Governance
Framework for Hiring, Retention, and Compensation
With reference to the various guidelines put forth by the International Labour Organization (ILO) and other bodies, the NEC Group Human Rights Policy acknowledges employees’ three primary labour rights—the right to organize, the right to collective bargaining, and the right to collective action. In addition, the labour agreement that NEC has concluded with NEC labor unions guarantees the right of workers to bargain collectively and stipulates that management must consult with workers if any changes are to be made to important labour conditions, such as wages and work hours.
As a forum for such discussions, a central labour and management council meeting is held biannually.
At NEC Corporation, the labour agreement states that all employees are labor union members, except for managers and certain general employees engaged in designated operations.
NEC’s labor union is called the NEC Workers’ Union, and is a member of the NEC Group Federation of Workers’ Unions, which is a federation of workers unions of certain NEC Group companies (Approx. 45,000 union members as of March 2025).
Furthermore, the NEC Group Federation of Workers’ Unions is a member of an umbrella organization, the Japanese Electrical, Electronic and Information Union. Labour-management relationships are stable, and there are no particular issues of note.
Approach
The NEC Group needs to acquire and retain talented employees in order to develop products, services and solutions that society accepts. In doing so, the Group potentially competes with multinational technology companies possessing extensive resources. Therefore, the NEC Group’s Human Resources Division constantly strives to hire and retain the personnel required by the divisions that drive the NEC Group’s businesses, including the growth areas of the Mid-term Management Plan. Given these efforts, hiring and labour costs may increase. In addition, as technology and industry trends evolve, there could be an increasing need to hire diverse, socially aware talent who have various values, abilities, backgrounds, and unconventional skills. Specifically, recent advancements in digitalization and automation have increased demand for personnel with skills in AI, machine learning, data science and statistical analysis. Competition to acquire such personnel is therefore expected to become more intense. To attract personnel with these skills it will be necessary to complement traditional recruiting methods with diverse methods such as referrals (employee introductions) and scouting.
Consequently, if a large number of talented employees leaves the Company, if the NEC Group is unable to hire new talented personnel, or if it is unable to ensure diversity in its workforce, it may be difficult for the Group to achieve its business objectives and it may fail as a Social Value Innovator to provide products, services and solutions that society accepts.
Initiatives Related to Recruitment and Retention
Hiring
1. Initiatives to Hire New Graduates
NEC conducts initiatives to secure diverse human resources through job-matching hiring.
Starting with the new graduate hires who joined in April 2024, the Company has been implementing job-matching hiring consisting of division- and job-specific hiring1 in which the division and job type to which a prospective employee will be assigned are determined at the time of employment offer, as well as open-division hiring in which only the job type is determined at the time of employment offer.
We are also expanding our Division-Based Internship Program, where various NEC divisions set themes and accept students by role or division. In fiscal year 2025 (combining summer and winter sessions), more than 1,000 students participated across approximately 150 themes.
NEC has taken harassment incidents very seriously during its new graduate recruitment activities for employees joining the Company in April 2026. We are working to prevent any recurrence and are striving to ensure greater transparency in our hiring practices.
To ensure that students can feel secure in their job-hunting process, all employees involved in new graduate hiring sign a pledge to follow our recruitment guidelines, and we are rigorously enforcing adherence to these rules. We have thoroughly communicated the rules for meetings between students and employees. When meeting with students, employees are required to submit prior notice and post-meeting reports to their direct supervisors and the HR recruitment team.
1. About 50 job descriptions are published during recruitment, and students apply by selecting their preferred division/role combination. Successful applicants are guaranteed to be initially assigned to the division and role for which they applied. Division- and job-specific hiring accounts for approximately 70% of hiring.
2. Initiatives for Mid-Career Hires
To realize “the right person at the right job and the right time,” NEC has conducted a wide-ranging review of the way it utilizes human resources. We are promoting mid-career recruitment (544 hires in fiscal year 2026) to enable immediate execution of our business strategy and accelerate job-based human resources management, including the use of external talent.
- In fiscal year 2026, NEC Corporation hired 182 employees through direct sourcing methods, such as referral recruitment that leverages employee networks and direct scouting.
3. Inclusion of Mid-career Hires
In light of the increasing number of mid-career hires, the following initiatives are being implemented.
4. Support Provided to Supervisors of Departments Accepting Mid-career Hires
- Four-day orientation for mid-career hires
- Distribution of onboarding manuals to departments to which mid-career hires are assigned
- Collection of employee feedback via the Voice of Employees questionnaire after a fixed period upon joining NEC
Mid-career hires have diverse approaches and perspectives based on their experience working at other companies outside of NEC Corporation. These employees serve as the catalyst for cultural transformation by putting forth ideas to improve existing operations in their assigned places of work.
Attrition
NEC’s employee turnover rate is calculated by dividing the number of employee resignations by the number of employees at the end of the relevant fiscal year (employees who join or resign during the fiscal year each counted as one employee).
Resignations also include retirement at mandatory retirement age and transfers to affiliated companies.
Turnover Data (Data Collection)
Employee Evaluations
1. Evaluations That Lead to Individual Growth
NEC has implemented an evaluation system which is based on dialogue between employees and their managers to promote individual growth. All employees hold one-on-one meetings with their managers to confirm whether their goals are aligned with the organizational strategy and their individual roles, and also to discuss plans for individual growth and career development. We encourage holding one-on-one meetings at least twice a month to discuss goals, their progress, and career development.
NEC is also implementing the following initiatives to promote individual growth.
- We evaluate performance, and also provide feedback and guidance on behavior in accordance with NEC Group’s universal “Code of Values”
- We implement 360-degree feedback called “Feedback From Others” to encourage multi-perspective input
- We provide management enhancement training designed to empower managers to cultivate their team members’ autonomy, creativity, motivation, and proactive behavior, thereby maximizing team performance
- When there is a business necessity, assignments such as changes in job roles might be carried out even if it is not the employee’s intention. However, the assignment should be explained to the employee by the 10th of the month before the official announcement to allow time for preparation and transition
Supporting Diverse Workstyles for Employees with Many Years of Experience
1. Continued Employment
- Introduced a continued employment system for employees who wish to work beyond the age of 60. The system’s maximum age for continued employment increased to 70 in fiscal year 2024.
- NEC has operated a recruiting system and flexible treatment based on the system for continued employment that matches the needs of individuals and hiring organizations, based on the type of work, job description, employment terms, and other conditions.
- From fiscal year 2025, we revised the evaluation system for continued employment and integrated it into the same annual evaluation process used for regular employees. By standardizing the processes from goal setting to performance evaluation and bonus decisions, we strengthened performance management for continued employment and ensured that evaluations are reflected in employee treatment.
2. Provide Support for Job Assignment and Placement Both Within and Outside the Company
Launched in fiscal year 2022, NEC Life Career, Ltd. provides a career consultation and matching service to boost employees’ sense of career ownership through a lifelong career at NEC, creating opportunities for employees with many years of experience to make long-term contributions to society in ways suited to their lifestyles.
Compensation Initiatives
Compensation
NEC aims to be an “Employer of Choice,” striving for global business growth by establishing a mutual relationship where both the Company and employees choose each other. As a continued act of “investment in people,” we aim to attract, engage, and retain highly marketable talent and strengthen our global competitiveness by implementing market-competitive compensation based on job-based human resources management and differentiated rewards aligned with each individual’s expected role and contributions. Based on this approach, NEC will implement a wage increase of approximately 7% in fiscal year 2027, equivalent to fiscal year 2026, and continue investing in people. In addition, we will significantly raise total compensation, including stock-based incentives, for strategic positions.
Compensation for non-managerial personnel is determined based on consultations with the labor union and requests raised during the annual spring labour-management negotiations. In addition to bonuses, which are calculated based on the Company’s performance and individual evaluations, both managerial and non-managerial employees are also eligible for overtime pay at premium rates.
1. Payment of Appropriate Wages
In determining compensation, NEC complies with applicable laws and regulations in each country and region. For example, in Japan, we comply with minimum wage requirements and conduct regular checks to confirm that there are no violations.
The starting salary for new graduate hires exceeds Tokyo’s minimum wage as of October 2025 (1,226 yen/hour).
2. Wage Disparity Between Men and Women
The disparity between wages of male and female (female to male ratio) workers at the Company and at many consolidated subsidiaries is in the 70s percent. The different numbers of men and women in management positions, which have relatively high wages, is likely to have an impact on the overall disparity. The wage disparity by position of the Company is around the mid-90s percent, which is considered small.
Details on the Wage Disparity Between Men and Women (Data Collection)
For initiatives to close the gender pay gap, please refer to the following.
Retirement Benefit System and Stock Compensation Program (NEC Value Shares)
In addition to offering a retirement benefit system for regular employees, we are introducing a new employee stock compensation program called “NEC Value Shares” starting in fiscal year 2026, including enhancements to the existing NEC Employee Stock Ownership Plan (ESOP). This system also applies to certain contract employees in line with the principle of “equal pay for equal work.”
1. Retirement Benefits System (Retirement Allowance System and Pension Plan)
NEC’s retirement benefits system has two components: a retirement allowance system that accumulates funds during employment and pays them at retirement, and a corporate defined contribution pension (DC pension) plan. A fixed percentage of annual income is contributed monthly as a part of the retirement benefit to create a compensation linked and market-competitive retirement benefit system. In light of workforce diversity, we have eliminated the traditional Japanese practice of basing retirement benefits on years of service or age.
We have built a DC pension governance framework through constructive collaboration between the workers union and management within the NEC Group. This has enabled us to create a competitive investment lineup, enhance ongoing investment education, offer free consultations with financial experts, and disclose DC pension utilization status to employees in comparison with competitors. These initiatives support employees’ career ownership while strengthening the mutual relationship between NEC and its people as they choose each other.
2. Stock Compensation Program (NEC Value Shares)
As part of efforts to build a highly engaged workforce and continuously strengthen global competitiveness, we have introduced the NEC Value Shares stock compensation program for employees, starting in fiscal year 2026. Through this program, we aim to share NEC Group’s core values with employees and enhance awareness of our business performance and stock value, thereby driving sustainable growth and corporate value over the medium to long term.
Beginning in fiscal year 2026, NEC started granting stock compensation to approximately 400 employees, primarily those in strategic positions such as seneior directors. The program will be expanded to include the Company and select NEC Group companies expected to make significant medium- to long-term contributions, with stock compensation awarded strategically. In addition, we have expanded our ESOP system, making approximately 74,000 NEC Group employees eligible to participate. During fiscal year 2027, NEC plans to introduce a mechanism under which employees participating in the stock ownership plan will receive Company shares free of charge.
The ESOP is open to employees of NEC and major Group companies in Japan. Employees may voluntarily join and purchase NEC shares by contributing a set amount from their monthly salary or bonuses. The ESOP encourages participation by offering a matching incentive based on the contribution amount. Setting aside a fixed amount each month enables asset formation for plan members over the medium to long term.
The ESOP fosters a greater sense of employee participation in company management. In addition, these initiatives help enhance corporate value, leading to increases in stock prices and asset formation for members.
Benefits and Welfare System
1. “Cafeteria-Style” System
The NEC Group has introduced a “cafeteria-style” system (Will be) that allows employees to select benefits according to their diverse individual needs and receive them as benefits.
Based on the employee benefits concept of “Growth & Well-being,” NEC offers programs that support balancing work with childcare, nursing care, and household responsibilities; programs for self-development and health promotion; refreshment programs to maintain physical and mental well-being; and programs that support asset formation so that each employee can grow and work comfortably and energetically.
In particular, employees receive more generous support when using the program for self-development and health promotion than for other menu options, thereby encouraging utilization consistent with the employee benefits concept and promoting behavioral change.
Furthermore, in addition to basic earned points, the Company provides employees engaged in childcare and nursing care with special points that can be used for each activity to support work-life balance. In addition, the Company provides Challenge Points for employees with disabilities to support improvements in their daily lives and work efficiency.
2. Asset Formation Service “Shines” for Employees
NEC and major domestic Group companies have introduced “Shines.” “Shines” is an asset formation service that combines the independent financial advisory (IFA) business of our Group company Japan Asset Management Co., Ltd. with NEC’s digital finance technologies. Financial professionals provide optimal asset formation and investment advice to NEC Group employees, tailored to the Group’s human resources, retirement benefits, and benefits and welfare systems. As of February 2026, a cumulative total of over 36,000 employees attended seminars, and nearly 5,000 used the consultation services. We are also expanding the service to clients based on our in-house success.
Please see below for more details.
“Shines”: Asset Formation Service for Employees (Japanese language only)