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Corporate Governance

Corporate Governance Policy

Toshiba's corporate governance policy aims to enhance management efficiency and transparency, while maximizing corporate value from the shareholders' perspective.

Corporate Governance Report (Japanese)

Toshiba's Governance System

As a “company with committees,” Toshiba aims to enhance its management mobility, supervisory functions, and increase transparency. The board of directors consists of 16 members, half of whom are directors who do not form part of the executive management team ("the Non-Executive Directors"). The Non-Executive Directors include four outside directors (including one woman), the chairman, the vice chairman, and two full-time Audit Committee members. The benefit of this composition is that it allows the board to formulate basic management policy efficiently based on the actual status of management through the inclusion of Toshiba executives who are familiar with its operations but who devote themselves to supervision, though half of the eight are independent outside directors. Each committee has a majority of outside directors and the Nomination and Compensation Committees are both chaired by outside directors.

Notification has been filed regarding all outside directors as being independent directors stipulated in the Securities Listing Regulations of the Tokyo Stock Exchange.

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.

To help the Audit Committee perform its duties, we have created the office for the committee. The personnel transfers of the staff members of the office are determined by prior consultation with the Audit Committee. The Corporate Audit Division, which is in charge of internal audits, consults with the Audit Committee in advance to formulate annual auditing policies and plans. The Corporate Audit Division also participates in discussions on the audited divisions and shares audit information through semimonthly liaison meetings with the Audit Committee.

Along with these activities, the Audit Committee normally draws on field surveys conducted by the Corporate Audit Division for detailed information. Though the Audit Committee obtains reports on the results of audits conducted by the Corporate Audit Division, it also conducts its own audits if deemed necessary.

Corporate Governance Structure

Corporate Governance Structure

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Compensation for Directors and Executive Officers

We have designed a compensation system for retaining talented human resources, and for providing incentives to directors and executive officers to effectively execute their duties. Directors receive fixed 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 (non-payment) to double depending upon the year-end performance of the division for which the executive officer is responsible or that of Toshiba Corporation.

Total Amount of Compensation Paid to Directors and Executive Officers (FY2012, Toshiba Corp.)
Position Total Amount
(Million of yen)
Basic Fixed Compensation
(Million of yen)
Performance Based Compensation Number of Persons
Directors
(excluding Outside Directors)
236 236 - 11
Outside Directors 59 59 - 6
Executive Officers 1,199 1,101 98 36
Directors and Executive officers whose total compensation exceed 100 million yen for FY2012
Name Position Company Basic Fixed Compensation
(Million of yen)
Performance Based Compensation Total Amount
(Million of yen)
Atsutoshi Nishida Director Toshiba Corporation 127 - 127
Norio Sasaki Director Toshiba Corporation 6 - 115
Executive Officers 102 7

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Internal Control Systems

The Toshiba Group Standards of Conduct prescribes the values and codes of conduct that all executives and employees should share. In response to the Companies Act of Japan, which came into effect in May 2006, we also determined basic policies on the internal control system at a meeting of the board of directors. Accordingly, in order to enhance the Group-wide internal control system, all group companies also adopted a similar resolution at respective board of directors’ meetings and established related regulations. Thus they are continuing to strive to bolster their internal control systems. In addition, Toshiba Group has created an organization for the internal control reporting system and assesses the effectiveness of internal controls over financial reporting. We will continue our efforts to properly manage the internal control system regarding financial reporting.

In order to prevent damage due to antisocial forces, based on a resolution of the Board of Directors in June 2006, Toshiba revised the Toshiba Group Standards of Conduct to state clearly that the company refuses all involvement in business activities with antisocial forces. Based on these revised Standards of Conduct, the company has established a management system as shown below, thus ensuring sound management.

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Toshiba's Internal Control System

As a “Company with Committees system,” Toshiba has put into place the systems listed below.

Systems to ensure appropriate operation as a stock company

(1)System to ensure that Executive Officers' compliance with laws and regulations and the Articles of Incorporation.

  1. Executive Officers periodically report to the Board of Directors on their execution of their duties and are required to report on necessary items to the Board of Directors, as necessary.
  2. The General Manager of the Corporate Audit Division periodically reports to the Board of Directors on internal audit results.
  3. The Audit Committee periodically interviews Executive Officers and the General Manager of the Corporate Audit Division reports to the Audit Committee on internal audit results.
  4. Executive Officers report to the Audit Committee on any material violation of laws and regulations without delay in accordance with the Rules concerning Reporting to the Audit Committee.

(2)System for retention and management of information concerning Executive Officers' execution of their duties.

  1. In accordance with the Rules concerning the Document Retention Period, Executive Officers appropriately retain and manage material documentation, such as information materials for the Management Meetings and decision-making documents, and other documents such as account books and records.
  2. Executive Officers run a system that allows Directors to access important information, such as information materials for the Management Meetings, decision-making documents, account books and records and business reports.

(3)Rules and other systems concerning risk management

  1. In accordance with the Basic Rules concerning Risk-Compliance Management, the Chief Risk-Compliance Management Officer (hereinafter referred to as the “CRO”) formulates and promotes measures concerning crisis and risk management in his/her capacity as the chairman of the Risk-Compliance Committee.
  2. Executive Officers formulate and promote measures necessary for continuously clarifying business risk factors and minimizing loss in the event that risk is realized.

(4)System to ensure that Executive Officers efficiently execute their duties

  1. The Board of Directors determines the basic management policy and approves the mid-term business plan and annual budgets prepared by the Executive Officers.
  2. The Board of Directors delegates authority and responsibilities to Executive Officers in an appropriate manner and Executive Officers clarify the authority and responsibilities of the Executive Officers and employees in accordance with the Rules concerning Responsibilities of Division and the Rules concerning Managerial Duties.
  3. Executive Officers set concrete targets and roles of organizations and employees.
  4. Executive Officers make decisions on business operations based on appropriate procedures in accordance with the Board of Directors Rules, the Corporate Decision Making Rule, the In-house Company Decision Making Rule and other rules.
  5. Executive Officers follow up annual budget implementation and appropriately evaluate performance evaluation by means of monthly meetings and the Performance Evaluation Committee.
  6. Executive Officers promote strengthening of information security systems and operate the accounting system, the authorization system and other information processing systems in an appropriate manner.

(5)System to ensure that employees' performance of their duties conforms to laws and regulations and the Articles of Incorporation

  1. The President & CEO ensures, through continuous execution of employee education etc., that employees comply with the Toshiba Group Standards of Conduct clarifying values and codes of conduct to be shared by all officers and employees.
  2. The CRO formulates and promotes measures concerning compliance with laws and regulations in his/her capacity as the chairman of the Risk-Compliance Committee in accordance with the Basic Rules concerning Risk-Compliance Management.
  3. The Executive Officer in charge endeavors to detect problems early and deal with them in an appropriate manner by making use of the whistle-blower system.

(6)System to ensure the appropriateness of business operations of Toshiba Group

  1. Toshiba Corp. requests its subsidiaries to adopt and implement the Toshiba Group Standards of Conduct.
  2. Toshiba Corp. requests its subsidiaries to report to Toshiba Corp. in accordance with the Operational Communication Arrangement in the event that material issues arise in their business operations.
  3. Toshiba Corp. formulates appropriate measures for internal control, including that of its subsidiaries, and requests its subsidiaries to promote the measures according to their situations.
  4. Toshiba Corp. requests its subsidiaries to establish audit systems in accordance with the Toshiba Group Auditors' Audit Policy.
  5. Toshiba Corp. executes management audits of its subsidiaries, as necessary.

Items Necessary for the Audit Committee's Performance of its Duties

(7)Employees assigned to assist the Audit Committee in the performance of its duties

  1. In order to assist the Audit Committee in the performance of its duties, the Audit Committee Office consisting of five or so staff is established. No director is assigned to assist the Audit Committee in the performance of its duties.

(8)Independence of employees mentioned in the preceding paragraph from Executive Officers

  1. Personnel transfer of employees of the Audit Committee Office is discussed with the Audit Committee in advance.

(9)System for reporting by Executive Officers and employees to the Audit Committee and other systems concerning reporting to the Audit Committee

  1. Executive Officers and employees report to the Audit Committee in accordance with the Rules concerning Reporting to the Audit Committee in the event that any material issue arises that may affect operation and financial performance.
  2. The President & CEO provides auditors designated by the Audit Committee with opportunities to attend important meetings, including the Management Committee meetings.

(10)System to ensure that audits by the Audit Committee are conducted effectively

  1. The President & CEO periodically dialog with the Audit Committee.
  2. Executive Officers and employees report the execution of their duties to the Audit Committee by means of the periodical interviews conducted by the Audit Committee and circuit interviews.
  3. The General Manager of the Corporate Audit Division discusses the policy and the plan for internal audits at the beginning of each fiscal year with the Audit Committee in advance and timely reports the internal audit results to the Audit Committee.
  4. The Audit Committee has accounting auditors provide explanations and reports concerning the accounting audit plan at the beginning of each fiscal year, the situation of accounting audits during each term and the results of the accounting audits at the end of each fiscal year.
  5. The Executive Officer in charge provides explanations to the Audit Committee concerning the interim settlement of accounts and settlement of accounts at the end of fiscal year as well as quarterly settlement of accounts prior to the approval by the Board of Directors.
  6. The President & CEO informs the Audit Committee in advance and provides explanations concerning the assignment of the General Manager of the Corporate Audit Division, taking into consideration the independence of the General Manager of the Corporate Audit Division from other Executive Officers and organizations.

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Internal Control System over Financial Reporting

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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Takeover Defense Measures

With the goal of protecting and enhancing the Company's corporate value and the common interests of its shareholders, Toshiba has implemented countermeasures against large scale acquisitions of shares in the Company.
For more information visit: Renewal of Countermeasures to Large-Scale Acquisitions of Toshiba Corporation Shares (Takeover Defense Measures) [PDF 217MB/31 pages]

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Evaluation of Corporate Governance

  • Toshiba was ranked 6th in the JCGIndex Survey conducted by the Japan Corporate Governance Research Institute, Inc. (March, 2013)
  • Toshiba stock was selected for the Corporate Governance Fund of the Pension Fund Association.

Evaluation by External Parties

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