SCSK is working to ensure transparency in management, strengthen appropriate governance and monitoring structures, and enhance the soundness of management through ongoing risk management.
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 SCSK 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 matters high among management priorities, we aim to build an optimal management structure that benefits SCSK the most.
We implement each of the principles set forth in the Tokyo Stock Exchange’s Corporate Governance Code and provide detailed disclosures within our Corporate Governance Report based on each principle.
Corporate Governance Structure
Board of Directors
As of June 25, 2019, SCSK’s Board of Directors comprises 11 members, including four independent outside directors. The Board of Directors makes decisions on important management issues and supervises operational execution. The main matters discussed by the Board of Directors include matters stipulated by law, matters stipulated in company regulations, and important matters regarding management such as management strategy and management plans.
SCSK’s Board of Directors meets in principle on a monthly basis, but also convenes extraordinary meetings when necessary. Meetings of the Board of Directors were held 13 times in fiscal 2018.
In addition, SCSK has concluded a liability limitation agreement with directors (excluding directors who also act as executive officers, etc.) for the minimum liability amount stipulated in Article 425-1 of the Companies Act, pursuant to Article 427-1 of the Companies Act and Article 29-2 of the Articles of Incorporation.
SCSK introduced an executive officer system on January 1, 2005. Through this system, executive officers are assigned responsibility for areas of operational execution under the directions of the Chairman and Chief Executive Officer and President and Chief Operating Officer 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.
The Management Committee, made up of executive officers, etc., functions as an advisory body to the Chairman and Chief Executive Officer and President and Chief Operating Officer 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 including the Chairman and Chief Executive Officer and the President and Chief Operating Officer, have authority and responsibility for matters of daily operational execution.
Audit and Supervisory Committee
The Audit and Supervisory Committee comprises four directors, including three independent outside directors as members. The committee carries out organized audits using the internal control system and supervises and audits business execution from an independent and objective position. One director who is an Audit and Supervisory Committee member is a certified public accountant with considerable knowledge of finance and accounting.
We have also established the Governance Committee as an advisory committee to the Board of Directors. This committee is charged with ensuring fairness and transparency, and that consideration is given to the interests shared by SCSK and SCSK’s 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.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.Matters involving transactions between the company and relevant parties that the Board of Directors ask the Governance Committee to deliberate on as necessary for ensuring the fairness of decision making by the Board of Directors.
- 3.Matters concerning the selection criteria and election process of directors and executive officers as well as the appointment and dismissal of directors.
- 4.Matters concerning the remuneration of directors and executive officers.
- 5.Other matters that the Board of Directors inquire about as necessary for ensuring the fairness of their decision making.
SCSK’s Audit Department is in charge of the company’s internal audits. It is independent from departments that execute business operations, and examines and evaluates control activities and risk management covering all management activities of SCSK and its subsidiaries from the standpoint of improving operational effectiveness and efficiency and securing the reliability of financial reporting.
The Audit Department reports the results of internal audits to the Audit and Supervisory Committee as it is under the direct supervision of the Audit and Supervisory Committee. It also reports these results directly to the Chairman and Chief Executive Officer and President and Chief Operating Officer.
Corporate Governance Structure
Election and Dismissal of Directors and Procedures
Directors (excluding those directors that serve as members of the Audit and Supervisory Committee) are elected and dismissed by SCSK’s Board of Directors based on certain criteria and take into account the results of examinations by the Governance Committee, which mainly consists of independent outside directors, and the views of the Audit and Supervisory Committee. These criteria include the necessary knowledge, experience and track record to serve as a director of SCSK, 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.
The election and dismissal of candidates for directors that serve as members of the Audit and Supervisory Committee are determined by the Board of Directors with the consent of the Audit and Supervisory Committee, taking into account the results of examinations by the Governance Committee, a majority of whose members consists of independent outside directors. 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 or the IT services industry. Currently, one female director has been elected considering diversity, including both gender and international experience. This director possesses a wealth of experience and broad insight concerning the international situation. 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
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 individual amounts of remuneration of directors (excluding those directors that serve as members of the Audit and Supervisory Committee) are decided by the Board of Directors taking into account the results of examinations by the Governance Committee, a majority of whose members consists of independent outside directors, and views of the Audit and Supervisory Committee. Calculation methods takeinto account SCSK’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.
In addition, directors that serve as members of the Audit and Supervisory Committee are given sole discretion regarding their own compensation pursuant to the provisions of Article 361, Paragraph 3 of the Companies Act.
Remuneration of Directors and Corporate Auditors
SCSK has established the Basic Policy on Establishing the Internal Control System so that the execution of duties by directors conforms to laws and the Articles of Incorporation and that other operations along with the operations of the corporate group comprising SCSK and its subsidiaries are performed appropriately.
In accordance with this basic policy, we continuously check the effectiveness of the internal control system and conduct reviews based on the changing management climate, which allows us to modify the internal control system on occasion as the need arises.