DENSO believes that establishing a corporate governance system designed to strengthen Group competitiveness is the key to maintaining and improving long-term corporate performance in a quickly changing global marketplace. It is also essential to promoting CSR management that is essential for sustainable growth on an ongoing basis. We are working to strengthen our corporate governance in accordance with this belief.
DENSO Corporation has adopted a corporate auditor system. In addition to statutory bodies such as the General Meeting of Shareholders, Board of Directors, Board of Corporate Auditors and Accounting Auditor, DENSO Corporation has developed various internal control mechanisms. In addition, we have adopted a managing officer system consisting of 29 managing officers to oversee business execution while ensuring a lean Board of Directors structure to facilitate expeditious decision-making and operational execution (term of directors: one year).
Roles and results of principal board meetings
Board of Directors:
The Board of Directors acts as the decision-making body for management policies and important operational issues. Decisions are made by the chairman based on the collective opinions of all Board members. Instructions deriving from decisions made concerning legal matters and important issues that relate to the entire Group are implemented through the Executive Meeting, and individual directors ensure that the necessary actions are taken in their areas of responsibility by issuing instructions to managing officers or department managers. Attendance by directors and auditors at the 16 Board of Directors meetings held in fiscal 2012 was 94% and 81%, respectively.
Top Management Meeting:
The Top Management Meeting is a deliberative body charged with discussing issues to be decided by the Board of Directors and other important issues that have a bearing on overall corporate management (corporate business plans, investment issues, important transaction formats and collaborative projects and other important management matters) and gives direction to corporate policy. Decisions are made by the chairperson after aggregating the opinions of all meeting members and results of the group’s deliberations are reported to the Board of Directors for final decision-making. In fiscal 2012, the Top Management Meeting convened 45 times.
Compensation for executives, directors and auditors:
The monthly amount of compensation for executives shall be within the upper limit for the total amount of compensation (directors: 80 million yen; auditors: 7 million yen) prescribed by a resolution at the General Meeting of Shareholders. The monthly amount of compensation for each individual director is decided by a representative director who has received authorization from the Board of Directors and is in accordance with standards prescribed by the Company, while the amount of compensation for each individual auditor is decided through cooperative consultation among auditors. Bonuses are decided upon receiving authorization for total amounts to be paid to directors and auditors, respectively, through a resolution at the Ordinary General Meeting of Shareholders. The amount of the bonus for each director takes into consideration the level of individual contribution and is decided by a representative director who has received authorization from the Board of Directors, while the amount of the bonus for each auditor is decided through cooperative consultation among auditors.
Management oversight function
Two standing corporate auditors and three external auditors with dedicated staff are responsible for monitoring the execution of duties by directors as well as the business operations and financial conditions of DENSO Corporation and its domestic and overseas subsidiaries. Under the Company’s audit system, corporate auditors, who implement legally mandated functions, are augmented by specialized internal audit departments in key Group companies in Japan and overseas, who conduct ongoing on-site audits not only of administration, business practices and legal compliance but also of the appropriateness of management and operational procedures.
In addition to attending important meetings such as Board of Directors and Top Management meetings, corporate auditors fulfill their management oversight function by auditing directors’ business execution through information exchange with internal audit departments, departments related to internal controls and the Accounting Auditor.
Developing and strengthening internal controls
Starting in fiscal 2009, in order to ensure the reliability of financial reporting, the Financial Instruments and Exchange Law requires an audit of the internal control reporting system (where companies assess the effectiveness of their internal controls pertaining to financial reporting and have those controls audited by an auditing firm). In fiscal 2009, an auditing firm gave our internal controls a fair assessment based on pertinent legal procedures, and we submitted a report on our internal controls to the Financial Services Agency, which determines whether the Group’s internal controls are effective.
Corporate governance system