Message from a Full-time Audit & Supervisory Board Member

Message from a Full-time Audit & Supervisory Board Member : “A Flat Organization and Unrestricted Communication” Masato Suzaki

From general manager of the legal department to audit & supervisory board member

After joining the SoftBank Group in 2002, I served as general manager of the Legal Department for 16 years. In 2017, I was appointed as a full-time Audit & Supervisory Board member. During my tenure at the Legal Department, I actively stated my opinions. On many occasions, however, I felt the limitations of working within a legal framework. Although I must take even greater responsibility for my own statements, my recent appointment as a full-time Audit & Supervisory Board member has allowed me to make broader statements without restrictions of such a framework.

A challenge I face is that, unlike my time as general manager of the Legal Department when I always had a finger on the pulse of frontline operations and had quick access to the latest information, I am now farther away from the frontline operations, and it takes more time to catch up with details. Nonetheless, my desire to contribute to the SoftBank Group remains the same as it was when I joined it. Mindful of my position as an Audit & Supervisory Board member elected by shareholders, I will perform my auditing role thoroughly by checking for any potential issues in management decision-making or any signs of noncompliance. At the same time, I intend to be outspoken to help the SoftBank Group improve its efficiency and generate more profits. To this end, efforts to keep abreast of the frontline operations is essential, even if it is more difficult to do so than when I was serving as general manager of the Legal Department.

Further, my own experience can be useful to the SoftBank Group. To become a genuinely global corporation, the SoftBank Group needs to form a world-class organization. I spent 10 years overseas during my 20-year career at a general trading company. Therefore, I feel I am in a good position to provide the SoftBank Group with advice regarding overseas operations.

Revamping the audit & supervisory board scheme for more engaged discussions

Since my appointment as a full-time Audit & Supervisory Board member, I have helped reform the scheme of the Audit & Supervisory Board. For example, only full-time Audit & Supervisory Board members used to attend proposal briefings in advance of the Board of Directors' meetings. At present, part-time Audit & Supervisory Board members are also invited to attend. This allows Audit & Supervisory Board members to scrutinize the details of the proposals in advance and has upgraded the quality of the proposals as well as improving the members' understanding. Previously, the monthly Audit & Supervisory Board meetings were sometimes simply briefings without much in-depth discussion. Now, in contrast, Audit & Supervisory Board members hold discussions after the briefings, and we are providing more feedback at the meetings of the Board of Directors or to the CEO. As a result, I believe the quality of the discussions has improved.

Measures to curb noncompliance risk

CEO Masayoshi Son once stated that it is impossible to completely eliminate noncompliance, and I agree. What is important is to have a system for responding promptly when problems arise. The SoftBank Group has an open corporate culture. Even the CEO and other members of the senior management team pay attention to the opinions of junior employees. Moreover, there are few organizational barriers between divisions. Should a compliance issue arises, the SoftBank Group's flat organization structure, in which divisions cooperate with each other, would enable an agile and appropriate response without any attempt at concealment. Maintaining this culture will help the SoftBank Group's governance function effectively.

Establishing a code that clearly sets out noncompliance will be very difficult as deciding on the details thereof will be practically endless. What is critical is to always keep a fundamental commitment to compliance. For example, some business models inadvertently incorporate some form of bribery. However, the awareness to reevaluate one's own business model could help achieve fundamental solutions rather than relying solely on stopgap measures.

Tasks for the SoftBank Group going forward

It can be said that the biggest management issue for the SoftBank Group going forward will be formulating a management structure after CEO Masayoshi Son leaves office. While management by a group of co-executives is conceivable, this arrangement would not function effectively if executives were in competition with each other or unable to state opinions frankly. In such a scenario, executives would conceal embarrassing incidents in their own divisions, leading to dysfunctional governance. To prevent this type of situation from developing, it is essential for the executives to exchange opinions with each other now and build relationships of mutual trust. As I mentioned earlier, lively communication between divisions and the ease of sharing information between them are among the SoftBank Group's strengths. Even though the nature of my role as an Audit & Supervisory Board member sets me apart from daily operations, by making an effort to talk to the members of each division, I am hoping to create an environment that is free from physical or mental barriers. In a vertical organization structure, each division tries to resolve all issues independently. However, this approach could lead to unexpected pitfalls. Maintaining an environment in which employees are aware of what is happening across the SoftBank Group, even if it is something that does not seem to directly concern them, will increase the effectiveness of the compliance hotlines and naturally strengthen the compliance system. Regardless of the governance system in place, there is no cause for worry as long as the environment enables unimpeded information sharing, discussion, and problem-solving beyond divisional boundaries should compliance issues arise.