富士通（6702） – Corporate Governance Report

Corporate Governance Report Last Update: March 31st, 2022 Fujitsu Limited Takahito Tokita, Representative Director & CEO Contact: Public & Investor Relations Division Securities Code: 6702 https://www.fujitsu.com/global/ The corporate governance of Fujitsu Limited (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views Our basic approach to corporate governance and how the company streamlines mechanism and exercises corporate governance based on this approach are described in the Corporate Governance Policy (the Policy) in the following website. Corporate Governance Policy (“Policy”) (English Translation) https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf [Reasons for Non-compliance with the Principles of the Corporate Governance Code] Our company is implementing each of the principles of the Japan’s Corporate Governance Code. [Disclosure Based on the Principles of the Corporate Governance Code] [Principle 1.4 Strategic Shareholdings] The Company holds only those strategic shares with clear-cut objectives and meaningful significance in a positive manner. Board of Directors meetings examine the weighted average capital cost of the Company as the standard to evaluate quantitatively whether returns (quantitative factors, such as dividends and the state of transactions), or risks are well balanced with the cost. If quantitative significance in shareholdings is not detected, Board of Directors meetings will further evaluate whether there is a qualitative reason that provides backing for reasonableness to still hold those shares and discuss the continuation of such holdings. For FY2020, the Company sold 23 issues, and the Board of Directors meeting, held on June 24, 2021, discussed strategic shareholdings held by the Company as of the end of March, FY2020. The Company deals with strategic shareholders on an equal footing just like with other business partners. Even when strategic shareholders indicate their sales of shares, we do not prevent them from selling them. Said that, we sometimes call upon them the timing of sales, or ways of selling them. In addition, for the policy for strategic shareholdings and the standard of exercising voting rights as to the strategic shareholdings, please refer to 3.(4) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf [Principle 1.7 Related Party Transactions] – 1 – The Board of Directors performs the oversight on the transactions involving the conflict of interest by Directors in accordance with the relevant laws, regulations, and the Regulations of the Board of Directors. For the procedure framework, please refer to 2.(2)c of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf [Supplementary Principle 2.4.1 Ensure diversity in the promotion to core human resources] < Policies and voluntary and measurable goals for ensuring diversity > To realize the Group’s purpose, to “make the world more sustainable by building trust in society through innovation,” it is essential for the Group itself to create an environment and culture that allows each and every employee to harness others’ value systems and skills regardless of factors such as gender, nationality, age and to change the workplace into one that allows everyone to take on challenges in a fair and just manner. To that end, our Group as a whole seeks to ultimately achieve a 50% female employee ratio at every level and to provide opportunities for personnel of various nationalities and ages to flourish, so as to proactively create an environment that provides job satisfaction for everyone. As a first step towards achieving the above objectives, our Company and the domestic Group companies will push forward with several initiatives to achieve a domestic female managerial staff ratio of 30% (7.9% as of October 2021) as early as possible. For midcareer hires and foreign nationals , the Company performs promotions to middle managerial positions based on the individual’s skills, and there has been no unfavorable treatment regarding the promotions. Setting quantitative targets for middle managerial positions for midcareer hires and foreign nationals could potentially impair placement of the right person in the right place; therefore, we do not set quantitative targets. As part of our efforts to ensure the diversity mentioned above, one of the measures taken to achieve the female managerial staff ratio target is raising awareness among all employees and transforming management style through education and other means. Additionally, while hiring, developing, and promoting personnel to achieve our objectives, we will also implement diverse and flexible ways of working under our Company’s new work concept of “Work Life Shift” and provide support for our employees’ life events. For our Group’s views on securing diversity, please refer to the websites below. Fujitsu Group Integrated Report https://www.fujitsu.com/global/about/ir/library/integratedrep/ Diversity and inclusion https://www.fujitsu.com/global/about/csr/diversity/ [Principle 2.6 Fulfill the function as asset owner of corporate pension] The Company elects the one with experience of and insights into related operation as the manager of Fujitsu Corporate Pension Plan, which the Company and its subsidiaries participate in. The Company puts in place the structure where the manager is engaged in management over a long period of time. The Company also refers to an external consultant firm for advice on management. [Principle 3.1 Full Disclosure] (i) Company objectives (e.g., business principles), business strategies, and business plans In Fujitsu Way, our company shows the purpose of our existence in society, our values, and principles (code of conduct) for how each employee should behave. For Fujitsu Way, please refer to the following website. https://www.fujitsu.com/global/about/philosophy/index.html We disclosed our Management Direction in July 30, 2020. For our Management Direction, please refer to the following website. https://www.fujitsu.com/global/about/ir/library/presentations/ (ii) The Basic approach to corporate governance and guidelines The basic approach to corporate governance and how the company streamlines mechanism and exercises corporate governance based on this approach are described in the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf – 2 – (iii) Board policies and procedures in determining the remuneration of the senior management and Directors For the policies and procedures in determining the compensation of the Directors and Auditors (hereinafter, the term used for the combination of Directors and Audit & Supervisory Board Members), please refer to 2.(8) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf (iv) Board policies and procedures in the appointment and dismissal of senior management and candidates nomination of Directors and Auditors For the policies and procedures in the appointment and/or dismissal of Directors and Auditors, please refer to 2.(7) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf Given the term of the Company’s director is one year, the Company will not dismiss a Director during one’s tenure as a general rule, but the Company consider whether the Director should be re-elected or not during the appointment process. The Company delegates management execution authority to Corporate Executive Officer in accordance with the Policy on the Internal Control System. According to Representative Director’s proposal, the Board of Directors’ meeting makes a resolution on appointment of Corporate Executive Officer. According to Representative Director’s proposal, the Board of Directors’ meeting may dismiss relevant Corporate Executive Officer for lack of competency as defined by Agreement of Corporate Executive Officer (v) Explanations with respect to the individual appointments and/or dismissal and nominations For the individual appointments and/or dismissal and nominations of Directors and Auditors, the Company explains the reasons in the reference materials for the Annual Shareholders’ Meeting. Regarding the reference materials for the Annual Shareholders’ Meeting, please refer to the following website. https://www.fujitsu.com/global/about/ir/stock/meeting/ Appointment and/or dismissal of Corporate Executive Officer are disclosed on the website whenever required. [Supplementary Principle 3.1.3 Sustainability initiatives] Our Group’s initiatives regarding sustainability are disclosed in the Fujitsu Group Integrated Report and our Company website. Fujitsu Group Integrated Report https://www.fujitsu.com/global/about/ir/library/integratedrep/ Fujitsu Group’s sustainability https://www.fujitsu.com/global/about/csr/index.html In the Management Direction released on July 30, 2020, our Company raised two initiatives as part of our human capital investment, 1) recruiting sophisticated talent (consulting and other services) and 2) internal enhancements (reskilling). With regards to recruiting sophisticated talent, we have introduced a “personnel system for highly skilled professionals” with the objective of strengthening the recruitment of talented professionals in our Company’s priority areas, focusing on AI and security. Additionally, for highly skilled engineers who have contributed greatly to our Company’s business and have played an active role as the face of our Company, we award the title of “Global Fujitsu Distinguished Engineer,” which is certified as a common global standard. Going beyond the framework of country and organization, engineers are encouraged to learn from each other, work on resolving highly complex technical challenges, contribute to our Company’s business strategy and customer value creation, and transmit superior technical capabilities both within and outside the company. And by doing so we will attract superior technical personnel from the market. In terms of internal enhancements (reskilling), we will conduct reskilling training for our existing sales personnel so as to strengthen our “ability to make high value-added proposals,” which is critical for us to serve as our customer’s DX partner. Concurrently, in order to become a DX company, we are reinforcing support for the acquisition of knowledge and skills related to DX and the latest technologies for employees at our Company and all our domestic Group companies. The Management Direction released on July 30, 2020, can be found on the following website. https://www.fujitsu.com/global/about/ir/library/presentations/ – 3 – In order to achieve our purpose, our Company’s Management Direction Update released on April 28, 2021, defined seven key focus areas that will allow us to grow while also working to resolve societal issues together with our customers. To support these seven key focus areas from a technical standpoint, on FY2021 R&D Strategy Briefing held on October 12, 2021, we defined the following five areas: computing, networks, AI, data and security, and converging technologies. And our investments in intellectual properties will also focus on these five technology areas. Our Group’s investments in intellectual properties can be viewed on our website. Fujitsu’s intellectual property https://www.fujitsu.com/global/about/businesspolicy/tech/intellectualproperty/ Please refer to the following website for the Management Direction Update released on April 28, 2021, and the FY2021 R&D Strategy Briefing on October 12, 2021. https://www.fujitsu.com/global/about/ir/library/presentations/ Please refer to our Company’s website regarding climate change-related risks and earnings opportunities. TCFD-based information disclosure https://www.fujitsu.com/global/about/environment/tcfd/ [Supplementary Principle 4.1.1 The scope and content of matters delegated to the management] For the delegation of authorities by Board of Directors to Management Executives, please refer to 2.(6) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf [Principle 4.9 Independence Standards and Qualification for Independent Directors] The Company provides in two. (1)c, f of the Policy that Independent Directors and Independent Audit & Supervisory Board Members shall qualify for our Independence Standards. For Independence Standards, please refer to the Appendix of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf [Supplementary Principle 4.10.1 The authority and responsibilities of the Executive Nomination Committee and the Compensation Committee] For our view on the independence of the committee formation process regarding the Executive Nomination Committee, please refer to 2.(7) procedures and policy of Directors and Auditors nomination/dismissal. And for our view on the independence of the committee formation process regarding the Compensation Committee, please refer to 2.(8) procedures and policy of determining Directors and Auditors compensation on the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf For the authority and responsibilities of the Executive Nomination Committee and the Compensation Committee, please refer to the supplemental explanation related to voluntary committees in II. Business Management Organization and Other Corporate Governance Systems Regarding Decision-Making, Execution of Business, and Oversight in Management 1. Organizational Composition and Operation [Supplementary Principle 4.11.1 Appropriate combination of skills and other attributes of Directors based on factors such as the management environment and business characteristics] Our view on the balance of knowledge, experience, and skills of the Board of Directors as a whole and on diversity and board size are stated in 2.(1) and 2.(7) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf See below for the skill matrix of Directors and Auditors as of June 27,2022, which is announced in Nominations for Directors and Auditors on March 31, 2022. The nominations are subject to approval at the Annual Shareholders’ Meeting scheduled for June 27, 2022 https://pr.fujitsu.com/jp/news/2022/03/en/31-2.pdf For clarity, corporate governance status in this report other than the skill matrix is based on the information as of March 31, 2022. – 4 – [Supplementary Principle 4.11.2 Situation of Directors and Auditors who are in the management at other companies] For the situation of Directors and Auditors who are in the management at other companies, we explain about them if they fall under category of important positions in reference materials for the Annual Shareholders’ Meeting and Business Report. For reference materials for the Annual Shareholders Meeting, please refer to the following website. https://www.fujitsu.com/global/about/ir/stock/meeting/ For Business Report, please refer to the following website. https://www.fujitsu.com/global/about/ir/library/reports/ [Supplementary Principle 4.11.3 Summary of the results of analysis and evaluation for effectiveness of Board of Directors as a whole] It is stipulated in the Policy (2.(3)d) that the Board of Directors analyzes and evaluates the performance of the board of directors meetings every year to maintain and improve their effectiveness, which is publicized in our website (https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf). 1. Action taken in FY2020 based on the evaluation of FY2019 To improve the availability of documents as well as the efficiency of meetings of the Board of Directors and Independent Directors & Auditors Council, these documents have been digitized. Also, to facilitate access to information outside Board of Directors meetings, the company had business heads provide briefings on business overviews for Independent Directors and Auditors. Furthermore, Independent Directors and Auditors continued to hold the Independent Directors and Auditors Council in an effort to facilitate exchange of information and formulation of opinions between them, and private sessions hosted by Independent Director were introduced as a platform for Independent Directors and Auditors to form opinions. 2. Evaluation of FY2020 (1) Evaluation method The evaluation of FY 2020 includes an evaluation of the Chairman, and as in FY 2019, an anonymous questionnaire with a five-grade evaluation was conducted. From this fiscal year and onwards, self-evaluations by Directors and Audit & Supervisory Board Members are also being carried out. The results of the survey were reported at the regular Board of Directors Meeting and discussions based on the results were carried out at the meeting. Furthermore, the evaluation of the company’s Board of Directors by a proxy advisory firm was also reported. (2) Evaluation As a result of the above, the following evaluations were made. – Compared to the previous year, overall improvements were recognized. However, there is room for further improvement in document format and volume as well as the information provided. – To enable the review of high priority items, sharing information in advance and enhancing vital communication between board members is important. While continuing to hold the Independent Directors and Auditors Council, private sessions, and briefings on business overviews by Management Executives the company strives to provide a platform for the further provision of information and the exchange of views outside of the Board of Directors Meeting. [Supplementary Principle 4.14.2 Training policy for Directors and Auditors] For training policy for Directors and Auditors, please refer to 2.(9)b of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf [Principle 5.1 Policy for a Constructive Dialog with Shareholders] For our policy for a constructive dialog with shareholders, please refer to 3.(2) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf – 5 – 2. Capital Structure Foreign Shareholding Ratio More than 30% [Status of Major Shareholders] Name / Company Name The Master Trust Bank of Japan, Ltd. (for trust) Number of Shares Owned Percentage (%) 13.32 26,372,500 Ichigo Trust Pte. Ltd. Custody Bank of Japan, Ltd. (for trust) GIC PRIVATE LIMITED – C JP MORGAN CHASE BANK 385632 Custody Bank of Japan, Ltd. (for trust 7) Fujitsu Employee Shareholding Association STATE STREET BANK WEST CLIENT – TREATY 505234 Asahi Mutual Life Insurance Company SSBTC CLIENT OMNIBUS ACCOUNT Controlling Shareholder (except for Parent Company) Parent Company N/A N/A Supplementary Explanation 14,899,500 10,625,800 5,918,400 5,746,464 4,504,900 4,183,804 3,519,401 3,518,052 3,247,543 7.52 5.37 2.99 2.90 2.28 2.11 1.78 1.78 1.64 Notes 1: The shares held by The Master Trust Bank of Japan, Ltd. (for trust), Custody Bank of Japan, Ltd. (for trust) and Custody Bank of Japan, Ltd. (for trust 7) pertain to the trust business by the institution. 2: In the Report of Possession of Large Volume made available for public inspection (a report on change) dated April 21, 2020, BlackRock Japan Co., Ltd. and five (5) joint holders thereof are reported as the shareholders, but this has not been taken into account in the above “Status of Major Shareholders,” as the number of shares substantially held as of September 30, 2021 has not been able to confirmed by the Company. [Personal name or company name/number of shares held/shareholding percentage] BlackRock Japan Co., Ltd. and five (5) other companies /10,990,492 shares / 5.31% 3: In the Report of Possession of Large Volume made available for public inspection (a report on change) dated June 4, 2020, Sumitomo Mitsui Trust Asset Management Co., Ltd. and one (1) joint holder thereof are reported as the shareholders, but this has not been taken into account in the above “Status of Major Shareholders,” as the number of shares substantially held as of September 30, 2021 has not been able to confirmed by the Company. [Personal name or company name/number of shares held/shareholding percentage] – 6 – Sumitomo Mitsui Trust Asset Management Co., Ltd. and one (1) other company /10,437,099 shares / 5.04% 3. Corporate Attributes Listed Stock Market and Market Section Tokyo Stock Exchange, First Section Nagoya Stock Exchange, First Section March Fiscal Year-End Type of Business Number of Employees (consolidated) as of the End of the Previous Fiscal Year Sales (consolidated) as of the End of the Previous Fiscal Year Electric Appliances More than 1000 More than ¥1 trillion Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year More than 300 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder N/A 5. Other Special Circumstances which may have Material Impact on Corporate Governance ■Views and policies for Group management Fujitsu manages the Fujitsu Group with the aim of achieving continuous growth and the generation of medium- to long-term corporate value of the entire Group while also urging each Group company to realize its potential to the maximum extent possible. For some subsidiaries, we publicly list them with the aim of further improving their business value through diversification of the capital procurement necessary for sustainable growth and enhancing the value of the entire Group. By publicly listing subsidiaries, it is possible to focus on investment in specific businesses rather than just in the Group as a whole, thus contributing to diversifying investment opportunities. As there are some concerns regarding the possibility of a conflict of interest with minority shareholders and our publicly listed subsidiaries, we respect the independence of their management and make efforts to provide advice and support to enhance the corporate value of relevant subsidiaries by holding reporting sessions on an as-needed basis. To further promote our policies for group management, we established a department in February 2020 as a corporate function that specializes in formulating and conducting plans and measures for the most suitable group formation and corporate governance, thus handling the management of the Group including listed subsidiaries. Our policy is to turn non-core listed companies into strong independent businesses. We will consider their independence from the following perspectives: ensuring sustainable growth of the relevant business, maximizing the Company’s asset value, and considering the best timing for independence. ■Significance of each listed subsidiary [Significance of owning listed subsidiaries] Listed subsidiaries of the Company include the following two companies: FDK Corporation, and Shinko Electric Industries Co., Ltd. A. Shinko Electric Industries Co., Ltd. The company’s core business is the development, production, and sale of semiconductor packages. The company supplies products to semiconductor manufacturers in Japan and overseas. – 7 – As previously described in the policies for Group management, we consider that the following is the significance of owning publicly listed subsidiary: the perspectives of holding the ability to raise capital through direct financing from the capital market, maintaining and improving the motivation of its employees, and hiring of talented people, we can enhance the possibilities of sustainable growth and business value, which leads to providing investment opportunities in specific businesses rather than in our entire Group. B. FDK Corporation The company operates mainly in the battery and electronic component business. As previously described in the policies for Group management, we consider that the following is the common significance of owning publicly listed subsidiary: the perspectives of holding the ability to raise capital through direct financing from the capital market, maintaining and improving the motivation of its employees, and hiring of talented people, we can enhance the possibilities of sustainable growth and business value, which leads to providing investment opportunities in specific businesses rather than in our entire Group. Our Group hereafter will concentrate our management resources on Technology Solutions so as to further transform ourselves into a DX company. Our policy is to turn non-core listed companies into strong independent businesses. The Board of Directors will verify specific details to be considered concerning the maintenance of the listing of each listed subsidiary. [Measures to ensure the effectiveness of corporate governance] Fujitsu understands that our publicly listed subsidiaries make efforts to enhance corporate governance and provides support for these efforts. We recommend our listed subsidiaries become a Company with an Audit and Supervisory Committee to strengthen corporate governance. Accordingly, in all listed subsidiaries are ensured their independence by appointing Independent Directors and Directors dispatched from the Company maximize the corporate value of theirs. II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management 1. Organizational Composition and Operation Organization Form Company with the Audit & Supervisory Board Member [Directors] Maximum Number of Directors Stipulated in Up to 15 Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board Number of Directors Number of External Directors Number of Independent Directors External Director External Directors’ Relationship with the Company (1) Name Attribute Relationship with the Company* a b c d e g h f i j k Other ○ Chiaki Mukai 1 9 5 5 – 8 – Atsushi Abe Yoshiko Kojo Scott Callon Kenichiro Sasae * * * From another company Academic Other Other ○ Categories for “Relationship with the Company” ”○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category in the past “●” when a close relative of the director presently falls or has recently fallen under the category; “▲”when a close relative of the director fell under the category in the past a. Executive of the Company or its subsidiaries b. Non-executive director or executive of a parent company of the Company c. Executive of a fellow subsidiary company of the Company d. A party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the listed company or an executive thereof f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a Director/Audit & Supervisory Board Member g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only) (the director himself/herself only) i. Executive of a company, between which and the Company External Directors and Auditors are mutually appointed j. Executive of a company or organization that receives a donation from the Company (the director himself/herself External Directors’ Relationship with the Company (2) Designation as Independent Director ○ Supplementary Explanation of the Relationship Reasons of Appointment Ms. Chiaki Mukai is the Although Ms. Chiaki Mukai has not previously been Vice President of the involved with company management other than having Tokyo University of served as an external director, she has an impressive Science. There are personal history as a doctor who became Japan’s first business transactions female astronaut, and she exemplifies the Company’s between Fujitsu and spirit of taking on challenges at the cutting edge of Academic Corporation science. And she led discussion about executive Tokyo University that compensation in her capacity as the chairperson of the operates the university, Compensation Committee. Because the Company with which in fiscal expects that she will continue to be able to provide – 9 – entity) only) k. Others Name Chiaki Mukai – Atsushi ○ Abe 2020 the sum of oversight and advice from a fair and objective global transactions was about perspective based on broad knowledge of science and ¥61 million. technology, she has been re-appointed as an External Director. As noted on the left, Fujitsu has business transactions with Academic Corporation Tokyo University of Science that operates the Tokyo University of Science, where Ms. Mukai serves as Vice President. However, taking into account the scale of our sales, the amount of transactions is immaterial and does not constitute a conflict of interest. Consequently, Fujitsu considers Ms. Mukai to be independent and has designated her as an Independent Director. Through many years of experience in investment banking and private equity, Mr. Atsushi Abe has gained a deep understanding of the ICT industry and mergers and acquisitions. Since he became the Chairman of the Board of Directors in the previous year, he has been managing proceedings objectively from his perspective as an investor gained through his experience to date and dialogues with institutional investors and has been leading discussion. Because the Company expects that, in addition to being able to provide oversight and advice from a shareholder and investor perspective, Mr. Abe will continue to contribute to timely and decisive management decision-making and has been re-appointed as an External Director. Mr. Abe has never been a major shareholder, nor has he held a position involved in business execution of a major business partner of the Company. Therefore, Fujitsu considers Mr. Abe to be independent and designates him as an Independent Director. involved with company management other than having served as an external director, she served in important positions, including the President of the Japan Association of International Relations, and her research has for many years focused mainly on the impact of Yoshiko ○ – Although Ms. Yoshiko Kojo has not previously been Kojo – 10 – economic entities, including private companies, on international politics. The Company expects that she will be able to provide extensive advice and oversight concerning the Company’s responses to change in the external environment during a dramatic transition of international politics and initiatives for SDGs) based on her deep insight. Therefore, she has been re-appointed as an External Director. Ms. Kojo has never been a major shareholder, nor has she held a position involved in business execution of a major business partner of the Company. Therefore, Fujitsu considers Ms. Kojo to be independent and designates her as an Independent Director. ○ Mr. Scott Callon is the Having served at a foreign-owned securities firm, Mr. Scott Callon Chairman of Scott Callon currently serves as Chief Executive Officer Representative of Ichigo Asset Management, Ltd., a non-affiliated Executive Officer, CEO investment advisory firm specialized in investment in and Director, and Japanese stocks, and has experience of engaging in Chairman of the Board dialogues with investees as an institutional investor. In of Directors of Japan view of his experience, the Company expects that he will Display Inc. There are be able to provide oversight and advice from a business transactions shareholder and investors’ perspective. Therefore, the between Fujitsu and Company proposes reappointing him as an Independent Japan Display Inc. that Director. in fiscal 2020 the sum As noted on the left, Fujitsu has business transactions of transactions was with Japan Display Inc., where Mr. Callon serves as about ¥ 380 million. Chairman of Representative Executive Officer, CEO and Director, and Chairman of the Board of Directors. However, taking into account the scale of our sales, the amount of transactions is immaterial and does not constitute a conflict of interest. Additionally, Ichigo Trust Pte. Ltd., which jointly holds voting rights with Ichigo Asset Management, Ltd. where Mr. Callon serves as Chief Executive Officer, is our principal shareholder, though it does not fall under major shareholders stipulated in our Independence Standards. As he has never held a position involved in business execution of a major business partner of the Company, Fujitsu – 11 – Kenichiro ○ Sasae – considers Mr. Callon to be independent and designates him as an Independent Director. Although Mr. Kenichiro Sasae has not previously been involved with company management other than having served as an external director, he has served in important positions including the Vice Minister for Foreign Affairs, Ambassador Extraordinary and Plenipotentiary of Japan to the United States of America, and currently as the President of the Japan Institute of International Affairs. He has extensive knowledge and practical experience in international politics and economics. As the international situation becomes more complicated these days, the Company expects that he will be able to provide oversight and advice from a fair and objective global perspective based on his knowledge and experience. Therefore, the Company proposes appointing him as an Independent Director. The Japan Institute of International Affairs, where he serves as President, and the Company have no business dealings. He is neither a Major Shareholder nor has he held an executive management position with a major trading partner of the Company, and thus the Company believes that he satisfies the Independence Standards established by the Company. In accordance with listing regulations, the Company plans to report to the securities exchanges on which the Company is listed in Japan that he is an Independent Director. Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee Established Committee’s Name, Composition, and Attributes of Chairperson Committee Corresponding to Nomination Committee Executive Nomination Committee Committee Corresponding to Remuneration Committee Compensation Committee Committee’s Name All Committee Members Full-time Members 4 0 4 0 – 12 – Inside Directors External Directors External Experts Other Chairperson 1 3 0 0 Supplementary Explanation 0 4 0 0 External Director External Director The Company has established the Executive Nomination Committee and the Compensation Committee as advisory bodies for its Board of Directors for the process of nominating Directors and Audit & Supervisory Board Members, for ensuring the transparency and objectivity of its process for determining executive compensation, to enable efficient and substantial discussions, as well as to ensure the fairness in the structure and level of executive compensation. The Executive Nomination Committee deliberates on the candidates for Director and Audit & Supervisory Board Member positions in accordance with the Framework of Corporate Governance Structure and the Procedures and Policy for the nomination and dismissal of Directors and Auditors stipulated in the Policy, and it provides its recommendations or proposal to the Board of Directors. In addition, the Compensation Committee provides its recommendations or proposal on the level of base compensation and the method for calculating performance-based compensation to the Board of Directors in accordance with the Procedures and Policy of Determining Directors and Auditors Compensation, as stipulated in the Policy. Base compensation, and performance target setting and the paid amount linked to performance-based compensation for each Director and Auditor will be determined by the Representative Director and CEO with approval from the Compensation Committee. In FY 2021, Executive Nomination Committee consists of four Non Executive Directors (including three Independent Directors) and Compensation Committee consists of four Independent Directors. Members of the 2 committees are as follows. Additionally, the secretariats of both committees are operated by the Company’s HR and legal departments. < Executive Nomination Committee > Chairperson: Atsushi Abe(Independent Director) Members: Yoshiko Kojo Scott Callon Masami Yamamoto < Compensation Committee > Chairperson: Chiaki Mukai (Independent Director) Members: Yoshiko Kojo Scott Callon Kenichiro Sasae In FY2020, the Executive Nomination Committee met three times to discuss the election of Representative Directors including the CEO, the nomination of candidates for Director, etc. and provide its recommendations to the Board of Directors. The Compensation Committee met two times to discuss the level of compensation for Directors and Auditors, composition ratio, etc., and provide its recommendations to the Board of Directors. [Audit & Supervisory Board Members] Establishment of Audit & Supervisory Board Established – 13 – Maximum Number of Audit & Supervisory Board Members Stipulated in Articles of 5 Incorporation Number of Audit & Supervisory Board Members 4 Cooperation among Audit & Supervisory Board Members, Accounting Auditors and Internal Audit Departments The accounting auditor, Ernst & Young ShinNihon LLC, reports to the Audit & Supervisory Board concerning the audit plan and results. The accounting auditor also conducts exchanges of opinions when needed and carries out coordinated audits. The Internal Control & Audit Office serves as an internal audit group. This office audits the internal affairs of the entire Group in cooperation with the internal audit groups of each Group company. The Internal Control & Audit Office reports once a month, as a rule, to full-time members of the Audit & Supervisory Board on auditing plans for and results of internal audits, including matters relating to Group companies, and makes regular reports, once every quarter as a rule, to the Audit & Supervisory Board and accounting auditors. Additionally, the Internal Control & Audit Office reports the results of the internal audit, including matters related to the Group companies to the Board of Directors, via the Risk Management & Compliance Committee. Appointment of External Audit & Supervisory Appointed Number of External Audit & Supervisory Board Number of Independent Audit & Supervisory Board Members Members Board Members 2 2 External Audit & Supervisory Board Member’s Relationship with the Company (1) Name Attribute Koji Hatsukawa CPA Relationship with the Company* a b c d e f g h i j △ k * * * Hideo Makuta Lawyer Categories for “Relationship with the Company” ”○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category in the past “●” when a close relative of the director presently falls or has recently fallen under the category; “▲”when a close relative of the director fell under the category in the past l m a. Executive of the Company or its subsidiary b. Non-executive director or accounting advisor of the Company or its subsidiaries c. Non-executive director or executive of a parent company of the Company d. Audit & Supervisory Board Member of a parent company of the Company e. Executive of a fellow subsidiary company of the Company f. A party whose major client or supplier is the Company or an executive thereof g. Major client or supplier of the Company or an executive thereof h. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an Audit & Supervisory Board Member – 14 – i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity) j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the Audit & Supervisory Board Member himself/herself only) Board Member himself/herself only) k. Executive of a company, between which and the Company External Directors and Auditors are mutually appointed (the Audit & Supervisory l. Executive of a company or organization that receives a donation from the Company (the Audit & Supervisory Board Member himself/herself only) m. Others Name Koji Designation as Independent Member ○ External Audit & Supervisory Board Member’s Relationship with the Company (2) Supplementary Explanation of the Relationship Reasons of Appointment Hatsukawa CEO of External Audit & Supervisory Board Mr. Hatsukawa is a former Mr. Hatsukawa has been appointed as an PricewaterhouseCoopers Member because he has a wealth of Aarata. Fujitsu and auditing experience at global corporations PricewaterhouseCoopers as a certified public accountant, and he has Aarata have sales business broad knowledge of corporate accounting. dealings associated with As noted on the left, services of the Company, PricewaterhouseCoopers Aarata, where which in fiscal 2020 amounted Mr. Hatsukawa served as CEO, has a to about ¥ 0.4 million. business relationship with Fujitsu, but it is considered immaterial and not constituting a conflict of interest when taking into account the size of Fujitsu’s total sales. PricewaterhouseCoopers Aarata has not performed accounting audits for Fujitsu. Fujitsu has thus determined that there is no risk of a conflict of interest in representing the interests of regular shareholders. Therefore, Fujitsu considers him to be independent and has designated Mr. Hatsukawa as an Independent Audit & Supervisory Board Member. Mr. Hideo Makuta has no direct company management experience, but has profound insight into not only legal but also economic and social matters affecting corporate management, gained through his career as a public prosecutor and as a commissioner of the Japan Fair Trade Hideo Makuta ○ – – 15 – Commission. Therefore, Fujitsu considers him to be independent and has designated Mr. Makuta as an Independent Audit & Supervisory Board Member. [Independent Directors & Auditors] Number of Independent Directors & Auditors 7 Matters relating to Independent Directors & Auditors All External Directors and Auditors qualified to serve as Independent Directors & Auditors are identified as such. Incentive Policies for Directors Performance-based Compensation [Incentives] Supplementary Explanation Executive compensation is comprised of the following: “Base Compensation,” specifically a fixed monthly salary in accordance with position and responsibilities; “Bonuses” that are compensation linked to short-term business performance; and “Performance-based Stock Compensation,” which is a long-term incentive that emphasizes a connection to shareholder value. At the 107th Annual Shareholders’ Meeting held on June 22, 2007, a resolution terminating the retirement allowance system for executives was passed. Details of the Performance-based Compensation are described below. (1) Details of performance indicators for the calculation basis and reason for selecting them In order to provide Executive Directors with an incentive to achieve their performance targets for one fiscal year with regard to bonuses, and to provide Executive Directors with an incentive to increase corporate value over the medium to long term with regard to performance-based stock compensation as well as to further promote management from the perspective of shareholders, the Company has selected revenue and operating profit of the consolidated financial results, which are set out as management target indicators for each type of compensation, as indicators for bonuses and performance-based stock compensation. (2) Calculation method (a) Bonuses At the beginning of each fiscal year, the Company will present the Executive Directors with a base bonus amount in accordance with performance targets and respective rank. Then, at the end of the relevant fiscal year, the bonus amount to be paid will be calculated by multiplying the base bonus amount by the coefficient, which was set within a certain range in accordance with the level of achievement of the performance targets set in advance. No bonus will be paid if the degree of achievement is less than the preset lower limit. In addition, if the degree of achievement exceeds the preset upper limit, the amount obtained by multiplying the base bonus amount by the preset upper limit of the coefficient will be paid. (b) Performance-based Stock Compensation The Company will present to Executive Directors a base number of shares in accordance with respective rank, performance judging period (three fiscal years) and performance targets in advance. The number of shares, which is calculated by multiplying base number of shares by a fixed coefficient according to the level of achievement of the performance targets, is fixed at each fiscal year and upon completion of the performance judging period. When the performance judging period is over, the total number of shares is allocated to each applicable person under the condition that they continued to be in the position of an applicable person in the – 16 – plan throughout the performance judging period. Then, monetary compensation claims comparable to market value of allocated shares are provided to the Executive Directors. The Executive Directors invest these monetary compensation claims in allocated shares to acquire shares of the Company. The Executive Directors may transfer acquired shares of the Company at their own discretion unless they violate regulations regarding insider trading. Recipients of Stock Options N/A Supplementary Explanation N/A [Director Remuneration] Disclosure of Individual Directors’ Selected Directors Remuneration Supplementary Explanation Executive compensation is disclosed only for individual Directors and Auditors if they were paid ¥100 million or more consolidated compensation. Total compensation and total compensation by type for Directors and Auditors who were paid ¥100 million or more during fiscal 2020 is as follows. Filing company: Takahito Tokita (Representative Director and CEO) ¥230million (Base compensation of ¥69 million, bonuses of ¥58 million and Performance-based Stock Compensation of ¥102 million) Hidenori Furuta (Representative Director and COO) ¥155million (Base compensation of ¥51 million, bonuses of ¥37 million and Performance-based Stock Compensation of ¥66 million) Takeshi Isobe (Director and Corporate Executive Officer, SEVP) ¥100million (Base compensation of ¥36 million, bonuses of ¥24 million and Performance-based Stock Compensation of ¥39 million) Consolidated subsidiaries: – For fiscal 2020, total compensation to Directors and Auditors was as follows: – Directors Compensation paid to External Directors – Audit & Supervisory Board Members Compensation to External & Supervisory Board Members Audit paid 10 people ¥623 million 5 people 7 people 4 people ¥75 million ¥105 million ¥33 million (Base compensation of ¥294 million, bonuses of ¥120 million and Performance-based Stock Compensation of ¥208 million) (Base compensation of ¥75 million) (Base compensation of ¥105 million) (Base compensation of ¥33 million) *1 Includes Audit & Supervisory Board Members who resigned in fiscal 2020. *2 The total amount of monetary compensation to Directors was resolved to be ¥600 million or less per year at the 106th Annual Shareholders’ Meeting held on June 23, 2006 and the total amount of non-monetary compensation was resolved to be ¥300 million or less per year and the total number of common stock of the Company to be allocated to be within 43,000 shares* per year at the 117th Annual Shareholders’ – 17 – Meeting held on June 26, 2017. The Company is paying the compensation shown in the above table, which is within these limits. The total amount of monetary compensation to directors was resolved to be within ¥1,200 million or less per year (including ¥150 million per year for external directors) at the 121st Annual Shareholders’ Meeting held on June 28, 2021. At this Annual Shareholders’ Meeting, separate to the limit on monetary compensation for directors, the total amount of non-monetary compensation was resolved to be ¥1,200 million or less per year and the total amount of common stock of the company to be allocated to be within 75,000 shares per year. *The Company conducted consolidation of shares at a rate of one share for every ten shares effective October 1, 2018, and thus the number of shares after the consolidation of shares is indicated here. *3 The total amount of compensation to Audit & Supervisory Board Members was resolved to be ¥150 million or less per year at the 111th Annual Shareholders’ Meeting held on June 23, 2011. The Company is paying the compensation shown in the above table, which is within these limits. *4 For performance-based stock compensation, the amount charged to expenses during fiscal 2017 is stated. Policy on Determining Remuneration Amounts Established and Calculation Methods Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

To secure exceptional human resources required to manage the Fujitsu Group as a global ICT company, and to further strengthen the link between its financial performance and shareholder value, while at the same time improving its transparency, executive compensation is comprised of the following: “Base Compensation,” specifically a fixed monthly salary in accordance with position and responsibilities; “Bonuses” that are compensation linked to short-term business performance; and “Performance-based Stock Compensation,” which is a long-term incentive that emphasizes the connection to shareholder value. – Base compensation is paid to all Directors and Audit & Supervisory Board Members. A fixed monthly amount shall be determined for each executive in accordance with the position and responsibilities of each executive. – Bonuses shall be paid to Executive Directors. The amount of a bonus shall reflect business performance in the respective fiscal year. – As a specific method for calculating a bonus, Fujitsu shall adopt an “On Target model” that is based primarily on consolidated revenue and consolidated operating profit as indices and the amount shall be determined in accordance with the degree of achievement of the performance targets for the respective fiscal year. – Performance-based stock compensation shall be granted to Executive Directors, in order to share the profit with shareholders and as an incentive to contribute to enhancement of medium- to long-term performance. – A base number of shares in accordance with respective rank, performance judging period (three years) and mid- to long-term performance targets in terms of consolidated revenue and consolidated operating profit, and coefficient according to performance achievement level vis-à-vis the mid- to long-term performance targets shall be set in advance. The number of shares to be allocated for each fiscal year shall be calculated by multiplying the base number of shares and the coefficient according to the performance achievement level, and the total number of shares calculated shall be allocated upon completion of the performance evaluation period. < Composition Ratio for Each Type of Executive Compensation> – 18 – – With the aim of setting competitive compensation that contributes to securing and maintaining exceptional human resources, executive compensation shall be determined based on the financial position of the Company, comparing the compensation composition ratio and compensation levels for each executive position at other companies with similar business lines and similar scale as benchmarks. The ratio of performance-based compensation to the total compensation for Executive Directors shall be determined so as to strengthen the link between the Group’s financial performance and shareholder value by setting the higher ratio to the higher rank. In the decision process, the Compensation Committee shall deliberate to ensure objectivity and validity. – – [Supporting System for External Directors and Auditors] Fujitsu supports External Directors and Auditors through the Legal, IP& Internal Control Unit (Secretariat of Board of Directors Meeting and Independent Directors & Auditors Council Support Office) and Auditing Support Division). This responsibility involves complying with requests from External Directors and Auditors to provide information and explain about Fujitsu or the entire Fujitsu Group that is required for management oversight or audits. Depending on the information, relevant business unit managers are made available to provide additional explanations. Furthermore, to allow board members to gain a proper understanding of the details prior to the meeting, materials relevant to the Board of Directors Meetings, such as agenda items, are shared with all board members (Directors and Audit & Supervisory Board Members) via the system. [Status of Persons who have retired from Representative Director and CEO, etc.] Name Title/ Position Content of Operation etc.） Form and Condition of Services Resignation Date Term (Fulltime/Non-Full time, Paid/Unpaid from CEO, Etc. – – – – – – Total Number of Senior Executive Advisor (Sodanyaku)/Advisor (Komon) who have retired – from Representative Director and CEO, etc. Other matters Fujitsu abolished its senior executive advisor (Sodanyaku) and advisor (Komon) system, effective March 31, 2018, in order to clarify management responsibilities and strengthen corporate governance by the resolution of its Board of Directors Meeting. Fuitsu will enter into commission contracts with retiring officers, who will be known as “senior advisors” or “senior fellows,” on an individual basis and subject to a resolution of the Board of Directors, in cases where such treatment of retiring officers is indispensable as they are to be appointed as an officer of an unaffiliated organization, or where the individual’s expertise in specific fields is particularly useful for Fujitsu’s business operations. 2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System) (1) Overview of Corporate Governance Structure – 19 – The Company has a Board of Directors to serve as a body for making important decisions and overseeing management. The Board of Directors delegates the decision-making authority over business execution to the Representative Directors and subordinate Corporate Executive Officers to the broadest extent that is permitted by law and the Articles of Incorporation of the company and is considered to be reasonable and will mainly perform as oversight and advisory function. Moreover, the Board of Directors has been formed with Non-Executive Directors at its core so as to enable correction and remediation of errors, insufficiencies, and recklessness in business execution. And by ensuring that External Directors, who are highly independent and hold diverse perspectives, constitute the majority of the members of the Board of Directors, the oversight and advisory function of the Board of Directors is strengthened. Furthermore, in order to better define the management responsibility of the Directors, their terms were reduced from two years to one year in accordance with a resolution at the June 23, 2006 Annual Shareholders’ Meeting. The Board of Directors is comprised of 9 members in total: 3 Executive Directors and 6 Non-Executive Directors (including 5 External Directors). The Company held 14 Board of Directors meetings in FY2020 (including twice extraordinary Board of Directors meetings) to discuss matters including progress in the formulation of the Management Direction, business reformation and measures for implementing them as well as to decide a new management system based on the recommendation of the Executive Nomination Committee. Except one extraordinary Board of Directors meeting with a single External Director absent, all the other meetings were attended by all members. The Company has an Audit & Supervisory Board that performs the auditing and oversight functions. The auditing and oversight functions are carried out by Audit & Supervisory Board Members, who review the Board of Directors as well as business execution functions and attend important meetings, including meetings of the Board of Directors. The Audit & Supervisory Board has four members, comprising two full-time Audit & Supervisory Board Members and two External Audit & Supervisory Board Members. The Company held 8 Audit & Supervisory Board meetings in FY2020, mainly to discuss audit policy and plans, the audit method of Accounting Auditors and the properness of the audit results, and the Key Audit Matters. Internal Audit Departments made reports and full-time members of the Audit & Supervisory Board reported matters of importance to External Audit & Supervisory Board Members, which were discussed at Audit & Supervisory Board meetings. Except one Audit & Supervisory Board Members meeting with a single Audit & Supervisory Board Member absent, all the other meetings were attended by all Audit & Supervisory Board Members. The activities of Audit & Supervisory Board Members during FY 2020 included attending and expressing opinions at meetings of the Board of Directors, meetings of Independent Directors and other important meetings, inspecting important approval documents, exchanging opinions with Representative Directors, auditing operations of the head office and subsidiaries, exchanging information with auditors of subsidiaries, hearing reports from Accounting Auditors, hearing the status of an audit and its results from the Internal Audit Department, and hearing the status of whistle-blowing activities from the Compliance Department. In addition, with respect to the Key Audit Matters that were adopted as early as in FY 2019, we continued to hold a sufficient number of discussions and deliberations with Accounting Auditors in FY 2020. The discussion topics were potential risks of material misstatements in the consolidated financial statements and impacts of, and developments in, material events, etc. that occurred in FY 2020. In response to the requirements of Japan’s Corporate Governance Code, which facilitates the activities of Independent Directors and Auditors, and in order to invigorate discussions on the medium- to long-term direction of the Company at its Board of Directors Meetings, the Company believes it essential to establish a system that enables Independent Directors and Auditors, who maintain a certain degree of separation from the execution of business activities, to consistently gain a deeper understanding of the Company’s business. Based on this recognition, the Company established the Independent Directors and Auditors Council in FY2015, which consists of all Independent Directors and Auditors (five Independent Directors and two Independent Auditors), and discusses the medium- to long-term direction of the Company, shares information, and exchanges viewpoints so that each can formulate their own opinions. In FY2020, the Independent Directors and Auditors Council met nine times. The members shared information and exchanged viewpoints on the Company’s management direction, the scope of business of the Company and of the Fujitsu Group, etc. Based on the knowledge gained through the Council, each Independent Director and Auditor provided advice to the Board of Directors. – 20 – (2) Status of Business Execution Organs For the Status of Business Execution Organs, please refer IV1 . (3) Status of Accounting Audits and Internal Audits The accounting auditor, Ernst & Young ShinNihon LLC, reports to the Audit & Supervisory Board concerning the audit plan and results. The accounting auditor also conducts exchange of opinions when needed and carries out coordinated audits. The four certified public accountants associated with Ernst & Young ShinNihon LLC who performed the accounting audit were Messrs.Yuichi Mochinaga, Yoshihiko Nakatani, Tomoko Tanabe and Kohei Koyama in FY2020. In addition, they were assisted by a further 43 certified public accountants, 18 accounting assistants, and another 78 persons, all associated with Ernst & Young ShinNihon LLC. The Internal Control & Audit Office (with 54 members) serves as an internal audit group. This office audits the internal affairs of the entire Group in cooperation with the internal audit groups of each Group company. The Internal Control & Audit Office reports once a month, as a rule, to full-time members of the Audit & Supervisory Board on auditing plans for and results of internal audits, including matters relating to Group companies, and makes regular reports, once every quarter as a rule, to the Audit & Supervisory Board and accounting auditor. The Internal Control & Audit Office