Social Responsibility

Holding Company System

Accelerated Decision-making to Enhance Corporate Competitiveness

The Konica Minolta Group comprises a holding company named Konica Minolta Holdings, Inc., five business companies, and two common function companies. We have adopted this holding company system, in which our businesses are split up into separate companies, so as to accelerate decision-making and ultimately increase the Group's competitive edge. Since each business company holds both authority and responsibility in the area directly related to its business, these companies can make decisions more quickly and flexibly. The common function companies, on the other hand, perform basic research activities and administrative services for all the other Group companies. By integrating these common functions, the system enhances overall management efficiency. The holding company system also enables Konica Minolta Holdings to focus on Group management and governance.

Outside Directors Independent from the Company

In selecting outside directors, we place the highest priority on their independence from the Company, as well as their experience in corporate management

To enhance the supervisory functions of the Board of Directors, in selecting outside directors, we place the highest priority on their independence, as well as their experience in corporate management. Only candidates who have no important business relations with the Group or personal relationships with our executive officers are eligible to serve as outside directors. At the same time, we regard it preferable that outside directors have a broad range of experience in corporate management, since their roles include decision-making regarding management issues, as well as supervision of corporate management. To strictly maintain the independence of outside directors, we generally restrict their reappointment, thus limiting their terms of office.

In June 2007 Mr. Takeo Higuchi was appointed as a new outside director.

Lively and Constructive Discussions at the Board of Directors

Information Sharing with Outside Directors

During fiscal year 2006, Board of Directors meetings were held approximately once a month. The overall attendance rate of outside directors to these meetings and those of the three committees exceeded 90%. Advance orientation on upcoming agendas was provided to outside directors by either the Secretariat staff members or directors (those not executive officers) who had attended important in-house meetings. These directors had attended those meetings in order to provide detailed information, if so requested, by the outside directors. In addition, either the president or responsible executive officers provided advance briefing on strategic matters, so as to enhance outside directors' understanding of the matters involved in resolutions, and to enliven discussions at Board of Directors meetings.

Compensation for Directors/Executive Officers

A New Compensation System Matching the Roles of Directors/Executive Officers and Reflecting the Group’s Performance

In June 2005 we abolished the conventional retirement benefit system for directors/executive officers, and revised their compensation system (see table below) to match it to their roles in the company. In case of executive officers, we introduced performance-based compensation in order to provide long-term incentives.

Since we regard it as important to indicate the Company’s policy on compensation for directors and executive officers, together with the ratio of incentive compensation, we have decided and stipulated that the executive officers’ compensation shall comprise fixed compensation, performance-based compensation for short-term incentives, and stock options to offer long-term incentives, with the ratio of the three basically being 60:20:20.

In the Annual Report for the year ended March 2007, we disclosed the amount of compensation to directors and executive officers as shown in the table below.

Note:

"Executive Officers" in the table above include 13 executive officers who are primarily responsible for our Company’s subsidiaries. The table also includes the part of their fixed compensation and performance-based compensation paid by the subsidiaries concerned.

Introduction of E-Voting to the Meetings of Shareholders

Optimizing Voting at the Meetings of Shareholders Using an Electronic Voting System

We are striving to promote better communication with institutional investors, through measures such as the early provision of agendas of shareholders’ meetings.

In June 2007, Konica Minolta joined the electronic voting system that is already used by approximately 2,000 institutional investors worldwide (particularly in the U.S. and U.K.). The system made it possible for institutional investors to exercise their voting rights online. To date, investors outside Japan have been informed of agendas for shareholders’ meetings through various related organizations. Since this took a considerable amount of time, investors outside Japan often had only a short time to study the agenda presented. By using the online system, we have managed to shorten the time required for providing agenda information, thereby optimizing the voting environment.

Group Audit System

Priority on Maintaining and Enhancing the Integrity of the Entire Group, as well as the Efficiency of the Audit System

In the Konica Minolta Group, Konica Minolta Holdings, which has adopted the Board-with-Committee system, has established an Auditing Committee, whereas its business companies, common function companies, and other subsidiaries have their respective auditors. In addition, Konica Minolta Holdings has its Corporate Audit Division, which conducts an internal audit of the entire Group.

The Auditing Committee comprises five directors (who do not hold positions as executive officers), three of whom are outside directors. The chairperson of the Auditing Committee is selected from among outside directors. To ensure effective operation of the Committee, it has established its own Office (Auditing Committee Office) with two staff members who are independent from any sections committed to actual business operations.

The Auditing Committee members evaluate the legality and validity of the management decisions made by directors/executive officers, review internal audit systems, evaluate accounting auditors, and select members to be appointed, reappointed, or dismissed. In principle, a Committee meeting is held before the meeting of the Board of Directors, so that the Committee members can present their unanimous opinions to the meeting of the Board of Directors, if deemed appropriate. During fiscal year 2006 a total of 13 meetings were held by the Auditing Committee.

To reinforce the Group-wide audit system, in fiscal year 2006 the members of the Auditing Committee and the Corporate Audit Division, as well as auditors of individual Group companies, enhanced partnerships by holding Audit Council meetings every three months, where participants shared related information and coordinated audit activities across the Group. In addition, the same parties held regular meetings with the accounting auditors in order to review auditing systems and policies, and to examine whether or not the existing system sufficiently enables accounting auditors to fulfill their tasks.

The Corporate Audit Division, which is responsible for the Group-wide internal audit under the direct leadership of the CEO, performs internal audits of business and common function companies, as well as major overseas affiliated companies. Using the risk approach, the Division evaluates these companies in terms of the reliability of their financial statements, efficiency, and validity of their businesses and the level of their legal compliance. To reinforce the Group-wide internal control system, the Division also conducts follow-up audits, in which it examines improvement measures taken by respective companies in response to suggestions provided by the auditors. In addition, the Division outsources audit of overseas affiliated companies to Tohmatsu, an independent auditing corporation that has an international network.

In coming years, we will reinforce our internal control system and ensure that the system meets the requirements of Japan's new Company Act. To this end, the Company will continue to monitor the ongoing construction of its system, which is now required by the Financial Products Transaction Law (often called the “Japanese SOX Act”) through concerted efforts of the Auditing Committee, the Corporate Audit Division of Konica Minolta Holdings and the auditors of our respective Group companies.