
and audit corporate management and the directors. Three
independent corporate auditors from outside the Company
have been invited to sit on the Board.
Corporate Governance
The Nikon Group, in a global business environment, is strengthening corporate governance, improving
its internal control systems and solidifying its relationship of trust with stakeholders by enhancing
management efficiency and transparency.
Internal Control System
The Nikon Group's basic policy on its internal control system
was established in accordance with Japan's Corporate
Law and its enforcement regulations, enacted in May 2006,
in order to create a structure for ensuring appropriate
business operations.
The Internal Control Reporting System, based on the
Japanese Financial Instruments and Exchange Law
(J-SOX), was introduced in April 2008 with the aim of
ensuring the credibility of financial reports. In accordance
with this law, Nikon has established and implemented
internal controls, to ensure the reliability of financial
reporting, that complies with the basic internal control
framework specified by the Standards of the Financial
Services Agency and other criteria.
The Internal Audit Department, independent from other
operational departments and under the direct control of
the president, conducts separate evaluations based on
J-SOX, as well as audits of the Nikon Group’s systems and
their operational status, such as whether departments
are conducting operations in accordance with laws,
internal regulations and other rules, and whether risks
are effectively managed. The department then submits
proposals for improvement.
In addition, internal audit sections have been established
for each region to audit overseas Group companies. These
sections perform internal audits and J-SOX evaluations of
their local companies from an independent position, while
Nikon's internal audit sections coordinate these activities.
In order to further improve the quality of internal audits of
overseas Group companies, we also established an internal
audit section for the Americas in a North American holding
company in June 2011. In this way we are making efforts
to construct an internal audit system that covers all four
regions worldwide, namely Japan, Europe, Asia–Oceania
and the Americas.