FUJIFILM Holdings is Strengthening and Enhancing Corporate Governance in an Effort to Raise Corporate Value.
We recognize that a corporation's main mission is to keep improving corporate value. To promote the accomplishment of this mission, we implement measures to strengthen and expand our corporate governance systems and thereby aim to win the trust of all stakeholders. Such measures are what underpin our Group-wide efforts to achieve corporate governance consistent with a holding company and maximize corporate value. The Fujifilm Group aims to constantly improve the transparency and soundness of Group management.
Details regarding corporate organization
Directors and Board of Directors
We have positioned the board of directors as the organization for determining basic Group management policies and strategies and other important matters relating to business execution, as well as supervising the implementation of business affairs. Our Articles of Incorporation stipulate that the board can consist of up to 12 directors. Currently, the board has 12 directors, including 2 outside director. The board's regular meetings are held, in principle, once a month, with extraordinary board meetings held on an as-required basis. In addition, certain matters are deliberated and resolved flexibly at the board of directors meetings convened by directors with special authority. To better clarify their missions and responsibilities, our directors have a one-year term of office.
Meanwhile, we have adopted a remuneration system under the stock option plan to make our directors, excluding outside directors, share a mutual interest—the effect of stock price fluctuations—with our shareholders. In this way, the directors are in fact encouraged to have stronger drive and morale toward achieving higher corporate value.
Executive Officer System
We have adopted an executive officer system to facilitate agile business execution. Executive officers carry out business affairs in accordance with the basic policies and strategies formulated by the board of directors. We currently have 11 executive officers, including 6 concurrently serving as the board members. The executive officers have a one-year term of office, the same as our directors.
The management council makes decisions on the submission of matters to be exclusively deliberated by the board of directors. At the same time, the council deliberates the measures adopted by executive officers to implement particularly important initiatives in accordance with the basic policies, plans and strategies formulated by the board of directors.
Audit & Supervisory Board and the Audit & Supervisory Board Members
We have adopted an audit & supervisory board system with the audit & supervisory board members, which currently consists of 4 members, including 2 outside audit & supervisory board members. As an independent organization with key roles and responsibilities in our corporate governance system, the audit & supervisory board members audit the entire scopes of the directors' performance of their duties following audit policies and an audit plan in conformity with the audit & supervisory board members' audit standards determined by the audit & supervisory board. At meetings of the audit & supervisory board, which are held, in principle, once a month, information on audit results is shared among the board members. In addition, all audit & supervisory board members attend meetings of the board of directors, while the full-time audit & supervisory board members also attend every management council meeting, regularly exchange opinions with the representative directors and audit the entire range of business execution. We have currently appointed 2 personnel to perform internal audits and to support the audit & supervisory board members, with the aim of strengthening the audit functions of the audit & supervisory board members.
We have an Internal Audit Division, which currently comprises nine personnel, as an internal auditing unit that is independent from business operations. From the standpoint of a holding company, this division audits operational processes and other relevant matters at our individual divisions and Group companies in cooperation with the internal auditing units at the operating companies. In this way, the division evaluates and verifies that these processes are appropriate.
In addition, the division is in charge of assessing internal control over financial reporting by FUJIFILM Holdings and our Group companies, in response to the April 2008 application of the internal control reporting system in Japan. We compile the outcome of the assessment in a “Management's Report on Internal Control over Financial Reporting.” Moreover, designated staff are appointed to operating companies and audits are conducted across a wide range of areas, including the environment, quality control, security, labor, export control, and issues relating to the Pharmaceutical Affairs Law of Japan.
We engage Ernst & Young ShinNihon LLC as our independent auditors. Ernst & Young ShinNihon expresses an audit opinion on our financial statements from an independent standpoint. In addition to accounting audits, Ernst & Young ShinNihon commenced auditing internal control of our financial reporting from the fiscal year ended March 31, 2009.
The Corporate Governance Structure of FUJIFILM Holdings Corporation
Matters Concerning the Outside Director and Outside Audit & Supervisory Board Members
Two of the Company's 12-member Board of Directors are outside Directors. Outside directors request explanations as necessary to ensure appropriate decision making by the Board of Directors while also providing appropriate management supervision.
Two of the Company's Audit & Supervisory Board members are appointed from outside the Company. These outside Audit & Supervisory Board members request explanations when necessary and make comments where appropriate at the Board of Directors' meetings that they attend. During the fiscal year under review, outside Audit & Supervisory Board members asked questions and expressed their opinions at the meetings of the Audit & Supervisory Board that they attended.
We have notified each stock exchange in Japan of the designation of two outside Directors and two outside Audit & Supervisory Board members as its independent officers pursuant to the Securities Listing Regulations of Japanese stock exchanges.
Support System for Outside Director and Outside Audit & Supervisory Board Members
The Legal Division, as the office for the board of directors, prepares materials and provides the outside director and outside audit & supervisory board members with information relating to proposals submitted to regular board of directors meetings. The office also provides them with supplementary explanations where requested. The internal auditing unit, as the office for the audit & supervisory board, provides support to outside audit & supervisory board members in such areas as the preparation of materials and provision of relevant information for regular meetings of the audit & supervisory board members. The materials prepared are used to promote information sharing between full-time and outside audit & supervisory board members.
The Fujifilm Group maintains a proactive stance in disclosing such corporate information as management strategies and financial results, with due consideration given to disclosure timeliness, fairness, accuracy, and continuity. This stance is based on a principle interwoven in the Fujifilm Group Charter for Corporate Behavior. In legal terms, we disclose information in strict compliance with the Financial Instruments and Exchange Act of Japan and other relevant laws and regulations as well as timely information disclosure rules of the Japanese stock exchange market on which our stock is listed. We disclose information that is not required by such laws, regulations, and rules but may have material influence on investors' decision-making in a proactive manner and facilitate deeper understanding of Fujifilm. Such information disclosure is carried out through press conferences and briefings and various IR tools, which include our website.
We have been strengthening the relationship of trust between Fujifilm and investors and improving the quality of IR activities, while its top management actively participates in these activities. Also, we strive minimize the discrepancy between Fujifilm's true corporate value and its market evaluation by constantly disclosing management policies and other important information and incorporating feedback from capital markets into management processes. More specifically, we hold conferences on financial results every quarter with the attendance of its top management or executive officers. Complementing these briefings, we also hold conferences and small meetings frequently for both domestic and overseas institutional investors. In addition, we have been strengthening the communicational activities with investors by several measures, such as placing a person in charge of IR in its North American branch.
For individual investors, we provide information through its website, while also holding company information sessions in major cities nationwide.
Every effort has been made to disclose detailed information through the Group's IR website. We have posted such information as 10 years of financial data for comparison purposes, trends in our stock price, past performance in connection with the issuance of corporate bonds, and analysts' coverage. We have been trying to enhance the communication of information for both domestic and overseas investors by posting financial reports, presentation materials for business briefings, and others.