Board of Directors
NEC's Board of Directors consists of 12 members, 6 of whom are Outside Directors.The Board of Directors holds regular meetings basically once a month and extraordinary meetings as necessary to determine important matters related to business execution, including business realignment, funding plans and financing and investment, as well as matters concerning business plans.
Furthermore, the term of office for Directors has been set at one year in order to clarify their responsibility for management every fiscal year from June, 2004.
Ratio of Outside Directors to all Directors (At the conclusion of the Ordinary General Meeting of Shareholders)
In order to ensure greater diversity within the Board of Directors and to strengthen its supervisory function, at the General Meeting of Shareholders held on June 22, 2021, NEC decided to increase the number of Outside Directors from 5 members to 6, increasing the total number of the Board members from 11 to 12. As a result, one half of the Board of Directors comprises Outside Directors.
Nomination policy for Outside Directors
NEC appoints Outside Directors for the purpose of (i) strengthening the supervisory functions over business execution; (ii) obtaining a broad range of advice on corporate management; and (iii) enhancing accountability for management. In appointing Outside Directors, NEC considers that they have superior character, discernment and high ethical standards. In addition, they would sympathize with the NEC Way and act with strong will to realize the Philosophy and they have their extensive experience and deep insight related to the career background and skills NEC especially expects of Directors. Furthermore, Outside Director's independency is expected to be ensured through the Board of Directors' composition as a whole.
Support for Outside Directors
Aiming to ensure that these roles and functions expected of Outside Directors are properly fulfilled, NEC has been working to enhance deliberations by the Board of Directors through such means as briefing Outside Directors in advance on important agenda to be put forward to the meetings of the Board of Directors.
NEC also provides support to Outside Directors in order to facilitate their understanding of the NEC Group, such as by organizing tours of business sites and exhibitions of NEC and its subsidiaries.
Evaluation on the Effectiveness of the Board of Directors
NEC has conducted an analysis and evaluation on the effectiveness of the Board of Directors to improve the function of the Board of Directors since the fiscal year ended March 31, 2016.
The summary of the results of the analysis and evaluation for the fiscal year ended March 31, 2021 and initiatives to be implemented in light of these results are as follows.
(1) Procedure of the analysis and evaluation
In the fiscal year ended March 31, 2021, NEC conducted a questionnaire of all Directors and A&SBMs, and also conducted individual interviews based on the results. In the questionnaire and interviews, participants expressed their opinions regarding the items listed below and identified issues and points for NEC to improve upon with the overall aim of improving the effectiveness of the Board of Directors.
- Evaluation regarding NEC's corporate governance system
- Roles and functions of the Board of Directors as a means to enhance corporate governance
- The effectiveness of deliberations that have been continuously enhanced based on the evaluation conducted in fiscal year ended March 31, 2019 regarding broad, Companywide management strategies and corporate governance.
- Improvements necessary for more effective use of Outside Directors' insights and opinions
Issues and points for improvement identified in the questionnaire and interviews were reported at the ordinary Board of Directors' meeting held in February 2021, and the Board of Directors deliberated on plans for improvement going forward.
(2) Summary of evaluation result and initiatives going forward
A summary of the evaluation of the effectiveness of the Board of Directors for fiscal year ended March 31 2021 is as follows:
- (i)Regarding the role and function of the Board of Directors
The Board of Directors can be evaluated as appropriately fulfilling its role and performing its functions sufficiently, including deliberations regarding broad, Companywide management strategies and corporate governance. However, to improve the effectiveness of the Board of Directors even further, NEC needs to consider improvements in line with the following points.
- Use of Outside Directors' insights and opinions
- Selection of themes for deliberation based on changes in the external environment and their impact and risks
- (ii)Regarding the use of Outside Directors' insights and opinions
While it has been useful to clarify the expected role of Outside Directors, which was a response to the evaluation of the effectiveness of the Board of Directors conducted in fiscal 2020, to better utilize Outside Directors' insights and opinions, NEC need to consider improvements in line with the following points.
- Further enhancement of information provision for Outside Directors
- Investigation of more effective deliberation formats according to theme (off-site meetings, etc.)
- (iii)Regarding the corporate governance system
The current corporate governance system was deemed appropriate overall; however, it is important for NEC to continue looking into optimal systems based on the ideal direction of the NEC Group. The evaluation also reflected a desire for NEC to consider further strengthening the Board of Directors' supervisory functions over the medium to long term.
To enhance corporate governance, NEC need to consider improvements in line with the following points.
- Further expansion of the authority of the Board of Directors on the business execution side (including a review of the criteria for matters to be discussed by the Board of Directors)
- Provision of opportunities at meetings of the Board of Directors to allow for deliberation on the ideal system of corporate governance for the NEC Group for the medium to long term
(3) Initiatives going forward
NEC will investigate and implement measures to further improve the effectiveness of the Board of Directors based on the following three policies, which were derived using the results from the evaluation of the effectiveness of the Board of Directors conducted in fiscal 2021.
- Review the management methods of the Board of Directors to better obtain the diverse opinions and advice of Outside Directors, which includes measures involving the content and delivery method of information provided to Outside Directors
- Select themes for deliberation based on the changes in the external environment and their impact and risks for the NEC Group
- Clarify the role of the Board of Directors in building an ideal corporate governance system for the NEC Group, and strengthen the supervisory functions required to fulfill that role