Board of Directors
NEC's Board of Directors consists of 11 members, 5 of whom are Outside Directors. The Chairman of the Board serves as a chairman of meetings of the Board of 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, since June 2004 the term of office for Directors has been set at one year in order to clarify their responsibility for management every fiscal year.
Ratio of Outside Directors to all Directors (At the conclusion of the Ordinary General Meeting of Shareholders)
NEC added an Outside Director in June 2001 for a total of two Outside Directors in order to strengthen the supervisory functions of the Board of Directors. The number of members has increased and the system of five Outside Directors has continued since its inception in June 2007.
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 Group Corporate Philosophy and act with strong will to realize the Philosophy and they have their experience of corporate management and deep insight. 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 particularly important proposals 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
With external advices on a method of effectiveness evaluation of the Board of Directors, NEC has conducted an analysis and evaluation on the effectiveness of the Board of Directors once a year to improve the function of the Board of Directors since the fiscal year ended March 31, 2016.
In the fiscal year ended March 31, 2019, NEC made several changes based on the result of the analysis and evaluation on the effectiveness of the Board of Directors conducted in the previous fiscal year. NEC provided a separate opportunity outside of the Board of Directors meeting for Directors to discuss long-term management strategy. It also revised the pricing criteria of the standard for matters to be resolved at the Board of Directors, enhanced the information provided to Directors prior to meetings, and made further improvements to the format of materials for reports to the Board of Directors. These changes were intended to further enhance the discussion related to mid- to long-term management strategies in the Board of Directors. Furthermore, NEC continued its initiatives for reflecting the opinions and guidance received from Outside Directors in its business execution, and took steps such as providing opportunities for the Chairman of the Board, the President and the Outside Directors to exchange opinions freely on various themes.
The summary of the results of such analysis and evaluation for the fiscal year ended March 31, 2019 is as follows.
(1) Procedure of the analysis and evaluation
In the fiscal year ended March 31, 2019, NEC conducted a questionnaire of all of the Directors and A&SBMs. In addition, individual interviews were held based on the results of the questionnaire. In the questionnaire and interviews, participants were asked mainly for their opinions regarding the kind of governance structure that NEC should aim for (organizational design, director composition, etc.) and the roles, functions, and method of operation of the Board of Directors. Based on the analysis and evaluation of these opinions, the Board of Directors deliberated on a policy and improvement plan for strengthening governance going forward.
Improvements were also made to the questionnaire. In addition to the questions regarding the level of achievement of measures formulated based on the evaluation of effectiveness, evaluation items for confirming the degree of improvement from the previous fiscal year were added as part of improvements to the survey method.
(2) Summary of evaluation result and initiatives going forward
(i) Summary of evaluation result
A summary of the evaluation of the effectiveness of the Board of Directors for the fiscal year ended March 31, 2019 is as follows:
-In the Board of Directors, it can be evaluated that appropriate supervision of business execution has been conducted as lively discussion was held among the Directors regarding decision making on important business execution and other important matters of mid- to long-term management strategy;
-The current governance structure (organizational design, director composition, etc.) can generally be considered appropriate; however, operation of the Board of Directors has room for improvement, such as conducting discussions with an emphasis on broad, company-wide management strategies and governance; and
-NEC will continue working to enhance the information provided to Directors prior to meetings.
(ii) Initiatives going forward
Based on the above evaluation results, NEC will strengthen the Board of Directors' functions through the following initiatives:
-To further deepen discussions in the Board of Directors regarding broad, company-wide management strategies and governance, NEC will revise the setting of themes for the matters brought up for discussion by the Board of Directors and the annual discussion plan;
-For important and complex matters for discussion, NEC will aim to hold multiple meetings of the Board of Directors and to enhance prior explanation, etc.;
-For long-term management strategy and other such themes, NEC will combine use of the Board of Directors and other meetings to enable deeper discussion; and
- To enhance the provision of information to Outside Directors, NEC will hold worksite tours and provide guidance to newly appointed Directors, along with improving the Board of Directors materials in line with the new themes for discussion by the Board of Directors.