Canon 2010 Annual Report Download - page 12

CANON ANNUAL REPORT 201010
solely of independent directors. Thus, the Company’s Board of
Directors currently does not include any non-management
directors.
2. Committees
Under the Corporation Law, the Company may choose to:
(i) have an audit committee, nomination committee and
compensation committee and abolish the post of corporate
auditors; or
(ii) have a board of corporate auditors.
The Company has elected to have a board of corporate
auditors, whose duties include monitoring and reviewing the
management and reporting the results of these activities to
the stockholders or Board of Directors of the Company. While
the NYSE Corporate Governance Rules provide that U.S. listed
companies must have an audit committee, nominating com-
mittee and compensation committee, each composed en-
tirely of independent directors, the Corporation Law does not
require companies to have specifi ed committees, including
those that are responsible for director nomination, corporate
governance and executive compensation.
The Company’s Board of Directors nominates candidates
for directorships and submits a proposal at the General
Meeting of Shareholders for stockholder approval. Pursuant
to the Corporation Law, the stockholders then vote to elect
directors at the meeting. The Corporation Law requires that
the total amount or calculation method of compensation for
directors and corporate auditors be determined by a resolution
Other Corporate Governance Committees
The Corporate Ethics and Compliance Committee, in addition to
the Disclosure Committee, is the key body of Canon’s manage-
ment committees. The Corporate Ethics and Compliance Com-
mittee discusses and approves corporate ethics and compliance
policies while monitoring the implementation of these policies.
The Disclosure Committee works to ensure strict compliance
with disclosure regulations as prescribed by stock exchanges.
Compliance
Shortly after its founding, Canon established the San-Ji, or
“Three Selfs” spirit—namely: “self-motivation,” or taking the
initiative and being proactive in all things; “self-management,”
or conducting oneself responsibly and being accountable for
all one’s actions; and “self-awareness,” or understanding one’s
situation and role in it. These principles remain the basis for
employee education and provide the platform for the Canon
Group Code of Conduct.
Recognizing the importance of safeguarding personal infor-
mation, Canon does its utmost to protect this valuable form of
information asset in the course of fulfi lling its social responsibili-
ties. With the aim of keeping its employees informed and aware,
the Company conducts e-learning sessions as part of its per-
sonal information protection education programs every year.
Disclosure
Canon makes every effort to disclose information on its man-
agement and business strategies as well as its performance
results to all stakeholders in an accurate, fair and timely man-
ner. To this end, Canon holds regular briefi ngs and posts the
latest information on its website together with a broad range of
disclosure materials.
Canon has formulated its own Disclosure Guidelines and
established the Disclosure Committee, which makes decisions
regarding information disclosure, including necessity, content
and timing. The Disclosure Committee makes such decisions
Section 303A of the New York Stock Exchange (the “NYSE”)
Listed Company Manual (the “Manual”) provides that compa-
nies listed on the NYSE must comply with certain corporate
governance standards. However, foreign private issuers
whose shares have been listed on the NYSE, such as Canon
Inc. (the “Company”), are permitted, with certain exceptions,
to follow the laws and practices of their home country in
place of the corporate governance practices stipulated under
the Manual. In such circumstances, the foreign private issuer
is required to disclose the signifi cant differences between the
corporate governance practices under Section 303A of the
Manual and those required in Japan. A summary of these
differences as they apply to the Company is provided below.
1. Directors
Currently, the Company’s Board of Directors does not have
any director who could be regarded as an “independent
director” under the NYSE Corporate Governance Rules for U.S.
listed companies. Unlike the NYSE Corporate Governance
Rules, the Corporation Law of Japan (the “Corporation Law”)
does not require Japanese companies with a board of corpo-
rate auditors such as the Company, to appoint independent
directors as members of the board of directors. The NYSE
Corporate Governance Rules require non-management
directors of U.S. listed companies to meet at regularly sched-
uled executive sessions without the presence of manage-
ment. Unlike the NYSE Corporate Governance Rules, however,
the Corporation Law does not require companies to imple-
ment an internal corporate organ or committee comprised
Signifi cant Differences in Corporate Governance Practices between Canon and U.S. Companies Listed on the NYSE