Corporate Governance

SCSK is working to ensure transparency in management, strengthen appropriate governance and monitoring structures, and enhance the soundness of management through ongoing risk management.

Corporate Governance

Basic Policy

Embracing its focus on corporate social responsibility (CSR), the SCSK Group conducts business activities with an eye to shareholders and other stakeholders. From this perspective, the Group considers raising the efficiency and soundness of management as well as ensuring transparency in the decision making process as the most basic components of its corporate governance. Rating these mattershigh among management priorities, we aim to build an optimal management structure that befits SCSK.

SCSK established the Nomination and Remuneration Advisory Committee in December 2015 and transitioned to a company with an Audit and Supervisory Committee in June 2016 with the purpose of strengthening the supervising function of the Board of Directors, reinforcing corporate governance and heightening the soundness and effectiveness the management. In April 2017, we eliminated directors with specific titles and appointed an outside director as the Chairman of the Board, in order to further separate supervision from business execution and take additional steps to reinforce corporate governance.

Corporate Governance Structure

Board of Directors
In June 2017, we slimmed down the Board of Directors from 19 directors to 16 as well as appointed seven Audit and Supervisory Committee members (six of which are outside directors) and appointed seven outside directors (six of which are independent directors). These changes were made to take a further step in separating management and business execution and reinforcing supervision of the Board of Directors, while enabling agile decision making.

Executive Officers
SCSK introduced an executive officer system on January 1, 2005. Through this system, executive officers are assigned responsibility for areas of operational execution based on the directions of the chairman and president and act in accordance with the management policies decided by the Board of Directors. This system clarifies that authority for making decisions on important management matters and supervising operational execution collectively resides with the Board of Directors. In addition, the system allows for the establishment and strengthening of supervising systems to ensure that effective operational execution can be conducted based on swifter decisions regarding management policies by the Board of Directors. In these ways, the executive officer system contributes to the enhanced corporate governance of the Company.

Management Committee
The Management Committee, made up of executive officers including the chairman and the president, has been established to function as an advisory body to the chairman and president with regard to important operational execution matters. This committee was created with the aim of strengthening both corporate governance and operational execution capabilities by creating a system with clear separation of management supervision and execution functions in which executive officers, the chairman and president, have authority and responsible for matters of daily operational execution.

Governance Committee
We have also established the Governance Committee, chaired by an independent outside director and whose members consist of a majority of outside directors including independent outside directors, as an advisory committee to the Board of Directors and other meeting bodies. This committee is charged with ensuring fairness and transparency, and consideration is given to the interests shared by the Company and its shareholders, during decision making by directors and the Board of Directors. The Governance Committee deliberates on the following matters and reports to the Board of Directors and other meeting bodies.

  1. 1.Matters involving transactions that could pose a conflict of interest between the Company and directors and that require approval of the Board of Directors as per the Companies Act.
  2. 2.Matters involving transactions between the Company and relevant parties that the Board of Directors or other meeting bodies ask the Governance Committee to deliberate on as necessary for ensuring the fairness of decision making by the Board of Directors.
  3. 3.Matters concerning the selection criteria and election process of directors and executive officers as well as the appointment and ismissal of directors.
  4. 4.Matters concerning the remuneration of directors and executive officers.
  5. 5.Other matters advised by the Board of Directors or other meeting bodies as necessary for ensuring the fairness of decision making by the Board of Directors.

Audit and Supervisory Committee
SCSK has established the Audit and Supervisory Committee in charge of audits and supervision which forms the auditing system of SCSK together with the supervision of operational execution by the Board of Directors. The Audit and Supervisory Committee comprises seven directors, including six outside directors as members, of which five are independent directors. The committee receives reports on important audit-related matters, based on which it holds discussions and makes decisions.

Corporate Governance Structure

Audits by Audit and Supervisory Committee

In addition to periodically receiving reports from the Internal Auditing Department, the Audit and Supervisory Committee is able to request to conduct investigations when necessary. The Audit and Supervisory Committee also meets regularly with the independent auditor to audit and supervise the execution of duties by directors (excluding those directors that serve as members of the Audit and Supervisory Committee) and the operational execution of executive officers.

Members of the Audit and Supervisory Committee attend meetings of the Board of Directors and other important meetings and request reports on the business activities of directors (excluding those directors that serve as members of the Audit and Supervisory Committee) and executive officers when necessary in order to collect information on the status of operational execution. In addition, the Company has established the Audit and Supervisory Committee Department to aid the activities of the Audit and Supervisory Committee. Equipped with a dedicated staff, this department helps heighten the effectiveness of audits.

Internal Controls

A Basic Policy on Internal Controls has been formulated to ensure that operational execution and other activities by directors comply with applicable laws and regulations. The policy ensures the Company has a system to confirm that internal controls are functioning effectively. By continuously reviewing this policy in line with the changing management environment, SCSK is building a structure of the internal controls system that addresses needs as they arise.

Internal Audits

The Internal Auditing Department is under the direct supervision of the Chairman and the President, and acts as an internal auditing system in order to confirm that internal controls are functioning effectively and to supervise the implementation of internal controls. The department examines and evaluates the control activities and risk management activities of all business activities of SCSK and its subsidiaries and affiliates that the Company has a management authority over. These examinations and evaluations are conducted from an independent and objective standpoint and are based on laws and regulations as well as management policies. When necessary, the department provides recommendations and counsel on how to improve management activities. In this way, the Internal Auditing Department conducts audits to contribute to the improvement of the SCSK Group's corporate value and the development of its business.

Appointment and Election of Directors

Candidates for executive management and directors (excluding those directors that serve as members of the Audit and Supervisory Committee) are determined by the Board of Directors based on certain criteria after deliberation by the Governance Committee, which mainly consists of independent outside directors. These criteria include the necessary knowledge, experience and track record to serve in an executive management position or as a director, the ability to contribute to constructive discussion at meetings of the Board of Directors, excellent management skills and understanding of compliance with laws and regulations, high levels of corporate ethics, and for directors who also act as executive officers, sufficient knowledge in the field they are in charge of. Candidates for directors that serve as members of the Audit and Supervisory Committee are examined by the Governance Committee, which mainly consists of independent outside directors, and determined by the Board of Directors with the consent of the Audit and Supervisory Committee. Directors that serve as members of the Audit and Supervisory Committee must have specialized knowledge and experience and be able to carry out audits from an objective standpoint.

In addition to the above, candidates for outside director are determined based mainly on whether they have specialized and wide-reaching knowledge concerning corporate management as well as the IT services industry.
SCSK continually appoints independent outside directors without any concern of conflict of interests with general shareholders in order to maintain and improve directors’ supervision of management execution by executive officers. Outside directors with management discernment gained through a wide range of business activities attend meetings of the Board of Directors and provide recommendations for the maximization of corporate value.

Reason for Election of Outside Directors

  Reason
Kiyoto Matsuda
(Chairman of the Board)
Independent Director
Kiyoto Matsuda has a breadth of experience and a wealth of knowledge in corporate management. He has been selected since we believe the experience and knowledge accumulated through his professional capacity qualify him to supervise the execution of operations of the Company.
Yoshiharu Takano
Audit and Supervisory Committee Member
Yoshiharu Takano has been a Corporate Auditor at SCSK since FY2013. He has been selected since we believe his accumulated experience and knowledge throughout his work qualify him to audit the Company's directors' execution of duties from an objective standpoint, and we have selected him to be an outside director and a member of the Audit and Supervisory Committee.
Shigeki Yasunami
Audit and Supervisory Committee Member Independent Director
Shigeki Yasunami has specialized knowledge and experience that he has developed as a certified public accountant, and has been a corporate auditor at SCSK since FY2011. He has been elected since we believe his accumulated experience and knowledge through his work qualify him to audit the company's directors' execution of duties from an objective standpoint, and we have selected him to be an outside director and a mamber of the Audit and Supervisory Committee.
Yuko Yasuda
Audit and Supervisory Committee Member Independent Director
Yuko Yasuda has a wealth of experience and extensive knowledge as management of corporations. She has been elected as outside director and member of the Audit and Supervisory Committee since we believe her accumulated experience and knowledge garnered through her career qualify her to audit the company's directors' execution of duties from an objective standpoint.
Shigenobu Aikyo
Audit and Supervisory Committee Member Independent Director
Shigenobu Aikyo has a wealth of experience and extensive knowledge of management of corporations. He has been elected as outside director and member of the Audit and Supervisory Committee because we believe the experience and knowledge that he has accumulated through his career qualify him to supervise SCSK's Directors execution of duties from an objective standpoint.
Kimitoshi Yabuki
Audit and Supervisory Committee Member Independent Director
Kimitoshi Yabuki has specialized knowledge and experience as an attorney. He has been elected as outside director and member of the Audit and Supervisory Committee because we believe the experience and knowledge accumulated through his career qualify him to audit the execution of duties by Directors from an objective standpoint.
Masaichi Nakamura
Audit and Supervisory Committee Member Independent Director
Msasaichi Nakamura has been elected as outside director and member of the Audit and Supervisory Committee because he is qualified for carrying out audits of directors' execution of duties objectively based on his professional experience and knowledge and his specialized knowledge and experience as a certified public accountant.

Remuneration for Directors

SCSK pays out annual remuneration to directors, including bonuses, within the maximum amount as determined at the Ordinary General Meeting of Shareholders.

The policies, procedures, and calculation methods, and exact amounts of remuneration of directors (excluding those directors that serve as members of the Audit and Supervisory Committee) are discussed by the Governance Committee and then decided by the Board of Directors. Calculation methods take into account the Company’s business scale and the need to secure talented candidates, and individual remuneration amounts are determined in consideration of the accomplishments of specific directors and the Company’s business performance. Remuneration amounts for directors that serve as members of the Audit and Supervisory Committee are decided through discussions by the Audit and Supervisory Committee.

Bonuses for directors and executive officers have been linked to business performance with the goal of elevating the motivation and morale of directors and executive officers as well as further increasing profits and reinforcing the Company’s business structure.

Remuneration of Directors and Corporate Auditors

Category Total remuneration
(millions of yen)
Total remuneration by type(millions of yen) Number of eligible Directors/ Corporate Auditors(persons)
Basic remuneration Bonus Other
Directors(excluding those directors that serve as Audit and Supervisory Committee Members)
(of whom, outside directors)
706
(10)
473
(10)
182
(0)
50
(0)
22
(2)
Directors that serve as Audit and Supervisory Committee members
(of whom, outside directors)
39
(39)
38
(38)
0
(0)
1
(1)
4
(4)
Corporate auditors
(of whom, outside directors)
15
(9)
14
(8)
0
(0)
0
(0)
4
(3)

Enhanced Disclosure of Information

Information disclosure represents an important responsibility of management from the standpoint of ensuring the transparency and fairness of the Company’s decision making. We strive to carry out information disclosure in an appropriate and timely manner in order to help deepen understanding among various stakeholders, including shareholders and other investors, about management’s decision making and the Company’s business activities.

The Company’s basic policy on information disclosures is to disclose information in a proactive manner. In addition to disclosures on operating results and financial information pursuant to laws and regulations, non-financial information deemed material by the Company is also communicated using various means, including the corporate website and SCSK report.