Translation

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

CORPORATE GOVERNANCE

Kamigumi Co., Ltd.

Last Updated: November 10, 2023

Kamigumi Co., Ltd.

Yoshihiro Fukai, President and Representative Director Contact: 078-271-5110 Ticker Code: 9364 https://www.kamigumi.co.jp/

Discussed below is the current state of corporate governance at the Company.

I Basic Outlook on Corporate Governance, Capital Composition, Company Attributes, and Other Basic Information

1. Basic Outlook on Corporate Governance

We strive to enhance and strengthen corporate governance based on a policy that emphasizes efficient management systems, stable and long- term growth founded on swift, appropriate decision-making and execution, and the interests of diverse stakeholders, including shareholders.

To ensure Kamigumi and its Group member companies are managed in accordance with laws and regulations under consolidated management and as part of our good-faith efforts to fulfill our corporate social responsibilities, we have developed an internal control system that addresses various business management risks.

[Reasons for Not Implementing Various Principles of Corporate Governance Code]

[Supplementary Principle 4.1.3] Formulating a Succession Plan

We currently lack a concrete plan for identifying a CEO successor. When the need arises, we will choose the best candidate from among potential successor candidates, based on a consideration of their personal qualities, experience, and track record. However, we are formulating and documenting a succession plan and working to achieve a more systematic approach to the selection and development of successor candidates.

[Supplementary Principle 4.3.3] CEO Dismissal Procedures

At this time, we have not set forth uniform evaluation criteria or requirements concerning the dismissal of the CEO. However, Directors (CEO included), Audit & Supervisory Board Members, and management executives are nominated by the Board of Directors based on an overall judgment of their experience, knowledge, and ability, and we can dismiss the CEO immediately if a clear violation of laws or ordinances is identified.

We are progressing with documenting the standards and procedures for dismissal.

[Supplementary Principle 5.2.1] Basic Policy on Business Portfolio in Formulating a Corporate Strategy, Etc.

Our business portfolio is organized into the Logistics Business, centered on our core business of port & harbor transportation, and Other Businesses. We manage and analyze profitability along the two axes of businesses and cargo handled. We continually strive to raise corporate value, thus consider the restructuring of our business portfolio and advancing portfolio management in ways consistent with our long-term management strategies to be important topics. We will proceed with efforts to address these topics as we move to formulate the next medium- term management plan.

[Disclosure Based on Various Principles of Corporate Governance Code]

UPDATED

[Principle 1.4] Cross-Shareholdings

We acquire and hold cross-shareholdings only in cases judged to be effective in preserving and reinforcing relationships with transaction partners or achieving business synergies, thus contributing to medium- to long-term enhancements of our corporate value. Regarding the pros and cons of maintaining specific cross-shareholdings, we review trading status, dividends, and other matters annually and weigh the benefits of holding individual shares. Based on the results of these verification procedures, the Board of Directors makes comprehensive decisions on whether to maintain cross-shareholdings. The Company is making progress on plans to sell, by the end of the year ending March 2025, holdings of shares in 25 of 68 listed companies, the holding of which was judged to be insignificant in consideration of the cost of equity based on the results of verification by the Board of Directors in its meeting held in November 2023. For the exercise of voting rights, overall decisions are made to support resolutions after considering whether they would enhance the issuer's corporate governance and increase shareholder value and their potential impact on the Group.

[Principle 1.7] Related Party Transactions

Based on our comprehensive system of management in accordance with our Board of Directors Regulations and in-house rules, competing transactions and conflicts of interest with related parties such as Directors and major shareholders are subject to prior approval by the Board of Directors, and the results of such transactions, once implemented, are reported to the Board of Directors. In this way, we maintain a monitoring structure to prevent conflicts of interest with shareholders and with the Company.

[Supplementary Principle 2.4.1] Ensuring of Internal Diversity, Women's Empowerment Included 1. Basic concept of ensuring diversity

We espouse the following as our management philosophy: "By keeping up with the times and carefully responding to the demands of an ever- changing business environment, we take on challenges that are one step ahead of present-day needs. As a result, we strive to enhance our corporate value and the stability of our management, ultimately contributing to the realization of an affluent society." Additionally, we aspire to

realize perpetual corporate growth as a total logistics company that supports the social infrastructure. To that end, we believe that securing a workforce based on a diverse personnel makeup and work styles, innovation borne of diverse values, and flexible and innovative ideas are essential. To accommodate the declining working population expected to occur and the diversification of values surrounding work styles and duties, we will strive to free ourselves from an earlier outlook characterized by unvarying employee profiles and work styles; encourage flexible styles of work by fostering a corporate culture accepting diverse human resources and enhancing employee work life balance; and pursue diversity management so that our employees can demonstrate their ability, expertise, and individuality.

2. Measurable targets

Based on the "Basic concept for ensuring diversity" referred to above, Kamigumi has identified the following as a key goal: Creating attractive workplace environments in which diverse human resources can thrive. It has established related topics, KPIs, and numerical targets to achieve this goal. In light of current conditions for the training and promotion of women employees within the Company, we have set a target of women occupying 4% of managerial positions by the end of the fiscal year ending March 2035 (vs. 1.81% at the end of the fiscal year ending March 2023). For other targets, see the materiality topics on our website.

Regarding the appointment of non-Japanese personnel to managerial positions, we are making progress on the local hiring of personnel for top management posts and other managerial positions at local corporations based overseas. Based on our perception that we have managed to ensure the internal promotion of non-Japanese employees in the Kamigumi Group as a whole, we have set no quantitative targets for this aspect. We will also consider the need to establish such targets with a view to enhancing diversity.

3. Human resource development policy, internal environment improvement policy, and status thereof

(1) Human resource development

We promote enhanced measures to support various human resources, including female employees and midcareer hires, so that these individuals can build diverse careers tailored to their environment/surroundings and fully demonstrate their abilities and skills. While we are currently administering training for employees in managerial positions and other forms of position-specific training, we plan to enhance training opportunities for women in career positions and other target groups selected based on different perspectives and to expand e-learning training curriculum.

(2) Internal environment improvement

Based on shifting values surrounding work styles and duties, which have become increasingly diverse in recent years, we promote a corporate culture accepting diverse human resources and strive to enhance the work life balance of our employees. To foster a corporate culture accepting diverse human resources, we have educated our employees based on our Charter of Corporate Behavior. In the future, we will consider measures targeting deeper penetration and entrenchment, including training on unconscious biases. To enhance the work life balance, in addition to pursuing the normalization of working hours by enhancing work efficiency, we are currently encouraging flexible work styles that include staggered shifts adapted to different workplaces. Moreover, we are considering introducing other measures to enhance support systems for employees with small children.

[Principle 2.6] Roles of Corporate Pension Funds as Asset Owners

We have introduced a defined contribution pension system. We do not manage reserves for corporate pensions.

[Principle 3.1] Full Disclosure

(1) Management philosophy, management strategy, and management plans

We disclose our corporate philosophy and medium-term management plan on our website and elsewhere.

(2) Basic outlook and policies on corporate governance

We disclose our basic outlook on corporate governance under "I-1. Basic Outlook" in this Report.

(3) Policy and procedures for determining remuneration of management executives and directors

Our policy and procedures for determining the remuneration of management executives and Directors are stated in "II-1. Director Remuneration" in this Report.

  1. Policy and procedures for electing and dismissing management executives and nominating Director and Audit & Supervisory Board Member candidates
    Upon the nominations of Director and Audit & Supervisory Board Member candidates and management executives, the Board of Directors makes a decision based on an overall evaluation of the individual experience, knowledge, and ability and the balance of comprehensive knowledge and skills achieved on the Board of Directors. We also select as external Director candidates individuals characterized by marked independence in accordance with our independence standards and having experience in company management and deep insights in specialized fields, whose proactive recommendations would enhance corporate governance.
    We established the Nomination and Remuneration Committee effective June 29, 2023. This Committee will provide advice to the Board of Directors on decisions regarding nomination of management executives, including officers.
  2. Reasons for electing and dismissing management executives and nominating, electing and dismissing Director and Audit & Supervisory Board Member candidates
    We disclose reasons for electing or dismissing individual officers in Reference Documents for the General Meeting of Shareholders in the Notices of Convocation of Ordinary General Meeting of Shareholders of Kamigumi Co., Ltd. and elsewhere.

[Supplementary Principle 3.1.3] Sustainability Initiatives, Etc.

(1) Sustainability initiatives

In its June 2022 meeting, based on the understanding that sustainability issues are key to realizing our corporate vision, the Board of Directors formulated a fundamental policy on sustainability and selected priorities (materiality items) that the Company must address as top priorities. Further, in its November 2023 meeting, the Board of Directors established a sustainability promotion structure centered on the Sustainability Committee following a review of the design of governance systems, intended to accelerate the above initiatives. Beginning in November 2023, the Company will strive to address environmental, social, and governance issues through the Sustainability Committee, which is supervised by the Board of Directors, while making use of the Sustainability Liaison Committee to implement various sustainability measures smoothly and effectively with subcommittees serving as venues for practical discussions of sustainability issues.

With regard to our response to climate change, we announced our support for the Task Force on Climate-Related Financial Disclosures (TCFD) in June 2022. We will continue to analyze the risks, opportunities, and impacts on business strategy associated with climate change in line with the TCFD framework while disclosing information including that on measures to reduce greenhouse gas emissions and achieve related targets.

(2) Investments in human capital and intellectual property

Kamigumi recognizes that its people are key assets in achieving sustained corporate growth based on our heritage of technologies and expertise combined with innovations. We identify enhanced efforts to secure and develop human resources as a priority strategy in the medium-term management plan for the fiscal years 2021-2025. We plan to invest proactively in reforms of our human resource systems, including efforts to strengthen training and education systems. In addition, to further diversity and sustainability, we are working to develop systems and environments that promote women in the workplace.

With regard to investments in intellectual property, based on a priority strategy identified in the medium-term management plan-to enhance business through digital transformation (DX)-we wil l invest proactively in DX fields, enhance the business infrastructure, and boost customer satisfaction.

  • Medium-termmanagement plan: https://www.kamigumi.co.jp/english/ir/management/midtermbusiness.html

[Supplementary Principle 4.1.1] Scope of Delegation to Management

We delegate decision-making responsibilities for the execution of business affairs other than matters considered exclusively by the Board of Directors based on laws and regulations to a Board of Executive Officers composed of Executive Officers and Audit & Supervisory Board Members or to the President, depending on the gravity of the matter.

We also distinguish among these various responsibilities in the Board of Directors Regulations and other internal rules.

[Principle 4.9] Independence Standards and Qualification for Independent Directors

We select independent external officer candidates marked by a strong independent outlook, to whom none of the following items applies:

  1. He/she currently serves or has previously served in the last ten years as a person who has executed business of the Company or its consolidated subsidiary.
  2. He/she currently falls under any of the following items from (1) to (6), or has fallen under such items in the last three years:
  1. a business partner or a person who executing business of such business partner in which the amount of the transactions with the Company for one fiscal year exceeds 2% of the consolidated net sales of the Company or the business partner
  2. a major shareholder of the Company holding over 5% of the ownership of the Company or a person who executing business of such shareholder
  3. a major creditor of the Company or a person who executing business of such creditor
  4. a person who has received annual donations of over 10 million yen from the Company or belongs to an organization that has received annual donations of over 10 million yen from the Company
  5. a lawyer, certified public accountant, certified tax accountant, or consultant who has received remuneration of over 10 million yen (other than officers' compensation) from the Company (if it is a judicial person and other similar organization, a person who belongs to the organization in which compensation provided from the Company exceeds 2% of the annual revenue of the organization)
  6. When a person who executing the Company's business concurrently serves as a director of other company, a person who executing business of the other company

3. Spouse or relative within the second degree of kinship of a person described in 1. and 2. above.

[Supplementary Principle 4.10.1] Establishment of Voluntary Advisory Committee

The nomination and remuneration of Directors is currently determined by resolution of the Board of Directors, as stated in Principle 3.1 above. To ensure transparency and impartiality in decisions related to nomination and remuneration, we established the Nomination and Remuneration Committee effective June 29, 2023.

The Nomination and Remuneration Committee will advise the Board of Directors concerning decisions on the nomination of management executives, including Directors.

[Supplementary Principle 4.11.1] Expanding the Diversity and Capabilities of the Board of Directors

In light of the roles assigned to the Board of Directors, we have defined the specializations and other properties to be possessed by the Board and prepared a skills matrix listing the knowledge, experience, and other qualities expected of individual directors and other executives. The skills matrix is disclosed in the Reference Documents for the General Meeting of Shareholders in the Notices of Convocation of Ordinary General Meeting of Shareholders of Kamigumi Co., Ltd.

At present, women represent 25% of Directors and 25% of Audit & Supervisory Board Members. To maximize diversity in management perspectives, we will promote gender diversity on the Board of Directors by maintaining or increasing these levels in the future.

[Supplementary Principle 4.11.2] State of Concurrent Duties Served by Directors and Audit & Supervisory Board Members

We disclose the state of concurrent positions served by Directors and Audit & Supervisory Board Members at other listed companies in the Business Report and Reference Documents for the General Meeting of Shareholders in Notices of Convocation of Ordinary General Meeting of Shareholders of Kamigumi Co., Ltd.

[Supplementary Principle 4.11.3] Analysis and Evaluation of Effectiveness of Board of Directors

Each year, to verify the effectiveness of the Board of Directors, we survey the Directors attending meetings of the Board of Directors via questionnaires about the composition and the state of operations of the Board. Analyses and evaluations based on FY2022 survey responses indicate that Directors believe the Board functions as an effective body. The following opinions and recommendations were offered regarding further improvements in the Board's effectiveness:

  1. The composition of the Board should be studied on a continual basis in areas including raising gender diversity and reviewing the skills matrix.
  2. Detailed discussion and deliberation should be undertaken for revision of the business portfolio to inform medium- to long-term management strategies.
  3. Training for Directors, including external Directors, should be further enhanced.

Based on the above, we will consider and implement necessary measures as appropriate with the aim of further improving the effectiveness of the Board of Directors.

[Supplementary Principle 4.14.2] Policy on Training for Directors and Audit & Supervisory Board Members

As part of training for Directors and Audit & Supervisory Board Members, we have newly-appointed Directors participate in external seminars to deepen their understanding of their responsibilities. Other Directors and Audit & Supervisory Board Members strive to cultivate their knowledge by participating in appropriate external seminars. Additionally, for external officers, we hold tours of facilities and briefings on our businesses to deepen their knowledge and understanding of our operations.

[Principle 5.1] Policy for Constructive Dialogue with Shareholders

Our policy on constructive dialogue with our shareholders is as follows:

  1. Designation of management for dialogue with shareholders and (2) Initiatives for organic cooperation between internal departments IR operations are supervised by the director in charge of administration department. The IR/SR Section spearheads efforts to engage in dialogue with shareholders in cooperation with the Management & Planning Department, the Corporate Communication Department, and other departments.
  1. Initiatives for enhancing dialogue besides individual meetings
    To promote dialogue, in addition to individual meetings, we disclose information through financial results briefings and on our website. We will also consider holding investor briefings and other events in the future.
  2. Initiatives for passing on shareholder opinions/concerns
    Of the opinions/requests we receive from our shareholders, we pass on those believed to contribute to the management of our company to the Board of Directors, where they are shared.
  3. Initiatives for managing insider information
    Upon engaging in dialogue with shareholders, we set forth internal rules, manage insider information appropriately, and strive to prevent leaks of such information.

[Efforts to realize a management outlook cognizant of capital costs and share prices]

The Company is striving to ascertain its cost of equity using Capital Asset Pricing Model (CAPM) theory. Given the basic recognition that the level of ROE secured must exceed the cost of equity, our current medium-term management plan (that ends in the fiscal year ending March 2025) sets an ROE target of at least 6.5% in the final fiscal year of the plan, and in the 7% range thereafter. See the overview of the medium- term management plan on our website for capital policies aimed at achieving this target ROE.

  • Medium-termmanagement plan: https://www.kamigumi.co.jp/english/ir/midtermbusiness/

Our ROE and business performance have improved along with steady progress on the medium-term management plan. However, our price to book value ratio (PBR) remains below 1.0, and we take the resulting valuation on the stock market very seriously.

To achieve a PBR exceeding 1.0, we believe it is essential to satisfy the following three requirements simultaneously: further improving ROE, developing a long-term growth narrative, and enhancing ESG initiatives. We have begun efforts to achieve each of these goals.

With regard to ROE, we are making every possible effort to surpass the target level through steadily achieving the financial indicators called for in the medium-term management plan. Regarding the narrative for growth, in the process of formulating the next medium-term management plan, we will identify a clear long-term vision and ideal future form and formulate various measures by back casting from these.

We are implementing Companywide efforts to achieve various ESG initiatives under the promotion structure described under Supplementary Principle 3.1.3 (1) above.

[Status of efforts to implement shareholder dialogue, etc.]

Reviewed below is the status of efforts to implement shareholder dialogue in FY2023.

(1) Key participants in shareholder dialogue

The key participants in shareholder dialogue include the IR/SR Section staff, as well as executive officers responsible for IR oversight.

(2) Summary of shareholders involved in dialogue

In addition to IR discussions with sell-side analysts and domestic and international institutional investors (including participation in telephone interviews and conferences) throughout the year, we also held two briefings during the year for analysts and institutional investors.

In addition, we solicited SR interviews (including online interviews) with the staff who oversee ESG and the exercise of voting rights at domestic institutional investors.

(3) Major themes of dialogue

Shareholders showed strong interest in the long-term growth vision and in the capital policies and ROE targets indicated in the medium-term management plan. They also commented on our efforts to enhance ESG initiatives and nonfinancial disclosure.

(4) Feedback to the Board of Directors, etc.

The results of such exchanges are reported to the Board periodically and referred to in discussions of matters such as the medium-term management plan and ESG.

2. Capital Composition

Foreign shareholding ratio

Over 30%

[Status of Major Shareholders]

UPDATED

Shareholders' Name

Number of Shares

Ratio of

Shareholding

The Master Trust Bank of Japan, Ltd. (Trust Account)

13,485,700

12.64

Kamigumi Customers and Subcontractors Shareholding Association

7,407,271

6.94

Custody Bank of Japan, Ltd. (Trust Account)

6,945,100

6.51

Kamigumi Employees Shareholding Association

3,396,425

3.18

National Mutual Insurance Federation of Agricultural Cooperatives

2,772,000

2.59

The Murao Educational Foundation

2,456,222

2.30

Nippon Life Insurance Company

2,271,643

2.13

Sumitomo Life Insurance Company

2,250,500

2.11

NORTHERN TRUST CO. (AVFC) RE FIDELITY FUNDS

2,101,800

1.97

Aioi Nissay Dowa Insurance Co., Ltd.

2,021,302

1.89

Presence of controlling shareholders

―――

(parent excluded)

Presence of parent

None

Supplementary Explanation

―――

3. Company Attributes

Listed exchange and market

Tokyo Stock Exchange, Prime Market

classification

Fiscal year end

March

Business category

Warehousing and transport-related businesses

Number of employees at the end of the most recent business year (consolidated)

Net sales at the end of the most recent business year (consolidated)

Number of consolidated subsidiaries at the end of the most recent business year (consolidated)

1,000 or greater

¥100 billion or greater but less than ¥1 trillion

10 or more but less than 50

4. Guidelines on Measures to Protect Minority Interests in Transactions with Controlling Shareholders

―――

5. Other Special Circumstances with Potential to Materially Impact Corporate Governance

―――

II Status of Business Administration Organizations Pertaining to Management Decision-Making, Execution and Auditing, and Other Corporate Governance Structures

1. Matters Pertaining to Organizational Structure and Operation

Organizational configurationCompany with auditors

[Directors]

Quorum for Directors according to

20

Articles of Incorporation

Term of Directors according to Articles

1 year

of Incorporation

Chairman of meetings of Board of

President

Directors

Number of Directors

8

Election status of external Directors

Elected

Number of external Directors

3

Number of external Directors

designated as independent officers

3

Relationship to Company (1)

Name

Attribute

Relationship to Company*

a

b

c

d

e

f

g

h

i

j

k

Nobuko Ishibashi

Attorney-at-law

Osamu Hosaka

Other

Harumi Matsumura

Possesses

background with

another company.

*Items selected regarding relationship with Company

*Items true for the person now or recently are marked with a "○." Items true for the person previously are marked with a "△."

*Items true for a close relative now or recently are marked with a "●." Items true for a close relative previously are marked with a "▲."

  1. Executor of business affairs at the Company or a subsidiary thereof
  2. Executor of business affairs or director not involved in business decision-making at the parent of the Company
  3. Executor of business affairs at sibling company of the Company
  4. Party for whom the Company is a main business partner or an executor of business affairs thereof
  5. Main business partner of the Company or an executor of the business affairs thereof
  6. Consultant, accounting specialist, or legal specialist paid large monetary sums or other property other than officer remuneration from the Company
  7. Main shareholder of the Company (in cases in which the said main shareholder is a corporation, an executor of business affairs of that corporation)
  8. Executor of business affairs of a business partner of the Company (to whom none of d, e, or f applies) (person in question only)
  9. Executor of business affairs of a company for which an external officer of the company concurrently serves as external officer of the Company and vice versa (person in question only)
  1. Executor of business affairs of an organization to which the Company makes donations (person in question only)
  2. Other

Relationship to Company (2)

Name

Independent

Supplementary Explanation of

Reason for Appointment

Officer

Compliance Matters

Ms. Ishibashi brings wide-ranging experience and

extensive knowledge as an attorney. While she does

The Company engages in no

not have experience with direct involvement in

corporate management except as an external director,

transactions with the Kobe City Law

she was appointed an external Director in

Office where Ms. Ishibashi serves as

expectations that she will provide valuable advice,

a Representative Employee Lawyer;

mainly from a compliance perspective, and will help

with Takamatsu Construction Group

Nobuko Ishibashi

○

strengthen and advance Company governance

Co., Ltd., where she serves as an

through meetings of the Board of Directors and other

External Director; or with Fukuoka

opportunities.

Financial Group, Inc., where she

No known conflicts of interest exist between the

serves as an External Director serving

Company and Ms. Ishibashi. Her appointment as an

as an Audit & Supervisory Committee

external Director reflects the fact that she satisfies the

Member.

independence criteria of the stock exchange and

criteria established by the Company for determination

of independence.

Mr. Hosaka brings considerable knowledge, primarily

related to resupply and transport, gained from

experience as a high-ranking officer in the Japan

Ground Self-Defense Force. While he lacks

experience with direct involvement in corporate

management in the past, Mr. Hosaka was appointed

The Company engages in no

an external Director in expectations that he will help

Osamu Hosaka

○

transactions with Yutaka Shipping

strengthen and advance Company governance

K.K., where Mr. Hosaka serves as

through meetings of the Board of Directors and other

Advisor.

opportunities.

No known conflicts of interest exist between the

Company and Mr. Hosaka. His appointment as an

external Director reflects the fact that he satisfies the

independence criteria of the stock exchange and

criteria established by the Company for determination

of independence.

The Company engages in no

Ms. Matsumura brings considerable knowledge based

transactions with Rock Field Co., Ltd.,

where Ms. Matsumura serves as an

on her experience in managing a snacks maker and a

external Director. While the Company

manufacturer of residential equipment. Ms.

engages in ordinary banking

Matsumura was appointed an external Director in

transactions, such as deposits with

expectations that she will help strengthen and

Harumi

Hiroshima Bank, Ltd., where Ms.

advance Company governance through meetings of

○

Matsumura serves as an External

the Board of Directors and other opportunities.

Matsumura

Audit & Supervisory Board Member,

No known conflicts of interest exist between the

the amount of fees and other

Company and Ms. Matsumura. Her appointment as an

payments we make to Hiroshima

external Director reflects the fact that she satisfies the

Bank, Ltd. represents less than 1% of

independence criteria of the stock exchange and

its consolidated operating revenues,

criteria established by the Company for determination

therefore there are no conflicts of

of independence.

interest between us and the bank.

Presence of voluntary committee

equivalent to nomination committee or Established remuneration committee

Establishing the Voluntary Advisory Committee, its Membership, and its Chairperson

Committee

Total

Full-time

Internal

External

External

Others

members

members

Directors

Directors

experts

Chairperson

name

(persons)

(persons)

(persons)

(persons)

(persons)

(persons)

Voluntary committee

Nomination

equivalent to

and

5

0

2

3

0

0

Internal

nomination

Remuneration

Director

committee

Committee

Voluntary committee

Nomination

equivalent to

and

5

0

2

3

0

0

Internal

remuneration

Remuneration

Director

committee

Committee

Supplementary Explanation

The Company has established a Nomination and Remuneration Committee to advise the Board of Directors.

As requested by the Board, the Nomination and Remuneration Committee reviews the following matters concerning nomination, remuneration, etc. and advise the Board.

(1) Matters related to nomination

Matters related to topics such as appointment and dismissal of Directors and officers delegated business execution authority (matters subject to resolution in General Meetings of Shareholders), the composition of the Board of Directors, and succession planning (including successor development)

(2) Matters related to remuneration

Matters related to topics such as remuneration systems and remuneration levels for Directors and officers delegated business execution authority

The Nomination and Remuneration Committee consists of four or more members chosen by resolution of the Board of Directors. At least one- half of its membership consists of External Directors. Its chairperson is chosen from among committee members by the resolution of the Board of Directors.

[Membership]

Yoshihiro Fukai (Chairperson, President and Representative Director) Toshihiro Horiuchi (member, Representative Director)

Nobuko Ishibashi (member, External Director)

Osamu Hosaka (member, External Director) Harumi Matsumura (member, External Director)

[Audit & Supervisory Board Members]

Establishment of Audit & Supervisory Board

Quorum for Audit & Supervisory Board Members according to Articles of Incorporation

Number of Audit & Supervisory Board Members

Established

5

4

Status of Cooperation among Audit & Supervisory Board Members, Independent Auditor and Internal Audit Department

Audit & Supervisory Board Members regularly hold report meetings and otherwise engage in exchanges of opinions and information with the independent auditor and the internal audit department.

Election status of external Audit &

Elected

Supervisory Board Members

Number of External Audit &

3

Supervisory Board Members

Number of External Audit &

Supervisory Board Members

3

designated as independent officers

Relationship to Company (1)

Name

Attribute

Relationship to Company*

a

b

c

d

e

f

g

h

i

j

k

l

m

Takumi Nakao

Attorney-at-law

Ai Kuroda

Attorney-at-law

Tomokazu Hideshima

Certified Tax Accountant

*Items selected regarding relationship with Company

*Items true for the person now or recently are marked with a "○." Items true for the person previously are marked with a "△."

*Items true for a close relative now or recently are marked with a "●." Items true for a close relative previously are marked with a "▲."

  1. Executor of business affairs at the Company or a subsidiary thereof
  2. Director not involved in business decision-making or an accounting advisor at the Company or subsidiary thereof
  3. Executor of business affairs or director not involved in business decision-making at the parent of the Company
  4. Auditor at the parent of the Company
  5. Executor of business affairs at sibling company of the Company
  6. Party for whom the Company is a main business partner or an executor of business affairs thereof
  7. Main business partner of the Company or an executor of business affairs thereof
  8. Consultant, accounting specialist, or legal specialist paid large monetary sums or other property other than officer remuneration from the Company
  9. Main shareholder of the Company (in cases in which the said main shareholder is a corporation, an executor of business affairs of that corporation)
  1. Executor of business affairs of a business partner of the Company (to whom none of f, g, or h applies) (person in question only)
  2. Executor of business affairs of a company for which an external officer of the company concurrently serves as external officer of the Company and vice versa (person in question only)
  3. Executor of business affairs of an organization to which the Company makes donations (person in question only)
  4. Other

Relationship to Company (2)

Name

Independent

Supplementary Explanation on

Reason for Appointment

Officer

Compliance Matters

Mr. Nakao was appointed an external Audit &

Supervisory Board member based on the

judgment that he will help strengthen and

advance Company governance through various

activities, including audit implementation and

viewpoints expressed at meetings of the Board

of Directors and other opportunities, reflecting

No known conflicts of interest exist

his high degree of independence vis-à-vis the

Company and experience gained from a long

Takumi Nakao

○

between the Company and Mr.

career as a prosecutor and expertise as an

Nakao.

attorney.

No known conflicts of interest exist between the

Company and Mr. Nakao. His appointment as

an external Audit & Supervisory Board member

reflects the fact that he satisfies the

independence criteria of the stock exchange

and criteria established by the Company for

determination of independence.

Ms. Kuroda brings considerable experience and

extensive knowledge as an attorney, as well as

practical experience in corporate law, including

experience with the Companies Act and work in

overseas offices. While she lacks experience

with direct involvement in corporate

management, she was appointed an external

Audit & Supervisory Board member in

expectations that she will contribute to overall

No known conflicts of interest exist

audits of business activities as an external Audit

& Supervisory Board member of the Company,

Ai Kuroda

○

between the Company and Ms.

which engages in business activities in global

Kuroda.

markets, and will help strengthen and advance

Company governance through meetings of the

Board of Directors and other opportunities.

No known conflicts of interest exist between the

Company and Ms. Kuroda. Her appointment as

an external Audit & Supervisory Board member

reflects the fact that she satisfies the

independence criteria of the stock exchange

and criteria established by the Company for

determination of independence.

Mr. Hideshima was appointed an external Audit

& Supervisory Board member based on the

judgment that he will help strengthen and

advance Company governance through various

activities, including audit implementation and

viewpoints expressed at meetings of the Board

of Directors and other opportunities. While

lacking experience with direct involvement in

No known conflicts of interest exist

corporate management, he will draw on his

various qualifications, including many years of

Tomokazu Hideshima

○

between the Company and Mr.

experience with tax administration and

Hideshima.

expertise in corporate taxation gained as a

certified tax accountant.

No known conflicts of interest exist between the

Company and Mr. Hideshima. His appointment

as an external Audit & Supervisory Board

member reflects the fact that he satisfies the

independence criteria of the stock exchange

and criteria established by the Company for

determination of independence.

[Independent Officers]

Number of independent officers

6

Other Items Related to Independent Officers

We have designated all persons qualified as independent officers to serve as independent officers.

[Incentives]

State of implementation of measures for granting incentives to Directors

Introduction of performance-linked compensation system, etc.

Supplementary Explanation on Applicable Matters

Regarding Director remuneration, we have adopted a remuneration system under which a certain portion of the monetary remuneration is coupled to performance and contributions to business performance for the fiscal term in question, in addition to a basic amount as consideration for the responsibilities of each officer and the performance of their duties.

Additionally, at the 80th Ordinary General Meeting of Shareholders convened on June 27, 2019, we decided to implement a compensation plan to grant restricted stock to our Directors (external Directors excluded) separately of the above remuneration for the purpose of granting incentives to facilitate sustained improvements in corporate value and to share shareholder value.

Details on this matter are stated under "II- 1. Director Remuneration" in this Report.

Persons eligible for granting of stock options

Supplementary Explanation of Applicable Matters

―――

[Director Remuneration]

State of disclosure (of individual

Partially disclosed

Director Remuneration)

Supplementary Explanation of Applicable Matters

The Financial Report and the Business Report disclose total remuneration figures for each Director, Audit & Supervisory Board Member, and external officer for the preceding fiscal year. Additionally, in the Financial Report, we disclose persons whose total consolidated remuneration is ¥100 million or more.

Policy for determining remuneration

and computation methods thereof

Established

UPDATED

Information Disclosed on Policy for Determining Remuneration and Methods Thereof

With regard to the remuneration of our Directors, a resolution was passed at the 81st Ordinary General Meeting of Shareholders convened on 26 June, 2020, to set the maximum remuneration for Directors at ¥600 million per year (including ¥50 m illion as the maximum remuneration for external Directors) and the maximum remuneration for Audit & Supervisory Board Members at ¥60 million per year.

1. Basic policy on officer remuneration

  • Officer remuneration must encourage the performance of duties in a manner consistent with our management philosophy and management strategy and provide motivation to achieve specific management goals, with the purpose of sustainably improving our corporate value over the medium to long term.
  • The remuneration of Directors who handle the execution of business must include the appropriate configuration of a percentage of share- based remuneration linked to our medium- to long-term corporate value to facilitate shared interest with shareholders.
  • An officer remuneration system suitable for the significant responsibilities of our officers must be adopted.

2. Officer remuneration and composition

Director remuneration shall be determined based on position and responsibility (roles) after accounting for business performance levels, social conditions, remuneration at other companies and other factors, and shall consist of monthly basic remuneration (cash remuneration) and medium- and long-term remuneration (stock remuneration) with the exception of remuneration for external Directors.

(1) Monthly basic remuneration (cash remuneration)

Monthly basic remuneration is determined in accordance with the position and duties of the individual Director, as well as the business performance for the preceding fiscal year. More specifically, monthly basic remuneration shall consist of a fixed salary and variable salary. An amount equivalent to approximately 60% of the monthly basic remuneration is set as fixed salary based on the position and responsibility of the individual director and other factors; an amount equivalent to approximately 40% of monthly basic remuneration is set as variable salary (performance-linked remuneration) determined based on the business performance for the preceding fiscal year.

The actual variable salary is based on the business performance for the preceding fiscal year, while the base salary is based on that Director's position, responsibilities, and other factors. The Board of Directors determine the business performance based on which the amount of variable salary is determined, taking into account the indicators cited in our medium-term management plans.

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Kamigumi Co. Ltd. published this content on 28 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 December 2023 02:49:43 UTC.