Corporate Governance

Basic Approach to Corporate Governance

Through a decision by the Board of Directors in December 2015, Fujitsu formulated a basic policy that sets out its approach to corporate governance (the "Corporate Governance Policy"). This Policy has been deliberated and established to best fit the present company conditions. However, considering the objective of corporate governance—that is, to conduct a better management—the company is working to continuously review the Policy so that it does not become too rigid or lose substance, as well as holding periodic discussions on the Policy in the Board of Directors Meeting to maintain the best corporate governance structure.

The company recognizes that corporate governance is an indispensable mechanism to manage the company under our Purpose (from the Fujitsu Way). This is not merely to pursue short-term profits, but to ensure the trust of customers and business partners, to encourage employees to engage in activities vibrantly and proudly, and to contribute to society. For these reasons, the company designed a governance structure based on the following approach.

The latest version, revised in December 2021, can be downloaded from the URL below.

Corporate Governance Structure (as of December 23, 2021)

In accordance with its Corporate Governance Policy, the company outlines the following rules to ensure effective oversight and advice, given from the diverse perspectives of Non-Executive Directors (hereinafter, the term used for a combination of Independent Directors and Non-Executive Directors appointed from within the company), to Executive Directors on their business execution as part of the Board of Directors function while taking advantage of the company through the Audit & Supervisory Board system.

<Board of Directors>
The Company has a Board of Directors to serve as a body for making important decisions and overseeing management. The Board of Directors mainly acts in an oversight and advisory role and delegates the decision-making authority over business execution to the Representative Directors and subordinate Corporate Executive Officers to the broadest extent that is permitted by law and the Articles of Incorporation of the company and is considered to be reasonable. Moreover, the Board of Directors has been formed with Non-Executive Directors at its core so as to enable correction and remediation of errors, insufficiencies, and recklessness in business execution. And by ensuring that External Directors, who are highly independent and hold diverse perspectives, constitute the majority of the members of the Board of Directors, the oversight and advisory function of the Board of Directors is strengthened. Furthermore, in order to better define the management responsibility of the Directors, their terms were reduced from two years to one year in accordance with a resolution at the June 23, 2006 Annual Shareholders’ Meeting.

As of December 23, 2021, the Board of Directors consists of nine members in total, comprising three Executive Directors and six Non-Executive Directors (including five External Directors).

The Company held 14 meetings of the Board of Directors in FY2020 (including two extraordinary Board of Directors meetings) to discuss the formulation of the Management Direction and measures for its implementation as well as to decide a new management system based on the recommendation by the Executive Nomination Committee.

<Audit & Supervisory Board>
The Company has an Audit & Supervisory Board that performs the auditing and oversight functions. The auditing and oversight functions are carried out by Audit & Supervisory Board Members, who review the Board of Directors as well as business execution functions and attend important meetings, including meetings of the Board of Directors. As of December 23, 2021, the Audit & Supervisory Board has four members, comprising two full-time Audit & Supervisory Board Members and two External Audit & Supervisory Board Members. The Audit & Supervisory Board held eight meetings in FY2020, mainly to discuss audit policy and plans, the audit method of the Accounting Auditors and the appropriateness of the audit results, and the key audit matters. Internal Audit Departments made reports and full-time members of the Audit & Supervisory Board reported matters of importance to External Audit & Supervisory Board Members, which were discussed at Audit & Supervisory Board meetings.

The activities of Audit & Supervisory Board Members during FY 2020 included attending, and expressing opinions at, meetings of the Board of Directors, meetings of Independent Directors and other important meetings, inspecting important approval documents, exchanging opinions with Representative Directors, auditing operations of the head office and subsidiaries, exchanging information with auditors of subsidiaries, hearing reports from Accounting Auditors, hearing the status and results of an audit from the Internal Audit Department, and hearing the status of whistle-blowing activities from the Compliance Department.

In addition, with respect to the key audit matters that were adopted in FY 2019, we continued to hold a suitable number of discussions and deliberations with Accounting Auditors in FY 2020. The discussion topics were potential risks of material misstatements in the consolidated financial statements and impacts of, and developments in, material events, etc. that occurred in FY 2020.

<Independent Directors & Auditors Council>

In response to the requirements of Japan’s Corporate Governance Code, which facilitates the activities of Independent Directors and Auditors, and in order to invigorate discussions on the medium- to long-term direction of the Company at its Board of Directors Meetings, the Company believes it essential to establish a system that enables Independent Directors and Auditors, who maintain a certain degree of separation from the execution of business activities, to consistently gain a deeper understanding of the Company’s business. Based on this recognition, the Company established the Independent Directors and Auditors Council, which consists of all Independent Directors (five Independent Directors and two Independent Auditors). The members of the Council discuss the medium- to long-term direction of the Company, share information, and exchange views so that each can formulate their own opinions.

In FY2020, the Independent Directors and Auditors Council met nine times. The members shared information and exchanged views on the Company’s management direction, the scope of business of the Company and of the Fujitsu Group, etc. Based on the knowledge gained through the Council, each Independent Director and Auditor provided advice to the Board of Directors.

<Executive Nomination Committee & Compensation Committee>
The Company has established the Executive Nomination Committee and the Compensation Committee as advisory bodies for its Board of Directors to ensure the transparency and objectivity of its process for nominating Directors and Audit & Supervisory Board Members and its process for determining executive compensation as well as to ensure the fairness of the method and the level of executive compensation.

The Executive Nomination Committee deliberates on candidates for Director and Audit & Supervisory Board Member positions in accordance with the Framework of Corporate Governance Structure and the Procedures and Policy for nomination/dismissal of Directors and Auditors stipulated in the Company’s Corporate Governance Policy and provides its recommendations or proposal to the Board of Directors. In addition, the Compensation Committee provides its recommendations or proposal on the level of base compensation and the method for calculating performance-based compensation to the Board of Directors in accordance with the Procedures and Policy for Determining Directors and Auditors Compensation stipulated in the Company’s Corporate Governance Policy.

The members of each committee appointed in July 2021 are as follows. Additionally, the secretariats of both committees are operated by the Company’s HR and legal departments.

  • Executive Nomination Committee
    Chairperson: Atsushi Abe (Independent Director and Chairman of Board of Directors)
    Members: Yoshiko Kojo, Scott Callon (Independent Directors), Masami Yamamoto (Director and Senior Advisor)
  • Compensation Committee
    Chairperson: Chiaki Mukai (Independent Director)
    Members: Yoshiko Kojo, Scott Callon, Kenichiro Sasae (Independent Directors)

Following the July 2020 appointment of members to the two committees, up to the end of FY2020 the Executive Nomination Committee met three times to discuss the election of Representative Directors (including the CEO) and the nomination of candidates for Director, etc. The Compensation Committee met twice to discuss the level of compensation for Directors and Auditors, the composition ratio, etc. Both committees provided recommendations to the Board of Directors.

The diagram below illustrates the Company's corporate governance structure.

Corporate Governance Structure

Reasons for Adoption of Current Corporate Governance System

We believe that both direct oversight of business execution by Non-Executive Directors and oversight by Audit & Supervisory Board Members who remain distant from the decision making and operation of business execution should work jointly to ensure highly effective oversight performance. The company has adopted the "company with Audit & Supervisory Board” model where an Audit & Supervisory Board, composed of the Audit & Supervisory Board Members, is established and appointed as an independent agent.

The Board of Directors is composed mainly of at Non-Executive Directors as Executive Directors to ensure its capacity to correct faulty, insufficient, or excessive business executions, and external directors constitute majority of the members of Board of Directors. At least one Non-Executive Director is appointed from within the company to complement the External Directors’ knowledge in business fields and the corporate culture of the company so that the efficiency of oversight performance by the Non-Executive Directors is enhanced.

Policy for Determining Executive Compensation

Compensation paid to Directors and members of the Audit & Supervisory Board is determined based on the policy on the determination of the details of compensation, etc. for individual Directors established by the Board of Directors, subject to approval by the Compensation Committee.

Basic Approach to the Internal Control System

To continuously increase the corporate value of the Fujitsu Group, it is necessary to pursue management efficiency and control risks arising from business activities. Recognizing this, the Board of Directors have formulated the "Policy on the Internal Control System", which provides guidelines on: a) how to practice and promote the Fujitsu Way, the principles that underlie the Fujitsu Group’s conduct; and b) what systems and rules are used to pursue management efficiency and control the risks arising from the Company’s business activities.

See below for the full text of the Policy on the Internal Control System and an overview of the operating status of the systems tasked with ensuring appropriate business practices.

Disclosures Relating to Corporate Governance

Board of Directors (as of June 28, 2021)

 NamePosition and ResponsibilitiesRepresentation AuthorityIndependent Officer
Business executedTakahito TokitaCEO, CDXO, Chairman of the Risk Management & Compliance Committee 
Hidenori FurutaCOO, CTO 
Takeshi IsobeCorporate Executive Officer, SEVP, CFO  
Non-executiveMasami YamamotoSenior Advisor  
Chiaki Mukai  
Atsushi AbeChairman of the Board of Directors 
Yoshiko Kojo  
Scott Callon  
Kenichiro Sasae  

FY2020 Attendance at Meetings of the Board of Directors or Audit & Supervisory Board

MeetingNumber of MeetingsAttendance Rate
Board of Directors1499.2%*
Audit & Supervisory Board897.9%**

* Of the nine members of the Board of Directors, eight attended every meeting, with only Yoshiko Kojo missing one of the 14 meetings.
** With the exception of Koji Hatsukawa (who attended seven of the eight meetings), the other members of the Audit & Supervisory Board attended every meeting.

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