Hitachi Construction Machinery

Global

Basic policies on corporate governance

As a member of the Hitachi Group, the HCM Group shares Hitachi, Ltd.’s “Vision”, the Hitachi Founding Spirit and states our Codes of Conduct in line with them. The HCM Group positions our Codes of Conduct as the basic policies on corporate governance.

Basic Concept

We firmly recognize that we should act not only to improve our business performance but also to serve as a useful corporate citizen in society. Our commitment to fair and transparent corporate behavior underpins our corporate governance. We believe this commitment will in turn lead to greater corporate value and improved shareholder value.

We have adopted a corporate organizational system of a company with nominating committee, etc. as defined in Article 2, Paragraph 12 of the Companies Act, with the aim of ensuring 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 operations.

In addition, the Hitachi Construction Machinery Group’s own Code of Conduct, based on that of the Hitachi Group, guides our basic policy for corporate governance as one of the Hitachi Group companies, and serves as the foundation for the Hitachi brand and our CSR activities. We will foster the Hitachi Group’s common values and share the same understanding of our corporate social responsibilities.

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 (1) of Hitachi Construction Machinery’s ten (10) Directors also concurrently serves as advisor to Hitachi Ltd., the parent company is able to exert influence on decisions on our management policy through the views expressed by this director at Board meetings. Nevertheless, the other nine (9) directors do not serve concurrently in executive or other positions at Hitachi Ltd. and there are three (3) outside directors who have been reported to the Tokyo Stock Exchange as independent officers. Therefore, we are in a position to be able to make our own management decisions. Also, terms and conditions of transactions with Hitachi Ltd. and its group companies are determined reasonably based on mutual discussions referencing market prices and other factors.

Corporate govenance system (as of June 24, 2019)

Policy on determining the amount of compensation, etc. for directors and executive officers

1. Method for determination of policies
Our Compensation Committee sets forth the policy on the determination of the amount of compensation for the company’s individual Directors and Executive Officers pursuant to the provision of the Companies Act applicable to companies with nominating committees, etc.

2. Policy Overview
(1) Matters relating to both Directors and Executive Officers
Compensation will be commensurate with the scope and range of our company’s business, the ability required of, and the responsibilities and risks to be borne by, Directors and Executive Officers, taking into consideration package at other companies.
(2) Matters relating to Directors
Compensation for Directors consists of a monthly salary and year-end allowance.

  • A monthly salary is determined by making additions reflecting committees to which the employee belongs and his or her position to the base salary on a full-time or part-time basis.
  • The year-end allowance shall be, in principle, payed at the amount multiplying the amount of basic salary by a certain factor. However, the amount may be reduced depending on operating results of the Company. In case of Directors who also serve as Executive Officers, compensation as a Director is not paid.

(3) Matter relating to Executive Officers
Compensation for Executive Officers consists of a monthly salary and performance-linked compensation.

  • A standard yearly compensation is set in accordance with societal standards by taking into account the scope and range of our company’s business, the abilities required of, and the responsibilities and risks to be borne by Executive Officers.
  • Monthly salaries are set to standard amounts according to job positions.
  • The standard sum for performance-based compensation is roughly 40% of standard annual income for the Chairman and President. For other Executive Officers it is roughly 30% of annual income. It is determined within a certain range depending on the company performance and achievement of individual roles.
  • For foreign Executive Officers, standard annual income is set according to the benchmarks of salary levels of the country in question from the view point of retaining capable personnel, taking into account the competitiveness of the salary.

Directors and Executive Officers (as of June 24, 2019)

Directors

髙橋 秀明 取締役会長

Hideaki Takahashi Chairman of the Board

Kazushige Okuhara Outside Director

Haruyuki Toyama Outside Director

 Junko Hirakawa Outside Director

Tetsuo Katsurayama Director

Toshikazu Sakurai Director

Koji Sumioka Director

写真:豊島 聖史

Seishi Toyoshima Director

写真:蓮沼 利建

Toshitake Hasunuma Director

写真:平野 耕太郎

Kotaro Hirano Director

Executive Officers

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 and Executive Officer Naoyoshi Yamada
Vice President and Executive Officer Takaharu Ikeda
Vice President and Executive Officer Sonosuke Ishii
Vice President and Executive Officer Seishi Toyoshima
Vice President and Executive Officer Hideshi Fukumoto
Executive Officer Yusuke Kajita
Executive Officer Moriaki Kadoya
Executive Officer Masafumi Senzaki
Executive Officer Kazunori Nakamura
Executive Officer Masaaki Hirose
Executive Officer Hidehiko Matsui
Executive Officer Makoto Yamazawa
Executive Officer David Harvey

Note: Executive officers are listed in the Japanese syllabic order for each job title.

Reasons for appointing outside directors (independent executives)

We have appointed Kazunari Okuhara as Outside Director so that he can provide advice on our company’s overall management and supervise the execution of duties by Executive Officers from an independent position, utilizing his extensive experience as the top executive of a global company, knowledge and deep insight on personnel and labor policy.
Mr. Okuhara is a constituent member of the nominating committee and audit committee.

We have appointed Haruyuki Toyama as Outside Director so that he can provide advice on our company’s overall management and supervise the execution of duties by Executive Officers from an independent position, utilizing the extensive experience and knowledge in the fields of monetary affairs and finance that he has cultivated to date.
Mr. Toyama is a constituent member of the nominating committee, compensation committee and audit committee.

We have appointed Junko Hirakawa as Outside Director so that she will be able to provide advice on our company’s overall management and supervise the execution of duties by Executive Officers from an independent position, utilizing her extensive experience and knowledge that she has cultivated to date as legal expert.
Ms. Hirakawa is a constituent member of the nominating committee, compensation committee and audit committee.

Corporate Governance Guidelines

Ensuring tax transparency

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), as well as that body’s Action Plan on Base Erosion and Profit Shifting(BEPS).
  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.

※BEPS : Base Erosion and Profit Shifting


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