Organizational Governance Corporate Governance Efforts on Corporate Governance Fujikura believes the corporate governance system discussed herein is optimal for achieving its growth strategies. In light of this, Fujikura has adopted the “company with audit and supervisory committee” organizational structure to establish the corporate governance system outlined herein. (1) Enhancing the Decision-making Capabilities of the Board of Directors Fujikura needs to build a structure whereby the Board of Directors thoroughly and extensively explores important matters, including the annual and mid-term business plans, which are the core of our growth strategies, and large-scale M&A deals, so that proper decisions can be rendered. To facilitate this approach, in addition to our internal executive directors, who are well-versed in the businesses managed by each in-house company, Fujikura also plans to enlist several outside directors to take advantage of their diverse knowledge and objective opinions, which are not influenced by Fujikura’s internal state of affairs. Fujikura believes that engaging outside directors will facilitate the establishment of a structure whereby the Board of Directors can thoroughly and extensively explore and discuss vital matters to arrive an optimal decision. At present, there are four outside directors: two with corporate management experience (in the finance and manufacturing industries, respectively) and two others (one a lawyer and the other a certified public accountant). (2) Delegation of Authority to Directors Engaging in the Execution of Business Operations The main businesses of Fujikura are organized into three in-house companies (the Power & Telecommunication Systems Company, Electronics business Company, and Automotive Products Company). An executive director is assigned to an in-house company to handle oversight. Fujikura believes that a flexible system needs to be put in place to facilitate quick and decisive decision-making by said executive directors on items exclusive to the in-house company and on matters with a relatively minimal degree of risk. To this end, Fujikura plans to delegate a significant amount of authority to the executive directors in charge of management of the in-house companies. And also Fujikura has set up a Nominating Advisory Committee and Remuneration Advisory Committee, both composed of a majority of outside directors, to nominate individuals to the position of executive director and to decide on appropriate remuneration. There is a system in place to ensure each committee objectively evaluates candidates and remunerations. Fujikura believes this boosts incentives to motivate executive directors to improve the performance of the in-house company they are put in charge of. Nominating Advisory Committee At Fujikura, the Nominating Advisory Committee (the majority of committee members are outside directors and the committee is also chaired by an outside director), an advisory body to the Board, discusses nomination criteria for director candidates. The committee then submits director candidates, based on the set criteria it set, to the Board of Directors. Based on the advice of the committee, the Board then submits a proposal for director candidates to be voted upon at the general meeting of shareholders. Remuneration Advisory Committee At Fujikura, the Board of Directors decides on remuneration of each individual director. (1) Results of surveys, conducted by several research institutes of primarily publicly listed companies, are used as a reference. (2) The Board also receives a report from its advisory body, the Remuneration Advisory Committee (the majority of committee members are outside directors and the committee is also chaired by an outside director). The Board of Directors uses this information to determined individual director remuneration. The Remuneration Advisory Committee discusses the performance evaluation of each director, whether remuneration standards for each position are in line with the market, and the remuneration system. The committee submits a report on individual director remunerations, which take into account findings for each of the areas discussed. The Board of Directors then issues a decision on director remuneration based on the committee’s report. In specific, the director remuneration system consists of three components: basic compensation, short-term performance-based compensation, and stock-based compensation. The details of each component of compensation are as follows. Basic compensation The compensation for the monitoring and supervision functions of each director, which is a fixed amount according to his/her rank. Short-term performance-based compensation Compensation varies within a range from 0% to 200% of a base amount which is set by his/her rank, reflecting certain indicators used to measure corporate performance or the performance of the division under the director’s oversight (operating income ratio, return on equity (ROE), and return on invested capital (ROIC). Stock-based compensation In addition to the monetary compensation in (1) and (2) above, Fujikura also grants shares of Fujikura Ltd. as compensation. This scheme is intended to enhance the motivation of directors towards contribution to an increase in corporate value of Fujikura by placing directors in a position to enjoy the merit of a rising share price as well as to bear the risk of a falling share price, whereby directors and shareholders share the merit and demerit of such fluctuations. The above compensation system represents a compensation system for executive directors only, and compensations for non-executive directors, in light of their duties, will comprise exclusively a fixed amount as basic compensation, and will not include short-term performance-based compensation or stock-based compensation. Corporate Governance Structure Female Director There is no female director. Outside Directors Fujikura has a total of 14 directors, of which four (4) are independent outside directors. The independent outside directors have a diverse background. One (1) is a lawyer, one (1) is a CPA, and two (2) have management experience (finance and manufacturing industries). These independent outside directors actively participate in discussions held by the Board of Directors and use their diverse knowledge and specialized expertise to offer up opinions. Furthermore, the incorporation of objective opinions not influenced by internal circumstances at Fujikura into Board discussions contributes to the enhancement of the Board of Directors’ decision-making. The following are criteria for determining independence of outside directors at Fujikura. Fujikura has determined that the four (4) outside directors satisfy all of the following requirements to serve as an independent outside director. Standards and qualifications for determining the independence of independent outside directors A candidate must satisfy independence standards and qualifications. The candidate is not deemed independent should they, their spouse and children (dependents), and relatives to the second degree that either currently meet or in the most recent three-year period have met one of the following criteria. a. A major client of the Fujikura Group*1 or a person who executes business for a major client of the Fujikura Group*2 b. A person/company for which the Fujikura Group is a major client or a person/company that executes business for said person/company c. A shareholder with 10% more of total voting rights in Fujikura or a person who executes business for said shareholder d. A person receiving substantial contributions*3 from Fujikura or one of its subsidiaries, in addition to remuneration as an outside director or a person executing business for said person *1Major client refers to a person/company that accounts for 1% or more of Fujikura’s consolidated net sales or a person/company that earns 1% or more of their consolidated net sales from Fujikura *2Person/company executing business on someone’s behalf refers to a director engaging in the execution of business operations or an employee working under said director *3Substantial contributions refers to annual amounts in excess of ¥10 million yen Corporate Governance Code The status of corporate governance including our response to corporate governance code is announced in "Corporate Governance Report" published in "Investor Relation" - "Corporate Governance". Responsibility to Stakeholders Regulations on respect of stakeholders' position by internal regulations In April 2009, we established the Fujikura Group CSR Philosophy, the Fujikura Group CSR Basic Principles, and the Fujikura Group CSR Activity Guidelines. We have established six stakeholders ("Customers", "Employees (including family members)", "Investors and shareholders", "Business partners", "Communities", etc.) that are particularly involved, and these stakeholders We believe that it is important for companies to fulfill their social responsibilities to disseminate information on corporate activities in a timely and appropriate manner and to make use of their expectations and opinions from stakeholders for future group management It is working. Conduct of environmental conservation activities and CSR activities We are implementing a wide range of initiatives related to the environment, society and corporate governance, which are three aspects of CSR. Regarding these efforts, we prepare "CSR Integration Report" every year and publish it on our website. We will continue to widely inform stakeholders about our company's CSR activities approach and efforts. Next>>
