Omron 2005 Annual Report Download - page 32

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CORPORATE GOVERNANCE AND LEGAL COMPLIANCE
CORPORATE GOVERNANCE STRUCTURE
Basic Policies
Our Group deems long-term maximization of its corporate
value to be our ultimate management goal. We believe
that accomplishing that goal does not mean merely
responding to the expectations of the capital market, but
to the expectations of all stakeholders including our cus-
tomers and society at large. Through efficient and
competitive management, we will achieve greater corporate
value. Furthermore, we will always be aware of the three
perspectives of fulfilling management accountability, achiev-
ing management transparency, and pursuing high business
ethics in order to strengthen corporate governance.
Progress Status
In 1999, our Group implemented the Managing Officer Sys-
tem and the Internal Company System, thus separating the
roles of corporate management and business execution.
Seizing this opportunity, decision-making authority is dele-
gated to a great extent to the presidents of each internal
company, who possess a deep knowledge of their respec-
tive fields, in order for the Company to be the strongest in
its respective fields. This system facilitated swift decision-
making and enhanced productivity. The delegation of
authority to the presidents is naturally accompanied by
their fulfillment of responsibility and operation. Therefore,
we thoroughly ensure that each company implements per-
formance-based compensation and a committed operation
of various management goals including profits.
1) Business Execution Structure
We are now operating with a small Board of Directors, which
consists of seven members, to speed up decision-making.
Our management monitoring functions were also enhanced
by a separation of the duties of corporate management and
business execution; the President &CEO is charged with the
execution of both, while the former is the domain of the direc-
tors, and the latter the responsibility of the executive officers.
Furthermore, in order to enforce our management objectivity,
in fiscal 2003 we increased the number of outside directors
from one to two and outside corporate auditors from two to
three (one of whom works full time). In addition, the Chairman
of the Board of Directors oversees business operations as a
representative of stakeholders without actually taking part in
the execution of business. In terms of the appointment, pro-
motion, and compensation of all Board Members (Directors,
Auditors, Managing Officers) we have established a Personnel
Advisory Committee and a Compensation Advisory Commit-
tee within the Board of Directors to enhance transparency, as
well as to maintain objectivity by having the outside directors
chair each of the committees.
2) Auditing Functions
The Board of Corporate Auditors, which consists of four
auditors (three of whom are outside corporate auditors),
checks expected governance and management conditions,
and monitors daily activities of management, including the
board of directors. Also, as a means of its internal auditing
function, the Audit Office, which functions directly under
the President &CEO, periodically conducts internal audits
of accounting, administration, business risks, and compli-
ance for each headquarters division and each company. In
addition to its checking functions, the Audit Office also
offers concrete advice for administrative improvement.
Efforts Made in Fiscal 2004
•One more director was added to further strengthen moni-
toring and supervision of execution.
•The retirement bonus system for directors and auditors
that emphasized deferred compensation was abolished
and replaced with a system that reflects annual results
and performance.
•To make inviting outside directors onto the board sim-
pler, an internal provision was established to enable
outside directors to sign a contract limiting their obliga-
tions to Omron within the scope of laws and regulations,
and this contract was put into effect.
LEGAL COMPLIANCE STRUCTURE
Basic Policies
One of our management philosophies is to maintain corpo-
rate ethics while promoting corporate activities.
Additionally, we consider risk management as a strategic
investment for greater competitiveness. Upon such basic
policies, in April 2004 we established the Corporate Ethics &
Business Conduct Committee. Chaired by our President &
CEO, this committee designs overall policies and plans,
monitors their state of implementation, and conducts
deliberations and adjustments of important affairs.
Progress Status
The Corporate Ethics &Business Conduct Committee was
established to integrate existing corporate ethics and risk
management. The general manager of each division and
It is not enough to construct a system of Governance and Compliance. Only
after the system actually starts to function will it gain the steadfast support of
our stakeholders, and lead to everlasting growth through distinguishing our-
selves from our competitors—that is what we at Omron believe.