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Governance

Corporate Governance

Basic Approach to Corporate Governance
Corporate Governance Structure
Evaluating the Effectiveness of the Board of Directors
Succession Plan
Determination Policy and Process for Officer Compensation

Basic Approach to Corporate Governance

We believe that strengthening the system of corporate governance in accordance with the purposes of each principle of the "Corporate Governance Code" of the Tokyo Stock Exchange is an important management issue for maximizing corporate value while meeting the expectations of various stakeholders, including shareholders and other investors, as well as customers, business partners, and employees. Therefore, we are working to ensure that our governance functions effectively based on our basic policies of ensuring sound management, executing appropriate decision-making and business activities, clarifying accountability, and maintaining thorough compliance.

Note that, as a result of gaining approval at the 40th Ordinary General Meeting of Shareholders held on June 19, 2025 as well as the Minister for Internal Affairs and Communications approving certain changes to our Articles of Incorporation, we transitioned from a company with an Audit & Supervisory Board to one with an Audit and Supervisory Committee.

To more fully flesh out our corporate governance structure, we will strive to sustainably increase the corporate value of the NTT Group as a whole.

A History of Strengthening Corporate Governance

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2025 -	Transition to a company with an Audit and Supervisory Committee	2025	Transitioning to a company with an Audit and Supervisory Committee to accomplish goals that include further fleshing out discussions on our management policy and strategy, strengthening the monitoring function of the Board of Directors, and evolving to achieve a governance model that makes it easier for overseas investors and other interested parties to understand our business as a global company Dissolving the Legal Office and establishing the Legal Department that directly reports to the President
2022 -	Strengthening of governance functions, diversification of members	2022	Increase in number of Board Members: from 8 to 10 (5 from outside) Increase the ratio of female directors, Audit & Supervisory Board Members, and executive officers to more than 30% Reorganize the Internal Control Office into an Internal Audit Department under direct control of the President
2021 -	Further strengthening of corporate governance	2021	Transfer the Appointment and Compensation Committee into the separate Nomination Committee and Compensation Committee based on their applicable functions Transfer the Sustainability Committee under the Executive Officers Meeting to a Committee reporting directly to the Board of Directors
2020 -	Separation of the functions of managerial decision-making / supervision and business execution	2021	Expanded ratio of performance-linked compensation: 30% → 50% Increased number of outside directors on Nomination Committee and Compensation Committee: 2 → 3 Transfer the existing Appointment and Compensation Committee into the separate Nomination Committee and Compensation Committee based on their application functions Disclosed skill matrix for Members of the Board and Audit & Supervisory Board members
2020 -		2020	Optimizing the size of the Board of Directors: 15 → 8 Ratio of outside directors: 27% → 50% Adoption of executive officers system Separation of the functions of managerial decision-making / supervision and business execution Disclosure of specific KPIs for officers' earnings-linked remuneration
2018 -	Further reinforcement of oversight function by enhancing diversity, advancement of disclosure	2019	Establiment of NTT, Inc. (strengthening of the governance of the global business), appointment of three foreign-national directors Conducting of evaluation questionnaire on the effectiveness of the Board of Directors Commencement of ESG information disclosure in notices of convocation
2018 -		2018	Appointment of two female directors (one inside and one outside), a Company first Increase in the number of outside Members of the Board: 2 → 4 Strengthening of the reflection of KPIs in performance-linked compensation Expansion and improvement of statements regarding the compensation of directors, strategic shareholdings, succession plans, and evaluations of the effectiveness of the Board of Directors
2011 -	Strengthening of information disclosure with an awareness of dialogue with stakeholders	2017	Introduction of notices of convocation that are viewable via smartphones
		2015	Response to Corporate Governance Code Establishment of independence standards for independent Members of the Board and Independent Audit & Supervisory Board Members Commencement of issuance of sustainability reports Commencement of disclosure of the notices of convocation before they are sent (henceforth, 42-45 days before the date of the convening of the Ordinary General Meeting of Shareholders, In Japanese and English on the same date)
		2011	Appointment of first female corporate officer (1 outside Audit & Supervisory Board Member)
2006 -	Strengthening of supervisory function and improvement of corporate governance transparency	2006	Increase in number of outside Audit & Supervisory Board Members: 2 → 3 Appointment of financial expert as Audit & Supervisory Board Member Commencement of disclosure of Corporate Governance Report
	Establishment of a foundation for corporate governance	2005	Establishment of Disclosure Committee Establishment of Nomination Committee and Compensation Committee Commencement of issuance of CSR reports
		2003	Increase in number of Audit & Supervisory Board Members: 4 members (2 inside members, 2 outside members) → 5 members (3 inside members, 2 outside members)
		1985	Appointment of multiple outside Members of the Board

Appointment of Officers

Policy to ensure that at least 50% of the Members of the Board are independent directors
Policy to increase the ratio of female Members of the Board and Executive Officers to at least 30%
A Nomination Committee and a Compensation Committee, each consisting of five members (three members, being a majority, are outside independent Members of the Board) have been voluntarily established as preliminary deliberation organizations for the Board of Directors.

The composition of our Board of Directors is based on our management's appointment policy under the NTT Group Personnel Policy, and we will appoint a broad range of human resources from both within and outside of the NTT Group who possess the skills necessary to contribute to the resolution of issues faced by the Group.

We expect outside Members of the Board to provide a wide range of management perspectives and expert opinions, and the promotion of diversity is also considered when appointing internal and outside Members of the Board. The Board of Directors has 16 Members of the Board, including eight outside independent Members of the Board (including four females), which brings the total percentage of outside Members of the Board to 50%. Note that, at NTT, in accordance with the provisions of Article 10, paragraphs 1 and 2 of the Act on Nippon Telegraph and Telephone Corporation, etc., a foreign national cannot serve as a Representative Member of the Board, nor can foreign nationals constitute one-third or more of the Members of the Board.

Corporate Governance Structure

NTT intends to appoint outside independent Members of the Board (excluding Audit and Supervisory Committee Members) to strengthen the function of appropriately supervising business execution. Furthermore, by adopting an executive officer system, NTT also intends to clearly separate management-related decision-making and supervisory functions of the Board of Directors from business execution functions of Executive Officers and improve its management flexibility. Additionally, NTT has voluntarily established a Nomination Committee and a Compensation Committee, each of which consists of five Members of the Board, including three outside independent Members of the Board, to further increase the objectivity and transparency of decisions relating to appointment and compensation. NTT has determined that governance functions based on an Audit and Supervisory Committee are sufficiently effective to achieve this purpose.

Governance Chart

Committee name	Function
Board of Directors	The Board of Directors has 16 Members of the Board, including eight outside independent Members of the Board, which brings the total percentage of outside Members of the Board to 50%. In addition, the introduction of an executive officer system that clearly separates the management decision-making and oversight functions from the business execution function ensures closer supervision of execution and enhanced management flexibility. In principle, the ordinary meetings of the Board of Directors are held once per month, and extraordinary meetings are held as needed. The Board of Directors discusses the group management strategies and makes decisions on matters stipulated by laws and regulations and on important matters related to company management and group management. Moreover, through such means as periodic reports from Members of the Board and Executive Officers on the status of business execution, the Board of Directors supervises the business execution of Members of the Board and Executive Officers. Each outside independent Member of the Board has extensive experience and a high level of integrity and insight. We believe that the outside independent Members of the Board will help strengthen the supervisory function for business execution and expect to incorporate the opinion they provide from their wide-ranging managerial perspective. With the objective of further strengthening the independence, objectivity, and accountability in decisions with respect to appointments and compensation of officers and related matters made by the Board of Directors, the Company has voluntarily established a Nomination Committee and Compensation Committee, each consisting of five Members of the Board, of which a majority (three) are outside independent Members of the Board, as preliminary review institutions of the Board of Directors, thereby increasing the effectiveness of governance. Moreover, in recognition of the fact that responding to sustainability issues is an important management challenge, the Company has voluntarily established a Sustainability Committee that reports directly to the Board of Directors. The committee will work to further promote initiatives after important issues and indicators have been decided by resolution of the Board of Directors.
Audit and Supervisory Committee	The Audit and Supervisory Committee has a total of five members, two of whom are also Members of the Board and three of whom are also outside Members of the Board (including one of each who is a female, for a total of two). The Audit and Supervisory Committee has an independent position that differs from that of business executors, based on which it conducts business and accounting audits and also audits the status of business execution by Members of the Board (excluding Audit and Supervisory Committee Members).
Nomination Committee / Compensation Committee	With the objective of further strengthening independence, objectivity, and accountability in decisions made by the Board of Directors with respect to appointments and compensation of the Members of the Board and officers, the Company has voluntarily established a Nomination Committee and a Compensation Committee, each consisting of five Members of the Board, of which a majority (three) are outside independent Members of the Board, as preliminary review institutions of the Board of Directors, thereby increasing the effectiveness of governance.
Executive Officers Meeting	Important corporate matters to be decided are, in principle and in advance, discussed at the Executive Officers Meeting, which is made up of senior vice presidents and others. The Executive Officers Meeting is held about once a week. To improve the transparency of management decision-making, one Member of the Board who is an Audit and Supervisory Committee Member participates in the Executive Officers Meeting.
Various Committees	A number of committees have been established below the Executive Officers Meeting to discuss specific important business execution-related matters. Major committees include the Technology Strategy Committee, which deliberates on the Group's R&D vision and technology development strategy; the Investment Strategy Committee, which examines investment projects that are larger than a certain scale; and the Finance Strategy Committee, which discusses basic financial strategies and issues. These committees, which are held as necessary throughout the year, are in principle chaired by the president or a senior executive vice president and are attended by relevant senior vice presidents and other designated members.

Evaluating the Effectiveness of the Board of Directors

The Board of Directors of the Company, which is a pure holding company, plays the role of monitoring the specific business operations of the Group companies based on the medium- to long-term business strategy of the entire Group.

The Board of Directors of the Company decides important items related to the Group's management that have passed the Executive Officers Meeting, which is made up of the Executive Officers and others, as well as the review of the various committees chaired by the President or a Senior Executive Vice President and attended by the relevant Executive Officers, while also monitoring the status of the execution of the duties of the individual Members of the Board and Executive Officers.

At meetings of the Board of Directors, based on the authority of the individual Members of the Board, current issues in group management and the initiatives being taken to resolve them are reported and reviewed, as well as initiatives for growing the business, such as investments and partnerships.

During the financial year, lively discussions were had, focusing on directions in which the NTT Group's business should head and future important initiatives such as the new medium-term management strategy "New Value Creation & Sustainability 2027 Powered by IOWN."

In addition to the advance explanations to independent Members of the Board of matters discussed at meetings of the Board of Directors, explanations of matters such as issues of immediate concern and the status of considerations were also given by the Chief Executive Officer. By striving to clarify the focus of execution of duties and the purpose of such initiatives, we are working to strengthen the supervisory function of the Board of Directors.

Furthermore, to allow the outside independent Members of the Board to more deeply understand the Company's business, meetings were held between the outside independent Members of the Board and representative Members of the Board to exchange ideas and opinions on the Company's management strategies, and they received explanations on topics such as the results of cutting-edge research by attending exhibitions and were introduced to talks using the latest ICT technology.

Additionally, ideas and opinions on issues in NTT Group management were exchanged between the outside independent Members of the Board and the Audit & Supervisory Board Members of the Company.

In these meetings, we received opinions on NTT's Board of Directors from the outside independent Members of the Board and the Audit & Supervisory Board Members that adequate information is provided and Members of the Board engage in active discussions, thereby ensuring the Board's effectiveness in their evaluation.

In addition, NTT implements an evaluation of the effectiveness of the Board of Directors annually for the purpose of strengthening the governance of the top management through continuous improvement of effectiveness of the Board of Directors.

During the fiscal year under review also, NTT implemented an evaluation of its effectiveness as the Board of Directors, with the support of a third-party organization, getting all Members of the Board and Audit & Supervisory Board Members to complete a questionnaire survey concerning the Board of Directors.

Questions were asked with regard to the role and responsibilities of the Board of Directors, its composition, its operation, and its satisfaction level. The results, which were compiled at the third-party organization, confirmed that the Board was sufficiently fulfilling its important role and responsibilities, with a majority of positive opinions for all the questions.

In addition, as a result of a dialogues held in order to reinvigorate strategic changes and the furtherance of discussions on the future business direction that should be taken by the NTT Group and material issues such as future important initiatives, positive opinions were received from all Directors, and the company has assessed this to mean that the efficacy of the Board of Directors has been ensured.

Breakdown of Board of Directors Resolutions and Reports

Succession Plan

With respect to successor candidates for the CEO position, we view it as important to secure successor candidates who can respond to technological innovation, market trends, and the speed of changes in the business environment. By securing the diversity of candidates through offering experience of a broad range of jobs and appointments to important posts, we are cultivating personnel for promotion who, in addition to possessing integrity and insight, are exceptionally well-suited to the times. The decision regarding the appointment is made by the Board of Directors after it has been presented for deliberation to the Nomination Committee, a preliminary review institution of the Board of Directors, which consists of five Members of the Board including three outside independent Members of the Board.

For future management candidates, we select various people of any age, gender, or field of expertise. Through education at the NTT University, which was started as a program for developing management candidates, we target diverse people who are full of desire to lead our transformation.

Determination Policy and Process for Officer Compensation

Regarding the composition and level of compensation for Members of the Board of NTT under the Determination Policy, in order to secure objectivity and transparency, NTT established the Compensation Committee, which consists of five Members of the Board, including three outside independent Members of the Board. Compensation matters are decided by the Board of Directors after deliberation by this committee. Moreover, decisions on the ratios and calculation methods for compensation for Members of the Board, and amounts of compensation for individual Members, are delegated from the Board of Directors to the Compensation Committee. The reason for delegating these authorities to the Compensation Committee is that such committee is composed of two Representative Members of the Board and three Outside Members of the Board, and we believe that it is able to make the appropriate judgements from an outside perspective while also taking a bird's-eye view of the Company's overall performance.

Compensation of individual Members of the Board (excluding outside Members of the Board and Members of the Board who are Audit and Supervisory Committee Members) consists of a monthly salary (base salary) and a bonus (short-term incentives) as well as NTT stock purchases through the Board Members Shareholding Association and performance-linked stock compensation (medium- to long-term incentives). In a case where standard business results are achieved, the compensation composition ratio for the President and CEO as well as the Senior Executive Vice President, is approximately 40:35:25 for monthly salary, short-term incentives, and medium- to long-term incentives, respectively. For other Members of the Board (excluding outside Members of the Board and Members of the Board who are Audit and Supervisory Committee Members), that ratio is set at 50:30:20.

Bonus performance Indicators

We have set performance indicators for financial targets, etc. included in our medium-term management strategy, and we use them to evaluate year-on-year improvements and the achievement of our targets.

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Category	Performance Indicators	Evaluation Weight	Evaluation Method	Results for Fiscal 2023	Results for Fiscal 2024
Financial Indicators	EBITDA	25%	Year-on-year improvement	¥3418.1 billion	¥3239.3 billion
Financial Indicators	EPS (earnings per share)	10%	Year-on-year improvement	15.1 yen	12.0 yen

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Category	Performance Indicators		Evaluation Weight	Evaluation Method	Targets for Fiscal 2024	Results for Fiscal 2024
Financial Indicators	EBITDA		25%	Achievement of targets	¥3330.0 billion	¥3239.3 billion
	Operating profit		10%		¥1810.0 billion	¥1649.6 billion
	Overseas operating profit margin		10%		8.5%	7.5%
	ROIC (return on invested capital) in existing fields		5%		6.6%	5.6%
Sustainability Indicators	Greenhouse gas emissions		5%		225.0 million t	211.4 million t
	Rate of new appointment of women to managerial positions		2.5%		30%	28%
	Employee engagement rate		2.5%		57%	61%
	Customer engagement rate	NPI	2.5%		73.6%	70.5%
	Customer engagement rate	NPS	2.5%		-26.2	-31.3

Clawbacks System

We have adopted a performance-linked stock compensation system for Members of the Board and officers of NTT and its major subsidiaries. A system has been established such that, in the event that an Eligible Member of the Board or officer engages in significant illegal or inappropriate activity, or takes employment at another company in the same industry without the permission of the company, the system enables the revocation of rights to receive Company Shares under the Compensation System with respect to such person (malus clause) and the request for the return of funds corresponding to previously delivered Company Shares (clawback).

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