Corporate Governance Framework
Organizational Structure
OMRON has chosen to adopt the organizational structure of a "Company with Audit & Supervisory Board."
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.
Audit & Supervisory Board and 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 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 enhance the oversight functions of Board of Directors, four voluntary advisory committees are attached to Board of Directors. The President & CEO does not belong to any of these committees. CEO Selection Advisory Committee, Personnel Advisory Committee, and 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. 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, 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
Board of Directors
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.
Meeting Attendance
In order to make sure that the Board of Directors effectively fulfill its roles and responsibilities, all Directors and Audit & Supervisory Board members are required to maintain the target attendance rate of 75% or higher.
The meeting attendance for fiscal 2022 is as follows.
| Position | Name | Attendance |
|---|---|---|
| Chairman of the Board | Fumio Tateishi | 100%（14/14 times） |
| Representative Director | Yoshihito Yamada | 100%（14/14 times） |
| Representative Director | Kiichiro Miyata | 100%（14/14 times） |
| Director | Koji Nitto | 100%（14/14 times） |
| Director | Satoshi Ando | 100%（14/14 times） |
| Outside Director | Takehiro Kamigama | 100%（14/14 times） |
| Outside Director | Izumi Kobayashi | 100%（14/14 times） |
| Outside Director | Yoshihisa Suzuki | 100%（11/11 times） |
| Audit & Supervisory Board Member | Shuji Tamaki | 100%（14/14 times） |
| Audit & Supervisory Board Member | Kiyoshi Yoshikawa | 93%（13/14 times） |
| Outside Audit & Supervisory Board Member | Hideyo Uchiyama | 100%（14/14 times） |
| Outside Audit & Supervisory Board Member | Tadashi Kunihiro | 100%（14/14 times） |
| Outside Director | Eizo Kobayashi | 100%（3/3 times） |
(Note) Mr. Eizo Kobayashi retired as Director, and Mr. Yoshihisa Suzuki was newly appointed as Director on June 23, 2022.
Policy regarding Composition of the Board of Directors
In order to strengthen the supervision function of the Board of Directors, at the Company, management oversight and business execution are kept separate, and a majority of the Board of Directors shall consist of Directors who are not involved with business execution. In addition, at least one-third of the Board of Directors shall consist of Outside Directors. Regarding Outside Directors and Outside Audit & Supervisory Board Members, from the perspective of ensuring their independence, they are elected in accordance with the Company’s “Independence Requirements for Outside Executives.” Based on the above, regarding Directors and Audit & Supervisory Board Members who make up the members of the Board of Directors, the Company shall select human resources who possess experience, specialized knowledge and insights necessary for the realization of the management vision, thereby ensuring sufficient diversity in the Board of Directors.
Policy regarding Appointment of Directors and Audit & Supervisory Board Members
- Directors, Audit & Supervisory Board Members, and Executive Officers are composed of human resources with the experience, specialized knowledge and insight necessary for the realization of the management vision.
- The Personnel Advisory Committee seeks to diversify Directors, Audit & Supervisory Board Members, and Executive Officers (experience, specialized knowledge, insight, gender, internationality, age, etc.) in order to respond swiftly to global growth, enhanced competitiveness, and significant changes in the business environment.
- The experience, specialized knowledge, and insight necessary for the realization of the management vision related to Directors and Audit & Supervisory Board Members is presented in the skill matrix.
[Criteria for Appointment of Outside Directors]
- Outside Directors are deeply involved in the CEO Selection Advisory Committee, which specializes in matters such as the appointment of the President, which is the top-priority matter in management oversight. In order to establish a highly transparent and objective system for appointing a President and CEO, Outside Directors must have management experience or equivalent experience.
[Criteria for Appointment of Outside Audit & Supervisory Board Members]
- Audit & Supervisory Board Members must possess the necessary insight, high ethical standards, fairness, and integrity as an Audit & Supervisory Board Member, as well as specialized knowledge in law, finance, accounting, management, or other areas.
Composition of the Board of Directors
The composition of the Board of Directors for fiscal 2023 is as follows.
Main Areas of Expertise and Specialization of Directors and Audit & Supervisory Board Members (Skill Matrix)
Areas of expertise and specialization (skills) required for Directors and Audit & Supervisory Board Members for the realization of the long-term vision “SF2030” are as follows.
*Aiming for 3 years of experience or more
The skill matrix of Directors and Audit & Supervisory Board Members for fiscal 2023 is as follows.
Audit & Supervisory Board
Roles and Responsibilities
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, Audit & Supervisory Board strives to develop a system to ensure effectiveness of audits conducted by each of its members. Audit & Supervisory Board works in collaboration with independent outside directors and the internal auditing department. 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, Audit & Supervisory Board is composed of members with experience, specialized knowledge, and deep insight in a well-balanced manner.
CEO Selection Advisory Committee
Roles
CEO Selection Advisory Committee has been established for the purpose of bolstering the management oversight function of Board of Directors by enhancing the transparency, objectivity, and timeliness of the decision-making process regarding nomination of candidates for CEO. CEO Selection Advisory Committee that specializes in selection of the President and appoints a candidate for the President and CEO for the next fiscal year, and deliberates about CEO succession planning and contingent succession planning to take over the position in emergency situations.
Composition
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.
Activities and Activity Status
| CEO Selection Advisory Committee | |
|---|---|
| Members | Five members (three Outside Directors and two internal Directors) |
| Chairman | Outside Director |
| Committee composition |
|
| Number of meetings held | 3 |
| Attendance rate | 100% |
| Matters deliberated and matters reported |
|
Personnel Advisory Committee
Roles
Personnel Advisory Committee has been set up for the purpose of bolstering the management oversight function of Board of Directors by enhancing the transparency, objectivity, and timeliness of the decision-making process regarding nomination of candidates for directors, Audit & Supervisory Board members, and executive officers. Personnel Advisory Committee sets criteria and policies relating to the selection of Directors, Audit & Supervisory Board Members and Executive Officers. The committee also deliberates about candidates.
Composition
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.
Activities and Activity Status
| Personnel Advisory Committee | |
|---|---|
| Members | Five members (three Outside Directors and two internal Directors) |
| Chairman | Outside Director |
| Committee composition |
|
| Number of meetings held | 7 |
| Attendance rate | 100% |
| Matters deliberated and matters reported |
|
Compensation Advisory Committee
Roles
Compensation Advisory Committee has been established for the purpose of bolstering the management oversight function of Board of Directors by enhancing transparency and objectivity in determining compensation amounts for each director and executive officer. Compensation Advisory Committee deliberates about compensation levels and amounts for Directors and Executive Officers, as well as setting compensation policies and carrying out compensation assessments.
Composition
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.
Activities and Activity Status
| Compensation Advisory Committee | |
|---|---|
| Members | Five members (three Outside Directors and two internal Directors) |
| Chairman | Outside Director |
| Committee composition |
|
| Number of meetings held | 5 |
| Attendance rate | 96% |
| Matters deliberated and matters reported |
|
Corporate Governance Committee
Roles
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. Corporate Governance Committee discusses policies to continuously enhance corporate governance and to increase management transparency and fairness.
Composition
Corporate Governance Committee is chaired by an independent outside director, and its members comprise independent outside directors and independent outside Audit & Supervisory Board members.
Activities and Activity Status
| Corporate Governance Committee | |
|---|---|
| Members | Five members (three Outside Directors and two Outside Audit & Supervisory Board Members) |
| Chairman | Outside Director |
| Committee composition |
|
| Number of meetings held | 2 |
| Attendance rate | 100% |
| Matters deliberated and matters reported |
|
Fiscal 2023 Advisory Committee
Evaluating the Effectiveness of Board of Directors
Status of initiatives towards improving Board of Directors' effectiveness
1. Overview of initiatives towards improving Board of Directors’ effectiveness
The Company ensures transparency and fairness in business management, speeds up management decisions and practices, and strives to boost the OMRON Group’s competitive edge. The ultimate objective is to achieve sustained enhancement of corporate value. To this end, the Company reinforces the oversight functions of Board of Directors through initiatives for improving its effectiveness.
Such initiatives are undertaken in a cycle of (1) evaluation of Board of Directors’ effectiveness, and (2) determination of the operational policy and focus themes of Board of Directors and formulation and implementation of annual plans.
(1) Evaluation of Board of Directors’ effectiveness
The Company’s evaluation of Board of Directors’ effectiveness is conducted by Corporate Governance Committee chaired by a Director (Independent) and comprising only Directors (Independent) and Audit & Supervisory Board Members (Independent) (hereinafter “Outside Executives”). Outside Executives act as members of Board of Directors while having the perspectives of all stakeholders including the shareholders. Corporate Governance Committee, which is composed only of Outside Executives, performs evaluations in order to ensure that evaluations are both objective and effective.
(2) Determination of the operational policy and focus themes of Board of Directors and formulation and implementation of annual plans
Based on the evaluation results by Corporate Governance Committee in (1) and the business environment, etc., Board of Directors determines its operational policy and focus themes for the next fiscal year. Board of Directors formulates and implements annual plans based on this operational policy.
The Company continues to improve Board of Directors’ effectiveness by implementing (1) and (2) above on a yearly basis. Corporate Governance Committee has evaluated these initiatives to be the Company’s unique, optimal activities that are both objective and effective. Board of Directors recognizes the Company's initiatives as being more effective than evaluations by third parties.
Initiatives towards improving Board of Directors' effectiveness
For more information, see the following documents.
Status of initiatives towards improving the Audit & Supervisory Board’s effectiveness
For details, please refer to the following link.
Corporate Governance Initiatives
Since establishing the Management Personnel Advisory Committee (now Personnel Advisory Committee) in 1996, OMRON has spent more than 20 years enhancing its corporate governance system. To achieve sustainable enhancement of corporate value, the Company will continue improving its corporate governance.
