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. Furthermore, 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.
External perspective vital in creating new core businesses
Mochio Umeda (Date of birth: August 30, 1960)
Director (outside) and Member of Nomination and Compensation Committee Since June 2010
(Currently) President, MUSE Associates, LLC. (U.S.A.); Managing Director, Pacifica Fund I, LP.; Outside Director, ASATSU-DK INC.; Representative Director and President of MUSE ASSOCIATES INC.; Director, βinnovation, Co., Ltd.
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 outside perspective. He attended 10 out of 11 Board meetings held in fiscal 2013.
In today’s business environment, there are a number of companies that operate with a sense of speed and dynamism and there are just as many that race ahead in bursts of explosive movement seeking immediate gains rather than permanence and stability. Both of these approaches, however, are completely different from the way most Japanese companies operate. Globalization has all these companies seeking to survive through competition and cooperation in various places all over the world.
Ricoh’s Board of Directors pursues free and open-minded discussions, albeit in an ultra-alert environment, and I feel the supervisory function is working well. As an outside director, I always strive to provide a perspective that might be difficult to see from the inside. I consider issues from a shareholder’s perspective while keeping world affairs and the operations of rival businesses in mind. I identify the substance behind every proposal submitted to the Board and pose questions on issues that I believe require attention.
Ricoh has established solid core businesses over many years. But it is time for the company to reinforce the corporate foundation by honing these businesses to an even greater degree and by working toward the creation of new core businesses. From experience, I know a key ingredient for success is decision making based on different concepts. An external perspective is extremely vital in this regard as well.
Three points to remember to ensure sustainable growth and higher corporate value
Kunio Noji (Date of birth: November 17, 1946)
Director (outside) and Member of Nomination and Compensation Committee Since June 2012
(Currently) Chairman of the Board, Komatsu Ltd.; Outside Director, NEC Corporation
Mr. Noji was president and CEO of Komatsu Ltd. He has abundant experience and expertise as a member of top management of one of the leading companies in Japan. We believe that this wealth of experience and knowledge will greatly benefit our decision-making process, and Mr. Noji will be able to offer us useful advice and counsel from an independent perspective. He attended all 11 Board meetings held in fiscal 2013.
In my capacity as the head of a major corporation, I conduct 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 remember the following three points:
First, “Initiate communication with employees and business partners.” This requires management to convey current issues as well as the company’s charted course and strategies directly to employees and business partners and thereby align all corporate activities in the same direction. Second, “Never put off dealing with risks.” When risk comes to light, it must be reported immediately, and measures—immediate and thorough—must be taken to prevent recurrence. Third, “Top priorities: safety, environment and compliance.” To create this kind of corporate culture, the priorities must become part of daily operations. For example, reports might start off with a description of safety, environmental and compliance issues before moving on to business performance.
I intend to continue with constructive participation at Board meetings as an outside director so that I can contribute to enhanced corporate value at Ricoh.
Master the “flamingo pose” but work on building another leg to stand on, too
Makoto Azuma (Date of birth: May 25, 1945)
Director (outside) and Member of Nomination and Compensation Committee Since June 2014
(Currently) Professor, Graduate School of Innovation Studies, Tokyo University of Science; Advisory Professor, Tsing Hua University (China)
Mr. Azuma was senior vice president and executive officer and CTO (chief technology officer) of Toshiba Corporation and is currently a professor at Tokyo University of Science Graduate School of Innovation Studies. His wealth of knowledge regarding technology strategy and managerial expertise will help shape and integrate our decision making and guide our efforts with an objective, expert perspective.
After some eight years in management at a major corporation, I took a position as an instructor at the Tokyo University of Science Graduate School of Innovation Studies. All my students are already in the workforce and belong to various industries, so lectures and seminars are greater opportunities for me to learn a little about a lot of companies. From this perspective, I see Ricoh as a company specializing in office equipment, particularly copiers. I liken it to a company in a flamingo pose, so to speak—a company balanced on one business leg. For these companies, the management issue of greatest importance is to work out strategies to strengthen and develop this one-leg business and then steadily implement the necessary steps.
In reviewing many corporate histories, I have found evidence of longevity in a single business. But to ensure longevity in one business, a company must be able to embrace change. For 40 years in the latter half of the 20th century, cathode-ray tubes were essential to television manufacturing, but today they have been entirely superseded by liquid crystal panels. Consequently, industry players are completely different from those in the past. Companies must always be ready for the appearance of disruptive technology. No company can stand on a single leg, not indefinitely, anyway. Management should not avoid investing in a complementary pillar of operations. It will be my role to actively suggest approaches to the Board of Directors to channel investment into the right R&D pursuits and the right technology acquisitions.
imgtitle">Board of Directors and Audit and Supervisory Board
(As of June 20, 2014)
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.
The Nomination and Compensation Committee—a unique permanent body consisting of three outside directors and two internal directors—plans the appointment/dismissal policy of directors and executive officers as well as their compensation packages.
The Internal Management and 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 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 directors are brought before the general shareholders meeting for approval.
Compensation paid to the Audit and Supervisory Board members is composed 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 (CPAs), taking into consideration the scale and characteristics of our businesses to determine final compensation for auditing services.
Compensation for auditing by external accounting auditors
Ricoh Institute of Sustainability and Business
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, based on its research, to the top management of Ricoh. The Institute pinpoints structural transformations taking place in society with regard to ongoing changes in the business environment while conducting independent analyses highlighting business conditions specific to Ricoh. In addition, the Institute explores new growth models, addressing such issues as corporate objectives for contributing to the resolution of universal problems, such as global warming, and how the Company should respond to global competition. Results are reflected in medium- and long-term management strategies. 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 deepen shareholder understanding of our business activities. We subscribe to the online Electronic Proxy Voting system to make voting more convenient for shareholders. After each general meeting of shareholders, we hold a business briefing where the CEO describes the mid-term management plan as well as a social gathering where executives and shareholders can speak directly with each other.
[Various explanatory meetings]
We hold meetings, as necessary, where the CEO explains our mid-term management strategy and progress on the implementation of associated measures. We also hold meetings each quarter to present financial results.
[IR site expansion]
Materials related to general meetings of shareholders, investor meetings and financial announcements are uploaded on our investor relations (IR) site as they become available for the benefit of shareholders and investors unable to attend related events. Ricoh’s IR site has been recognized for excellence by several external organizations, including Daiwa Investor Relations Co., Ltd.
[Communicating with shareholders and investors]
In addition to social gatherings for shareholders, Ricoh organizes various other events, including camera seminars, so that shareholders and investors have an opportunity to gain a deeper understanding of the Group’s activities. These kinds of events were held eight times in fiscal 2014. We also hold meetings with over 400 worldwide institutional investor firms annually.
[Number of tangen shares]
The number of shares constituting one unit (tangen) of shares was reduced from one thousand (1,000) shares to one hundred (100) shares, effective January 2014.