Hitachi Construction Machinery

Global

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 ten (10) Directors, of which three (3) are Outside Directors (two (2) male and one (1) female). The Representative 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 Representative 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 six (6) 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.

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 applicable to companies with a nominating committee, etc. 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 whether occupying the seat or not in each committee, and a “year-end allowance,” which is multiplying the “monthly fee” with a constant coefficient. Provided that, the “year-end allowance” may be reduced depending on operating results of the company. Compensation to Executive Officers consists of a “monthly fee” in accordance with the officer’s position referring standards in general, 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 April 1, 2018)

Directors

Kazushige Okuhara Outside Director

Haruyuki Toyama Outside Director

 Junko Hirakawa Outside Director

Tatsuro Ishizuka Director

Osamu Okada Director

Tetsuo Katsurayama Director

Yutaka Saito Director

Koji Sumioka Director

Kotaro Hirano Director

Hirotoyo Fujii Director

Executive Officers

Representative Executive Officer, Chairman, Executive Officer and Director Tatsuro Ishizuka
Representative Executive Officer, President, Executive Officer and Director Kotaro Hirano
Representative Executive Officer, Executive Vice President, Executive Officer and Director Koji Sumioka
Executive Vice President and Executive Officer Yasushi Ochiai
Senior Vice President, Executive Officer and Director Tetsuo Katsurayama
Senior Vice President and Executive Officer Michifumi Tabuchi
Senior Vice President, Executive Officer and Director Hirotoyo Fujii
Vice President and Executive Officer Hideshi Fukumoto
Vice President and Executive Officer Naoyoshi Yamada
Executive Officer Takaharu Ikeda
Executive Officer Sonosuke Ishii
Executive Officer Yusuke Kajita
Executive Officer Moriaki Kadoya
Executive Officer Masafumi Senzaki
Executive Officer Masaaki Hirose
Executive Officer Katsuhiko Murakami
Executive Officer Makoto Yamazawa
Executive Officer David Harvey

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.

Compliance with tax laws of each region

In January 2016, the Hitachi Group established regulations on tax related matters covering the entire Group. In accordance with these regulations, the HCM Group carries out tax risk management to address the globalization of its operations. Within our securities report, we disclosure corporate tax and other tax
obligations for the HCM Group and also disclose information on factors behind variance with the effective statutory tax rate to ensure full tax transparency.

The HCM Group we continue to implement these measures to fulfill its tax obligations with a focus on fairness in all of the regions where we conduct business and comply with the spirit and tax laws applied in those countries and regions.

Hitachi Construction Machinery Group Rules for Global Tax Management
  1.  Group companies strictly comply with all relevant laws and implement tax management when pursuing their business activities, bearing in mind such international tax-compliance standards as the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations of the Organisation for Economic Co-operation and Development (OECD※4 ), as well as that body’s Action Plan on Base Erosion and Profit Shifting(BEPS※5 ).
  2.  Group companies effectively, continually, and proactively manage tax-related issues as socially responsible organizations, while maintaining Hitachi brand value and seeking to maximize shareholder value.
  3.  Group companies build sincere and positive relations of trust with the tax authorities in the regions where the companies do business, and strive to maintain and develop those relations.

※4  OECD : Organization for Economic Co-operation and Development
※5  BEPS : Base Erosion and Profit Shifting


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