Mitsubishi Electric revised its compensation system in March 2004 with a view to developing a corporate culture in which employees recognize organizational targets as well as their own roles, work to raise their own value, and take on the challenge of difficult goals.

Under the new compensation system, performance is emphasized more than it was in the past, with appropriate assessment given to employees who contribute substantially to management and participate actively in it. Bonuses are awarded for outstanding service. In order to increase understanding of employees about the operation of the new system, we fully disclose its evaluation methods and standards, conduct surveys on the functioning of the system to gauge employee opinion on it, and otherwise work to increase understanding and acceptance by employees.

In fiscal 2008, some 80% of employees participated in the survey conducted on the functioning of the new compensation system. The results are reflected for enhancement of its operation. We are committed to making the system function effectively by organically combining and harmonizing the three components of the system, evaluation/compensation, skills development and effective workforce utilization, in order to provide opportunities for employees to develop their own skills and advance their careers.

We have established consultation desks at each business site as a means of facilitating dialogue with employees on remuneration, compensation, benefits and other related issues. There is also an avenue for contacting the head office about these issues by email or phone. Personal interviews are also held every year to provide an opportunity for individual employees to discuss compensation and other issues with their immediate superiors.

In line with provisions in the Patent Law, Mitsubishi Electric has established rules for the payment of bonuses for employee inventions. In return for transferring patent rights on an invention developed by an employee in the course of his duties, we pay filing and registration compensation to the employee when the patent is filed for and registered, and if the invention is utilized in a company product or licensed to another company, we pay utilization compensation to the employee.

Amendments to the Japanese Patent Law in April 2005 added requirements related to formulation of these rules; namely, deliberation with employees on formulation, disclosure of the rules to employees, and listening to employee opinions on the matter. In accordance with these amendments, we revised our rules for the payment of bonuses for employee inventions in July 2005. We then held presentations on the changes at all manufacturing works and research centers, distributed CD-ROMs of the presentation to all employees who were not present, posted the presentation on the company intranet, and listened to the opinions of employees on the matter. After deliberations with the labor union, we created a final revised version of the rules that incorporated the thoughts and opinions of employees, gave presentations on this final version at all our operating sites and gained the consent of employees.

Under these revised rules for bonuses on employee inventions, we eliminated the upper limit and raised the bonus ratio for inventions licensed to other companies in order to further motivate our engineers. We also improved fairness and transparency for inventions used only in company products by disclosing the formula used to calculate bonuses for them. Moreover, we established the Invention Consultation Committee to make it possible for employees to petition the committee to review the amount of their bonus when they are not happy with it. We explained the reasons for these changes and our related policies to the departments in charge of intellectual property issues at each of our Group companies as well, and the companies have developed systems in line with Mitsubishi Electric policies.

Apart from our system of bonuses for employee inventions, we also have a program for rewarding outstanding inventions. Under this program, 30 to 40 inventions are honored each year.