Board of Directors
NEC's Board of Directors consists of 11 members, 5 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, 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, 2018, based on the result of the analysis and evaluation on the effectiveness of the Board of Directors conducted in the previous fiscal year, NEC improved the contents to be reported in the Board of Directors and the format of the meeting materials in order to narrow down the agenda to be discussed and clarify the point of discussion at the Board of Directors. Furthermore, NEC introduced a new mechanism in order to reflect opinions and advices of Outside Directors in the operation of business. Under this mechanism, NEC notified those opinions and advices to the relevant parties in NEC, and reported the progress to the Board of Directors.
The summary of the results of such analysis and evaluation for the fiscal year ended March 31, 2018 is as follows.
(1) Procedure of the analysis and evaluation
In the fiscal year ended March 31, 2018, NEC sent a questionnaire regarding the role, composition and operation of the Board of Directors to all Directors and the Audit & Supervisory Board Members (KANSAYAKU) ("A&SBMs"), and all of them answered the questionnaire. Before sending the questionnaire, NEC improved the questionnaire by adding questions for free descriptive answers and questions for evaluation of achievement of the measure introduced in the previous fiscal year based on the result of the analysis and evaluation conducted in the previous fiscal year so that evaluation and opinions of Directors and A&SBMs could be reflected more adequately on their answers to the questionnaire.
(ii) Discussion based on the result of the analysis and evaluation
After analyzing the effectiveness of the Board of Directors based on the result of the questionnaire, NEC reported such result to the Board of Directors in March 2018. In the said Board of Directors, all Directors and A&SBMs discussed the improvement for the Board of Directors from the viewpoint of the reinforcement of the function and governance system of the Board of Directors, the best practice to discuss the management strategy and a method for decision making and the clarification of management policy looking ahead to the future vision of NEC.
(2) Summary of the results of such analysis and evaluation for the fiscal year ended March 31, 2018
In conclusion, it has been evaluated that in terms of the decision making for NEC's important business execution and a method for discussion for management strategies and management plan, the Board of Directors is structured and operated to facilitate active discussion among the Directors, and the Board of Directors has been appropriately supervising the business execution. Meanwhile, it has been confirmed that the Board of Directors needs to improve a method for the discussion for future vision of NEC and strategies to improve corporate value of NEC for medium and long term, and a method for distributing information to Directors in order to enrich constructive discussion in the Board of Directors.
(3) Future challenges
Based on the results above, by conducting the following countermeasure, NEC will continuously enhance and strengthen the Board of Directors function in order to deepen the Directors' and A&SBMs' understanding of the President's vision for the future of NEC, and deliberation on the mid- and long-term management strategy.
- To arrange opportunities for sufficient discussion of a long term management strategy;
- To improve the contents of information distributed to Directors in advance for discussion in the Board of Directors;
- To arrange an opportunities for exchanging opinions among the Chairman of the Board, the President and the Outside Directors;
- In each Board of Directors, to report the recent important matters and topics by the President to other Directors; and
- To improve the format of the meeting materials.