To maintain the public's trust and achieve sustained development, the NTT Group has singled out corporate governance as a critical management issue. As a member of society and an entity that depends on its relationships with the various stakeholders, including customers, shareholders and investors, business partners and employees, we are creating a system characterized by healthy and transparent management practices and a high level of ethics.
Corporate Organization, etc of NTT (Holding Company)
NTT (Holding Company) ("NTT") maintains a board of directors with 12 members, including two outside directors. In principle, the board of directors meets once per month to make decisions and report on important management issues. The inclusion of outside directors with independent status on the board serves to bolster our capabilities for overseeing the fairness of business transactions.
With regard to matters concerning the appointment and compensation of directors, in order to improve objectiveness and transparency, NTT has established the Appointment and Compensation Council, comprising four directors, including the two outside directors. The Appointment and Compensation Council deliberates on matters concerning the appointment and compensation of directors before the board of directors' meetings in which final determinations of such matters are made.
NTT maintains a board of audit, which is composed of five members, referred to as corporate auditors, of whom two are independent corporate auditors. Each corporate auditor attends board of directors and other important meetings. Through this and other means, the corporate auditors monitor the execution of NTT's business and operations, as appropriate. The corporate auditors are assisted by their own organization and staff maintained for such purposes. NTT's board of audit works in collaboration with corporate auditors from the NTT Group companies in carrying out its audit functions.
In addition, NTT institutes various meetings and forms committees as necessary for the promotion of effective group-level management in keeping with its status as a Holding Company with general control and coordination responsibilities for the NTT Group. To this end, these meetings and committees engage in ad-hoc discussions of key issues concerning management on both the corporate and group levels, and thereby assist appropriate decision-making.
Internal Controls
Based on the COSO framework*, NTT assesses the preparation and operation of internal controls for the NTT Group as a whole, executes audit reviews to assure the correctness of these controls, and carries out comprehensive audits with respect to high risk items common to all NTT Group companies.
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- COSO stands for Committee of Sponsoring Organizations of the Treadway Commission, and the COSO framework is an internal control framework outlined in the commission's report
Audits by the Auditors
Each corporate auditor of NTT audits the performance by NTT's directors of their duties as appropriate. In addition, the corporate auditors work to strengthen the auditing system by working in close concert with the NTT Group's audit firm, including periodic discussion of the audit plans and results.
The NTT Group has taken various measures to enhance corporate ethics based on our core belief that it is imperative to manage our business not only in compliance with laws but also based on high ethical standards.
Specifically, in November 2002, the NTT Group adopted the "NTT Group Corporate Ethics Charter" as a code of conduct for all directors and employees. We have also established an accountability system that includes those corporate ethics committees, departmental heads and personnel from departments of the NTT Group companies responsible for the implementation of the Charter. At the same time, we set up and launched a Corporate Ethics Help Line (Consulting Center) that is available to all NTT Group company employees. This includes not just an internal helpline for reporting and counseling, but also an external helpline utilizing the services of attorneys. These are measures the NTT Group has adopted to create a corporate culture of transparency and openness. The NTT Group is also striving to expand and strengthen its internal checks, through ongoing educational activities, including employee training sessions and lectures by outside instructors, and by conducting surveys to gauge employee awareness of corporate ethics.
NTT Group Corporate Ethics Charter
- Recognizing the establishment of corporate ethics as one of its most important missions, top management shall exert its leadership to ensure that the spirit of this Charter is adopted throughout the company, and shall assume full responsibility for solving any problems when any event inconsistent with that spirit occurs.
- Every person with subordinate employees shall not only act in a self-disciplined manner, but shall also always provide guidance and assistance to his/her subordinate staff to ensure that their conduct is in conformity with our corporate ethics.
- Every officer and employee of NTT Group shall not only comply with all laws and regulations, social standards and internal company rules whether in Japan or overseas, but officers and employees shall also hold the highest ethical philosophy within himself/herself both in public and in any private situations.
Among other things, each officer and employee, as an officer or employee of a member of a Global Information Sharing Corporate Group, shall keep himself/herself fully aware that any disclosure of customer or other internal privileged information constitutes a materially wrongful act. Also, as a member of a group of companies which holds great social responsibilities, he/she shall strictly refrain from giving or receiving from customers, business partners and other interested parties excessive gratuities.
- Each NTT Group company, at the first opportunity, shall take initiatives to provide training programs in order to help its officers and employees enhance their awareness of our corporate ethics.
- Every officer and employee of NTT Group shall direct his/her efforts to prevent wrongful or scandalous acts which may potentially occur as specialization and advancement of our business proceeds. Each NTT Group Company shall improve its system to prevent such acts, including, for instance, the re-assignment of contract representatives who have remained with the same customers for a long period of time, and the improvement of monitoring tools to protect customer and other information.
- Any officer or employee who may come to know of the occurrence of any wrongful act or any scandal shall promptly report the wrongful act or scandal to his/her superior or other appropriate persons.
If he/she is not able to make such a reporting, he/she may contact the "Corporate Ethics Help Line (Consulting Center)". It should be noted that every officer and employee who reports the occurrence of any wrongful act or scandal shall be protected so that the reporting party shall not suffer any negative consequences due to such reporting.
- In the event of an occurrence of any wrongful act or scandal, each NTT Group company shall be committed to the settlement of the problem by taking appropriate steps through a speedy and accurate fact finding process, and responding in a timely, suitable and transparent manner in order to fulfill its social accountability.
The NTT Group considers that business risk must be properly managed, because inadequate control could cause the company physical and economic losses. We thus strive to deal with such risks properly.
Specifically, we have an accountability structure for business risk management, and a standard manual for unified control of business risk throughout the group. We work to prevent and predict risks, so that should they arise, we are able to continue our business activities to the maximum extent, and minimize the impact on our stakeholders.
The NTT Group respects human rights. A commitment to resolving human rights issues, including fighting discrimination, is vital for building a bright, prosperous society, and all companies and organizations in the group are committed to this issue.
Specifically, we focus on such human rights issues as discrimination, the disabled, foreign residents in Japan, the elderly, sexual harassment, and power harassment, as well as trends in human rights in Japan and internationally, and also provide a broad range of human rights education training, in order to promote the treatment of human rights issues as a personal issue by each employee, deepen their understanding and awareness, and enable them to base their day-to-day business activities on human rights.
To establish a clear management structure directed toward enhancement of the NTT Group's CSR, NTT created CSR Committee in June 2005. The Senior Executive Vice President of NTT serves as Chairman of this Committee. In addition to NTT executives, directors of the NTT Group companies may attend committee meetings depending on the topics to be discussed at the meeting. The Committee is a vehicle for ongoing discussion regarding the promotion of the NTT Group's CSR initiatives. We are also working to establish systems to promote these initiatives within each group company.
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