NEC 2007 Annual Report Download - page 35

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of business units and other members. This committee deliberates and reports on matters related to the status of
business execution, such as monitoring progress with respect to meeting budgets set by the Board of Directors,
with the aim of sharing management information and optimizing business execution.
Compensation Committee
NEC has established the Compensation Committee, which consists of five members, including two outside
members, one of whom is the chairperson. This committee deliberates on the remuneration system and level
of compensation for directors and corporate officers from an objective perspective. The Compensation
Committee reports the results of its deliberations to the Board of Directors.
Corporate Auditors
NEC has adopted the corporate auditor system and established the Board of Corporate Auditors pursuant to
Japan’s Company Law. Five corporate auditors, three of whom are outside corporate auditors*2, audit the
directors’ performance of duties. Furthermore, the Board of Corporate Auditors decides on audit policies
and other matters, and receives status reports on audits from each corporate auditor and on other matters.
The corporate auditors are stepping up cooperation with the independent auditor, such as by receiving
briefings on financial audits covering status reports on their audits and audit plans, and exchanging opinions
on their audits. Furthermore, the duties of the Board of Corporate Auditors include approving, as necessary,
NEC’s and its subsidiaries’ engagement of independent auditors to perform audit and other services, pursuant
to the U.S. Sarbanes-Oxley Act.
*2 Outside corporate auditors as stipulated in Item 16 of Article 2 of the Company Law of Japan
Internal Audit Division
NEC has established the Corporate Auditing Bureau as an internal audit division reporting directly to the
president of NEC. This bureau mainly consists of such staff members as with expertise in internal auditing.
The Corporate Auditing Bureau performs audits of the NEC group in cooperation with the internal audit
divisions of NEC subsidiaries to ensure legal, appropriate and efficient execution of business activities, and
identifies issues and proposes improvements.
The Corporate Auditing Bureau is taking steps to strengthen cooperation with the corporate auditors.
These steps include reporting and exchanging opinions on audit results regularly or as necessary with the
corporate auditors, and reporting on the status of NEC Helpline, a compliance hotline for employees to
discuss or report issues concerning possible breaches of corporate ethics or compliance.
Internal Control System
NEC has established and operates an internal control system in which endeavors to constantly improve and
strengthen this system. In accordance with Japan’s Company Law, NEC’s Board of Directors formulated a
basic policy on establishing an internal control system, structured to ensure appropriate corporate business
operations. This policy is disclosed on NEC’s website at the following URL:
http://www.nec.co.jp/profile/en/internalcontrol.html
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