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Governance

Corporate Governance

Policy and Basic Concept

The Ricoh Group is working to enhance its governance system in accordance with social awareness and various stakeholders aimed at strengthening competitiveness and continuously improving the system while ensuring transparency based on corporate ethics and legal compliance. In this way, the Ricoh Group will achieve continuous growth, and improve corporate value and shareholder value.
The Ricoh Group has introduced a corporate audit system. In addition, the Group is making efforts toward enhancing oversight of executive management by the Board of Directors and enhancing execution of operations by the executive officer system. Furthermore, by appointing Outside Directors, the Group is making efforts toward further enhancement of corporate governance by decision-making and oversight of executive management through discussion from their independent perspectives.
The nomination of Directors and Executive Officers and their compensation are deliberated by the Nomination Committee and the Compensation Committee, advisory bodies which comprise a majority of Outside Directors.
The results are reported to the Board of Directors.

Corporate Governance Structure

Committees

Non-executive Directors account for a majority of the members of each Committee, and more than half of them are Outside Directors.
As of June 24, 2021

Review meetings

Governance review meeting
Governance review meetings provide a forum for comprehensive discussions on Ricoh’s direction of governance and related issues by Directors, Audit and Supervisory Board Members, and other relevant parties. The outlines of the review meetings held are disclosed in the Corporate Governance Report and other documents.
Directors’ Review Meeting
Directors’ review meetings provide an opportunity and time for Directors and Audit and Supervisory Board members to thoroughly discuss important corporate themes (such as the Mid-Term Management Plan) in advance of the Board of Directors resolution.

Structures and Systems

Board of Directors

The Board of Directors is responsible for management oversight and essential decision-making for Group management. By appointing highly independent Outside Directors, the Group ensures greater transparency in its management and fair decision-making. By leveraging the expertise and experience of each Outside Director, Non-executive Director, and Executive Director in holding in-depth discussions on important issues, the Company encourages initiatives in new areas of growth, creating a structure that allows for management oversight from the perspectives of various stakeholders, including shareholders. The Company’s policy is for at least one-third of the members of the Company’s Board of Directors to be Outside Directors (Independent Directors).
In fiscal 2020, of the 10 Directors, five were independent Outside Directors—part of its continued effort to incorporate various views and opinions and eliminate arbitrary decision-making in management. As a rule, all Directors must attend at least 80% of the Board of Directors’ meetings and are required to fulfill an effective supervisory function for corporate management.

Board of Directors structure
  • Maximum number of Directors: 15
  • Current number of Directors: 10 (including 5 Outside Directors)
  • Term: 1 year

As of June 24, 2021

Board of Directors

Audit and Supervisory Board

The Audit & Supervisory Board discusses and decides on audit policies and assignment of duties, audits the execution of duties by Directors, plays a supervisory function on management through cooperating with the Company’s Independent Auditor and the internal audit division, and auditing internal departments and subsidiaries. Audit & Supervisory Board Members attend important meetings, including but not limited to the Board of Directors meetings, and exchange information regularly with Representative Directors.
The Company has five Audit & Supervisory Board Members, comprising two (2) full-time members who are familiar with internal circumstances and three outside members who meet the requirements for independent Audit & Supervisory Board Member set by the Company, and the majority of the members are independent Outside Audit & Supervisory Board Members. In addition, the Audit & Supervisory Board is required to secure necessary knowledge, experience, and specialized abilities in a well-balanced manner in forming the Audit & Supervisory Board. We have built a system that enables deep discussions from an independent and objective perspective, capitalizing on a wealth of experience and wide-ranging insight in the specialized fields of each Audit & Supervisory Board Member.

Audit and Supervisory Board structure
  • Maximum number of Audit and Supervisory Board Members: 5
  • Current number of Audit and Supervisory Board Members: 5 (including 3 Outside Audit and Supervisory Board Members)
  • Term: 4 years

As of June 24, 2021

Audit and Supervisory Board

Framework for the Audit and Supervisory Board Office to assist the execution by Audit and Supervisory Board Members

Audit and Supervisory Board

Coordination of the audit function

In order to ensure effective performance of duties by Audit & Supervisory Board Members, in addition to the activities reported in the Notes on the Audit Performance, the Audit & Supervisory Board coordinates as appropriate with Audit & Supervisory Board Members, the Independent Auditor and Internal Audit Office to strengthen and enhance all aspects of the Company’s audit function.

1. Three-way audit coordination

Audit & Supervisory Board Members, the Independent Auditor and the Internal Audit Office (the Company’s internal audit division), meet to discuss audit policies, plans and methods. In addition, basic information and risk information related to subsidiaries, which had previously been managed in various places across the Group, has been gathered into one place and reorganized into “integrated risk information database for the Ricoh Group,” which can be shared and utilized effectively by each audit body. The Audit & Supervisory Board also holds monthly three-way audit meetings with the Independent Auditor and the Internal Audit Office, to exchange information on the details and results of audits, and exchange opinions regarding matters such as the status of internal control and risk assessment, with the aim of ensuring a shared awareness of issues.

2. Individual coordination

  1. Coordination between Audit & Supervisory Board Members and the Internal Audit Office

    Full-time Audit & Supervisory Board Members hold regular monthly meetings with the Internal Audit Office and the corporate officer in charge of internal controls, to discuss the results of audits and ensure a shared awareness of issues. In addition, the Internal Audit Office reports quarterly to the Audit & Supervisory Board on the status of its activities, and engages in an exchange of opinions that includes the perspectives of Independent Outside Audit & Supervisory Board Members.

  2. Coordination between Audit & Supervisory Board Members and the Internal Audit Office

    Full-time Audit & Supervisory Board Members hold regular monthly meetings with the Internal Audit Office and the corporate officer in charge of internal controls, to discuss the results of audits and ensure a shared awareness of issues. In addition, the Internal Audit Office reports quarterly to the Audit & Supervisory Board on the status of its activities, and engages in an exchange of opinions that includes the perspectives of Independent Outside Audit & Supervisory Board Members.

  3. Coordination between the Independent Auditor and the Internal Audit Office

    The Internal Audit Office shares the results of internal audits with the Independent Auditor and engages in the exchange of opinions.

Committees

Nomination Committee/Compensation Committee

As part of strengthening the management oversight functions by the Board of Directors, the Nomination Committee, which a Non-executive Director chairs, 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. The establishment of these committees is to ensure transparency and objectivity of selection, dismissal, and compensation of Directors and Executive Officers, etc. In addition, one Outside Audit and Supervisory Board Member attends the deliberations of the Nomination Committee and Compensation Committee as an observer each time.

Group Management Committee

The Group Management Committee (GMC), chaired by the President and Chief Executive Officer, and consisting of executive officers, 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.

Disclosure Committee

The Disclosure Committee performs appropriate disclosure of information which may influence the decisions of investors in addition to promoting dialogue with shareholders and capital markets by proactively disclosing corporate information that contributes to investment decisions, and thereby seeks to develop relationships of trust with shareholders and capital markets as well as to achieve an appropriate recognition of the Ricoh Group.
This committee is composed of representatives from the disclosure management division, accounting division, legal division, information-generating and acknowledging departments, the principal administrative divisions managing affiliates, the internal control division, and the CFO, who is responsible for information disclosure.
In FY2020, we reviewed the existing roles and standards of holding of the Disclosure Committee meetings. We added to its role the deliberation on active disclosure and monitoring disclosing procedures regarding company information that contributes to investors’ investment decisions, including surveys that have a significant impact on branding, along with the judgment on the appropriateness and accuracy of annual report documents and timely disclosure documents, and judgment on the necessity of information disclosure in disclosure procedures. Furthermore, the internal control division regularly evaluates the timeliness of information disclosure, the accuracy and validity of disclosure statements, and the validity of disclosure decisions, etc., and reports its findings to the Internal Control Committee and the Board of Directors.

Internal Control Committee

The Internal Control Committee is an organization to deliberate and make decisions on the internal control system of the whole Ricoh Group.
This committee is composed of GMC members and is chaired by the CEO. Delegated by the CEO, the committee determines the policies for internal control activities of the entire Ricoh Group in accordance with internal control principles, and periodically evaluates and rectifies the internal control development and operation status. In consideration of environmental changes, the committee makes proposals to the Board of Directors to revise the internal control principles as necessary.

Risk Management Committee

The Risk Management Committee was established as an advisory body to the GMC to strengthen risk management processes across the entire Ricoh Group. The committee is chaired by the corporate officer in charge of risk management and has experts from each organization as members to ensure comprehensive coverage of risks and substantial discussions and propose to the GMC specific risks requiring response and focused on the management of the Ricoh Group. The committee enhances the Ricoh Group’s risk management by reviewing and restructuring the risk management system as needed, shown in the figure on the right.
In fiscal 2020, the committee meeting was held twice in November. We had an intensive discussion about new risks which various changes will bring about, such as changes in work styles due to the pandemic, changes in the internal environment (transition to a business unit structure and transformation into a digital services company), and the everchanging international situation. In March 2021, we reconfirmed if any important risks remain for the new structure, but it cannot be said that the possibility of unexpected events and management blind spots is zero. Therefore, from fiscal 2021, we will strengthen monitoring by increasing the frequency of the Risk Management Committee meetings, identifying and addressing risks early, and reviewing managerial risks appropriately to deal with risks flexibly. Management coordinates with each business execution division, selecting a person responsible for risk management from each division (as a rule, the manager), as well as a person responsible for the promotion of risk management (in a position to communicate with the organization head daily), to further enhance the effectiveness and comprehensiveness of risk management systems. In addition, we are fostering a corporate culture resilient to risks by holding meetings to strengthen coordination for persons in charge of promoting risk management, sharing good examples of risk management activities at each organization, disseminating managerial risks, and holding study sessions and workshops organized by outside experts about ways to make the corporate culture more risk-resistant.

Risk Management

Investment Committee

The Investment Committee is positioned as an advisory committee to the GMC, and verifies investment plans based on the validity of financial aspects including capital costs, and strategic aspects such as profitability and growth risks, etc. Members with expertise review and discuss diversifying investment projects to external entities in order to ensure consistency with management strategies and raise the efficacy of the investment while improving the speed and accuracy of investment decisions.
The committee mainly discusses investments from the aspects of strategies, finances, and risks, and its members include a chairperson appointed by the CEO, representatives from the business planning, accounting, legal, and internal control sections as specialists on each aspect as well as various experts depending on the project. The committee receives prior inquiries from planning departments to provide evaluations and advice after performing comprehensive discussion on the investment value of a project. Although the committee is not authorized to approve or disapprove of any investment projects, it assists the decision-maker in making objective decisions by clarifying the results of the committee's discussions on each project.
In order to improve the accuracy of decisions made in the entire Group to invest in external entities, the committee, which is an advisory body to the GMC, also handles projects below the minimum investment amount set out by the GMC. This is intended to strengthen the investment decision-making capabilities of the planning department as well as maintaining the flexibility of amending the minimum investment amount through recommendations to the GMC as necessary.

ESG Committee

The ESG Committee aims to respond promptly and appropriately to the expectations and needs of stakeholders by continuously discussing medium- to long-term environmental, social, and governance issues faced by the Ricoh Group at a management-level and leading the discussions to the quality enhancement of the entire Group. The ESG Committee has the following specific responsibilities:

  1. Formulate the Ricoh Group Sustainability Strategy to resolve social issues through business, such as initiatives toward achieving SDGs, into the foundation of the Company's management
  2. Identify medium- to long-term sustainability risks and opportunities as well as material issues faced by the entire Group (including those regarding investment decisions on risks and opportunities related to climate change recommended by the TCFD*
  3. Supervise and advice on sustainability strategies, material issues, and progress on KPIs for each business division throughout the entire Group
  4. Identify sustainability issues to be submitted for discussion at the Board of Directors meetings

The committee is chaired by the CEO, and is composed of GMC members, an Audit and Supervisory Board member, and the executive officer overseeing ESG. The committee convenes quarterly and invites representatives of the business divisions associated with the subject of discussion, and provides a system to examine and discuss sustainability issues across the board.

*
TCFD
Task Force on Climate-related Financial Disclosures.
Established by the Financial Stability Board (FSB), the TCFD provides stability to financial markets by promoting information disclosure of climate-related risks and opportunities by companies, and facilitating a smooth transition to a low-carbon society.

Disclosure based on TCFD framework

Election of Directors

Approach to Election of Directors

Election Criteria for Directors

Management capabilities
Superior insight and judgment necessary for management functions
  1. Knowledge of a wide range of businesses and functions, and the ability to think and make decisions appropriately from a company-wide and long-term perspective
  2. Insight into the essence of issues
  3. Vision to make best decisions on a global leve
  4. Judgment and insight based on extensive experience, as well as excellent track record leading to significant improvements in corporate value and competitive strength
  5. Ability to think and make decisions appropriately from the perspective of various stakeholders including shareholders and customers based on a firm awareness of corporate governance
Character and personality
Positive trust relationships between Directors and management team for smooth performance of the oversight function
  1. Integrity (honesty, moral values and ethics); exemplifies fair and honest decisions and actions based on a high sense of morality and ethics in addition to the strict observance of laws, regulations, and internal rules.
  2. Ability to interact with others with deference and trust based on a spirit of respect for humanity and set an example for decisions and actions that respect the personality and individuality of others based on a deep understanding and acceptance of diverse values and ideas.

Election criteria for Outside Directors

In addition to the same election criteria as for Internal Directors stated above, the election criteria for Outside Directors include expertise in different fields, problem discovery and solving capabilities, insight, strategic thinking capabilities, risk management capabilities, and leadership qualities.

Diversity Policy

We believe that the Company’s Board of Directors should be composed of directors with management ability and a rich sense of humanity, in addition to diverse viewpoints and backgrounds, in addition to sophisticated multilateral skills. When considering diversity, our policy is to select candidates based on their character and insight without distinction of race, ethnicity, gender, nationality, etc. In addition, we also ensure diversity of expertise and experience in various management-related fields.

Election Process and Evaluation Process for Directors

We are making ongoing efforts to strengthen and enhance corporate governance for our sustainable growth and improvement of corporate and shareholder value.

Nomination Committee

The Board established the Nomination Committee, which ensures that procedures for appointing, dismissing, and evaluating Directors, the CEO, and other management team members are objective, transparent, and timely. In order to enhance objectivity and independence, the committee is chaired by a Non-executive Director, and the majority of the members are Non-executive Directors, with at least half being outside directors. During fiscal 2021, the committee was chaired by an Outside Director with four Outside Directors, one internal Non-executive Director, one Internal Executive Director, and a majority of Outside Directors.
The Nomination Committee deliberates on the following inquiries and reports on the deliberation and conclusions to the Board of Directors.

Inquiry items
  1. Nomination of candidates for CEO and Directors
  2. Evaluation of the soundness of the CEO and Directors to continue in their duties
  3. Evaluation of achievements of the CEO and Directors
  4. Confirmation of status of CEO succession plans and development of future CEO candidates
  5. Confirmation of appointment/dismissal proposals and reasons thereof for Corporate Vice Presidents, Group Executive Officers, Advisors, and Fellows
  6. Approval or disapproval on the formulation, revision or abolishment of appointment/dismissal systems for Directors, Corporate Vice Presidents, and Group Executive Officers
  7. Other matters individually consulted by the Board of Directors
Other agenda items
  1. Confirmation of reasons for selecting candidates for Audit & Supervisory Board Member based on requests from the Audit & Supervisory Board
  2. Confirmation of performance evaluation of Executive Officers
  3. Other matters consulted by the CEO

Election process

In order to maintain a Board of Directors structure that enables appropriate and effective management decision-making and supervision of business execution, the Nomination Committee undertakes ongoing deliberation on the composition of the Board and the specializations, experience (skills and career matrix), etc. required of Directors. Candidate nominations for Director are deliberated by the Nomination Committee over two sessions and undergo a strict screening process. Based on the reporting from the Nomination Committee, the Board of Directors deliberates from shareholder perspectives. It determines the candidates to be submitted to the General Meeting of Shareholders.

Evaluation process

Directors are evaluated annually by the Nomination Committee. From the year ended March 31, 2019, the former one-step evaluation was modified to a two-step evaluation. In the first evaluation, careful and appropriate deliberations are made on the soundness of Directors to continue in their duties, ensuring timeliness of appointment and dismissal. In the second evaluation, Directors' achievements are evaluated with a multifaceted approach, and their issues are clarified through feedback in an effort to improve the quality of management.
Furthermore, evaluations are based on such standards as “Management oversight status as a Director,” “Financial aspects including key management indicators regarding business results, return on capital, etc.;” and “Contribution to shareholders and evaluation by capital markets.”

Evaluation of CEO and CEO Succession Plan

Evaluation of CEO and CEO Succession Plan

The CEO succession plan is an important initiative for improving shareholder value and corporate value of the Ricoh Group in a continuous manner over the medium to long-term and continuously fulfilling the social responsibilities of the Group as a member of the society. From the viewpoint of strengthening corporate governance, the Group works to establish a CEO succession plan with procedures that are objective, timely, and transparent.

CEO Evaluation

The Nomination Committee evaluates the CEO. It adopted a two-step assessment process in fiscal 2018. In the first evaluation, careful and appropriate deliberations are made on the soundness of the CEO, ensuring timeliness of appointment and dismissal. In the second evaluation, the CEO’s achievements are evaluated with a multifaceted approach, and their issues are clarified through feedback to improve the quality of management. The Nomination Committee’s deliberations and conclusions on the evaluation of the CEO are reported to the Board of Directors to oversee the CEO effectively.

Key items for the CEO evaluation
(1)
Financial viewpoint
Progress of the Mid-term Management Plan and business plans, return on capital, other key management indicators, etc.
(2)
Shareholder and capital market viewpoint
Stock-related indicators including TSR, analyst evaluations, etc.
(3)
Non-financial viewpoint
ESG measures, customer and employee satisfaction, safety and product quality, etc.

Selection, development and evaluation of CEO candidates

Once a year, the CEO prepares a list of potential future CEO candidates together with a development plan for them and elaborates on the proposals at the Nomination Committee. The Nomination Committee deliberates on the validity of the CEO candidate list and development plans, provides advice to the CEO on candidate development, and reports the findings to the Board of Directors. The Board of Directors confirms the validity of the candidate selection and development plans upon reporting from the Nomination Committee and is actively involved in the selection and development of CEO candidates.

Selection of candidates

CEO candidates are selected by terms in the table on the left according to the timing of the change. The backup candidate in case of accident in the table on the left is determined via resolution of the Board of Directors at the same time the CEO is selected.

Terms Number of persons selected
Backup candidate in case of accident One
First candidate in line Several
Second candidate in line Several
Development of candidates

The Nomination Committee deliberates on the development plan for future CEO candidates and gives guidance to the CEO, who provides growth opportunities suited to each candidate according to their individual targets, allowing the candidates to accumulate experience. The CEO also gives direct guidance to promote the candidate's development based on individual assessment.

Evaluation of candidates

CEO candidates are evaluated annually, and the CEO reports to the Nomination Committee regarding the status of achievements and growth of the CEO candidates. The Nomination Committee reviews the selection of CEO candidates, and reports the results to the Board of Directors. Upon reporting from the Nomination Committee, the Board of Directors evaluates the CEO candidates and confirms the validity of deliberations on which candidates are to remain, and is actively involved in the process.

Compensation for Directors

Policy of Compensation for Directors

Executive compensation is positioned as an effective incentive to achieve sustainable increases in corporate earnings for the medium to long term in the pursuit of increased shareholder value of the Ricoh Group. In addition, from the viewpoint of strengthening corporate governance, measures to secure objectivity, transparency, and validity are taken in setting up compensation levels and determining individual compensation. Ricoh determines executive compensation based on the following basic policies:

  1. Executive compensation is composed of three elements: i) basic compensation that reflects expected roles and responsibilities, ii) bonuses that reflect business results (performance-linked compensation), and iii) compensation that reflects medium- to long-term increase in shareholder value. Compensation for Outside Directors is only basic compensation to ensure independence from business execution. Compensation for internal Non-executive Directors is comprised only of basic compensation and bonuses in light of their roles of serving full-time and overseeing business execution with extensive knowledge of the actual situation of Ricoh.
    Compensation for Audit and Supervisory Board Members consists only of basic compensation for their roles of appropriately conducting audits.
  2. When compensation levels are set up, and individual compensation is determined, objectivity, transparency, and validity must be secured through proper external benchmarks and deliberation by the Compensation Committee
Breakdown of Director compensation

Breakdown of Director compensation

1
Basic compensation is monetary remuneration paid monthly during the term of office as compensation that reflects the roles and responsibilities expected of Directors. The amount of compensation is decided within the range of the total amount of compensation determined at the general meeting of shareholders. The total amount of compensation paid for fiscal 2020 was 253.32 million yen.
2
Bonuses are monetary compensation paid after the end of a fiscal year as compensation that reflects our business performance and shareholder value improvements in the target fiscal year. Operating profit is used as the basis for calculating the payment amount. Operating profit, which correlates with market capitalization, is set as an important indicator to clarify that Directors are responsible for improving the performance of the Ricoh Group and shareholder value. In addition, to clarify that Directors are accountable for achieving the targets set for important indicators, we have established an indicator that uses ROE results for each fiscal year as an incentive to enhance return on capital, and another indicator, the annual DJSI*4 Rating, which we are pursuing as an incentive to improve ESG on a company-wide basis.
Regardless of the results calculated by the formula below, the Compensation Committee deliberates whether or not to pay bonuses, reflects the status of governance and non-financial factors, and makes recommendations to the Board of Directors. Based on these recommendations, the Board of Directors decides whether or not to submit a proposal of paying Directors’ bonuses to the general meeting of shareholders.
Regarding bonuses for Directors in fiscal 2020, the Board of Directors decided at its meeting on May 7, 2021 not to pay bonuses for Directors in light of an operating loss of 45.4 billion yen for the full year, following the deliberation by the Compensation Committee accordingly. Therefore, there is no disclosure item regarding the bonus calculation method and performance indicator results for fiscal 2020.
3
Compensation that reflects the stock price consists of the following compensation for acquiring stock and stock-based compensation with stock price conditions to strengthen further Directors’ commitment to improving corporate value over the medium to long term.
*1 
Excludes Outside Directors
*2 
Excludes Outside Directors and Non-executive Directors
*3 
Excludes Outside Directors and Non-executive Directors
*4 
Dow Jones Sustainability Indices:
Dow Jones & Company of the United States and sustainability investment research firm S&P Global jointly developed these indices, analyzing corporate sustainability from economic, environmental, and social perspectives

Revision to the formula for calculating Directors’ bonuses linked to key performance indicators

Bonuses for the Company’s Directors are determined based on key performance indicators related to increasing share price and reinforcing competitive strength. At the meeting of the Board of Directors held on March 31, 2020, it was determined to establish return on capital and ESG indicators in the formula for calculating Directors’ bonuses, starting from fiscal 2021. With this revision to the bonus formula, Directors’ responsibility has been made clear with regard to achieving key performance indicator goals.

Main Points of the formula revision

Establish a performance indicator using ROE results for each fiscal year, as an incentive to enhance return on capital
Establish the annual DJSI Rating, which the Company as a whole is pursuing, as a performance indicator, as an incentive to enhance ESG indicators
Indicators related to return on capital and ESG will also be added to the formula for Executive Officers.
Formula for calculating Director's bonuses

Formula for calculating Director's bonuses

Assessing effectiveness of Board of Directors

Overview of Board of Directors’ effectiveness assessments in fiscal 2020

1.Fiscal 2020 evaluation of effectiveness of Board of Directors

Our evaluation focused not just on the effectiveness of the Board of Directors but also on how executives responded to requests from the Nomination Committee, Compensation Committee, and Board of Directors. In addition, a third-party evaluation was implemented to ensure objectivity.

Basic policies for fiscal 2020
  1. Provide oversight and support to ensure timely and appropriate responses to the business environment and update and implement strategies for the future
  2. Appropriately monitor conditions and deliberate more from medium- to long-term perspectives to bolster capital returns and operating capital
Evaluation process

The evaluation was conducted through discussions attended by all Directors and Audit and Supervisory Board Members, after sharing the results of their written assessments and the analysis of questionnaires conducted by a third-party that ensured anonymity.
Through the discussions, participants reviewed and evaluated the Board of Director’s performance during fiscal 2020, in terms of the basic policies on the operation of the Board of Directors and the three improvement items outlined below, which were set forth by the Company’s Board of Directors in the previous effectiveness assessment.

2. Results of operation of the Board of Directors

In fiscal 2020, the Board of Directors oversaw and supported emergency response to the pandemic. At the same time, it deliberated more from medium- to long-term perspectives and endeavored to supervise and decide on important agenda items. These included formulating the 20th Mid-Term Management Plan, adopting a business unit structure, and considering the capital policy. The Board of Directors determined pressing and medium- to long-term priorities and enhanced reporting and deliberation based on the annual schedule. It also shared information more effectively by using advance explanations and written reports and better supporting outside directors and the Audit and Supervisory Board members.
The time allocation to agenda items at meetings of the Company’s Board of Directors in fiscal 2020 is disclosed below to ensure the transparency of the status of deliberations of the Board of Directors

Board of Directors—Time allocation by agenda item

Board of Directors—Time allocation by agenda item

*1 Items to be resolved:
In addition to agenda items for resolution by the Board of Directors, these include Directors’ review meetings and governance review meetings held to prepare for deliberations.
*2 Other:
Resolutions, etc., per the provisions of the Companies Act.
3. Fiscal 2020 action items and results summary
〈Action items〉
  1. Encourage appropriate responses to the impact of the pandemic from emergency and medium- to long-term perspectives
  2. Accelerate implementation by properly deliberating and supporting strategic updates given the operating climate
  3. Monitor business expansion in terms of capital returns and discussion and support efforts to reinforce operating capital, notably in terms of human resources, technology, and funding for sustainable growth
〈Improvement results〉
Action items 1 and 2
  • The Board ensured sufficient liquidity to cover the pandemic emergency and monitored the responses while conducting situational analyses based on detailed regional data.
  • As well as reinforcing emergency oversight, the Board further discussed the Mid-Term Management Plan, capital policy, corporate structure, business plans, and other matters. Ricoh’s decision on effective plans and frameworks, which serve as a steppingstone toward becoming a digital services company, earned recognition.
  • Still, in the coming years, the top challenges will be to implement and reach goals for the 20th MTP and the fiscal 2021 business plan. To further shape the execution plan, management system and operations will be required to be implemented quickly for the Board to provide appropriate monitoring and support.
Action item 3
  • The Board held extensive deliberations on human resources, technological, intellectual property, liquidity base, and other capital forming foundations for growth over the medium through long terms. The 20th Mid-Term Management Plan reflects these deliberations. The company was commended for deepening discussions about shareholder returns and other capital policy elements, showing a path forward to improving corporate value.
  • The Board will be required to continue its exploration of medium- to long-term digital transformation strategies, human resources, technologies and intellectual property, growth investments and ESG, and other business underpinnings for Ricoh to transform into a digital services company.
  • ROIC-driven business and portfolio management and closer follow-up on growth investments under the business unit structure are necessary to improve the return on capital while transitioning the business structure.

Fiscal 2021 efforts to improve the effectiveness of the Board of Directors

Based on the evaluation above, we recognize the importance of continuously improving corporate value by deploying 20th Mid-term Management Plan initiatives and reaching our fiscal 2021 business plan goals. Accordingly, the Board will keep with the following fiscal 2021 basic policies and prioritize the three action items to strive to become more effective.

Basic policies for fiscal 2021
  1. Monitor and support the steady implementation of the 20th Mid-term Management Plan and achieve the fiscal 2021 business plan
  2. Enrich deliberations on business foundations and strategies to accelerate sustainable growth after the pandemic emergency
Action items for fiscal 2021
  1. Increase the degree of achieving fiscal 2021 business plan goals by monitoring financial and non-financial results and progress with measures while encouraging appropriate responses
  2. Bolster supervision and deliberation to transform the business structure and improve returns on capital over the medium and long terms and optimize resource allocations, systems, and operations
  3. Further discussion about the business infrastructure components, such as human, technological, and intellectual capital, as well as growth, digital transformation, and other strategies, from the standpoint of the post-pandemic business environment

Approach to Election of Audit & Supervisory Board Members

Election Criteria for Audit & Supervisory Board Members

Candidates for Audit & Supervisory Board Member are selected for their appropriateness as personnel able to contribute, through the performance of duties as an Audit & Supervisory Board Member, to sound and sustained growth of the Company and the medium- to long-term enhancement of its corporate value, taking into consideration the balance of knowledge, experience and specialized abilities required of the Audit & Supervisory Board.
The following criteria (requirement definitions) have been established by the Audit & Supervisory Board in order to select candidates for Audit & Supervisory Board Member based on objective assessment of their suitability.

Audit ability
  1. Appropriate experience, ability, and the necessary knowledge regarding finance, accounting and law
  2. Professional skepticism and the ability to investigate facts properly, with an earnest attitude, and exercise objective judgement
  3. Sense of duty and courage founded on personal beliefs, and the ability to make active and forthright suggestions and proposals to Directors and employees
  4. The ability to see matters from a shareholders’ perspective, act on this perspective, and engage in audits based on an attitude of learning from actual front lines, actual things and actual facts
Knowledge background and temperament
  1. Healthy in mind and body, and able to serve for a full four-year tenure as Audit & Supervisory Board Member
  2. Always aspires to improve him/herself, with a desire to learn new things
  3. Able to manage local staff and communicate in English

Election Criteria for Outside Audit & Supervisory Board Members

In addition to the criteria above, Outside Audit & Supervisory Board Members are elected based on their high degree of specialist insight in the fields of corporate management, finance, accounting and law, and their extensive experience. The absence of any issues of independence regarding their relationships with the Company, its Representative Director, other Directors and important employees, with reference to the Company’s Standards for Independence of Outside Directors and Outside Audit & Supervisory Board Members, is an additional criterion.

Diversity

When considering diversity in the appointment of Audit & Supervisory Board Members, no distinction is made on the basis of race, ethnicity, gender, nationality or similar attributes, and candidates are selected based on their character and knowledge, thus ensuring diversity in such attributes.

Election Process for Audit & Supervisory Board Members

“Recommendation of candidates” and “nomination of candidates” for Audit & Supervisory Board Member is conducted primarily by the Audit & Supervisory Board, in accordance with the process shown below, with an emphasis on ensuring the independence of Audit & Supervisory Board Members. The Audit & Supervisory Board recommends candidates based on the election criteria for Audit & Supervisory Board Members and after deliberation with the CEO. These candidates are nominated and proposed after confirmation by the Nomination Committee. The Board of Directors respects the judgment of the Audit & Supervisory Board in resolving the nomination of candidates for Audit & Supervisory Board Member.

Election Process for Audit & Supervisory Board Members

Training for Directors and Audit and Supervisory Board Members

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 Outside 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.
Upon appointment of Internal Directors and Audit & Supervisory Board Members, training is provided to allow these persons to confirm their expected roles and duties, as well as acquire knowledge necessary to carry out duties, including knowledge regarding corporate governance, law, and finance. Even after appointment, training opportunities are provided via internal/external training and e-learning initiatives suited to each Director and Audit & Supervisory Board Member so they can update their knowledge.
Outside Directors and Audit & Supervisory Board Members are appointed from among those who have adequate insight and experience necessary to carry out duties. Upon appointment, to enable them to deepen their understanding of the Company’s current status, they are briefed on topics such as business strategy, financial conditions, and organizational structure as well as make site visits to key locations as required. In addition, even after appointment, efforts are made to ensure and improve the management oversight function of the Board of Directors and the effectiveness of audits by Audit & Supervisory Board Members, through the regular provision and sharing of information on the status of the Company, the management environment, risks in business operations, etc., as well as the provision of an opportunity to grasp the actual situation of the company, such as participation as an observer in the management meeting (Group Management Committee) and site inspections.
To confirm that the above measures are being conducted appropriately, their results are reported to the Board of Directors.

Cross-Shareholding

Policy Regarding Cross-Shareholdings

From the viewpoint of streamlining and strengthening of business alliances and development of collaborative businesses, the Company shall be able to hold shares of the relating partners only when such holding of shares is deemed necessary and effective for the future development of Ricoh Group, while taking into consideration of the returns such as dividends.
Specifically, the Board of Directors will verify each issue whether the benefits and risks of the holding are worth the capital cost, and if the holding loses significance in the medium- to long-term, they will be reduced accordingly.

Exercise Criteria for Voting Rights to Cross-Shareholdings

The Company will exercise voting rights attached to cross-shareholdings upon examining each agenda whether it enhances the corporate value of the investee in the medium- to long-term, or whether it impairs shareholder value, and determining approval or disapproval.