Corporate Governance

We recognize that appropriate and timely information disclosure to the shareholders and investors, and active dialogues with them are essential for sustainable growth and medium- to long-term enhancement of our corporate value. In accordance with the disclosure rules established by laws, regulations and stock exchanges, we disclose our financial and non-financial information appropriately. We also take initiative in the provision of information not designated therein to ensure the transparency of management. Regarding the dialogues with shareholders and investors, we fully feedback the results into the company, and make use of them in our management strategies and business operations, to further fulfill the dialogues in the future.

Based on the Corporate Governance Code established by Tokyo Stock Exchange, we have established Corporate Governance Guideline on which we should rely in our corporate activities. We will review the Guideline as necessary to fulfill the governance.

Based on the recognition that internal controls serve as the foundation of corporate governance, Directors establish, maintain, and evaluate an appropriate internal control system, conduct ongoing inspections and make improvements to the system, and periodically review their basic policy for internal controls. Given that internal controls ensure and maintain the reliability of compliance, appropriate risk management, and financial reports, we also pay sufficient attention to the effectiveness and efficiency of operations. The establishment of this system enables the Board of Directors to make decisions on appropriate information and subsequently, the execution of business.

• Principles of Internal Control System

In order to further enhance the effectiveness of the Board of Directors, the Company regularly evaluates and analyzes the Board of Directors. In FY2024, the Legal Affairs Department, which is the secretariat, conducted a questionnaire. Based on the contents, the Board of Directors analyzed, discussed, and evaluated at the regular meeting of the Board of Directors in January 2025.

This year's survey methodology, summary of evaluation results, and future issues and initiatives are as follows.

1. Methodology

2. Summary of Evaluation Results

The responses to the questionnaire indicate that, the size, composition, and operational status of the Board of Directors were generally positively evaluated, as in the previous fiscal year, and it was confirmed that the Board of Directors is fulfilling its decision-making and supervisory functions related to the execution of business.

With regard to the issue of "increasing opportunities for communication with site managers," which was an issue last fiscal year, we shared the status of operations at each site through work report meetings at overseas bases and provided opportunities for communication with members of overseas bases. In addition, with regard to the expansion of discussions on succession planning, the Nomination and Remuneration Advisory Committee once again explained and discussed succession planning.

On the other hand, it has been pointed out that it is necessary to continue to work on "expanding and deepening discussions on medium- to long-term management and risk strategies."

3. Addressing Future Issues and Issues

We have been working to improve the effectiveness of our deliberations for some time, but this year's effectiveness evaluation concluded that there is room for improvement in the following items. In order to further improve the functions of the Board of Directors and stimulate discussions, we will share recognition and work to make improvements.

(1) Expand and deepen discussions on medium- to long-term management and risk strategies

Continuing from last year, an outside officer has expressed a request to expand discussions on medium- to long-term management and risk strategies. Based on this opinion, we will further enhance discussions at the Board of Directors meetings toward the formulation of the next medium-term management plan, and by setting up a forum outside the Board of Directors for intensive discussions, we will further expand and deepen discussions and work to strengthen governance from both offensive and defensive perspectives.

(2) Deepening discussions on succession planning

While the efforts to "expand discussions on succession planning" implemented in the last fiscal year received a certain level of praise, outside directors expressed the opinion that discussions on training should be expanded in particular. Based on this opinion, we will work to deepen discussions at the Nomination and Remuneration Advisory Committee by expanding the provision of information on potential successors and enhancing opportunities for discussion.

(3) Further improvement of understanding of the Company by providing information and experience

In order to deepen understanding of the Company, outside officers have expressed opinions requesting visits to overseas bases and sites, as well as requesting the expansion of information provision. Based on this opinion, we will strive to improve the effectiveness of deliberations by conducting on-site inspections and expanding the provision of information on the Company's business environment, and will work to expand discussions for the sustainable growth of the Company.

• Board of Directors & Executive Officers

• We appoint Directors who have profound knowledge and results concerning the business operations, who are able to make appropriate decisions for the improvement of the company value based on the viewpoints of diverse stakeholders, and who have high ethical standards and fair-minded personality.
• We appoint Outside Directors who, in addition to the similar criteria to the above, have expertness in different fields from ours and ample knowledge concerning the overall management.
• We, keeping the similar criteria to the above in mind, appoint Audit & Supervisory Board Members who are able to properly audit the performance of duties and business operations of Directors.
• The knowledge held by respective Directors and Audit & Supervisory Board Members and their reasons for appointment are as shown in the following Table.
• The Company provide Directors and Audit & Supervisory Board Members with opportunities of training necessary for performing their roles and responsibilities. When Outside Directors or Outside Audit & Supervisory Board Members newly take their office, we provide them with necessary explanation and information on general circumstances and business issues of the Company, including its business operations, finance and organization.

The remunerations of Directors (excluding Outside Directors) should be appropriate, fair and well-balanced to further enhance the respective Directors’ motivation for the maximization of the Company’s corporate values. The remuneration system is as shown below:

The table below shows actual remuneration for FY2024.

*The above numbers and the remuneration amounts include one Audit & Supervisory Board Member who retired at the Regular General Meeting of Shareholders of June 27, 2024.
Regarding the remunerations of officers, as the performance-linked remunerations are based on the net profit of the previous year, we consider that the addition of a factor that reflects the medium- to long-term performance to the remuneration system should be discussed.