Fujitsu 2013 Annual Report Download - page 85

2. Issues Relating to Functions for Business Execution, Auditing, Oversight, Nominating, and Compensation
Decisions (Overview of Current Corporate Governance Structure)
Overview of Current 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, external 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 an Audit & Supervisory Board that performs the auditing function. The auditing function is carried out by Audit & Supervi-
sory Board members, who review the Board of Directors as well as business execution functions and attend important meetings, including meet-
ings of the Board of Directors as well as the Management Council. The Audit & Supervisory Board Members’ Office provides support for the audits
by the Audit & Supervisory Board members, and in order to promote the independence and effectiveness of the auditing, the Company holds
discussions with Audit & Supervisory Board members 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 12 members, comprising eight internal directors and four external directors, and the Audit & Supervisory Board
has five members, comprising two internal Audit & Supervisory Board members and three external Audit & Supervisory Board members. 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 resolu-
tion at the June 23, 2006 Annual Shareholders’ Meeting.
In addition, the Corporate Internal Audit Unit (with 55 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 standing members of the Audit & Supervisory Board 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 Audit & Supervisory Board
and the accounting auditors.
The accounting auditor, Ernst & Young ShinNihon LLC, reports to the Audit & Supervisory Board concerning the audit plan and results. The
accounting auditor also conducts exchange of opinions when needed and carries out coordinated audits of business operations. The four certified
public accountants associated with Ernst & Young ShinNihon LLC who performed the accounting audit were Yasunobu Furukawa, Yuichi Mochi-
naga, Tsuyoshi Saita, and Akiyuki Matsumoto. In addition, they were assisted by a further 37 certified public accountants, 31 accounting assis-
tants, and another 62 persons, all associated with Ernst & Young ShinNihon LLC.
The Fujitsu Way Promotion Council promotes internal control relating to the Fujitsu Way and financial reporting in the Fujitsu Group and
forms the core of operations to upgrade and evaluate internal control for the Group. During internal control audits by the accounting auditor and
statutory auditors, the Fujitsu Way Promotion Council holds regular meetings to provide and explain information as required. The council also
provides and explains information to assist the Corporate Internal Audit Unit in performing internal audits.
The Company established an Executive Nomination Committee and Executive Compensation Committee as advisory bodies to the Board of
Directors in order to ensure the transparency and objectivity of the process for choosing candidates for executives, determining their compensa-
tion and ensuring that the compensation system and levels are appropriate. The Executive Nomination Committee takes into consideration the
current business climate and anticipated trends, and makes recommendations on candidates (draft) for executives, choosing candidates having
objectivity in making management decisions, foresight and perceptiveness, and a superior character. The Compensation Committee is tasked
with making recommendations on executive salaries and methods for calculating bonuses linked to financial performance, taking into consider-
ation compensation levels at other companies with similar business activities, business scale, and other factors. The aim of this activity is to
retain superior management talent, and provide effective incentives for improving the Company’s financial performance.
3. Reasons for Selecting the Current Corporate Governance Structure
The current structure clarifies the management responsibility of the members of the board, who, after their election at the annual meeting of
shareholders, become involved in making decisions about important matters concerning the management of the Company. Furthermore, the
current structure maintains the robustness and efficiency of governance by having the dual features of (1) the mutual monitoring by the mem-
bers of the Board of Directors, and (2) the audits by the Audit & Supervisory Board members. At the time of the introduction in Japan of the
corporation-with-committees governance system, Fujitsu was using the company with Audit & Supervisory Board members system, and since the
Audit & Supervisory Board members were performing the auditing function effectively, we have continued to use the system.
The Company maintains the robustness of its governance system by having an effective auditing function in which Audit & Supervisory Board
members who are independent of the management perform objective audits, by actively appointing external directors, and by having established
the Executive Nomination Committee, Exective Compensation Committee and an internal audit organization. Finally, to further improve efficiency,
we have established a Management Council, which has accelerated decision-making and management execution.
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FUJITSU LIMITED ANNUAL REPORT 2013
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