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.

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 Business Plan, while ensuring opportunities for discussions aimed at medium- to long-term growth and enhancing corporate value.
In FY2024, the Board of Directors actively discussed the progress of management structural reforms, the formulation of the newly established Vision 2035 and Mid-Term Business Plan 2027 aimed at medium- to long-term growth, a review of the business portfolio, and shareholder return policies. In FY2025, the Board of Directors plans to continue discussions on enhancing corporate value, including reforms to corporate governance based on the evaluation of the Board’s effectiveness, as well as the realization of Vision 2035 and the achievement of the Mid-Term Business Plan 2027.

Skills Matrix, and Attendance of the Board of Director

■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 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.

Major Meetings of the Outside Director Liaison Meetings

Evaluation of the Effectiveness of the Board of Directors

Based on the above, we concluded that the Board’s effectiveness was appropriately maintained in FY2024.
At the same time, we recognized the need to further enhance the initiatives undertaken in FY2024 to improve effectiveness.

• Continued improvement of materials used in Board and Management Meetings
• Securing and enriching time for discussions on key themes related to enhancing corporate value
• Providing further training for directors and vice presidents
• Improving communication among officers, particularly between outside directors and vice presidents

We will continue working to maintain and improve the effectiveness of the Board of Directors, ensure thorough oversight of management, and pursue sustainable enhancement of corporate value.

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.
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 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.

Composition and Attendance of each committee

■Independent outside director

Considerations by the Nomination Advisory Committee and Compensation Advisory Board

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

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 greatest extent possible through a compensation structure that emphasizes a link with short-, medium-, and long-term performance, and thereby continue to enhance its corporate value.

Process for Determining Directors’ Remuneration, etc.

Types of Remuneration

The remuneration for executive directors consists of basic remuneration, bonuses, and restricted shares compensation (see figure on the right for composition ratio). It is designed so that higher positions have a greater proportion of variable compensation. Additionally, the compensation for non-executive directors is limited to basic remuneration, reflecting their role in overseeing the Company’s management from an objective standpoint.
The level and composition of remuneration (fixed remuneration and performance-linked remuneration) are determined with reference to external specialist survey data, and we are also introducing a clawback system starting in FY2027.

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 Performance-Linked Remuneration (Bonus)

1. Bonuses reflect Companywide performance based on a system that ranges between 0% and 200% of the standard payment amount established for each individual in accordance with business results for a single fiscal year. To promote management that is conscious of capital costs, operating income margin, pro t attributable to owners of parent, and ROE are used as evaluation indicators. For FY2025, the system has been revised to vary between 0% and 300% of the standard payment amount established for each individual to better reflect overall corporate performance.
2. The performance and results of each individual are reflected in their bonuses through individual assessments conducted by the Compensation Advisory Board, and are reflected in additions or subtractions to the payment amounts calculated in 1. above.

3) Policy on Restricted Share Compensation

Restricted share compensation is paid based on the amount of restricted share compensation determined by position. The stock price reflects the market’s evaluation of corporate value, and by providing Company shares as compensation, the goal is to encourage management to focus on medium- to long-term corporate value enhancement.
To encourage executives to take leadership in promoting sustainability-related initiatives, ESG evaluation metrics have been included in the criteria for restricted share compensation. Based on our standards, calculated from the results of ESG evaluation agencies, the share remuneration amount determined for each position is adjusted up to ±20%.

Director Remuneration System

Remuneration Composition (Median of System Design)

Remuneration Composition

Design of Restricted Shares Compensation System

FY2024 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

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