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 decision-making by the Board of Directors
The Company thinks it important to build a structure that enables the Board of Directors to make decisions after sufficient, thorough deliberation of the annual and mid-term business plans, large M&A deals, and other matters that are central to the policy and growth strategy of the Company. We therefore elect multiple outside directors who possess a broad range of expertise and have objective opinions that are not influenced by internal company circumstances, in addition to electing internal executive directors who are well-versed in and oversee the business of each in-house company. We think this enables the Board of Directors to engage in sufficient, thorough deliberation in making decisions on important matters.
At present, there are five outside directors: Three with corporate management experience (in finance, manufacturing, and legal affairs and risk management, respectively) and two others (one attorney and one certified public accountant).v
Delegation of authority to executive directors
Strengthening the supervisory function of the Board of Directors
The Company has established an effective system of internal controls to ensure the legality and appropriateness of the performance of duties by each executive director to whom the Board of Directors has delegated broad authority.
The Board of Directors has also strengthened the function for supervising each executive director by appointing multiple outside directors who are independent from the company’s management.
The Board of Directors also believes that establishment of a structure that ensures objectivity and transparency in evaluating the performance of executive directors appropriately contributes to strengthening the supervisory function of the Board of Directors. To achieve this, Fujikura has established a Nominating Advisory Committee and a Remuneration Advisory Committee, the majority of members of which are outside directors. The Board of Directors makes decisions on nomination and remuneration of executive directors after such matters have been discussed in these committees. This ensures the objectivity and transparency of the decision-making process.
Corporate Governance Structure
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.
Based on the findings of this survey, Fujikura works to strengthen the structure to specifically ensure that 1) explanations of Fujikura’s products and individual businesses are provided to outside directors to give them a deeper understanding of the company and thereby further enhance deliberations by the Board of Directors and 2) strengthen the structure to enable prediction, analysis, and investigation of risks, and rapid response when a risk materializes in operating divisions, to take the risk of incurring losses in business operations into consideration.
Policy and procedures followed by the Board of Directors to determine remuneration for executive management and directors
In addition to handling a large variety of products, Fujikura operates its business globally, and director duties are also highly complex and varied. Our basic policy is that the director remuneration should be at a level appropriate for outstanding human resources who are capable of accomplishing such duties. We have therefore classified director remuneration into the following three specific categories, based on the survey results from multiple research groups, mainly on listed companies. We have established a system of remuneration based on objective indicators and evaluation, while also strengthening the link to performance.
Fujikura’s Board of Directors determines the amount of remuneration for directors who are not audit and supervisory committee members after it has been discussed by the Nominating Advisory Committee, which is an advisory body to the Board of Directors (and consists of the director in charge of human resources and three outside directors, and chaired by an outside director). The Remuneration Advisory Committee evaluates the performance of each director, examines whether the level of compensation is in line with the market, and confirms that the decision-making process concerning the remuneration structure and specific remuneration is appropriate. It then reports the results to the Board of Directors. The Board of Directors then takes these findings into consideration in determining the remuneration of directors who are not audit and supervisory committee members.
|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 ranges from 0% to 200% of the basic compensation set by rank, according to corporate performance and performance of the division the director is in charge of, and performance is based on certain indicators (operating margin, ROE, ROIC). These indicators are used because they easily reflect management policy, strongly correspond to shareholder return, and are highly compatible with the Fujikura’s growth strategy.|
|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 to contribute to an increase in the corporate value of Fujikura by placing directors in a position to enjoy the advantage of a rising share price as well as to bear the risk of a falling share price, so that directors and shareholders share the advantages and disadvantages of such fluctuations.|
Messages from Outside Directors on Enhancing Corporate Value
Focus on More Intensive Risk Management through Active Discussions
Contributing to the Enhancement of Corporate Value using Teamwork Based on My Experiences at Other Companies
Supporting a Balance between High Value Added Monozukuri and Profitability/Efficiency
Committed to Enhancing Management’s Soundness and Transparency to Earn the Trust of Stakeholders
Supporting Fujikura’s Management from a Legal Perspective Mindful of Society
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 (FY2018)
|Results briefing||4 times (1Q, 3Q is a telephone conference format)|
|Overseas IR||3 times|
|Individual interview||30 companies (including telephone conference format)|