Olympus 2014 Annual Report Download - page 26

Corporate Governance
Internal Controls
Framework to ensure compliance with applicable laws
and regulations as well as the Articles of Incorporation
of directors and employees when performing their duties:
Compliance Committee
The Company shall establish the Compliance Commit-
tee chaired by an outside director as a body to oversee
and improve the compliance system.
CSR Committee
Olympus shall set up the CSR Committee chaired by
the president and regularly hold meetings to plan CSR
activities for the Olympus Group and set objectives for
and evaluate these activities.
Group Internal Audit Of ce
Olympus shall establish the Group Internal Audit Offi ce
to directly report to the president. The Group Internal
Audit Offi ce shall, pursuant to the provisions of the Inter-
nal Audit Regulations, periodically conduct internal
audits of all business operations with respect to
compliance with laws and regulations, the Articles of
Incorporation, internal rules and regulations, the appro-
priateness of business execution procedures and
details, and other matters.
Corporate Offi cer Compensation
The upper limits for the monthly compensation of directors
and audit & supervisory board members as well as director
bonuses are decided at the general meeting of shareholders.
Director compensation is decided by the Board of Direc-
tors in accordance with the Director Compensation Guidelines
based on the recommendations of the Compensation
Committee, which is comprised of a majority of highly inde-
pendent outside directors. Audit & supervisory board
member compensation is decided by the Audit & Supervi-
sory Board in the same manner. Bonuses and stock options
are not paid to audit & supervisory board members to main-
tain their standing as independent from business execution.
Position Total value of remuneration
(¥ million)
Total compensation by type (¥ million) Number of directors / audit &
supervisory board members
Base
Bonuses Stock options Retirement benefits
Directors (excluding outside directors) 379 288 53 38 — 5
Audit & supervisory board members
(excluding outside audit & supervisory
board members)
56 56 — — — 2
Outside offi cers 105 105 — — — 10
Activity Times conducted Details
Conference on results for institutional
investors and analysts 4Meetings held quarterly (May, August, November, and February) to explain topics from the period, focused on fi nancial performance and forecasts
Facility tours 3 Tours of plants, repair centers, training centers, and other facilities
Conference call for overseas
institutional investors 4Teleconferences with overseas institutional investors held on the day of fi nancial results presentations for each quarter
Overseas IR roadshow 5 Meetings for institutional investors in which the president and other related offi cers visit overseas sites
Meetings for individual investors 3 Meetings held at branch offi ces of securities companies
Uploading of IR information to
Company website As required Posting of fi nancial results and other timely disclosure materials, intellectual property reports, and fact books as well as information on CSR and environmental activities
Investor Relations Activities
The following investor relations activities were conducted in fi scal 2014.
Policies for Determining Corporate Of cer
Compensation Amount and Calculation Method
Compensation for directors, excluding outside directors,
includes monthly salaries, bonuses, and stock options.
Outside directors only receive monthly salaries and are
not eligible for bonuses or stock options. In fi scal 2015,
the Company will introduce income-linked bonuses for
directors to build a stronger link between the Company’s
performance and directors’ bonuses.
Calculation Method for Income-Linked Bonuses
The following formulas will be used for calculating the
compensation to be paid to directors in fi scal 2015.
1 Total value of remuneration
Total value of remuneration =
((Consolidated operating income in fi scal 2015 – ¥15.0
billion) × 0.0658% + (Consolidated net income in fi scal
2015 – ¥1.0 billion) × 0.0655%) × (Total sum of “offi cer
points” for all applicable directors ÷ 96)
(rounded to the nearest ¥10,000)
2 Individual compensation
Individual compensation =
Total value of remuneration ÷ Total sum of “offi cer points” for
all applicable directors × “Offi cer points” of individual director
Each director receives individual compensation as a
portion of the total value of remuneration calculated in 1 above
that is proportionate to the director’s individual score of “offi cer
points” as shown below (rounded to the nearest ¥10,000).
Systems and measures to manage risks of losses:
1 The Company shall manage its business risks based on
thorough discussions held at meetings of the Board of
Directors and the Executive Management Committee,
among other meetings, and appropriate internal
approval procedures.
2 The Company shall manage risks, such as those relating
to quality, product safety, export control, information
security, occupational health and safety, the environ-
ment, and disasters, by defi ning responsible divisions,
establishing internal corporate regulations and stan-
dards, and implementing related education and training.
3 The CSR Committee shall report and deliberate on plans and
measures in relation to risk management and make efforts to
establish and maintain a risk management system. Moreover,
pursuant to the internal rules on risk management, each busi-
ness division shall be aware of risks and take preventative
measures, and the Company shall develop a framework that
enables prompt actions in the event of an emergency. In the
event of an earthquake, fi re, other natural disaster, accident,
corporate ethics violation, or occurrence of another high-risk
incident, the business divisions shall make immediate reports
to the president, members of the CSR Committee, and other
relevant individuals through the Risk Management Department.
Response measures will then be decided by the president.
Framework to ensure the effective performance of duties
by directors:
1 The Board of Directors shall develop medium- and long-
term corporate strategic plans in order to clarify the
Company’s business objectives and realize effi cient
resource allocation based on the yearly business plans.
In addition, the Board of Directors shall receive a monthly
report on business performance in order to evaluate the
progress of the Company’s yearly business plan.
2 The Board of Directors shall determine the separation of
duties among the representative director, other operating
directors in charge of business execution, and executive
offi cers and supervise their execution of their duties.
3 With the exception of matters deliberated on at meet-
ings of the Board of Directors, the representative
director shall only make decisions about signifi cant
matters after discussing these matters at meetings
of the Executive Management Committee.
4 Based on internal corporate regulations, including the
internal rules on approval procedures and organizational
matters, the Board of Directors shall determine the
management organization and the separation of duties,
as well as the responsibility and authority of each corpo-
rate offi cer, and establish an appropriate and effective
system for the performance of duties.
Offi cer Points
Chairman President and
Representative Director Director, Vice President
Director, Senior Executive
Managing Officer
Director, Executive
Managing Officers
Director, Managing
Officers
24 28 20 16 12 9
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OLYMPUS Annual Report 2014
48 OLYMPUS Annual Report 2014
Risk Management Structure
Olympus has identifi ed one of the functions of the CSR
Committee, which is headed by the president, as managing
risks, and the committee thus works to reduce exposure to
risks and prevent their actualization as part of its normal oper-
ations. The Company has also put into place systems for
responding to serious risks should they be realized. In addi-
tion, to further strengthen the Company’s risk management
structure, the Risk Management Bureau was revised and
renamed the Risk Management Department in October 2012.
Risk Management System
President:
Risk management leader
Task Force
(activated in the event of a crisis)
Risk Management Department
Executive groups, af liated compa-
nies, and head of ce departments
CSR Committee
Chairperson: President
Risk managers of business units
and head of ce departments
Risk Management Promotion
Committee