Outside Director Interview

Mr. Katsu, IIJ's president, had an interview with Mr. Takashi Tsukamoto, IIJ's outside director.

Q: What is your overall assessment of IIJ's current Board of Directors?

A: In the extremely fast-changing IT industry, the top management of Mr. Suzuki, Chairman, and Mr. Katsu, President, have taken control of the entire group under their strong leadership, and each director has been firmly executing his or her responsibility, resulting in the sustainable growth of our business. Under these business circumstances, I have evaluated that the Board of Directors has been effectively functioning with a mainly focus on monitoring to support our group's stable growth and increase in its corporate value.

Q: Please describe discussion and atmosphere at the Board of Directors meetings.

A: The meeting is held once a month in principle and lasts for normally one to two hours, which are not so long. However, various managerial indicators are presented in a format that makes it easy to understand the business situation at a glance, and important issues and risks are clearly indicated, which have led to very effective and efficient reporting and decision making. The atmosphere is very open for discussion, and diverse and forthright discussions actively have taken place by outside directors based on their own backgrounds. In the past, top management mostly answered questions, but recently the number of comments from directors and executive officers in charge has increased, bringing more depth to the discussions.

Q: Please discuss the evaluation of effectiveness of the Board of Directors.

A: Since the enactment of the Corporate Governance Code, the evaluation of effectiveness has been conducted in-house. A questionnaire consisting of approximately thirty questions and free opinions is sent to all directors and company auditors on an annual basis, and the annual trends of the evaluation have been monitored. The points raised in the assessment have been improved by the following fiscal year, and I consider that the level of effectiveness regarding the Board of Directors has been steadily improving. I think this is a good example of our attitude that we consider it to be important to make practical improvements rather than spending excessive resources on procedures. A very good cycle is in place.

Q: Would you discuss how the voluntary Nomination and Remuneration Committee has been operating?

A: With regard to the determination of directors' remuneration, firstly, the Nomination and Remuneration Committee is consulted on the draft of the remuneration determination policy. In its deliberations, the committee recognizes that we are a growing corporate group in an expanding market; therefore, the remuneration for directors is designed to encourage the enhancement of performance and corporate value from a long-term perspective while maintaining a balance between fixed and performance-based remuneration rather than being overly short-term performance-linked.
In addition, as for the nomination of candidates for directors, the representative directors present a nomination proposal to the Nomination and Remuneration Committee based on the candidate selection criteria. The Nomination and Remuneration Committee holds discussions focusing on whether candidates have extensive experience and a high level of expertise appropriate to the requirements of directors to fulfill the management philosophy. For full-time directors, we have selected candidates who are well versed in the IT industry, and who can embody our management philosophy including members who have been with IIJ since its inception.

Q: Please comment on the status of IIJ's internal controls.

A: I recognize that our governance is based on the concept that we will continue to fulfill the management philosophy that we have set forth. In order to realize the concept, business growth, including scale, is a key prerequisite and at the same time, we would like to support medium- and long-term growth by ensuring that the governance system is well implemented. The basic principles that underlie our control environment are well known throughout the group. I evaluate that a necessary and sufficient internal control system has been established and it has been functioning effectively.

Q: Are there any other interesting aspects of the Board of Directors meeting operation?

A: Briefings on the status of each business segment and other information are given to outside directors and company auditors after each board meeting. These are useful in understanding business trends and background. Recently, "Board of Directors Dashboard" function has implemented on the intranet. It aggregates managerial information and is used by outside directors and company auditors as an effective tool. I consider these to be important systems that support better operation of the Board of Directors meetings.

Q: What are your thoughts on the future challenges of the Board of Directors?

A: In the expanding IT market, we have achieved steady growth based on our Internet technological capabilities, highly specialized human resources, and corporate customer base. The Board of Directors believes that we are entering a phase that requires discussion from a long-term perspective on how to further solidify and continue sustainable growth, how to achieve further growth in the next stage that would not be an extension of the current growth, and what kind of future vision we should aim for. I hope that the Board of Directors will deepen discussions on the next major steps while monitoring business execution and managing risks, especially now that business performance is strong.

Outside Director Mr. Takashi Tsukamoto Career & current positions in and outside IIJ

April 1974 Joined The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho Bank, Ltd.) April 2004 Managing Executive Officer (Head of EMEA) of Mizuho Corporate Bank, Ltd. April 2009 President and CEO of Mizuho Financial Group, Inc. June 2011 President and CEO of Mizuho Bank, Ltd. Chairman of Mizuho Financial Group, Inc. July 2013 Chairman of Mizuho Bank, Ltd. April 2014 Senior Advisor of Mizuho Financial Group, Inc. April 2017 Honorary Advisor of Mizuho Financial Group (current position) June 2017 Director of IIJ (current position)