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Governance and CSR Management

Governance Report

Corporate Governance

Hitachi Chemical is structured on a “company with a nominating committee” scheme that separates executive and supervisory functions. We also reinforced the supervisory functions of the Board of Directors to ensure its management is highly objective and transparent. In addition, directors and auditors from Hitachi Chemical are assigned as necessary to Group companies to enhance oversight.

The Hitachi Chemical Group also strives to augment its governance structure to ensure its operations conform with the law and its Articles of Incorporation. Hitachi Chemical periodically conducts internal audits of business sites and Group companies. In fiscal 2014, audits were carried out at 41 locations.

Furthermore, to secure the credibility of our financial reporting, the Group documents its performance and objectively evaluates the effectiveness of governance in financial reporting in accordance with the Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting. As well, the Group discloses results within the framework of the Financial Instruments and Exchange Law. With respect to Group companies, Hitachi Chemical periodically performs operation audits while monitoring internal controls to support improvements in control environments.

Hitachi Chemical has two basic policies on directors’ pay to ensure that they are appropriate and to raise directors’ motivation. First, their pay is linked to earnings performance, not only in the short term, but also designed to motivate them to engage in management that aims to raise corporate value over the longer term. Second, directors’ remuneration packages should be competitive so that we can attract the best people from diverse backgrounds. Based on these policies, the Remuneration Committee discusses policy and levels of pay for directors and executive officers every year to determine pay packages. Directors’ pay is a combination of a basic monthly salary and year-end bonus. The pay of executive officers and directors who are also executive officers consists of a basic monthly salary and earnings-linked bonus.

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