Corporate Governance, Internal Controls, and Compliance and Risk Management Promoting Sound and Proper Corporate Management Omron is committed to maintaining and exercising a proper corporate governance system while increasing manage- ment transparency. To fi rmly establish a high standard of corporate ethics, we will continue to enhance our compliance system and strengthen the risk management framework that supports ongoing improvement in corporate value. Corporate Governance Basic Policies business execution activities as a representative of the At Omron, senior management was quick to realize the Company’s stakeholders. Furthermore, Omron has estab- importance of corporate governance and has progressively lished the Personnel Advisory Committee, the CEO Selection developed foundations for supporting good corporate gover- Advisory Committee, the Compensation Advisory Committee, nance. As such, Omron has worked to drive the spread of and the Corporate Governance Committee, all chaired by such foundations in Japan and other countries by having outside directors. In this manner, the Company is working to offi cials assuming principal posts in relevant external organi- increase the transparency and objectivity of management’s zations and through other means. decision-making process. Omron’s basic policy is to fortify corporate governance By incorporating the best aspects of the Companies based on the belief that the most crucial factor in earning with Committees system, we have created a type of hybrid stakeholders’ support is building an optimal management corporate governance regime that we feel is the most structure and conducting fair business operations while appropriate for the Company. enhancing the mechanism (a super visory system) for such verifi cation and realizing sustainable growth. Auditing Functions In line with this basic policy, Omron has adopted an execu- The Audit & Supervisory Board, composed of four audit & tive offi cer system and clearly separates management over- supervisory board members, audits governance practices sight and business execution. Under an internal company and monitors the everyday management activities of the system, Omron is realizing faster decision making and ef- Board of Directors and other management staff as well as Corporate Value Foundation fi cient business operations by delegating substantial authority the nature and operational conditions of the corporate gover- to the president of each internal company. Moreover, autono- nance regime. The Internal Audit Division, which reports mous individual business units that can specialize in creating directly to the president and CEO, periodically conducts value for customers take the initiative in conducting business. internal audits of accounting, administration, business risks, At the same time, through commitment-based management, and compliance in each headquarters division and in each we clarify roles and responsibilities and practice corporate business company as part of its internal auditing function. value management based on shareholder value. Moreover, the Internal Audit Division offers specifi c advice for improving business functions. Management and Oversight Frameworks Omron is a “Company with Audit & Supervisory Board.” Appointment of Outside Executives The corporate governance regime has a supervisory and To allow the Board of Directors to monitor business execution observational function pertaining to the actions of the Board as a representative of the Company’s stakeholders, two of of Directors and also involves auditing carried out by the the seven directors are outside directors and two of the four Audit & Supervisory Board. audit & supervisory board members are outside members. Omron has set the number of members of its Board of Emphasizing the independence of outside executives, Directors at seven to encourage effi cient and meaningful Omron has formulated its own original Outside Executive discussion. Since June 2013, the Company has begun in- Eligibility Criteria in addition to the requirements under Japan’s creasing the number of directors serving concurrently in Corporate Law. positions related to business execution. This revision will Also, the Corporate Governance Committee takes steps to effectively expedite decision making by directors and improve confi rm the Outside Executive Eligibility Criteria do not pose the effi ciency of business execution. In addition, the any problem with respect to determination criteria concerning Company has appointed outside and independent directors, independence formulated by the appropriate securities ex- thereby ensuring that directors concurrently fulfi lling busi- change. After obtaining a resolution of the Board of Directors, ness execution roles do not represent a majority in the notifi cations are submitted with the appropriate securities Board of Directors. In this manner, we are simultaneously exchange for all outside executives as independent offi cers. improving corporate governance functionality. To increase objectivity in management, the positions of chairman and president and CEO are separated. At the same time, every effort is made to bolster management oversight functions. The chairman of the Board of Directors monitors Integrated Report 2013 77 Corporate Governance Initiatives 1999 2003 2011 1987– 2003– 2011– President President Yoshio Tateishi President Hisao Sakuta President Yoshihito Yamada Chairman of the Board of Directors/CEO President serves as Board of Directors’ Chairman and CEO Chairman serves as Board of Directors’ Chairman / President serves as CEO Separation of management 1999~ Number of directors reduced to seven oversight and 30 directors business execution 1999~ Introduction of executive officer system Advisory Board 1999 Advisory Board One 2001 2003~ Two members (seven directors) Outside directors member Audit & Supervisory Board One 1998 1999~ Two members 2003~Three members (four auditors) 2011~Two members (four auditors) members (Part-time) member 1996 – Management Personnel 2000 – Personnel Advisory Committee Advisory Committee Advisory committees 2003 – Compensation Advisory Committee 2006 – CEO Selection Advisory Committee 2008 – Corporate Governance Committee Corporate Corporate Omron Principles Revised in 1998 Revised in 2006 philosophy motto formulated in 1990 formulated in 1959 Corporate Governance Structure Shareholders’ Meeting Audit & Supervisory Board Board of Directors Chairman: Chairman of the BOD Personnel Advisory Committee Audit & Supervisory Board Office Board of Directors Office CEO Selection Advisory Committee Accounting Auditor Compensation Advisory Committee Corporate Governance Committee Executive Organization President & CEO Executive Council CSR-Related Committees* Head office divisions Business companies (Internal companies) Internal Audit Division * This includes: Corporate Ethics & Risk Management Committee, Information Disclosure Executive Committee, Group Environment Activity Committee, etc. Board of Directors (BOD) Personnel Advisory Committee Compensation Advisory Committee Executive Council The BOD oversees business activities This committee, chaired by an outside This committee, chaired by an outside This council determines and reviews and decides important business matters, director, sets election standards for director, determines the compensation important business operation matters such as management objectives and directors and executive offi cers, selects structure for directors and executive that are within the scope of authority strategies. candidates, and evaluates current offi cers, sets evaluation standards, of the president. executives. and evaluates current executives. Audit & Supervisory Board CEO Selection Advisory Committee Corporate Governance Committee This board oversees the corporate This committee, chaired by an outside This committee, chaired by an outside governance system and its implementa- director, is dedicated to the nomination director, discusses measures to con- tion and audits the day-to-day operations of presidents and deliberates on the tinuously enhance corporate governance of directors and other executives. selection of the new president for the and increase fairness and transparency upcoming term and on preparing in management. contingency succession plans. Director and Audit & Supervisory Board of the Board of Directors, and the amount of compensation Member Remuneration for each audit & supervisory board member is determined by To increase objectivity and transparency, the Compensation discussions among the audit & supervisory board members Advisory Committee, chaired by an outside director, is con- (resolution of the Board of Corporate Auditors). sulted on the compensation of directors. This committee The following amounts are within the scope of the discusses the compensation of each individual and makes aggregate compensation amounts for all directors and all recommendations. audit & supervisory board members, as each has been set After receiving these recommendations, the amount of by a resolution of the General Meeting of Shareholders. compensation for each director is determined by a resolution 78 Omron Corporation Fiscal 2012 Director and Audit & Supervisory Board Member Remuneration (Millions of yen) Classifi cation Number of People Basic Compensation Bonus Total Remuneration Directors 7 360 144 504 (Outside Directors) (2) (21) (–) (21) Audit & Supervisory Board 4 82 – 82 Members (Part-time) (2) (17) (–) (17) Total (Total for Outside 11 442 144 586 Directors and Audit &