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 1 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. The management council consists of full-time members—the chairman, president, and executive officers responsible for corporate planning and corporate R&D—and meetings of the management council are flexibly convened, with the attendance of relevant executive officers requested, depending on the matters concerned.
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 5 members, including 3 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 9 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 through 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.” In addition, personnel in specialized units at the operating companies audit operations regulated by the Pharmaceutical Affairs Law of Japan, as well as those in the quality control, environmental and export control fields.
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.
Cooperation between Internal Auditing Unit, Audit & Supervisory Board Members, and Independent Auditors
With the aim of improving corporate governance, the Fujifilm Group promotes coordination between internal audits and audit & supervisory board members' audits as well as independent auditors' audits—which include audits of internal control over financial reporting. When audits are planned, performed and reviewed every fiscal year, these three groups exchange information and opinions and hold deliberations as needed. In addition, the internal auditing unit and the independent auditors report results of audits to audit & supervisory board members on a regular basis and results of annual audit reviews to the audit & supervisory board.
The Corporate Governance Structure of FUJIFILM Holdings Corporation
Matters Concerning the Outside Director and Outside Audit & Supervisory Board Members
Outside director Teisuke Kitayama imparts his ample experience and wide range of knowledge as a director of a financial institution, employing this experience and expertise from an objective viewpoint to provide appropriate counsel to the board of directors. Also, by requesting explanations as necessary he ensures appropriate decision-making by the board of directors and provides appropriate management supervision. We have notified each stock exchange in Japan of the designation of Mr. Teisuke Kitayama as our independent director, pursuant to the Securities Listing Regulations of Japanese stock exchanges.
Outside Audit & Supervisory Board Members
Audit & supervisory board members Kiichiro Furusawa and Daisuke Ogawa impart their ample experience and wide range of knowledge as directors of a financial institution and company, respectively. Through their appointments as audit & supervisory board members, they appropriately audit the execution of duties by our directors from an objective viewpoint based on their experience and knowledge. Mr. Takeo Kosugi is a partner of Matsuo & Kosugi and accordingly has ample experience and a wide range of knowledge on corporate legal affairs as a legal expert. In line with his appointment as an outside audit & supervisory board member he appropriately audits the execution of duties by our directors from an objective viewpoint based on his experience and knowledge. Also, we have notified the each stock exchange in Japan of the designation of Messrs. Kiichiro Furusawa, Daisuke Ogawa, and Takeo Kosugi as our independent audit & supervisory board members, pursuant to the Securities Listing Regulations of Japanese stock exchanges.
Each of the outside audit & supervisory board members requested explanations when necessary and made comments where appropriate at the board of directors meetings they attended. They also asked questions and expressed their opinions, as appropriate, at the audit & supervisory board they attended.
The attendance record of the outside director and outside audit & supervisory board members at meetings of the board of directors and the audit & supervisory board during the fiscal year ended March 31, 2013 is presented as follows.
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.
Fujifilm's top management actively participates in IR activities. This is because they are fully aware that these activities are important in accelerating interactive communication between Fujifilm and investors and, ultimately, strengthening the trust and improving the quality of these activities. Also, we strive to 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 business results every quarter with the attendance of our top management or executive officers. Complementing these briefings, we also hold conferences and small meetings frequently for both domestic and overseas institutional investors. For individual investors, we provide information through the 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. In addition to trends in our stock price, we have posted such information as past performance in connection with the issuance of corporate bonds and analysts' coverage. We have also provided a financial data graph function that allows users to freely compile graphs that combine indicators drawn from major financial data provided on a discretionary basis. Making the most of the features available under the Internet, we are working to increase the convenience of investors.