Fujitsu 2011 Annual Report Download - page 80

Disclosed Policy on Calculation and Determination of Compensation Amounts
Executive Compensation Policy
To secure exceptional human resources required to manage the Fujitsu Group as a global ICT company, and to further strengthen the link
between its financial performance and shareholder value, while at the same time improving its transparency, Fujitsu establishes its Executive
Compensation Policy as follows.
Executive compensation is comprised of the following: “Basic Compensation”, specifically a fixed monthly salary in accordance with position
and responsibilities; “Stock-based Compensation”, which is a long-term incentive that emphasizes a connection to shareholder value; and
“Bonuses” that are compensation linked to short-term business performance.
Basic Compensation
• Basic compensation is paid to all directors and auditors, in accordance with position and responsibilities, as compensation for work responsi-
bilities with regard to management oversight and the carrying out of executive responsibilities.
Stock-based Compensation
• Stock-based compensation, intended for directors responsible for carrying out executive duties, is a long-term performance incentive, with the
amount to be paid determined based on a qualitative evaluation of medium- to long-term initiatives.
• Stock-based compensation is to be paid for the purchase of the company’s own shares. These purchases are to be made through the Director
Stock Ownership Plan. Shares purchased for this purpose are to be held by each director for the term of his or her service.
Bonuses
• Bonuses are short-term performance incentives to be paid to directors who carry out executive responsibilities. The amount of a bonus is to
reflect business performance in the respective fiscal year.
• As a specific method to calculate a bonus, Fujitsu will adopt a “Profit Sharing model” which uses consolidated operating income and consolidated
net income as an index. However, bonuses will not be paid in the event of negative net income recorded under non-consolidated accounting.
In accordance with a resolution of the Annual Shareholders’ Meeting, the total amount of basic compensation, stock-based compensation
and bonuses shall not exceed 600 million yen per year for directors and 150 million yen per year for auditors.
[Support Structure for Outside Directors and Outside Auditors]
Certain staff members of the Secretary Office are responsible for providing support to outside directors and outside auditors. In addition, the
Legal Unit (Secretariat of Board of Directors) and the Auditor’s Office (Secretariat of Board of Auditors) are also responsible for providing support
to outside directors and outside auditors. This responsibility involves complying with requests from outside directors or outside auditors to provide
and explain information about Fujitsu or the entire Fujitsu Group that is required for management oversight or audits. Depending on the infor-
mation, relevant business unit managers are made available to provide additional explanations. We also provide a dedicated webpage for all
board members (directors and auditors) to use to access material relevant to Board of Directors’ meetings, such as agenda items, before meet-
ings are held in order to allow board members to gain a proper understanding of the material.
The above measures are intended to provide indirect support to help outside directors and outside auditors provide effective management
oversight and auditing of the execution of duties throughout the entire Fujitsu Group by facilitating mutual communication during internal
audits, statutory audits and accounting audits.
2. Issues Relating to Functions for Business Execution, Auditing, Oversight, Nominating, and Compensation
Decisions Overview of Current Structure (Overview of Current Corporate Governance Structure)
The Company has a Board of Directors to serve as a body for overseeing management. The Board of Directors is responsible for management
oversight, supervising the business execution functions of the President and Representative Director and the Management Council, an executive
organ under its authority. Moreover, outside members of the board are actively recruited for positions in the Board of Directors in order to
strengthen its oversight function. The Management Council deliberates upon fundamental policies and strategy regarding business manage-
ment, as well as makes decisions on important matters regarding business execution. Issues discussed by the Management Council and a sum-
mary of its discussions are reported to the Board of Directors, which makes decisions on items of particular importance. In principle, the
Management Council meets three times a month, but meetings may be convened whenever necessary.
The company has a Board of Auditors, who perform the auditing function. The auditing function is carried out by auditors, who review the
Board of Directors as well as business execution functions and attend important meetings, including meetings of the Board of Directors as well as
the Management Council. The Auditing Support Division provides support for the audits by the auditors, and in order to promote the indepen-
dence and effectiveness of the auditing, the company holds discussions with auditors prior to selecting candidates for positions in the division.
Personnel with the appropriate qualifications are selected as division staff candidates, and as a general rule, as full-time staff.
The Board of Directors has 11 members, comprising seven internal directors and four outside directors, and the Board of Auditors has five
members, comprising two internal auditors and three outside auditors. In order to better define the management responsibility of the directors,
their terms were reduced from two years to one year in accordance with a resolution at the June 23, 2006 Annual Shareholders’ Meeting.
In addition, the Corporate Internal Audit Unit (with 64 members) serves as an internal audit group. This unit audits the internal affairs of the
entire Fujitsu Group in cooperation with the internal audit groups of each Group company. The Corporate Internal Audit Unit reports once a
month as a rule to the statutory auditors on the audit plans and results of internal audits, including matters relating to group companies, and
makes regular reports (once every quarter as a rule) to the Board of Auditors and the accounting auditors. The Corporate Internal Audit Unit
FUJITSU LIMITED ANNUAL REPORT 2011078
CORPORATE GOVERNANCE