Epson 2015 Annual Report Download - page 40

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6A “large donation” is a donation in an amount which, on average in any of the last three years, exceeds the
greater of ¥10,000,000 or 30% of the group’s total annual expenses.
Outside directors
Epson’s board has two outside directors. No special interests exist between the Company and the outside
directors.
Outside Director Toshiharu Aoki was an executive at Nippon Telegraph and Telephone Corporation and at NTT
Data Corporation. Epson has not had business transactions with either Nippon Telegraph and Telephone
Corporation or NTT Data Corporation for the past three years, and neither company is considered a major
supplier under Epson’s outside director independence criteria.
Outside Director Hideaki Omiya is Chairman of Mitsubishi Heavy Industries, Ltd. Although Epson and
Mitsubishi Heavy Industries have bought and sold semiconductor fabrication equipment and had other business
transactions within the past three years, Mitsubishi Heavy Industries is not considered a major supplier under
Epson’s outside director independence criteria, as the value of transactions is less than 0.1% of the consolidated
revenue of either company.
Outside corporate auditors
Each of Epson’s three outside corporate auditors draws on a wealth of experience and keen insight when
conducting audits, and offers frank opinions to the board of directors. No special interests exist between the
Company and any of the outside corporate auditors.
Outside corporate auditor Yoshiro Yamamoto is a former Fuji Bank, Ltd. (presently Mizuho Corporate Bank,
Ltd.) executive who has been retired from the bank for more than 10 years. He was invited to become an auditor
because he fits the needs of the Company and for no other reason, such as a recommendation by Fuji Bank, Ltd.
Net interest-bearing liabilities account for only a small percentage of the Company’s total assets, and the
Company’s dependence on bank loans is low. Furthermore, the Company deals with multiple financial
institutions and does not depend on Mizuho Corporate Bank, Ltd. for a high proportion of its borrowing. There
is therefore no special relationship between the Company and Mizuho Corporate Bank, Ltd., and Mizuho
Corporate Bank, Ltd. does not influence Epson’s decision making.
Outside corporate auditor Kenji Miyahara was an executive at Sumitomo Corporation. Epson has not had
business transactions with Sumitomo Corporation over the last three years.
Outside corporate auditor Michihiro Nara is an attorney, but the Company has never engaged him or the law
office to which he belongs to perform duties under an advisory agreement or under any other separate
agreement, nor does it plan to do so in the future.
There is no particular system of coordination between outside corporate auditors and audit functions in the
Group; however, corporate auditors take the initiative to consult with the internal audit organization and
independent public accountants. Each time an issue is identified by an audit, details are passed on to the outside
corporate auditors to keep them informed as appropriate. Moreover, corporate auditors participate in the
Compliance Committee, which supervises compliance programs, and they conduct inquiries at departments
where a significant incident involving internal control has occurred. Corporate auditors are thus kept abreast of
operational issues and the status of measures to address those issues.
(4) Director remuneration
Basic policy
Directors serve to enhance corporate value, both in the immediate and long terms, and Epson has designed its
system of director remuneration to provide them with incentives to improve business performance.
The monthly salaries of directors are decided by the board of directors after deliberation by the Compensation
Committee and in consideration of Epson’s business performance. Director bonuses are paid only if the
Company has achieved a level of profit that increases corporate value. The desired level of profit is predefined
by the board of directors after deliberation by the Compensation Committee, and the board of directors submits
to the general shareholders for approval a proposal for the total amount of director bonuses to be paid in a given
period, the amount to be commensurate with the level of performance with respect to profit.
Furthermore, a portion of the monthly salaries of directors is paid as Epson stock so that remuneration is linked
to share price, and to serve as an incentive for improving business performance in the long term.