2. BUSINESS OPERATION POLICY |
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(1) Basic Business Operation Policy In a business environment marked by rapid and dramatic changes in market structure, NTT and its affiliates (NTT Group or the Group) are actively engaged in the reform of the Group's business structure. Specific initiatives include: (1) active development of fiber-optic and other services as appropriate for the ubiquitous broadband era; (2) creation of new basic technologies utilizing R&D and the steady introduction of the fruits of R&D efforts to business operations; (3) promoting the international development of mobile multi-media communications businesses and IP network businesses; (4) continuous advance of overall Group structural reform through comprehensive management rationalization and expansion into new businesses; and (5) full utilization of the advantages of the holding company structure to achieve the above objectives. (2) Basic Principle concerning Profit Allocation NTT believes it is critically important to reinforce its financial standing and to serve the best interests of its shareholders over the long run. As such, NTT has adopted as its basic principle the payment of stable dividends with due regard to overall operating trend and financial situations while acting to secure necessary levels of internal reserves. While utilizing its internal reserves for strengthening its financial standing, NTT intends to repurchase its own shares in order to implement a capital policy that takes into account supply and demand conditions of NTT's shares. (3) Basic Principle and Policies concerning Reduction of Minimum Trading Lots for Shares The reduction of minimum trading lots for shares is believed to expand the scope of investors. NTT will decide on this matter while taking into account such factors as shareholder composition, liquidity, and the cost of such measures. (4) Basic Approach to Corporate Governance and Status of Corporate Governance Policy Implementation NTT recognizes corporate governance as an important management issue in its practical implementation of shareholder-oriented management. NTT is striving to enhance its corporate governance, centered around its Board of Directors and Board of Auditors system. a) Description of corporate organization NTT has formed a Board of Directors with 11 members, including two outside directors. In principle, this Board of Directors meets once per month to make decisions and report on important management issues. The inclusion of outside directors with independent stances in the Board of Directors acts to bolster capabilities for overseeing the fairness of business transactions. NTT applies the corporate auditor scheme and has a Board of Auditors with five members, including two outside auditors. Members of the Board of Auditors attend meetings of the Board of Directors and other important management meetings, implement appropriate auditing of NTT's business transactions, and have a full-time organization and staff for these purposes. They also conduct audits in coordination with the auditors of NTT subsidiaries. In addition to the organs prescribed in the Commercial Law of Japan, NTT institutes various conferences and 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 conferences and committees engage in ad-hoc discussion of key issues concerning management on both the corporate and group levels, and thereby assist appropriate decision-making. b) Preparation of the internal control system and risk management scheme In accordance with the Internal Control - Integrated Framework advocated by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), NTT checks the preparation and operation of internal controls for the NTT Group as a whole, executes audit reviews to assure the correctness of the same, and performs a unified supervision with respect to high-risk items common to all Group companies. Given the huge influence of the NTT Group on Japanese society at large, NTT recognizes that it must not only strictly observe all laws and regulations, but also conduct its business with the highest sense of ethics. Accordingly, NTT adheres to rigorous corporate ethics standards. More specifically, in November 2002, it drafted an "NTT Group Corporate Ethics Charter" and instituted not only an internal system for related reporting and consultation but also an external one utilizing the services of attorneys. While working to create a corporate climate marked by a high degree of transparency and openness through such steps, it is also making continuous efforts to expand and strengthen educational activities and internal checks. In addition, NTT is developing appropriate management of business risks in a rapidly changing business climate. To this end, NTT is establishing schemes for provision against natural disasters, accidents, and other large-scale risks that are likely to adversely affect the entire Group, as well as for risk prevention, advance preparations for occurrence of risks, and both sure and prompt response in the event of the actualization of risks. |
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