Konoike Transport : Foundation Supporting Value Creation

Chapter 04

Management Structure

Directors

KONOIKE STORY

The Future and Our Strategies

Sustainability

Foundation Supporting Value Creation

Data

Audit & Supervisory Board

Tadahiko

Konoike

Representative Director,

Chairman, President and

Chief Executive Officer

Apr 1976 Joined Konoike Construction Co., Ltd.

Apr 1981 Joined the Company

Dec 1983 Managing Director

Dec 1987 Senior Managing Director Dec 1989 Executive Director and Vice

President

Jun 2003 Executive Director and President Apr 2018 Representative Director,

President, and Chief Executive Officer

Apr 2021 Representative Director, President, and Chief Executive Officer

Jun 2021 Representative Director, Chairman, President and Chief Executive Officer (current position)

Tadatsugu

Konoike

Director and Senior Managing Executive Officer,

In charge of International Business/In charge of Technology Innovation

Apr 2006	Joined Sumitomo Mitsui Banking
	Corporation
Apr 2013	Joined the Company
July 2014	General Manager of Corporate Planning
	Division
Apr 2016	Executive Officer
Apr 2017	Managing Executive Officer
Jun 2017	Director and Managing Executive Officer
Apr 2018	Director and Senior Managing Executive
	Officer
Apr 2019	Director and Senior Managing Executive
	Officer, New Business Development
	Administrator, Executive General
	Manager of New Business Development
	Division
Apr 2021	Director and Senior Managing Executive
	Officer, Chief International Officer and
	Chief Technology Innovation Officer
Apr 2022	Director and Senior Managing Executive
	Officer, In charge of International
	Business/In charge of Technology
	Innovation (current position)

Mitsugu

Otani

Full-time Audit & Supervisory Board Member

Apr 1982	Joined the Company
Sep 2011 General Manager of Life Related
	Division (Osaka)
Jun 2012	General Manager of Airport
	Division
May 2013 Executive Director of Career
	Service Co., Ltd. (now Mercury
	Corporation)
Apr 2015	General Manager of Internal
	Auditors Office
Apr 2019	General Manager of Auditing
	Office
July 2020	Audit & Supervisory Board
	Member of the Company
	(current position)

Hiroaki

Kobayashi

Full-time Audit & Supervisory Board Member

Apr 1983	Joined the Company
Jun 2012	General Manager, Administration
	Department
Jun 2013	General Manager, Accounting
	Department
Apr 2015	Executive Officer, Deputy
	Executive General Manager,
	Finance/Accounting Division
Apr 2016	Executive Officer, Executive
	General Manager, Systems
	Promotion Division, General
	Manager, Systems Sales
Apr 2018	Executive Officer, Audit &
	Supervisory Board Office
Apr 2019	Executive Officer, General
	Manager, Internal Auditors Office
Apr 2021	Executive Advisor
Jul 2021	Audit & Supervisory Board
	Member of the Company
	(current position)

Yoshihito Ota

External Director (Independent)

Taisuke

Fujita

External Director

Apr 1978	Joined KYOCERA Corporation
Jun 2003	Executive Officer of KYOCERA
	Corporation
Jun 2010	Director and Managing Executive
	Officer of KYOCERA Corporation
Dec 2010 Senior Managing Executive Officer
	of Japan Airlines Co., Ltd.
Dec 2015 Chairman of KYOCERA
	Communication Systems Co.,
	Ltd.
Apr 2017	Executive Advisor (KYOCERA
	Communication Systems Co.,
	Ltd)	Mika
Jun 2018	External Director of the Company
	(current position)	Masuyama
Sep 2019	Chairman of MTG Co., Ltd.
Dec 2019	Director and Chairman of MTG
	Co., Ltd. (current position)	External Director
		(Independent)

Oct 1991	Joined Tohmatsu & Co. (now Deloitte
	Touche Tohmatsu LLC)
Nov 2000	Joined Morgan Stanley Japan Securities
	(now Mitsubishi UFJ Morgan Stanley
	Securities Co., Ltd.)
Jun 2002	Joined SPARX Asset Management Co.,
	Ltd.
Mar 2006	Joined Taiyo Pacific Partners LP
Feb 2012	Established Unleash Capital Pte. Ltd.
Dec 2012	Joined Orbis Investments Management
	Ltd.
Sep 2014	Joined Asian Energy Investments Pte. Ltd.
May 2016	Joined Amundi Japan Ltd.
Jul 2020	External Director of the Company
	(current position)
Jun 2022	External Director of HOGY MEDICAL CO.,
	LTD. (current position)

Apr 1985	Joined the Bank of Japan
Sep 1991 International Marketing Director of
	Cap Gemini Sogeti
Nov 1992 Senior Consultant of Gemini
	Consulting Japan
Jun 1997	Joined Egon Zehnder
Jan 2004	Partner (Egon Zehnder)
Oct 2016	President and Representative
	Partner of Masuyama & Company
	LLC (current position)
Mar 2017	Outside Director, Member of the
	Audit and Supervisory Committee
	of Suntory Beverage & Food
	Limited (current position)
Mar 2019	Outside Director of KOKUYO Co.,
	Ltd. (current position)
Jun 2019	External Director of the Company
	(current position)

Yutaka

Fujiwara

External Audit & Supervisory Board Member

Apr 1974	Joined MODEC, Inc.
Nov 1987	Joined the Yasuda Trust and Banking Co.,
	Ltd. (now Mizuho Trust & Banking Co., Ltd.)
Jun 1996	Chicago Branch Manager (Mizuho Trust
	& Banking Co., Ltd.)
Jul 1998	Resigned (Mizuho Trust & Banking Co., Ltd.)
Aug 1998	Joined OMRON Corporation
Jun 2005	Executive Officer, Senior General
	Manager of Financial IR Office (OMRON)
Jun 2008	Managing Executive Officer and Senior
	General Manager, Corporate Strategic
	Planning HQ (OMRON)
Aug 2011	Representative Director of Cross-
	Border-Bridge Corporation
Jun 2013	Outside Director of Nabtesco
	Corporation
Jun 2017	Outside Director of KITZ Corporation
	(current position)
Apr 2018	Representative of Cross-Border-Bridge
	Consulting (current position)
Jul 2020	External Audit & Supervisory Board
	Member of the Company (current position)

Chie

Hoshi

External Audit & Supervisory Board Member

Apr	1998	Admitted to the Bar
Sep 2004 Joined Tanabe & Partners
Apr	2006	Partner, Tanabe & Partners
		(current position)
Apr	2014	Member, Ministry of Defense
		Procurement Council
		(current position)
Jun 2021	External Audit & Supervisory Board
		Member of the Company
		(current position)

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Chapter 04

Corporate Governance

KONOIKE STORY

The Future and Our Strategies

Sustainability

Foundation Supporting Value Creation

Data

Composition of the Board of Directors

Basic Philosophy

We at the KONOIKE Group believe that meeting our social responsibility is an important part of our mission. We strive to build corporate value as we build relationships of trust with society in the practice of our corporate philosophy and to pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust.

Driven by this philosophy, we use our business activities to build positive relationships with our stakeholders as we engage in responsive, efficient, sound, fair, and transparent business. To this end, we continue to strengthen our supervisory functions and provide timely information disclosure, introducing new measures as necessary.

Structure

General Meeting of Shareholders

Elect/Dismiss

Elect/Dismiss

Elect/Dismiss

Audit

Report

Board of Directors

Audit & Supervisory Board

Accounting Auditors

Advise/Report

Advise/Report

Cooperate

Report

Supervise

Audit

Cooperate

Cooperate

Audit

Human Resources and

Sustainability

Compensation Committee

Committee

To distinguish clearly between management oversight and business execution, three of the five members of the board of directors are external directors, while two of the four members of the audit & supervisory board are external members. Further, we have filed notice with the Tokyo Stock Exchange for four of these five external officers to be designated as independent directors. In June 2019, we established the Human Resources and Compensation Committee, an elective advisory committee to the board of directors, and will work toward further reinforcing initiatives in corporate governance.

Skills Matrix

Board of Directors

Human Resources and

Compensation Committee

Female

Female

Directors

External

External

External

Report

(5)

External

External

External

Independent Independent

Advise

Director

Director

Chair

Independent

President

Independent

Director

Female

Director

Audit &

Supervisory

External

External

Board

Members

Independent Independent

(4)

Director

Director

Execution		Management Meeting
				Direct
President and Chief Executive Officer				Internal Auditors Office
				Report
Report		Direct
Operational								Audit
	Executive Officer
Report		Direct

Divisions, Departments, Worldwide Group Companies

Corporate Governance Improvement Timeline

2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

Corporate

International

Sustainability

HR and

New

Technology

Finance and

Legal

Capital

Directors

Current Title(s)

Management and

Employee

Business/

ICT/DX

and Risk

Experience

/ESG

/R&D

Accounting

Markets

Business Experience

Development

M&A

Management

Representative Director, Chairman,

Tadahiko

President, Chief Executive Officer, and

〇

〇

〇

〇

Chairman of the Board of Directors

Konoike

Human Resources and Compensation

Committee Member

Tadatsugu

Director and Senior Managing

〇

〇

〇

〇

Directors

Konoike

Executive Officer

Yoshihito

External Director (Independent)

〇

〇

〇

〇

Human Resources and Compensation

Ota

Committee Chair

Mika

External Director (Independent)

〇

〇

〇

〇

Human Resources and Compensation

Masuyama

Committee Member

Taisuke

External Director

2003: Implemented Executive Officer System

Separation of

Supervision and 2003: Changed Director Term to 1 Year Business Execution

External Directors	1 Director
External Audit & Supervisory	2006: 2 Members
Board Members
Committees

Other

Changed Title of President to

President and Chief Executive Officer

External Directors Comprise

a Majority of Directors

2 Director

3 Director

Established Human Resources and

Compensation Committee

Established Integration Committee

(Changed to Sustainability Committee in November 2021)

Listed on First Section of the Tokyo Stock Exchange

Implemented Compensation-Type

Stock Options (Abolished in 2021)

Implemented Restricted

Stock Compensation Plan

Transitioned to Prime Market of the Tokyo Stock Exchange

	Fujita	Human Resources and Compensation	〇	〇		〇	〇
	Committee Member
Board	Mitsugu	Audit & Supervisory Board Member	〇			〇	〇
Otani	(full-time)
Supervisory	Hiroaki	Audit & Supervisory Board Member	〇		〇	〇
Kobayashi	(full-time)
Yutaka	External Audit & Supervisory Board	〇	〇		〇	〇
Fujiwara	Member (Independent)
&
Audit	Chie	External Audit & Supervisory Board					〇
Hoshi	Member (Independent)

* The list above does not represent all the knowledge, experience, etc., possessed by directors and members of the audit & supervisory board.

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Chapter 04

Corporate Governance

Human Resources and Compensation Committee

Activities in FY3/2022

The committee met a total of 10 times in response to consultations from the board of directors. The committee discussed

KONOIKE STORY

The Future and Our Strategies

Sustainability

Foundation Supporting Value Creation

Data

Evaluating the Effectiveness of the Board of Directors

Since FY3/2016, our board of directors has conducted an annual evaluation of the composition and operation of the board, board deliberation content, and support systems. We have worked to strengthen the functions of the board to ensure a sustained increase in corporate value for the KONOIKE Group.

appointments of directors and executive officers, reporting the discussions to the board of directors. On multiple occasions, the committee also discussed the state of the compensation system for directors and executive officers.

Officer Compensation System

	Basic Policy		Determination of Compensation
1	2

Evaluation Method

Evaluator	Self-Evaluation by Board of Directors/
Full-Time Audit & Supervisory Board Members
Evaluation Method Questionnaire Format

Response Format Non-Anonymous

Evaluation and Additional Comments on

Following Items

1 Composition of the Board of Directors

Evaluation Items	2	Operation of the Board of Directors
3	Active/Reactive Governance

1. Questionnaire to All Members of Board of Directors and Full-Time Audit & Supervisory Board Members
2. Aggregation by the Secretariat

Evaluation

Process

3 Self-Evaluation by Board of Directors

Based on Questionnaire Results

We have established the following basic policy to ensure our officer compensation system supports our Corporate Philosophy (Our Mission), which reads, "We pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust."

The board of directors decides the amount of compensation given to each director based on reports from the Human Resources and Compensation Committee. The amount of compensation given to each full-time Audit & Supervisory Board member is decided by discussion among members of the Audit & Supervisory Board. Specific amounts are based

4	The Board of Directors' Advisory Body
	(Human Resources and Compensation Committee)
5	Other Factors

4 Exploration Based on Evaluation Results

1. The director compensation system must contribute to realizing the Corporate Philosophy (Our Mission)
2. The director compensation system must aid in recruiting and retaining a talented management team intent on achieving our 2030 Vision
3. The director compensation system must encourage a constant spirit of ambition to go beyond expectations
4. The director compensation system must be designed to link compensation closely to corporate earnings
5. The director compensation system must continue to pay compensation linked to share prices over the medium- to long-term
6. The director compensation system must be designed to guarantee fairness and transparency, ensuring that officers are accountable to employees, shareholders, and other stakeholders

on compensation limits approved by the general meeting of shareholders and take into account company earnings, compensation levels at other companies, employee salaries, etc.

Overview of FY3/2022 Evaluation Results

Evaluations indicated that the composition of the board of directors is appropriate in terms of the overall number of directors and the balance between the number of internal and external directors. Evaluations improved regarding the operation of the board of directors due to partial revision of the content and volume of materials and to securing time for discussion of important management matters. However, issues requiring improvement were identified, specifically regarding the establishment of a monitoring system for management indicators, including non-financial indicators.

Going Forward

In light of the results above, we are considering improvements to the following items.

Establishing a monitoring system

Monitoring in the new medium-term management plan (ongoing verification and discussion of steady implementation) Organizing and systematically providing information, etc. necessary for monitoring operational execution

	Total		Total Compensation Amount by Type (Millions of Yen)	Number of
Position	Compensation
				Eligible Officers
Basic Compensation		Performance-Linked Compensation (Bonuses)	Non-Monetary Compensation (Restricted Stock)
	(Millions of Yen)
Directors	272	152		98	21	8
(External Directors, Included)	(37)	(37)		(-)	(-)	(3)
Audit & Supervisory Board Members	66	66		-	-	6
(External Audit & Supervisory Board Members, Included)	(22)	(22)		(-)	(-)	(3)
Total	339	219		98	21	14
(External Officers, Included)	(59)	(59)		(-)	(-)	(6)

*1 The above table is inclusive of the amount paid to one director and two Audit & Supervisory Board members (including one external member) who retired at the conclusion of the 81st Annual General Meeting of Shareholders held on June 24, 2021.

*2 The amount of compensation for directors does not include employee salaries of directors who concurrently serve as employees.

Continuing annual planning of matters to be discussed

Enhancing the content of materials for the board of directors

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Chapter 04

Corporate Governance

KONOIKE STORY

The Future and Our Strategies

Sustainability

Foundation Supporting Value Creation

Data

Training Future Leaders

Human resource development is a core component of sustainable growth for the KONOIKE Group. The president, directors (serving concurrently as managing executive officers), and executive general managers (executive officer level) meet once every month at the Executive General Manager Steering Committee to share information about operational execution. Executive general managers, through discourse and discussion with directors, seek to cultivate their perspectives as managers. In addition, as one of a number of initiatives to further enhance the human resources foundation, a forum for deliberation is held as needed. Here, members

exchange opinions about strategies, philosophies, and other areas related to the KONOIKE Group, leading to a desire to launch new businesses and expand existing domains. Individuals regarded as next-generation managers, including headquarters office managers and branch managers, build relationships of mutual trust in their daily work. We sponsor internal seminars to bring next-generation managers and above to share our Corporate Philosophy and behavioral guidelines. In this way, we pass on the experience and expertise necessary for management without interruption between generations.

Compliance Initiatives

To put our Corporate Philosophy into practice and be a company trusted and loved by customers and society, the KONOIKE Group must comply with laws, ordinances, and social norms, as well as conduct business fairly and transparently. To this end, we established a Corporate Ethics Code. Under this code, we further defined a Compliance Code and Operational Regulations on the KONOIKE Helpline, which we use to ensure compliance with and practical application of the Corporate Ethics Code. These measures guide our efforts to raise compliance throughout the group.

Raising Compliance Awareness

We regularly conduct a compliance awareness survey for career-track employees. Based on the results of the survey, we provide compliance education during annual and rank-based training. During each training, we reiterate the Basic Philosophy, describe case studies of wrongdoing and misconduct within and beyond the group, discuss observations from government offices, and work to raise employee awareness of ethics. In particular, compliance is not only limited to adherence to laws and other rules. We are thoroughly committed to the necessity of facing all stakeholders with integrity in accordance with ethical and social values and social norms as well.

Initiatives for Overseas Subsidiaries

Executive General Manager			Directors
Steering Committee
Cultivation of Management Perspectives
Through Discourse and Discussion			Executive
				General Managers
				(Executive Officer Level)
				Deputy Executive
				General Managers
				Next-Generation
				Managers

Board of Directors

Development of Successors for Top Management Positions

KONOIKE FORUM

Sharing Corporate Philosophy

We must promote the KONOIKE Group philosophies to overseas subsidiaries, where business practices differ from those in Japan. In addition to the implementation of a compliance awareness survey and online compliance training, we conducted an engagement survey in FY3/2022 to gauge employee attachment at each local subsidiary and work to increase engagement through activities such as Katariba. We hold study meetings on our corporate ethics code for managers and promote thorough enforcement of the Basic Philosophies of safe and comfortable workplaces, contribution as a corporate citizen and care for the environment, as well as fair transactions.

Internal Reporting System

The KONOIKE Group offers the Konoike Helpline as an internal reporting system. We also offer access to a law firm as an external reporting point for employees who are reluctant to report to an internal party. Although there are no official codes in this regard, Audit & Supervisory Board members sometimes receive reports directly. In these cases, the member contacts the staff overseeing the Konoike Helpline to investigate the report. Report contents are submitted to the Compliance Subcommittee and the board of directors. We have also introduced internal reporting systems at some locations outside Japan, planning to gradually expand these reporting channels.

Strategically Held Stocks

	Basic Policy		Standards for the Exercise of Voting Rights
1	2

Konoike Helpline Structure
Board of Directors
	Disciplinary Committee			Report
			Sustainability Committee
				Report

Konoike Transport Co., Ltd. holds stock strategically to enhance our corporate value over the medium to long term. We do this by working to sustain and strengthen trade relationships with the customers who are vital to our business, as partnerships are key to Konoike Transport Co., Ltd. business activities across a range of areas.

Each year, the board of directors regularly verifies the appropriateness of holdings of individual strategic stocks. The board considers whether the risks and benefits

of holding these shares are commensurate with the accompanying cost of capital. If the board determines that holding a stock is not rational, the group sells said stock to reduce strategic holdings.

Konoike Transport Co., Ltd. do not make uniform decisions on policies when exercising voting rights for strategically held stocks. Rather, we consider and decide each case separately from perspectives that include sustained growth and improvement in medium- to long-term value of the company in question. We never approve resolutions that would be harmful to shareholder value.

Compliance Subcommittee

Report

Corporate/Quality Division

Report

Report

Unofficial Reporting Channel

Konoike Transport

Co., Ltd. Department

Report

in Charge

Contact/Provide Instructions

Konoike Helpline

Audit & Supervisory

Report

Board Members

Notify

Responsible Person

at Affiliate

Contact/Provide Instructions

Notify

Report

Notify

Notify

External Reporting Desk (Irokawa Law Office)

Notify

KONOIKE Group Officers, Employees*, and Retirees

*Employees: Includes Incoming Dispatched Workers, Seconded Employees, and Part-Time Employees

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Chapter 04

Corporate Governance

Crisis Management

We define a crisis as any situation that threatens the survival or business continuity of the KONOIKE Group, whether such a situation is caused by internal or external factors, arises suddenly, or is a result of poor management. We define crisis management as an emergency response, recovery activities, or business continuity activities in response to a crisis. We have built systems capable of responding appropriately and rapidly to events, one example of which is our Crisis Management Standards. We prepare various manuals for ready use in case of natural disaster.

The KONOIKE Group Definition of Crisis

1. Any potential harm to the life or safety of any group officer, employee, or concerned party
2. Any potential interruption of service and potential of significant loss to customers
3. Any potential threat to lifestyles due to risk or potential violation of social norms
4. Any potential significant damage to the KONOIKE Group corporate image, either directly from a risk or due to negative reporting by the media
5. Any other potential interference, damage, or significant loss to business continuity, asset maintenance, or operational management

Column

Response to Large-Scale Natural Disasters and Pandemics

KONOIKE STORY

The Future and Our Strategies

Sustainability

Foundation Supporting Value Creation

Data

Shareholders/Investors

Basic Philosophy

We do not limit IR activities for shareholders and investors involved with the KONOIKE Group to simple reports of results or explanations of our businesses. Rather, we strive to help shareholders and investors understand our company from a medium- to long-term perspective.

In addition to disclosing information in a timely and appropriate manner, we also incorporate outside expectations and opinions into our management decisions as we strive to maintain positive relationships.

Activities

IR Interviews
140	New Technology
and Digital Transformation	Earnings
Presentations, and Konoike
	Presentations
Meetings With	Institute of Technology	2 x
Innovation Center
the President
Observation Tours
23
1x	(Interim, Year-End)
(One-on-one and
small meetings)

Engagement With Shareholders and Investors

The KONOIKE Group established Crisis Management Standards to deal with the risk of pandemics, large earthquakes, and other large-scale natural disasters that threaten business continuity. When a risk arises, we convene the Crisis Management Committee, headed by the individual serving as Representative Director, Chairman, President and Chief Executive Officer. If we determine the presence of a real emergency, we set up a command center to deal with the situation. We also conduct disaster-preparedness drills and other exercises to sharpen our ability to respond to

emergencies and minimize damage.	Advanced Lifesaving Drill

Response to the COVID-19 Pandemic

In response to the COVID-19 pandemic that emerged in 2019, we held a Crisis Management Committee in February 2020 to ensure each operating base had implemented thorough measures to prevent infection. We continue to implement thorough infection prevention measures at each of our operating locations, including at overseas subsidiaries. We have stockpiled masks,

For Institutional Investors

Even during the COVID-19 pandemic, we have ensured opportunities for dialogue and meetings with institutional investors and analysts not only face-to-face but also through remote formats. We treat these dialogues as valuable opportunities to explain our approaches and to receive opinions that contribute to the improvement of our corporate value.

During the FY3/2022, we held dialogues regarding our approach to medium- to long-term strategies, responses

to sustainability, etc. In exchange, we received numerous thought-provoking opinions.

We held 140 interviews during FY3/2022, each providing lengthy and purposeful dialogues.

We will continue to encourage the exchange of opinions between investors and management, which we believe will contribute to the improvement of our corporate value over the medium and long term, striving for mutual understanding.

alcohol disinfectant solution, and other items, and we are prepared to distribute these items promptly in the event of a shortage or an emergency, such as a natural disaster.

For Individual Investors

In consideration of the risk of the spread of COVID-19, we have decided to cancel information sessions for individual investors, which are traditionally conducted in a face-to-face or group format. We apologize sincerely for any inconvenience to individual investors. We will consider holding individual and group briefings based on the risk of COVID-19 infections. At the same time, we will strive to foster a deeper understanding of the KONOIKE Group by posting materials such as archived videos of earnings presentations and Q&A sessions on our IR website.

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