Corporate Governance

Fuji Electric’s corporate governance is being strengthened through efforts to reform our management structure and improve transparency and our supervisory functions.

Management Structure Reforms

In April 2011, we restarted as the “New Fuji Electric,” by integrating Fuji Electric Systems, which primarily handles energy and the environment, and Fuji Electric Holdings, our holding company. We have also introduced an executive officer system that has been implemented across the company, including our affiliates. The management and execution roles have been made clear, which speeds up the decision-making process as well as clarifying executive responsibility for each business.

We are transferring all domestic magnetic disk operations to Malaysia to strengthen our ability to make profits even in the face of sudden, rapid changes in demand. In tandem with this move, we merged Fuji Electronic Device Technology Co., Ltd., our domestic subsidiary, into Fuji Electric Co., Ltd. in July 2011.

A Corporate Governance Structure Emphasizing the Role of Outside Officers

Outside officers fulfill the role in management of objective supervision. By providing useful advice and instructions across the entire spectrum of Fuji Electric’s business, outside officers help to ensure the rationality of business judgments. Our corporate governance structure emphasizes the role of outside officers, with three of our 11 directors and three of our five auditors placed from outside the company.

Outside directors serve to ensure the rationality and propriety of decision making, and strengthen oversight functions. Our three outside directors—Mr. Tadashi Kudo, who brings strong experience in finance-related management, Mr. Hiroaki Kurokawa, who has deep experience as a manufacturing executive, and Mr. Motoyuki Suzuki, with wide-ranging experience in the field of environmental engineering—provide Fuji Electric with useful advice and instructions in every aspect of our business.

In addition to having the role of strengthening our auditing functions, our three outside auditors—Mr. Yuzuru Fujita, who possesses strong experience as a financial institution executive, Mr. Takahiko Ito, with his experience as a standing auditor at a listed company, and Mr. Kunio Morikiyo, an attorney—also provide useful advice at our Board of Directors meetings and in other venues concerning our entire business.

Of these outside officers, five have been appointed as independent directors as required by the financial instruments exchanges.

Attendance of outside officers in FY2010 at Board of Directors meetings (held 14 times) and Board of Auditors meetings (held four times) was 91% and 100%, respectively.

Corporate Governance Framework

(1) Directors and Board of Directors
The Board of Directors conducts decision-making and oversight of the management of Fuji Electric and the execution its important business. Fuji Electric proactively appoints outside directors with a view to strengthening the management supervisory function from an objective perspective and maintaining the rationality and propriety of business decisions.

(2) Auditors and Board of Auditors
The auditors inspect Fuji Electric’s management and business execution. In addition to our proactive appointment of outside auditors, we shore up our auditing functions by requiring Standing Auditors to attend Executive Committee meetings.

(3) President, Executive Officers, Executive Committee
Led by the President, the Executive Committee rules on the execution of business other than that decided upon by the Board of Directors.
The Executive Committee is composed of executive officers and serves to advise the president, and fulfills functions such as reporting to enable deliberation, recommendation, and monitoring of important matters. Each executive officer controls the execution of the business of which he is in charge.

Remuneration for Directors

Fuji Electric has established a remuneration system and remuneration levels for directors and auditors that are deemed appropriate for their respective duties and in accordance with the shareholders’ mandate, giving due consideration to the aims of securing and maintaining competent personnel and providing incentives for the improvement of business performance.

Standing Directors

Remuneration for standing directors comprises fixed-amount remuneration determined according to position, and performance-based remuneration. A predetermined amount of the fixed-amount remuneration is required to be paid to the director ownership plan, in accordance with the director’s position. Performance-based remuneration is paid only when dividends from retained earnings are paid to shareholders. In order to establish a clear link with consolidated performance in each fiscal year, the total amount is limited to 1.0% of consolidated net income in the previous fiscal year.

Outside Directors and Auditors

Remuneration for outside directors and auditors comprises a fixed amount determined according to position, as they bear the responsibility of supervising and auditing the execution of duties for Fuji Electric overall. Acquisition of the Company’s stock is on a voluntary basis.

In fiscal 2006, the holding company abolished the retirement benefit system for directors.

Total Remuneration for Directors and Corporate Auditors

Internal Control System

The Fuji Electric Board of Directors determines basic policies concerning the establishment of an internal control system as stipulated in the Companies Act, and the company discloses that policy. Fuji Electric’s company-wide internal control system is designed to respond promptly and accurately to the demands placed upon the company by society, and improvements are continuously made to it.