Corporate Governance

Corporate Governance Report

Basic Approach

Our basic approach to corporate governance is to thepursue management efficiency to maximize corporatevalue while also reinforcing corporate ethics andincreasing management transparency to increase thetrust we earn from all our stakeholders.

Corporate Governance System

The adoption of this corporate governance structurestrengthens oversight functions by making Audit andSupervisory Committee Members, the peopleresponsible for the audit and oversight of businessexecution by directors, members of the Board ofDirectors. This strengthening of our monitoringfunctions will further enhance corporate governanceand enable the broad consignment of businessexecution tasked to the Board of Directors to variousdirectors. This shift will not only increase the speedof decision-making related to business execution, itwill also allow the Board of Directors to focus ondecisions related to critical management matterssuch as business plans. Overall, this shift willcontribute to improvement in our corporate value.We further enhanced corporate governance byestablishing a Nomination and CompensationCommittee to increase transparency for theevaluation and decision-making processes relatedto director nomination and compensation.

Directors

The Board of Directors is comprised of 9 directors (of which, five are outside directors, including two female).The Board is responsible for making management decisions and monitoring business execution. We strengthen management monitoring functions by appointing outside directors with no interests in the Company. Board of Directors’ meeting are held once per month and impromptu meetings are convened as necessary.

Audit and Supervisory Committee

The Audit and Supervisory Committee consists of three Audit and Supervisory Committee Members, all of whom are Outside Directors. Each Audit and Supervisory Committee Member conducts audits in accordance with the audit policy and audit lan
established by the Audit and Supervisory Committee. For the 2022 fiscal audit year (the Company's audit year is from July to June of the following year), the Audit and Supervisory Committee passed resolutions to determine audit policies, plans, and assignments around the start of the audit year. During the period, the Audit and Supervisory Committee exchanged opinions based on reports from full-time (appointed) Audit and Supervisory Committee Members on business activities, including visits to business sites and audits of important approval documents, considered and deliberated on internal control based on reports from the internal auditing division, deliberated on the legality of regular Board of Director meeting proposals, and shared information on risk issues and other matters. For proposals that require information to be shared with Outside Directors, who are not Audit and Supervisory Committee Members, Outside Directors, who are not Audit and Supervisory Committee Members attend as observers and engage in communication. During this business year, one full-time (appointed) Audit and Supervisory Committee Member makes visits to each division and subsidiary throughout the year, attends major meetings such as Executive Officer Committee and General Managers' Meeting, and inspects the minutes of important meetings and other important documents. If there are any questions, they receive
explanations from Directors and employees, seeks reports from them, and expresses their opinions. In addition, they attend on-site audits by the accounting auditor, conduct joint audits with the Internal Audit Department, and exchange opinions as appropriate to enhance the effectiveness of audits through mutual cooperation. Part-time Audit and Supervisory Committee Members attend Board of Directors meetings and Audit and Supervisory Committee Member meetings to ask appropriate questions and express their opinions based on their expertise and knowledge as management executives in response to reports and explanations from the Executive directors and Full-time Audit and Supervisory Committee Members.
Furthermore, in FY2023, the Company will not place full-time Audit and Supervisory Committee Members, but will adopt a systematic audit system utilizing the Internal Audit Department and the internal control system. This decision has been
made because the Internal Audit Department has established a system to assist the Audit and Supervisory Committee Members in their duties in the two years since the transition to a company with an Audit and Supervisory Committee, and because the effectiveness of the internal control system has been confirmed, and because the Company judged that it is not particularly necessary to place a fulltime person. However, we have appointed Mr. Suzuki, an Audit and Supervisory Committee Member who served for 10 years until the current business year (including as a full-time Outside Corporate Auditor), as an appointed Audit and Supervisory Committee Member. He will continue to perform important operational auditing duties, such as attending meetings of the Executive Officer Committee, Management Committee, etc., inspecting various important documents, and visiting important business divisions and subsidiaries.

Nomination and Compensation Committee

The Nomination and Compensation Committee has been established as an advisory body to the Board of Directors in order to enhance the fairness, transparency, and objectivity of procedures related to the nomination and remuneration of directors of the Company and to improve corporate governance. The Nomination and Compensation Committee receives inquiries from the Board of Directors, thoroughly discusses matters concerning nomination and compensation, etc., and
reports to the Board of Directors. Furthermore, the Committee is comprised of the President, the Head of Administration Division, and three outside Directors, with the majority being outside Directors.

The skill matrix

The skill matrix after approval of Proposals 2 is as follows

Directors who are not Audit and Supervisory Committee Members

NamePerson in chargeCorporate
management,
Management
strategy		Marketing/
Business
development		ITLogistics/
Purchases		SalesOverseaManagement
personal/ Human
resources
development		Accounting/
Finance		Legal affairs,
Risk		Internal
control/
Governance		Experience in
different
indusries
Takuji Iuchi ◎ 〇 〇 〇 〇 ◎ 〇 〇
Kazuhito Yamada Sales Division ◎ 〇 〇 ◎ 〇 〇 〇
Toshiki Hara ◎ 〇 〇 〇 ◎ 〇 〇 〇
Keisuke Nishikawa Administration
Division		 ◎ ◎ 〇 〇 〇 〇 〇 〇
Odaki Kazuhiko ◎ ◎ 〇
Yumie Endo ◎ ◎ 〇 〇 〇

Directors who are Audit and Supervisory Committee Members

NamePerson in chargeCorporate
management,
Management
strategy		Marketing/
Business
development		ITLogistics/
Purchases		SalesOverseaManagement
personal/ Human
resources
development		Accounting/
Finance		Legal affairs,
Risk		Internal
control/
Governance		Experience in
different
indusries
Kazutaka Suzuki 〇 ◎ 〇 〇 ◎ 〇
Hideaki Mihara ◎ ◎
Michiko Kanai 〇 ◎ ◎

Corporate executive officer

NamePerson in chargeCorporate
management,
Management
strategy		Marketing/
Business
development		ITLogistics/
Purchases		SalesOverseaManagement
personal/ Human
resources
development		Accounting/
Finance		Legal affairs,
Risk		Internal
control/
Governance		Experience in
different
indusries

Mitsushige Kimura
Senior Executive Officer
(entrusted)

 Overseas
Business
Division		 〇 ◎ 〇 〇 ◎ 〇 〇 〇
Kaneno Toru Specialized
Business
Division		 ◎ ◎ 〇
Isamu Hayashi AS ONE
SHANGHAI
Corporation		 〇 ◎ 〇 ◎ 〇
Masataka Maruhashi Electric
Commerce
Business
Division		 ◎ 〇 ◎ 〇
Tomohiro Fukuda DX
Development
Division		 〇 ◎ 〇
Jun Machida Supply Chain
Management
Division		 〇 〇 ◎ 〇

Outside Directors’ Role and Independence

AS ONE currently appoints five outside directors. All are registered with the Tokyo Stock Exchange as independent outside directors.

NameNumber of the
Company's shares
held (100 shares)		Board of Directors
Meeting Attendance		Business
relationship with
AS ONE and other
special interests		Main background or concurrent positions
*As of the end of May 2022 *As of the end of March 2023
Outside Director Kazuhiko Odaki 1 13/13 Not applicable Formerly worked at the Ministry of Economy, Trade and Industry (until March 2012), Professor, Faculty of Economics, Nihon University (current)
Outside Director Yumie Endo - 10/10 Not applicable Executive Officer COO, IR Office, Corporate Sustainability Department of Sojitz Corporation
Outside Director Kazutaka Suzuki 11 13/13 Not applicable Formerly worked at Resona Bank, Limited (until June 2013)
Outside Director Hideaki Mihara 4 13/13 Not applicable Mihara Accounting Firm (current)
Outside Director Michiko Kanai 3 13/13 Not applicable Member, Oh-EBASHI LPC & PARTNERS (current)

Kazutaka Suzuki has worked for Resona Bank,Limited, a bank with which AS ONE does business,and 10 years have passed since he retired from thebank.As of FYE 03/2023, the Group’s total loan balanceis 6.1 billion yen, which is 6.3% of total assets andapproximately 35% of total cash and deposits,indicating we have a low debt dependence.Furthermore, loans from the above bank were 2,475million yen, roughly 2.5% of total assets, and loans from the above bank can be sufficiently substitutedvia other means of procurement.Based on the above and AS ONE’s “Reference:Criteria for Determining Independence of OutsideDirectors and Outside Auditors,” it is our judgementthat there are no problems with the independentstatus of Mr. Suzuki as an Outside Director, andthere are no concerns of any conflicts of interest between general shareholders and the Company.

Officer Compensation

The maximum amount of compensation for directors wasdetermined at the 60th General Meeting of Shareholdersheld in June 2021. The appropriateness of officercompensation is then deliberated by the Nomination andCompensation Committee, which is comprised of a majorityof independent outside directors, before a final decision ismade by the Board of Directors.The types of compensation consist of fixed compensation (cash), earnings-linked compensation (cash bonuses),earnings-linked non-monetary compensation in the form ofa board benefit trust (BBT), and non-monetary share-basedcompensation subject to transfer restrictions (RS).Furthermore, outside directors and directors who are Auditand Supervisory Committee Members receive only fixedcompensation.Compensation limits are as indicated in the following table.

[Payment status for FYE 03/2023]

　Total amountMonetary compensationNon-monetary compensationNumber of applicable
people
Fixed-compensationBonusBoard benefit trustRS
Directors (excluding outside directors) 220 119 68 13 20 5
Outside Directors 45 45 ー ー ー 7
Total 266 164 68 13 20 12

（Unit：million yen）

Bonuses are based on consolidated operating profit with afinal decision made based on a comprehensive evaluation ofdividends, employee bonus levels, trends among othercompanies, and medium- and long-term results and pastpayouts.The board benefit trust (BBT) allocates points equivalentto stock based on stock benefit regulations outlined by theCompany and condition to the achievement of net sales andoperating profit goals set forth for each fiscal year plan ofthe Medium-Term Management Plan. Furthermore, if theCompany achieves the goals of the Medium-Term Management Plan, PROJECT ONE, directors are allocatedthe initially scheduled points. If the goals of the upgradedPROJECT ONE ver.2.0 are achieved, then additional pointswill be added and allocated in two stages.To promote objectivity and transparency, the Nominationand Compensation Committee are consulted in advance onspecific individual remuneration ratio by type andcompensation amounts, after which the Board of Directorsvotes to consign final decision-making to the President, whogives due respect to the recommendations of theNomination and Compensation Committee.

The performance criteria used in the calculation ofbonuses is operating profit. The performance criteriaand earnings used as the basis for BBT calculationsare as shown in the table to the right.

Full-year plan when formulating
the Medium-Term Management Plan		FYE 03/2023 goal to be established at the
beginning of the relevant fiscal year based
on the revised Medium-Term Management Plan		The result of
consolidated fiscal year
Net sales 83,600 92,060 91,421
Operating profit 9,050 10,010 11,396

（Unit：million yen）

Dialogue with Stakeholders

As is represented in our Company name, we strive to workas one with our users, dealers, and suppliers towardscreating new value. Our Sales Division, Customer SupportDivision, and Purchasing Divisions take the lead in engagingin daily communication with these stakeholders to promotedaily improvements.The Public and Investor Relations Department works with the Director in charge of the Administration Division and ourPresident to facilitate communication with shareholders andinvestors. During FYE 03/2022, we held meetings with a totalof more than 370 institutional investors. Recently, we areincreasing engagement with ESG investors, which hasenabled us to partake in valuable exchanges of opinion thatwe later reflect in management.

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