PRINT

Corporate Governance Framework

Organizational Structure

OMRON has chosen to adopt the organizational structure of a “Company with Audit & Supervisory Board.”
The Board of Directors strives for sustainable enhancement of the OMRON Group’s corporate value by exercising oversight over overall management through the election of directors, Audit & Supervisory Board members, and executive officers; the determination of compensation for directors and executive officers; and making important operational decisions.
The Audit & Supervisory Board and the Audit & Supervisory Board members work to secure the integrity of the OMRON Group and achieve the sustainable enhancement of corporate value by conducting audits on legality and appropriateness of directors’ duties, and the fulfillment of the Board of Directors’ oversight obligations. In addition, each Audit & Supervisory Board member can exercise his/her authority on his/her own as a single-person organ in which the power over final decision-making is given to one person. This allows them to play a crucial role in strengthening internal controls.
Furthermore, to complement the oversight functions of the Board of Directors, four voluntary advisory committees are attached to the Board of Directors. The Personnel Advisory Committee, the CEO Selection Advisory Committee, and the Compensation Advisory Committee are chaired by an independent outside director, and a majority of each committee’s members shall be composed of independent outside directors. The CEO Selection Advisory Committee is dedicated to the deliberation and nomination of candidates for CEO, which is the top-priority matter in management oversight. In addition, the Corporate Governance Committee, established for the purpose of enhancing corporate governance, is also chaired by an independent outside director, and exclusively comprises independent outside directors and independent outside Audit & Supervisory Board members. Through these unique initiatives, OMRON has established and adopted a system that enhances the transparency and objectivity of management’s decision-making process.
By incorporating the best aspects of the corporate governance system of a “Company with Committees (Nomination, etc.),” OMRON has created the kind of hybrid corporate governance structure that we feel is most appropriate for OMRON as a “Company with Audit & Supervisory Board.”

OMRON's Corporate Governance Structure

Organizational Chart

Board of Director

Roles and Responsibilities

The Board recognizes its fiduciary responsibility to shareholders and assumes the responsibility of sustainably improving the OMRON Group’s corporate value through appropriate exercise of its authority. To fulfill the above responsibilities, the Board exercises oversight functions over the overall management in order to ensure fairness and transparency of management practices. The Board does so through election of directors, Audit & Supervisory Board members, and executive officers. It also determines compensation for directors and executive officers, and makes important operational decisions. The Board is also responsible for establishing a system to respond to cases when Audit & Supervisory Board members or external auditors have discovered fraud within the OMRON Group and demanded appropriate remedies or pointed out deficiencies or problems.

Composition

To effectively fulfill its duties and responsibilities, the Board of Directors is composed of members with experience, specialized knowledge, and deep insight in a well-balanced manner. Management oversight and business execution are kept separate and a majority of the Board shall consist of directors who are not involved with business execution. At least one-third of the Board shall consist of independent outside directors.

Audit & Supervisory Board

Roles and Responsibilities

The Audit & Supervisory Board bears in mind its fiduciary responsibility to shareholders and works to secure the integrity of the OMRON Group toward sustainable enhancement of corporate value, and acts for the common interests of the shareholders. To fulfill the above-mentioned responsibility, the Audit & Supervisory Board strives to develop a system to ensure effectiveness of audits conducted by each of its members. The Audit & Supervisory Board works in collaboration with independent outside directors and the internal auditing department. The Audit & Supervisory Board also exchanges views with independent outside directors and provides them with information acquired through auditing.

Composition

To effectively fulfill its duties and responsibilities, the Audit & Supervisory Board is composed of members with experience, specialized knowledge, and deep insight in a well-balanced manner.

The Personnel Advisory Committee

Roles

The Personnel Advisory Committee has been set up for the purpose of bolstering the management oversight function of the Board of Directors by enhancing transparency and objectivity in the decision-making process regarding nomination of candidates for directors, Audit & Supervisory Board members, and executive officers. The Personnel Advisory Committee deliberates and sets criteria and policies for the selection of directors, Audit & Supervisory Board members, and executive officers. The committee also selects candidates for these executives and evaluates the performance of current directors and executive officers.

Composition

The Personnel Advisory Committee is chaired by an independent outside director, and a majority of committee members shall consist of independent outside directors. The committee comprises directors excluding Chairman and CEO.

The CEO Selection Advisory Committee

Roles

The CEO Selection Advisory Committee has been established for the purpose of bolstering the management oversight function of the Board of Directors by enhancing transparency and objectivity in the decision-making process regarding nomination of candidates for CEO. Dedicated to CEO selection and succession planning, the CEO Selection Advisory Committee deliberates and nominates candidates for CEO, and deliberates on succession candidates in the event of an emergency.

Composition

The CEO Selection Committee is chaired by an independent outside director, and a majority of committee members shall consist of independent outside directors. The committee comprises Directors who are not engaged in business execution.

The Compensation Advisory Committee

Roles

The Compensation Advisory Committee has been established for the purpose of bolstering the management oversight function of the Board of Directors by enhancing transparency and objectivity in determining compensation amounts for each director and executive officer. The Compensation Advisory Committee sets policies regarding compensation for directors and executive officers, and deliberates on compensation levels and their assessment, as well as specific compensation packages.

Composition

The Personnel Advisory Committee is chaired by an independent outside director, and a majority of committee members shall consist of independent outside directors. The committee comprises directors excluding Chairman and CEO.

Corporate Governance Committee

Roles

The Corporate Governance Committee has been established for the purpose of enhancing the transparency and fairness of management practices from the standpoint of all stakeholders and to continuously take steps to enhance corporate governance. The Corporate Governance Committee discusses policies to continuously enhance corporate governance and to increase management transparency and fairness.

Composition

The Corporate Governance Committee is chaired by an independent outside director, and its members comprise independent outside directors and independent outside Audit & Supervisory Board members.

Fiscal 2017 Advisory Committee

Evaluating the Effectiveness of the Board of Directors

Initiatives intended to improve the effectiveness of the Board of Directors

OMRON analyzes and evaluates the effectiveness of the Board of Directors. This is intended to ensure that the members of the Board will enhance the functions and the effectiveness of the Board to realize sustainable enhancement of corporate value by recognizing, sharing, and improving the direction to be taken by the Board and the issues arising from taking such a direction. Evaluation of the Board’s effectiveness is conducted by the Corporate Governance Committee, composed of independent outside directors and independent outside Audit & Supervisory Board members, thus ensuring both effectiveness and objectivity.

Evaluation Process for the Board’s Effectiveness

For evaluation of the Board’s effectiveness, all directors and Audit & Supervisory Board members are asked to fill out self-assessment sheets for anonymous self-evaluation. Evaluation items include the matters discussed at the Board meetings and the Board operating methods, as well as the policies for the operation of the Board and related initiatives. In addition, the chairman of the Board and directors are interviewed individually to provide them with an opportunity to give their opinions on the effectiveness of our Board. The Corporate Governance Committee analyzes the self-evaluation results and findings from interviews, and reports the results to the Board of Directors. The Board of Directors then develops the Board operating policy for the subsequent fiscal year based on these evaluation results.

Fiscal 2016 Evaluation Results

The Corporate Governance Committee concluded that there are no problems with the current governance system or operations. The committee further concluded that the Board is functioning appropriately, and confirmed the initiatives based on the fiscal 2016 policies for the operation of the Board of Directors. The committee also confirmed matters identified as future issues.

[ Fiscal 2016 Initiatives ]

  • Discussed medium- to long-term business strategies and approved the medium-term management plan VG2.0, including specific initiatives and targets.
  • Formulated OMRON Group-wide ESG-related policy (Sustainability Policy). Identified materiality based on the policy, and developed the structure to supervise the management of these issues.
  • Revised Rules for the Board of Directors and delegated Board authority to executive officers regarding certain matters for deliberation.

[ Future Issues ]

  • Supervisory functions for achieving VG2.0 goals

Fiscal 2017 Policies for the Operation of the Board of Directors

Based on the results of the evaluation, the Board of Directors will exercise its oversight functions to ensure OMRON achieves the objectives of the VG2.0 medium-term management plan (launched in fiscal 2017) with a focus on the following three areas:

  • Progress of the short-term management plan
  • Human resources and technological strategies, at the core of the medium-term management strategies
  • Initiatives to address materiality identified based on Sustainability Policy

We will continue striving to improve the effectiveness of the Board of Directors toward sustainable enhancement of corporate value.


Training for Directors and Audit & Supervisory Board Members

OMRON offers training and information necessary for directors and Audit & Supervisory Board members to fulfill their roles and responsibilities, as required.
Specifically, when directors and Audit & Supervisory Board members newly assume office, they will be offered lectures by experts and training regarding laws and corporate governance. Training regarding amendments to law and management issues will continuously be offered after they assume office. In addition to the above, when independent outside directors and independent outside Audit & Supervisory Board members newly assume office, an explanatory session about the OMRON Group’s business and a tour to observe OMRON Group’s main business sites are organized.
Furthermore, the Board of Directors annually makes opportunities available for explanation of each business’s strategy.

[ Examples of Training Opportunities ]

  • For newly appointed internal directors and internal Audit & Supervisory Board members:Offering lectures on laws; participation in corporate governance seminars
  • For newly appointed outside directors and outside Audit & Supervisory Board members: Briefing on the OMRON Group’s medium-term management plan, as well as business strategies, corporate governance initiatives, etc. in accordance with the plan; participation in factory tours
  • For outside directors: Participation in factory tours in and out of Japan, exhibitions (System Control Fair, etc.), company events (TOGA Global conference), etc.

Corporate Governance Initiatives

Over the past 20 years OMRON has strived to enhance its corporate governance system. As part of this drive, OMRON set up the Management Personnel Advisory Committee (now the Personnel Advisory Committee) in 1996. We intend to continue our pursuit of ongoing corporate governance improvement as we develop our own unique vision of governance.

About OMRON

PAGE TOP