Corporate governance

Itoki places importance on ensuring diversity across the board of directors, and in 2023, the first female director was appointed. In addition, to ensure an appropriate size for high-quality discussions and balance across the board, the board is composed of executive directors who are familiar with the company's operations and capable of agile business execution, and outside directors who have advanced expertise and can be expected to provide management advice and supervision from a broad perspective. In principle, the board of directors meets once a month to decide on important matters related to management, as well as matters stipulated by law and the articles of incorporation, and to oversee business execution and sustainability activities.

The Audit & Supervisory Board conducts audits based on the Audit & Supervisory Board's audit standards, audit implementation plans, and division of duties established by the Audit & Supervisory Board, and monitors and audits management. The Audit & Supervisory Board receives explanations of audit plans and regular reports on the status of audits from the accounting auditor, and reports on audit plans and the status of audits from the Audit Department, and submits opinions on audit results. In this way, the Audit & Supervisory Board works in cooperation with the accounting auditor and the Audit Department to grasp the status of the Company in a timely and appropriate manner. In addition, the Audit & Supervisory Board receives explanations on individual cases from directors, etc. as necessary.

The remuneration of directors, excluding outside directors, consists of (1) fixed remuneration, (2) performance-linked variable remuneration, and (3) restricted stock remuneration (non-monetary remuneration). (1) Fixed remuneration is paid as monthly remuneration in accordance with the monthly remuneration table for each position approved by the Board of Directors. (2) Variable remuneration is calculated and paid based on the position-based monetary remuneration, linked to the operating profit for the current fiscal year, taking into account the performance of each individual, in order to contribute to the improvement of corporate performance. The performance of each individual is evaluated based on the evaluation index set by business and function for each area of responsibility. (3) Restricted stock remuneration is paid based on the position-based stock remuneration as a motivation for achieving performance in the medium term, on the condition that the director remains in the position, with the aim of achieving sustainable improvement of corporate value and sharing value with shareholders. Remuneration of outside directors consists of fixed remuneration and restricted stock remuneration.

In order to ensure that corporate governance functions continuously and effectively, ITOKI analyzes and evaluates the effectiveness of the entire Board of Directors, including proceedings and agenda items, at the Board of Directors meeting every year. In the evaluation, the effectiveness of the Board of Directors is confirmed, and issues for future efforts are identified and addressed for improvement, thereby improving the functioning of the Board of Directors.

Itoki places importance on ensuring diversity across its board of directors, and its first female director was appointed in 2023. In order to ensure an appropriate size for high-quality discussions and balance across the board, the board will consist of executive directors who are familiar with the company's operations and capable of agile business execution, and outside directors who have advanced expertise and can be expected to provide management advice and supervision from a broad 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. The person is not an executive officer of a major business partner of the Company (a business partner with which the annual transaction amount exceeds 2% of the Company's consolidated sales, or a supplier with which the annual purchase amount exceeds 2% of the said 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.

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" resolved at the Board of Directors meeting held on May 31, 2006, Itoki strives to establish a system to ensure that the execution of duties by directors complies with laws and regulations and the Articles of Incorporation. Itoki also endeavors to establish an effective internal control system by regularly checking and improving the operation of the internal control system.

Itoki's basic policy is to hold shares for strategic purposes only if it is deemed to contribute to the economic development of the Itoki Group and to the improvement of its medium- to long-term corporate value from the perspective of maintaining and strengthening relationships with business partners. In addition, the Board of Directors annually examines whether there is rationality in continuing to hold strategically held shares, such as whether the benefits of holding them are commensurate with the capital cost. If the examination results show that holding shares is not meaningful, the shares will be sold. In fiscal 2023, five shares were sold. When exercising voting rights for strategically held shares, the standard is to not unconditionally agree to proposals from the holding company, but to exercise voting rights after making an individual judgment from the perspective of whether it is recognized as contributing to the improvement of the corporate value of the Company.