Canon 2011 Annual Report Download - page 28

26 MANAGEMENT SYSTEM>CORPORATE GOVERNANCE
OTHER COMMITTEES
The Corporate Ethics and Compliance Committee, in
addition to the Disclosure Committee, is the key body
of Canonǯs management committees. The Corporate
Ethics and Compliance Committee discusses and
approves corporate ethics and compliance policies
while monitoring the implementation of these policies.
The Disclosure Committee works to ensure strict com-
pliance with disclosure regulations as prescribed by
stock exchanges.
COMPLIANCE
Shortly after its founding, Canon established the San-Ji,
or DzThree SelfsdzspiritȄnamely: Dzself-motivation,dzor tak-
ing the initiative and being proactive in all things;
Dzself-management,dzor conducting oneself responsibly
and being accountable for all oneǯs actions; and Dzself-
awareness,dzor understanding oneǯs 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
information, Canon does its utmost to protect this valu-
able form of information asset in the course of fulfilling
its social responsibilities. With the aim of keeping its
employees informed and aware, the Company conducts
e-learning sessions as part of its personal information
protection education programs every year.
DISCLOSURE
Canon makes every effort to disclose information on its
management and business strategies as well as its per-
formance results to all stakeholders in an accurate, fair
and timely manner. To this end, Canon holds regular
briefings 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
Section 303A of the New York Stock Exchange (the DzNYSEdz)
Listed Company Manual (the DzManualdz) 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 DzCompanydz), 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 significant differences between the
corporate governance practices under Section 303A of the
Manual and those required in Japan. A summary of these dif-
ferences as they apply to the Company is provided below.
1. Directors
Currently, the Companyǯs Board of Directors does not have
any director who could be regarded as an Dzindependent direc-
tordzunder the NYSE Corporate Governance Rules for U.S.
listed companies. Unlike the NYSE Corporate Governance
Rules, the Corporation Law of Japan (the DzCorporation Lawdz)
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 Cor-
porate Governance Rules require non-management directors
of U.S. listed companies to meet at regularly scheduled execu-
tive sessions without the presence of management. Unlike the
NYSE Corporate Governance Rules, however, the Corporation
Law does not require companies to implement an internal
corporate organ or committee comprised solely of independ-
ent directors. Thus, the Companyǯs 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 compen-
sation 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 audi-
tors, 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 entirely
of independent directors, the Corporation Law does not
require companies to have specified committees, including
those that are responsible for director nomination, corporate
governance and executive compensation.
The Companyǯs Board of Directors nominates candidates for
directorships and submits a proposal at the General Meeting of
Shareholders for stockholder approval. Pursuant to the Corpo-
ration 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 cor-
porate auditors be determined by a resolution of the General
Meeting of Shareholders respectively, unless the amount or
calculation method is provided under the Articles of Incorpo-
ration. As the Articles of Incorporation of the Company do not
provide an amount or calculation method, the amount of com-
Significant Differences in Corporate Governance Practices between Canon and U.S. Companies Listed on the NYSE