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Toshiba's corporate governance policy aims to enhance management efficiency and transparency, while maximizing corporate value from the shareholders' perspective.
The basic policy and objective of Toshiba's corporate governance is to enhance management efficiency and transparency while maximizing corporate value from shareholders' perspective.
Based on this approach, Toshiba made the transition to a system of a company with committees in June 2003 to enhance management flexibility, supervision and transparency. Of the 14 board of directors, 7 are non-executive directors, comprising 4 outside directors, the chairman of the board of directors and 2 full-time Audit Committee members. Each committee has a majority of outside directors; and the Nomination and Compensation Committees are both chaired by outside directors.
Pursuant to the Companies Act of Japan, the Nomination Committee is responsible for making proposals on the appointment and dismissal of directors. At Toshiba, the Nomination Committee is endowed with greater authority to make recommendations on the appointment and dismissal of the President and members of the committees.
The outside directors receive prior explanations on the matters to be resolved at board meetings from the staff in charge. They also attend the monthly liaison conferences of executive officers in order to oversee Toshiba's management.
Corporate Governance Structure  |
Toshiba has adopted its compensation system, designed effectively to facilitate the execution of duties of directors and executive officers. Directors receive fixed amounts of compensation according to their duties and their status as full-time or part-time directors. Executive officers receive basic compensation based on their ranks and service compensation calculated according to their duties; 40% to 50% of the service compensation fluctuates from zero to double depending upon the year-end performance of the division for which the executive officer is responsible or that of Toshiba Corporation.
In June 2006, Toshiba abolished the system of granting retirement benefits to directors and executive officers.
| Category | No. of People Amount | Paid (millions of Yen) |
|
|---|---|---|---|
| Board of directors | Compensation paid to directors (of which outside directors) |
18 (4) |
292 (64) |
| Executive officers | Compensation paid to executive officers | 46 | 1,197 |
Toshiba established the Toshiba Group Standards of Conduct in May 1990 to govern business activities in accordance with the Basic Commitment of Toshiba Group. In response to the Companies Act of Japan, enforced in May 2006, the basic policies on internal control system were determined in April 2006 by the board of directors.
Accordingly, Toshiba requested all group companies in Japan to adopt basic policies on internal control system by resolutions of their respective boards of directors, in order to reinforce Group-wide internal control system. Toshiba supported group companies by providing established models of basic policies and principal rules covering internal control systems.
In view of the introduction of the internal control reporting system in accordance with the Financial Instruments and Exchange Act of Japan (J-SOX) from the fiscal year ended March 2009 onward, Toshiba has established an organization at the corporate level to promote assessment of the effectiveness of internal control system over financial reporting; and each in-house company and group company both inside and outside Japan has put in place an organizational structure in response to J-SOX and made the assessment accordingly. Based on the assessment of the effectiveness of internal control system over financial reporting, we will endeavor to improve reliability of Toshiba Group's financial reporting.
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