Fujikura Ltd.

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Corporate Governance

Basic Views on Corporate Governance

Fujikura Ltd. believes the corporate governance system discussed herein is optimal for achieving the company’s growth strategies. Fujikura has adopted a “company with Audit and Supervisory Committee” organizational structure to establish such a corporate governance system.

Enhancing the Decision-Making Capabilities of the Board of Directors

Fujikura believes 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, large-scale M&A deals, etc., needs to be built so that proper decisions can be rendered. To facilitate this approach, Fujikura believes that a system can be realized that allows the Board of Directors to thoroughly and extensively explore and discuss vital matters to arrive at an optimal decision by having in addition to our internal executive directors, who are well-versed in the businesses managed by each In-house Company, a plurality of outside directors who have diverse knowledge and objective opinions, which are not influenced by Fujikura’s internal state of affairs.

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).

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, the Electronics Business Company, and the 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 delegates a significant amount of authority to the executive directors in charge of management of the In-house Companies.

Also, Fujikura has set up a Nominating Advisory Committee and a Remuneration Advisory Committee, both composed of a majority of outside directors, to nominate individuals to the position of executive director and to decide on remuneration, respectively. Each committee objectively evaluates candidates and remunerations, and Fujikura believes this boosts incentives for executive directors to improve the performance of the In-house Company they are put in charge of.

Corporate Governance Structure

Corporate Governance Structure

Each Committee's Member

Each committee's member

Officers List

Matters Related to Independent Officers

Fujikura designates all outside directors that satisfy the criteria for independent officers as independent officers.

Criteria for Independence

An individual does not have independence if any of the following applies, has applied in the most recent three-year period, or applies to a spouse, or to a first or second-degree relative.

  • ※1Major business partner: Person or company that accounts for 1% or more of Fujikura’s consolidated net sales, or person or company that earns 1% or more of its consolidated net sales from Fujikura
  • ※2Person who executes business: Executive director or employee working under said director
  • ※3Substantial compensation: Annual amounts in excess of ¥10 million yen

Analysis and Evaluation of the Effectiveness of the Board of Directors

A survey is conducted on the effectiveness of the Board of Directors and applies to all directors. The survey includes questions on the adequacy of Board meetings overall (time, frequency, management of meeting proceedings, minutes, etc.), adequacy of agenda items (timing, importance, volume of information, etc.), aspects of Board members (participation in discussions, etc.), and executive office function. Fujikura considers the results of the survey and takes remedial measures as necessary.

Specifically, in order to further enhance the deliberation of the Board of Directors, aimed at obtaining a deeper understanding from outside directors, Fujikura holds briefing sessions on its products and individual projects for outside directors, and prepares for important matters in advance with briefing sessions.

Directors Remuneration

At Fujikura, the Board of Directors decides on remuneration of each individual director based on (1) results of surveys - conducted by several research institutes of primarily publicly listed companies - used as a reference, and (2) a report received 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 Remuneration Advisory Committee discusses the performance evaluation of each director, whether remuneration standards for each position are in line with the market, as well as the remuneration system. The committee submits a report on individual director remunerations, which takes 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.

The above compensation system represents a compensation system for executive directors only, and compensations for non-executive directors, in light of their duties, comprises exclusively a fixed amount as basic compensation, and does not include short-term performance-based compensation or stock-basedcompensation.

Remuneration Classification

Classification Detail
Basic compensation 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) are such indicators).
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.

Policy on Strategic Share Holdings

Fujikura does not, in principle, hold shares as a policy. However, in the course of its business activities, it is necessary for Fujikura to enter into strategic business partnerships, in which case Fujikura strategically holds shares of its partners exclusively if it contributes to an increase in corporate value over the mid to long-term.

In addition, Fujikura sells off shares that it has decided to stop holding, and the Board of Directors receives reports on the sell-off of these shares. The Board of Directors determines whether the shares that Fujikura holds should continue to be held. In making this decision, the Board of Directors treats the shares as capital invested in each In-house Company, and it considers whether holding the shares would contribute to the above purpose.

Measures to Ensure That Corporate Pension Funds Perform Their Role as an Asset Owner

Fujikura has established a corporate pension fund (the Fujikura Corporate Pension Fund) to which it has entrusted the management of Fujikura’s pension assets. Fujikura Corporate Pension Fund subcontracts the entire management of the assets to asset management firms and monitors the management of those assets.

Fujikura takes care to provide Fujikura Corporate Pension Fund with the necessary personnel and organizational structures to ensure that the fund can monitor the asset management firms (which manage the assets in practice) effectively.

Communication with Shareholders and Investors

Fujikura promotes initiatives by which the President and senior management can engage in dialogue with shareholders and investors as a means to achieve sustainable growth and increase corporate value over the mid to long-term.

Fujikura places a director in charge of handling constructive dialogue to ensure the effectiveness of dialogue and information disclosure, under whom the IR Group of the Corporate Strategy Planning Division is set up and that cooperates with related departments to conduct a timely, fair, and adequate disclosure of information.

For the purpose of preventing the leakage of financial information and ensuring fairness, Fujikura has established a quiet period. During this quiet period, Fujikura does not make any comments about its financial information neither responds to questions about this information. In addition, pursuant to its internal information management rules, Fujikura endeavors to prevent the leakage or proliferation of important information, and to prevent insider trading.

Announcement of Financial Results, Press Release

Fujikura and the Fujikura Group are making efforts to disclose information promptly, including disclosure on the Tokyo Stock Exchange and release to press. On the "Investor Information" page of the Fujikura website, we will post the quarterly financial disclosure schedule, quarterly performance disclosure material, medium-term management plan material, new business, research development results, press release of the establishment of a new company, in Japanese / English We are trying to enrich it, including posting in.

Activities for Institutional Investors

In Japan, we provide quarterly accounts settlements for institutional investors and securities analysts. During the interim period and fiscal year-end, the top executives explain the results and the progress of the mid-term plan at the results presentation meeting.

Overseas, the president and director in charge of IR visit Europe, North America and Asia directly to institutional investors to explain our business outline, account settlement explanation, and medium-term management plan. In addition, we visit investors as appropriate, and we are trying to enhance dialogue by having a forum for exchanging opinions on the general meeting of shareholders, corporate governance system, ESG etc.

Activities for Individual Investors

In addition to sending a business report, we provide information on a website in a timely manner to individual investors, and the IR Group handles inquiries about business results as a contact point.

IR Activities (FY2017)

Classification Results
Results briefing 4 times (1Q, 3Q is a telephone conference format)
Overseas IR 3 times
Individual interview  248 companies (including telephone conference format)