Epson 2015 Annual Report Download - page 39

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In addition, expenses required to execute the duties of corporate auditors when emergency or extraordinary
audits are needed will be promptly paid in advance or refunded on each occasion.
(2) Internal audits
Epson’s internal compliance system guards against potential legal and internal regulatory violations in
departmental operations, and the internal audit organization, with a staff of 20, directly reports to the president
the results of routine internal audits, including those conducted at Epson subsidiaries. The audit organization
evaluates the effectiveness of the governance process and requests improvements where needed.
(3) Outside directors and outside corporate auditors
View on independence
The Epson board of directors has established criteria concerning the independence of outside directors. In
compliance with these criteria, it selects candidates for outside directors and outside corporate auditors who do
not have potential conflicts of interest with general shareholders. The outside directors and the outside auditors
that are currently engaged all meet the independence criteria.
The criteria concerning the independence of outside directors are listed below.
Outside director independence criteria
Epson does not select as candidates for outside director persons to whom any of the following apply:
(1) A person who receives significant business1 from Epson or a person who has within the last five years been
employed as an executive officer2 of a company that receives significant business from Epson
(2) A person who is a major business partner3 of Epson or a person who has within the last five years been
employed as an executive officer of a company that is a major business partner of Epson
(3) A consultant, an accounting professional such as a certified public accountant, or a legal professional such
as an attorney who, in the last three years, has received from Epson a large sum of money4 or other
property for reasons other than director remuneration (including any person who has belonged to or been
employed as an executive officer or the like with a company, union or other group that has received such
property in the last three years)
(4) A person who is a major Epson shareholder5 or a person who, within the last five years, has been an
executive officer or corporate auditor of a company that is a major Epson shareholder
(5) A person who is employed as an executive officer or corporate auditor of a company or other group in
which Epson is a major shareholder
(6) A person who has belonged within the last 10 years to an auditing company that has conducted a statutory
audit of Epson
(7) A person who has belonged to Epson’s managing underwriter within the last 10 years
(8) A person who has received a large donation6 from Epson (a person who belongs to a legal entity, union or
other group that has received a large donation from Epson and has been employed therein as an executive
officer or the equivalent)
(9) A person from a company that employs a former Epson employee as an outside director
(10) The spouse or other immediate family member of a person to whom any of items (1) through (9) apply
Notes
1A “person who receives significant business from Epson” is a person or supplier who has received payments
amounting to 2% or more of the person’s or supplier’s annual consolidated sales for any fiscal year in the
last three years.
2An “executive officer” is an employee in a senior executive management position, including executive,
managing director, operating officer, or general manager or higher position.
3A “person who is a major business partner of Epson” is a person or customer who has furnished Epson with
payments amounting to 2% or more of Epson’s annual consolidated sales for any fiscal year in the last
three years.
4A “large sum of money” is, in the case of an individual, an amount which, on average in any of the last three
years, is equal to ¥10,000,000 or more, or, in the case of a group, equivalent to 2% or more of the group’s
total revenue.
5 “Major shareholder” means a person who owns, either directly or indirectly, 10% or more of the outstanding
voting rights.