Sustainability

Corporate Governance

Corporate Governance Policy

We at EXEDY recognize that constructing a system of corporate governance and thoroughly carrying out compliance management serve as the basis for management.
More specifically, we have arranged a system that monitors and audits the actions of our directors through our board of directors and our audit and supervisory board, and, by improving the functionality of our internal controls and building an organization that immediately responds to changes in our managerial environment, we will make our management more transparent and endeavor to strengthen our system of governance and compliance management.

Basic Policy

1. We will strive to ensure the equality and rights of our stockholders.
2. We will endeavor to cooperate with all stakeholders outside of our stockholders, including customers, business counterparts, creditors, the local community, employees, etc.
3. We will strive to ensure both the transparency and proper disclosure of information.
4. We will endeavor to have our board of directors properly carry out its functions and obligations so that it both makes decisions in a quick and decisive manner and remains fair and transparent.
5. We will strive to have a constructive dialogue with stockholders so that we can improve our medium to long-term business value and continue to grow.

Business Management Organ Related to Managerial Decision-making, Performance of Duties, and Supervision of Such (Our System of Corporate Governance)

Organizational Structure and Administration

Board of Directors

Corporate Auditors

An Outline of Our Current System of Corporate Governance: Matters Regarding Corporate Affairs, Appointments, Audits and Supervision, and Remuneration

EXEDY’s board of directors is comprised of 12 individuals, 6 of whom serve as outside directors. Our board of directors holds regular meetings once a month, and, when deemed necessary, additional meetings are held under special circumstances, where directors thoroughly discuss the matters at hand and make managerial decisions regarding them.
EXEDY’s audit and supervisory board is made up of four members, three of whom are outside members. These audit and supervisory board members, along with participating in meetings alongside the board of directors where they give advice on managerial decisions from an auditing perspective, also supervise the board of directors in its performance of duties.

As part of our administrative strategies, we convene managing directors meetings, where 3 individuals from our upper management, consisting of our president and CEO, executive managing officers, and senior executive managing officers, assemble for a corporate review. In addition to this administration of corporate affairs, we also hold management meetings approximately twice a month, the participants of which include all full-time executives. At these meetings, members actively exchange their ideas and opinions, thoroughly conducting both reviews and discussions.

Moreover, in order to carry out corporate affairs in a manner that promptly responds to any changes in our managerial situation, we have been endeavoring to flexibly operate our business by: a.) introducing our executive officer system, and b.) appointing human resources that are knowledgeable and well-informed about business and work-related duties to executive positions.

EXEDY’s financial audits are handled by the certified public accountants Masahisa Kinoshita and Ryuichi Sakai, who are in the employ of PricewaterhouseCoopers Japan LLC. These auditors perform periodic audits of our corporation as well as provide us with consulting services regarding accounting matters.

As per our advisory agreements, our legal advisers will, even for matters related to financial affairs, enter into contracts with external specialists, and, as the situation demands, receive any pertinent or relevant advice from them.

With regards to EXEDY’s internal control system, our Global Auditing Department, the division that performs operational audits independent of the direct control of the company president, carries out both compliance checks and operational audits for each and every one of our departments.

Our Reasons for Selecting Our Current System of Corporate Governance

We at EXEDY are carrying out efficient work operations and exercising prompt decision-making through the introduction of our executive officer system, where 5 of our directors concurrently serve as executives managing corporate affairs. At the same time, so that we can ensure transparency in all business operations, we made our board of directors consist of 12 directors and 4 auditors, of which 9 individuals are outside executives (and of these 5 individuals serve as an independent outside directors and 2 individuals serve as independent outside auditors), and we have deemed that our present structure of a company with an audit and supervisory board is currently the optimum choice.

Measures We Implement for Our Shareholders and Stakeholders

1. Our efforts aimed at invigorating the General Shareholders Meeting and streamlining the shareholder voting process

2. Investor relations efforts

3. Never forgetting the importance of our stakeholders

Regarding Our System of Internal Control

Our Approach Towards and Management of Our System of Internal Control

Our management policy includes the extent at which we fulfill our corporate responsibility, how we improve ourselves so that we can be held in high esteem by the society we live in, our corporate ideology and compliance, and our response to environmental issues.
Adhering to the above, our board of directors has resolved to implement a fundamental policy for our system of internal control that upholds all applicable corporate laws and ordinances, and it is detailed as follows. Please note that the status of the following is reported to the board of directors as the situation demands.

1. Managing and saving information related to the duties of our directors

We will properly manage and save information related to the execution of corporate affairs, acting in accordance with our regulations for managing confidential information, preserving documents, and saving documents.

2. Regulations for risk management

We designate our Administrative Headquarters as the department in charge of comprehensive risk assessment, and are developing methods to prevent losses before they happen.

3. Ensuring that our directors conduct their duties in an effective manner

In addition to holding periodic board meetings once a month, we also hold management meetings twice a month that both our full-time directors and executives participate in. At these meetings, we have discussions and examine managerial issues, and, depending on the circumstances, put into place a flexible system that is able to deal with the issue at hand.

4. Ensuring that the duties of our directors and employees conform to all laws and articles of association

EXEDY has established its own code of conduct, and we strive to keep our employees, directors, and executives informed about all laws, articles of association, and company regulations. We ensure that we adhere to compliance management by combining the aforementioned with regulations concerning the protection of whistleblowers.

5. Ensuring that all work done in EXEDY Group is done in a fair manner

Following our regulations for managing affiliates, we unify all administrative tasks pertaining to EXEDY Group at our Administrative Headquarters.

1) System for reporting to EXEDY about matters regarding EXEDY Group directors’ execution of work duties

The manner in which work is being conducted at group companies is confirmed through monthly reports submitted by each company. Important matters regarding how work is conducted are reported and discussed at board of directors meetings and management meetings.

2) System for regulations regarding the management of dangerous losses for group companies etc.

Based on our risk management/compliance regulations, which are also used at our group companies, we will spread our activities conducted to prevent losses.

3) System to ensure that the execution of directors’ work duties at our group companies is carried out efficiently

In order to materialize our midterm consolidated management plan that we have created, we are sharing our objectives and issues with the entire group and endeavoring to ensure a system where work duties are executed effectively.

6. Ensuring that the work conducted by both directors and employees of group companies complies with both the law and our articles of association

We distribute our code of conduct, which comes in the form of a small booklet, to all directors, executive officers, and employees, translating its contents whenever necessary.
Based on our regulations for the management of group companies and our regulations for internal audits, our Global Auditing Department inspects the extent to which regulations are upheld and how the organizations and systems of our group companies are being operated.

7. Employees will assist our audit and supervisory board members as required

Our audit and supervisory board members will, when they deem it necessary, appoint employees to assist them in their duties.

8. Assuring the independence that employees assisting audit and supervisory board members have from directors

All matters concerning employees assisting our audit and supervisory board members, such as their relocation, evaluation, punishment, etc., must first be discussed with and reported to an audit and supervisory board member.

9. Ensuring the effectiveness of instructions given to employees assisting audit and supervisory board members

When an employee is put in the service of audit and supervisory board members, this employee will not serve concurrently with another department, and they must follow all instructions given by any audit and supervisory board members.

10. Reporting to audit and supervisory board members

1) A system for directors and employees to report to audit and supervisory board members

All directors and executives, when discovering any information that could cause considerable damage to EXEDY Group, will immediately report these contents to an audit and supervisory board member.

2) A system for directors, audit and supervisory board members, assistants, or anyone who has received reports from any of the aforementioned to report to audit and supervisory board members

Both executives and employees of EXEDY Group must, when requested by the audit and supervisory board to make a report regarding matters relating to work duties, make both immediate and appropriate reports.

11. Ensuring that individuals who report matters to the audit and supervisory board are not subject to unfavorable treatment due to the nature of their reports

Based on our regulations for protecting whistleblowers, employees will not be dismissed or punished for reporting or speaking about a whistleblowing matter.

12. Matters concerning policies related to liabilities handling and expenses caused by the execution of work duties, such as repayment procedures and the paying of expenses caused by advance payments for the work of audit and supervisory board members

When it is requested that we, regarding the execution of work duties of an audit and supervisory board member, pay in advance for expenses based on corporate law, any expenses and liabilities related to this request, excluding cases where it is not deemed necessary for audit and supervisory board members to execute their work duties, will immediately be processed. We set aside a specific budget each year in order to pay for any expenses etc., which result from the execution of audit and supervisory board members work duties.

13. Ensuring that that the audits of our audit and supervisory board members are being performed in an efficient manner

Full-time audit and supervisory board members will participate in management conferences as well as all other meetings where decision-making occurs, maintaining a system that is always able to grasp the current status of the execution of corporate affairs.

14. Our countermeasures against organized crime

As written in our code of conduct, we resolutely assume countermeasures against organized crime syndicates that threaten the order and safety of civilian societies.

Our Basic Policy and Countermeasures Against Organized Crime

As aforementioned, we resolutely assume countermeasures against organized crime syndicates that threaten the order and safety of civilian societies.
In order to accomplish this, we have established a division within our company that is prepared to deal with organized crime syndicates and is equipped to handle any unjust demands or illegal acts.
We have also included this policy inside of our code of conduct, and we have made sure to distribute it to all of our employees so that they can familiarize themselves with its contents.

A schematic of our system of corporate governance

Board of Directors Meetings and Management Meeting Schedules

In FY2022, we held 12 Board of Directors Meetings and 27 Management Meetings to efficiently operate business and, in addition, held one Risk Management Committee Meeting to respond to group-wide problems and discuss recurrence prevention measures. The Global Auditing Department systematically carries out both compliance checks and operational audits for EXEDY and its group companies and regularly reports to audit and supervisory board members.
Full-time Corporate Auditors attend the Management Meeting and the Risk Management Committee to oversee the company’s operating performance. In addition to a contact point for whistleblowers, we have a corporate ethics consultation desk in place for the entire EXEDY Group.
Further, we opened the "EXEDY Hotline", a consultation desk where employees can report matter to an external lawyer directly. With this initiative we try to prevent and detect illegal activities in an early stage.
In order to thoroughly disseminate this information, we clearly mention the consultation desk in the "EXEDY Code of Conduct", a booklet distributed to every employee of the entire EXEDY Group, to improve awareness regarding compliance.

Total Amount of Remuneration for Directors and Audit and Supervisory Board Members

Note)
The amount of remuneration, etc. does not include employee salaries and bonuses for Directors who also serve as employees.
The non-monetary remuneration, etc. is stock-based compensation (restricted stock), and 2,349 shares were issued to 6 Directors in accordance with the resolution of the Board of Directors on June 27, 2023.

The upper limit on total compensation decided at the 56th General Shareholders Meeting of June 27, 2006

The above maximum amount of remuneration for Directors does not include employee salaries and bonuses for Directors who also serve as employees.
As of the close of this General Meeting of Shareholders, there were 14 Directors and 4 Corporate Auditors.
In addition, EXEDY has adopted the following resolution on stock-based compensation non-monetary compensation.

Details of the resolution on stock-based compensation at the 68th Annual General Shareholders Meeting of June 26, 2018

The number of directors (excluding external directors and part-time directors) as of the close of this General Shareholders Meeting is seven.

Appointment of Independent Directors

The Company appoints independent directors who are judged to be capable of supervising management to ensure that the interests of general shareholders are not harmed. In addition, in the event of any proprietary or competitive transactions, the Board of Directors will adopt a resolution.

Analysis and Evaluation of the Board of Directors’ Effectiveness

Every year, we conduct a questionnaire on the effectiveness of the Board of Directors, and in fiscal 2022, we conducted the same questionnaire. Based on the results, we believe that the effectiveness of the Board of Directors has been secured. We will continue to make improvements to further enhance the effectiveness of the Board of Directors.

Disclosure of information related to corruption prevention

EXEDY's anti-corruption policy is described in the Code of Conduct, and has been extended to all Group companies in Japan and overseas. In the event that corruption is detected, the Chief Risk Management Officer is required to report the relevant facts and measures to prevent recurrence to the Board of Directors.
In addition, we have a whistle-blower service that protects privacy and prevents employees who use this service are treated disadvantageously. Here we collect information from a wide range of sources, including anonymous sources, both from employees and from outside the company, and promptly respond to problems as they arise.

Internal consultation and internal reporting system

Corruption prevention

1. We will make political donations and contributions in accordance with the laws of each country, and strive to build transparent and fair relationships with politics and government.
2. We will not entertain, give or receive gifts, or give or receive money to customers, cooperating companies, or other business partners for the purpose of obtaining or maintaining unfair profits or preferential treatment.

Employee training

All employees are required to read the Code of Conduct once a week in their department. In addition, a lecture is given once a year at the new team leader training.

There have been no anti-corruption fines, penalties or dismissals in FY2022. Also, the company has made no political contributions.