Corporate Governance

We believe in the importance of maximizing the interests of all stakeholders, including shareholders, customers, local communities, and employees. Our basic policy is to achieve sustainable growth and maximize corporate value over the medium to long term, while balancing the interests of all stakeholders and returning profits to them, directly or indirectly.
In addition, to fulfill our responsibilities to stakeholders and realize effective corporate governance, we have established the Alps Alpine Co.,

Corporate Governance Structure

Alps Alpine has adopted a company with an audit and supervisory committee system as its organizational design, and the Audit and Supervisory Committee, which is independent from executive officers, audits and supervises the activities of the Board of Directors in close cooperation with accounting auditors and the internal audit department. In addition, the Nomination Advisory Committee and the Compensation Advisory Board, the majority of which consist of outside directors, have been established as advisory bodies to the Board of Directors. Through these measures, we will continue to enhance our corporate governance and realize fair, transparent, and highly effective management.

Corporate Governance at Alps Alpine (As of April 2023)

Our Path toward Stronger Corporate Governance

Board of Directors

In the June 2023 election of directors, the percentage of independent outside directors increased to a majority, further strengthening the auditing and supervisory functions of the Board of Directors. In addition, the Board of Directors deliberates and decides essential management matters, including basic management policies and medium- to short-term management plans, and promotes the delegation of important business execution decisions to executive directors. The Board of Directors is positioned as an organization that audits and supervises the execution of business operations and is working to strengthen its monitoring function.
In fiscal 2022, the Board of Directors met once a month for 12 meetings, with the attendance of each director shown in the table on the right. Also, a discussion theme is selected each month with the aim of deepening discussions on agenda items that contribute to the Company’s medium- to long-term growth.

Skills Matrix

The following chart denotes the specific areas of expertise of each director (main skills, experience, and knowledge).

■Independent outside director

Knowledge and Expertise with Expected Demonstration of Particular Skills

Appointment of Outside Directors

Alps Alpine appoints outside directors based on their wealth of experience and extensive insight as experts on business management, law, and accounting from an objective perspective to offer advice on and conduct oversight of Company management.
The independence of outside directors is confirmed on the basis of Company standards for the selection of director candidates, upon which outside directors, with their consent, are designated as independent directors and their designation is notified to Tokyo Stock Exchange, Inc.

Outside Directors Liaison Meeting

In order to share information between outside directors, the Company holds quarterly meetings of the Outside Directors Liaison Meeting, which

Outside Director Liaison Meetings

Evaluation of the Effectiveness of the Board of Directors

Each year, the Company evaluates the effectiveness of the Board of Directors in order to realize more effective corporate governance and further improve the functioning of the Board of Directors.

Vice Presidents’ Meeting

We have introduced a vice president system to separate management supervision from business execution and to speed up decision-making in business execution, with chief officers appointed to the individual functions of sales, technology, production, materials, quality, and management. Directors delegated by the Board of Directors to make essential business decisions instruct and supervise the chief officers and vice presidents responsible for ensuring efficient business execution per the business conditions and scale of the Company and each subsidiary while enhancing their respective mobility through discussions and deliberations at the Vice Presidents’ Meeting to ensure prompt and accurate decision-making and business execution in line with business characteristics.

Audit and Supervisory Committee

The Company’s Audit and Supervisory Committee consists of four members, two men and two women. It comprises outside Audit and Supervisory Committee members with extensive experience as lawyers, certified public accountants, and business managers, and inside Audit and Supervisory Committee members who are familiar with our business. The committee is chaired by an outside Audit and Supervisory Committee member to ensure that, as an independent organization, the transparency of our business activities and the effectiveness of our governance remains at a high level. Through attendance at important meetings, review of important documents, and interviews with the representative directors, other directors, vice presidents, and employees, the Audit and Supervisory Committee members audit the execution of duties by directors from an objective standpoint, independent of that of the Board of Directors. Through close cooperation with the internal audit department and accounting auditors, the Audit and Supervisory Committee endeavors to share its views at the Board of Directors’ meetings and other important meetings.
The Company has selected a full-time Audit and Supervisory Committee member to strengthen the monitoring function of the Audit and Supervisory Committee by exchanging information with directors and employees daily and attending essential meetings to obtain information necessary for their activities as an Audit and Supervisory Committee member. The full-time Audit and Supervisory Committee member shares this information with other Audit and Supervisory Committee members and exchanges opinions at Audit and Supervisory Committee meetings, focusing on priority audit items to form audit opinions. In addition, full-time staff with appropriate knowledge, ability, and work experience will be assigned to assist with the duties of the Audit and Supervisory Committee, and independence from directors (excluding board members that are Audit and Supervisory Committee members) is secured for the employees in charge of such duties.

In fiscal 2022, the Audit and Supervisory Committee convened a total of 14 times and the attendance rate for each Audit and Supervisory Committee member was as follows.

■Independent outside director

Internal Audits

The internal audit department undertakes activities with the aim of contributing to the attainment of management targets by evaluating the effectiveness of the Company's governance, risk management and compliance processes and working to bring about improvements.
In accordance with internal audit plans approved by the Board of Directors, the internal audit department implements internal audits of the Company and its subsidiaries to check that business affairs are conducted properly and lawfully from the perspectives of reliability of information about financial and operational matters; attainment of business targets; protection of assets; and conformance with laws, policies, specified procedures, and agreements. Suitable advice on making improvements is then provided. Results of internal audits and areas requiring improvement are reported to the Board of Directors and the Audit and Supervisory Committee.
Under a three-way audit system, the internal audit department cooperates and liaises with both the Audit and Supervisory Committee and the Company's accounting auditor to ensure an efficient auditing process.

Nomination Advisory Committee and Compensation Advisory Board

The Nomination Advisory Committee and the Compensation Advisory Board have been established as advisory bodies to the Board of Directors to enhance objectivity and transparency regarding matters related to the nomination and dismissal of directors, the selection and dismissal of other officers, and the compensation of directors (excluding those who are Audit and Supervisory Committee members) and other officers, as well as to improve corporate governance. The chairpersons of both committees are selected from outside directors, and outside directors comprise the majority of each committee.
The Nomination Advisory Committee and the Compensation Advisory Board were each held a total of three times in fiscal 2022.

Composition of the Nomination Advisory Committee and Compensation Advisory Board

■Independent outside director

(As of July 2023, Chairperson:◎)

Considerations by the Nomination Advisory Committee and Compensation Advisory Board

Nomination Policies

The Company has established criteria for the selection of directors and executive officers to ensure that those with sufficient ability and qualifications are appointed as directors. The Company’s policy is to nominate and appoint as candidates for directors and members of senior management those who possess exceptional management decisionmaking capabilities, foresight, and insight, as well as a law-abiding spirit and high ethical standards.

Policy for Determining Remuneration

Policy

Established by the Board of Directors, the Company’s policy on officer remuneration is to encourage officers to work to improve the Group’s business performance and stock price to the extent possible through a compensation structure that emphasizes a linkage with short-, medium-, and long-term performance and thereby continue to enhance its corporate value.

Types of Remuneration

Remuneration of executive directors consists of basic remuneration, bonuses, and restricted shares. The table on the right shows the composition of remuneration in the standard evaluation after July 2023, and in principle, the higher the positions, the higher the proportion of variable compensation. Remuneration of non-executive directors consists solely of basic remuneration
Remuneration levels and composition (ratios of basic remuneration, bonuses, and shares) are established with reference to survey data of external specialist organizations.

1)Policy on Basic Remuneration (Fixed Remuneration

Basic remuneration is paid monthly in the form of fixed remuneration in accordance with the officer’s position, etc.

2)Policy on Performance-Linked Remuneration (Bonus)

(1) Bonuses reflect Companywide performance based on a system that ranges between 0% to 200% of the standard payment amount established for each individual in accordance with business results for a single fiscal year (operating income margin and profit attributable to owners of parent).
(2) The performance and results of each individual are reflected in their bonuses through individual assessments conducted by the Compensation Advisory Board and reflected in additions or subtractions to the payment amounts calculated in (1) above.
For the indicators related to bonuses to be paid in fiscal 2024 and thereafter, ROE will be added to the existing operating margin and profit attributable to owners of parent to determine the bonus payment rate.

3) Policy on Restricted Share

Restricted shares are paid in accordance with the amount of restricted share compensation determined by position. This system is designed to share not only the benefits of an increase in the stock price with shareholders but also the risks involved with declines in stock prices. This is intended to ensure that management is aware of stock prices.
With respect to the restricted shares to be allocated in fiscal 2024 and thereafter, the Compensation Advisory Board will evaluate the ESG management initiatives each fiscal year from the perspective of improving corporate value over the medium to long term. The results of this evaluation will be added to or subtracted from the share-based remuneration amount determined by position within a range of ±20%.

Director Remuneration System

Remuneration Composition

Fiscal 2022 Director Remuneration

(Millions of yen)

• Corporate Governance
• Compliance
• Risk Management
• Information Security