KONICA MINOLTA

About Konica Minolta

Giving Shape to Ideas

Corporate Governance

Management and Governance Structure

Corporate Governance System

Board of Directors

Since the company is a company with three committees, the Board of Directors delegates to executive officers as much authority as allowed by laws and regulations for making operational decisions. This contributes to the speed and flexibility of managing business operations.
The Board of Directors makes decisions solely about items, such as fundamental management policies, that can be determined only by the directors, according to laws and regulations. In addition, the Board of Directors makes decisions about investments larger than a certain amount and such other items that will have a significant impact on the Konica Minolta Group.
In addition, the Board of Directors enhances sustainable growth and corporate value for the Group by ensuring management oversight.

Executive Officers

The executive officers are responsible for deciding how to perform the operations delegated by Board of Director resolutions, and then executing those operations.
In addition, based on substantial delegation of authority by the Board of Directors, the executive officers work to accelerate decision-making in business execution.

Nominating Committee

The Nominating Committee decides the content of proposals for director appointment and dismissal to be submitted to the General Meeting of Shareholders. It also receives reports concerning succession planning (candidate training and selection) from the President and CEO, as necessary, and supervises the process.

Audit Committee

The Audit Committee reviews the execution of duties by directors and executive officers, prepares audit reports, and decides the content of proposals for appointment, dismissal, and non-reappointment of accounting auditors to be submitted to the General Meeting of Shareholders.

Compensation Committee

The Compensation Committee decides the details of individual compensation, bonuses, and other benefits received from the company as consideration for duties performed by the directors and executive officers.

Structure of Corporate Governance Systems

Structure of Corporate Governance Systems (As of June 17, 2016)

Operations of the Board of Directors

The Board of Directors strives to ensure highly effective operations.

Operation

As a general rule, the Board of Directors meets once each month. Before each meeting, the directors are expected to make themselves familiar with the proposed resolutions, and materials are distributed to outside directors in advance so that effective discussions can be held on the day of the meeting. In addition, before important management decisions are made, the executive officer responsible sometimes gives a preliminarily explanation concerning the matter at hand.
The seating position of the directors is changed at every meeting, except for that of the chairman and the President, and other such measures are taken to further enhance communication among the directors and ensure that the meetings are dynamic.

Attendance

The meeting results and attendance rates for the Board of Directors and the three committees in fiscal 2017 were as follows.
Furthermore, the attendance rate at Board of Directors and the three committee meetings for the four outside directors ( Kazuaki Kama, Hiroshi Tomono, Kimikazu Noumi, and Takashi Hatchoji) was 99%.
Note: All the members of the Board of Directors are required to attend more than 80% of the meetings, and in order to achieve this attendance rate, the number of companies which they can serve as directors (officers under Japan’s Companies Act) is restricted to no more than three in principle.

Board of Directors Nominating Committee Audit Committee Compensation Committee Total
Number of meetings 14 10 13 8 45
Attendance rates for all directors (%) 99 100 100 98 99
Attendance rates for outside directors (%) 98 100 100 96 99

Feedback on Board of Directors Effectiveness

In 2003, the company became a company with committees (now a company with three committees). To determine if the corporate governance system is functioning as intended, the company started performing self-assessments in 2004 concerning the Board of Directors’ effectiveness. Self-assessments have been performed every year since then in order to make improvements.
The company now has a PDCA cycle that covers assessments and the analysis of results, the establishment of policies for the operation of the Board of Directors in the next fiscal year, and the creation and implementation of a plan for the board’s operations. PDCA is used as a tool for continuous improvements in the effectiveness of the Board of Directors.

In order to increase objectivity by incorporating third-party viewpoints, and to clarify issues not identified through the conventional self-assessments, in fiscal 2016 the company had an external organization perform the questionnaires and interviews.
Then, in fiscal 2017, the company implemented an effectiveness assessment with an emphasis on determining two things: whether a suitable corporate governance system had been created, namely one that can help promote sustainable growth and improved corporate value over the medium to long term; and whether it was operating properly. The company carried out this evaluation independently, and the details are outlined in the Corporate Governance Report.
Regular evaluation by external organizations will be continued in the future.

Support System for Outside Directors

At the time of appointment, each outside director is provided with information including the company overview, business content, organizational structures and personnel, the Medium-Term Management Plan, the budget and the corporate governance of the company. After appointment, outside directors receive information about each business area of the company, such as its position in the whole company business portfolio, composition of the company’s business portfolio, the company’s position in each industry field and business environments. Outside directors also conduct frontline inspections in departments such as development, production, sales, and service in each business area, and they receive the latest information from the responsible executive officers.
A Board of Directors Office has been established as the secretariat for the Board of Directors, Nominating Committee, and Compensation Committee, while the Audit Committee Office serves as the secretariat for the Audit Committee. The staff members of these offices support the outside directors to enable the Board of Directors and committees to function properly. Members of this office also distribute the document in advance concerning agenda items to outside directors, and create proposals and plans for visits to company facilities and accompany outside directors as needed as part of activities to these directors. The objectives are to enable outside directors to thoroughly discuss subjects at the Board of Directors meetings and to ensure that these meetings take place with no difficulties.

Policy and Procedures for Appointing Director Candidates, and the Applicable Approaches and Standards, etc

The Nominating Committee starts each year by performing reviews of the composition of the Board of Directors and committees and of the standards for the selection of directors and committee members. By performing examinations from the standpoints of balance of career and skill, diversity and other factors, this committee aims to upgrade its selections of director candidates. The following process is used to make selections.

Board of Directors

(1) The Nominating Committee examines the objectives of the composition of the board and then confirms a proposal for the total number of directors, the number of outside directors, and the number of inside directors who do and do not concurrently serve as executive officers.

(2) Confirmation of directors who will resign due to standards for the number of years as a director or age, and expected number of new outside director and new inside director candidates.

Use the link below for detailed information.

Outside Directors

(1) To select outside director candidates, after the Nominating Committee confirms the selection process, the requirements (necessary careers and skills) for the new outside directors are discussed and determined, considering the combination with the outside directors to be re-appointed, in order to ensure that the company will obtain useful supervision and advice on operational issues. Based on these considerations, the Nominating Committee chairman asks for a broad range of recommendations for candidates, regardless of gender, based on information from Nominating Committee members, other outside directors and the President and CEO. To provide reference information, the Board of Directors Office distributes to Nominating Committee members a candidate database, centered on “chairmen” of excellent companies, which includes information about independence, age, concurrent positions and other characteristics of candidates.

(2) From the candidates recommended through the preceding process, the Nominating Committee uses the following steps to narrow down the number of candidates and establish an order of priority, without any selection conditions based on gender.

(3) Using the order of priority for candidates, the Nominating Committee chairman and Chairman of the Board of Directors visit and approach the candidates to serve as an outside director.

Inside Directors

(1) An initial list of candidates for inside director is prepared through consultation between the chairman of the Board and the President and CEO, with emphasis on the following points.

  • Roles of directors who do and do not concurrently serve as executive officers
  • Required skills, experience and other characteristics of directors who do and do not concurrently serve as executive officers

(2) The Nominating Committee uses the draft proposals to examine the candidates.

Executive System and Appointment of Executive Officers

Executive System

(1) Under a mandate from the Board of Directors, executive officers make decisions about operations and then execute them. The business execution is overseen by the Board of Directors and reviewed by the Audit Committee to ensure the efficiency, adequacy, legality and soundness of management.

(2) Executive officers are appointed by the Board of Directors, which selects the President and CEO, selects senior executive officers from among the executive officers, and establishes a division of duties among the officers. The executive officers, including the President and CEO, make decisions concerning the execution of duties delegated by the Board of Directors, and execute their duties.

Selection of Executive Officers

The Board of Directors uses a fair, timely and appropriate method to select people who have the capabilities to serve as executive officers. These individuals must be able to create new value for the Group and earn the support of internal and external stakeholders. Standards for making these judgments about capabilities are defined in “Standards for the Selection of Executive Officers.”

Compensation for Directors and Executive Officers

The company, which has adopted the company-with-three-committees system, has established a Compensation Committee. Outside directors account for the majority of members of the committee and the committee is chaired by an outside director to ensure transparency and to determine compensation in a fair and appropriate manner. The company’s directors’ compensation system is intended to strengthen the motivation of directors and executive officers to strive for the continuous medium-to-long-term improvement of the Group’s performance in line with management policies, to meet shareholder expectations and contribute to the optimization of the Group’s value. The company aims for a level of compensation that enables it to attract and retain talented people to take responsibility for the company’s development.

In fiscal 2017, the company revised its Compensation Determination Policy.
Major revisions to the compensation policy and reasons:

  • The company started stock bonus linked to medium-term performance. The intent is to increase motivation to achieve the performance targets of the medium-term plan.
  • Stock bonus linked to medium-term performance is company stock rather than cash. Owning company stock during their time at the company is intended to make individuals view the importance of medium- to long-term growth of corporate value from the same standpoint as shareholders.
  • The structure of compensation was reexamined. This resulted in a reduction in the percentage of fixed compensation and the replacement of stock bonus-type stock options with stock bonus linked to medium-term performance. In addition, performance-linked compensation increased as a percentage of total compensation. Taking these actions made individuals even more aware of the importance of improving the company’s performance.
  • Compensation includes a claw-back provision. By performing the required procedure, the company can limit compensation or demand the return of compensation. However, this is possible only when performance indicators that are the basis for calculating performance-linked compensation differ significantly from actual performance due to a major error or fraud.

These revisions were discussed and examined by the Compensation Committee starting in fiscal 2015. The company believes these revisions are consistent with Supplementary Rule 4-2-1 of the Corporate Governance Code (There should be a suitable division between compensation linked to medium to long- term performance and cash compensation and company stock bonus so that compensation functions as a sound incentive for senior executives to achieve sustained growth.

Amount of compensation paid to directors and executive officers for the year ended March 2018
(Unit: 1 million yen)
Total Total base salary Performance-linked compensation Stock bonus
Persons Amount Persons Amount Persons Amount
Directors Outside 48 5 48
Inside 157 3 127 3 23
Total 205 8 175 3 23
Executive officers 897 23 529 23 181 23 160
Stock bonus type
Stock options
Persons Amount
Directors Outside
Inside 3 6
Total 3 6
Executive officers 18 24

Notes

  1. At the end of the period (March 31, 2018), the company has four outside directors, three inside directors (not concurrently holding executive officer posts) and 24 executive officers.
  2. In addition to the three inside directors shown above, the company has another three inside directors who concurrently hold executive officer posts, and the compensation to these directors is included in compensation to executive officers.
  3. Regarding the performance-linked compensation, the amounts which were recorded as expense in the period are stated.
  4. Regarding the stock-based compensation, the amounts shown are those to be recorded as expenses in the fiscal year concerned, based on calculation of the expected amount of compensation including future granting of the company's shares, in accordance with the expected number of points granted to Directors (excluding outside directors) and executive officers.
  5. Stock bonus-type stock options were terminated in fiscal year 2016 (the 12th year), but the amounts stated are those that should have been recorded as expenses in the fiscal year concerned based on an estimation of the fair value of the subscription rights.

Total compensation for those individuals with a total compensation of 100 million yen or more in the fiscal year ended March 2018

(Unit: 1 million yen)
Position / Name Company type Total Total base salary Performance-linked compensation*2 Stock bonus Stock bonus-type
stock options
Directors
President and CEO
Shoei Yamana
Submitting company 115 65 21 24 3
Executive Officers
Richard K.Taylor*1
Consolidated subsidiary
Konica Minolta Business Solutions U.S.A., Inc.
173 88 85

Notes

  1. Executive Officer Richard K. Taylor is the CEO of the consolidated subsidiary, Konica Minolta Business Solutions U.S.A., Inc.
  2. Regarding performance-linked compensation, the amounts to be expensed in this fiscal year are given.
  3. Regarding the stock bonus, the amounts shown are those to be recorded as expenses in the fiscal year concerned, based on calculation of the expected amount of compensation including future granting of the company's shares, in accordance with the expected number of points granted.
  4. Stock-bonus type stock options were terminated in fiscal year 2016 (the 12th year), but the amounts stated are those that should have been recorded as expenses in the fiscal year concerned based on an estimation of the fair value of the subscription rights.

Guidelines on Officer Ownership of Konica Minolta Shares

In order to further raise awareness of shareholders' expectations for performance improvement and growth in the stock price, a stock bonus linked to medium-term performance (for executive officers) and a medium-term stock bonus (for directors) have been introduced. Accordingly, Stock Ownership Guidelines have also been established for inside directors and executive officers.

Group Auditing System

Creating a system that aims for effective audits

Konica Minolta Inc., which has adopted the company-with-committees system, has established an Audit Committee, while its subsidiaries in Japan have appointed their own respective auditors. In addition, Konica Minolta Inc., has a Corporate Audit Division, which conducts an internal audit of the entire Group.

The members of the Audit Committee and the Corporate Audit Division, as well as auditors of the subsidiaries in Japan, share related information and strengthen the coordination of audit activities across the Group. With the aim of ensuring effective audits, the same parties hold regular meetings with the accounting auditors, review auditing systems and policies, and examine whether or not the accounting auditors can fulfill their tasks properly.

Audit Committee System and Roles

The Audit Committee is comprised of six directors (who do not hold positions as executive officers), four of whom are outside directors. The chairperson of the Audit Committee is selected from among the outside directors. To ensure effective operation of the committee, it has established its own office (Audit Committee Office) with staff members who are independent of any sections committed to actual business operations. The Audit Committee members evaluate the legality and validity of the management decisions made by directors and executive officers, monitor and validate internal control systems, and assess the adequacy of the accounting auditors. In principle, a committee meeting is held before the meeting of the Board of Directors, so that the committee members can present their opinions to the meeting of the Board of Directors, if deemed appropriate.

Corporate Audit Division Systems and Role

The Corporate Audit Division of Konica Minolta Inc., which directly reports to the president and CEO, is responsible for the Group-wide internal audit and performs internal audits of Konica Minolta and its subsidiaries, as well as major overseas affiliated companies. Using the risk-assessment 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. The division also conducts follow-up audits in which it examines improvement measures taken by respective companies in response to suggestions provided by internal auditors.

In addition, major subsidiaries have their own internal audit divisions which work closely with the Corporate Audit Division of Konica Minolta Inc., and enhance the internal audit function of the entire Group.

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