Epson 2013 Annual Report Download - page 34

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33
Reasons for adopting the current system of corporate governance
Epson is looking to initiate fresh growth by developing and executing strategic measures based on the
Updated SE15 Mid-Range Business Plan (FY2013-15), which is aimed at achieving the goals set forth in
Epson's "SE15" long-range corporate vision.
As it moves forward on the updated mid-range business plan, the Company believes that it will be
important to have a governance system that strikes a good balance between business speed and efficiency
on the one hand and effective oversight of management on the other.
For this reason, the Company employs an agile, practical management organization wherein directors who
understand the situation inside the Company simultaneously oversee multiple key business operations,
while the outside director conducts checks to assure that business decisions make sense.
In addition, Epson employs an independent outside director and independent statutory auditors to ensure a
sound management audit function. The names of the outside director and outside auditors have been
reported to the Tokyo Stock Exchange (TSE) as they are considered to be independent directors/auditors as
defined by the TSE.
Internal control system
The Epson Management Philosophy defines the Company's top-level philosophies, goals, ambitions, and
mores. "Principles of Corporate Behavior," a business code of conduct that is shared across the Epson
Group, was established to realize these. The Company has installed a system of internal controls to ensure
that duties are executed properly and in compliance with laws and the Articles of Incorporation. Moreover,
the Company strives to steadily improve the level of internal control across the entire Epson Group, as
described below.
The board of directors passed a resolution at March 13, 2013 board meeting to select a Chief Compliance
Officer (CCO), establish a Compliance Committee, and create a dedicated compliance department,
effective April 1, 2013, in order to strengthen the compliance risk management function and organization.
The system is detailed below.
Compliance
(1) Epson established "Principles of Corporate Behavior" as a code for putting the Management
Philosophy into practice. The Company also established regulations that spell out things such as basic
compliance requirements and the organizational framework.
(2) The company selected a CCO to head an organization that oversees and monitors the execution of all
compliance operations.
(3) The Company also created a Compliance Committee to serve as an advisory body to the board of
directors. The Compliance Committee is chaired by the CCO and has as members the outside director,
outside statutory auditors, and a director appointed by the board of directors. The Compliance
Committee meets to hear and discuss important matters concerning Epson's compliance program. It
reports its findings and offers opinions to the board of directors.
(4) Compliance promotion and enforcement are supervised by the president of Seiko Epson. The chief
operating officers of Epson's operations divisions promote compliance programs within their
respective businesses and at subsidiaries consolidated under them. Group-wide compliance projects
are carried out by Head Office supervisory departments with the cooperation of departments in the
various operations divisions. A dedicated compliance department helps ensure the coverage and
effectiveness of compliance programs by monitoring compliance across the Epson Group and by
taking corrective action or making adjustments where needed.
(5) The Corporate Strategy Council, an advisory body to the president comprised of Company directors,
addresses important matters with respect to compliance promotion and enforcement. The Council
strives to ensure the effectiveness of compliance by exhaustively discussing and analyzing the state of
programs for assuring observance of statutes, internal regulations, business ethics and initiatives in key
areas.
(6) The Company strives to run an effective whistleblowing system by providing internal and external
routes for reporting compliance concerns. Employees are encouraged and are able to easily and
immediately report compliance violations via a variety of access platforms.
(7) The Company strives to enhance legal consciousness by providing Epson Group employees with
web-based training and other educational opportunities.