Framework, etc.

Corporate Governance Framework (As of October 1, 2022)

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
  • Sustainability Committee: This committee deliberates on sustainability-related matters such as solving social issues (SDGs), social contribution , and the environment through business.
  • Information Security Committee: ensures overall information security regarding information assets

Organizational Form

Company with an Audit & Supervisory Board

Composition of Directors and Advisory Committees

  • During the fiscal year ended March 31, 2021, the Nomination Advisory Committee met on one occasion and the Remuneration Advisory Committee met on one occasion.

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

  • 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

Nomination and Election Procedures for Directors

[1] Select candidates based on the above criteria
[2] Deliberate them at a Nomination Advisory Committee
[3] Approve them at a Board of Directors
[4] Elect them at the Annual Shareholders Meeting

Nomination and Election Procedures for Audit & Supervisory Board Members

[1] Select candidates based on the left criteria
[2] Deliberate them at a Nomination Advisory Committee meeting
[3] Gain approval from the Audit & Supervisory Board
[4] Approve them at a Board of Directors meeting
[5] Elect them at the Annual Shareholders Meeting

Consideration Criteria for Termination

  • When the performance of a business that a director is responsible for or the achievements of a department a director is responsible for are exceptionally poor
  • When the company is harmed by a major misstep or intentional violation of a law, regulation or the Articles of Incorporation in their execution of duties
  • When the company’s credibility and reputation are significantly damaged by the inappropriate seeking of personal gain through the abuse of position or authority
  • When the company determines that keeping a director is not appropriate

Termination Procedures for Directors

  • After deliberations at the Nomination Advisory Committee meeting, the Board of Directors deliberates the matter as needed and implements necessary measures for termination

Evaluation Results

Summary

The evaluation confirmed that KDDI’s Board of Directors is operating properly and functioning effectively. The following two points received particular praise:

  • Management of the Board of Directors meetings utilizing the knowledge of outside directors The Company has fostered a culture in which outside directors can actively speak up at Board of Directors meetings.
    In addition, executives are responding sincerely to the opinions and questions of outside directors, and the Board of Directors is managed in a manner that takes advantage of the knowledge of outside directors from various backgrounds.
  • Discussions focused on sustainable growth and the medium-to long-term enhancement of corporate value
    Discussions are being held from a medium- to long-term perspective on themes such as the sustainable growth of the mainstay domestic telecommunications business, full-scale rollout of 5G, and value creation through the integration of telecommunications and life design, the previous mid-term management strategy.

Improvements from Previous Evaluation

In the previous meetings, each director and Audit & Supervisory Board member proposed various themes to be discussed in the process of formulating new Mid-term Management Strategy to ensure KDDI’s sustainable growth in a rapidly changing business environment, by holding discussions among directors and Audit & Supervisory Board members utilizing their diverse experiences and knowledge.
Based on this challenge, in 2021, we ensured time for the active and constructive exchange of opinions among executives and sufficient time for deliberations, and discussed various issues, including the proposed themes, for the formulation of the new Mid-Term Management Strategy.

Moving Forward

Through proactive initiatives based on the "Satellite Growth Strategy" with telecommunications at its core, KDDI continues to diversify its business domains and expand its business scale through an increase in the number of group companies.
In this environment, we believe that in order for the KDDI Group to fulfill its social responsibilities and achieve sustainable growth while appropriately responding to various risks, it is important to further strengthen corporate governance, which serves as the foundation for such efforts.
The Group as a whole will strive to further disseminate the "KDDI Group Philosophy," which serves as the foundation of its corporate activities, as well as strengthen its governance system, including risk management, while enhancing the effectiveness of risk management through timely and appropriate supervision by the Board of Directors.

Principal Activities of Outside Directors and Outside Audit & Supervisory Board Members

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 he has contributed to improving the corporate value of the Company. Going forward, the Company expects that he will contribute to the strengthening of the supervisory function for the execution of business and provide advice from a wide-ranging managerial perspective based on his management experience at other companies. Therefore, he has again been selected as an Outside Director.
Keiji
Yamamoto
Mr. Yamamoto has excellent knowledge cultivated in IT development and electronics engineering divisions and abundant management experience as a management at the one of the world’s leading automobile manufacturers. On the Board of Directors, he expressed broad opinions on promoting KDDI’s 5G/IoT strategy, etc., from a medium- to long-term perspective, and has thus contributed to improving KDDI’s corporate value. He has again been appointed as an outside director because the Company expects him to contribute to enhancing the supervising function of business execution and provide advice in the telecommunications field from technical perspectives.
Riyo
Kano
Ms. Kano has abundant experience and superior knowledge, cultivated as a partner at a law firm and a committee member of government committees. On the Board of Directors, she expressed technical opinions related to legal risk management from a medium- to long-term perspective independent of the management team, and has thus contributed to improving KDDI’s corporate value. She has again been appointed as an outside director because the Company expects her to contribute to enhancing the supervising function of business execution and provide advice from technical perspectives as a lawyer.
Tsutomu
Tannowa
Mr. Tannowa has a wealth of corporate management experience cultivated as the Chairman of the Board and Representative Director of a major chemical manufacturer, while also offering excellent insight from a global perspective. He has been appointed as an outside director with the expectation that he will contribute to enhancing KDDI’s corporate value by providing advice from a medium- to long-term perspective based on his management experience at the other company and by helping to strengthen the supervisory function of business execution.
Junko
Okawa
Ms. Okawa has a wealth of corporate management experience, in addition to excellent insight cultivated from her work experience at a major airline company, especially in practical aspects such as customer service, corporate revitalization, and diversity promotion. She has been appointed as an outside director with the expectation that she will contribute to enhancing KDDI’s corporate value by providing advice from a medium- to long-term perspective based on her management experience at other companies and by helping to strengthen the supervisory function of business execution.

Outside Director/Auditor Support System

To ensure active discussions in the Board of Directors meetings, we inform outside directors and Audit & Supervisory Board members at least 3 days in advance of the dates and agenda items and provide agenda materials for upcoming meetings to help them gain a deeper understanding of the agenda in advance.
In addition, we make the deliberations more substantial by accepting questions beforehand and preparing more extensive explanations for the meetings based on the questions.
We also provide a wide range of information outside the board meetings, including on business strategies, management status, R&D and technology. Specifically, each division’s general manager and Director provide detailed explanations of the general overview of the business and issues and regularly report on the management status of subsidiaries, we provide opportunities to visit in-house exhibitions of R&D achievements as well as the telecommunications equipment and network monitoring center and other workplaces. We also provide two reports every year on corporate ethics and risk management activities.
In addition, to enable outside directors to strengthen their ability to gather information, they are invited to attend meetings of the Audit & Supervisory Board when the auditing firm reports the results of the second quarter review and the year-end audit, and liaison meetings with Audit & Supervisory Board members are held twice a year.
To promote cooperation among outside directors, we hold liaison meetings exclusively for outside directors and liaison meetings for outside directors and part-time Audit & Supervisory Board members.
We aim to raise the effectiveness of the Board of Directors supervision of management and to invigorate discussions of management strategies at board meetings by providing a deeper understanding of our business through these initiatives.
We established the Audit & Supervisory Board Member’s Office, which supports Audit & Supervisory Board members, including part-time outside members.

Policies on Parent and Subsidiary Listings

One of KDDI’s subsidiaries, Okinawa Cellular Telephone Company (hereafter "Okinawa Cellular"), is listed on the Tokyo Stock Exchange Standard Market.Being committed to "growth as a group," KDDI aims to maximize mutual synergies and expand and strengthen new growth foundations for the entire group by maximizing the use of our assets and supporting the growth of group companies.
Okinawa Cellular was established with the cooperation of several prominent local companies, making it a community-based company that contributes strongly to the local community. Based on this background, we believe that there are the following advantages to having Okinawa Cellular as a publicly traded company, and we believe that it continues to be significant to have Okinawa Cellular as a listed subsidiary.

  • Returns to investors
    By implementing shareholder return measures as a listed company, Okinawa Cellular will be able to return profits to its investors, including local companies that cooperated in the company’s establishment and investors who have supported the company since its listing.
    Okinawa Cellular’s shareholder return policy should be determined in consideration of the interests of all shareholders, taking into account the balance between medium- and long-term business growth and shareholder returns, and its implementation will be determined at the company’s discretion as an independent listed company.
  • Contributing to employment in Okinawa prefecture and securing talented human resources
    Currently, many people from Okinawa prefecture have joined Okinawa Cellular and are playing an active role in the company.
    Given the geographical characteristics of Okinawa Cellular, we believe that the fact that its business area is limited to Okinawa prefecture meets the needs of people from Okinawa who wish to work locally, and the fact that Okinawa Cellular is a publicly listed company also helps us recruit talented personnel.
  • Promote the use of Okinawa Cellular’s services and increase subscriptions by earning the trust of Okinawa residents
    In addition to KDDI’s similar services, Okinawa Cellular also offers unique services based on local conditions. As a community-based listed company, we believe that we have earned the trust of people in Okinawa by operating our business in line with the expectations of the local community, and this has led to the promotion of Okinawa Cellular’s service use and increased subscriptions.

For transactions that may cause conflicts of interest, Okinawa Cellular determines whether to implement the transaction after multifaceted discussions by independent outside directors and independent outside auditors. Okinawa Cellular has also established a voluntary committee led by an independent outside director as an Advisory Committee to the Board of Directors to discuss director nominations and compensation, and decisions regarding management nominations and compensation are made after discussions by Okinawa Cellular’s independent directors/auditors to ensure transparency.
Through these efforts, we will ensure management transparency from the perspective of protecting minority shareholders, and at the same time meet the expectations of our shareholders by increasing corporate value and returning profits to shareholders.
KDDI will continue to respect independence and autonomy while mutually cooperating with Okinawa Cellular in business operations and development as a group.

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 the medium to long-term increase of corporate value.
Every year, the Board of Directors reviews all the pros and cons of continuing the possession of each individual strategic holding by judging its significance and economic rationale. When a strategic shareholding is found to have only tenuous significance, we will sell 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 the valuation of each strategic shareholding at the end of the most recent fiscal year, and confirming whether the ratio satisfies the capital cost standard established by the Company.

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