Omron Announces Leading-Edge Corporate Governance, ROIC Policies

Omron has announced leading-edge, detailedcorporate governance policies that focus around many of the principles and conceptsset forth in Japan’s new corporate governance code. The shareholder-friendly policies apply a clear definition of independence, require that at least one-third of the board be independent directors,use advisory committees chairedby (and staffed mainly by)such externaldirectors for key functions, and apply a rigorous use of ROIC-based capital allocation.

A brief summary that BDTI received from the head of Omron’sIR & Communications Deparment is as follows:

We publicly announced OMRON Corporate Governance Policies today.Our policies uphold the aim and spirit of Japan’s Corporate Governance Code, which became effective on June 1, 2015 as listing rules.

I would like to highlight below points within our policies, in particular:

State specific schedule about:

Annual general shareholders meeting (at least three days prior to theso-called date of highest concentration of AGM)
Sending convocation notices to shareholders (at least three weeksbefore the date of AGM)
Posting electronic version of convocation notices in Japanese andEnglish on the website (about a month before the date of AGM)

Secure the rights of shareholders: disclose the level of opposing votescastagainst company proposals (30%), in which casewe shall take necessarymeasures such as engagement with shareholders proactively
State specific indices (ROIC, ROE, EPS) to be considered at capitalpolicies
Declare not to introduce takeover defense measures
State relationship with employees, customers, business partners andsuppliers, and communities based on the spirit of OMRON Principles
State a hybrid-type governance structure with advisory committees, whichomplements the organizational structure of Company with an Audit &Supervisory Board
State specific rules about composition of board of directors

Majority shall not be involved with business execution; at leastone-third shall consist of independent outside directors
All advisory committees shall be chaired by independent outsidedirectors, and the majority should be composed of independent outsidedirectors
All members of corporate governance committees should be independentoutside directors
Chairperson shall not have authority to represent the company, andshould not be involved with business execution

Specify internal control rule that matters related to risk managementand compliance are quarterly reported to the Board of Directors
State that compensation for directors shall consist of a base salary,yearly performance-linked bonuses, medium-term performance-linkedbonuses and stock compensation
Establish and disclose policy for constructive dialogue withshareholders
Disclose independence requirements for outside directors and audit &supervisory board members

While there is roomtobrush up the policies further (the way of expression, for example), we consider that the policies should be practically applied to our daily work and believe that Omron’s basic spirit towards building trustworthy relationship with all stakeholders are incorporated in this policies. It would be great if you could take a look at your convenience and let me know your opinions or thoughts.

Separately, we plan to issue our Integrated Report 2015 at the end of July.
In this year’s report, we intend to explain Omron’s sustainable value creation story bydentifying materiality and illustrating connectivities. We challenged to obtain assurance from the third party.

Started in 2012, this year’s one will be our fourth integrated report. I believe that we are almost completing the prototype of integrated report, so please look forward to our Integrated Report 2015 as well!

OMRON Corporate Governance Policies
https://www.omron.com/ir/management/pdfs/20150623_governance_policies_e.pdf

OMRON Corporate Governance Report
https://www.omron.com/ir/management/pdfs/20150624_governance_e.pdf

April Investor Presentation (inc.Upgraded ROIC Management, Ver. 2.0)
https://www.omron.com/ir/irlib/pdfs/20150427_presentation_e.pdf

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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