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 it follows internal control procedures to achieve the success of our corporate strategies and business targets.
(As of June 22, 2018)
As part of the strengthening of management oversight functions by the Board of Directors, the “Nomination Committee”, which is chaired by a Non-executive Director, and the “Compensation Committee”, which is chaired by an Outside Director, with the majority of members on both committees being Non-Executive Directors and at least half of the members being Outside Directors, were established to ensure transparency and objectivity of nomination, dismissal and compensation of Directors and executive officers, etc. And the Board of Directors Office was set up to support the Board of Directors, driving robust decision-making and ensuring transparent management oversight.
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 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.
The Company carried out an evaluation of the effectiveness of the Board of Directors meetings held during the year ended March 31, 2018, specifically the year starting in April 2017 and ending in March 2018. The following summarizes the results of the evaluation.
For the purposes of this evaluation—as we head into the fiscal year ending March 31, 2019, in which the Company will steer in the direction of its growth strategy—the Company not only conducted an evaluation from the perspective of improving the effectiveness of the Board of Directors, it also evaluated the business execution that is subject to supervisory monitoring. This approach was taken in recognition of the fact that it is necessary to create an environment in which both the Board of Directors and the business execution system can collaborate appropriately, and with a suitable sense of tension.
Specifically, all Directors and Audit & Supervisory Board Members evaluated the levels of achievement of two items for improvement, which were proposed last year (see below), the effectiveness of the deliberations, decision making and supervision of the Board of Directors, and other matters including the response to business execution checked at the Board of Directors. The evaluations were made in advance by writing evaluation comments in free form, which were then shared and discussed among the members.
The following is a summary of the content of the evaluation comments, and the results of subsequent deliberations.
In response to the evaluation of the effectiveness for the previous year, the Company's Board of Directors set basic policies and four specific items for improvement with the aim of steadily achieving improvements to increase the level of effectiveness.
<Basic Policies for the year ended March 31, 2018>
<Items for improvement>
With respect to the actions mentioned above, key views presented in the evaluation meeting as follows.
In view of the evaluations presented above, in moving toward the implementation of the Company's growth strategy, Ricoh Ignite, the Board of Directors will operate in accordance with the following basic policies, and will seek to make further improvements to enhance its effectiveness focusing primarily on the following three items for improvement.
<Basic policies for the year ending March 31, 2019>
<Items for improvement for the year ending March 31, 2019>
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.
|Category||Number of persons||Total amount of compensation, etc. (Millions of Yen)||Total amount of each type (Millions of Yen)|
|Directors (excluding Outside Directors)||6||342||296||46|
|Audit & Supervisory Board Members (excluding Outside Audit & Supervisory Board Members)||3||57||57||–|
|Outside Directors and Audit & Supervisory Board Members||8||86||86||–|
|Outside Audit & Supervisory Board Members||4||29||29||–|
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.
|Category||Fiscal year ended March 31, 2018|
|Fees for audit services (Millions of Yen)||Fees for non-audit services (Millions of Yen)|
|Ricoh Company Ltd.||218||–|