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 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

The main businesses of Fujikura are organized into two in-house Companies (the Power & Telecommunication Systems Company, and the Electronics, Automotive & Connector Business Company). An executive director is assigned to each 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 these executive directors on items exclusive to the in-house company and on matters posing a relatively minimal degree of risk. Fujikura therefore delegates a significant amount of authority to the executive directors in charge of management of the in-house companies. Fujikura is working to strengthen the structure for business execution further in light of the losses incurred in business operations in past years. One of the steps we are taking is to build a system that enables Fujikura to predict risks, analyze and thoroughly investigate them, and mount a rapid response when a risk materializes.

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

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Officers List

Officers Photo

Please refer to this page for officers.

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.

- Major business partner of the Fujikura Group*1, or a person who executes business for said business partner*2
- Person for which the Fujikura Group is a major business partner, or a person who executes business for said person
- Shareholder with 10% or more of total voting rights in Fujikura, or a person who executes business for said shareholder
- Person who receives substantial compensation*3 in money or other forms from Fujikura or its subsidiaries, other than compensation received as an outside officer, or a person who executes business for said person

※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.

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 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

Masaaki Shimojima

Focusing even more comprehensively on risk management to achieve structural reform of businesses
I have mainly voiced my opinion on how to handle risk management in investment projects, based on my experience in screening credit for overseas projects in the financial institutions where I worked previously.
On the Remuneration Advisory Committee, I am also putting effort into ensuring transparency in compensation of executive directors and building a performance-linked compensation system that proves strong incentives to achieve plans.
Fujikura’s performance deteriorated substantially when the company found itself unable to respond to the rapid changes in market environment and customer trends in the key businesses of optical fiber and FPC (flexible printed circuits). The company is currently working on an operational turnaround.
Bold business structural reforms and speed in achieving these reforms are needed to succeed in turning around operations and meet the expectations of stakeholders.
I view it as my role to continue to voice my opinion from an objective standpoint as an outside director on decisive structural reforms and strengthening risk management even more to achieve a rapid recovery in investment from this point forward.
Fujikura possesses technological capabilities developed over its long history and many outstanding human resources who want to improve the company.
I am certain that Fujikura can succeed in the operational turnaround that will lead the company into the next generation if all employees unite as one team.

Kenichiro Abe

Contributing to appropriate decision-making as a professional in finance and audits
Since I became an outside auditor in 2013, I have toured business locations in Japan and overseas and provided my opinion on management issues and other matters based on cases at other companies and other knowledge.
I am contributing to enhancing the corporate value of Fujikura by working as a team with other outside directors with different areas of expertise, based on my experience in finance, auditing, and global business.
Fujikura has entered the operational turnaround phase and the business environment is severe. We are therefore engaging in even more in-depth constructive debates in Board of Directors meetings and I believe that the company is successfully implementing strategic governance aimed at future growth.
As a member of the Remuneration Advisory Committee, I am also verifying the director performance evaluations appropriately and considering the functioning of the compensation system with an eye toward the future.
As a certified public accountant and outside director, my first priority is to pursue the facts and exercise supervisory oversight of accurate financial statements. This supports appropriate decision-making by Fujikura.
I will first support the successful completion of the operational turnaround phase to realize the sustained growth that Fujikura has achieved over the course of its more than 130-year history.

Yoshio Shirai

Urging transformation of the corporate culture with a focus on the post-turnaround vision
Fujikura produced extremely poor business results in FY2019.
Structural issues that must be overcome emerged in each business and it is my view that sustained growth cannot be anticipated with the business model Fujikura has operated under thus far.
As the chairperson of the Nominating Advisory Committee, I have met individually with each director and sorted through and shared the issues faced by management.
The Nominating Advisory Committee met every month in FY2020. We spent much time on selecting the talent that will carry Fujikura forward in the future, including a succession plan for CEO, and considering organizational structural reforms with the goal of achieving a fresh start for the company.
It is precisely the circumstances demanding operational execution and necessitating a switch in business models under the COVID-19 pandemic that are providing an excellent opportunity to transform the corporate culture into one that will foster a sense of unity aimed at achieving sustainable growth of Fujikura.
While the operational turnaround is currently the top priority, I will contribute to discussions on the medium and long-term vision and global organizational structure for Fujikura to enable the Fujikura to continue as truly global company.

Tsuneko Murata

Contributing to enhancement of corporate value by increasing the soundness and transparency of management and satisfaction of customers and employees
Fujikura faced an unprecedented deterioration in performance in 2020. The company is currently in the middle of business reforms and I think it is necessary, now more than ever, for the company to rededicate itself to the spirit of innovation that has been passed down in an unbroken chain from the founders over the course of Fujikura’s more than 130-year history, steadily, persistently, and with single-minded dedication.
I believe that the role of an outside director is to firmly communicate necessary opinions, even when they are hard for management to hear.
We must take this to heart and make sure that a “see no evil, speak no evil, hear no evil” approach is never taken. I think it is important to state my opinions from the dual strategic and defensive perspectives of compliance and risk management.
For corporate governance to function effectively, I think it is important for outside directors to understand the actual conditions on the frontlines as well. I attend the audits and interviews by full-time Audit & Supervisory Committee members to the extent possible, and I believe that this enables me to confirm actual business conditions on the frontlines and my insights, and leads to providing constructive opinions and advice.
I also think that employee satisfaction (ES) is important to achieving customer satisfaction (CS), and achieving both enhances corporate value.
I will continue to work to improve management soundness and transparency while also contributing to the enhancement of corporate value to enable Fujikura to achieve sustainable growth as a company that employees also find it easy to work at, and to enable Fujikura to earn the trust of shareholders, customers, business partners, and all other stakeholders.

Hamako Hanazaki

Striving to strengthen risk management from a long-term perspective
I have confronted challenges that Fujikura is experiencing by communicating with employees who work on the frontlines since I became an outside director last year.
While the current business conditions are extremely severe, I regard these conditions as the launching point to restoring earning power and sustainable growth in the future.
Fujikura is currently aiming to complete the operational turnaround phase and is focusing on enlisting the entire company in restoring performance quickly. However, I have an important mission as an outside director to state my opinion on what the vision of the company should be from a long-term perspective.
One long-term issue is establishing a risk management structure.
As an attorney, I use my legal knowledge and past experience to consider the balance between the creation of firm rules in company management and making sure that the rules do not hinder innovation. I recognize how extremely important my role is in supporting system design and operation.
The severe business environment will probably persist, but the telecommunication business has achieved a certain degree of success in expanding profits even amid the COVID-19 pandemic and I want everyone to look forward to completion of the turnaround phase and future successes.

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.