In an effort to become more sensitive to global viewpoints, the Japanese electronics firm said it is nominating two foreigners: George Buckley, who is executive chairman of the Minnesota technology company 3M, and Philip Yeo, who is chairman of the governmental agency Spring Singapore.
Meanwhile Hitachi said it will also reduce the number of directors it appoints internally to six from eight, and the number of directors serving concurrently as executive officers from two to one. The three resigning directors include Tadamichi Sakiyama, Isao Ono, and Masaharu Sumikawa.
It's not the first time Hitachi has made changes to its board. The company adopted a committee system in June 2003, months after it became possible to do so under Japanese law, and its 13-member board has had four independent directors since. In another positive move, Hitachi in 2005 began disclosing the attendance at its board meetings. And in June 2007 the company appointed a woman, Yoshie Ohta, to be one of its independent directors.
To be sure, Hitachi's financial statements have reflected aggressive accounting and governance risk since December 2010, putting it into the third of four risk categories at GMI Ratings that range between conservative and very aggressive. Over the last few years Hitachi has had a steady stream of acquisitions and divestitures and a few restructurings, which reduce the transparency of financial statement reporting and create opportunities for misrepresenting true operating results.
Reflecting the balance between the company's efforts to strengthen its corporate governance as well as its risks, GMI Ratings gives Hitachi a C on its corporate governance overall.