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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 Stance
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 medium-to-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 in order to realize effective corporate governance for the value creation process to create business ecosystems, an audit system that includes supervision by the Board of Directors and auditing by outside auditors is effective for monitoring management, and thus has adopted an Audit & Supervisory Board structure.

Given the decision-making speed required in light of the changing market environment, the Company aims to make decisions that combine a broader perspective with objectivity and transparency as well as to ensure the effectiveness of supervisory functions related to the execution of duties. It will accomplish this by utilizing 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 rate of outside directors at Board of Directors meetings was 100%.
    The attendance rate of outside Audit & Supervisory Board members at Board of Directors and Audit & Supervisory Board meetings was 97%.
    (the Board of Directors met 12 times and the Audit & Supervisory Board met 13 times in FY2018).
Size and Diversity of the Board of Directors and the Audit & Supervisory Board
Evaluation of Effectiveness of the Board of Directors
To continuously improve corporate value, Nihon Unisys considers it important for the Board of Directors to enhance governance by fully deploying its functions, including ensuring the appropriateness of operations. Every year since FY2016, the Company has analyzed and evaluated the effectiveness of the Board of Directors in the previous fiscal year and worked to improve its functionality.
In FY2018, the Company set and implemented action policies for issues pointed out in the FY2017 evaluation of the effectiveness of the Board of Directors, including clarifying the selection criteria for directors and specifying a succession plan for senior management.
The FY2018 evaluation of Board of Directors effectiveness has verified the status of those efforts. The evaluation method began with administering open questionnaires to all directors and Audit & Supervisory Board members and compiling them internally. The Company then requested an external consultant to analyze the survey content and, based on the results of that analysis, deliberated on and assessed the current situation of the Board of Directors and areas for improvement.
As shown below, although the results received a high evaluation overall, there was a need for deeper discussions on each theme and new recommendations for further enhancing the governance structure. Based on these results, in FY2019 the Company has begun measures to clarify the selection criteria and procedures for outside directors, to review the remuneration system and to further deepen discussion of themes related to the essence of management, such as business strategy, corporate culture reform, sustainability and expansion of the scope of compliance, among others.
Evaluation
Succession Plan for the CEO of Nihon Unisys Group
Nihon Unisys regards a succession plan for its senior management including the CEO as another priority item for accelerating its evolution. To ensure the transparency of the selection process, the Nomination and Remuneration Committee, which includes an independent outside director, deliberates and reports to the Board of Directors.

In this plan, integrity is the basis of the seven core competencies listed on the right that have been set as important qualifications required of senior management. The Committee believes that the degree to which each requirement is displayed may vary depending on the business environment.

In FY2018, the Company launched the Management Leader Program for managers above a specified level to select and cultivate candidates for senior management, including the CEO. The program includes sessions with experts from inside and outside the Company, self-evaluations and evaluations by superiors conducted with reference to the seven competencies, and challenging assignments.
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

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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