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Corporate Governance System
An overview of the NEC's corporate governance system is as follows:
NEC has adopted the structure of a "Company with a Nominating Committee, etc." under the Companies Act of Japan. By clearly separating the oversight and execution functions, the Board of Directors strengthens its oversight function, while delegating substantial authority to Executive Officers to accelerate decision-making and business execution. In line with this, NEC also promotes strengthening governance on the execution side.
Oversight Function
Board of Directors
- (i)The Board of Directors is responsible for overseeing the execution of duties by Directors and Executive Officers as well as guiding the direction of management through deliberation of important matters related to NEC's basic management policy.
- (ii)The Board of Directors is comprised with consideration given to the balance between diversity, in such factors as career background, specialist field, internationality and gender, and appropriate size. In addition, from the perspective of ensuring independence, the majority ofthe Board of Directors is comprised of independent Outside Directors.
- (iii)NEC judges Outside Directors' independency based on the standards defined by Tokyo Stock Exchange and the "Independence Criteria for Outside Directors" established by NEC (see the attachment for the criteria).
Directors at a glance (as of June 2, 2023)
| (Title) | (Name) |
|---|---|
| Director (Chairman of the Board of Directors) | Takashi Niino |
| Director | Takayuki Morita |
| Director | Osamu Fujikawa |
| Director | Hajime Matsukura |
| Director | Shinobu Obata |
| Outside Director | Kuniharu Nakamura |
| Outside Director | Christina Ahmadjian |
| Outside Director | Masashi Oka |
| Outside Director | Kyoko Okada |
| Outside Director | Harufumi Mochizuki |
| Outside Director | Joji Okada |
| Outside Director | Yoshihito Yamada |
Nominating Committee
- (i)The Nominating Committee deliberates, from the perspective of objectivity, fairness and transparency, on matters concerning nomination of NEC's Officers (including the succession plan for the President), as well as on the contents of proposals to be submitted to the General Meeting of Shareholders concerning the election or dismissal of Directors.
- (ii)The Nominating Committee shall consist of at least three Directors, the majority of whom shall be independent Outside Directors. Also, the Committee is chaired by an independent Outside Director.
Nominating Committee's member at a glance (as of June 22, 2023)
| (Title) | (Name) |
|---|---|
| Chairperson (Outside Director) | Harufumi Mochizuki |
| Member (Outside Director) | Kuniharu Nakamura |
| Member (Outside Director) | Masashi Oka |
| Member (Director) | Takashi Niino |
Compensation Committee
- (i)The Compensation Committee deliberates, from the perspective of objectivity, fairness and transparency, on matters concerning the remuneration of NEC's Directors and Executive Officers, including the formulation of policies on remuneration, etc. for Directors and Executive Officers and the determination of the details of remuneration, etc. for each individual Director and Executive Officer.
- (ii)The Compensation Committee shall consist of at least three Directors, the majority of whom shall be independent Outside Directors. Also, the Committee is chaired by an independent Outside Director.
Compensation Committee's member at a glance (as of June 22, 2023)
| (Title) | (Name) |
|---|---|
| Chairperson (Outside Director) | Masashi Oka |
| Member (Outside Director) | Christina Ahmadjian |
| Member (Outside Director) | Yoshihito Yamada |
| Member (Director) | Takayuki Morita |
Audit Committee
- (i)The Audit Committee audits the execution of duties by Executive Officers and Directors. The Audit Committee periodically reports the audit plan and audit results to the Board of Directors, and makes recommendations based on the audit results to the President.
- (ii)The Audit Committee shall consist of at least three Directors who are not involved in the execution of business of NEC or its subsidiaries, the majority of whom shall be independent Outside Directors. Also, the Committee is chaired by an independent Outside Director.
- (iii)The Audit Committee may appoint a full-time Audit Committee member when it deems it necessary.
- (iv)Members of the Audit Committee are appointed from among Directors who have knowledge and experience in finance, accounting, legal affairs, and other areas necessary for auditing.
Audit Committee's member at a glance (as of June 22, 2023)
| (Title) | (Name) |
|---|---|
| Chairperson (Outside Director) | Joji Okada |
| Member (Outside Director) | Kyoko Okada |
| Member (Outside Director) | Harufumi Mochizuki |
| Member (Director) (Full-time) | Shinobu Obata |
Execution Function
Executive Officers
Executive Officers are delegated by the Board of Directors to execute NEC's business execution. NEC promotes accelerated decision-making and business execution by delegating substantial authority to Executive Officers.
Chief Officer
NEC has introduced Chief Officers to implement Group-wide strategies. Under the direction of the President, each Chief Officer is working to establish and operate the optimal management infrastructure for the NEC Group in the key Group-wide functional areas for which he or she is responsible.
Executive Committee
NEC has established the Executive Committee, which is the highest level deliberative body on the execution side, as well as other committees which work in tandem with the Executive Committee in order to ensure high-quality decision-making in terms of both opportunities and risks. The Executive Committee, consisting of Executive Officers, including Presidents of each business unit and Chief Officers, deliberates on important matters related to the management of the NEC Group, such as management policies and strategies, and examines important business execution matters. Budget Progress Committee, Financial Strategy Committee, Business Strategy Committee, Investment Committee, and Critical Contract Risk Assessment Council, etc. conduct deliberations, etc., on their respective responsibilities in accordance with their roles and authorities and work in tandem with the Executive Committee.
The Committees working in tandem with the Executive Committee are as follows.
| (Name of deliberative body) | (Summary) |
|---|---|
| Budget Progress Committee | Progress management regarding the annual budget |
| Financial Strategy Committee | Multifaceted review of financial strategies |
| Business Strategy Committee | Discussion of business strategies and sharing of important matters |
| Investment Committee | Multifaceted review of investments and loans |
| Critical Contract Risk Assessment Council | Multifaceted review of important business contracts, etc. in order to reduce risk |
| Risk Control and Compliance Committee | Multifaceted review of company-wide risk management and compliance |
Company-wide Risk Management System
NEC has established the company-wide risk management system centered on the Risk Control and Compliance Committee, in order to accurately recognize and respond to internal and external risks related to the NEC Group's business. The Risk Control and Compliance Committee deliberates fully on such matters of importance from a perspective of risk management, such as the strategy to control significant management risk, and the matters of particular importance are reported to the Executive Committee and the Board of Directors.
Group Internal Audit Department (Internal Auditing Division)
NEC has established the Group Internal Audit Department to conduct internal audits of NEC and its Group companies. The Group Internal Audit Department conducts audits to ensure legal, appropriate, and efficient business execution in the NEC Group, identifies problem areas, and makes recommendations for improvement. In addition, the Group Internal Audit Department cooperates with some subsidiaries that have their own internal auditing divisions by exchanging information to enhance the audits. There are approximately 90 staff members with expertise engaged in internal audits of the NEC Group.
Risk Management and Compliance Department (Compliance Division and Company-wide Risk Management Division)
NEC has established the Risk Management and Compliance Department as the Compliance Division and the Company-wide Risk Management Division. The Risk Management and Compliance Department has approximately 60 staff members, including those responsible for compliance promotion, company-wide risk management, and ensuring the appropriateness of financial reporting, etc.