Epson 2004 Annual Report Download - page 31

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SEIKO EPSON CORPORATION 29
RISK MANAGEMENT SYSTEM SUPERVISED BY
THE PRESIDENT AND THE FLOW OF INFORMATION
business execution and management
oversight common to the “Company
with Committees” governance frame-
work, Epson vests monitoring func-
tions in the Board of Directors, which
is underpinned by the statutory audi-
tors. Epson’s stance is that this system,
whereby directors are responsible
for business execution, is optimal
for monitoring functions in light of
the current configuration of Epson’s
business operations. The same rea-
soning prompted the decision to
forego the appointment of external
directors to the board.
With this stance in mind, Epson is
appointing suitably qualified directors
with the ability to concurrently per-
form both business execution and
management oversight roles, and is
broadening the jurisdictional scope
of the Board of Directors, as it main-
tains a governance structure backed
by the statutory auditors. While
strengthening the operation of this
structure, the search for an optimized
governance structure will remain an
ongoing issue for the consideration
of management.
Epson is also increasing transpar-
ency in the appointment of directors
and their remuneration. Two com-
mittees specifically responsible for
exploring these issues were put in
place in the fiscal year ended March
2004. The Nominating Committee
is responsible for setting nomina-
tion criteria and the selection of
candidates. The Compensation
Committee is charged with defining
the parameters of the remuneration
system and drafting policies govern-
ing directors’ remuneration. These
“No Hiding,” “No Tricks,” and
“Report Bad News Quickly”:
Epson’s Mantras for Maintaining
a Sound Corporate Culture
Epson views compliance as a means
of preventing one of the risks that
corporations face: management
risk. In contrast to external risk
factors such as accidents, natural
disasters, or social problems, the
management risk Epson addresses
Compliance
committees conduct extensive
deliberations in each respective
area, ultimately presenting their
conclusions for consideration by
the Board of Directors.
Epson also has an internal com-
pliance system in place that is
designed to prevent any potential
legal or internal regulatory viola-
tions at its operational divisions
during the course of business
execution. Epson’s Auditing Office,
under the direct control of the
president, regularly audits the
operations of business units and
Epson subsidiaries, reporting its
findings directly to the president.
CRISIS MANAGEMENT COMMITTEE
(CHAIRED BY PRESIDENT)
OCCURRENCE OF RISK
RISK MANAGEMENT
SUB-COMMITTEE
(CHAIRED BY
BUSINESS UNIT HEADS,
PRESIDENTS OF AFFILIATE
COMPANIES)
COMPLIANCE
MANAGEMENT
COMMITTEE
(CHAIRED BY EXECUTIVE
VICE PRESIDENT)
COMPLIANCE
MANAGEMENT
SUB-COMMITTEE
(CHAIRED BY BUSINESS UNIT
HEADS, PRESIDENTS
OF AFFILIATE COMPANIES)