Corporate Governance

Hitachi Cable considers its efforts for continuous development of business as the foundation of corporate governance on the basis of compliance with relevant laws, business ethics and CSR principles as well as one of the most important challenges of management. In order to speed up management decision-making and enhance management transparency under the principles, the company has adopted the committee system, clearly separating executive and supervisory functions of management. Based on an outline decided by the Board of Directors, the internal control system is constructed and operated as an organization "supervision."

Corporate Governance Structure

Supervisory Function Management and Operating Functions

The Board of Directors devotes itself to decision-making on such matters as basic management policies and supervisory functions, and it has broadly transferred executive authority for operations to executive officers. As part of the supervisory functions of the Board of Directors, three independent committees, each of which comprises of two outside directors and one Hitachi Cable director, have been established to contribute to the fulfillment of the audit responsibilities of the Board of Directors: the Nominating Committee, the Audit Committee, and the Compensation Committee. Basically, the Audit Committee meets monthly, while the Nominating Committee and the Compensation Committee meet whenever necessary. There are eight members on the Board of Directors, including three outside directors. The Chairman of the Board who chairs meetings of the Board of Directors does not serve as an executive officer.
As part of internal control over the execution of operations by executive officers, an Executive Committee comprised of all executive officers has been established. The purpose of the Committee is to enable each executive officer to review and make decisions about important issues transferred from the Board of Directors in different angles and to share information about the execution of operations by individual executive officers.

Directors and Executive Officers compensation system

The committee determines compensation for members of the Board of Directors and executive officers. This is individually determined as per policies decided by the Compensation Committee. Compensation for directors is comprised of a monthly salary and year-end benefits, and no compensation as a director is paid to any director also serving as an executive officer. Compensation for executive officers is comprised of a monthly salary and renunciation linked to performance. The renunciation linked to performance is determined by the status of medium-term plans, budgets and other target achievements, depending on the distribution ratio of consolidated results, the performance of a division each executive officer assumes responsibility for and personal achievements specified by position.
The total amount of annual compensation for directors for the fiscal year ending March 2009 was 60 million yen while that of executive officers was 503 million yen.

Audit Function, Internal Control System

To further strengthen internal control, the Internal Audit Office (9 specialized staff members and 37 staff members serving concurrent positions) has been established. In an organized manner, the Office implement internal audits and promote internal control about the legality and appropriateness of operations by individual departments and sections of Hitachi Cable and its Group companies; whenever necessary, the Compliance Office Legal Group (3 specialized staff member and 7 staff members serving concurrent positions) conducts training, audit and guidance for individual departments and sections of Hitachi Cable and for its Group companies to ensure that corporate activities conform to laws, regulations and business ethics. The Audit Committee receives reports on these audit results and having the directors and executive officers report their execution of business operations as appropriate, assuring the organization is comprehensively and fully audited.
The Company also has an Internal Control Committee that determines policies, plans, operations and procedures of the internal control system regarding internal control associated with financial reports and reviews/approves results of the assessment of the effectiveness of the system, organizing a structure to assure appropriateness and reliability of financial reporting.
With regard to account auditing, Ernst & Young Shin Nihon LLC has been appointed as the independent auditor. The composition of the team involved in auditing operations is determined on the basis of the account auditor's selection criteria and, in precise terms, is comprised of seven certified public accountants, and nineteen other staff. The independent auditor reports to the Audit Committee at its meetings, exchange opinions with the Audit Committee members and the General Manager of the Internal Auditing Office who also attend the meetings, promoting partnership in auditing.
Hitachi Cable complies with an internal control reporting system based on the J-SOX Law (Financial Instruments and Exchange Law), introduced in FY2009, enforced and amended laws and regulations in the future and operation policies of the Hitachi Group, improves the corporate governance structure and realizes fair and transparent management.

Compliance

Promotion Structure

The Hitachi Cable Group touts "Keeping to the Straight and Narrow" as part of its code of conduct to be complied with by all executive officers and employees and make it clear that compliance is the preposition of business activities.
The company established the Compliance Office Legal Group and the Group not only engages itself in enlightenment, auditing and guidance for business activities conforming to the relevant laws, regulations and corporate ethics but also actively address compliance challenges in collaboration with the Internal Auditing Office, the Legal Department and other associated departments and sections so that business activities matching social requirements against the company are promoted.

Compliance Education

The Company takes every opportunity to host as many as more than a dozen compliance education courses including corporate-wide function-wise education, management education for Group Companies and Anti Monopoly Act education mainly for Sales.
Furthermore, as material to supplement educational opportunities, the Company published Japanese, English and Chinese versions of "Framework Handbook for Business Ethics" so that the awareness of compliance should be promoted as wide as possible in the Group including overseas Group Companies, distributing it to employees of all Group companies.
In FY2009, we hosted a total of nine corporate-wide compliance and human rights education courses and a total of three manager education programs for Group companies. We also hosted an antimonopoly law education for engineers in the Hitachi and Tsuchiura areas, which was participated by about 90 people.

Compliance status

In FY2009, no instructions were given to the Hitachi Cable Group. In FY2010, however, the Fair Trade Commission conducted an on-the-spot inspection on the suspicion that we were determining order prices, order awardees and order shares jointly with other manufacturers and vendors for fiber optic cables and associated products for telecommunications carriers on June 2, 2009.
We humbly accepted the on-the-spot inspection and fully cooperated with the investigation of the Fair Trade Commission.

Disclosure Compliance Reporting System

To supplement its corporate purification, Hitachi Cable established the Disclosure Compliance Reporting System in October 2003. If not only employees of Hitachi Cable or its Group companies but also suppliers and other external parties concerned once become aware of any illegal or inappropriate action, he or she can directly report to our Compliance Office. These are then summarized and publicly released.

Contacts of the Disclosure Compliance reporting system Internal Company Contact   Mailing address Compliance Office Legal Group, Hitachi Cable Akihabara UDX, 4-14-1 Sotokanda, Chiyoda-ku, Tokyo 101-8971, Japan FAX +81-3-5256-3240 E-mail address compliance@mail.hitachi-cable.co.jp We strictly manage and control any personal information received at the time of notification in accordance with the "Hitachi Cable Personal Information Protection Policies" and do not use the information for any purpose other than investigations of the notified matter and its reporting.

Risk Management

To share risk-related information about decision-making on risk management policies, responses to risks and recurrence prevention, Hitachi Cable has established a Risk Management Committee under the Executive Committee and headed by the President and Chief Executive Officer as its chairperson. The committee attempts to identify, assess, prevent and reduce risks.
Furthermore, to prepare for such risks as large earthquakes and other disasters, acts of terrorism and new types of influenza and other pandemics, the company prepares a business continuity plan (BCP) so that any interruption to the business will not have any substantial impact on society.

Export regulations

Hitachi Cable considers the essence of export regulations lies in compliance of export regulation related laws and regulations in direct and indirect export projects, protection from illegal acts by business partners and compliance with CSR requirements in terms of international security. We founded the Corporate Export Regulation Office directed by the Vice President and Executive Officers to strengthen our export regulation system by promoting the guidance of establishment and improvement, auditing, education and awareness-raising activities of the system by our Company and domestic and overseas Group companies.
As part of a comprehensive range of activities in FY2009, we conducted auditing and education for 16 overseas Group companies, deepened their understanding of the significance of export regulations and enhanced regulation systems. Going forward, responding to amendments of relevant laws and regulations, we shall continue to improve and promote thorough implementation of steady and efficient export regulations.