Hitachi Cable strictly adheres to laws and regulations as well as to the management policies of the
Hitachi Group, thereby continuing to strengthen its corporate governance structure and conducting fair
and transparent corporate Management.
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Basic approach |
Hitachi Cable considers achieving corporate governance
on the basis of compliance with relevant laws, business
ethics and CSR principles to be the foundation that
allows the continuous development of business as one of
the most important challenges of management. In order
to speed up management decision making and enhance
management transparency under the principles, the
company has adopted the committee system, clearly
separating executive and supervisory functions of management.
Based on an outline decided by the Board of
Directors, the internal control system is constructed and
operated as an organization "supervision."
As of March 31, 2011, Hitachi, Ltd. and its group companies
(collectively, "the Hitachi Group") hold 53.1% of
the total of Hitachi Cable shares with voting rights. In
conducting its business, Hitachi Cable maintains independence
from parent company Hitachi. At the same
time, the Company's operations do not heavily rely on
transactions with the parent company. Moreover, Hitachi
Cable has designated one of its outside directors as an
"independent director," defi ned under the securities listing
regulations of the Tokyo Stock Exchange and the
Osaka Securities Exchange on which its stock is listed.
This independent director provides various opinions and
advice regarding corporate management from a thirdparty
standpoint, enabling the Company to ensure the
objectivity of its Board of Directors' decision-making processes
and its independence from the parent company.
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Corporate governance structure |
Supervisory Function Management and Operating Functions
Hitachi Cable designs and administers its internal control
system in line with the basic internal control policies formulated
by its Board of Directors, which is tasked with the
supervision of the system. The Board of Directors devotes
itself to decision making on such matters as basic management
policies and supervisory functions, and it has
broadly transferred executive authority for operations to
executive offi cers. As part of the supervisory functions of
the Board of Directors, three independent committees,
each of which comprises of two outside directors and one Hitachi Cable director, have been established to contribute
to the fulfillment of the audit responsibilities of the
Board of Directors: the Nominating Committee, the Audit
Committee, and the Compensation Committee. Basically,
the Audit Committee meets monthly, while the
Nominating Committee and the Compensation
Committee meet whenever necessary. There are eight
members on the Board of Directors, including three outside
directors. The Chairman of the Board who chairs
meetings of the Board of Directors does not serve as an
executive officer.
Also, to assist executive officers in making decisions
and managing operations, Hitachi Cable has established
the Executive Committee, the Business Strategy
Committee and Business Briefing Committee. The
Executive Committee and the Business Strategy
Committee together serve as an advisory body supporting
executive officers' decision making. The Executive
Committee provides advice to executive officers excluding
those on the Business Strategy Committee) making
decisions related to operations that the Board of Directors
has delegated authority to executive officers. Moreover,
the Executive Committee serves as a hub for information
sharing among executive of ficers, disseminating
Companywide policies and data on business execution
status. The Business Strategy Committee functions as an
advisory body supporting each business unit in making
decisions regarding management strategies, business
plans and other important matters. The Business Briefing
Committee compiles business performance reports,
identifies issues and implements and manages measures
addressing these issues.
Directors and Executive Officers Compensation System
The committee determines compensation for members of
the Board of Directors and executive officers. This is individually
determined as per policies decided by the
Compensation Committee. Compensation for directors is
comprised of a monthly salary and year-end benefits, and
no compensation as a director is paid to any director also
serving as an executive officer. Compensation for executive
officers is comprised of a monthly salary and renunciation
linked to performance. The renunciation linked to
performance is determined by the status of medium-term
plans, budgets and other target achievements, depending
on the distribution ratio of consolidated results, the
performance of a division each executive officer assumes
responsibility for and personal achievements specified by
position.
The total amount of annual compensation for directors,
excluding outside directors, for the fiscal year ended
March 2011 was 105 million yen. Compensation for outside
directors and executive officers totaled 26 million yen
and 492 million yen, respectively.
Audit Function, Internal Control System
To further strengthen the Company's internal audit and
internal control functions, the Internal Audit Office (8 dedicated
staff members and 37 staff members serving concurrent
positions) has been established. The Internal
Audit Office strategically implements internal audits and
promotes internal control to ensure the legality and
appropriateness of operations by individual departments
and sections of Hitachi Cable and its consolidated subsidiaries.
Furthermore, the Compliance Office (3 dedicated staff
members and 11 staff members serving concurrent positions)
provides education for and conducts audits of individual
departments and sections of Hitachi Cable and its
consolidated subsidiaries, thereby ensuring that the
Company's activities conform to laws, regulations and
business ethics. The Audit Committee monitors and verifies
the status of these audits while having directors and
executive officers report their execution of business operations
as appropriate. In this way, the Audit Committee is
overseeing the Company's management overall.
The Company also has an Internal Control Committee
that determines policies, plans, operations and procedures
of its internal control system. In addition, the
Internal Control Committee reviews and approves results
of the assessment of the effectiveness of the Company's
internal control system. As such, Hitachi Cable has organized
a structure to ensure the appropriateness and reliability
of its financial reporting.
Meanwhile, the independent auditors report to the
Audit Committee and exchange opinions with Audit
Committee members and with the general manager of
the Internal Audit Office who also attend Audit Committee
meetings. This structure enables Hitachi Cable to promote
partnership in its auditing operations.
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Risk Management |
To share risk-related information about decision-making
on risk management policies, responses to risks and
recurrence prevention, Hitachi Cable has established a
Risk Management Committee under the Executive
Committee and headed by the President and Chief
Executive Officer as its chairperson. The committee
attempts to identify, assess, prevent and reduce risks.
The Hitachi Cable Group provides wide-ranging products
and services in many markets throughout the world
while utilizing an extensive portfolio of advanced technologies
to promote its business. Due to the nature of its
business, the Company's activities may be affected by
various factors. These factors include: (1) changes in
demand and political and economic conditions in the
markets where Hitachi Cable operates; (2) fluctuations in
raw material prices and procurement conditions; (3) fluctuations
in foreign exchange rates; (4) the implementation
of business restructuring; (5) product-related accidents
and quality problems; (6) new product development; (7)
laws, regulations and official restrictions; (8) intellectual
property rights; (9) information security; (10) large-scale
disasters and pandemics; (11) retirement and severance
benefit obligations; and (12) relationship with the parent
company.
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