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., Ltd., Corporate Governance Policies and disclose them on our corporate website.

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 (As of April 2024)

Our Path toward Stronger Corporate Governance

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 short- to medium-term management plans, while ensuring opportunities for discussions aimed at medium- to long-term growth and enhancing corporate value.
In fiscal 2023, there were active discussions on issues such as the positioning of non-core and unprofitable segments for medium- to long-term growth, strategies for inorganic growth, initiatives to advance management structure reforms, and approaches to shareholder return policies. Additionally, in fiscal 2024, we plan to boost discussions aimed at enhancing corporate value and realizing management structure reform, taking into account the Board of Directors effectiveness evaluations and recommendations from the Audit and Supervisory Committee.

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.

Composition and Skills Matrix of the Board of Directors and All Committees

■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 Directors Liaison Meeting

We hold Outside Director Liaison Meetings quarterly to share information with outside directors. These meetings also serve as a forum for exchanging views that transcend individual expertise, with themes appropriately set to enhance our corporate value.

Record of Outside Director Liaison Meetings

Board of Directors Effectiveness Evaluation

We conduct an annual evaluation of the Board of Directors’ effectiveness to enhance effective corporate governance and further enrich the board’s functions. Please see a summary of the effectiveness evaluation conducted for fiscal 2023 below.

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.

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 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.

Considerations by the Nomination Advisory Committee and Compensation Advisory Board

Composition of Each Committee and Number of Attendances in Fiscal 2023 (Chairperson:◎)

■Independent outside director

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 link, 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 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 page 43 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.
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.
From fiscal 2024, ROE has been added as an evaluation indicator in addition to operating income margin and profit attributable to owners of parent for the purpose of conducting management with a greater awareness of the cost of capital.
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.

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.
From the June 2024 payment onwards, ESG evaluation metrics were added to the evaluation criteria for restricted share compensation to encourage executives to take leadership in promoting sustainability-related activities. 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

Remuneration Composition (Median of System Design)

Design of Restricted Shares Compensation System

Fiscal 2023 Director Remuneration

(Millions of yen)

• Corporate Governance
• Compliance
• Risk Management
• Information Security