Corporate Governance

• Corporate Governance Structure
• Board of Directors
• Audit and Supervisory Committee
• Nomination Advisory Committee
  and Compensation Advisory Board
• Internal Control Systems
• Our Path toward Stronger Corporate Governance

Basic Policy

Corporate Governance Structure

Alps Alpine has adopted a company structure 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

Board of Directors

We position the Board of Directors as an entity responsible for auditing and supervising business execution, striving to strengthen its monitoring functions. The Board of Directors deliberates and decides on key management matters, including basic management policies and the Mid-Term Management Plan, while ensuring opportunities for discussions aimed at medium- to long-term growth and enhancing corporate value.
In FY2025, the Board of Directors actively discussed the progress of initiatives to achieve the Mid-Term Management Plan 2027, reviews of the business portfolio and material issues, and progress against the annual plan for sustainability activities. In FY2026, the Board of Directors plans to advance discussions on further corporate governance reforms based on the evaluation of the Board’s effectiveness, as well as business scenarios for realizing Vision 2035 and measures to achieve the Mid-Term Management Plan 2027.

Composition of Directors

Skills Matrix, and Attendance of the Board of Director

■Independent outside director

Expected Knowledge and Expertise

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 submitted to the Tokyo Stock Exchange, Inc.

Outside Director Liaison Meetings

We hold Outside Director Liaison Meetings to share information with outside directors. Starting in FY2025, these meetings are held monthly and serve as a forum for exchanging views that transcend individual expertise, with themes appropriately set to enhance our corporate value.

Outside Directors Liaison Meeting Activities

Evaluation of the Effectiveness of the Board of Directors

Vice Presidents’ Meeting

We have introduced a vice president system to separate management oversight from business execution, aiming to expedite decision-making in business operations. Directors entrusted with key business executions by the Board of Directors guide and supervise the vice presidents responsible, significantly delegating executive authority to them in their respective business areas, thereby establishing a system for swift and accurate decision-making.
In addition, under the authority delegated by the vice presidents, executive managers have been positioned to carry out efficient and timely execution within designated operational areas.

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 by 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. Outside Audit and Supervisory Committee members also serve on the Nomination Advisory Committee and Compensation Advisory Board, where they participate in discussions and provide advice.
In addition, full-time staff with appropriate knowledge, ability, and work experience are 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.

Composition and Attendance of the Audit and Supervisory Committee

Evaluation of the Effectiveness of the Audit and Supervisory Committee

Internal Audits

Alps Alpine’s 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.
The internal audit department implements internal audits of the company and its subsidiaries in accordance with internal audit plans approved by the Board of Directors. The internal audits are performed to check that business affairs are conducted properly and lawfully from the standpoints of reliability of information about financial and operational matters; attainment of business targets; protection of assets; and conformance with laws, policies, established procedures, and agreements. Suitable advice on making improvements is then provided. Results of internal audits and areas identified for 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 vice presidents, and the compensation of directors (excluding those who are Audit and Supervisory Committee Members) and vice presidents, as well as to improve corporate governance. Both committees are chaired by outside directors, and outside directors comprise the majority of each committee. To ensure coordination between the two committees, outside directors and others who have not been appointed as committee members also participate as observers, creating a highly effective deliberation framework.

Composition and Attendance of each committee

■Independent outside director

Considerations by the Nomination Advisory Committee and Compensation Advisory Board

Sustainability Committee

As the body responsible for managing sustainability activities, we have established the Sustainability Committee, which comprises all vice presidents (Chair: Satoshi Kodaira, Executive Vice President and COO). Sustainability issues are incorporated into the Mid-Term Management Plan and short-term management plans, and are addressed by each division. The Committee meets quarterly to monitor and evaluate the progress of initiatives and to deliberate on individual measures. It also reports regularly to the Board of Directors four times a year.

Business Portfolio Committee

To pursue the sustained improvement in returns on capital that ROIC-based management is intended to achieve, we established the Business Portfolio Committee (Chair: Satoshi Kodaira, Executive Vice President and CFO), which began operations in August 2026. The committee deliberates policies on business selection and concentration and the allocation of management resources to growth areas, promoting business portfolio optimization from a Companywide perspective, including business restructuring and exits. The committee meets quarterly, with its deliberations submitted to and reported at the Vice Presidents’ Meeting.

Compliance Promotion Committee

As the body responsible for promoting compliance activities, we have established the Compliance Promotion Committee (Chair: Satoshi Kodaira, Executive Vice President and COO). The Committee works to establish and operate a Companywide compliance promotion framework, foster compliance awareness by promoting education and awareness-raising, and encourage adherence to rules and processes by conducting effective periodic inspections and sharing incident information and recurrence prevention measures across the organization. The Committee meets quarterly and submits matters for deliberation and reports to the Vice Presidents’ Meeting.

Economic Security Committee

Against a backdrop of increasingly complex international affairs and growing uncertainty in the business environment, we have established the Economic Security Committee (Chair: Mayumi Kiriu, Vice President) to minimize the impact on the Group of mounting economic security and geopolitical risks.
The Committee considers and implements any necessary responses based on information it gathers about economic security. The Committee meets quarterly and submits matters for deliberation and reports to the Vice Presidents’ Meeting as necessary.

Director Nomination and Compensation

The Nomination Advisory Committee and the Compensation Advisory Board were 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 the outside directors, and outside directors comprise the majority of each committee.

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 decision-making capabilities, foresight, and links, as well as a law-abiding spirit and high ethical standards.

Policy for Determining Remuneration

To ensure objectivity and transparency in officer remuneration, the Board of Directors has established the policy for determining remuneration and related matters, following deliberation by the Compensation Advisory Board.
We regard officer remuneration as a key element of the management foundation supporting the realization of Vision 2035, “Shaping a Future Where Technology Extends Your Senses,” and the Mid-Term Management Plan 2027. Our basic policy is for the officer remuneration system to serve as an incentive not only to achieve short-term performance targets, but also to enhance corporate value over the medium to long term, improve capital efficiency, and promote value sharing with shareholders. Specifically, we design the remuneration structure based on the following principles.

• Emphasize linkage with short-, medium-, and long-term performance
• Encourage officers to take action to sustainably improve earning power, capital efficiency, and shareholder value
• Provide sound incentives that curb excessive short-termism and contribute to sustainable enhancement of corporate value across the Group

The same remuneration structure applies to vice presidents who do not concurrently serve as directors, in line with this policy.

Process for Determining Directors’ Remuneration, etc.

Officer remuneration is determined within the total amount approved by the General Meeting of Shareholders.
To enhance objectivity and transparency, the Board of Directors delegates full authority to determine the remuneration of directors (excluding directors who are Audit and Supervisory Committee members) to the Compensation Advisory Board. Under this delegation, the Compensation Advisory Board deliberates on and determines the details of the remuneration system and the remuneration of each individual.
The remuneration of directors who are Audit and Supervisory Committee members is determined by the Audit and Supervisory Committee within the limits approved by the General Meeting of Shareholders.

Types of Remuneration

The remuneration of the Company’s executive directors comprises (a) basic remuneration, (b) bonuses, and (c) restricted share compensation. In principle, the composition is designed so that the proportion of variable remuneration reflects each director’s position.
Remuneration for outside directors and directors who are Audit and Supervisory Committee members consists solely of basic remuneration, reflecting their role in overseeing management. In both cases, they are paid a fixed remuneration on a monthly basis.

1) Policy on Basic Remuneration (Monthly remuneration)

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

2) Policy on Short-term Performance-Linked Remuneration (Bonus)

(1) Bonuses emphasize linkage with the achievement of annual management targets and are determined according to Companywide performance and individual evaluations for the fiscal year under review. Each bonus is calculated by applying Companywide performance (50% weighting) and the individual evaluation (50% weighting) to the standard payment amount established for each position. The payout rate for Companywide performance ranges from 0% to 300%, while that for the individual evaluation ranges from 0% to 200%. These are multipliers for the respective evaluations, and the final bonus amount is determined by taking their weighted average according to the applicable weightings.
The Companywide performance component is based on the performance of the reportable segments (Component Segment, Sensor and Communication Segment, and Mobility Segment) and is intended to support achievement of the Mid-Term Management Plan 2027. Its performance measures are three key indicators under the Plan: operating income margin, profit (loss) attributable to owners of parent, and ROE. Each performance measure is evaluated on a four-level scale according to the achievement rate against the target set in line with the Mid-Term Management Plan 2027, and the payout rate is determined from the total score after applying the weighting assigned to each measure. If either the operating income margin or profit (loss) attributable to owners of parent is negative, the payout rate for Companywide performance is set at 0%.

(2) Individual evaluations are designed to provide individualized incentives, with the payout rate determined on a five-level scale based on individual performance and management contribution, each assessed separately. Individual performance is assessed based on medium- to long-term initiatives and performance by business segment, among other factors, that cannot be captured by Companywide performance alone. To further strengthen the management execution framework, we also revised the assessment of management contribution, which had been weighted too heavily toward short-term and financial indicators, by increasing the weight of non-financial indicators such as human capital, sustainability, and governance, and by adding perspectives such as expectations, missions, and role behaviors, with the final assessment determined after peer evaluations by inside directors (excluding directors who are Audit and Supervisory Committee members) and vice presidents.

Remuneration Composition

(Note) The final bonus amount is calculated as the weighted average of the payout rates for Companywide performance (50% weighting) and the individual evaluation (50% weighting).

3) Policy on Medium- to long-term performance-linked remuneration (restricted shares)

Restricted share compensation is calculated based on a standard amount established for each position, with the aim of promoting alignment of interests with shareholders and achieving sustainable enhancement of corporate value. A specified portion (20%) of this standard amount is adjusted in stages according to the performance indicator evaluation results, and the total compensation amount is designed to range from 80% to 120% of the standard amount.
We use ESG evaluation scores as the performance indicators because they enable objective assessment of our initiatives to address material issues and encourage improvement in company performance and corporate value over the medium to long term. Specifically, the three-year average scores from FTSE Russell ESG Ratings and MSCI, two leading third-party rating agencies, are each converted into points using five predefined bands, after which the scores for both indicators are totaled, and the prescribed coefficient corresponding to the resulting score range is applied to calculate the compensation amount.

Design of Restricted Shares Compensation System

Director Remuneration System

Remuneration Composition

FY2025 Director Remuneration

(Millions of JPY)

Clawback Provision

Alps Alpine has in place a clawback provision that enables the company, through deliberation by the Compensation Advisory Board and approval by the Board of Directors, to request the full or partial return of compensation paid to executive directors or executive officers as bonuses or restricted stock units in the case of serious law violations or other misconduct. In the case of a downward revision of the company’s financial results after bonuses have been already paid, the company will reassess the bonus rate, given that financial results are used to calculate bonuses, and request the return of all or some of the paid bonuses.

Internal Control Systems

Basic Policy on Internal Control Systems and Their Establishment

In keeping with the Companies Act and Regulations for Enforcement of the Companies Act, Alps Alpine has established systems for ensuring the appropriateness of business operations. This is the company’s basic policy on the establishment of internal control systems. Through the enhancement of internal controls aligned with those systems, Alps Alpine pursues sound management and business operations.

Our Path toward Stronger Corporate Governance

Metrics and Targets

Mid-Term Management Plan 2027 metrics and targets and past performance are as follows.

• Corporate Governance
• Compliance
• Risk Management
• Tax Management
• Information Security