Canon 2012 Annual Report Download - page 24

Strategy Business Units MANAGEMENT SYSTEM Financial Section
22
OTHER COMMITTEES
The Corporate Ethics and Compliance Committee, in
addition to the Disclosure Committee, is a key body of
Canon’s management committees. The Corporate Ethics
and Compliance Committee reviews and approves poli-
cies and measures concerning law-abiding and corporate
ethics matters. 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
(“Three Selfs”) Sprit principles: “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. In 2001, Canon established the Canon Group Code
of Conduct, inspired by the above Three Selfs. The Code
has been translated into 13 languages from Japanese and
each Group company makes efforts to enforce the Code.
Detailed policies and measures concerning the com-
pliance activities of Canon are decided at the Corporate
Ethics and Compliance Committee. With management
by the Compliance Office, these policies and measures
are mainly carried out by compliance leaders at each
headquarters and Group company.
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
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 significant differences between the corporate gov-
ernance 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 direc-
tor” 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 the Audit & Supervisory
Board such as the Company, to appoint independent direc-
tors 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 scheduled executive ses-
sions without the presence of management. Unlike the NYSE
Corporate Governance Rules, however, the Corporation Law
does not require companies to implement an internal cor-
porate organ or committee comprised 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 com-
pensation committee and abolish the post of the Audit &
Supervisory Board Members; or
(ii) have the Audit & Supervisory Board.
The Company has elected to have the Audit & Supervisory
Board, whose duties include monitoring and reviewing the
management and reporting the results of these activities to
the shareholders 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 Company’s board of directors nominates candidates
for directorships and submits a proposal at the general meet-
ing of shareholders for shareholder approval. Pursuant to the
Corporation Law, the shareholders then vote to elect directors
at the meeting. The Corporation Law requires that the total
amount or calculation method of compensation for directors
and Audit & Supervisory Board Members be determined by a
resolution of the general meeting of shareholders respectively,
unless the amount or calculation method is provided under
the Articles of Incorporation. As the Articles of Incorporation
of the Company do not provide an amount or calculation
method, the amount of compensation for the directors and the
Audit & Supervisory Board Members of the Company is deter-
mined by a resolution of the general meeting of shareholders.
Significant Differences in Corporate Governance Practices between Canon and U.S. Companies Listed on the NYSE