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Toshiba's corporate governance policy aims to enhance management efficiency and transparency, while maximizing corporate value from the shareholders' perspective.
In June 2003, Toshiba made the transition to a company with committees system in order to improve speed and flexibility of management, reinforce management supervision and increase transparency. The Board consists of 14 directors; 7 are non-executive directors, which comprise of 4 outside directors, the chairman of the board of directors and 2 full-time audit committee members. Each of the three committees has a majority of outside directors, and the Nomination Committee and Compensation Committee are both chaired by outside directors.
Pursuant to the Companies Act of Japan, the Nomination Committee is responsible for making proposals on the appointment and dismissal of directors. At Toshiba, the Nomination Committee is endowed with greater authority to make recommendations on the appointment and dismissal of the President and members of the committees.
The outside directors receive prior explanations on the matters to be resolved at board meetings from the staff in charge. They also attend the monthly liaison conferences of executive officers in order to oversee Toshiba's management.
Corporate Governance Structure  |
Directors receive fixed amounts of compensation according to their duties and their status as full-time or part-time directors.
Executive officers receive basic compensation based on their ranks and service compensation as calculated according to their duties; 40% to 45% of the service compensation fluctuates from zero to double depending upon the year-end performance of the division for which the executive officer is responsible or that of Toshiba Corporation.
In June 2006, Toshiba abolished the system of granting retirement benefits to directors and executive officers.
| Category | No. of People | Amount Paid (millions of Yen) |
|
|---|---|---|---|
| Board of directors | Compensation paid to directors (of which outside directors) |
14 (4) |
282 (55) |
| Executive officers | Compensation paid to executive officers | 36 | 1,374 |
Toshiba established the Toshiba Group Standards of Conduct in 1990 to govern business activities in accordance with the Basic Commitment of the Toshiba Group.
In response to the Companies Act of Japan, enforced in May 2006, the basic policies on internal control systems were resolved in April 2006 by the board of directors. Accordingly, Toshiba requested all group companies in Japan to adopt basic policies on internal control systems by resolutions of their respective boards of directors, in order to reinforce internal control systems throughout Toshiba Group. Toshiba is supporting group companies by establishing models of basic policies and principal rules covering internal control systems.
In view of the introduction of the internal control report system in accordance with the Financial Instruments and Exchange Act of Japan (J-SOX) for the fiscal year ending March 2009 onward, Toshiba has established an organization at the corporate level to promote assessment of the effectiveness of internal control system over financial reporting; and each in-house company and group company has put in place an organizational structure in response to J-SOX. Based on the results of assessment, we will continue our efforts to ensure the design and execution of appropriate internal control system over financial reporting.
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