Corporate Governance

Approach and Governance System

To drive sustainable growth and enhance corporate value over the medium and long terms, the Group is committed to establishing an organization and systems that enable fast, efficient responses to a changing business environment. At the same time, our basic policy on corporate governance is to make every effort to thoroughly implement and strengthen compliance and improve the soundness and transparency of management.

Based on this philosophy, GS Yuasa Corporation, a pure holding company, is responsible for formulating management strategies for all of the Group’s businesses, as well as management for the entire Group and oversight of the Group’s business execution. GS Yuasa International Ltd., the Group’s core operating subsidiary, is the key decision-making body for business execution, consolidating and strengthening business execution and enhancing dynamisms in the execution of business.

In this manner, functions are divided between GS Yuasa Corporation and GS Yuasa International to enhance and reinforce management structures while establishing governance structures that can increase the transparency and efficiency of management.

Governance Structure (FY 2022)

image:Governance Structure

Efforts to strengthen corporate governance

image:Efforts to strengthen corporate governance

Compliance with the Corporate Governance Code

The Company implements all the principles established in the Corporate Governance Code.

Establishment of Nomination and Compensation Committee

On February 26, 2019, the Board of Directors voted to establish a discretionary Nomination and Compensation Committee, chaired by an independent outside director, and serving as an advisory body to the Board of Directors. The goal of the committee will be to strengthen the independence, objectivity and accountability of Board of Director functions such as director nominations and compensation. Nomination committee functions include consulting on proposals for nominating new directors and for selecting a new corporate president and plans for successors (including human resource development), in addition to reporting findings to the Board of Directors. Meanwhile, the compensation committee will consult on policy determinations for director compensation as well as for individual director remuneration, and reporting findings to the Board of Directors.

In fiscal 2021 there were 8 Nomination and Compensation Committee Meetings.

Information of Executives and Board of Directors

Executives (As of June 29,2022)

GS Yuasa Corporation

President and Representative Director, CEO
Osamu Murao
Senior Managing Director and Representative Director
Masahiro Shibutani
Director
Kazuhiro Fukuoka
Director and CFO
Hiroaki Matsushima
Outside Director
Ikuo Otani
Outside Director
Takayoshi Matsunaga
Outside Director
Yoshiko Nonogaki
Corporate Auditor
(Full-time)
Masayuki Murakami
Corporate Auditor
(Full-time)
Akio Furukawa
Outside Corporate Auditor
(Part-time)
Tsukasa Fujii
Outside Corporate Auditor
(Part-time)
Akira Tsujiuchi

GS Yuasa International Ltd.

President and Representative Director
Osamu Murao
Senior Managing Director and Representative Director
Masahiro Shibutani
Director
Ryoichi Okuyama
Director
Masaya Nakagawa
Director
Kazuhiro Fukuoka
Director
Takashi Taniguchi
Director
Takao Omae
Director
Hiroaki Matsushima
Director
Takashi Abe
Director
Yoshikazu Nose
Corporate Auditor
(Full-time)
Masayuki Murakami
Corporate Auditor
(Full-time)
Akio Furukawa
Outside Corporate Auditor
(Part-time)
Hideki Matsuyama

Skills matrix of directors and auditors

image:Skills matrix of directors and auditors

Reasons for Appointing Internal Directors

To enable the Board of Directors to effectively fulfill its duties as the Board of Directors of the holding company, we select, in a well-balanced manner, persons with knowledge, experience, skills, and so on relating to the business of our Group as a whole and persons who can make statements and act from an objective standpoint and a long-term, wide-ranging perspective. In addition, we strive to achieve a size and composition that can reflect diverse opinions, including gender and international viewpoints. In the selection of candidate directors, the Board of Directors asks the Nomination and Compensation Committee for advice and makes a final decision in the light of its report.

Evaluating the effectiveness of the Board of Directors

Once each year, the Company evaluates the effectiveness of its Board of Directors under the leadership of the outside directors and the president with the objectives of confirming whether the current situation is consistent with the ideal status of the Board and the roles it should fulfill, identifying areas for improvement, and further improving operation of the Board.

The Board then investigates and carries our improvement measures to address the issues that were identified through the evaluation. The Company will continue to evaluate the effectiveness of the Board and strive to make further improvements in the future.

<Evaluation Method>
Each director and corporate auditor completes a questionnaire, and based on the responses obtained, individual interviews are conducted. The details of the responses are analyzed and evaluated, and based on the results, the Board of Directors deliberates on improvement measures.

<Evaluation Items>
●Composition of the Board of Directors  ●Agenda of the Board of Directors  ●Management of the Board of Directors  ●Duties of the Board of Directors

Evaluating the effectiveness of the Board of Directors

image

Information of Outside Directors

Reasons for nomination of, status of main activities of, and record of attendance by outside directors at Board of Directors and Auditor Meetings(FY2021)

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Policy on the Independence of Outside Directors

Candidates selected as outside directors must meet the requirements for independence set out in the Companies Act and possess the experience and insight to objectively and fairly judge the legality and appropriateness of the execution of the company's duties from the shareholders' perspective without being limited by being in charge of business implementation. Also, we believe in the importance of employing people who are outwardly independent and use the Tokyo Stock Exchange's independence standards as their reference.

Independent outside director independence standards and qualities

In selecting outside director candidates, in addition to their meeting the requirements for externality as stipulated in the Companies Act, the Company strives to determine whether they have the experience and insight to make objective and neutral judgments about the legality and appropriateness of the execution of the Company's business from the standpoint of shareholders, without being subject to restrictions imposed by the executive management.

Further, the Company believes that it is desirable to have human resources who are considered independent from the perspective of those outside the Company also, and for this reason, the Company uses the independence standards, etc. set forth by the Tokyo Stock Exchange, as a reference.

Remuneration of Directors

Basic Policy

To continuously enhance our corporate value and strengthen our corporate competitiveness, the remuneration of directors is ranked and structured in consideration of such factors as securing and retaining talented human resources and increasing their motivation to achieve better business performance.

Determination process and composition of remuneration

At a meeting held on February 25, 2021, the Board of Directors approved a policy on determining the details of remuneration including the remuneration of individual directors. In deciding this policy, the Board referred the matter to the Nomination and Compensation Committee and received a report. The Board also confirmed that the method of determining the remuneration for each director for the current fiscal year and the specifics are consistent with the decision-making policy approved by the Board and that the report from the Nomination and Compensation Committee was complied with and is in line with the decision-making policy. The Board of Directors determines the specific amounts to be paid within the limit of compensation approved by the Shareholders’ Meeting and delegates decisions to the president based on the report of the Nomination and Compensation Committee.

A director’s remuneration consists of a fixed basic remuneration, a performance-linked annual bonus as a short-term incentive, and a performance-linked stock remuneration scheme as a medium- to long-term incentive. The basic remuneration (cash remuneration) is decided in consideration of such factors as various assessments and levels in listed companies with about the same business scale as the Company. The annual bonus, a short-term performance-linked remuneration, is paid to directors (excluding outside directors) after approval by the Shareholders’ Meeting with the aim of increasing awareness of the need to contribute to sustained business growth and enhanced corporate value. The stock remuneration scheme is aimed at increasing the awareness of directors of the need to contribute to medium- to long-term business growth and enhanced corporate value. In principle, company shares are issued at the time of a director’s retirement through a trust set up by the Company.

Corporate auditor remuneration is determined by discussion among the corporate auditors within the range of the amount approved by resolution at the first annual Shareholders’ Meeting, which was held on June 29, 2005. In view of their role and independence, auditors receive only the fixed basic remuneration.

Total Amount of Remuneration, Etc. by Category and by Type, and Number of Applicable Persons

図

Note: The above figures are the total amount of remuneration, etc. paid to directors by GS Yuasa and our subsidiaries.

Composition of GS Yuasa Corporation's director remuneration

image:Composition of GS Yuasa Corporation's director remuneration

Note: The figure is hypothetical with percentages calculated based on results for fiscal 2021 and may change due to variations in consolidated performance and other factors.

Evaluation items regarding officer remuneration for directors

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The performance-linked points awarded in fiscal 2021 were to be calculated based on results for fiscal 2020. However, it was difficult to calculate the consolidated results forecast for fiscal 2020 due to the impact of COVID-19, and as a result, the forecast was excluded from the Fifth Mid-Term Management Plan and no performance-link point index was set. Because of this, performance-linked points were not awarded in fiscal 2021.

Cross-shareholdings

Policy on cross-shareholdings

Shares held by the Company for purposes other than pure investment are those of business partners, etc., with which the Company expects to maintain medium- to long-term relationships, expand transactions, and generate synergies and which the Company believes will enhance corporate value and benefit shareholders and investors. For this reason, the Board of Directors verifies the rationality of holding each individual stock every year. As a result of this verification, the Company attempts to reduce the number of shares held when it judges that there is no rationality in holding such shares.

Criteria for ensuring the proper exercise of voting rights in relation to cross-shareholdings

The Company exercises its voting rights in relation to cross-shareholdings after comprehensively evaluating the rationality of the proposals of investee companies from the perspective of improving corporate value over the medium to long term.

Risk Management

About our Group’s Risk Management, please refer to the following URL.

Sustainability Website “Developing Fair, Transparent, and Sound Business, and Anti-Corruption”

Internal Control System

To strengthen the management foundation, the GS Yuasa Group has improved the system and relevant rules to ensure the maintenance of ethical business practices based on the Companies Act. This system includes mechanisms to ensure effective auditing, information management, and risk management throughout the Group.

To comply with the internal control reporting system required under the Financial Instruments and Exchange Act, we are maintaining an internal control system and financial reporting mechanisms to meet all requirements.

Our international subsidiaries and other consolidated Group companies evaluate the status of the improvement and implementation of internal controls. Following external audits, reports on these internal controls are publicly disclosed.