Corporate Governance

Overview of corporate governance

Corporate governance structure

KITZ has adopted the organizational design of a company with a Nominating Committee, etc. to strengthen corporate governance and improve management speed. By clearly separating the director oversight function from the executive function, strengthening the oversight function of the Board of Directors, and delegating substantial authority for business execution from the Board of Directors to the executive officers, we are able to realize swift management decision-making.

With regard to corporate governance bodies, we have established voluntary Risk committees in addition to the Board of Directors, Nominating Committee, Audit Committee and Compensation Committee as supervisory functions. The Board of Directors strengthens its supervisory function by having more than one-third of its members consist of independent outside directors. In addition, the Nominating Committee, the Audit Committee, the Compensation Committee, and the Risk Committee are composed of a majority of outside directors and are chaired by outside directors, thereby enhancing the transparency and objectivity of management.

In addition, the Company has established the Senior Executive Officers and the Board of Executive Officers as executive functions.

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Supervisory function

Board of Directors and Directors

Based on their fiduciary responsibility of management to shareholders, the board of directors places importance on the determination or strategic discussions about such matters as the Long-term Vision and Medium-term Plans, annual management plans, and the Basic Policy on Management with the aim for sustained growth and enhancement of corporate value over the medium to long term of the KITZ Group, in addition to resolutions specified in laws, regulations, the articles of association, and the board of directors’ regulations. In addition, the board of directors delegates significant business execution authority to senior executive officers and oversees business execution through such means as receiving periodic reports on business execution from senior executive officers.
Moreover, in principle, the board of directors meets monthly in regular board meetings, quarterly in board meetings on financial results, and at other times as necessary in extraordinary board meetings.

Category	Details of deliberations by the Board of Directors in fiscal 2024
Strategic management and ESG	Second Medium-Term Plan, Market Strategy, Introduction of Business Unit System, DX Strategy, Improvement of Human Resource Strategy and Employee Engagement, Transition to a Company with a Nominating Committee, etc., Evaluation of the Effectiveness of the Board of Directors, Nominating Committee Report, Executive Personnel, Compensation Committee Report, Audit Committee Report, Internal Control, Risk-Compliance, and IT and Information Security
Capital efficiency management, accounting and financial	Financial strategy, cost of equity capital, strategic shareholdings, liquidation of shares, and repurchase and retirement of treasury stock
Investments and loans (large-scale projects)	M&A, Semiconductor-related capital investment and establishment of plant in Vietnam

In the Articles of Incorporation, KITZ has set the number of directors at 14 or less. As of March 31, 2025, the Board of Directors consisted of 10 directors, seven of whom are independent outside directors (including two female directors). We believe that it is important to ensure diversity in the composition of the Board of Directors so that deliberations by the Board of Directors are conducted in a multifaceted and appropriate manner, based on the realization of increased corporate value over the medium to long term. For this reason, we consider the selection of director candidates in a balanced manner based on our “Election and Dismissal Policy for Directors and Executive Officers,” including knowledge, experience, ability, expertise, gender, internationality, career and age.

As for the chairperson of the meeting of the Board of Directors, it is served by the Director, Chairman of the Board at this time because it is also important for the chairperson of the Board of Directors meeting to fully recognize and understand the realities and issues confronting KITZ. In order to enhance the decision-making function, the function of management supervision, and the advice function of the board of directors, outside directors are selected who have extensive experience and knowledge about business management and are well versed in legal affairs.

Policy for Election and Removal of Directors
and Senior Executive Officers[PDF 177KB]

Skill Matrix of Directors

KITZ formulates and discloses a skill matrix of directors so as to visualize the balance of diversity and skills of the board of directors.

Name	Position at the Company	Main specialized knowledge/area
Name	Position at the Company	Corporate management	Global experience	Legal matters/ risk management	Sustainability (ESG)	Capital efficiency management/ accounting/ finance	Manufacturing/ quality	Innovation/ DX/technological development	Sales/ marketing	Personnel affairs/ human resource development
Yasuyuki Hotta	Director Chairman of the Board	〇	〇						〇
Makoto Kohno	Director Representative Executive Officer and President	〇	〇						〇
Toshiyuki Murasawa	Director				〇	〇				〇
Minoru Amoh	Outside Director	〇	〇					〇
Yutaka Fujiwara	Outside Director		〇		〇	〇
Yukino Kikuma	Outside Director			〇	〇					〇
Shuhei Sakuno	Outside Director			〇		〇				〇
Ayako Kobayashi	Outside Director			〇	〇					〇
Toichi Maeda	Outside Director	〇					〇	〇
Yasunobu Suzuki	Outside Director	〇	〇						〇

The main areas in which each director is expected to demonstrate specialized knowledge based on past experience are indicated with up to three marks. This does not indicate all knowledge and experience that each director possesses.
Reasons for electing each director are disclosed in the description of the election agenda in the NOTICE OF THE 111TH ORDINARY GENERAL MEETING OF SHAREHOLDERS (pages 6 to 15).

Independent Officers

Outside directors meet the Independence Standards for Outside Directors of the Tokyo Stock Exchange and the Company. The Company has registered all such directors with the Tokyo Stock Exchange as independent officers.

Independence Standards for Outside Directors[PDF 156KB]

Support Structure for Directors

We are considerate of the fact that, for directors to fully understand the business challenges the company must cope with and make appropriate and precise decisions, explanations may be necessary in addition to providing directors with information or documents regarding agendas before holding meetings of the Board of Directors. Moreover, the management-planning division, relevant divisions, and each related division of each committee support directors so that the directors can obtain necessary information in more detail.

We will allow Directors to attend various meetings and visit business offices, including those of the KITZ Group, so that Directors can obtain the information necessary for decision-making at any time. Additionally, we will allow Directors to hear the opinions of lawyers, certified public accountants, and other outside experts at our expense regarding business issues that require appropriate and accurate judgment.

Training Structure for Directors

To acquire the necessary knowledge and improve themselves, we will provide opportunities for them to participate in training at external educational institutions and management study sessions held by inviting external instructors based on themes after they assume office or from the time they are candidates. In order for Outside Directors to grasp and understand necessary information regarding the business, finance, organization, and other aspects of the Company and its subsidiaries after assuming office, we will explain our corporate philosophy system, Long-term Vision, Medium-term Plan, business overview, the industry to which we belong, history, governance system, compliance system, and other matters.

Additionally, regarding content verification for director training, the training shall be improved as necessary by summarizing opinions after conducting a survey regarding the effectiveness of the Board of Directors.

Composition and Roles of Each Committee

Various committees are composed of directors appointed by resolutions at meetings of the Board of Directors. The majority of them are outside directors. The committees are chaired by outside directors, appointed by resolutions at meetings of the Board of Directors.

Nominating Committee

In addition to deciding the details of proposals for the election and dismissal of Directors to be presented to the General Meeting of Shareholders, based on the “Directors and Senior Executive Officers’ Election and Dismissal Policy” established by the Board of Directors, the Nominating Committee also deliberates on matters such as the nomination of candidates for the positions of the Chairman of the Board, Chair of the Board of Directors, members and chairpersons of statutory and voluntary committees, and Senior Executive Officers, as well as the planning of next generation managers, and reports the results of its deliberations to the Board of Directors.

Audit Committee

The Audit Committee decides on the contents of proposals regarding the election and dismissal of accounting auditors to be submitted to the General Meeting of Shareholders, in addition to auditing the execution of duties by directors and executive officers and preparing audit reports. The Audit Committee has full-time Audit Committee members who attend important internal meetings, such as the Executive Committee and the Executive Committee, to gain an accurate understanding of information in a timely manner and share it with other members.

In addition, the Audit Committee ensures opportunities to exchange opinions with our directors, executive officers and employees, as well as directors, auditors and employees of Group companies. The Audit Committee also works closely with the accounting auditor and the Internal Audit Office at the Three-Tier Audit Meeting.

Compensation Committee

The Compensation Committee determines the “Policy for Determining the Individual Remuneration for Directors and Senior Executive Officers” and the details of the individual remuneration for Directors and Senior Executive Officers. Remuneration for Directors and Senior Executive Officers will be set at an amount commensurate with the business performance of the Company, taking into account the standards of other companies with a focus on increasing motivation to achieve Long-term Vision and Medium-term Plan and to improve the corporate value of the KITZ Group.

Risk Committee (non-statutory)

The Risk Committee assists the KITZ Group’s risk management, and is designed to contribute to its sophistication as an integral part of management strategy. The committee identifies specific themes related to major risks and reports to the Board of Directors the results of deliberations on the appropriateness of the setting of issues and countermeasures by the executive officers with regard to the subject themes.

Composition and Chairperson of each committee

Name	Position at the Company	Committee Member Appointments （◎Committee Chairperson）
Name	Position at the Company	Nominating Committee	Audit Committee	Compensation Committee	Risk Committee
Yasuyuki Hotta	Director Chairman of the Board	〇		〇	〇
Makoto Kohno	Director Representative Executive Officer and President
Toshiyuki Murasawa	Director		〇		〇
Minoru Amoh	Outside Director	◎
Yutaka Fujiwara	Outside Director			◎
Yukino Kikuma	Outside Director				◎
Shuhei Sakuno	Outside Director		◎
Ayako Kobayashi	Outside Director		〇		〇
Toichi Maeda	Outside Director	〇			〇
Yasunobu Suzuki	Outside Director			〇

Independent Outside Directors Meeting and Lead Independent Outside Director

Independent outside directors have established an Independent Outside Directors Meeting as a body independent of the Board of Directors. The meeting comprises all independent outside directors of the Company, and a lead independent outside director is appointed from among them by a mutual vote.
Outside directors exchange information and share the understanding necessary to actively contribute to discussions at meetings of the Board of Directors. At the same time, they freely discuss matters related to KITZ ‘s business and corporate governance from an objective standpoint.

Ensuring the Effectiveness of the Board of Directors

KITZ performs an Evaluation Regarding the Effectiveness of Board of Directors as a survey questionnaire targeting all directors every year with the aim to enhance the effectiveness of corporate governance and improve functions of the whole Board of Directors. This survey is conducted by distributing questionnaires where the respondents give their names especially for important matters and receiving answers based on each principle of the Corporate Governance Code.

In this survey conducted in February 2025, the formulation and implementation of management strategies, initiatives related to sustainability, the composition of the Board of Directors, matters related to the nominating and compensation of officers, matters related to audits and outside directors, the revitalization of the Board of Directors’ deliberations and responses to shareholders, investors, and other stakeholders, the evaluation and gathering of opinions on items related to the revitalization of deliberations at each committee and the Independent Outside Directors’ Meeting.

As a result, our Board of Directors was evaluated as having generally secured its effectiveness. We also received constructive opinions and proposals on further improvements in profitability and capital efficiency, opportunities for dialogue with investors, human resource management, including succession planning, initiatives to improve employee engagement, and the way the Board of Directors operates. Based on the results of these evaluations, the Board of Directors confirms the status of action taken by the executive officers. At the same time, the Board of Directors strives to ensure effectiveness by conducting fundamental discussions to increase corporate value over the medium to long term.

Implementation guidelines

Purpose	Evaluate the effectiveness of the Board of Directors and improve the functions of the Board of Directors as a whole
Time of implementation	2025 Feb.
Eligibility	All 10 directors
Methods	Questionnaire (registered form)
Evaluation items	Formulation and execution of management strategies, initiatives related to sustainability, structure of the Board of Directors, nominating and compensation of officers, matters related to audits and outside directors, revitalization of deliberations of the Board of Directors, responses to stakeholders such as shareholders and investors, and revitalization of deliberations of each committee and independent outside directors meetings
Results	■Result of evaluation The Board of Directors was evaluated as having generally secured effectiveness. ■Main Opinions and Proposals Further improvements in profitability and capital efficiency, opportunities for dialogue with investors, human resource management including succession development plans, initiatives to improve employee engagement, and methods of managing the Board of Directors

The Individual Compensation for Directors and Senior Executive Officers

KITZ determines the compensation for directors and executive officers based on the policy set by the Compensation Committee for determining the details of individual compensation for directors and executive officers. The Compensation Committee reviews each year with reference to the level of other companies and the salary level of our employees. The remuneration structure is based on the fact that the remuneration is appropriate from the perspective of ensuring responsibilities and securing human resources. The remuneration structure for directors is based on their position as independent from business execution. The remuneration structure for executive officers is based on the remuneration structure that enables them to fulfill their responsibilities for improving business performance in each fiscal year and enhancing corporate value over the medium to long term. The summary of the Policy for determining the individual Compensation for Directors and Executive Officers is as follows:

1. Basic policy: Remuneration for Directors and Senior Executive Officers will be set at an amount commensurate with the business performance of the Company, taking into account the standards of other companies with a focus on increasing motivation to achieve the Long-term Vision and Medium-term Plan and to improve the corporate value of the KITZ Group.

2. Level of remuneration: The amount and content of individual remuneration for Directors and Senior Executive Officers based on this policy will be examined every year using objective remuneration survey data from external institutions and with reference to executive remuneration levels of other companies in the same industry, of the same size, and in other industries, as well as the remuneration levels of our employees, and will be set at an appropriate level from the perspective of responsibilities and securing human resources and determined by the Compensation Committee.

3. Remuneration system

(1) Directors
Considering that the position is independent from business execution, remuneration for Directors will consist of basic remuneration (fixed remuneration) and stock remuneration (non-performance-linked).
(2) Senior Executive Officers
So that Executive Officers can fulfill their responsibilities with the aim of improving performance in each business year and increasing corporate value over the medium to long term, remuneration for Executive Officers will consist of basic remuneration (fixed remuneration) and incentive remuneration (variable remuneration), and the incentive remuneration (variable remuneration) will consist of bonuses (performance-linked, short-term incentive remuneration), stock remuneration (non-performance-linked remuneration), and stock remuneration (performance-linked, medium- to long-term incentive remuneration).

Type of remuneration	Purpose and overview
[Monetary remuneration/Basic remuneration] (Fixed remuneration)	– Basic remuneration is fixed remuneration to encourage steady performance of duties and is cash remuneration paid at a fixed amount determined according to the position and responsibilities of Directors and Senior Executive Officers.
[Monetary remuneration/Bonuses] (Performance-linked, short-term incentive remuneration)	– Bonuses for Senior Executive Officers will be paid if the following requirements are met because we believe that it is desirable to link them to the same indicator as the dividend payout ratio to shareholders (i) The Company is able to pay annual dividends (12 months) of 10 yen or more to shareholders. (ii) Net income attributable to parent company shareholders is not secured because of a large amount of extraordinary profits. (iii) Net income attributable to parent company shareholders of 2.8 billion yen or more is secured. – The amount of individual bonuses for Senior Executive Officers will be determined by the Compensation Committee based on the degree of target achievement of net income attributable to parent company shareholders in each business year, evaluation of individual performance targets, and evaluation of performance (the amount is variable within a range of 0% to 200% of the bonus standard amount for each position).
[Non-monetary remuneration/Stock remuneration] (Non-performance-linked) (Performance-linked, medium- to long-term incentive remuneration)	– Shares with a restriction on transfer (non-performance-linked) will be granted to Directors as non-monetary remuneration. – Shares with a restriction on transfer (non-performance-linked) and performance share units (performance-linked, medium- to long-term incentive) will be granted to Senior Executive Officers as non-monetary remuneration. The performance share unit renumeration will be evaluated based on pre-determined indicators and will be paid for three years at the end of the three-year Medium-term Plan. (i) Purpose of this system The purpose of our stock remuneration system is to further share value with our shareholders by owning our shares, and to provide incentives for sustainable improvement of the corporate value of the KITZ Group, and our shares will be granted to Directors and Senior Executive Officers according to their positions and the degree of achievement of performance targets. (ii) Overview of this system While Directors and Senior Executive Officers will provide the remuneration (monetary remuneration claims) that is contributed by us to the Directors and Senior Executive Officers as contribution in kind to us, we will grant shares with a restriction on transfer to Directors and Senior Executive Officers, and grant the performance share units to Senior Executive Officers. In addition, an agreement on allocation of shares with a restriction on transfer will be entered into between us and Directors and Senior Executive Officers.

4. Determination of individual remuneration: After confirming that the content of individual remuneration for Directors and Senior Executive Officers for each business year is in accordance with this policy, the Compensation Committee will discuss and determine the validity of such remuneration.

5. Composition ratio of remuneration for Directors and Senior Executive Officers: A standard amount will be set for each position of Directors and Senior Executive Officers, and the composition ratio of remuneration for each position is as shown below:; (Note) 1. Directors listed above do not include one Director who serves concurrently as a Senior Executive Officer.
(Note) 2. Separate from the position-specific standard amounts, additions may include a “chair of the Board of Directors allowance,” “lead independent outside director allowance” and “committee chairperson allowance.”

6. Policy for determining the timing and conditions for granting remuneration

Administrative procedures related to the payment of remuneration to Directors and Senior Executive Officers are as follows:

(i) Of the remuneration for Directors and Senior Executive Officers, basic remuneration will be paid on the 28th of each month.
(ii) Of the remuneration for Senior Executive Officers, bonuses will be paid on a date separately determined by the Compensation Committee in March of each year.
The full amount will be paid even if these persons resign during the term of office.
(iii) Conditions for payment of remuneration for Directors and Senior Executive Officers other than those mentioned above will be, if any, determined by the Compensation Committee at the end of the business year.

Policy for determining the individual remuneration for Directors and Senior Executive Officers[PDF 164KB]

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Execution Function

Senior Executive Officers

The Board of Directors elects six senior executive officers by resolution and appoints one of them to be the representative executive officer (president). Senior executive officers are delegated broad authority from the Board of Directors and engage in swift decision-making regarding management and the execution of operations.

Position at the Company	Name
Representative Executive Officer and President (Concurrently serves as Director)	Makoto Kohno
Senior Executive Officer	Takaaki Kobayashi
Senior Executive Officer	Yasunori Sugita
Senior Executive Officer	Shuji Takei
Senior Executive Officer	Kenichi Bessho
Senior Executive Officer	Tomoya Maekawa

In addition, several executive officers are appointed as key employees under the direction of the senior executive officers.

Board of Senior Executive Officers

The Board of Directors has established a Board of Senior Executive Officers made up of all senior executive officers. The Board of Senior Executive Officers makes decisions through deliberation over the execution of operations delegated to all senior executive officers from the Board of Directors.

Management Meeting

KITZ has a Management Meeting under the command of the representative executive officer and president. The Management Meeting consists of all senior executive officers, executive officers, and department heads that senior executive officers and executive officers nominate. The Management Meeting is held every month. In addition to lively discussions over important management issues, the Management Meeting manages the progress of management plans and makes adjustments accordingly.

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Dialogue with shareholders and investors

Promotion of dialogue with shareholders

KITZ is making these efforts to promote dialogue with shareholders.

1. An Executive Officer in charge of Investor Relations has been appointed, we are promoting dialogue with shareholders centered around the Head of the IR Department.
2. In order to provide timely, accurate, and fair information to all shareholders and investors, we have formulated a disclosure policy and published it on our website.
3. In principle, we will hold quarterly financial results briefings for institutional investors and analysts, and annual company briefings for individual investors, in which the Representative Executive Officer & President, the Executive Officer in charge of Investor Relations, or the Manager of the IR Division will provide the explanation. In addition, Directors, including Outside Directors, will attend as necessary to promote dialogues with shareholders.
4. When we receive a request for an interview from shareholders, the Manager of the IR Division will, in principle, respond to such request, or depending on the purpose of the interview and the number of shares owned, the Representative Executive Officer & President, the Executive Officer in charge of Investor Relations will respond to such request.
5. When we engage in dialogue with shareholders, we will appropriately manage information to prevent insider trading.
6. We will explain our Long-term Vision, Medium-term Plan, and other plans in an easy-to-understand manner.
7. Related departments will work together organically as necessary to support dialogues with shareholders.
8. The Manager of the IR Division will regularly report opinions, requests, and other matters obtained through dialogues with institutional investors and analysts to the Representative Executive Officer & President and the Executive Officer in charge of Investor Relations, and as necessary, the Representative Executive Officer & President will report the details to the Board of Directors and the Board of Senior Executive Officers as well as use them to improve management.
9. In addition to IR information such as financial statements, securities reports, management information, stock information, and general meetings of shareholders’ information, we will disclose presentation of financial results, Q&A summary, and videos on our website.
10. The composition of shareholders as of the end of December each year is monitored.

Action to Implement Management that is Conscious of Cost of Capital and Stock Price

KITZ has resolved policies and specific initiatives regarding actions to implement management that is conscious of cost of capital and stock price based on analysis and evaluation of the current situation at a meeting of the Board of Directors. KITZ analyzed the cost of capital from two perspectives: the calculation based on the CAPM methodology and the rate of return expected by investors. Currently, KITZ’s balance sheet profitability is higher than the rate of return expected by investors. However, continuing to gain market confidence in our potential for medium to long-term earnings growth remains a key priority for KITZ.

In response, KITZ will work to evaluate and analyze measures by breaking down them into five elements: “ROIC management,” “Financial strategies,” “Growth strategies,” “ESG,” and ” IR/Shareholder strategies.” These efforts are aimed at increasing corporate value by facilitating further profit generation, fostering growth expectations, and reducing the cost of capital.

In addition, regarding the [KITZ’s action to implement management that is conscious of cost of the capital and stock price] that is a request for disclosure from the Tokyo Stock Exchange, it is disclosed on the website (Link setting: https://www.kitz.com/en/investor_ir/management-policy/m_vision/).

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Cross-Shareholdings

Reduction of Cross-Shareholdings

KITZ’ basic policy is to not maintain cross-shareholdings for the purposes of securing stable shareholders. In addition, share issues judged not to satisfy the Policy on Cross-Shareholdings are reduced as much as possible. The Board of Directors closely examines cross-shareholdings, quantitative economic rationality, the risks of maintaining such holdings, and other factors to verify whether it is appropriate to maintain the cross-shareholdings.

Since the year ended March 31, 2016, we have gradually reduced the number of listed stocks held. In the year ended December 2024, the ratio of cross-shareholdings to net assets was 5% or less.

Changes in the number of listed stocks held for the purposes other than the pure investment and the ratio of cross-shareholdings to net assets

(Note) 1. Number of shares held by parent company: Excludes stocks with a small amount (approximately 1 million yen) of which the minimum number of shares (1 unit) is held for information gathering purposes.
(Note) 2. Ratio of cross-shareholdings to net assets (%) = cross-shareholdings (balance sheet amount) ÷ consolidated net assets.

Standards for Exercising Voting Rights on Cross-Shareholdings

Regarding the exercise of voting rights related to cross-shareholdings, we will decide whether to approve or disapprove each proposal, comprehensively considering the stock issuing company’s management status and governance structure, the presence or absence of appropriate decision-making that leads to medium- to long-term improvements in corporate value, and whether or not this will lead to an increase in the corporate value of the KITZ Group.

Policy on Cross-Shareholdings[PDF 90KB]

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Response to Large Acquisition of Our Shares

The act of acquiring a number of shares that enable them to control our financial and business policy decisions (hereinafter referred to as “Large Acquisition Act”) are responded to as follows:

1. We consider that whether or not shareholders respond to Large Acquisition Act will be determined by the will of shareholders, and we will not introduce so-called takeover defense measures.
2. From the perspective of securing and improving our corporate value and the common interests of shareholders, we will request that the person who intends to carry out the Large Acquisition Act provide the necessary and sufficient information in order to appropriately judge the pros and cons of such Large Acquisition Act. Then, by disclosing the opinions of the Board of Directors regarding such Large Acquisition Act, we will strive to secure the period and information necessary for shareholders to consider the pros and cons of such Large Acquisition Act and implement the appropriate measures based on the Financial Instruments and Exchange Act, the Companies Act, and other related laws and regulations.

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Basic thinking on corporate governance

Overview of corporate governance