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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 to the Nihon Unisys Group’s continuous growth and increase in mid- and long-term corporate value. The Company shall create, maintain, and ceaselessly improve this mechanism.

Furthermore, Nihon Unisys believes that a company’s raison d’etre lies in its ability to contribute 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 shall proceed with its business activities in accordance with this principle.
Corporate Governance Structure
Nihon Unisys has judged that an audit system that includes supervision by the Board of Directors and audits by outside auditors is effective for monitoring management, and thus has adopted a Board of Auditors.

Given the drastically changing nature of its industry, the Company aims to realize decision-making that combines a broader perspective with objectivity as well as highly effective supervision of the execution of duties. It will accomplish this by having its Board of Directors center on internal directors who are well-versed in the state of the Company and its industry and appointing persons with extensive business experience and expertise as outside directors.
Corporate Governance and Internal Control
Size and Diversity of the Board of Directors and the Audit & Supervisory Board
  • The Company maintains an appropriate number of members that can effectively and efficiently exercise the functions of the Board of Directors.
  • The Company has appointed nine directors with diverse and extensive careers and knowledge, with independent outside directors, including two women, accounting for at least one-third of the total.
  • A majority of the Audit & Supervisory Board consists of independent outside members, including one lawyer and one certified public accountant, one of
    whom is a woman.
  • The attendance rates of outside directors at Board of Directors meetings and of outside Audit & Supervisory Board members at Board of Directors and Audit & Supervisory Board meetings are both 100% (the Board of Directors met 11 times and the Audit & Supervisory Board met 15 times in FY2017).
Size and Diversity of the Board of Directors and the Audit & Supervisory Board
Evaluation of Effectiveness of the Board of Directors
The Board of Directors has been working to improve its effectiveness by conducting self-evaluations since FY2015.

FY2017 was a year for formulating the new mid-term management plan. Consequently, in response to a determination at the time of the evaluation in FY2016 of the need to deepen discussion on creating the new mid-term management plan, the Board of Directors conducted multiple deliberations regarding the new plan after establishing study meetings on the Nihon Unisys Group’s businesses and other matters. These deliberations included officers from outside the Company and provided occasions for exchange of opinions among management.
Study meetings and other meetings for all directors and Audit & Supervisory Board members on matters such as ESG investment and management to master and update the knowledge and information necessary for discussion on the plan were also held.

In addition, from the viewpoint of seeking a governance structure suitable for the Company in the future based on the acceleration of business model reform in the mid-term management plan that will begin in FY2018, the effectiveness of the Board of Directors was evaluated with the support of an external consultant*2 in FY2017. As shown below, the result was an overall high evaluation. However, because new issues were pointed out, the Board of Directors will make efforts to address those issues in FY2018.
(*2)Japan Board Review Co., Ltd. distributed and compiled results for an anonymous questionnaire, conducted individual interviews and prepared a report. Based on the report, the Board of Directors has analyzed its current status and points for improvement and is deliberating and evaluating its future direction.
Evaluation
Policies for FY2018
Succession Plan for the CEO of Nihon Unisys Group
To ensure the transparency of the selection process of the CEO, the Nomination and Remuneration Committee, which includes an independent outside director, deliberates on a succession plan for the CEO and others, and reports to the Board of Directors.

In the plan, integrity is the basis of the seven required competencies listed on the right that have been set as important qualifications required of the CEO and others for sustainable improvement in corporate value.

In addition, the Committee believes that the degree to which each requirement is displayed may vary depending on the business environment (period of transformation/ change, period of continuation/expansion).
Requirements (Qualifications/Competencies)
Remuneration of Directors and Audit & Supervisory Board Members
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 remuneration (a monthly salary paid 90% in direct cash deposits), (b) annual performance-based bonuses using net income attributable to owners of the parent as an indicator, and (c) stock options as remuneration linked to medium-to-long-term business performance (appropriated from 10% of total monthly salary paid). Stock options may not be exercised while the director or other grantee is in office at the Company or one of its subsidiaries.
Non-executive directors, such as outside directors, are paid a fixed monthly salary only, without taking business performance into account. The exact amount of remuneration is decided by the Board of Directors after deliberation by the Nomination and Remuneration Committee, which includes one or more independent outside directors, within the amount as decided by resolution at general shareholders’ meetings.
Director Remuneration
Total Remuneration in FY2017 for Directors and Audit & Supervisory Board Members with Subtotals for Each Typeof Remuneration and Numbers of Recipients
Total Remuneration in FY2017 for Directors and Audit & Supervisory Board Members with Subtotals for Each Type of Remuneration and Numbers of Recipients

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 sys-tems 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 and Business Continuity Project chaired by the chief risk management officer (CRMO) to unify, lead, and manage risk management across the entire Group.

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