Maintaining Ricoh's corporate value on behalf of all stakeholders
The Ricoh Group established The RICOH Way as a set of guiding principles and values that serves as the foundation for all our business activities. Abiding by these principles in corporate ethics and compliance and maintaining transparency in management, we continuously strive to improve our governance, and in doing so ultimately enhance our corporate value.
We strongly believe that responsible global citizenship calls for a corporate culture that embraces a sense of mission to meet the expectations of diverse stakeholders — a culture that is committed to operating under the highest ethical standards in line with the expectations of society as a whole.
Based on this belief, we advance the operations of the entire Group under The RICOH Way, strengthening our governance and ceaselessly promoting a culture of integrity while working toward sustainable corporate growth.
The Ricoh Group has also introduced a corporate audit system, in which audit and supervisory board members strengthen the effectiveness of audits and the monitoring of top management, while the Board of Directors, including outside directors, maintains strict oversight over the decision-making process to make sure it is always transparent and fair. Futhermore, by expanding the executive officer system, the segregating of duties between oversight and business execution is clarified, resulting in speedier decision-making.
The Group has also implemented an integrated risk management system for both business opportunities and business execution, and follows internal control procedures to achieve the success of our corporate strategies and business targets.
Globalization means we all compete on the same playing field, like it or not
Our planet is vast and contains diverse cultures and values. Corporate management philosophies are equally diversified. Some companies constantly operate at high speed. Others race in bursts of explosive movement in pursuit of immediate gains. Whatever the business style, however, everyone in similar industries has to compete on the same playing field in this increasingly globalized world.
As an outside director, I strive to consider issues from a shareholder's perspective while keeping world affairs and competing businesses in mind. I work to extract key points from every proposal submitted to the Board, highlight issues and make recommendations. I endeavor to be a catalyst for free and open-minded discussions under pressure to ensure that Board meetings are productive.
Ricoh has established solid core businesses. Improving their performance will strengthen the corporate foundation and generate the revenue and time to pursue new initiatives that will underpin the company's prosperity over the next 30 to 40 years. I have great expectations for the future of Ricoh.
Mr. Umeda has advanced knowledge of information technology and experience in global business. This gives him expert ability to analyze our decision-making process and offer valuable recommendations from an external viewpoint. His attendance rate for the 12 Board meetings held in fiscal 2013 was 100%.
In a fast-changing, competitive environment, management must pull together a global team with on-the-ground expertise and full awareness of corporate responsibility
In my capacity as the head of a major corporation, I have conducted business fully aware of corporate social responsibility, placing emphasis on the workplace and global teamwork in a tough and rapidly changing business environment that has included the global financial crisis, the Great East Japan Earthquake and the extremely strong yen. From experience, I believe it is important for top management to execute the following three points:
1. Initiate communication with employees and business partners
Top management needs to communicate current issues, the company's charted course and strategies directly to employees and business partners (including distributors and vendors). The goal is to spread understanding so as to align all corporate activities in the same direction.
2. Never put off dealing with risks
Risk is part of business. Every risk identified must be reported and dealt with adequately and promptly. This must be followed up by full enforcement of measures to prevent recurrence of unnecessary risk.
3. Top priorities: Safety, environment and compliance
To create a corporate culture valuing these priorities, they must become part of the agenda of daily operations. For example, monthly and weekly meetings might start with reports on safety, environmental and compliance issues before moving on to business performance.
I hope to continue with constructive participation in board meetings as an outside director to enhance Ricoh’s corporate value.
Mr. Noji was formerly president and CEO of Komatsu Ltd. He has abundant experience and expertise as a member of the top management of one of the leading companies of Japan. He has attended eight out of the 10 Board meetings held since his appointment (attendance rate: 80%).
- The Ricoh Group has introduced a corporate audit system.
- The Board of Directors is responsible for management oversight and important decisionmaking concerning Group management. By appointing highly independent outside directors, the Group ensures greater transparency in its management and decision-making.
- Two of the Board's 10 directors are outside directors — part of an effort to incorporate various views and opinions and to eliminate arbitrary decision-making in management.
- To ensure a clear separation between management oversight and business execution, internal regulations stipulate that the chairman of the company — who in principle is not involved in the management of the business — serves as the chair of the Board of Directors.
- Audit and Supervisory Board Members hold discussions to determine audit and supervising policies and the assignment of duties, and monitor corporate management.
- Audit and Supervisory Board Members attend all important meetings, including but not limited to Board meetings, and exchange information regularly with the representative directors.
- The Audit and Supervisory Board Members Office, with designated support staff, has been established to ensure that the corporate auditors can work effectively.
- Under the executive officer system, the authority to carry out business has been assigned to respective functional departments so as to expedite decision-making and clarify the roles of each department.
Board of Directors
Audit and Supervisory Board Members
Group Management Committee
The Group Management Committee (GMC) consists of executive officers and is a decision-making body empowered by the Board of Directors. The GMC facilitates deliberations and renders decisions on the Group's overall management from the perspective of total optimization.
Nomination and Compensation Committee
The Nomination and Compensation Committee — a unique permanent organ consisting of two outside directors and three internal directors — plans the appointment/dismissal policy of directors and executive officers as well as their compensation packages.
The Internal Management & Control Division, which is in charge of internal auditing, objectively reviews and assesses the status of business execution by respective business divisions according to clearly defined rules to ensure legal compliance and adequacy of execution practices. It also provides advice and recommendations for improvement. The results are regularly reported to the GMC's Internal Control Committee.
Ricoh has formulated a set of guidelines called the "Policy and Procedures for Prior Approvals for Audit and Non-audit Services." In accordance with these guidelines, advance approval must be obtained from the audit and supervisory board members concerning the details of and fees for auditing contracts.
In its pursuit of increased shareholder value, the Ricoh Group employs executive compensation as an effective incentive to achieve a sustainable increase in corporate earnings over the medium and long term.
The base salary of Board directors consists of remuneration related to management oversight, remuneration reflecting the importance of individual roles and responsibilities, remuneration for the purpose of purchasing treasury stocks (except for outside directors), and variable remuneration linked to stock price performance during the relevant fiscal year. The Ricoh Group has been strengthening incentives for executives to increase shareholder value over the long term by allocating a portion of remuneration for stock repurchase so that executives will have a common interest with shareholders.
The amount of bonuses paid to directors is based on the attainment of key performance indicators — such as sales, operating income and ROA — that pertain to shareholder value and the company's competitiveness. Proposed bonuses for the Board of Directors are brought before the general shareholders meeting for approval.
Compensation paid to the Audit and Supervisory Board Members is comprised solely of remuneration for their auditing duties.
[Compensation for external accounting auditors]
Ricoh verifies the appropriateness of time spent on auditing together with audit firms and certified public accountants (CPA), taking into consideration the scale and characteristics of our businesses to determine final compensation for auditing services.
Compensation for auditing by external accounting auditors
The Ricoh Institute of Sustainability and Business has two think tank functions: to anticipate future socioeconomic trends and gauge their potential impact on corporate management; and to raise issues and offer advice to the top management of Ricoh based on its research.
The Institute enables Ricoh to gain an accurate understanding of structural transformations taking place in society and the economy that underlie ongoing changes to the business environment. At the same time, the Institute conducts independent analyses of Ricoh’s specific business conditions and explores issues reflected in medium- and long-term management strategies. The latter includes objectives for corporate contributions to the resolution of universal problems such as global warming, how the company should respond to global competition, and the search for a new growth model. Through this cycle of research tied to corporate initiatives, we seek to sharpen our competitive edge while gaining further trust from the international community.
Interacting with shareholders and investors
[General meeting of shareholders]
We review and revise our notifications of shareholder meetings and other materials as necessary to improve shareholder understanding of our business activities. We introduced the online Electronic Proxy Voting system to make voting more convenient for shareholders. We also hold a social gathering for executives and shareholders after each general shareholders meeting.
[Various explanatory meetings]
Our CEO regularly holds meetings to explain Ricoh's mid-term management strategy and the progress of its implementation to investors. We also hold meetings to explain our quarterly financial results in detail.
[IR site expansion]
Materials related to general meetings of shareholders, investor meetings and financial announcements are uploaded as they become available on our Investor Relations site for the benefit of shareholders and investors unable to attend related events. Ricoh's Investor Relations site was awarded the Internet IR Best Company Award by Daiwa Investor Relations Co., Ltd. in Japan in 2012.
[Communicating with shareholders and investors]
Ricoh organizes various events for shareholders, including social gatherings,tours of our business offices and explanatory m eetings to introduce the company's cultural and sports activities. (These kinds of events were held six times in fiscal 2013.) We also hold meetings with over 400 worldwide institutional investor firms annually.