NIPPON TELEGRAPH AND TELEPHONE CORPORATION

(9432)
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Corporate Governance Report (June 27, 2022) (pdf: 1.3 MB) 41pages

06/27/2022 | 02:46am EDT

Note: This document has been translated from the Japanese original for reference purposes only.

In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Corporate Governance Report

Last Update: June 27, 2022 Nippon Telegraph and Telephone Corporation Representative: Akira Shimada, President and Chief Executive Officer Contact: https://group.ntt/en/ir/contact/index.htmlSecurities Code: 9432 https://group.ntt/en/ir/

The corporate governance of Nippon Telegraph and Telephone Corporation (the "Company" or "NTT") is described below.

  1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other

Basic Information

1. Basic Views

NTT Group has a vision of working together with all of its partners to promote initiatives to resolve social issues through its business activities, in its role as "Your Value Partner." As an enterprise that is both public and commercial, NTT will resolve social issues by leveraging all of its management resources and capabilities to the fullest extent, including its research and development, ICT infrastructure and personnel, and by promoting digital transformation (DX) and CSR while collaborating with all of its partners.

Under this vision, in November 2018, NTT Group formulated and announced its "Your Value Partner 2025" Medium-Term Management Strategy (as amended in October 2021). In light of changes in society and the economy, NTT Group strives to contribute to the realization of a sustainable society through three innovations: a new management style that is compatible with a decentralized network society, the strengthening of domestic and global business, and the improvement of corporate value through ESG initiatives.

NTT believes that raising the effectiveness of corporate governance is an important management issue for meeting the expectations of various stakeholders, including shareholders and other investors, as well as customers, business partners, and employees, and for maximizing corporate value. Accordingly, NTT is working to strengthen corporate governance based on the purpose of the principles of the "Corporate Governance Code" by: (1) ensuring sound management; (2) executing appropriate decision-making and business activities; (3) clarifying accountability; and (4) maintaining thorough compliance as basic policies.

(1) Ensuring sound management

NTT, in order to strengthen functions for appropriately supervising and auditing business operations, ensures sound management by appointing outside Members of the Board and outside Audit & Supervisory Board Members as independent officers for implementing the supervision and auditing through the meetings of the Board of Directors and Audit & Supervisory Board. In addition, through its adoption of an executive officer system, NTT intends to clearly separate management-relateddecision-making and supervisory functions from business execution functions and improve its management flexibility.

(2) Executing appropriate decision-making and business activities

Decisions at NTT are made based on responsibility regulations setting forth the responsibilities and authorities for the president, the senior executive vice presidents, senior vice presidents and the officers of each organization under the supervision of the Board of Directors. Furthermore, in order to convene discussions regarding fundamental policies and other important business execution-related matters, and to smoothly execute matters delegated by the Board of Directors, NTT established Executive Officers Meetings

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comprising the senior vice presidents, to enhance deliberations on matters decided at Board of Directors' meetings, consultations are held in Executive Officers Meetings ahead of time, committees are formed for each type of significant business execution-related matters under the Executive Officers Meetings, in which relevant senior vice presidents and others also participate, to enable discussions towards the resolution and appropriate decision-making of matters. NTT implements appropriate business execution with respect to matters resolved and determined at Board of Directors' meetings or during Executive Officers Meetings, through the autonomous business operations of the major organizations, based on NTT's rules of organization, for which each major organization is responsible.

(3) Clarifying accountability

NTT is making efforts to disclose information in an appropriate, fair and timely manner, as it considers receiving the appropriate market ratings with respect to this area as important. Therefore, NTT strives to clarify accountability through various channels; NTT hosts presentations of financial results conducted by related officers, including the president, explains matters such as NTT Group's business progress and trends via a variety of press conferences and press releases, and swiftly discloses information via NTT's website.

(4) Thorough compliance

In order to comply with applicable rules and regulations, NTT formulated the NTT Group Corporate Ethics Policy ,which applies to all officers and employees of NTT Group, lays out the basic principles of corporate ethics and provides specific guidelines for ethical behavior. Based on this policy, NTT engages in business while maintaining high ethical standards. NTT believes that in order to make this effective, it must conduct on-going educational activities. NTT conducts corporate ethics and CSR and other training for its employees, and also conducts surveys to assess corporate ethics awareness of its employees. Furthermore, in order to foster a more open group-wide corporate culture, NTT has established a "Corporate Ethics Help Line" across the group as an internal and external point of contact for making whistleblower reports, which may be made on an anonymous or identified basis. NTT shall ensure that whistleblowers do not suffer disadvantages as a result of using these help lines. In addition, NTT Group has established and operates an independent reporting route to Audit & Supervisory Board Members as a contact point that is independent from management.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

NTT Group has implemented all principles of the "Corporate Governance Code" as revised in June 2021.

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[Disclosure Based on the Principles of the Corporate Governance Code]

  • Cross-Shareholdings(Principle 1-4)

NTT does not hold shares for the purpose of creating stable shareholders, and has no plans to hold such shares in the future. Conversely, NTT's business policy is to promote open innovation and collaboration with partners in a variety of industries with the aim of enhancing corporate value over the medium to long term. Based on this policy, at the Investment Strategy Committee, the Company verifies whether an individual holding will contribute to medium- to long-term enhancements in financial results and holds or sells shares accordingly. Among the comprehensive list of factors taken into consideration by the Investment Strategy Committee are the contribution to the medium- to long-term results of NTT, the progress of business collaborations, future considerations concerning business collaborations, trends in performance at investment targets and future business strategies of NTT. In addition, we apply the same policy to the strategic shareholdings of our Group companies, verifying every year whether individual holdings are appropriate, and taking steps to sell or take other actions accordingly.

Details of the status of NTT's holdings of such shares are as described in NTT's Annual Securities Report.

The total balance sheet amounts and the ratio to total equity as of March 31, 2022 are as follows:

(a) Total equity (consolidated)

¥9,018,132 million

(b) Total amount recorded on the balance sheet

¥754,501 million

(c) Ratio ((b)÷(a))

8.4%

(Note) The total amount recorded on the balance sheet in (b) above consists of the total of the amounts for NTT and NTT DOCOMO, as such two companies are the Annual Securities Report filer and its consolidated subsidiary with the highest amount, as required under the "Cabinet Office Ordinance on Disclosure of Corporate Information, etc."

With respect to exercising voting rights of strategic shareholdings, NTT exercises voting rights acquired through share ownership, as it sees fit and appropriate and upon determining whether it is an initiative that would contribute to the improvement of medium- and long-term corporate value, from the perspective of sustainable growth of the companies NTT invests in and improving corporate value for both NTT and the companies.

■ Related Party Transactions (Principle 1-7)

Transactions with directors and other important transactions must be approved by the Board of Directors in advance. NTT sets out fair and appropriate terms and conditions for all transactions considering market prices and other factors so as not to harm the interests of the company and the shareholders.

Transactions between directors and major shareholders are examined by persons in charge of legal affairs, among others, in accordance with internal regulations and other procedures and are regularly reported at Board of Directors' meetings attended by outside independent Members of the Board and outside independent Audit & Supervisory Board Members.

Furthermore, NTT approves all transactions according to the size and importance of each transaction based on internal regulations. NTT has a system in which Audit & Supervisory Board Members and the internal auditing department check the details of approvals.

  • Ensuring Company Diversity (Supplementary Principle 2-4-1)

(1) Views on Ensuring Diversity, Implementation of Measurable Targets and Disclosure of Current Progress

As of the filing date of this report, NTT's Board of Directors, Audit & Supervisory Board and Executive Officers are each least 30% composed of women. NTT Group has been working to ensure, develop and nurture a climate for diverse personnel in order to reflect a diversity of opinions in its business operations. NTT has

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set targets for female and mid-career hires, as set forth in the table below. NTT has been working to actively recruit foreigners and will work to increase their recruitment and promotion for the future.

Furthermore, across NTT Group as a whole, outside of Japan there are approximately 140,000 personnel working across 84 countries and regions worldwide (as of March 2021). NTT, Nippon Telegraph and Telephone East Corporation and Nippon Telegraph and Telephone West Corporation are prohibited by law (Article 10, Paragraph 1 of the "Act on Nippon Telegraph and Telephone Corporation, etc.") from appointing non-Japanese Members of the Board. Accordingly, amongst the six main companies, one non-Japanese board member has been appointed at NTT DATA.

In addition, through the job-based personnel system for high-ranking managers, it will be possible to secure a broad range of personnel, not limited to personnel within the company.

Subject

Measurable Target

Current Status

Women

Employment

30% per year

Achieved each year

since FY2013

Promotion to

30% of New Manager Appointment from

29.1% in FY2021

Managers and

FY2021

Directors

15% of Managers in 2025

8.7% in FY2021

Appointment as

25% to 30% of Directors in 2025

17.7% in June 2022

Core Personnel

External

Mid-Career Hires

Mid-career hire ratio of 30% in FY2023

32.5% in FY2021

Personnel

    • The table above provides the targets and current status at the six main companies (Nippon Telegraph and Telephone Corporation, NTT DOCOMO Inc., Nippon Telegraph and Telephone East Corporation, Nippon Telegraph and Telephone West Corporation, NTT Communications Corporation and NTT DATA Corporation).
  1. Policies for Personnel Development and Improving the Environment for Ensuring Diversity, and Status of Implementation

"NTT University," a program for developing candidates for management of NTT Group, maintains a female candidates ratio of at least 30%. With respect to specific development measures for female candidates, training and high-difficulty assignments are given to female employees of all levels, with the aim of producing female candidates for core personnel positions. In addition, trainings are conducted for personnel who have returned from parental leave and their supervisors.

In addition, as a means of developing global management personnel, every year NTT seconds approximately 40 managers from Japan to overseas operating companies in order to foster an environment in which they can experience global business.

With respect to the company environment, in order to achieve "work-in-life," remote work will become the default, with a policy of creating an environment that allows for flexible workstyles through the use of super flex-time and split shifts. In order to create a comfortable workplace environment for various types of personnel - whether they are minorities such as women, persons with disabilities or LGBTQ+ persons, or are personnel who face certain restrictions such as childcare or long-term care - NTT Group is developing human networks, providing trainings to nearby personnel (particularly supervisors) to acquire knowledge, transform mindsets and improve the corporate environment, while also actively promoting male participation in childcare.

At NTT Group, a "D&I Statement" has been formulated in order to promote D&I (diversity and inclusion). Please refer to NTT's website for details on specific initiatives, including ensuring diversity and developing personnel.

Based on the fact that management of corporate pension funds affects the stability of employee assets, and also has an effect on the company's financial condition, NTT Group is working to allocate and develop personnel with the necessary experience and qualifications to be able to conduct monitoring and other appropriate activities with respect to the organization in charge of the corporate pension.

  • Full Information Disclosure (Principle 3-1)
  1. Please see "1. Basic Views" of "I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information" in this report for a discussion of company objectives (e.g., business principles), business strategies and business plans. Furthermore, see NTT's website for details about the medium-term management strategy, which is described therein.
  2. Please see "1. Basic Views" of "I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information" in this report for a discussion of basic views and guidelines on corporate governance.
  3. Please see "Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" under "Director Remuneration" in "1. Organizational Composition and Operation" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" in this report for a discussion of board policies and procedures in determining the remuneration of senior management and directors.
  4. Please see "Composition of the Board of Directors, Nomination Procedures of Directors, etc. (Supplementary Principle 4-11-1)" of "1. Basic Views" of "I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information" in this report for a discussion of board policies and procedures in the appointment/dismissal of the senior management and the nomination of directors and kansayaku candidates.
  5. Since the fiscal year ended March 31, 2016, reasons for individual nominations and appointments when Member of the Board and Audit & Supervisory Board Member candidates are appointed have been explained in General Meeting of Shareholders reference documents. Please refer to NTT's website for details.
  • Initiatives Regarding Sustainability, Human Resources and Intellectual Property Resources (Supplementary Principle 3-1-3)

Through the promotion of the IOWN concept, which is based on high ethical standards and cutting-edge technology and innovation, NTT Group is working towards (1) co-existence with nature (Earth) (responses to environmental issues), (2) joint prosperity of cultures (groups, societies and countries) (responses to social issues) and (3) the maximization of well-being (happiness) (responses to human rights/Diversity & Inclusion).

For example, as a response to climate change, NTT formulated and announced the "NTT Green Innovation towards 2040" new environment and energy vision, in order to reduce NTT's environmental impact to zero and at the same time achieve economic growth. In addition to aiming to achieve carbon neutrality in 2040, as a means of contributing to the reduction of society's environmental impact, NTT is advancing a variety of initiatives, such as contributing to the reduction of greenhouse gases in Japan and worldwide by expanding the adoption of IOWN technologies from the telecommunications field to other industries. Furthermore, risks

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Disclaimer

NTT - Nippon Telegraph & Telephone Corporation published this content on 27 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 June 2022 06:45:09 UTC.


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