Sustainability

Initiatives Related to Corporate Governance

This page outlines the Company’s corporate governance initiatives.
The Company works to establish a sound governance structure that ensures highly transparent management and earns the trust of stakeholders.
* Information is current as of January 1, 2026.

Structure Diagram

Major Initiatives to Strengthen Corporate Governance

October 2003	Introduced an executive officer system
Date	Major initiatives
May 2015	Established the Risk Management Committee and Compliance Committee
	Established the Basic Corporate Governance Policy
June 2015	Appointed two outside directors
April 2016	Launched a questionnaire-based evaluation of the effectiveness of the Board of Directors
October 2018	Established the CSR Promotion Committee*1
March 2021	Established the Personnel and Remuneration Advisory Committee (three of five members are independent outside directors)
June 2021	Introduced a restricted stock compensation plan
April 2022	Established the Sustainability Promotion Committee
June 2022	Appointed one woman as an outside director Shifted to a structure with three outside directors
June 2022	Established a Board of Directors structure in which outside directors account for at least one-third of the Board
June 2022	Shortened the term of office of directors from two years to one year
July 2024	Established the Sustainability Council
July 2024	Introduced a performance-linked remuneration system*2, effective from remuneration paid in July 2024
January 2026	Established the Human Capital Strategy Committee

*1 Renamed the SDGs Promotion Committee in March 2021.
*2 “Remuneration, etc. for Directors” consists of the basic salary, position-based salary, and performance-linked portion* as basic remuneration (monetary remuneration), and restricted shares as basic remuneration (stock remuneration). “Remuneration, etc. for Outside Directors,” in light of their responsibilities and duties, consists only of basic salary as basic remuneration (monetary remuneration).
Effective from remuneration paid in July 2024, the performance-linked portion was revised to use net sales, operating profit, and return on equity as performance indicators.
With respect to the ratio by type of remuneration after the change, when performance indicators are achieved 100%, the approximate ratio is designed to be: fixed portion of basic remuneration (monetary remuneration) : performance-linked portion of basic remuneration (monetary remuneration) : basic remuneration (stock remuneration) = 60 : 20 : 20. However, because the performance-linked portion actually paid varies depending on the Company’s business performance, the payment ratio varies.

Strengthening Corporate Governance

The Company is a company with an Audit & Supervisory Board. The Board of Directors consists of eight directors, including three outside directors, and the Audit & Supervisory Board consists of three members, including two outside members. The Board of Directors makes decisions on important matters and supervises directors’ execution of duties. Important matters are discussed in advance by the Management Council before being submitted to the Board of Directors.
The Company has also established the Personnel and Remuneration Advisory Committee, a voluntary advisory body comprising three or more members, the majority of whom are independent outside directors. The Committee strengthens the independence, objectivity, and accountability of the Board of Directors in matters concerning the appointment, dismissal, and remuneration of management. The Company is further enhancing corporate governance through measures such as a restricted stock compensation plan designed to align interests with shareholders and support long-term corporate value. The ratios of outside officers and women among directors and Audit & Supervisory Board members are shown in the figures.

Approach to Director Nomination

When selecting senior management and nominating director candidates, the Company comprehensively considers whether candidates possess the diverse experience, knowledge, and capabilities, as well as the broad perspective, ability to act, and leadership required to further enhance the Group’s corporate value.

Skill Matrix of Each Director (List of Knowledge, Experience, Abilities, etc.)

Position	Name	Management / Business Planning	HR / General Affairs / Legal	Digital (DX Promotion)	Finance / Accounting	ESG / Sustainability	Technology / Innovation / Procurement / Production	Sales / Marketing	Global Experience
Representative Director and President	Hiroshi Ikeda	○	○			○		○	○
Director	Toshimi Kumazaki	○			○		○	○	○
Director	Keiji Mataba	○	○					○	○
Director	Shinji Kuramoto		○	○		○	○	○
Director	Kazuhiro Takeda			○			○		○
Director (Independent Outside Director)	Shinya Okuda	○				○		○	○
Director (Independent Outside Director)	Yuka Miyake				○	○
Director (Independent Outside Director)	Yasuhiro Tsuji		○			○

* Circles indicate skills for which contribution is particularly expected, based on past career experience, current positions, qualifications and similar criteria.

Main Skills (Knowledge, Experience, Abilities, etc.) Required for the Board of Directors as a Whole, and Reasons for Selection

Skill	Reason for selection
Management / Business Planning	Because it is necessary to promote the creation of a company that contributes to the realization of a sustainable society through business activities, look ahead to the future vision, and formulate and supervise growth strategies that contribute to sustainable value creation from a medium- to long-term perspective.
HR / General Affairs / Legal	Because it is necessary to work on “strengthening Human Capital Strategy,” which is the highest-priority issue in the '24 Mid-Term Business Plan, develop human resources who promote transformation, and build a strong corporate governance structure, including compliance and risk management.
Digital (DX Promotion)	Because improving productivity through the introduction of AI, improving the efficiency of indirect department operations using digital technologies, and speeding up new product development and reducing man-hours are necessary to maintain and strengthen competitiveness.
Finance / Accounting	Because it is necessary to formulate financial and capital strategies conscious of the cost of capital and to promote capital policies that improve medium- to long-term corporate value by appropriately executing growth investments and shareholder returns to enhance shareholder value.
ESG / Sustainability	Because, under the corporate philosophy “To give attentive consideration to both humanity and nature,” it is necessary to formulate and execute strategies from both the risk and opportunity perspectives concerning the future impact of environmental and social changes, including climate change, on the business in order to contribute to the realization of a sustainable society.
Technology / Innovation / Procurement / Production	Because, in order to embody the management basic policy “to contribute to society through the provision of highly functional, highly precise and high-quality products” and to continue maintaining and strengthening competitive advantage over the medium to long term, it is necessary to improve and develop intellectual and technological capital and manufacturing capital.
Sales / Marketing	Because, to realize a co-creation-oriented business model focused on customer value, effective sales and marketing activities are necessary to understand the characteristics of each industry, accurately grasp customer needs, and maximize brand value.
Global Experience	Because, for the Company whose overseas sales ratio exceeds 50%, it is necessary to formulate and execute business strategies from a global perspective with knowledge of the business environments and needs of different markets and with consideration for geopolitical risks and other risks.

Roles Expected of Independent Outside Directors

Possess high levels of expertise, extensive practical experience, and leadership experience in fields such as corporate management, international business, finance and accounting, financial services, compliance, the legal profession, public administration, academia and research, risk management, human resource development and education, and IT and digital technology.
Be capable of taking a Group-wide perspective and identifying fundamental issues and risks, and be expected to contribute to candid, active, and constructive deliberations at meetings of the Board of Directors and other bodies.
Be able to provide objective oversight and judgment of management, as well as advice and support for the Company’s sustainable growth, from a practical perspective grounded in extensive experience in corporate management and specialized fields.
Meet the requirements for outside directors under the Companies Act and the independence criteria established by the Tokyo Stock Exchange.

Status of Operation of the Board of Directors

In accordance with laws and regulations, the Articles of Incorporation, and the Board of Directors Regulations, the Board of Directors deliberates and resolves matters concerning basic management policies, investments, and other important business execution, including the disposal and acquisition of significant assets, large borrowings, establishment or reorganization of important organizations, and appointment or dismissal of important employees. The Board also receives reports on directors’ execution of duties and other important business matters.

Item	FY2025
Number of meetings held	14
Average meeting duration	87.1 minutes
Average number of agenda items	5.9

In FY2025, in addition to regular resolution matters and reporting matters, the Board deliberated on matters related to the '24 Mid-Term Business Plan, important issues related to corporate governance (nomination and remuneration of directors, succession plans for the representative director and directors, etc.), and major investment projects (production and logistics-related, business-related investments). In addition, from the perspective of sustained improvement of corporate value, the Board also received reports and held discussions on priority issues in non-financial fields, including climate change and human capital.
To support effective Board operation and allow sufficient deliberation within the available meeting time, preliminary briefing sessions are held for outside directors before Board meetings. Thirteen preliminary briefing sessions were held in FY2025.

Major agenda items (excerpt)

Category	Major agenda items at Board of Directors meetings (excerpt)
Management policy / Growth strategy	Financial results reports and business performance Next Mid-Term Business Plan Major capital investments Policies and decisions regarding the sale of cross-shareholdings Human capital management
Other	Analysis and evaluation of Board effectiveness Succession plans for the Representative Director and directors Review of internal rules on director remuneration standards Policies and measures for addressing significant risks Reports on priority issues in non-financial fields, such as climate change and human capital (reports from the Sustainability Council)

Status of Operation of the Personnel and Remuneration Advisory Committee

Item	FY2025
Number of meetings held	9
Average meeting duration	31.7 minutes

The Company has established the Personnel and Remuneration Advisory Committee as a voluntary advisory body to strengthen the independence, objectivity, and accountability of the Board of Directors in matters concerning the appointment, dismissal, and remuneration of management. The Committee comprises three or more members, the majority of whom are independent outside directors, and is chaired by an independent outside director.
In response to consultations from the Board of Directors and in accordance with its regulations, the Committee deliberates and decides on policies and procedures for nominating director candidates, selecting and dismissing senior management, succession planning for the Representative Director and directors under normal and emergency circumstances, and determining directors’ remuneration.
In FY2025, to build a framework supporting the Company’s future sustainable growth, the Committee interviewed 13 department general managers identified as candidates for next-generation leadership roles, for approximately 30 minutes each, and reviewed their capability development and career plans. Based on the interview results, the Committee deliberated on matters including assessments of their suitability as next-generation leaders and their development policies.

Evaluation of the Effectiveness of the Board of Directors

The Company evaluates the effectiveness of the Board of Directors annually to maintain and further improve its functioning. The evaluation method, process, and results are outlined below.

Evaluation Process
January 2026: The Board of Directors Secretariat reviewed and discussed the implementation method and determined the purpose and basic policy.
February 2026: Self-evaluation questionnaires were conducted by the target persons, and the Secretariat confirmed and analyzed the questionnaire results.
March 2026: Based on the aggregation and analysis results, an opinion exchange meeting was held by the Board of Directors, and issues for further improving effectiveness going forward were shared.

Evaluation Items (Section Names of the Self-evaluation Questionnaire)
Roles and responsibilities of the Board of Directors, and its composition and operation
Management strategy and business strategy
Corporate ethics and risk management
Evaluation and remuneration of management
Dialogue with shareholders and others

Evaluation Results and Future Issues
Based on these results, at the Board of Directors meeting held in March 2026, the Company evaluated that “the current Board of Directors is functioning effectively and fulfilling its responsibilities toward enhancing corporate value.” Based on this fiscal year’s opinion exchange meeting, the following matters were recognized and shared as issues for further improving effectiveness going forward.

Deepening strategic discussions and expanding opportunities concerning medium- to long-term management strategies and growth and value-creation narratives
Making consideration of Human Capital Strategy linked to management strategy more concrete and improving its effectiveness
Expanding opportunities to consider the appropriate form of governance* based on the desired role and composition of the Board of Directors
Strengthening the risk management system and risk response capabilities in light of changes in the business environment

* Institutional design and utilization of third-party organizations in effectiveness evaluation, etc. From FY2026 onward, the Company will continuously monitor and improve the status of responses to these issues based on the PDCA cycle, and will work to further improve the effectiveness of the Board of Directors.

Status of Dialogue with Shareholders and Investors

The Company has established a Policy on Constructive Dialogue with Shareholders and actively engages with shareholders to promote constructive dialogue. Shareholder views identified through these dialogues are reported as necessary to directors, management, and relevant internal departments, where the information is shared and used.<br? In FY2025, the Company held a total of 55 financial results briefings and individual dialogues with institutional investors and analysts and received valuable feedback. The Company will continue to deepen relationships of trust with shareholders through transparent disclosure and sincere dialogue.