Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction

Whatʼs Hitachi

Corporate GovernanceValue Creation

Business Strategies

Sustainability

Corporate Governance

Data

85

Independent Directors Dialogue

Corporate Governance
Hitachi views the expansion of long-term and overall shareholder returns as an important management objective. Hitachi, Ltd. and Hitachi Group companies maintain good relationships with a wide
range of stakeholders, and we recognize that these relationships make up an important portion of our overall corporate value. Accordingly, we are striving to establish a system that will improve ourcorporate value primarily through the implementation of measures focused on promoting constructive dialogue. To advance these efforts effectively, we are working to improve our corporate governanceby ensuring thorough separation between the oversight and execution of management, establishing a swift business execution system, and striving to achieve highly transparent management.

Message from the Chairman of the Board
On Being Appointed Chairman of the Board

Katsumi Ihara
Independent Director

Four years have passed since I was appointed as a Hitachi
director. This period marks the final phase of Hitachi’s major
structural reforms, implemented for more than 10 years
after the 2008 global financial crisis. During this time, Hitachi
has been laying the foundation for growth by transforming
individual businesses to be competitive in the global market
and supplementing the necessary pieces with substantial
M&A activities. We have finally entered a phase of full-fledgedtransition from structural reforms to global growth. The Midterm Management Plan 2024, announced in April 2022, isbased on this recognition.
Hitachi has invested a substantial amount of capital in M&A inrecent years. It is an important responsibility of the Board of
Directors to follow up on these acquisitions to ensure that the
newly acquired assets generate synergies within the groupand contribute to the enhancement of corporate value. At
the same time, looking at the current business environment,
we are in the midst of volatility, uncertainty, complexity
and ambiguity (VUCA), such as rising geopolitical risks,
inflation and supply chain disruptions. The Board of Directors
continues to address the strengthening risk management
system as one of its important themes.

Many of Hitachi’s independent directors have management
experience at global companies and possess a wide rangeof experience and knowledge. Above all, they have a strong
desire to contribute to the enhancement of Hitachi’s corporate
value. Despite the challenging business environment, we will
fulfill our responsibility in terms of management oversightto ensure rigorous and effective discussions leading tosustainable growth.

Board of Directors Composition andEffectivenessAt present, Hitachi’s Board of Directors consists of 12
members, of which nine are independent directors, five are
non-Japanese and two are women. They have a wide rangeof specialties, including top management experience at global
companies and public administration backgrounds. At theBoard of Directors meetings, these members pose sharpquestions and opinions during lively discussion with executive
officers. I feel that the current composition of the Board of
Directors goes beyond formal aspects and substantiallycontributes to the enhancement of Hitachi’s corporate value.
In recent years, Hitachi has been focusing more on the digitalHitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

86

Independent Directors Dialogue

field, so we have brought independent directors on board
who are well versed in digital technologies. To maintain andimprove the effectiveness of the Board of Directors, it isnecessary to continuously secure directors with experienceand knowledge that match the direction the company isheading. However, it is not an overnight task to invite people
with management experience in global companies to serve
as independent directors. I believe that the activities ofNominating Committee, which deliberates Board compositionin light of Hitachi’s future vision, including advances in ESG
management contributing to the realization of a sustainable
society, are extremely important in terms of ensuring theeffectiveness of the Board of Directors.

Lively and Earnest Discussions at
Board Meetings
Not all directors agree with agendas submitted to the Board of
Directors. In the past, there have been cases where opinions
on major M&A projects were divided. As large M&A projects
entail significant risks, analysis from a variety of perspectives
is essential, and it is natural that there will be differences injudgment. What is important here is not only that the agenda
is passed, but also that the executive side understands
the rationale behind points discussed and applies them tosubsequent PMI and risk management.
In formulating Mid-term Management Plan 2024, the Boardof Directors held five sessions to discuss the plan before it
was announced. Independent directors provided a variety ofopinions that were reflected, for example, in the new businesspromotion organization and the deepening of Lumada
strategy. The technology strategy was also discussed in theform of backcasting from 2050, rather than focusing only on
the three-year period ending in 2024.

Strengths of Hitachi’s Board of Directors:
Awareness of and Confidence in Mutual Respect
Since being appointed director, I felt that Hitachi’s corporate
culture is based on respect for the opinions of others.
Executives sincerely listen to director opinions and are willingto incorporate them into their work. Further, directors have apassionate desire to contribute to the sound development of
Hitachi’s business based on their own experiences. Hence, alldirectors attend the Board meetings after careful preparation,
including reading through the materials distributed in advanceand sorting out points to be confirmed. I think that effectivenessof Hitachi’s Board of Directors is largely supported by thissense of mutual respect and trust.
Additionally, Board meetings are not the only opportunity forinteractions between independent directors and executive
officers. Opinions and questions from independent directors
to executive officers are also exchanged on a daily basis
via email, while executive officers seek the opinions of
independent directors on specific area of expertise. Further,
Hitachi has non-executive directors within the company who
are familiar with Hitachi’s business and worksites, effectivelyfunctioning as a bridge between independent directors andthe company.
Before the COVID-19 pandemic, all directors attended
meetings together, which gave them the opportunity toreceive explanations from relevant parties and communicate
with each other before meetings. Since fiscal 2020, Board
members living overseas have had difficulties traveling toJapan and remote meetings have become the norm, limiting
face-to-face communication. Going forward, while keeping aneye on the situation, we will use face-to-face opportunities asmuch as possible to further invigorate communication among
directors and with executive officers to improve the quality of
discussions and enhance the effectiveness of the Board of
Directors.

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction

Whatʼs Hitachi

Corporate Governance1999

Business Strategies

Introduction of Objective Perspective

General Meeting of Shareholders

 ractical advice from experts in Japan andPoverseas

Senior Executive Committee

Appointment

Demarcation of Management Oversight andExecution

	Transitioned to a company with committees(currently a company with nominating committee, etc.)

Appointment/
oversight

Report2 Board of Directors

2 executive
members

President & CEO

members
10 non-executive(including two women)

Executive Vice Presidents
and Executive Officers/
Senior Vice Presidents andExecutive Officers/
Vice Presidents andExecutive Officers

Increased management speed and improved
management transparency

2010

2006

Enforcement of Companies Act

1

1

1

2010	
Enhancement of Interactions with CapitalMarkets

Nominating
Committee

Compensation
Committee

Audit
Committee

4 directors

4 directors

5 directors*

3 Audit*One standing Audit
Committee member

3 Report	Launched Hitachi IR Day(briefing on business strategy by division)Clarifiedcommitment of business unit top
management to capital markets

2012

87

Data

Corporate Governance

Hitachi’s Corporate Governance Framework and Features (as of July 2022)

Management Advisory Committees

2003

Sustainability

Independent Directors Dialogue

History of Hitachi’s Corporate Governance Reform
1999

Value Creation

Acceleration of Global Management

Executive
Officer
Department
in charge

3 Audit	Increased number of independent directors, including
non-Japanese directors, to comprise a majority

	Development of Guidelines forStrengthening GovernanceInternal
Auditing
OfficeDepartment
in charge

Department
in charge

Department
in charge

3 Audit
3 Report

Non-independent

Executive
Officer

3 AuditAccounting Auditors

Independent2015

	Development of Corporate Governance Guidelines

2014Development of Stewardship Code2015

Began Application of Corporate
Governance Code2016	
Enhanced Dissemination of Information
about Medium- to Long-term Sustainability	Published the Integrated Report2019	
Accelerated the Social Innovation Businessacross Five Growth Fields
	Executive vice presidents were placed in five sectors
	Held ESG briefing sessions
An independent director (chair of the Audit
Committee) and the CEO shared their remarks

POINT 1

POINT 2

POINT 3

Transparency in Management

Independence of the Board of Directors

Transitioned to a company withcommittees (currently a company with anominating committee, etc.) in 2003.

Increased the number of independent
directors, including non-Japanese
directors, in 2012.

Enhanced Collaboration
through Tripartite Auditing

Hitachi established the Nominating Committee, theCompensation Committee and the Audit Committee,
with independent directors comprising the majority ofmembers and serving as chairpersons. This system
ensures transparency in management, separates
the oversight and execution of management,
facilitates the full exercise of oversight functions, andenables discussions and reports to be conducted
appropriately within these three committees.

The Board of Directors, which is chaired by anindependent director, has 12 members, including nine
independent directors, two directors who are also
serving as executive officers, and one director who is
not serving as an executive officer. The chairman of theBoard is an independent director. In addition, we haveestablished a system that facilitates the full exerciseof oversight functions by maintaining a separation
between management oversight and execution.

Hitachi’s Audit Committee and internal
audit sections collaborate with thirdparty accounting auditors to strengthen
Tripartite Auditing aimed at increasing
the effectiveness of internal controls.

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Whatʼs Hitachi

Introduction
Corporate GovernanceValue Creation

Business Strategies

Sustainability

Corporate Governance

88

Data

Independent Directors Dialogue

Experience, Knowledge and Capabilities Required for Directors
Hitachi Directors need to have a wide range of experience and knowledge in the global and diverse fields that are worthy of leading Hitachi’s management to expand the Social Innovation Businessglobally, and have the qualities of a broad experience and expertise in management.
The experience, knowledge, capabilities and other qualities required for Hitachi directors are as follows.

Core Skills

Number ofapplicabledirectors

Core qualities that ensure management oversight efficiency anddecision-making functions

Professional Skills
Expertise and experience that enhances discussions pertaining to the promotion of theSocial Innovation Business

Number ofapplicabledirectors

Corporate
management

Corporate management experience and knowledge

12peopleGovernments
and internationalorganizations

Leadership experience in government, governmental agencies, international organizations
or economic associations that facilitate an understanding of and response to regulations
and social issues, as well as practical experience at educational institutions

4
peopleGlobalbusiness

Business experience outside Japan or management
experience at a company that develops business globally

12peopleLegal affairs

Expertise and practical experience in legal affairs
indispensable for global business and the development of
new business1
personRiskmanagement

Knowledge of risk assessment and management
necessary to maintain operations

12
peopleR&D andintellectual
property

Expertise and practical experience in R&D or intellectual
property facilitating the utilization of technology and theincorporation of new technologies

2
peopleFinance andaccounting

Knowledge and management experience pertaining tofinancial accounting necessary for medium- to long-term
corporate value creation from a financial perspective

12
peopleDigitalPractical experience in industrial fields vital for promoting digitaltransformation (DX) in the Social Innovation Business4
peopleBoard of Directors Composition (As of July 2022)
Independence(ratio of independent directors)

Diversity(ratio of non-Japanese and female directors)

Diversity(by country of origin)
Germany:
1personIndependent
directors
Nine people

75%

United Kingdom:
1personNon-Japanese
directors
Five people

41.7%

United States:
2people2 female directors(16.7% of overall
director total)

India: 1person

Industrial field
Japan:

Finance7peopleEnergy and resources

RetailMaterials andchemicals

Transportationand logistics

Automobiles
andtransportation

Electricity
and gasIT and services

Machinery
Electric andprecision instruments

Hitachi Integrated Report 2022

Introduction

Message from the Chairman of the Board

Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

89

Independent Directors Dialogue

Highly Experienced Directors
At Board of Directors, discussions are conducted from a variety of perspectives by directors possessing a wealth of experience and knowledge pertaining to management, legal affairs, accounting,capital markets, government agencies and digital initiatives at global corporations.
Name

Notes

Main industrial fields

Positions at Hitachi and responsibilities

Katsumi Ihara

Engaged in Sony Group management, possessing a wealth of experience and insight in the field of international corporate
management.

Electric and precision
instruments, financeIndependent director
Nominating Committee chairman
Audit Committee member
Compensation Committee member

Ravi Venkatesan

Possesses a wealth of experience and insight in international corporate management at Microsoft India and other companies,
and in particular, the digital field and business in emerging markets.

IT and services

Independent director

Cynthia Carroll

Possesses a wealth of experience and insight as a manager of large international corporations including Anglo American.

Materials and chemicals, energy
and resources

Independent director
Nominating Committee member

Ikuro Sugawara

Held a leading position in the Ministry of Economy, Trade and Industry, and possesses a wealth of experience and insight in
the administrative field.

General industry

Independent director
Audit Committee member

Joe Harlan

Possesses a wealth of experience and insight in international corporate management, including at the Dow Chemical
Company.

Electricity and gas, energy
and resources, materials andchemicals

Independent director
Compensation Committee member

Louise Pentland

Attorney licensed in New York and the UK possessing a wealth of insight into corporate legal affairs and corporate
governance cultivated through experience as a Legal Officer at PayPal Holdings and other large global corporations.

IT and services, finance and retailIndependent director

Takatoshi Yamamoto

Possesses extensive insight into business and management in the fields of corporate analysis and international corporate
management.

Finance

Independent director
Compensation Committee chairman

Hiroaki Yoshihara

Possesses a high degree of professional knowledge and a wealth of experience in the fields of international corporate
management, finance and accounting.

Finance, general industry

Independent director
Nominating Committee member
Audit Committee chairman

Helmuth Ludwig

Mainly engaged in Siemens Group management, possessing a wealth of experience and insight in international corporate
management and the digital field in particular.

Machinery, manufacturing

Independent director
Audit Committee member

Keiji Kojima

Engaged in R&D at Hitachi and its group companies, most recently in the Smart Life sector, possessing a wealth ofexperience and achievements, particularly in digital businesses related to Lumada global deployment.

IT and services

Director, Representative Executive Officer,
President & CEO
Compensation Committee member

Hideaki SekiEngaged in managing Hitachi and group company elevator/escalator and automotive systems businesses, possessing a
wealth of experience and achievements, including promoting the global expansion of these businesses.

Automobiles and transportation,
machinery

Director
Audit Committee member

Toshiaki Higashihara

Engaged in managing a wide range of fields at Hitachi and its group companies, including the social infrastructure and electric
power system businesses, possessing a wealth of experience and achievements that include promoting the global expansionof Hitachi Group business.

Transportation and logistics,
IT and services, energy andresources

Director, Executive Chairman, Representative
Executive Officer
Nominating Committee member

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Data

Corporate Governance90

Independent Directors Dialogue

Administrative Performance of the Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and oversees
the execution of the duties of executive officers and directors in order to sustainably enhance
corporate value and the shareholders’ common interests. The basic management policy
includes the Mid-term Management Plan and annual budget compilation. The Board of Directors
focuses on strategic issues related to the basic management policy, as well as other items to beresolved that are provided in laws, regulations, the Articles of Incorporation, and the Board of
Directors Regulations.
Fiscal 2021 was a year in which we formulated the next Mid-term Management Plan, with theBoard of Directors holding numerous discussions between executive officers and directors on
the plan’s direction and priority issues. At a Board meeting held in October 2021, then CEO
Toshiaki Higashihara (currently Executive Chairman of the Board) provided a progress report on
the 2021 Mid-term Management Plan, facilitating a common understanding among directors
regarding issues that need to be strengthened in the next Mid-term Management Plan. This
process was aimed at sharing Hitachi’s aspirations as a Company and examining specific plandetails. In promoting the execution of management strategies, more time is spent discussing
and deliberating than is used to explain quarterly financial reports and business strategies. As
for GlobalLogic, which plays a major role in promoting Hitachi’s digital strategy, the Board of
Directors is informed of the post-acquisition PMI plan and progress, and the status of promotion
is shared on a regular basis. In terms of environmental initiatives, a report on Hitachi’s participationin COP26 and the revision of long-term environmental targets was provided, affirming Hitachi’sefforts toward the environment including carbon neutrality.

Board of Directors Meetings in Fiscal 2021
Fiscal 2021 Board of Directors Meeting Results
Nine days

Meetings held

7.5 per meeting

Average number of agenda items

3.5 hours (longest meeting 5.7 hours)

Average meeting length

Discussion of Major Themes
Discussions/deliberations

Explanations

FinancialreportingBusinessstrategy
Mid-term
Management Plan
0

25

50

Providing Information to Independent Directors
The Board of Directors holds individual meetings and site
visits to improve the effectiveness of the Board of Directors
and increase opportunities for information sharing. Sitevisits were conducted on a limited basis in fiscal 2021 dueto the impact of the COVID-19 pandemic, but throughonline participation in the Hitachi Social Innovation Forum,
attendance at Internal Business Conference and ResearchPresentation Meeting held at research institutes, we provided
opportunities to deepen understanding of the business andengage in dialogue with senior management and front-line
employees.

Digital Research Presentation Meeting held on November 12, 2021

Visit to Hitachi Research Laboratory on May 12, 2022

75
100
Average time/meeting (minutes)

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

91

Independent Directors Dialogue

Activities of the Three Committees
Nominating Committee

Audit Committee

Compensation Committee

The Nominating Committee has the authority todetermine proposals submitted to the general meeting ofshareholders for the election and dismissal of directors.
The Nominating Committee consists of four directors,
three of whom are independent directors.
This committee determines director candidates, holds
preliminary discussions concerning the appointment
and dismissal of the CEO and receives advance reportson the selection and dismissal of executive officers.
In fiscal 2021, the Nominating Committee held meetingson 10 days.

The Audit Committee has the authority to audit the execution ofduties of directors and executive officers and to decide on proposals
submitted to the general meeting of shareholders for the election
and dismissal of accounting auditors. The Audit Committee currently
consists of five directors, including four independent directors andone standing Audit Committee member.
Hiroaki Yoshihara, the chairman of the Audit Committee, has been
involved in accounting and other business practices at the KPMG
Group for many years and possesses a considerable wealth ofknowledge concerning finance and accounting.
In fiscal 2021, the Audit Committee held meetings on 15 days.

The Compensation Committee has the authority to determine remuneration
policies for directors and executive officers and remuneration for individuals(including amounts of remuneration) based on them. Currently composed of four
directors, including three independent directors, the committee strives to ensure
objectivity, transparency, and fairness in the remuneration determination process.
In addition, the Compensation Committee verifies and reviews details of
the process used for determining remuneration for individuals, including
assessments concerning basic remuneration amounts, evaluations ofprogress made toward individual targets, and performance appraisals thatare tied to short-term incentive compensation.
In fiscal 2021, the Compensation Committee held meetings on five days.

Primary Activities
In addition to deciding upon the contents of proposals
made concerning director appointments at the Annual
General Meeting of Shareholders, the Nominating
Committee confirmed and deliberated proposals
for CEO appointments and confirmed receipt of apreliminary report on the executive officer system
implemented in fiscal 2022. In addition, it promoted
committee-related activities, including discussions andindividual interviews aimed at developing candidates
for future management and leadership positions.

Primary Activities

Primary Activities

The Audit Committee conducted activities that were focused on its priority
matters for consideration, which included the strengthening of collaborationand the facilitation of information sharing under a “Tripartite Audit” (audit by
the Audit Committee, internal audit and audit by accounting auditors), andauditing of the establishment and operation of internal control systems fromthe perspective of risk management and validity of execution of duties. In
addition, a standing committee member worked to obtain information asneeded in a timely and accurate manner, mainly by collaborating with theInternal Auditing Office, among other departments, and attending importantinternal meetings such as the Senior Executive Committee, and facilitated
information sharing with other committee members.

The Compensation Committee determined remuneration amounts
for individual directors and executive officers in accordance withestablished policies while verifying and reviewing the processes
and results of appraisals for performance and individual targets
tied to short-term incentive compensation for executive officers.
In addition, the committee reviewed the executive compensation
system while giving due consideration to compensation granted to
managers at global companies and the goal of sharing value withshareholders, and decided upon policies covering remuneration
for directors and executive officers in fiscal 2022.

CEO Appointment, Dismissal, and Succession Plan
After a preliminary report to the Nominating Committee, Hitachi’s Board of Directors decides upon
the appointment and dismissal of executive officers with the goal of constructing an optimal businessexecution system for management. As stipulated in our Corporate Governance Guidelines, our basic policy
concerning the CEO requires that individuals serving in the position of CEO have extensive experience andachievements in the field of company management. They must also be considered optimally suited for
conducting management aimed at achieving Hitachi’s goals of continuously raising its corporate value andfurther serving the common interests of its shareholders. Decisions regarding the appointment or dismissalof the CEO shall be made based on prior deliberations and proposals by the Nominating Committee.

Regarding our CEO Succession Plan, as the speed of change in the management environment
accelerates, we are striving to build a system that enables us to appropriately and promptly secureand develop (both internally and globally) necessary management personnel who will provide
leadership that will allow us to realize our growth strategies. Accordingly, we are also concentratingon providing training for selected employees while targeting the early development of candidates
for future management positions. Moreover, we are developing next-generation leaders capable ofacting authoritatively and resolutely by establishing forums where participants can discuss what isnecessary for Hitachi’s future growth and make recommendations to management.

Hitachi Integrated Report 2022

Whatʼs Hitachi

Introduction

Message from the Chairman of the Board

Corporate GovernanceValue Creation

Business Strategies

Sustainability

92

Data

Corporate GovernanceIndependent Directors Dialogue

Analysis and Evaluation of the Effectiveness of the Board of Directors
Hitachi evaluates the effectiveness of its Board of Directors each year in a continuous effort to maintain and improve its functions.

Fiscal 2021 Evaluation Process

1. Questionnaire-based
self-assessment by eachdirector(February–March 2022)

Evaluation Results and Future Initiatives
Points of evaluation

Evaluation results• Composition: Diversity on the Board, the number and proportion of Inside andOutside directors, etc.
• Visibility of responsibilities and roles of the Board• Meeting operation: Meeting frequency, deliberation time, agenda setting, quality ofdeliberation, Chairman’s role, etc.
• Contribution: Contribution to strategy building and change of company culture,contribution to constructive discussions, utilization of Director’s knowledge andexperience, discussions contribution to CEO succession plan, etc.
• Understanding of the company: Hitachi Group Identity, risk factors, potential
challenges and opportunities.
• Three committees: Composition, responsibilities and roles, coordination with the Board, etc.
• Supporting system for the Board: Provision of necessary information such as theBoard materials, etc.

• The Board assessed that Board members are diverse and make use of theirknowledge and expertise to speak out, having vigorous discussions especiallyon matters related to business strategies such as the Mid-term Management
Overall evaluation in fiscal 2021
Plan targeting the medium- to long-term growth of corporate value. The Board
concluded that the effectiveness of the Board as a whole is maintained.

2. Discussions among
independent directors(March 2022)• Independent directors had a meeting and discussed the Board effectiveness there
referring to the Board’s activities in each evaluation items set out in the above 1.

3. Discussions at the Board
meeting(May 2022)• The Board analyzed and evaluated its effectiveness as a whole and confirmed the policy
on approaches to further enhance the Board’s effectiveness based on the results of thepreceding process, considering comparison to the evaluation results of the previous
year and measures taken for improving its effectiveness in fiscal 2022.

Policy regarding Strategic Shareholdings
Policy on listed company strategic shareholdings
Hitachi’s basic policy is not to acquire or hold other companies’ shares except in cases whereacquiring or holding such shares is necessary in terms of transactions or business relationships.
We will promote reducing shares already held unless significance of holding shares or economic
rationales of holding are confirmed.
The Board of Directors verifies the appropriateness of all stock holdings every year. To this end,
each individual stock was reexamined as to the purpose of holding the shares and whether
benefits from holding shares are in line with target level of capital efficiency. As the resultof verification, we promote the sales of shares for which significance of holding shares andeconomic rationale are not confirmed. In the fiscal year ended March 31, 2022, we reduced thenumber of shares held in 10 listed stocks (total amount sold: 47,750 million yen).

Future initiatives

Further enhancement ofcorporate governance• Provide opportunities to freely discuss corporate culture and the overall future of
the business portfolio to deepen discussions.
• Discuss specific strategies including important themes (such as GX and DX)
in each sector and BU to confirm consistency with the Mid-term Management
Plan.

Enhancement of theBoard support system andimprovement of practicalissues in operations• Post COVID-19, increase opportunities for meetings with BU CEOs and others
and restart Independent Director visits to group sites.
• Further improve structure and content of materials for Board meetings andensure provision of materials well in advance of meetings.

Strategic shareholding status
Number of stocks held*
500
400

396

401

375

300

332

309

288

272

200

233

217

198

100
0
2012
2013
2014
2015
2016
Total amount recorded on balance sheet* (millions of yen)
244,181353,957

334,617*Total of listed and unlisted shares

239,993324,323

2017

2018

2019

2020

2021

270,336

179,668

141,859

201,055

274,470(FY)Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

93

Independent Directors Dialogue

Director and Executive Officer Compensation
Basic Policy• Compensation shall be such that it enables the company to attract necessary personnel
to achieve an improvement in corporate value through global business growth.
• Compensation shall be commensurate with the roles and responsibilities of each
Director and Executive Officer.
• Compensation for Directors shall be such that it enables them to exercise themanagement oversight functions effectively.
• Compensation for Executive Officers shall be such that it enables them to contributeto sustained improvement in corporate value through the execution of business andemploys an appropriate balance between short-term performance and medium- andlong-term performance.
• The level of compensation shall be determined considering compensation levels atother companies as well as economic and market trends.
• The Compensation Committee utilizes external experts to gain expert advice andan objective viewpoint, if necessary, for considering the details and amounts ofcompensation.

Compensation Structure(1) Directors
Compensation for Directors is basic remuneration as fixed pay. The amount of basic
remuneration is decided by adjusting a basic amount to reflect full-time or part-time status,
committee membership and position, and travel from place of residence, etc. A Director
concurrently serving as an Executive Officer is not paid compensation as a Director.

(2) Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay and short-term
incentive compensation and medium- and long-term incentive compensation as variable pay.
The basic amount of basic remuneration, short-term incentive compensation and medium- andlong-term incentive compensation is set based on the ratio of 1:1:1 as the standard, taking
into account the composition of executive compensation for major global companies, in orderto improve corporate value through the growth of global businesses. The higher the position
an Executive Officer holds, the greater the proportion of variable pay is set to the total annualcompensation.
If it is found that an executive officer has engaged in misconduct during their term of office, any
compensation already paid shall be returned to the company (clawback provision).
Please refer to Compensation to Directors and Executive Officers on page 94 of the Annual Securities Report(The 153rd Business Term)
https://www.hitachi.com/IR-e/library/stock/hit_sr_fy2021_4_en.pdf

Reflecting Sustainability Targets in Executive Compensation Evaluation
In fiscal 2021, Hitachi introduced evaluations that take environmental value into consideration in
the executive compensation system for the first time with the aim of accelerating the creation ofenvironmental value. All executive officers, including the CEO, set targets for environmental value
and were evaluated for their achievement of individual targets.
From fiscal 2022, in addition to environmental targets such as decarbonization and resource
efficiency, we introduced quantitative and qualitative target setting for occupational health andsafety and product quality in the compensation evaluation of all executive officers to further
advance sustainable management.

Examples of Sustainability Targets Reflected in Fiscal 2022 Compensation Evaluations
Sustainability targets
Decarbonization• Efforts to realize carbon neutrality* in business sites (factories and offices) by fiscal 2030
• Efforts to achieve carbon neutrality* by fiscal 2050 throughout the value chain

Resource efficiency• Efforts related to resource efficiency

Occupational healthand safety• Zero fatal accidents• Wellbeing initiatives

Product quality• Efforts to enhance product quality*Regarding fiscal 2030 and fiscal 2050 decarbonization targets, single-year targets are set Groupwide and for each BU.

Hitachi Integrated Report 2022

Whatʼs Hitachi

Introduction

Message from the Chairman of the Board

Corporate GovernanceValue Creation

Business Strategies

Sustainability

Corporate Governance

Data

94

Independent Directors Dialogue

Compensation to Executive Officers (Fiscal 2022)
Basic remuneration: short-term incentive compensation: medium- and long-term incentive compensation = 1:1:1 ratio
Total remuneration
Fixed pay
1 Basic remuneration

Variable pay
2 Short-term incentive compensation

1 Basic remuneration
Set according to the relevant position by adjusting that amount to reflect financial results andindividual performance.
2 Short-term incentive compensation
The amount of short-term incentive compensation is decided within a range of 0 to 200% of abasic amount set according to the relevant position by adjusting that amount to reflect financial
results and individual performance.
From fiscal 2022, we are also working to further strengthen accountability by linking theachievement of KPIs, including sustainability indicators specified in the Mid-term Management
Plan, to the performance evaluation of executive officers.
(Executive officers forming the Senior Executive Committee)*

Linked to evaluations ofCompany-wide performance (80%)(Other executive officers)

Linked to evaluations ofdivisional performance (50%)
Evaluated referring to adjusted operating
income and operating cash flows for eachdivision, among other indicators, to measure
the level of achievement of targets under the
Mid-term Management Plan and the annual
budgets for divisions.

Linked to evaluationsof Company-wide
performance (30%)
Evaluated referring to consolidated
revenues, adjusted operating income,
EBIT, and net income attributable to
Hitachi, Ltd. stockholders in order
to measure the level of achievementof consolidated financial forecasts
disclosed to stakeholders, including
shareholders and investors.

Linked to evaluations
regarding theachievement of
individual targets (20%)
Varies according to theevaluation of the level ofachievement of individual
targets for each Executive
Officer determined based on
his/her responsibility.

*The rates used for “other executive officers” apply when “executive officers forming the Senior Executive Committee” are in
charge of sector or business unit.

3 Medium- and long-term incentive compensation

3 Medium- and long-term incentive compensation
Shares of restricted stock were introduced in fiscal 2019 as compensation for Japanese
executive officers and corporate officers (the executive positions next to Executive Officers) topromote management from a medium- to long-term perspective and to provide incentives tobring about a sustainable increase in enterprise value by further promoting senior management’s
shared values with shareholders through the holding of shares during their term of office. In fiscal
2020, a restricted stock compensation unit system*1 was introduced as compensation for nonJapanese executive officers and corporate officers. In fiscal 2021, the scope of the restricted
stock compensation unit system was expanded to executives at some group companies.

Shares of restricted stock• The restriction on transfers shall be lifted if executive officers resign from all of the positions of
the company’s executive officer, director, and corporate officer.
• With regard to one-half of the granted shares of restricted stock, the number of shares forwhich the transfer restriction is lifted shall be determined after ex-post evaluation. In the expost evaluation, the total shareholder return (TSR) of Hitachi stock over the three years fromthe beginning of the fiscal year when the medium- to long-term incentive compensation is
granted is compared to growth rate of TOPIX over the same period.
TSR/TOPIX growth rate

Shares for which the transfer restrictions are lifted

120% or more

Transfer restrictions are lifted for all granted shares.

Between 80% or more but less than 120%

Transfer restrictions are lifted for part of granted shares*2.

Less than 80%

No granted shares have transfer restrictions lifted.

*1 A system in which restricted stock compensation units are granted to the eligible persons, and over three years from the startof the business year in which the restricted stock compensation units were granted, one-third of the number of restricted
stock compensation units granted is paid in each fiscal year that passes, as Hitachi stock or cash.
*2 Number of shares for which the transfer restrictions are lifted = Number of granted shares × {(TSR/TOPIX Growth Rate Ratio × 1.25) – 0.5}
Shares for which the transfer restrictions are not lifted shall be acquired by Hitachi without consideration.

Hitachi Integrated Report 2022

Whatʼs Hitachi

Introduction

Message from the Chairman of the Board

Value Creation

Business Strategies

Sustainability

Data

Corporate Governance95

Independent Directors Dialogue

Corporate GovernanceInternal Control over Financial Reporting

Enhanced Collaboration through Tripartite Audits

To ensure the reliability of its consolidated financial reporting, the Hitachi Group is establishingand implementing relevant internal controls. We evaluate their effectiveness by adhering tostandards for the evaluation of internal controls related to financial reporting that are generally
accepted as fair and reasonable.
Furthermore, we have established the J-SOX Committee with the goal of raising the effectivenessof these internal controls. This committee evaluates internal control effectiveness and establishes
frameworks designed to improve and strengthen them.

In pursuit of sustainable growth in corporate value, Hitachi’s Audit Committee and internal audit
section collaborate with third-party accounting auditors to strengthen its “Tripartite Auditing,”
which aims to increase the effectiveness of internal controls. The three parties communicate
closely to share risk information and assessments concerning risk response while securingtransparency and ensuring appropriate checks and balances.

Enhanced management of risk
associatedwith global business expansion

Creation of a system focused on
maintaining transparency and asense of urgency

Ensuring transparency and a senseof urgency and improving theeffectiveness of internal controls

Sharing of risk information
and assessments of risk response

Financial
Services
AgencyInternal Control Report

Internal Control Assessment Framework

Hitachi, Ltd. President
Chief Financial Officer

Audit
Committee

ReportAudit
Committee

ReportReportJ-SOX Committee
Cooperation
ReportAccounting
auditors

Tripartite
audit
approach(accounting audits)Business Units andMajor Group Companies
ReportInternal
Auditing Office(Internal Audit Office)External Audit•Audit plans•Audit Policy and auditing
methods•Assessment and reportingof audit results•Methods and results ofinternal audits•Evaluation of group audit
system

Tripartite
audit
approachInternal
Auditing Office(Internal Audit Office)Subsidiary Companies
Execution•Sharing of risk information•Audit plans and results•Internal audit results•Reciprocal reporting and evaluation
concerning Group audits•Reporting on the quality control system

Regulation

Accounting
auditors(accounting audits)•Exchange of information regarding audit plans,
auditing methods, and audit results•Sharing of risk information•Division of internal auditing duties and mutual
utilization of audit information

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

96

Independent Directors Dialogue

Building a More Effective and Efficient Auditing System
Audit Committee
The Audit Committee formulates audit plans in accordance with risk-based approaches andconducts audits for each consolidated business unit. Cooperating with the internal audit section
audits, Audit Committee members meet directly with business unit heads. These members
share concerns and issues related to the implementation of business strategies aimed atachieving sustainable growth that require attention with the internal audit section. At that time,
the committee also verifies matters that carry high levels of risk in terms of quality, measuring
these risks through employee awareness surveys and thorough implementation of businessstrategies.

of audits by submitting “management letters” containing points of concern and improvement
suggestions through the finance department. Recently, they have also been working to raise theefficiency of checks on the accuracy of numerical figures by using some IT systems to investigate
all cases rather than performing test-checking through sampling.

TopicsInternal Audit Section

Sector Corporate Auditor System

Hitachi’s internal audit section performs regular internal audits of each business unit, businessdivision and subsidiary. This section reports directly to the President and is independent fromorganizations that are subject to its audits. The internal audit section also formulates audit
plans based on past audit records and the most recent business circumstances. In addition,
this section performs audits while sharing information with the Audit Committee, ensuring theireffectiveness. The internal audit section at Hitachi is responsible for confirming the legality andappropriateness of all business operations, including those related to accounting, production
management, sales, purchasing, IT systems, compliance, and human resources. Furthermore,acting on behalf of our management team, the internal audit section confirms whether employees
are well versed in the ideas and policies of management, whether operations are being carriedout based on these ideas and Policies, and whether business strategies are being implemented
in a way that will efficiently lead to sustainable growth.

To further raise audit effectiveness, sector corporate auditors were assigned in eachcore business field (sector) in April 2019. Through this action, we expanded theinternal control system spearheaded by chief auditors and enhanced collaboration
with executive vice presidents managing each sector, as well as with the Audit
Committee.
Although sector corporate auditors do not act as organs under the Companies Act,
they still assume responsibility for governance in each sector. Statutory auditors,
which function as organs at Hitachi subsidiaries under the Companies Act, also
report to sector corporate auditors and work to improve the effectiveness of
Hitachi’s internal control systems.

Accounting Auditors

When conducting business audits, we use IT systems to expeditiously search
for reference information contained within materials submitted prior to audit in
an attempt to improve efficiency. We are currently enhancing a system that willallow our internal audit section to share information with professional accounting
auditors using a data lake. When reading audit reports submitted to the President
by the internal audit section, the President must be able to quickly understand theissues identified by these reports and make prompt judgments concerning whether
immediate action is required. In the future, our internal audit section will continue
to maintain its transparency and independence while working to improve audit
efficiency as one member of our Tripartite Audit system.

Accounting auditors perform audits that focus on the accuracy and reliability of our financial
statements. First, they adopt a risk-based approach in response to the group’s overall financial
status. Applying this approach, they then determine the scope and methods of the audit,
formulate an audit plan, and share opinions with the Audit Committee. Next, based on the audit
plan, they perform audits on each of the five sectors and the business units that comprise them,enabling effective and efficient understanding of data related to Hitachi’s finance department andeach of its business segments. If, during the auditing process, our accounting auditors discovera degree of risk that could impact future financial statements significantly or issues that, even ifmonetarily small, could have a large qualitative effect, they share related information regardingthese risks and issues and the progress on a response from the related divisions with the Audit
Committee and internal audit section. They also work to improve and raise the effectiveness

IT Utilization

Hitachi Integrated Report 2022

Introduction

Message from the Chairman of the Board

Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

97

Independent Directors Dialogue

Comprehending Management Issues through Dialogues with Stakeholders
In promoting the Social Innovation Business, Hitachi accurately detects a variety of social issues
in each country and region, addressing these issues through co-creation with customers,
governments, academic organizations, research institutions and a wide range of otherstakeholders.
In response to the recent rise of ESG investing, Hitachi is proactively engaged in dialogue withshareholders and investors on both financial and non-financial information, while also focusing
efforts on co-creation to improve disclosure of non-financial information. Going forward, Hitachi
will continue to proactively promote dialogues with stakeholders, incorporating the takeaways
into operations to realize sustainable management.

ESG Disclosure Study GroupHow to address the rapidly changing global trend in ESG disclosure is a major challenge formany corporations and institutional investors in Japan. Hitachi, Ltd. is responding to this issue
through co-creation with stakeholders. In June 2020, Hitachi took the lead in establishing theESG Disclosure Study Group to explore ways of disclosing ESG information that contribute tolong-term corporate value enhancement while also keeping an eye on global trends. The study
group initially started with 19 companies, and as of June 30, 2022, more than 100 companies,
institutional investors, auditing firms and public organizations are participating.
Study group activities are divided into phases according to themes, and in June 2022, the “ESG
Disclosure Study Group Report 2022” was published including the results of these activities.
This report contains ESG disclosure recommendations for corporations, institutional investors
and standard-setting bodies and is disseminated to relevant organizations within and outside
Japan. Hitachi, Ltd. serves as the co-chairman and secretariat of this study group, and leads
these activities.
General Incorporation Association of ESG
Disclosure Study Group / EDSG
https://edsg.org/en/

Kyoto University and Hitachi Joint Project
One of the key initiatives for the evolution of sustainable management is to quantitatively clarify
the financial impact of non-financial values such as environmental and social values created bybusiness activities, as well as intangible asset measures such as human resource policies. Thisis expected to further advance management and improve engagement with stakeholders.
Since 2021, Hitachi, Ltd. has engaged with these challenges through experimental research
conducted in collaboration with Graduate School of Management, Kyoto University. Throughacademic and other approaches, it was quantitatively confirmed that Hitachi’s initiatives toward
the environment and human resources could have a positive impact on financial indicators (ROICand WACC). In the future, we will clarify the causal relationship between non-financial andintangible asset measures and financial indicators, as well as employee survey results, to identify
measures with a high degree of causal influence and lead them to measures to improve financial
performance through non-financial and intangible asset measures.

Enhancing Hitachi Sustainable Management
Visualization of correlation and causality between non-financial and intangible asset measuresand financial indicators, and quantification of financial impact is important.
Background

Global trends
Demand for disclosure linking financial and non-financial information• IFRS Foundation announced an exposure draft of ISSB (non-financial information disclosure standards)
in March 2022, indicating importance of “non-financial and financial connectivity”• Revised Japan’s Corporate Governance Code in June 2021 to reference the relationship between
human capital and investment• Securities Report revised in March 2020 upon request for disclosure of non-financial information
having a medium- to long-term financial impact

Hitachi’s activities
Le ft: 	 Tetsuo Kitagawa, Representative
Director, ESG Disclosure Study Group(Emeritus Professor of Aoyama Gakuin
University; Professor at Tokyo Metropolitan University)
Right : Norio Masuda, Co-Representative
Director, ESG Disclosure Study Group(Senior Manager, Sustainability
Promotion Division, Hitachi, Ltd.)

Mid-term Management Plan announcements• Announced that Mid-term Management Plan 2021 will
promote management focused on social, environmental and economic value
Engaged in non-financial value visualization in collaboration with related departments• Announced that Mid-term Management Plan 2024 will
strengthen efforts targeting human capital management and the environment
Correlation, causality, and quantification of financial impact are importantHitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction

Whatʼs Hitachi

Corporate GovernanceValue Creation

Business Strategies

Sustainability

Data

Corporate Governance98

Independent Directors Dialogue

Independent Directors Dialogue

Independent Directors Dialogue with Stakeholders
At Hitachi Investor Day 2022, held on June 13, 2022, a first-ever dialogue session
was conducted by Hitachi independent directors. With Executive Vice President, CFO
Yoshihiko Kawamura as moderator, independent directors Harufumi Mochizuki and
Helmuth Ludwig exchanged opinions on the formulation of the Mid-term Management
Plan, Lumada and Hitachi’s vision, among other questions submitted in advance byinstitutional investors and analysts.

Discussions at the Board of Directors Meetingon the Mid-term Management Plan
Mr. Kawamura: My understanding is that the Board
conducted in-depth discussions from early on in formulating
the Mid-term Management Plan 2024 announced in April
2022. Please share that process.
Mr. Mochizuki: In formulating a Mid-term Management Plan,
specific plans for the next three years are considered, but asa first step, it is extremely important that the directors andthe executive officers share the same vision of what Hitachi
wants to be. At Hitachi, the Board members and the executive
officers have had a series of discussions, so we have acommon understanding of what we want to be. On this basis,
we discussed priority issues for the next three years and how
to implement them. From the initial stages of plan formulation,
the Board of Directors has held a total of five meetings to
discuss. At these meetings, everyone provides opinions,thus a single agenda item can take up an hour or more.
In this process, various opinions were provided by Board
members from diverse backgrounds, but because we sharethe same underlying vision, discussions remained focused.
The important thing is to make sure that everyone outside thecompany understands it correctly, and independent
directors have pointed out that it should be written in more
specific terms. Through this process, I believe we were able
to formulate an easily understandable Mid-term Management
Plan focused on the essentials. For the past 10 years, I
have served as a Hitachi independent director, following thecompany’s transformation from the difficult period after the2008 global financial crisis to the present. I have watched theprocess of Hitachi’s incremental transformation into a global
company. I am impressed that Hitachi has changed direction
from a Japan-centric conglomerate to a Social Innovation
Business with a clearly defined stance as a global leader in the
Mid-term Management Plan 2024.

Lumada and the Mid-term Management Plan
Mr. Kawamura: Lumada is the lynchpin of the Mid-termManagement Plan 2024. Dr. Ludwig, you have in-depth
knowledge of the digital field, what is your assessment of
this plan?
Dr. Ludwig: I studied engineering in Germany and joined
Siemens in 1990. After that, for about the past 30 years, I havebeen engaged in business development in the automation andHarufumi
Mochizuki

Yoshihiko
Kawamura

Independent Director(in June 2022)

Executive Vice
President, CFO

Helmuth
LudwigIndependent
Directordigital fields—namely,
the integration of virtualwith physical. Just as GlobalLogic
has joined the Hitachi Group, I also
experienced a similar post-merger integration(PMI) at Siemens. It is my fervent belief thatcompanies must have deep knowledge in their businessdomain and integrate operational technologies (OT) with IT
capabilities to enhance competitiveness. With Lumada at thecore of Hitachi’s Social Innovation Business, there are two
critical points. First, is to focus on competition and provide
value to customers. To this end, Hitachi must understand how
to improve processes, then link them to revenues. Second,
solutions must be repeatable, which requires containerization.
Hitachi’s thorough knowledge of mobility, energy, industry
and other business domains offers the potential for businessscalability through the utilization of solutions in other fields.

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

99

Independent Directors Dialogue

Achieving this will enable Hitachi to increase margins in linewith expectations. Although the path forward is not easy, I think
Hitachi is off to a good start and on the right track.

while also experiencing some failures. I believe Hitachi
has attained a global standard with regard to acquisition
capabilities.

Large-scale M&A Discussions

Dr. Ludwig: GlobalLogic is a company that has achieved
amazing growth. The critical point was why it would be better
off with Hitachi. The Board of Directors thoroughly discussed
this point, confirming that the addition of GlobalLogic to the
Hitachi Group will provide even greater value to customers.
In M&A, it is of course important to select an appropriate
target and realize the deal, but the PMI process afterwards
is also extremely important. The question is how to integrate
human resources with different backgrounds with a senseof speed. GlobalLogic is full of dynamism, strengthening
Hitachi’s business and attracting talented human resources.
Employees have also been provided with a wider range ofopportunities.

Mr. Kawamura: Over the past two to three years, Hitachi
has made a series of large-scale M&A transactions, making
Hitachi High-Tech a wholly owned subsidiary and acquiring
both the ABB power grids business and GlobalLogic.
Given the risks associated with these deals, how were they
discussed at the Board meetings?
Mr. Mochizuki: Repositioning our business portfolio is an
important theme for Hitachi, and determining what to include
and what to divest was one of the means of structural reform.
Hitachi has made acquisitions in areas where synergies canbe expected, while disposing of non-synergistic businesses,
which has had a comparatively limited impact on finances
and the balance sheet. The acquisition of ABB’s power
grid business and GlobalLogic is a 1 trillion yen deal, so theBoard of Directors had a very in-depth discussion about it.
Since the Board members shared the strategy underlying
the discussion, the issues were very clear, and we confirmedthat we could expect synergies as a growth engine for
Hitachi in the true sense of the word. It was a very strategic
discussion and a major decision. Further, I also believe that
Hitachi’s repeated experience with acquisitions has made itvery sensitive to the discipline that must be observed when
conducting M&A activities. While preacquisition due diligence is taken asa matter of course, the degree towhich PMI is achieved is also a criticalfactor. Hitachi’s skills have improved
significantly over the past 10 years,
including risk mitigation, efforts torealize synergies, and post-acquisition
follow-up, including human resources,

Hitachi’s Business Portfolio and Vision for
Further Growth
Mr. Kawamura: As Hitachi is involved in a variety ofbusinesses, what are your thoughts on conglomerates(discounts)? Furthermore, what is required for a Company
with over 100 years of history toachieve growth going forward?
Dr. Ludwig: Capital markets may notconsider traditional conglomerates tobe the best structure. However, I believethat in the future, conglomerates will
have a different meaning. First of all,it is critical to have a clear vision andstrategy. Hitachi, which is focusing
efforts on sustainability and digital transformation, has a robust
innovation strategy. In this sense, I think Hitachi’s current
business portfolio is more streamlined and closer to theconglomerate of the future. In a world where unexpected events
often occur, corporations must be resilient. However, simply
engaging in a wide range of businesses is not the answer.
Hitachi must demonstrate synergies among businesses basedon a clear vision, and to this end, I think the speed of decisionmaking will become increasingly important.
Mr. Mochizuki: Hitachi used to be a Japanese conglomeratewith domestic sales accounting for 70% of its revenue. To
become a global leader, Hitachi must generate greater profits,
improve profit margins and continuously generate cash tocompete on the world stage. It is also important to havestrong leadership focused on the company’s ideal positioning
without losing the can-do spirit. Having watched Hitachi’s
trajectory over the past 10 years, my sense is that Hitachi
possesses both of these attributes.

Hitachi Integrated Report 2022

Whatʼs Hitachi

Introduction

Message from the Chairman of the Board

Corporate GovernanceValue Creation

Business Strategies

Sustainability

Corporate Governance

Data

100

Independent Directors Dialogue

Leadership (As of June 22, 2022)
Independent Directors*

Katsumi Ihara (71)

Ravi Venkatesan (59)

Cynthia Carroll (65)

Ikuro Sugawara (65)

Joe Harlan (63)Louise Pentland (50)

Share ownership: 1,100 shares
Term of office as Independent Director: 4 years

Share ownership: 400 shares
Term of office as Independent Director: 1 year, 11 months

Share ownership: 1,500 shares
Term of office as Independent Director: 9 years

Share ownership: 0 shares
Term of office as Independent Director: 0 years

Share ownership: 1,100 shares
Term of office as Independent Director: 4 years

Share ownership: 1,100 shares
Term of office as Independent Director: 7 years

2005 Executive Deputy President, Representative
Corporate Executive Officer, Member of theBoard, Sony Corporation

1999 Chairman of the Board of Directors, Cummins
India Ltd. (Retired in March 2004)

1991 General Manager, Foil Products, Alcan Inc.

1981 Joined Ministry of International Trade andIndustry of Japan

1999 Vice President and Chief Financial Officer,
Lighting Business, General Electric Company

1997 Admitted as a Solicitor (UK)2010 Director-General of the Industrial Science andTechnology Policy and Environment Bureau,
Ministry of Economy, Trade and Industry ofJapan (“METI”)

2001 Vice President, Corporate Financial Planningand Analysis, 3M Company

2012 Director-General of the Manufacturing
Industries Bureau, METI

2004 Executive Vice President, Electro andCommunications Business, 3M Company

2013 Director-General of the Economic andIndustrial Policy Bureau, METI2009 Executive Vice President, Consumer andOffice Business, 3M Company

2015 Vice-Minister of Economy, Trade and Industryof Japan2011 Executive Vice President, Performance
Materials, The Dow Chemical Company

2017 Special Advisor to the Cabinet of Japan(Retired in June 2018)2012 Executive Vice President, Chemicals, Energy
and Performance Materials, The Dow
Chemical Company

2009 Executive Deputy President, Corporate
Executive, Sony Corporation
Executive Vice President, Representative
Director, Sony Financial Holdings Inc.

2004 Chairman, Microsoft India Pvt. Ltd.
(Retired in September 2011)
2011 Independent Director, Infosys Ltd. (Retired in
May 2018, served as Co-Chairman from April
2017 to August 2017)1996 Managing Director, Aughinish Alumina Ltd.,
Alcan Inc.
1998 President, Bauxite, Alumina and Specialty
Chemicals, Alcan Inc.
2002 President & CEO, Primary Metal Group,
Alcan Inc.

2010 President, Representative Director, SonyFinancial Holdings Inc.

2013 Venture Partner, Unitus Ventures LLC.
(Currently in office)2011 President, Representative Director, Sony Life
Insurance Co., Ltd.

2007 CEO, Anglo American plc.
(Retired in April 2013)2015 Chairman (Non-Executive),
Bank of Baroda (Retired in August 2018)2013 Director, Hitachi, Ltd.

2015 Chairman, Director, Sony Life Insurance Co.,
Ltd. (Retired in June 2017)2018 Special Representative for Young People &Innovation, UNICEF (Currently in office)2016 Chairman, Director, Sony Financial Holdings
Inc. (Retired in June 2017)2020 Director, Hitachi, Ltd.

2022 Director, Hitachi, Ltd.

2018 Director, Hitachi, Ltd.

2002 President and Chief Executive Officer,
Sumitomo 3M Ltd.

2014 Chief Commercial Officer and Vice Chairman,
Market Business, The Dow Chemical
Company
2015 Vice Chairman and Chief Commercial Officer,
The Dow Chemical Company (Retired inAugust 2017)

Nominating Committee

Audit Committee

Compensation Committee

2001 Senior Legal Counsel, Nokia Networks, Nokia
Corporation2007 Vice President, Acting Chief Legal Officer andHead of IP Legal, Nokia Corporation
2008 Senior Vice President and Chief Legal Officer,
Nokia Corporation2009 Admitted to New York State Bar Association2011 Executive Vice President and Chief Legal
Officer, Nokia Corporation (Retired in May
2014)
2015 General Counsel, PayPal, eBay Inc.
Director, Hitachi, Ltd.
Senior Vice President and Chief Legal Officer,
PayPal Holdings, Inc.
2016 Executive Vice President, Chief Business
Affairs & Legal Officer, PayPal Holdings, Inc.
2022 Executive Vice President and Senior Advisor,
PayPal Holdings, Inc. (currently in office)2018 Director, Hitachi, Ltd.

Each Committee is composed of the following members (chair names underlined)
Nominating Committee : Katsumi Ihara, Cynthia Carroll, Hiroaki Yoshihara, Toshiaki Higashihara
Audit Committee: Hiroaki Yoshihara, Katsumi Ihara, Ikuro Sugawara, Helmuth Ludwig, Hideaki Seki

Compensation Committee : Takatoshi Yamamoto, Katsumi Ihara, Joe Harlan, Keiji Kojima* Independent directors are directors who fulfill the qualification requirements to be outside directors as stipulated in the Companies
Act and also meet independence criteria defined by Hitachi and stipulated by Japanese stock exchanges where Hitachi is listed.

Hitachi Integrated Report 2022

Message from the Chairman of the Board

Introduction
Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

101

Independent Directors Dialogue

Directors

Takatoshi Yamamoto (69)

Hiroaki Yoshihara (65)

Helmuth Ludwig (59)

Keiji Kojima (65)

Hideaki Seki (65)Toshiaki Higashihara (67)

Share ownership: 12,800 shares
Term of office as Independent Director: 6 years

Share ownership: 3,000 shares
Term of office as Independent Director: 8 years

Share ownership: 2,800 shares
Term of office as Independent Director: 1 year, 11 months

Share ownership: 100,800 shares

Share ownership: 12,000 shares

Share ownership: 198,800 shares

1995 Managing Director, Morgan Stanley Japan
Limited1978 Joined Peat Marwick Mitchell & Co.

2001 President, Software and System House
Division, Siemens AG

1982 Joined Hitachi, Ltd.

1979 Joined Hitachi, Ltd.

1977 Joined Hitachi, Ltd.

2011 General Manager, Hitachi ResearchLaboratory2011 Board Director, Hitachi Automotive Systems,Ltd.

2007 Vice President and Executive Officer(Retired in March 2008)2012 Vice President and Executive Officer

2008 President, Hitachi Power Europe GmbH

1999 Managing Director and Vice Chairman, Tokyo
Branch, Morgan Stanley Japan Limited

1996 National Managing Partner, the Pacific Rim
Practice, KPMG LLP
1997 The Board Member, KPMG LLP

2005 Managing Director and Vice Chairman, UBS
Securities Japan Co., Ltd.

2003 Vice Chairman and Global Managing Partner,
KPMG International (Retired in April 2007)2009 Managing Director, CASIO COMPUTER CO.,LTD.

2014 Director, Hitachi, Ltd.

2011 Advisor, CASIO COMPUTER CO., LTD. (Retired
in June 2012)2016 Director, Hitachi, Ltd.

2002 President, Systems Engineering Division,
Automation and Drives Group, Siemens AG
2007 President, Siemens PLM Software, Inc.

2016 Senior Vice President and Executive Officer

2013 Vice President, Board Director, Hitachi
Automotive Systems, Ltd.

2010 Global Head of Communications, Industry
Automation, Siemens Corp.

2018 Representative Executive Officer,
Executive Vice President

2014 Executive Vice President, Board Director,
Hitachi Automotive Systems, Ltd.

2011 President and CEO, Industry Sector, North
America, Siemens Industry, Inc.

2021 Representative Executive Officer,
President & COO and Director, Hitachi, Ltd.

2015 President & COO, Representative Director,
Hitachi Automotive Systems, Ltd.

2014 Executive Vice President and Chief Digital
Officer, Digital Factory Division, Product
Lifecycle Management, Siemens Corp.

2022 Representative Executive Officer,
President & CEO and Director, Hitachi, Ltd.

2016 President & CEO, Representative Director,
Hitachi Automotive Systems, Ltd.
(Retired in March 2018)2016 Chief Information Officer, Siemens AG (Retiredin December 2019)2020 Professor of Practice in Strategy and
Entrepreneurship, Cox School of Business,
Southern Methodist University (currently in
office)Director, Hitachi, Ltd.

2018 Senior Vice President and Executive Officer,
Hitachi, Ltd.
President, Representative Director,
Hitachi Building Systems Co., Ltd.
(Retired in March 2020)
2020 Director, Hitachi, Ltd.

2010 Representative Executive Officer,
President and Chief Executive Officer,
Hitachi Plant Technologies, Ltd.
President and Representative Director,
Hitachi Plant Technologies, Ltd.
2011 Vice President and Executive Officer,
Hitachi, Ltd.
2013 Senior Vice President and Executive Officer,
Hitachi, Ltd.
2014 Representative Executive Officer andPresident & COO, Hitachi, Ltd.
Representative Executive Officer,
President & COO and Director, Hitachi, Ltd.
2016 Representative Executive Officer,
President & CEO and Director, Hitachi, Ltd.
2021 Representative Executive Officer, Executive
Chairman, President & CEO and Director,
Hitachi, Ltd.
Representative Executive Officer, Executive
Chairman & CEO and Director, Hitachi, Ltd.
2022 Executive Chairman, Representative Executive
Officer and Director, Hitachi, Ltd.

Hitachi Integrated Report 2022

Introduction

Message from the Chairman of the Board

Corporate Governance

Whatʼs Hitachi

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data

102

Independent Directors Dialogue

Executive Officers
President & CEO

Executive Vice Presidents and Executive Officers

Vice Presidents and Executive Officers

Keiji Kojima*

Masakazu Aoki*

Yoshihiko Kawamura*Toshiaki Tokunaga*

Overall management, railway systems
business, nuclear energy business, energy
business, power grids business andinnovation strategies

Assistant to the President (industrial digitalbusiness, water & environment business,
industrial products business, industrial
equipment systems business, building
systems business, smart life & ecofriendly
systems business, measurement and analysis
systems business, and healthcare business)

Assistant to the President (financestrategies, corporate pension system,
investment strategies, investor relations
strategies, cost structure reforms, risk
management, corporate auditing andcorporate export regulation)

Assistant to the President (business forfinancial institutions, business forgovernment, public corporation and social
infrastructure systems, defense systems
business, services & platforms business,social innovation business promotion anddigital strategies)

Senior Vice Presidents and Executive Officers

Jun AbeKatsuya Nagano

Hidenobu Nakahata*

Masahiko Hasegawa*Services & platforms businessBusiness for government, public
corporation and social infrastructure
systems, and defense systems business

Human capital strategies, diversity &inclusion strategies, corporate
communications strategies, and safety andhealth management

Marketing & sales strategies, regional
strategies

Executive Officer

Noriharu Amiya

Takashi Iizumi

Railway systems business

Healthcare business, measurement andanalysis systems business

Hitoshi Ito

Tatsuro Ueda

Government & external relations

Business for financial institutions

Kenji Urase

Tomomi Kato

Energy business

Finance strategies and corporate
pension system

Tadashi Kume

Kohei Kodama

Nuclear energy business

Legal affairs, risk management andcorporate auditing

Takashi Saito

Norihiro Suzuki

Marketing & sales strategies(connective industries)

Research & development

Kenichi Tanaka

Jun Taniguchi

Human capital strategies

Digital strategies, services & platforms
business

Lorena Dellagiovanna

Kojin Nakakita

Sustainability strategies, environmental
strategies, diversity & inclusion
strategies

Regional strategies (APAC)

Hideshi Nakatsu

Seiichiro Nukui

Water & environment businessIT strategies

Andrew Barr

Tatsuro Hoshino

Railway systems business

Marketing & sales strategies(digital systems & services)

Kentaro Masai

Shinya Mitsudomi

Supply chain management(manufacturing strategies and quality
assurance), safety and healthmanagement

Urban business strategies, building
systems business

Masashi Murayama

Kazunobu Morita

Cost structure reforms and information
security management

Business for industrial digital

Takashi Yoda
Regional strategies (China)

Claudio Facchin

Mamoru Morita

Toshiaki Higashihara*

Power grids business

Management strategies

GeneralNote: Executive officers are listed by position and in Japanese alphabetical order within each grouping.
The asterisk (*) denotes executive officers who are representative executive officers.