Framework, etc.

Corporate Governance Framework (As of June 17, 2020)

1Board of Directors

At KDDI, Board of Directors resolutions determine:

  • Matters prescribed by the Companies Act or other laws and regulations
  • Matters prescribed by the Articles of Incorporation
  • Matters delegated for resolution at the general shareholder meeting, and
  • Other important management-related matters.

For other important management-related matters, their importance is determined according to such factors as the scale of money, business, assets, and investment involved.
The Board is composed of directors, including outside directors and independent outside directors. The Board of Directors reaches decisions on a variety of issues, including business plans and important matters outlined in laws and regulations. The Board also conducts supervision in an effort to ensure directors appropriately fulfill their work obligations.

2Advisory Committee

KDDI has formed a Nomination Advisory Committee and a Remuneration Advisory Committee to discuss with and provide advice to the Board of Directors to maintain both transparency and objectivity on the system of nomination of executive candidates and Audit & Supervisory Board member candidates and the level of remuneration for executives.
The Chairman, Vice Chairman and half or more of the members of these committees are outside directors.

3Corporate Management Committee

Comprised of internal directors, executive officers and others, the Corporate Management Committee deliberates and decides on important matters related to business execution at the Company and its subsidiaries.

4Audit & Supervisory Board/Audit & Supervisory Board Members

Audit & Supervisory Board members conduct their audit work based on audit policies and plans established by the Audit & Supervisory Board, and carry out their work by attending meetings of the Board of Directors, the Corporate Management Committee, and other major internal meetings. The Audit & Supervisory Board receives reports on the audit methods of Audit & Supervisory Board members and their results, discusses them, and offers its opinions, as appropriate, at meetings of the Board of Directors.

5Internal Audit

KDDI conducts periodic internal audits targeting all the operations of the Group, and regularly reviews the appropriateness and effectiveness of internal controls.
The results of these internal audits are reported to the president and the Audit & Supervisory Board members, along with recommendations for improvement and correction of any problems.

6Internal Committees

  • KDDI Group Business Ethics Committee: deliberates and makes decisions on compliance-related items for the Group
  • Disclosure Committee: deliberates on financial results information to be disclosed at fiscal period-ends
  • Information Security Committee: ensures overall information security regarding information assets
  • Sustainability Committee: deliberates on sustainability related matters such as CSR and the environment.

Organizational Form

Company with an Audit & Supervisory Board

Composition of Directors and Advisory Committees

  • During the fi scal year ended March 31, 2020, the Nomination Advisory Committee met on two occasions and the Remuneration Advisory Committee met on three occasions.

Policy and Procedure for the nomination of Director and Audit & Supervisory Board member candidates by the Board of Directors

Accepting the diversity of human resources and utilizing the diverse knowledge, experiences, and skills of each employee are important drivers of growth for the Company that aims for the "Integration of Telecommunications and Life Design," and we believe that ensuring diversity in the Board of Directors will also lead to good management decisions.
The Company believes that the overall Board of Directors should include members with advanced specialized knowledge and diverse perspectives when making decisions including matters that are important from a management perspective and matters that legally require supervision. Accordingly, in principle the board includes the following members.
(Standards of Nomination and Election)

Director Candidates

  • Director Candidates: Meeting one or more of the following standards
  • People with specialized knowledge and experience in various fields of business
  • People who have management knowledge appropriate to a supervisor or possess specialized knowledge
  • People who are highly independent

Audit & Supervisory Board Member Candidates

People who are able to supervise overall management from a perspective independent from directors and who have the extensive experience and broad-ranging insight to enhance audit appropriateness.

All Candidates

People who have no selfish and high ethical view and personality appropriate to an executive member

Decision Standards for Independence of Outside Executives

In addition to the independence standards provided by financial instruments exchanges, the Company has formulated its own standards. Specifically, these standards state that people hailing from business partners making up 1% or more of the Company's consolidated net sales or orders placed are not independent. Other matters are given individual consideration depending on circumstances.

Analysis and Evaluation of the Effectiveness of the Board of Directors

Objective of Board of Director Evaluations

To ensure a correct understanding of the current status of its Board of Directors and to work toward continuous improvement, KDDI has its Board of Directors conduct regular annual self-evaluations.

Overview of the Evaluation Process

The Company verifies the effectiveness of its Board of Directors based on an evaluation by the directors and the Audit & Supervisory Board members. The evaluation is conducted in questionnaire form, combining a four-grade rating scale with free space for comments.
This supports our efforts to validate the effectiveness of our initiatives and uncover any areas for improvement from both a quantitative and qualitative perspective.
The evaluation targets the most recent one-year period, and is conducted regularly on an annual basis. The results are reported to the Board of Directors, which then considers future countermeasures.
Key items for evaluation are as listed below.

  • Operation of the Board of Directors (including composition, documentation and explanations, provision of information, etc.)
  • Management supervision (including conflicts of interest, risk management, and management of subsidiaries, etc.)
  • Medium to long-term discussions (participation in medium-term management planning, monitoring of plan execution, etc.)

Overview of Evaluation Results

[Summary]

The evaluation confirmed that the Company's Board is operating properly. Even under the influence of COVID-19, it was evaluated that the decision-making and supervision worked sufficiently by holding online meetings as scheduled.

  • Ensuring decision-making transparency
    Human resources with different specialties have been appointed as outside officers, and various statements have been made at the board of directors. Executives are responding positively, and open discussions ensure transparency in decision-making.
  • Enhancing information provision to outside officers
    Many opportunities are offered for outside officers to deepen their understanding of our business by providing a chance to discuss with the person in charge of each business, conducting facility tours and site visits, etc.

[Improvements since previous evaluation]

In 2020, based on the recognition that monitoring of subsidiaries, etc. is particularly important, we decided to discuss toward more better business management of each companies with reorganize the management supervision process of the investee companies and evaluate not only the financial situation but also the realization of synergies and the degree of business contribution. In addition, we have clarified reporting standards so that risk information for the entire group can be grasped more quickly and reliably.
As a result, we confirmed that improvements were made toward "timely and appropriate monitoring as a group and better supervision," which was pointed out as an issue in the previous evaluation.

[Future issues]

In this time's evaluation, each director and corporate auditor made proposals from a broad perspective on various themes that should be discussed for the sustainable growth of the Company in a rapidly changing business environment. These themes would be taken up in the process of formulating the next medium-term management plan, and the effectiveness of the Board of Directors will be further improved by having discussions among directors and corporate auditors utilizing their diverse experiences and knowledge.

Reasons for Appointment as Outside Officers and Principal Activities (FY2018.3)

Name Independent
director
Reason for selection
Goro
Yamaguchi
Goro Yamaguchi has a wealth of corporate management experience and excellent knowledge cultivated as the President and Representative Director of one of the world's leading electronic components and equipment manufacturers. On the Board of Directors, the Company has received a large number of broad opinions related to business administration and operations from a medium- to long-term perspective, and has determined that he can contribute to improving the corporate value of the Company. Therefore, he has again been selected as an Outside Director.
Keiji
Yamamoto
Keiji Yamamoto has excellent knowledge cultivated in IT development and electronics engineering divisions and abundant corporate management experience as a corporate manager at the one of the world's leading automobile manufacturers. The Company has received a large number of broad opinions on promoting 5G/IoT strategy, etc. from a medium- to long-term perspective, and has determined that he can contribute to improving the corporate value of the Company. Therefore, he has again been selected as an Outside Director.
Shigeo
Ohyagi
Shigeo Ohyagi has a wealth of corporate management experience and excellent knowledge cultivated as the President and CEO of one of the world's leading companies in the fields of synthetic fibers, chemical products, medicines and medical treatment, and distribution and retail. The Company has received a large number of opinions from a medium- to long-term perspective especially focusing on the life design domain that the Company is promoting, global strategy and M&A, and has determined that he can continue to contribute to improving the corporate value of the Company, and for these reasons he has again been selected as an Outside Director. Moreover, with this background we judge there to be no risk of a conflict of interest with general shareholders and accordingly he has again been nominated as Independent Director.
Riyo
Kano
Riyo Kano has abundant experience and superior knowledge, cultivated as the partner at a law firm and a committee member of government committees. On the Board of Directors, the Company has received a large number of technical opinions related to legal risk management from a medium- to long-term perspective independent of the management team, and has determined that she can contribute to improving the corporate value of the Company, and for these reasons she has again been selected as a candidate for Outside Director. Moreover, with this background we judge there to be no risk of a conflict of interest with general shareholders and accordingly she has again been nominated as Independent Director.
Shigeki
Goto
Shigeki Goto has superior knowledge in telecommunications and network engineering, and information processing, which are directly relevant to the business of the Company, as well as in the field of cybersecurity that is crucial for its business operation. The Company has determined that he can contribute to improving the corporate value of the Company by giving technical opinions related to the management policy as a telecommunications operator that provides social infrastructure, from a medium- to long-term perspective independent of the management team, and for these reasons he has been selected as a candidate for Outside Director. Moreover, with this background we judge there to be no risk of a conflict of interest with general shareholders and accordingly he is scheduled to be nominated as Independent Director.
Name Independent
director
Reason for selection
Toshihiko
Matsumiya
Toshihiko Matsumiya has abundant experience and knowledge as a Certified Public Accountant, as the representative of an accountancy firm and as an Audit & Supervisory Board Member for other companies. In addition, he has the experience and knowledge cultivated through the business execution of various organizations.
From the perspective of leveraging this primarily accounting-related experience and knowledge to monitor general management and to engage in appropriate audit activities, he has been selected as an Audit & Supervisory Board Member.
Furthermore, with his background we judge there to be no risk of a conflict of interest with general shareholders and accordingly he is nominated as Independent Auditor.
Jun
Karube
Jun Karube has abundant experience and knowledge cultivated as a representative director of a listed company. From the perspective of leveraging this experience and knowledge to monitor general management and to engage in appropriate audit activities, he has been selected as an Audit & Supervisory Board Member.
Furthermore, with his background we judge there to be no risk of a conflict of interest with general shareholders and accordingly he is nominated as Independent Auditor.
Shin
Honto
Shin Honto has abundant experience and knowledge cultivated from many years of practical experience in the public sphere and involvement in the execution of business at various organizations. From the perspective of leveraging this experience and knowledge to monitor general management and to engage in appropriate audit activities, he has been selected as an Audit & Supervisory Board Member. Furthermore, with his background we judge there to be no risk of a conflict of interest with general shareholders and accordingly he is nominated as Independent Auditor.

Support for Outside Directors and Audit & Supervisory Board Members

In addition to notifying outside directors and outside Audit & Supervisory Board members in advance of the schedule and agenda for meetings of the Board of Directors, proposal materials are also distributed prior to the meetings to encourage understanding of the agenda items and invigorate discussion at the meetings. Questions are also accepted in advance and are used to enhance explanations on the day of the meeting, in an effort to provide for deepening more substantial deliberations.
Outside of the Board of Directors meetings, we also provide updates on the status of business strategy, management, R&D, and technology.
Regarding business outlines, the heads and general managers of each business headquarters explain the overall picture and issues in detail, and the management status of subsidiaries is regularly reported. We also have opportunities to inspect sites such as in-house exhibitions of research and development results, telecommunication facilities, and monitoring and maintenance centers. In addition, we report twice a year on corporate ethics and risk management activities.
In order for outside directors to maintain their independence and strengthen their ability to collect information, collaboration with auditors has been strengthened, and regular liaison meetings between outside directors and auditors have been held.
Auditors also explain audit results to outside directors.
In addition, in order to strengthen information exchange and information sharing among outside directors, we hold liaison meetings exclusively for outside directors and joint liaison meetings for outside directors and part-time auditors.
Through these efforts, we are deepening our understanding of KDDI's business, thereby invigorating discussions on management strategies at the Board of Directors and improving the effectiveness of management supervision and monitoring.
On April 1, 2006, KDDI established the Auditing Office to support Audit & Supervisory Board members, including outside members.

Policy on Strategic Shareholdings

KDDI believes that participating in tie-ups with a variety of companies is essential to providing our customers with increasingly diverse and advanced services.
KDDI possesses strategic shareholdings if such possession will contribute to the sustainable growth of KDDI's business and mid/long-term increase of corporate value.
Every year, Board of Directors reviews all the pros and cons of continuing the possession of each individual strategic holdings by judging the significance and economic rationale. We will sell a strategic shareholding which have tenuous significance, as promptly as possible.
The Company calculates the ratio of the contribution by the issuing company to the Company's profits within the most recent fiscal year. The economic rationale is verified by comparing the ratio with valuation of each strategic shareholding at the end of the most recent fiscal year, whether the ratio satisfies the capital cost standard established by the Company.

Standards for Ensuring Appropriate Exercise of Voting Rights on Strategic Shareholdings

Given the extensiveness and diversity of the KDDI Group's businesses, while respecting the intentions of share-issuing companies we set as our standard for exercising voting rights the sustainable growth and increased corporate value of the entire KDDI Group over the medium to long term, taking into overall consideration such factors as periodic business results and the results of dialogue with issuing companies.
To guard against decisions skewed toward short-term business interests, we have created a process for exercising voting rights that involves checks by the management team, thereby ensuring that management decisions are made from a companywide perspective.

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