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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, the Corporate Governance Committee, established for the purpose of enhancing corporate governance, is to be chaired by an independent outside director, and its members to consist of independent outside directors, independent outside Audit & Supervisory Board Members, and non-executive inside directors. 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

OMRON's Corporate Governance Structure

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 窶彜F2030窶 are as follows.

Areas of expertise and specialization (skills) Definitions of skills
Corporate management Experience as Chairman/President or equivalent experience (experience as Representative Director, etc.)
Sustainability, ESG Possesses business, management experience, and specialized knowledge related to sustainability and ESG
New business creation, innovation Possesses business, management experience, and specialized knowledge related to new business and innovation
Technology, production, quality Possesses business, management experience, and specialized knowledge related to technology, production, and quality
DX, IT Possesses business, management experience, and specialized knowledge related to DX and IT
Human resource development, diversity, human resource management (third-party evaluation) Possesses business, management experience, and specialized knowledge related to human resource development, diversity, and human resource management
Financial accounting Qualified as a CPA, CFO experience, business experience in financial institutions and accounting departments, and listed company management experience
Legal affairs, compliance, internal control Qualified as an attorney, experience as an auditor, work experience in legal and internal audit departments
Global experience Global experience, overseas business experience

*Aiming for 3 years of experience or more

The skill matrix of Directors and Audit & Supervisory Board Members for fiscal 2023 is as follows.

The skill matrix of Directors and Audit & Supervisory Board Members for fiscal 2023 is as follows.

Board of Directors

Directors


  • Yoshihito Yamada
    Chairman
    Chair of the Board of Directors
    Member of the CEO Selection Advisory Committee
    Member of the Corporate Governance Committee

  • Junta Tsujinaga
    Representative Director

  • Kiichiro Miyata
    Representative Director
    Member of the Compensation Advisory Committee

  • Masahiko Tomita
    Director
    Member of the Personnel Advisory Committee

  • Shizuto Yukumoto
    Director
    Vice Chairman of the CEO Selection Advisory Committee
    Vice Chairman of the Personnel Advisory Committee
    Vice Chairman of the Compensation Advisory Committee
    Member of the Corporate Governance Committee

Outside Directors


  • Takehiro Kamigama
    Outside Director
    Chairman of the CEO Selection Advisory Committee
    Chairman of the Corporate Governance Committee
    Member of the Personnel Advisory Committee
    Member of the Compensation Advisory Committee

  • Izumi Kobayashi
    Outside Director
    Chairman of the Personnel Advisory Committee
    Vice Chairman of the Corporate Governance Committee
    Member of the CEO Selection Advisory Committee
    Member of the Compensation Advisory Committee

  • Yoshihisa Suzuki
    Outside Director
    Chairman of the Compensation Advisory Committee
    Member of the CEO Selection Advisory Committee
    Member of the Personnel Advisory Committee
    Member of the Corporate Governance Committee

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ツresponsibilities, all Directors and Audit & Supervisory Board members are required toツ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%シ14/14 timesシ
Representative Director Yoshihito Yamada 100%シ14/14 timesシ
Representative Director Kiichiro Miyata 100%シ14/14 timesシ
Director Koji Nitto 100%シ14/14 timesシ
Director Satoshi Ando 100%シ14/14 timesシ
Outside Director Takehiro Kamigama 100%シ14/14 timesシ
Outside Director Izumi Kobayashi 100%シ14/14 timesシ
Outside Director Yoshihisa Suzuki 100%シ11/11 timesシ
Audit & Supervisory Board Member Shuji Tamaki 100%シ14/14 timesシ
Audit & Supervisory Board Member Kiyoshi Yoshikawa 93%シ13/14 timesシ
Outside Audit & Supervisory Board Member Hideyo Uchiyama 100%シ14/14 timesシ
Outside Audit & Supervisory Board Member Tadashi Kunihiro 100%シ14/14 timesシ
Outside Director Eizo Kobayashi 100%シ3/3 timesシ

(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窶冱 窶廬ndependence Requirements for Outside Executives.窶 Based on the above, the Board of Directors shall consist of diverse members who possess the experience, specialized knowledge, and insights necessary to realize the OMRON Group窶冱 management vision and shall ensure diversity without distinction as to gender, nationality, international experience, or age.

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.
  • To swiftly respond to the need for global-scale growth and greater competitive strength, as well as significant changes in the business environment, the Personnel Advisory Committee shall work to ensure diversity in the Board of Directors, Audit & Supervisory Board, and among executive officers in terms including work experience, specialized knowledge, insights, gender, nationality, international experience, and age.
  • 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.

Composition of the Board of Directors

Status of initiatives towards improving Board of Directors' effectiveness

1. Overview of initiatives towards improving Board of Directors窶 effectiveness

The Company ensures transparency and fairness in business management, speeds up management decisions and practices, and strives to boost the OMRON Group窶冱 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窶 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窶 effectiveness

The Company窶冱 evaluation of Board of Directors窶 effectiveness is conducted by Corporate Governance Committee chaired by a Director (Independent) and comprising only Directors (Independent) and Audit & Supervisory Board Members (Independent) (hereinafter 窶廾utside Executives窶). 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.
*FY22 results

(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窶 effectiveness by implementing (1) and (2) above on a yearly basis. Corporate Governance Committee has evaluated these initiatives to be the Company窶冱 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

Initiatives towards improving Board of Directors' effectiveness

Audit & Supervisory Board

Audit & Supervisory Board Members


  • Shuji Tamak
    Audit & Supervisory Board Member

  • Toshio Hosoi
    Audit & Supervisory Board Member

Outside Audit & Supervisory Board Members


  • Hideyo Uchiyama
    Outside Audit & Supervisory Board Member
    Corporate Governance Committee Member

  • Tadashi Kunihiro
    Outside Audit & Supervisory Board Member
    Corporate Governance Committee Member

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.

Meeting Attendance

The meeting attendance for fiscal 2022 is as follows.

Position Name Attendance
Audit & Supervisory Board Member Shuji Tamaki 100%シ13/13 timesシ
Audit & Supervisory Board Member Kiyoshi Yoshikawa 100%シ13/13 timesシ
Outside Audit & Supervisory Board Member Hideyo Uchiyama 100%シ13/13 timesシ
Outside Audit & Supervisory Board Member Tadashi Kunihiro 100%シ13/13 timesシ

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.

Principles of Conduct for OMRON Audit & Supervisory Board Members

Audit & Supervisory Board Members shall strive for self-improvement, be trustworthy at all times, uphold high ethical standards, and conduct themselves with humility.

1. We not only conduct compliance audits (Audit 1.0) and point out deficiencies; but also conduct risk-based/internal control audits (Audit 2.0) and state our views; and conduct management issue audits (Audit 3.0) and provide advice.

2. We emphasize listening attentively, dialogue, and empathy,
(1) Ask questions with curiosity and discuss freely and openly.
(2) Express opinions vigorously, including harsh ones, and be persistent.
(3) Strive for objective, fair, and impartial discussion and opinions based on data and evidence.

3. In the spirit of "throwing stones to make waves," we question conventional wisdom inside OMRON from diverse perspectives, including those of stakeholders.
(1) Insight into the true causes and issues, not just the surface of things
(2) An inquiring mind based on a healthy skepticism that does not accept the status quo
(3) Assumption that there are two sides to everything (light and shade)

4. We promote behavioral changes in management that will enable future-oriented, transparent, fair, swift, and decisive decision-making.

Initiatives to increase the Audit & Supervisory Board effectiveness

1. Overview of the initiatives

To fulfill the responsibilities entrusted by stakeholders and to achieve sustained enhancement of corporate value, the Audit & Supervisory Board conducts audits as it consistently discusses how the auditing activities should be in OMRON.
While deepening compliance audits* and risk-based internal control audits,* the Audit & Supervisory Board also includes management issues within its audit scope.
* OMRON Audit & Supervisory Board refers to compliance audits, risk-based internal control audits, and management issue audits as Audit 1.0, Audit 2.0, and Audit 3.0, respectively.

(1) Evaluation of the effectiveness

All Audit & Supervisory Board members self-evaluate the effectiveness on an anonymous basis. Besides those self-evaluations, the Audit & Supervisory Board also values input from third parties, such as opinions received from Directors and evaluations by the Audit & Supervisory Board Office members regarding the Audit & Supervisory Board窶冱 contributions to corporate value to increase the Audit & Supervisory Board effectiveness.

Framework of Audit 3.0

Framework of Audit 3.0

(2) Process of the activities

Evaluation results of the Audit & Supervisory Board窶冱 effectiveness are shared among related parties as concerned issues of the Audit & Supervisory Board. They are utilized to determine priority audit items, draw up audit plans, and conduct audit activities for the following fiscal year.

Audit cycle

Status of initiatives towards improving the Audit & Supervisory Board窶冱 effectiveness
For details, please refer to the following link.

Fiscal 2023 Advisory Committee

Fiscal 2020 Advisory Committee

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.

FY22 Activities and Activity Status

CEO Selection Advisory Committee
Members Five members (three Outside Directors and two internal Directors)
Chairman Outside Director
Committee composition
  • The majority shall be Outside Directors
  • The two internal Directors shall be non-executive Directors
    (the President and CEO is not a member of the committee)
Number of meetings held 3
Attendance rate 100%
Matters deliberated and matters reported
  • Narrowing down of candidates based on engagement surveys, 360-degree evaluations, and third-party evaluation results
  • Identification of candidates through contact opportunities such as interviews (conducted on a separate occasion from the committee meetings)
  • Determination of candidates for President
  • Determination of a successor in the event of a crisis in fiscal 2023

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.

FY22 Activities and Activity Status

Personnel Advisory Committee
Members Five members (three Outside Directors and two internal Directors)
Chairman Outside Director
Committee composition
  • The majority shall be Outside Directors
  • The Chairman of the Board of Directors and the President and CEO are not members of the committee
Number of meetings held 7
Attendance rate 100%
Matters deliberated and matters reported
  • Determination of criteria for appointing Directors, Audit & Supervisory Board Members, and Executive Officers
  • Determination of Director candidates, Audit & Supervisory Board Member candidates, and Executive Officer personnel
  • Reporting on succession planning for management executives
  • Reporting on the list of candidates for Outside Director and Outside Audit & Supervisory Board Member
  • Determination of the members of each Advisory Committee

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.

FY22 Activities and Activity Status

Compensation Advisory Committee
Members Five members (three Outside Directors and two internal Directors)
Chairman Outside Director
Committee composition
  • The majority shall be Outside Directors
  • The Chairman of the Board of Directors and the President and CEO are not members of the committee
Number of meetings held 5
Attendance rate 96%
Matters deliberated and matters reported
  • Determination of compensation policy and compensation structure for Directors
  • Reporting on the compensation policy and compensation structure for Executive Officers
  • Determination of compensation levels and tables for Directors and Executive Officers
  • Determination of compensation for foreign Executive Officers
  • Determination of evaluation criteria and payment amounts for Director bonuses and stock compensation
  • Determination of evaluation criteria and payment amounts for Executive Officer bonuses and stock compensation

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 from a medium- to long-term perspective. Corporate Governance Committee discusses policies to continuously enhance corporate governance and to increase management transparency and fairness.

Composition

Corporate Governance Committee is to be chaired by an independent outside director, and its members to consist of independent outside directors, independent outside Audit & Supervisory Board Members, and non-executive inside directors.

*In September 2023, the Corporate Governance Committee membership was revised to consist of independent outside directors, independent outside Audit & Supervisory Board Members, and non-executive inside directors.

FY22 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
  • Composed of Outside Directors and Outside Audit & Supervisory Board Members
Number of meetings held 2
Attendance rate 100%
Matters deliberated and matters reported
  • Evaluation of effectiveness of the Board of Directors in fiscal 2022

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.

Corporate Governance Initiatives