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Foresight in sight

Investor Relations

Corporate Governance and Internal Control System

The establishment of an effective corporate governance and internal control system is essential for sustainable growth and long-term improvements in corporate value, and accordingly the Company works to strengthen such structures.

Corporate Governance

Basic Views
A mechanism of corporate governance that enables management to make prompt and sound management decisions under appropriate and effective supervision is indispensable for enabling the Nihon Unisys Group to continuously grow and increase its mid- and longterm corporate value, and the Company shall create, maintain, and ceaselessly improve this mechanism.

Furthermore, Nihon Unisys believes that a company’s raison d’etre lies in its contribution to society. Based on this belief, the Company stipulates as part of its corporate philosophy “Listen sincerely to our stakeholders to improve our corporate value” in order to create relationships of trust with all stakeholders, and it shall proceed with its business activities in accordance with this principle.
Corporate Governance Structure
The Company has judged that an audit system that includes outside auditors is effective for supervising management, and thus has adopted the system of having a Board of Auditors.

Given the drastically changing nature of the Company’s industry, its Board of Directors consists of five internal directors who are wellversedin the state of the Company and its industry and also four outside directors who are expected to use their abundant management experience, give advice on management as a whole from their external, objective, and expert perspectives, and operate as an efficientsupervisory body to management. We think this makes the Company capable of more objective and broad-based decision making as well as more effective supervision of its business execution.
As of June 28, 2016
Corporate Governance and Internal Control
Board of Directors
The Board of Directors is composed of nine directors, including four outside directors (one of whom is female). It meets every month as a general rule. The Board of Directors receives reports on and decides on key matters for the Company. The term of directorship is set at one year in order to establish a flexible management system capable of responding to changes in the management environment and to clarify the management responsibilities of directors.

In FY ended March 2016, the Board of Directors met 11 times, holding discussions on various issues related to management. The attendance ratio of Board of Directors’ meetings was 87.5% for outside directors and 93.2% for outside Audit & Supervisory Board members.
Establishment of Nomination and Remuneration Committee
Board of Directors’ Structure
Evaluation of Effectiveness of the Board of Directors
The Audit & Supervisory Board
There are five Audit & Supervisory Board members (herein also referred to as “auditors”), including four outside auditors. Three are full-time auditors. Auditors attend key meetings (such as those of the Board of Directors), examine the state of the Company`s performance and assets, and audit the performance of the directors in their professional duties.
They are assisted in accomplishing their duties by dedicated personnelassigned to the Office of the Auditors in order to enhance the effectiveness and smoothness of audit operations by auditors.

In FY ended March 2016, the Audit & Supervisory Board met 13 times, with an attendance ratio for outside Audit & Supervisory Board members of 90.4%.
Internal Audit Department
The Internal Audit Department has been established as an internal body under the direct control of the president & CEO to assess the effectiveness and efficiency of internal controls across the Group.
Business Execution Structure
  • Executive Council

    The Executive Council consists of representative directors and directors who concurrently serve as corporate officers and has been established as a body to make efficient decisions regarding key matters relating to business execution.
  • Various Committees

    Various committees have been established in order to deliberate on specific management issues relating to business execution by the directors from practical perspectives. These are the Business Review Committee, the Investment Committee, the Information Systems Investmen Committee, the Compliance Committee, the Risk Management Committee, and the Information Security Committee. Furthermore, the CSR Committee and Management of Technology (MOT) Committee have been established as advisory bodies.
  • Corporate Officer System

    The Company has adopted a system of corporate officers in order to separate the supervision of management from its execution and to enable prompt business execution.
Remuneration of Directors and Audit & Supervisory Board Members
  • Policy and Procedure for Deciding Remuneration for Directors

    Directors are in principle paid according to their professional responsibilities, with a focus on performance-based pay and taking into account market-rate salaries and employees’ salary levels.
    Remuneration for directors consists of a fixed monthly salary, annual performance-based bonuses using net income attributable to owners of the parent as an indicator, and stock options for performance-based compensation system. Outside directors are paid a fixed monthly salary only. The exact amount of remuneration is decided by the Board of Directors after deliberation by the Nomination and Remuneration Committee, which partly consists of one or more independent outside directors, within the amount as decided by resolution at general shareholders’ meetings.

    It was resolved at the 49th Ordinary General Meeting of Shareholders held on June 25, 1993, that the monthly remuneration amount is a maximum of ¥ 35 million per month.

    It was resolved at the 72nd Ordinary General Meeting of Shareholders held on June 28, 2016, that the total amount of directors’ bonus is limited to ¥ 100 million per year, with the payment standard set at 0.5% of net income attributable to owners of the parent for the time being.
  • Performance-Linked Remuneration

    With the aim of increasing director motivation to contribute to continuous improvement in the Company’s performance and corporate value, the Company has been issuing stock options to directors since FY ended March 2013 based on a system of linking remuneration to performance.
  • Remuneration for Auditors

    Auditors are compensated without linking pay to performance in order to ensure the effectiveness of auditing from an independent perspective. Their fixed monthly remuneration is decided as a result of discussions among auditors.

    It was resolved at the 62nd Ordinary General Meeting of Shareholders held on June 22, 2006, that the monthly remuneration amount for auditors is a maximum of ¥ 8 million per month.
Total Remuneration for Directors and Audit & Supervisory Board Members with Subtotals for Each Type of Remuneration andNumbers of Recipients (FY ended March 2016)
Classification Total Remuneration Paid
(Millions of yen)
Remuneration Paid by Type (Millions of yen) Recipients(People)
Basic Remuneration Stock Options Bonuses
Directors
(Excluding Outside Directors)
219 198 21 - 6
Audit & Supervisory Board members
(Excluding Outside Audit & Supervisory Board Members)
28 28 -  (*1) -  (*1) 1
Outside Directors and Outside Audit &
Supervisory Board Members
80 80 -  (*1) -  (*1) 9
*1 Outside directors and outside Audit & Supervisory Board members do not receive stock options or bonuses.
*2 Figures shown in millions of yen have been rounded down to the nearest million.

Internal Control System

The Nihon Unisys Group has strived to establish, operate, and continuously improve its internal control system as follows in order to achieve the aims of internal control: improving the effectiveness and efficiency of business, ensuring the reliability of financial reports, compliance with laws and regulations on business activities, and preservation of Company assets.
Improving the Effectiveness and Efficiency of Business
The Group has established a mid-term management plan and specific management targets, and it strives to develop systems that will improve operational effectiveness and efficiency.
Ensuring the Reliability of Financial Reports
The Company’s management and employees have conducted themselves in compliance with the basic policy for appropriate financial reporting established by the Group set forth for ensuring the reliability of financial reporting.
Compliance with Laws and Regulations on Business Activities
In recognition of compliance as one of the most critical issues to the execution of business operation, the Group has established the Nihon Unisys Group Charter of Corporate Behavior, the Group Compliance Basic Regulations, and the Nihon Unisys Group Code of Conduct, based on which all of the Group’s employees act ethically in compliance with laws and regulations, social norms, and in-house regulations.
Preservation of company Assets (Risk Management)
The Nihon Unisys Group is faced with various kinds of risk in connection with its operating business activities. The Company has developed a common risk classification system for the Group to share and centralize the management of risks throughout the entire Group. Furthermore, it has developed preventive measures and countermeasures against the occurrence of risk events in order to safeguard its assets.

Accordingly, the Company has established a Risk Management Committee - Business Continuity Project chaired by the chief risk management officer (CRMO) to unify, lead, and manage risk management across the entire Group.

The Risk Management Committee has established a common risk classification system in order to share and centralize the management of risks throughout the entire Group. The system currently has approximately 130 risk management categories such as information management risks, system development risks, and disasters or accident-related risks. Staff departments or committees responsible for controlling such risk items have established management regulations as well as specific preventive measures and countermeasures in an event of a risk arising.

In the event of a material risk arising despite these measures, the department in which such risk arises or relevant committee promptly reports to the Risk Management Committee - Business Continuity Project. A Risk Countermeasure Meeting or Risk Countermeasures HQ is then established according to the severity of the risk in order to deal with the situation appropriately.
Risk Management Structure of Nihon Unisys Group

Information Security

The Nihon Unisys Group deals with the business information and information systems of its customers. As such, we work to ensure a uniform level of information security at each Group company and partner company. As of July 2016, 12 Group companies and affiliated organizations had received ISO 27001 (ISMS) certification, and eight Group companies had received PrivacyMark certification.
Promotion Structure
As a promotional structure for information security, the Group has established the Information Security Committee, the Security Promotion Team, the Group Management Council, and the Computer Security Incident Response Team (CSIRT). In addition, through integrated audits of information security management systems and personal information management systems, the Group is working to enhance the efficiency of its activities to promote security as well as to reduce the burden of frontline divisions.
Establishing and Expanding a Security-Oriented Culture
With the aim of further establishing a security-oriented culture, we place alerts on the intranet screen that appears when employees turn on their computers. We also implement training for information security officers and organization managers, new employees, and mid-career employees as well as e-learning programs that target all employees. In addition, we systematically carry out training aimed at partner companies.

Furthermore, we conduct training on how to deal with targeted e-mail attacks as part of our efforts to respond to cyber security risks. Through this training, participants gain firsthand experience of a cyberattack by actually receiving a fake targeted e-mail. In doing so, the training works to foster an awareness among employees toward the dangers of cyberattacks and have them develop a sense of ownership and responsibility. The training also allows employees to gain an understanding on how to appropriately respond in the event of a cyberattack.

Additionally, in order to promote the proactive utilization of information from the perspective of security, we make use of the remote access service SASTIKR as well as mobiGateR, a service that allows employees to securely access in-house systems from their smartphone or cellular device. In these ways, we have in place an environment where all employees can access the Company’s intranet in a highly secure manner even from outside the Company.

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