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.
On May 9, 2019, the Company carried out an evaluation the effectiveness of the Board of Directors held from April 2018 to March 2019 and disclose the results as outlined below.
The year ending March 31, 2020 is an important year to achieve the goals of the 19th Mid-Term Management Plan (the “19th MTP”) and to formulate the upcoming 20th Mid-Term Management Plan (the “20th MTP”). The Board of Directors evaluated its effectiveness in order to further enhance its function and governance for the purpose of continuing to provide appropriate oversight and support for the management, and to further increase Ricoh's corporate value through the achievement of the 19th MTP and growth strategy.
The effectiveness of the business execution was discussed along with that of the Board of Directors upon sharing written evaluations by the Directors and the Audit & Supervisory Board Members, similar to the previous year.
Following the evaluation of effectiveness in the year ended March 31, 2018, the Board of Directors worked to improve its effectiveness by establishing a basic policy for the year ended March 31, 2019 and has set three improvement items outlined below in order to make steady improvements.
<Basic policies for the year ended March 31, 2019>
<Items for Improvement>
The following results summary outlines the contents of the evaluations and discussions by the Directors and the Audit & Supervisory Board Members.
Evaluations concerning the effectiveness of the Board of Directors, the Nomination Committee, and the Compensation Committee are as follows.
Meanwhile, there were remarks calling for improvement on enhanced and efficient reporting according to the business condition. There were also remarks on the necessity to increase discussions which relates to a medium- to long-term corporate value development.
Appreciated for the fact that the following points crucial in developing the growth strategies were identified and steadily determined/implemented through the deliberation of the Board of Directors.
Meanwhile, there were remarks on needs to improve discussions of personnel strategies, technological strategies, and sustainable enhancements of corporate value based on a medium- to long-term stand point.
Appreciated for reviewing the appointment and dismissal process of the CEO and officers, and enforcing the governance system from a shareholder perspective by introducing the stock compensation system.
There were also good feedback on risk management, being inspected and streamlined, and also on its prompt decision making and execution of system development, such as the establishment of its expert committee.
Meanwhile, there were remarks on the importance of continuing defense measures such as the inspection and improvement of the governance and risk management systems as well as offense measures such as discussion to maximize corporate value for the Ricoh Group.
Appreciated for the optimization and performance recovery of the North American sales structure as a result of appropriate monitoring based on detailed reporting from frontline managers, as well as the prompt decisions and implementation of important structural reform themes such as business reorganization of the Ricoh Group following the previous year.
Meanwhile, there were remarks that the Board of Directors needs to continue monitoring cost reductions as an effort that can immediately address changes in business structure and earnings structure.
Following evaluations were made concerning the response of executives confirmed at the Board of Directors
Meanwhile, there were remarks calling for ongoing improvement of the management system covering administrative accounting, investment and risks, which accommodates the changes in business and profit structures as the growth strategies unfold.
In response to the above evaluation, the Board of Directors works to improve its effectiveness by establishing a basic policy for the year ending March 31, 2020, and has set three improvement items outlined below in order to enhance the corporate value through execution of the 19th MTP and formulation of the 20th MTP.
<Basic policies for the year ending March 31, 2020>
<Improvement items for the year ending March 31, 2020>
Training for the Company's Directors and Audit & Supervisory Board Members has the objective of enabling constructive discussion that contributes to improving corporate value and shareholder value via the oversight functions of the Board of Directors. It is conducted by acquiring and updating knowledge specific to the duties and environment for each of the Company's internal and external Directors and Audit & Supervisory Board Members. The goal of the training is to enable them to fulfill their roles and responsibilities fit for an executive that undertakes a position in the Company's important governing bodies.
To confirm that the above measures are being conducted appropriately, their results are reported to the Board of Directors.
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.
Basic compensation consists of compensation pertaining to management oversight and compensation reflecting the importance of individual roles and management responsibilities. In addition, compensation based on positions is additionally provided for the Representative Director, Chairman of the Board, Chairperson of the Nomination Committee and the Compensation Committee, etc.
The amount of bonuses paid to Directors is determined based on the achievement of key performance indicators, which reflect the improvement in shareholder value and enhancement of the Company's competitiveness. Operating income was decided as the key performance indicator serving as the standard for bonuses at the Compensation Committee held on December 12, 2017. By setting operating income as the key performance indicator, which is strongly correlated with market capitalization, it further clarifies responsibilities of Directors for the business results of the entire Ricoh Group and the improvement of shareholder value. In addition, regardless of the results calculated through this framework, whether or not a bonus will be paid reflecting the status of governance and nonfinancial factors will be discussed and decided by the Compensation Committee.
Compensation of Audit & Supervisory Board Members is appropriately reflected by expected role of the Auditors only.
|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||341||341||–|
|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||–|