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ITOCHU operates its business in accordance with the ITOCHU Group Corporate Philosophy and Code of Conduct. Our fundamental policy is to work toward the long-term preservation and enhancement of our corporate value by building positive and effective relationships with our stakeholders. To execute our business activities in a fair and efficient manner in accordance with our fundamental policy, we are increasing the transparency of our decision-making process and constructing a corporate governance system that incorporates appropriate monitoring and supervisory functions.
Features of ITOCHU’s Corporate Governance System
ITOCHU is a company with the Board of Directors and corporate auditors (the Board of Corporate Auditors). The corporate auditors including outside corporate auditors monitor and audit business management independently and objectively. And ITOCHU has elected highly independent outside directors for the purpose of further increasing the effectiveness of the supervision of management by the Board of Directors and improving the transparency of decision making.
Comprising 13 directors (including 1 outside director) as of March 1, 2013, the Board of Directors makes decisions on important management matters and supervises each director's business management.
ITOCHU has adopted an Executive Officer System in order to separate the decision-making and supervisory functions of the Board of Directors from its implementation of business management.
One feature of ITOCHU's corporate governance system is the HMC (Headquarters Management Committee), a supporting body of the CEO, where company-wide management policy and important issues are discussed and decided.
In addition, management issues in individual areas of responsibility are discussed and screened by various internal committees in order to support the decision making of the CEO and the Board of Directors. Moreover, ITOCHU is developing and implementing a system for incorporating third-party opinions in which outside experts become members of some internal committees.
The table below details steps ITOCHU has taken to strengthen corporate governance.
Steps Taken to Strengthen Corporate Governance
|1997||Introduced the Division Company System||To accelerate decision making / increase efficiency of business management|
|1999||Introduced Executive Officer System||To strengthen decision-making and supervisory functions of the Board of Directors|
|2007||Shortened the terms of office of directors and executive officers to one year||To clarify management responsibility during terms of office|
|2011||Introduced an Outside Directors System||To increase the effectiveness of the supervision of management and improve the transparency of decision making|
Increasing the Effectiveness of the Supervision of Management by the Board of Directors
ITOCHU has elected outside directors at the General Meeting of Shareholders held in June, 2011. The outside directors make a contribution to ensuring and increasing the effectiveness of the supervision of management by the Board of Directors, as well as the transparency of the Board of Directors' decision making by way of appropriately providing their monitoring and supervising functions to the internal directors and management advice based on various perspectives from their neutral and objective position. In view of the functions and roles to be expected for outside directors, ITOCHU deems it appropriate that an outside director is replaced at intervals of adequate periods, which in principle mean two terms (i.e., two years).
Relationship of Outside Directors with ITOCHU
|Name||Reason for Appointment|
|Yuko Kawamoto*1||ITOCHU has elected her, anticipating that she will use her wealth of knowledge on corporate management nurtured through her long expertise as a management consultant and a professor of a university's graduate school and also monitor and supervise the corporate management of ITOCHU from an independent perspective. And she has no material interests in ITOCHU.|
- *1 Yuko Kawamoto is registered as independent directors in the domestic financial instrument exchanges on which ITOCHU is listed.
Systems to Ensure Effectiveness of Audit Functions
ITOCHU appoints five corporate auditors, of whom three are outside corporate auditors. Standing corporate auditors strengthen audit functions by regularly attending meetings of the Board of Directors and other in-house meetings and working in cooperation with ITOCHU's independent external auditors and other audit bodies inside and outside ITOCHU. ITOCHU's Audit Division is responsible for internal audits. Aiming to facilitate exchanges of information and close collaboration, members of this division meet regularly with corporate auditors to discuss such matters as internal audit planning. In addition, the Corporate Auditors' Office, reporting directly to the Board of Corporate Auditors, supports corporate auditors. Furthermore, in view of the functions and roles to be expected for outside corporate auditors, ITOCHU deems it appropriate that an outside corporate auditor is replaced at intervals of adequate periods, which in principle mean one term (i.e., four years).
Relationship of Outside Corporate Auditors with ITOCHU
|Name||Reason for Appointment|
|Ryozo Hayashi*1||ITOCHU has elected him, anticipating that he will monitor management and provide auditing from an independent perspective by utilizing his wealth of experience at the Ministry of Economy, Trade and Industry and the former Ministry of International Trade and Industry, and his long-term perspective and broad vision as a professor of a university's graduate school. And he has no material interests in ITOCHU.|
|Keiji Torii*1||ITOCHU has elected him, anticipating that he will monitor management and provide auditing from an independent perspective by utilizing his many years of experience and insight as a former executive of a major financial institution. Before being appointed as a Corporate Auditor of ITOCHU, he had served as an executive of a major financial institution, with which ITOCHU has dealings, but he retired from his position at the financial institution before being appointed as a Corporate Auditor of ITOCHU and he has no material interests in ITOCHU at present.|
|Masahiro Shimojo*1||ITOCHU has elected him, anticipating that he will monitor management and provide auditing from an independent perspective by utilizing his wealth of experience and expertise as a lawyer in the field of corporate legal practice and international business law. And he has no material interests in ITOCHU.|
- *1 Ryozo Hayashi, Keiji Torii and Masahiro Shimojo are registered as independent auditors of ITOCHU in the domestic financial instrument exchanges on which ITOCHU is listed.
Comments from Corporate Auditor
My major activities at the Ministry of Economy, Trade and Industry as well as at the University of Tokyo were focused on corporate governance and corporate social responsibility. Based on my experiences, I intend to contribute to the enhancement of management performance by introducing an outside perspective and by focusing on enhancing the corporate governance system.
The current business environment surrounding major global companies, such as ITOCHU, is unprecedentedly difficult. The opportunities and risks that such companies face change swiftly and drastically. In such a business environment, management is required to show both strong leadership to pursue the business opportunities and an effective corporate governance system that limits risks. In particular, ITOCHU, as one of the largest trading companies engaged in diversified businesses around the world, has not only to perform a wide range of operations skillfully but also to maintain a balance between the realization of short-term business performance and the maintenance of sustainable long-term value creation. As a corporate auditor, I will monitor management performance and advise management with a view to developing a strong and well-balanced management system, which is an imperative to coping with these challenges. In developing such a system, I will keep reminding myself of the interests of ITOCHU shareholders as well as the interests of a wide range of other stakeholders.
ITOCHU's Current Corporate Governance System
As of March 1, 2013
- *1 Each Division Company has a Division Company President.
- *2 Internal control systems and mechanisms have been implemented at every level of ITOCHU. Only the main internal control organization and committees are described herein.
Further, the Internal Control Committee receives reports from internal departments related to internal control on the development and operation of respective internal controls for which they are responsible; evaluates the overall development and implementation status of internal control; and reports the results of evaluations as well as items for improvement to the HMC and Board of Directors.
- *3 CIO is under CSO's control, "CAO & CCO" changes the name to CAO from April 1st 2013.
Principal Internal Committees
|Internal Control Committee||
|Corporate Officer Compensation Consultative Committee||