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Board of Directors

NEC's Board of Directors consists of 10 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, 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)

NEC decided to decrease the number of Directors from 12 to 10 at the General Meeting of Shareholders held on June 22, 2022 in order to strengthen the corporate governance system by increasing the ratio of Independent Outside Directors and enable more flexible decision-making. The percentage of Outside Directors to the Board of Directors has been 50% since 2021. In addition to that, the percentage of Independent Directors to the Board of Directors became 50% from the General Meeting of Shareholders held on June 22, 2022.

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 legal eligibility, and 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 of the Effectiveness of the Board of Directors

NEC has conducted an evaluation and verification of the effectiveness of the Board of Directors for the fiscal year under review once a year, in order to improve the effectiveness of the Board of Directors.

The summary of the results of the analysis and evaluation for the fiscal year ended March 31, 2022 and initiatives to be implemented for the fiscal year ending March 31, 2023 in light of these results are as follows.

(1) Procedure of the analysis and evaluation

In the fiscal year ended March 31, 2022, NEC conducted a questionnaire of all Directors and A&SBMs on the following items, and also conducted individual interviews based on the results. At the ordinary Board of Directors' meeting held in March 2022, analytical results were reported and proposals for initiatives for the fiscal year ending March 31, 2023 were discussed.
- Matters defined by NEC as "the core function of the Board of Directors" (decision-making on important matters, deliberations regarding broad, company-wide management strategies and corporate governance, etc.)
- Board of Director Operations (content of material, frequency of meetings, appropriateness of deliberation time, deliberation environment, etc.)
- Other (off-site meetings, evaluation of improvement measures implemented in the fiscal year ended March 2022, etc.)

(2) Summary of evaluation result

A summary of the evaluation of the effectiveness of the Board of Directors for fiscal year ended March 31, 2022 is as follows.
The Board of Directors can be evaluated as appropriately fulfilling its core functions in general, including the decision-making process for important matters, company-wide management strategies, and deliberations on corporate governance. The operations of the Board of Directors can be evaluated as appropriate overall, including the enhancement of information provided to Outside Directors, which was newly started.
Ongoing focus on the selection of themes for deliberation based on changes in the external environment and their impact and risks, as well as strengthening management with an awareness of active discussions and the use of Outside Directors' insight, are also desirable.

(3) Initiatives for the fiscal year ending March 31, 2023

NEC will investigate and implement the following two initiatives based on the results from the evaluation of the effectiveness of the Board of Directors conducted in fiscal year ended March 31, 2022.
- Appropriate selection of themes for deliberation based on supervision of steady execution of the "Mid-term Management Plan 2025", promotion of initiatives related to sustainability issues, and increased adherence to the Corporate Governance Code.
- Strengthening operations for further activation of discussions and more effective use of Outside Directors' insight (addition of pre-distribution targets for materials for Board of Directors' meetings and more opportunities (off-site meetings) to exchange opinions with Outside Directors)