Corporate Governance

Basic Concept

The Company recognizes that corporate governance is "to clarify the fairness, transparency, and legality of corporate decision-making and responsibility systems to shareholders and society" and regards it as an important management issue. To live up to the trust and expectations of all stakeholders, we are committed to the following basic policies.

Policy

Corporate Governance Structure

The Board of Directors, which includes four outside directors, makes decisions on management policies, etc., and supervises the execution of business operations, and the Board of Corporate Auditors audits the execution of duties by directors. The Company has also established the Nomination Committee and the Compensation Committee as advisory bodies to the Board of Directors to enhance corporate governance.

Members per Institution (as of September 2024) and Attendance Rate in FY2023

• ◎ Indicates the chairperson or committee chairperson.

Corporate Governance Structure

Board of Directors

The Board of Directors consists of 10 directors (four of whom are outside directors), and holds regular meetings four times a year in principle, with extraordinary meetings held as necessary. The Board of Directors monitors and supervises the status of business execution by the Directors by deliberating on matters stipulated in laws and ordinances, the Articles of Incorporation, and the Board of Directors Regulations, in addition to reports on business execution by the Directors in charge, and by exchanging questions, proposals, and opinions among the Directors. The Company's Articles of Incorporation stipulate that the Board of Directors may adopt resolutions based on written resolutions with the consent of all Directors.

Board of Corporate Auditors

The Board of Corporate Auditors consists of three members: two full-time Corporate Auditors (one of whom is an Outside Corporate Auditor) and one part-time Corporate Auditor (an Outside Corporate Auditor). In cooperation with outside directors and the Internal Audit Office, they audit the decision-making process of the Board of Directors and the status of business execution by directors.

Management Committee

It is attended by the President, and Director, Managing Executive Officers (and related directors and corporate auditors, as necessary), and is responsible for decision-making on matters entrusted by the Board of Directors (excluding matters exclusively decided by the Board of Directors as stipulated in the Companies Act), as well as deliberating, deciding, and managing policies and plans for business execution. In addition to decision-making on matters entrusted by the Board of Directors (excluding matters exclusively decided by the Board of Directors as stipulated in the Companies Act), the Board of Directors deliberates, decides, and manages policies and plans for business execution.

Nomination Committee and Remuneration Committee

The Company has established the Nomination Committee and the Remuneration Committee as voluntary advisory bodies to the Board of Directors. The purpose of the Nomination Committee and the Remuneration Committee, as voluntary advisory bodies to the Board of Directors, is to enhance the transparency and objectivity of the decision-making process of the Board of Directors for decisions on matters such as nomination and compensation and to strengthen corporate governance. The Committee consists of three outside directors, one outside corporate auditor, and one internal director selected by resolution of the Board of Directors, and is chaired by an outside director.

Officers

The Company's Board of Directors consists of 10 directors, including four outside directors (including one foreign male and one foreign female), each with a wealth of knowledge and experience in corporate management and international business development, regardless of nationality, race, or gender, and we believe that the Board functions well as an effective Board of Directors.
The Board of Corporate Auditors consists of three corporate auditors, including two outside corporate auditors. One of the corporate auditors has sufficient knowledge of finance and accounting, and one of the corporate auditors is an attorney at law with sufficient knowledge of legal matters.

Composition of the Board of Directors and Board of Corporate Auditors

Nomination and Election Policy and Dismissal Criteria for Directors and Corporate Auditors

The policies and procedures of the Board of Directors for the election and dismissal of senior management and the nomination and dismissal of candidates for Directors and Corporate Auditors are as follows.

1. Policies and procedures for the appointment of candidates for directors and corporate auditors, including senior management
   <Director>
   （Policy）
   The applicant must meet the following criteria.
   1. (1) A person who fully understands and can put into practice the "Management Philosophy," "Management Policy," and "Employee Code of Conduct".
   2. (2) A person who has a strong will to maximize shareholder value and corporate value and who can exercise strong leadership to that end.
   3. (3) Those with practical insight and mature business judgment skills
   4. (4) A person with a high level of ethics, integrity, and values
   （Procedure）

   The Nomination Committee, chaired by an outside director, deliberates on this matter and resolves the matter at a meeting of the Board of Directors.

   <Corporate Auditor>
   （Policy）
   The applicant must meet the following criteria.
   1. (1) A person who has excellent character, insight, and high ethical standards, and who can fulfill the responsibilities of his/her position.
   2. (2) A person who can secure independence from business executors and maintain a fair and unbiased attitude.
   3. (3) At least one person with sufficient knowledge of finance and accounting
   （Procedure）
   The Nomination Committee, chaired by an outside director, deliberates on these matters, and after obtaining the consent of the Board of Corporate Auditors, the Board of Directors passes a resolution.
2. Policies and procedures for dismissal of directors and corporate auditors, including senior management
   （Policy）
   If any one of the following criteria is met, the proposal for dismissal will be made.
   1. (1) A socially reprehensible relationship with antisocial forces is recognized.
   2. (2) Violation of laws, regulations, the Articles of Incorporation, or other Group regulations, causing significant loss or business disruption to our Group.
   3. (3) Significant impediment to the execution of duties.
   4. (4) Each requirement of the appointment criteria is no longer met.
   （Procedure）
   If circumstances arise that require the dismissal of a Director, Corporate Auditor, or senior management member, the Nomination Committee shall deliberate the matter promptly, and the Board of Directors shall take into consideration the results of such deliberation and pass a resolution for the dismissal of the Director, Corporate Auditor, or senior management member, respectively. The dismissal of directors and corporate auditors is carried out following the provisions of the Companies Act, etc.
   The reasons for the election and dismissal of directors, corporate auditors, and senior management will be disclosed as necessary, such as in the reference materials of the notice of the general meeting of shareholders.

Medium-term Sustainability Plan "Governance"

Evaluating the Effectiveness of the Board of Directors

Every year, we conduct surveys (questionnaires) from each director and the corporate auditor regarding the operation of the Board of Directors and other matters, and after deliberation by outside officers, report to the Board of Directors that there are no problems with the operation of the Board of Directors and that its effectiveness is ensured.
The questionnaires to date have made recommendations on the composition of the Board of Directors, further enhancement of discussions on management policy (direction of growth strategy, etc.), and consideration of an incentive-based executive remuneration system, and we have implemented measures such as ensuring diversity of the Board of Directors, speeding up and enhancing discussions and decision making by dividing the functions of the Board of Directors and the Management Committee, formulation of Vision 2030 and introducing performance-linked compensation, including a stock-based remuneration system.
Based on the above questionnaire, we will continue to examine ways to enhance the effectiveness of the Board of Directors and further improve governance.

Ensuring Transparency and Objectivity of Executive Remuneration

The Company has established the Nomination Committee and the Remuneration Committee, which are voluntary advisory bodies to the Board of Directors, to enhance the transparency and objectivity of the decision-making process of the Board of Directors for decisions on matters such as nomination and compensation, and strengthen corporate governance. The committee consists of three outside directors, one outside corporate auditor, and one inside director selected by resolution of the Board of Directors, and the committee is chaired by an outside director.
The Company's policy regarding the determination of remuneration, etc. for Directors (excluding non-executive Directors and outside directors) is as follows.

Fostering a Sustainability Mindset among Directors

Our Group’s major domestic companies provide opportunities for training by inviting external lecturers and participating in external seminars as necessary to help management and supervisory personnel acquire the necessary knowledge and develop a sustainability mindset.