Hitachi Construction Machinery

Global

Corporate Governance

Basic policies on corporate governance

As a member of the Hitachi Group, the HCM Group shares Hitachi, Ltd.’s Basic Credo and Conduct guidelines and states our Standards of Corporate Conduct in line with them. The HCM Group positions these corporate behavior standards as the basic policies on corporate governance.

Corporate governance system

The HCM Group has adopted a corporate organizational system based on a structure for company with nominating committee, etc., as defined in the Companies Act, with the aims of ensuring highly fair and transparent management while building an operational system that facilitates the prompt and sound execution of management strategy. We have greatly strengthened our system of corporate governance through this separation of management oversight from business execution. The Board of Directors comprises eight (8) Directors, of which three (3) are Outside Directors (two (2) male and one (1) female). The Chief Executive Officer and Executive Officers, who are authorized to do so by the Board of Directors, have the right to make decisions on business execution and execute work in accordance with the Company’s basic management policies. The Board of Directors decides the responsibilities and duties of the Executive Officers, matters regarding supervision and authority, and the mutual relationships among the Executive Officers. An Executive Committee (convening twice a month, in principle), comprising all the Executive Officers has been established as a consultative organ for the Chief Executive Officer and President in making business decisions. The Executive Committee exercises control regarding important matters related to the management of the company’s operations.

Ensuring constant independence from the parent company

Since one of the Directors on HCM’s Board of Directors also previously worked for Hitachi, Ltd., the parent company exerts influence on decisions on our management policy through the views expressed by this Director at Board meetings. However, with the exception of the aforementioned Director, among HCM’s Board of Directors members, three (3) are Outside Directors designated as independent Outside Director, and five (5) are other Directors with no concurrent relationships with Hitachi, Ltd. or companies in the Hitachi Group. This ensures that we are able to make independent management decisions.

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Calculating executives' compensation (performance-linked compensation system)

HCM’s Compensation Committee sets the policy for deciding the amount of compensation for the company’s board members and executive officers in accordance with regulations stipulated by the Companies Act regarding companies with a committee governance structure. Compensation standards are established commensurate with the capabilities and responsibilities required and after consideration of remuneration levels at other companies. Compensation to Board members consists of a “monthly fee,” which is the basic compensation for full- or part-time service plus an amount calculated in accordance with the Director’s position, and a “year-end allowance,” which is based on an amount multiplied by a constant coefficient. Compensation to Executive Officers consists of a “monthly fee” in accordance with the officer’s position, and “performance-linked compensation,” which is determined in line with the Executive Officer’s performance and results achieved in the officer’s responsible duties. For Board members concurrently serving as Executive Officers, no compensation is paid for services provided as a Director of the Board.

Directors and Executive Officers (as of October 6, 2016)

Directors

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Yutaka Saito Chairman of the Board

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Kazushige Okuhara Outside Director

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Haruyuki Toyama Outside Director

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 Junko Hirakawa Outside Director

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Osamu Okada Director

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Tetsuo Katsurayama Director

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Koji Sumioka Director

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Yuichi Tsujimoto Director

Executive Officers

Representative Executive Officer, President & CEO Yuichi Tsujimoto
Representative Executive Officer, Executive Vice President and Executive Officer Koji Sumioka
Senior Vice President, Executive Officer Yasushi Ochiai
Vice President and Executive Officer Kenji Ota
Vice President and Executive Officer Toshihiro Oono
Vice President and Executive Officer Tetsuo Katsurayama
Vice President and Executive Officer Michifumi Tabuchi
Vice President and Executive Officer Hisashi Hasegawa
Vice President and Executive Officer Koutarou Hirano
Executive Officer Takaharu Ikeda
Executive Officer Moriaki Kadoya
Executive Officer Toshikazu Sakurai
Executive Officer Hideshi Fukumoto
Executive Officer Tadashi Motoi
Executive Officer Naoyoshi Yamada

Note: Executive officers are listed in the Japanese syllabic order.

Corporate Governance Guidelines

Ensuring tax transparency

The Hitachi Construction Machinery Group fulfills its obligation to pay taxes in the regions where it conducts business activities. The Group observes the letter and spirit of the applicable tax laws in these countries and regions. Moreover, the total amount of income and other taxes paid are disclosed by the Group in its annual securities report and other materials. Information, including factors that instigate a gap with the statutory tax rate, is also disclosed to ensure tax transparency.