Corporate governance

ITOKI places importance on ensuring diversity on the entire board of directors, and will have a female director appointed for the first time in 2023. In addition, in order to maintain an appropriate size that allows for high-quality discussions, and to ensure a balance among directors as a whole, we have selected executive directors who are familiar with company operations, etc., and who can execute operations with agility, as well as highly specialized directors. The board is comprised of outside directors who can be expected to provide management advice and supervision from a wide range of perspectives. In principle, the Board of Directors meets once a month to decide on matters stipulated by laws and regulations, the Articles of Incorporation, and important management matters, as well as to supervise business execution.

ITOKI has established a Board of Corporate Auditors to conduct efficient and effective audits of the execution of duties by directors. The Board of Corporate Auditors determines audit policies, plans, and priority audit items for each fiscal year, and implements audit activities. In addition to receiving regular reports from each division related to internal control systems, we also collaborate with accounting auditors to conduct confirmations from a variety of perspectives. Additionally, we receive explanations regarding individual projects from directors, etc. as necessary.

The Board of Directors shall be composed of a well-balanced board of directors with diverse backgrounds, including advanced specialized knowledge and experience, in order to appropriately fulfill its responsibilities of formulating basic management policies for the ITOKI Group and appropriately supervising management. I am. Furthermore, by appointing corporate auditors who have knowledge of finance, accounting, and legal matters, we are able to audit and supervise the Board of Directors and business execution functions from a neutral and objective perspective.

In order to contribute to the company's sustainable growth and increase in corporate value over the medium to long term, ITOKI has established its own standards regarding the independence of outside directors, and these standards are disclosed in the matters regarding independent directors in the corporate governance report. . In addition to the standards set by the Companies Act and stock exchanges, we appoint people as independent outside directors who meet our own independence standards.

1. Not currently or in the past 10 years a business executive of the Company, its subsidiaries or affiliated companies
2. Not be a current major shareholder (shareholder holding 10% or more of total voting rights) or an executive officer of the company
3. Not being an executive of one of the Company's major business partners (a business partner whose annual transaction amount exceeds 2% of the Company's consolidated sales, or a supplier whose annual purchase amount exceeds 2% of the company's consolidated sales)
4. Not a business executive of the Company's major lenders (financial institutions whose annual borrowing amount exceeds 2% of the Company's total assets)
5. Must not be a consultant, accountant, lawyer, or other professional who receives money or other assets of 10 million yen or more annually from the Company in addition to executive compensation.

ITOKI provides directors and auditors with the necessary opportunities, including external training, to ensure that they are aware of their roles and can appropriately fulfill their roles and responsibilities, both at the time of their appointment and after their appointment. Our basic policy is to provide support including: The support system is as follows.

Remuneration for directors, excluding outside directors, consists of (1) fixed remuneration, (2) variable remuneration linked to performance, and (3) restricted stock remuneration (non-monetary remuneration). Monetary remuneration is paid as monthly remuneration according to the approved monthly remuneration table for each position. (2) In order to contribute to the improvement of corporate performance, variable remuneration is calculated and paid based on position, linked to the operating profit of the current fiscal year, and taking into account individual performance. Masu. Individual performance is evaluated based on evaluation indicators set for each business and function for each area of responsibility. (3) Restricted stock remuneration is based on position-based stock remuneration, with the aim of sustainably increasing corporate value and sharing value with shareholders. , the salary is provided on the condition that the employee remains an officer. Compensation for outside directors consists of fixed compensation and restricted stock compensation.

From the perspective of maintaining and strengthening relationships with business partners, Itoki's basic policy is to hold stocks for cross-holding purposes only when it is determined that they will contribute to the economic development of the Itoki Group and the increase in corporate value over the medium to long term. This is our policy. In addition, each year the Board of Directors examines whether it is reasonable to continue holding cross-shareholdings, such as whether the benefits associated with holding them are commensurate with the cost of capital. As a result of the verification, we will proceed with the sale of stocks that are deemed to have little value in holding. In fiscal 2022, we sold three stocks.
When exercising voting rights related to cross-shareholdings, we do not unconditionally approve the proposals of the companies in which we hold shares, but rather make decisions after making individual judgments from the perspective of whether or not they are deemed to contribute to improving the company's corporate value. The standard is to exercise rights.

Based on the audit plan for each fiscal year, we conduct audits of Itoki and its domestic and overseas group companies to determine whether business execution is being carried out appropriately in accordance with laws and internal regulations, and whether risks are being effectively managed. I am. Additionally, as an independent evaluation department for the "Internal Control Reporting System" based on the Financial Instruments and Exchange Act, it evaluates the effectiveness of the ITOKI Group as a whole. In addition to regularly reporting audits to management and the Board of Directors, information is shared with the Board of Corporate Auditors and accounting auditors as appropriate, and the internal audit department reports audit results to full-time corporate auditors. We are increasing the effectiveness and efficiency of internal audits.

Based on the "Basic Policy for Establishing an Internal Control System," which was resolved at the Board of Directors meeting held on May 31, 2006, Itoki has established a system to ensure that the execution of duties by directors complies with laws and regulations and the Articles of Incorporation. We strive to build an effective internal control system by regularly checking the operating status of the internal control system and making improvements.