Corporate Governance

Latest Update : Nov.6, 2024

Corporate Governance System

Diagram of Corporate Governance Structure

Corporate Governance Structure

① Board of Directors	The 12 directors (including 4 outside directors) make prompt and highly strategic decisions and supervise management at regular monthly meetings of the Board of Directors and extraordinary meetings held as necessary. Significant business matters related to our domestic and overseas Group Companies are reported to and resolved by the Board of Directors.
② Nomination and Compensation Committee	This committee is established as an advisory body to the Board of Directors to improve transparency and objectivity in the process of nominating candidates for directors and determining their compensation. The chairperson of this committee is an independent Outside Director and at least half of the members are independent Outside Directors.
③ Audit & Supervisory Board Meeting	The Ordinary Audit & Supervisory Board meetings are held once every month in principle and extraordinary meetings are held accordingly, to discuss and adequately analyze specific issues. In addition, quarterly meetings are held with the Representative Director, Chairman CEO and Outside Directors to exchange respective views.
④ Senior Executive Officer Council	This Council serves as an advisory panel for the Representative Director, Chairman CEO. Matters related to business operations are discussed by the Senior Executive Officer Council in basically a monthly meeting or in extraordinary Senior Executive Officer Council when necessary.
⑤ Internal Auditing Office	The Internal Auditing Office regularly audits the Group Companies. Internal audits are designed to correct nonconforming or inappropriate operational procedures and improve the quality and efficiency of operations in accordance with internal audit regulations.
⑥ Special Committees	The Company has established committees for the purpose of monitoring and enhancing the effectiveness of governance regarding specific matters necessary for business operations, such as Compliance, Risk Management, Environmental Management, Information Security, Quality Management and Patents, etc.
⑦ Independent Auditors	KPMG AZSA LLC carries out the Company's accounting audits pursuant to the audit service agreement it has concluded with the Company for the implementation of audits under the Companies Act and audits under the Financial Instruments and Exchange Act. In order to monitor the independence of the auditing firm with respect to accounting audits, the Company seeks the consent of the Audit & Supervisory Board regarding the details of the audit service agreement, etc. and the amount of compensation.

Members of each institution (◎ is chairperson)

Positions	Name	Board of Directors Meeting	Nomination and Compensation Committee	Senior Executive Officer Council	Audit & Supervisory Board
Representative Director, Chairman CEO	Yoshihisa Kainuma	◎	○	◎
Representative Director, Vice Chairman	Shigeru Moribe	○		○
Director, President COO & CFO	Katsuhiko Yoshida	○		○
Director, Vice President Executive Officer	Ryozo Iwaya	○		○
Director, Senior Managing Executive Officer	Shigeru None	○		○
Director, Senior Managing Executive Officer	Satoshi Mizuma	○		○
Director, Managing Executive Officer	Katsutoshi Suzuki	○		○
Director, (Non-Executive)	Takashi Matsuoka	○
Outside Director	Yuko Miyazaki	○	◎
Outside Director	Atsuko Matsumura	○	○
Outside Director	Yuko Haga	○	○
Outside Director	Hirofumi Katase	○	○
Standing Audit & Supervisory Board Member	Masahiro Tsukagoshi				◎
Standing Outside Audit & Supervisory Board Member	Hiroshi Yamamoto				○
Outside Audit & Supervisory Board Member	Shinichiro Shibasaki		○		○
Outside Audit & Supervisory Board Member	Makoto Hoshino				○
Others				○^*1

*1 The Senior Executive Officers Meeting is comprised of seven Representative Directors and Executive Directors, as well as Managing Executive Officers and Executive Officers appointed by Representative Director, Chairman CEO.

Reasons for Adoption of Current Corporate Governance System

In addition to establishing a Board of Directors and an Audit & Supervisory Board as bodies under the Companies Act, the Company has established a Nomination and Compensation Committee and Senior Executive Officer Council as discretionary bodies to supplement those functions.
The Company has adopted this system because it achieves effective governance. It does this by the Board of Directors, including Outside Directors, overseeing business execution and making rapid and highly strategic management decisions while the Audit & Supervisory Board Members, including Outside Audit & Supervisory Board Members, audit the execution of the responsibilities of Directors from an objective and independent standpoint.

Main agenda items at Board of Directors meetings

Management strategy, M&A, Midterm Business Plan, Director compensation and nomination of officers, Reorganization and personnel transfers, Capital investment and financing, Risk management, Compliance, Next generation human resource development, Environment, Renewable energy, Issues based on effectiveness evaluation.

Disclosure of Summary of the Results on Analysis and Evaluation its Effectiveness as a whole

We periodically verify the members, agenda and operational status of the Board of Directors in terms of whether the entire Board of Directors is functioning appropriately. This is to ensure that the Board of Directors effectively fulfills its roles.

With this, we evaluated the effectiveness of the Board of Directors to extract issues and identify problems and strengths. Every Director and Audit & Supervisory Board Member undertakes a self-assessment with a written questionnaire with the involvement of a third party in March every year. The purpose of this is to look back at progress on improvements from the previous fiscal year and to discover important issues for the next fiscal year.

For the effectiveness evaluation in 2023, the total score on the five-point scale evaluation was deemed to have improved compared with the previous fiscal year, and the identified issues were also deemed to have improved. After taking into account the objective opinion of the third party, it was confirmed that there continued to be no problems concerning effectiveness for the Board of Directors.
For fiscal 2024, in addition to taking necessary responses regarding improvement matters for operational aspects based on the questionnaire and third party opinions, we established issues that we identified "themes to be discussed," including further enhance discussions on the company's basic policies and strategies, including medium- to long-term management strategies (including management strategies for each business domain and business portfolio strategies), sustainability (including the empowerment of women and work style reform), and risk management.
We will continue to clarify issues at the Board of Directors meetings and follow up on them through the PDCA cycle in order to make continuous improvements and improve the effectiveness of the Board of Directors.

Issues and results of initiatives based on the evaluation of the effectiveness of the Board of Directors conducted in March 2023

Results of evaluation of the effectiveness of the Board of Directors conducted in March 2024, issues, and initiatives for the current fiscal year

Supporting System for Outside Directors and/or Outside Audit & Supervisory Board Members

Support for Outside Directors is basically handled by the Secretariat of the Board of Directors, but the relevant departments appropriately handle as necessary. With regard to Outside Audit & Supervisory Board Members, the Company strives to maintain close contact with full-time Audit & Supervisory Board Members and share information. In addition, the Company distributes materials and gives advance explanations on the necessary agenda items for the Board of Directors meetings in advance to Outside Directors and Outside Audit & Supervisory Board Members in order to ensure that they understand the details of the agenda and reported items as soon as possible.

Also, the Company establishes opportunities for visits to major business sites including overseas and explanations by members of these business sites for Outside Directors and Outside Audit & Supervisory Board Members in order for them to gather information about the Company's organization, business operations and business sites, etc.

Cooperation among Audit & Supervisory Board Members, Independent Auditors and Internal Audit Departments

The Audit & Supervisory Board periodically holds meetings with the Internal Auditing Office, listens to and given opinions on annual audit plans and their objectives, etc., and receives reports about all internal audit results. In implementing audits, the Audit & Supervisory Board holds prior discussions on important auditing points and other matters, and joins and observes internal audits where necessary. In addition, the Audit & Supervisory Board receives explanations of the audit structure, audit plan, and audit implementation status from KPMG AZSA LLC, the Company's independent auditor, as well as carries out information sharing and information exchanges, etc. It also joins accounting audits conducted of domestic business sites and Group Companies, through which it regularly checks the suitability of the auditing method.

Changes in governance-related indicators

Organizatinal Body		Unit	76th FY2021 (Apr.2021-Mar.2022)	77th FY2022 (Apr.2022-Mar.2023)	78th FY2023 (Apr.2023-Mar.2024)
Board of Directos Meeting	Number of Directors	persons	12	11	12
	Number of Executive Directors	persons	7	6	7
	Number of Outside Directors	persons	5	5	5
	Number of female Directors	persons	2	3	3
	Average age of Directors	years old	64.8	64.8	64.9
	Number of Board of Directors Meeting held	times	13	16	12
	Attendace rate at Board of Directors Meeting	%	100	100	100
	Attendace rate of Outside Directors	%	100	100	100
Nomination and Compensation Committee	Number of members	persons	5	6	6
	Number of outside members	persons	4	5	5
	Average age of members	years old	68.6	66.5	67.5
	Number of Committee held	times	7	6	7
	Attendace rate at Committee	%	94.3	97.6	95.2
	Attendace rate of Outside members	%	100	100	100
Audit & Supervisory Board Meeting	Number of Audit & Supervisory Board members	persons	4	4	4
	Number of Outside Audit & Supervisory Board members	persons	3	3	3
	Average age of Audit & Supervisory Board members	years old	61.8	62.8	64.0
	Number of Audit & Supervisory Board Meeting held	times	16	14	15
	Attendace rate at Audit & Supervisory Board Meeting	%	100	100	100
	Attendace rate of Outside Audit & Supervisory Board Meeting members	%	100	100	100

* The above figures are as of each fiscal year-end. Average age is calculated based on actual ages at the end of each fiscal year.