TOKYO, March 3, 2003 -- Mitsubishi Electric Corporation (President and CEO: Tamotsu Nomakuchi) announced its board of directors' decision, from today's extraordinary meeting, that it will adopt the "Company with Committee System," which can be utilized under Japan's revised Commercial Code that comes into effect this April. The board also decided on director candidates to be submitted to the general stockholders' meeting scheduled for late June, as well as personnel changes of officers and related positions.

The board will apply these decisions to enable more flexible operations, further enhance management transparency and reinforce the supervisory functions of management, thereby positioning the company to realize "sustainable growth."

The board's decision will be proposed to the general stockholders' meeting to be held in June 2003, and will be implemented after approval of the stockholders.

1. Purpose of Adopting the Company with Committee System

By implementing the management reforms described below, Mitsubishi Electric will build a system in which the company can more appropriately respond to the expectations of customers, stockholders, vendors, employees and other stakeholders.

(1) Creation of suitable and quick decision-making and work execution structures
The company will divide functions based on the core principle of the "Company with Committee System" concept, that is, the "division of supervisory and implementation responsibilities." In line with this, the board of directors will focus on decisions concerning vital issues regarding management and the supervision of management in efforts to improve the suitability of management. On the other hand, overall authority will be conveyed to the executive officers to achieve increased promptness in management decision-making and implementation as for the respective ordinary operations regulated in the Commercial Code.

The term of office for a director and executive officer will be one year, enabling the building of a dynamic officer system.

(2) Creation of more appropriate, more efficient internal control and management supervision structures
The company will divert the authority over personnel and compensation matters to the Nomination Committee and Compensation Committee. These Committees, both of which will mostly be comprised of outside directors, will serve to construct a more appropriate management supervision structure by checking the appropriations of management through their functions.

Moreover, the Auditing Committee will conduct more effective auditing with staff deployed to support the Committee tasks. It will also work to organically link and heighten the efficiency of management auditing functions through the sharing of information with internal and external (certified public accountants) audit organizations and strengthened coordination of auditing.

(3) Construction of management structure with even greater transparency
The Nomination Committee, with its majority of outside directors, will decide on the selection of candidates for directors, while the Compensation Committee, with its majority of outside directors, will decide on the compensation for directors and executive officers.
These open decisions by these Committees regarding directors and their compensation, coupled with the disclosure of quarterly business performance and other measures that have traditionally been handled by the company, will further heighten the transparency of the management to stakeholders inside and outside of Japan.

2. Characteristics of New Management Structure

(1) Separation of Chief Executive Officer (CEO) and Chairman of the Board
Under the new structure, the posts of President, who is the chief executive officer, and the Chairman of the Board of Directors will be separated. This measure will help realize more effective management system functions of the board of directors.

(2) Composition of the Board of Directors
The number of executive officers concurrently serving as directors will be minimized to ensure the majority of directors doesn't hold these posts concurrently. Selection of candidates for concurrent posts will be conducted based on their functions. Specifically, only a few executive officers, including the president, will perform functions closely related to the issues discussed by the board.

The number of candidates for directors at the time of adopting the Company with Committee System will be 12 (comprised of 5 outside directors and 4 directors who are concurrently executive officers), while the number of executive officers will be 20.

(3) Auditing, Nomination and Compensation Committees
Each of the three committees will have 5 directors (of which 3 are outside directors).

The Auditing Committee will strengthen information sharing with internal and external audit organizations (certified public accountants), and work to organically link and heighten the efficiency of management audit functions. Auditing Committee members will not concurrently serve as executive officers.

The Nomination Committee, which selects candidates for directors, and the Compensation Committee, which decides on the policy and actual amounts of compensation for directors and executive officers, will be operated in a manner that guarantees their effectiveness as defined in the revised Commercial Code, and establishes a management supervision structure.

(4) Chairpersons of the Auditing, Nomination, and Compensation Committees
Each committee will select a chairperson who will supervise the committee's activities. The chairperson will be selected by vote.

(5) Outside Directors
The company is asking some select individuals outside the company to serve as directors and advise and supervise our management from an objective view. The following are candidates for outside directors to take office when the Company with Committee System is adopted.

-	Kazuo Ibuki, Advisor, The Bank of Tokyo-Mitsubishi, Ltd.
-	Minoru Makihara, Chairman of the Board, Mitsubishi Corporation
-	Hiroyoshi Murayama, Lawyer, SEIRYO Law Offices (former Superintendent Public Prosecutor, Tokyo High Public Prosecutor's Office)
-	Shunji Yanai, Professor, Chuo University (former Ambassador to the U.S.)
-	Yo Takeuchi, Senior Partner, IWATA-GODO ATTORNEYS AND COUNSELLORS AT LAW (former President, THE DAI-ICHI TOKYO BAR ASSOCIATION)

About Mitsubishi Electric
With over 80 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, Mitsubishi Electric Corporation (TSE: 6503) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. With operations in 35 countries, Mitsubishi Electric Corporation recorded consolidated group sales of 3,649 billion yen (US$27 billion*) in the year ended March 31, 2002. Additional information on Mitsubishi Electric Corporation is available at Global.MitsubishiElectric.com.

 

For Media inquiries only: Robert Barz, Public Relations Dept. Email: Robert.Barz@hq.melco.co.jp