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 for 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 one 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 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 actual 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 speedier 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 13 executive officers, including five concurrently serving as directors. 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.
Corporate Auditors and Board of Corporate Auditors
We have adopted a corporate auditor system with a board of corporate auditors, which currently consists of five members, including three outside corporate auditors. As an independent organization with key roles and responsibilities in our corporate governance system, the auditors audit the entire range of the directors' performance of their duties following audit policies and an audit plan in conformity with corporate auditors' audit standards determined by the board of corporate auditors. At meetings of the board of corporate auditors, which are held, in principle, once a month, information is shared on the details of matters subject to auditing. In addition, all corporate auditors attend meetings of the board of directors, while the full-time corporate auditors 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 two personnel to perform internal audits and to support the corporate auditors, with the aim of strengthening the audit functions of the corporate auditors.
We have an Internal Audit Division, which currently comprises 14 personnel, as an internal auditing unit that is independent from divisions responsible for the execution of business affairs. 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 opinion on our financial statements from an independent standpoint as an auditor. 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, Corporate Auditors and Independent Auditors
With the aim of improving corporate governance, the Fujifilm Group promotes coordination between internal audits and corporate auditors' 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 corporate auditors on a regular basis and results of annual audit reviews to the board of corporate auditors.
The Corporate Governance Structure of FUJIFILM Holdings Corporation
Matters Concerning the Outside Director and Outside Corporate Auditors
Outside director Teisuke Kitayama imparts his ample experience and wide range of knowledge as a director of a financial institution. Also, we have notified the Japanese bourses on which our stock is listed of the designation of Mr. Teisuke Kitayama as our independent director, pursuant to the Securities Listing Regulations of Japanese stock exchanges.
Outside director Teisuke Kitayama attended 11 of the 12 board of directors meetings during the fiscal year ended March 31, 2012. Mr. Kitayama requested explanations when necessary and offered advice where appropriate at the meetings he attended to ensure the adequacy and appropriateness of the decisions made by the board.
Outside Corporate Auditors
Corporate auditors Kiichiro Furusawa and Daisuke Ogawa impart their ample experience and wide range of knowledge as directors of a financial institution and company, respectively. Their appointments as corporate auditors are in line with our belief that they are able to 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 in and a wide range of knowledge on corporate legal affairs as a legal expert. His appointment as an outside corporate auditor is in line with our belief that he is able to appropriately audit the execution of duties by our directors from an objective viewpoint based on his experience and knowledge. Also, we have notified the Japanese bourses on which our stock is listed of the designation of Messrs. Kiichiro Furusawa, Daisuke Ogawa, and Takeo Kosugi as our independent corporate auditors, pursuant to the Securities Listing Regulations of Japanese stock exchanges.
Support System for Outside Director and Outside Corporate Auditors
Outside corporate auditor Kiichiro Furusawa attended 11 of the 12 board of directors meetings and 10 of the 11 board of corporate auditors meetings during the fiscal year ended March 31, 2012. Outside corporate auditor Daisuke Ogawa attended 11 of the 12 board of directors meetings and all 11 board of corporate auditors meetings during the same period. Outside corporate auditor, Takeo Kosugi has attended all 12 of the board of directors meetings and all 11 of the board of corporate auditors meetings for the fiscal year under review since his appointment.
Each of the outside corporate auditors requested explanations when necessary and made comments where appropriate at the board of directors meetings they attended to ensure the adequacy and appropriateness of the decisions made by the board of directors. They also asked questions and expressed their opinions, as appropriate, at the board of corporate auditors meetings they attended.
The Legal Division, the secretariat for the board of directors, prepares materials and provides the outside director and outside corporate auditors with information relating to proposals submitted to regular board of directors meetings. The department also provides them with supplementary explanations where requested. The internal auditing unit, the secretariat for the board of corporate auditors, provides support to outside corporate auditors in such areas as the preparation of materials and provision of relevant information for regular meetings of the board of corporate auditors. The materials prepared are used to promote information sharing between full-time and outside corporate auditors.
The Fujifilm Group maintains an aggressive 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 bourses 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 circle of 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 our management. More specifically, we hold conferences on business results quarterly 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 our website, while also holding company information sessions in major cities nationwide.
Renewal of Countermeasures to Large-Scale Acquisitions of FUJIFILM Holdings Corporation Shares (Takeover Defense Measures)
At our 114th ordinary general meeting of shareholders, held on June 29, 2010, the renewal of the Countermeasures to Large-Scale Acquisitions of FUJIFILM Holdings Corporation Shares has been approved.