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Sustainability

Corporate GovernanceCorporate GovernanceCorporate GovernanceCorporate Governance
Basic Approach
Corporate Governance Structure and Initiatives
Directors’ Compensation
Board of Directors & Executive Officers as of July, 2023

Risk Management
Risk Management
Basic Approach
Risk Management Relating to Business Activities Preliminary Risk Assessment
Business Continuity Plan (BCP)BCM Promotion System
Strengthening Information Security Management

Compliance
Compliance
Compliance Policy
Compliance System
Whistleblower System on Compliance
Initiatives to Avoid Infringement of Human Rights
Compliance Training
Anti-corruption Measures
Tax
Compliance Data

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Dialogues with Shareholders and Investors
Dialogues with Shareholders and Investors
Basic Approach and the IR & SR System
Results Briefings
Sustainability Briefings (ESG Briefings)
Individual Business Briefings (Small Meetings)
Initiatives for Individual Investors
Main IR & SR Activities in FY2022
Opinions of Analysts and Institutional Investors
Results of Conversations with Stakeholders

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Home

Sustainability

Corporate GovernanceCorporate GovernanceCorporate Governance

PolicyBasic Approach
Under our Corporate Mission of “illuminating a more affluent tomorrow” and our Corporate Philosophy ofproviding value“ for customer peace of mind and satisfaction,” our group has set forth our Ideal State ofBeing/Vision for 2030 as “Work to build a new society through integrity to the earth, society, and people,
and through the power of co-creation – Sustainability Partner –.” Our group takes the basic stance that
we maintain fair and steady business activities with respect for people and the global environment,
operate businesses focusing on profit while constantly pursuing new technology and high quality, andendeavor to give back to society.
In order to implement this basic stance, we formulated the “Basic Policy to Improve the Governance toSecure Fair Business Practices” at the regular Board of Directors meeting held in May 2006. In addition,
we revised this basic policy at the regular Board of Directors meeting held in July 2022, as a result of arevision of the officer system to further clarify the division of roles between executive functions(executive officers) and so-called supervisory functions (directors and the Board of Directors).
We will work to further improve the fairness, efficiency, and transparency of management by promoting
initiatives to enhance corporate governance in accordance with the Corporate Governance Code.
Basic Policy on the Corporate Governance Code
Meidensha will work to further improve the fairness, efficiency, and transparency of management bypromoting initiatives to enhance corporate governance in accordance with the Corporate GovernanceCode.
i. Ensuring shareholder rights and equality
We will work to establish an environment where shareholders can exercise their rights appropriately andwe will actively disclose information to this end, thereby ensuring shareholder rights and equality.
ii. Appropriate cooperation with stakeholders other than shareholders
In order to achieve our Group’s sustainable growth and enhance its corporate value over the medium tolong term, we will disclose appropriate information and engage in dialogue with our various stakeholders,
including customers, suppliers, and members of the local community.

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iii. Disclosing information appropriately and ensuring its transparency
We will make timely disclosures of information in accordance with laws and regulations and will also
disclose information on the status of our company, including non-financial information, in a timely andappropriate manner through media that are widely accessible to stakeholders (our websites, integrated
reports, and other publications).
iv. Obligations of the Board of Directors
Based on the Meidensha Group Corporate Philosophy, the Board of Directors will formulate medium- tolong-term management plans and strive to enhance the medium- to long-term corporate value of ourGroup by making decisions and supervising business execution in the implementation of these plans.
As a company with an Audit & Supervisory Committee, we strive to improve the supervisory function of
the Board of Directors. In addition, we will further promote separation of supervisory and executivefunctions by utilizing the executive officer system, which was introduced in June 2003 and revised toenhance its legitimacy in June 2022 to state that the Board of Directors makes appointments grounded in
the Articles of Incorporation.
v. Dialogue with shareholders
Our policy is to ensure that senior management respond within reason, when engaging in dialogue withshareholders who wish to create that dialogue to help enhance our corporate value over the medium tolong term.
In addition, as a prerequisite for this dialogue, we will endeavor to provide more opportunities for various
briefings and IR/SR interviews and offer enhanced information disclosure through our websites,
integrated reports, and other publications.

Organization and Initiatives

Corporate Governance Structure and Initiatives
We are a company with an Audit & Supervisory Committee, and we aim to further strengthen corporate
governance in the following areas.
(a) We further enhance the supervisory functions of the Board of Directors through use of legal authority, such as directors that are Audit & Supervisory Committee
Members holding voting rights at meetings of the Board of Directors and having the right to present a position statement relating to nomination andcompensation of directors at General Shareholder’s Meetings.
(b) We further enhance discussions on management strategies, etc. by transferring the Board of Directors’ meeting to a monitoring type, since a portion of theBoard of Directors' authority to make decision on business execution has been transferred to the Director & President and Executive Officer (Executive Officers’
Meeting).
(c) We aim to further promote separation of supervisory and executive functions by making changes to increase legitimacy in June 2022, and combining it with thetransfer of authority mentioned in (b) through the introduction of an executive officer system in June 2003, and a system for election of executive officers who
are responsible for a flexible and agile business execution system by the Board of Directors, based on the Articles of Incorporation.

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Corporate Governance Structure

Outline of Corporate Governance Structure
Form of Organization

Company with an Audit & Supervisory Committee

Directors

Number of directors (outside directors): 7 (3)Directors (Audit & Supervisory

Number of directors (outside directors): 4 (3)Committee Members)
Number of Independent Officers

6 (3 outside directors and 3 outside directors (Audit & Supervisory Committee members))(1) The Company’s Board of Directors
In principle, the Board of Directors convenes on a regular monthly basis and holds ad-hoc meetings asnecessary, to discuss major executive matters, business issues, and management issues related to the
our business execution. In FY2022, the Board of Directors held 13 meetings, and the attendance rate was
100% for all directors.
The specific composition of the Board of Directors and meeting attendance in FY2022 are described
below in “Composition of the Board of Directors, Nomination & Compensation Committee, and Audit &Supervisory Committee and Attendance in FY2022” below.
① Composition of Board of Directors

Our Board of Directors consists of 11 directors, including 4 who are Audit & Supervisory Committee
members. The 11 directors also include 6 outside directors (of which 3 are members of the Audit &Supervisory Committee). The 6 all satisfy the requirements for independent directors as defined by the
Tokyo Stock Exchange and our Criteria for Determining the Independence of Outside Directors. Thismeans that independent outside directors make up a majority of the Board of Directors, ensures theeffectiveness of the supervisory function of the Board of Directors, and ensures that objective andindependent opinions are fully incorporated into the company’s management.
It is the basic policy to ensure the diversity of the Board of Directors as a whole based on the abilities,
insight, and experience of individual directors and to assign appropriate human resources that contributeto the enhancement of our corporate value. It is also our policy to ensure the diversity and balance of the

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Audit & Supervisory Committee as a whole based on the knowledge and experience of accounting,financial, and legal matters etc., of directors who are members of the Audit & Supervisory Committee. Thebalance of expertise, knowledge, experience, etc., is as described in the Board of Directors’ Skill Matrix
below.
Composition of the Board of Directors, Nomination & Compensation Committee, and Audit & Supervisory
Committee and Attendance in FY2022(period: April 1, 2022–March 31, 2023)
Nomination &NamePosition (as of March 31, 2023)

Board of Directors

Compensation

Audit & Supervisory
Committee

Committee
Yuji Hamasaki

Director & Chairman & Senior Officer

13/13

12/12

－

13/13

12/12

－

13/13

－

－

Chairperson of the Board of Directors,
Member of Nomination & Compensation Committee
Takeshi Miida

Representative Director & President & Executive
OfficerMember of Nomination & Compensation Committee

Norio Takekawa

Representative Director & Executive Vice President &Executive Officer

Masayuki Iwao

Director & Senior Managing Executive Officer

13/13

－

－

Hiroyuki Takenaka

Outside Director

13/13

12/12

－

13/13

12/12

－

Chairman of the Nomination & Compensation
Committee
Yoshiaki Shin

Outside Director
Member of Nomination & Compensation Committee

Hiroji Adachi

Outside Director

10/10

－

－

Michihiko Kato

Director (Standing Audit & Supervisory Committee

13/13

－

16/16

13/13

10/10

16/16

10/10

－

13/13

10/10

－

13/13

Member)Chairman of the Audit & Supervisory Committee
Keiko Hayashi

Outside Director (Audit & Supervisory Committee
Member)Member of Nomination & Compensation Committee

Takashi Kuroda

Outside Director (Audit & Supervisory Committee
Member)

Hideki Hiraki

Outside Director (Audit & Supervisory Committee
Member)Note: Attendance at meetings of each body is shown as “Attended/held”② Activities of the Board of Directors

The Board of Directors considers “matters for discussion” in addition to matters to be resolved andreported. ”Matters for discussion” includes following the progress of and tracing matters related to basic
management policies such as the Medium-term Management Plan and important management themes.
At their meetings, directors actively exchange opinions on our management issues and strategies and on
corporate governance, while drawing on the knowledge of the outside directors. The Board of Directors
use the meeting as a forum to reach consensus on the direction of us in the conceptual and planningstages prior to making a board resolution.

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Major topics discussed by the Board of Directors in FY2022 included the following.
■Strengthening the supervisory function of the Board of Directors

The Board of Directors discussed this issue with the aim of further strengthening its supervisory function,
as found in the FY2021 board effectiveness evaluation. In addition, an outside attorney gave a training on
the role of the Board of Directors and outside directors and the exercise of their functions. Directors also
met several times outside of formal Board of Directors’ Meetings to trade opinions.
The following measures have been taken as a result of the Board’s discussions and deliberations.
・

Improved advance explanation of agenda items of the Board of Directors
The Executive Vice President & Executive Officer attends the explanatory meeting for outside
directors to share information on overall business execution as it relates to agenda items of theBoard of Directors and executive officers in charge provide explanations to resolve questions on
individual operations related to agenda items in advance, we make an improvement that helps
stimulate and enhance discussions and debates at Board of Directors’ Meetings.

・

Participation in discussions at the conceptual and planning stages
The FY2023 profit plan was discussed at a Board of Directors’ Meeting at the stage where policy wasforming. Directors discussed setting optimal profit targets and investment plans to enhance
corporate value. The profit plan is decided at a meeting of the Board of Directors after it is reviewed
by the business execution organization based on discussions.

・

Improved agenda setting
It was suggested that to strengthen the supervisory function of the Board of Directors, it is important
to strengthen Board of Directors agenda setting based on each director’s understanding ofmanagement issues. Previously, the annual schedule of Board of Directors meetings was preparedbased on the opinions of the directors and confirmed at each Board of Directors’ Meeting. Starting in
FY2023, the agenda of board meetings will be discussed and deliberated on a regular basis as a new
agenda item itself. The aim is to strengthen agenda setting and further reinforce the supervisory
function of the Board of Directors.

■Progress of Medium-term Management Plan 2024 in each business and strategies to achieve its objectives

The Board of Directors discussed several topics intended to monitor the progress of Medium-termManagement Plan 2024 and supervise strategies to achieve its objectives. The Board of Directors
discussed the situation and strategies in each business, especially measures to cope with rising
component prices, collaboration between businesses (especially between the product sales andmaintenance service businesses), and growth strategies beyond Medium-term Management Plan 2024.
■Promoting sustainability management

The Board of Directors’ Meeting discusses the progress of the meeting of the Sustainability Management
Strategy Committee (chaired by the President & Executive Officer) as part of supervision of sustainability
management, which is a basic policy of Medium-term Management Plan 2024. It also discusses thestatus of human capital initiatives.

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③ Participation of Outside Directors in Board of Directors’ Meetings■Participation in the agenda

Our outside directors have diverse management experience and areas of specialization, understand thecontent of the proposals put before the Board of Director’s Meeting from a variety of perspectives when
said matters are explained in advance, and attend Board of Directors’ Meetings having checked any
unclear points in advance.
At Board of Directors’ Meetings, multifaceted discussion occurs, based on the broad perspective ofmanagers, the knowledge of technicians, and the high-level specialization of experts, etc. The outside
directors participate in deliberations by actively making statements, etc., in particular concerning policies
and measures to deal with risks, and cautions when monitoring, etc.
■Training for New Outside Directors

We create opportunities to explain our business and structures, primarily to aid the understanding of
newly appointed outside directors.

The responsible officers or managers in charge of the businessgroup explain their business, group-wide themes, and our governance system to the outside directors,
answer their questions, and exchange opinions with them.
(2) Effectiveness Evaluation of the Board of Directors
Meidensha has a mechanism in place to conduct an analysis and evaluation of the effectiveness of theBoard of Directors in order to strengthen the supervisory function of the Board of Directors.
With regard to the activities of the Board of Directors in FY2022, all members of the Board of Directors,
including outside directors, conducted self-evaluations of the effectiveness of the Board of Directors, andthe following discussions took place at the meeting of the Board of Directors, in order to revitalize
deliberations by the Board of Directors.
An overview of the analysis, evaluation, and discussions is as follows.
① Major issues and status of efforts to increase effectiveness as discussed in previous fiscal year
Major issues in FY2021

Status of efforts in FY2022(1) Ensure greater diversity and skills balance among directors

Starting with the Notice of Convocation of the 159th Ordinary General Meeting of Shareholders,
disclosing “Skills Required to the Board of Directors and the Reasons”(2) Explore monitoring-type Board operations, including the use

Participating in discussions at the conceptual and planning stagesof Board of Directors meeting agenda items(3) Further strengthen information sharing with outside

Improving advance explanation of agenda items of the Board of Directors and improving agenda

directors

setting② FY2022 analysis and evaluation
1

Formulation of questionnaire

The Chairman and Secretariat of the Board of Directors formulate a questionnaire (11 questions,
all descriptive) on the status of the Board of Directors’ initiatives and their effectiveness, basedon the issues identified in the discussions of the effectiveness evaluation of the previous year,
the status of the response to them and evaluation, and new issues found by the Board of
Directors in FY2022.

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2

Conducting of questionnaire survey

All 11 directors are asked to fill out the above questionnaire in April 2023.

3

Discussions at Board of Directors meeting

At the May 2023 Board of Directors meeting, all directors discuss the results of the evaluation of
the effectiveness of the Board of Directors (Matters for Discussion by the Board of Directors),
based on the results of the responses to the questionnaire received from each director. The
FY2023 analysis and evaluation results are compiled to determine whether the Board of
Directors is effective.

4

Analysis and evaluation results

Results of questionnaire evaluation from each director are summarized and discussed by themembers of the Board of Directors, and the opinions are summarized as follows.

・ The composition of the Board of Directors and its deliberation time and operating methods
are appropriate.
・ The quality of the content of deliberations (agenda setting and discussion by directors) has
been enhanced.
・ Opinions and advice from outside directors have been adequately received, and follow-up

on these has improved since last year.
Based on the above, we have judged that our Board of Directors is effective.

[Effectiveness evaluation items (questionnaire items)]①

Composition, deliberations, and operations of the Board of Directors (size, independence, diversity, content of deliberations, deliberation time, and operating
methods)②

Ensuring the effectiveness of the Board of Directors (is the monitoring-type Board of Directors functioning?)③

Self-evaluation (securing time required for duties, demonstration of expertise, inside: awareness of management and supervisory perspectives, outside:supervision from an independent standpoint)④

Reorganization of Board of Director’s mMeeting agenda items and supervisory function (how execution and supervision should be further separated)⑤

Other (free description)

Issues and Future Initiatives
Major issues in FY2022

Initiatives in FY2023(1) Improve board meeting agenda setting to further the Board of Directors’

Enhance information sharing with outside directors, link agenda setting with thesupervisory function

Executive Officers’ Meeting, and hold discussions within the Board of Directors
with an awareness of the active involvement of outside directors.

(2) Organize delegation of decisions of important business execution

To organize what is being delegated, we will first organize the monitoring
function of the Board of Directors and seek a common understanding of thesupervisory function of directors that should exist in a company with an Audit &Supervisory Committee.

(3) Establish a system on the execution side

The content of deliberations and operating methods of the Executive Officers’
Meeting will be organized and linked to efforts to improve Board of Directors
operations to enhance effectiveness.

Based on the above, we will continue working to increase the effectiveness of the Board of Directors.

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(3) Nomination & Compensation Committee
Meidensha has established a voluntary Nomination & Compensation Committee as an advisory body to
the Board of Directors. Its purpose is to ensure management transparency and strengthen accountability
regarding nominations (appointments and dismissals) and compensation of directors.
The specific composition of the Nomination & Compensation Committee and meeting attendance in
FY2022 are described in “Composition of the Board of Directors, Nomination & Compensation
Committee, and Audit & Supervisory Committee and Attendance in FY2022” above.
■Activities of the Nomination & Compensation Committee in FY2022
Month & year
April 2022

Activity

・ Consideration of directors’ composition in organization of the Nomination & Compensation Committee, etc.
(Including revisions to Articles of Incorporation and related rules)
・ FY2021 officer compensation report

May 2022

・ Report on estimated director’s compensation in FY2022
・ Consideration of interviews between candidates for the next management personnel (executive side) and Nomination &Compensation Committee members
June 2022

・ Confirmation of agenda and dates of Nomination & Compensation Committee meetings for FY2022
・ Consideration of interviews between candidates for the next management personnel (executive side) and Nomination &Compensation Committee members

July 2022

・ Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios
・ Consideration of composition of Board of Directors and requirements for outside directors, etc.

August 2022

・ Consideration of composition of Board of Directors

September 2022

・ Consideration of reviewing director compensation framework for FY2023 and beyond
・ Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios

October 2022

・ Consideration of director appointments for FY2023

November 2022

・ Consideration of director appointments for FY2023
・ Consideration of executive-side nominations taking account of FY2023 organizational system

December 2022

・ Consideration of director appointments for FY2023
・ Consideration of executive-side nominations taking account of FY2023 organizational system
・ Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios

January 2023

・ Consideration of executive-side nominations taking account of FY2023 organizational system

February 2023

・ Consideration of reviewing the Board of Directors’ skills matrix

March 2023

・ Consideration of reviewing director compensation framework for FY2023 and beyond
・ Consideration of reviewing director’s compensation system, such as performance-linked (incentive) ratios
・ Consideration of reviewing Board of Directors’ skills matrix(4) Board of Directors Selection Policy and Appointment and Dismissal Process
The number of directors is set at no more than 15 to allow sufficient discussion of management issues.
(10 Directors who are not Audit & Supervisory Committee members and five who are)Based on the basic policy for ensuring a balance between the diversity of the Board of Directors as awhole and its expertise and experience, as described in (1) ① Composition of Board of Directors above,

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we select individuals who will help strengthen the decision-making and supervisory functions of theBoard of Directors. The Board of Directors consults with the Nomination & Compensation Committee (avoluntary committee), with independent outside directors as the main members and chair, then the Boardof Directors nominates candidates by resolution. Finally, nominations are submitted to the General
Meeting of Shareholders.
In the event that a director is found to be in violation of laws and regulations or the Articles ofIncorporation, or to have significantly deviated from the policy for the appointment of directors, the Boardof Directors will take the necessary procedures for dismissal after consulting with the Nomination &Compensation Committee.
•Board of Directors’ Skills Matrix[Skills Required to the Board of Directors and the Reasons]Meidensha believes that members of the Board of Directors should have such skills and experiences by
the reasons below.
SkillsBusiness management

Reasons why such skill is required
With the diversification of values as social conditions change dramatically, to promote sustainability
management and to strengthen the corporate governance structure by clarifying management direction by
rapidly and flexibly making management decisions in order to continuously grow with the challenge to build a
new society.

DX/Business transformation

It is essential to work on innovation through co-creation, operational reforms through Digital Transformation(DX), and business transformation in response to changes in society for illuminating a more affluent tomorrow.

Sales/Marketing

To formulate and execute sales strategies aimed at rapid progress in growth businesses and strengthening thecompetitiveness of the earnings base by realizing high quality growth in order to provide customer peace of mind
and satisfaction.

Research and Development/“Monozukuri”

To enhance product competitiveness which is necessary for high quality “Monozukuri” (design, manufacture,
construction, and maintenance) to maintain a safe and secure social infrastructure and for provision of value,
along with creating new technologies and new products.

GlobalTo promote initiatives aimed at building a strong business base for overseas business and further enhancing theearning power necessary to meet the world’s new infrastructure demands.

Finance/Accounting

To manage capital efficiently, invest in growth businesses, and deliver shareholder returns, together with making
accurate financial reports.

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Skills
Legal affairs/Internal control

Reasons why such skill is required
To strengthen internal control and compliance / risk management structure, the base for honest and responsible
business operations.

HR development

To enhance wellbeing and employee engagement and to promote initiatives such as DEI (Diversity, Equity &Inclusion), in order for diverse human resources, who are the source of corporate value, to be able to grow andplay an active role in a lively way, where each person can derive fulfillment from their work.

Environment

To expand businesses that contribute to the environment and to promote green strategies focused on internal
decarbonization which are necessary to realize carbon neutrality.

(5) Successor Planning
Meidensha selects several candidates to succeed the top executive from among those appointed as
directors or executive officers with titles who have undergone education and training and who meetcertain requirements and contribute to enhancing our corporate value.
In replacing the top executive, it is identified which of the candidates should be the successor after
consulting with the Nomination & Compensation Committee. The Executive Officers’ Meeting and theBoard of Directors scrutinize the requirements and eligibility, identify a candidate, and finally decide whowill be the top executive.
(6) Executive Officer System and Executive Structure
Meidensha introduced an executive officer system in June 2003 in order to streamline the Board of
Directors, as well as to accelerate management decision-making and to enhance supervisory functions.
At the same time, we sought to reinforce the functions of the Board of Directors by promoting theseparation of the decision-making authority and supervisory function from the business performance
function held by the Board of Directors.
Based on the Articles of Incorporation, executive officers selected by the Board of Director’s Meeting
assume responsibility for the execution of specified tasks within the scope of authority transferred by the
Executive Officers’ Meeting and the President and Executive Officer, and nimbly perform executivefunctions under the supervision of the Board of Directors, in accordance with the Meidensha Group’s
management policies determined by the Board of Directors.
The Executive Officers’ Meeting, which comprises Executive Officers with Titles, is created for executive
decision-making, and decides matters based on the rules of internal approval, as well as matters forwhich consultation from a full-company perspective is required.
Furthermore, apart from the meeting body to make decisions, we established advisory and internal bodies
such as review and strategy meetings, and with regard to important management matters, we created asystem wherein thorough discussion and deliberation are conducted prior to decision-making, and followup strategy and planning and improvement initiatives are conducted following decision-making.
Summaries and key points of proceedings at the Executive Officers’ Meeting and other internal bodies arereported at the regular meeting of the Board of Directors for the month as a report on business execution.
This helps to ensure and improve the effectiveness and supervisory functions of the Board of Directors.

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In executing business, resolutions and decisions are made by executive officers who have authority overbusiness execution and strive to execute operations proactively and flexibly.
In addition, when the Board of Directors delegates part of its business execution authority to executive
officers via the directors, the executive officers are required to submit a report on the status of businessexecution to the Board of Directors at least once every three months. This helps ensure that the Board of
Directors can supervise effectively.
(7) Auditing System
Meidensha transitioned from the prior institutional structure of a company having an Audit & Supervisory
Board to a company having an Audit & Supervisory Committee at the General Meeting of Shareholders
held on June 26, 2020.
Our Audit & Supervisory Committee consists of four directors who are Audit & Supervisory Committee
members (three outside directors and one standing inside director).
In principle, the Audit & Supervisory Committee is held once a month before the Board of Director’s
Meeting. The purpose is to enable the Audit & Supervisory Committee to form its own intentions on
matters to be discussed at Board of Director’s Meetings prior to the Audit & Supervisory Committee. Incase there is a quarterly audit report from the accounting auditor, Audit & Supervisory Committee is heldon the same day as the Board of Director’s Meeting. In that case, the Audit & Supervisory Committee isheld twice in a month. Each Audit & Supervisory Committee lasts about two hours.
In addition, we established the Support and Advisory Division for Audit & Supervisory Committee
exclusively to aid the Audit & Supervisory Committee. It has four members with legal, financial,accounting, sales, factory, quality control, R&D, overseas business, and internal auditing experience.
(8) Internal Auditing Systemi Organization
Meidensha has established the Internal Auditing Division (16members as of March 31, 2023).
As an organization under the direct control of the President and Executive Officer, the Internal Auditing
Division is independent from other executive lines. It conducts internal audits to check the effectivenessand efficiency of business operations, the reliability of financial reporting, the status of compliance withlaws and regulations, and the maintenance of assets, covering Meidensha and all of Meidensha Group
companies including in abroad.
With regard to internal control, the Internal Control Promotion Division is the specialized division that
establishes risk management systems that integrate the entire Meidensha Group, promotes
enhancement of internal control systems, and ensures complete internal control functions through joint
monitoring of internal control systems by the Audit & Supervisory Committee and the Internal Auditing
Division.

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ii Method of audits
In FY2022, the internal audits were mainly conducted by two methods.
We conducted risk-based audits in 10 divisions based on the major Company-wide risks identified by the
Risk Management Committee. We covered those risks comprehensively while prioritizing high-risk areas.
In FY2023, we will reevaluate the major Company-wide risks from the perspective of the Internal Auditing
Division and will audit units selected in consideration of risk factors of particular importance tomanagement and other risks.
To improve the coverage of risks in audits of subsidiaries, we conduct standardized audits with audit
standardization tools. We plan to conduct standardized audits of all subsidiaries between FY2021 andFY2024. In FY2022, we audited 4 domestic subsidiaries and 12 overseas subsidiaries.
The Internal Audit Regulations stipulate that internal audit results are to be reported to the President &Executive Officer, the Board of Directors, the Executive Officers’ Meeting, and the Audit & Supervisory
Committee.
In FY2022, reports were presented monthly to the President & Executive Officer, semiannually to theBoard of Directors and the Executive Officers’ Meeting, and 10 times to the Audit & Supervisory
Committee. Internal audit reports are also sent to the members of the Executive Officers’ Meeting andstanding Audit & Supervisory Committee members each time one is issued.
(9) Strengthening Group Governance
The Meidensha Group is working to continuously strengthen group governance by developing basic
policies based on the “Basic Policy regarding Establishment of a System to Ensure the Appropriatenessof Business Activities” at each Meidensha Group company, establishing a regulatory framework, andimplementing the PDCA cycle.
1. Major Initiatives in FY2022(1) The Group Company Internal Control Committee met twice in the year to share information on important top risks for the Group as discussed by the Risk
Management Committee and the progress of risk management at each company. It also introduced CSA (control self-assessment) to overseas subsidiaries andprovided internal control training and CSA training for local staff at 13 companies, mainly at presiding companies.
(2) In order to strengthen the internal controls of the entire Group, the Internal Auditing Division conducted standardized audits of four domestic subsidiaries andtwo overseas subsidiaries to check the status of their preparation and operation of internal controls.

(10) Basic Policy and Current Status of Cross-Shareholdings
Our purpose to hold cross-shareholdings is to maintain and expand transactions for the medium -to longterm and secure and strengthen medium- to long-term cooperative relationships with partners and allies,
taking account of market conditions and other factors. Based on the purpose, our basic policy is to holdcross-shareholdings that help enhance corporate value and to consider selling cross-shareholdings thatno longer seem significant or rational.
Under this policy, we decide to keep or reduce its current holdings of listed stocks based on acomprehensive assessment of whether the ratio of each stock’s return (dividends, related trading profits,

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etc.) to market value meets the target cost of capital, policy factors, and so on.
we sold 10 listed and unlisted stocks for ¥1,03 billion out of its 102 listed and unlisted stocks (balance
sheet amount: ¥16.406 billion) as of March 31, 2022, reducing the number of stocks to 96 (balance sheet
amount: ¥16,418 billion) as of March 31, 2023. This represents 14.8% of consolidated net assets as ofMarch 31, 2023.

Directors’ Compensation
Directors compensation policy
i Level and System of Compensation
The level of compensation of Meidensha’s directors is determined based on external objective
compensation market data, economic conditions, industry trends, and Meidensha’s businesscircumstances, etc. Giving consideration to this level, the content of the director’s compensation system
is determined in the form of internal regulations on director’s compensation after consultation andconfirmation by the aforementioned voluntary Nomination & Compensation Committee, chaired by anoutside director.
ii Composition of Compensation(a) Directors (excluding Audit & Supervisory Committee members and outside directors)

Compensation of directors (excluding Audit & Supervisory Committee members and outside directors) isbased on an annual salary system with performance-linked compensation and comprises basic
compensation (a) and incentive compensation according to position. Of these, incentive compensation
comprises performance-linked compensation (b) as a short-term incentive and compensation for stockacquisition (c) and TSR (total shareholder return)-linked compensation (d) as medium- to long-term
incentives.
Target Proportion of Each Type of Compensation (if 100% of targets were achieved)(b) Directors and Outside Directors Who Are Audit & Supervisory Committee Members

Directors and outside directors who are Audit & Supervisory Committee members only receive basic
compensation on annual salary system basis.
iii Incentive Compensation System
The performance indicator for calculating performance-linked compensation as a short-term incentive isdecided after the annual general meeting of shareholders for the relevant fiscal year. It is decided basedon the operating income of the previous fiscal year to raise awareness of the need to improve

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performance, especially profitability, each fiscal year. The performance-linked compensation indicatorvaries from 0 to 140 depending on the degree to which targets were achieved, with perfect achievement
counting as 100.
Operating income for FY2021 was ¥9.468 billion, compared to a target of ¥10 billion, which represents anachievement rate of 94.6%.
Calculation Formula

Meidensha provides compensation for stock acquisition and TSR-linked compensation as medium- tolong-term incentives to sustainably increase corporate value and ensure that directors (excluding Audit &Supervisory Committee members and outside directors) have some shared value with shareholders.
(1) The amount of compensation for stock acquisition is determined for each position based on internal rules on officers’ compensation. The amount is contributed
to the Officers’ Shareholding Association to acquire shares.
(2) The TSR-linked compensation indicator varies generally between 80 and 120 depending on the ratio of the Company’s TSR at the end of the latest fiscal year to
the TSR of the TOPIX benchmark including dividends corresponding to the Company’s TSR calculation period (relative TSR*).

Calculation Formula*

Relative TSR: Meidensha’s TSR at the end of the latest fiscal year divided by the TSR of the TOPIX benchmark including dividends corresponding to the Company’s TSR calculation period

iv Compensation Determination Procedures
Details of the compensation system and the amount of compensation (including the rules that it iscalculated in accordance with the standards of the compensation system and is within the compensation
limits decided at the General Meeting of Shareholders) are confirmed and deliberated from an objective
point of view by the voluntary Nomination & Compensation Committee.
Specific details of the amount of compensation for each individual director (excluding members of the
Audit & Supervisory Committee) are delegated to the President & Executive Officer (“President”), who is adirector, based on a resolution of the Board of Directors. To ensure that the President exercises thisauthority properly, the Board of Directors establishes procedures for the President to consult and obtainconfirmation of the draft in advance from the voluntary Nomination & Compensation Committee.
Moreover, the President’s decision must consider the details of such confirmation or report. In FY2022,
the Board of Directors resolved at its June 23, 2022, meeting to delegate President Takeshi Miida to
determine the specific details of the amount of compensation for directors. The reason for delegating
this authority is that the President, as the chief officer of the Company, is best suited to evaluate eachdirector while looking at Meidensha’s overall performance.
Compensation for directors who are members of the Audit & Supervisory Committee is determined by thesame committee within the compensation limit decided at the General Meeting of Shareholders. An
appropriate amount is set to reward the services of committee members, taking into consideration
whether they are standing or non-standing and the nature of their respective auditing duties.

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FY2022 Results
Total Amount of Each Type of Compensation, etc.

Total Amount ofClassification(millions of yen)
Directors (excluding Audit &(millions of yen)Compensation, etc.

Number of People

Basic compensation

Incentive compensation

246

175

70

6

26

26

-

4

34

34

-

2

26

26

-

5

333

262

70

17

Supervisory Committee
members and Outside
Directors)
Outside directors (excluding
Audit & Supervisory
Committee members)
Directors who are Audit andSupervisory Committee
members (excluding Outside
Directors)
Outside directors who are
Audit & Supervisory
Committee members
Total

Notes
1. Amounts are rounded down to the nearest ¥1 million.
2. The above includes three directors (excluding Audit & Supervisory Committee members) and two
directors who are Audit & Supervisory Committee members who retired at the conclusion of the 158th
Ordinary General Meeting of Shareholders held on June 23, 2022.
3. The amount of compensation for directors (excluding Audit & Supervisory Committee members)
does not include employee salaries for directors who also serve as employees.

Board of Directors & Executive Officers as of July, 2023
Board of Directors & Executive Officers as of July, 2023

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HOME

Sustainability

Corporate GovernanceRisk Management

Risk Management

PolicyBasic Approach
Businesses face conditions that change day to day: climate change, natural disasters growing infrequency and intensity, geopolitical risks coming to the surface, increasing digitalization, and diversifying
values. Under these circumstances, we must identify the wide range of potential future risks in a timely
manner and respond appropriately if we are to sustainably increase our corporate value.
The Meiden Group has created an ERM (Enterprise Risk Management) system designed to identify all
types of major business risks to the Group as a whole so that management can discuss them and control
them in an integrated manner.
In addition to everyday risk management, we also have an organization-wide BCM (Business Continuity
Management) system for managing and responding to business continuity risks caused by accidents ordisasters. Through this, we aim to be able to respond to constantly changing risks during both regular
operation and emergencies.
Risk Management Structure
The Meiden Group is building a risk management system using the following three-line model.

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[Explanation of terms]
First line

In our business units (the first line), including plants and domestic and overseas subsidiaries, we have introduced Control
Self-Assessment (CSA). With this tool, each unit identifies, assesses, and controls its own risks. To identify risks, units
refer to a 120-item risk list to ensure their review is comprehensive. Each unit then evaluates the major risks it identified,
focusing on scale of impact and likelihood of occurrence.

Second line

The second line consists of staff business units with expertise in general affairs, legal affairs, human resources, andmore. These units monitor and support the CSAs performed by the first line.

Third line

The internal audit department (the third line) conducts regular audits to verify that the first line’s CSA cycle and second
line’s support are functioning effectively. The status of internal audits is reported to the Executive Officers’ Meeting, theBoard of Directors, and key Company management as needed.

Internal Control Promotion DivisionThis unit is responsible for the framework in which management is involved in deliberations and decision-making on
major company-wide risks. The division consolidates the risk information from the first line’s CSAs and risk information
overseen by the second line and submits it to executive management after it is discussed by the Risk Management
Committee.

Risk Management Committee

Heads of staff business units serve on this committee, which meets twice a year to discuss major company-wide risks asaggregated by the Internal Control Promotion Division. The committee selects major company-wide risks, determines
which departments have jurisdiction over them, and clarifies the responsibilities of those departments. The committee
also discusses new major risks to strengthen risk control.

Internal Control Committees at Group

These committees consist of directors of subsidiaries and meet twice a year to take reports on the status of eachcompanies

company’s CSA and share information on major risks for the Meiden Group as a whole. The committees also take part inrisk discussions among subsidiaries to enrich the conversation.

The Risk Management Committee and the Group Company Internal Control Committee are chaired by the
Meidensha Director & Senior Managing Executive Officer, who is in charge of all administrative divisions.
Operations of the Risk Management Committee
The Risk Management Committee is chaired by the Director & Senior Managing Executive Officer andconsists of the heads of Headquarters staff business units. Twice a year, it deliberates on the importantbusiness risks of the Meiden Group as identified by the Internal Control Promotion Division, then selects
major company-wide risks. The committee determines which units have jurisdiction over each risk anddiscusses policies for dealing with the risks. Management holds discussions on the business risks
previously discussed by the Risk Management Committee and further debates them in meetings of the
Executive Officers’ Meeting and Board of Directors to determine the important business risks of the
Meiden Group and policies for dealing with them.
The Risk Management Committee is clearly independent from the Audit and Supervisory Committee.

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Major Risks from Business Activities
The Meiden Group stipulates major business risks to the entire Meiden Group, including in relation to ESG,
through regular discussion among managers according to systems such as those listed above. As aresult of the above discussion among managers, risks that could have a serious impact on the decisionsof investors are as follows.
Major Risks Facing the Group
Ranking

Risk

Risk assessment

Compariso
n withImpactLikelihoo

Speed ofEffectiveness ofLikelihood of harmdmaterialization

response

to brandprevious
year’sassessment1

Environmental regulations/climate

Large

High

NormalEffective

High

Large

High

Somewhat fast

NormalSomewhat highLarge

MediumExtremely fast

EffectiveHighchange2

Inadequate procurement
management

3

Insufficient internal information
management

4

Geopolitical risks

Large

MediumExtremely fast

NormalSomewhat high5

Inadequate labor management

Large

MediumNormalNormalHigh

6

Occurrence of industrial accident

Large

MediumExtremely fast

Somewhat effective

Somewhat high7

Reduced quality

Large

High

Fast

Somewhat effective

Normal8

Inadequate cyber measures

Large

MediumExtremely fast

Effective

Somewhat high9

Human rights violations

Large

MediumNormalNormalSomewhat high10

Insufficient personnel

Large

High

Somewhat slow

Somewhat effective

Normal11

Occurrence of a natural disaster

Large

MediumExtremely fast

Effective

Normal12

Disguising quality or iniquitous

Large

Low

Fast

Somewhat effective

High

Breach of Construction Business Act

Large

Low

Fast

Somewhat effective

High

Insufficient awareness or

Large

High

NormalEffective

NormalLarge

Low

Extremely fast

EffectiveHigh

MediumHigh

Somewhat fast

Somewhat effective

NormalLarge

Low

Extremely fast

Somewhat effective

Somewhat highMediumHigh

Somewhat slow

Somewhat effective

NormalLarge

Low

NormalSomewhat effective

Somewhat high

Large

Low

Extremely fast

NormalNormalinspection
13
14

responsiveness to changes in market
conditions
15

Breach of Antimonopoly Act orbribery

16

Losses due to fluctuations in
exchange rates, interest rates, stock
prices, and land prices

17

Incomplete control of overseas
subsidiaries

18

Insufficient or poor internal
communication

19

Incomplete control of Japanesesubsidiaries

20

Reduced ability to cater to customers

Note: Risk assessment is an independent analysis of the various risks faced by the Group rather than ageneral risk assessment.

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Initiatives

Risk Management Relating to Business Activities
Preliminary Risk Assessment
The Meiden Group’s preliminary risk assessment system, based on our Basic Policy on the Establishmentof a System to Ensure the Appropriateness of Business Operations, is designed to provide information for
management decision-making. In our system, we hold a preliminary risk assessment meeting to carefully
consider matters that may have a significant impact on the Group. Projects subject to review are
generally classified as large scale EPCs, M&A, partnerships, joint developments, new businesses, or othermatters that require a resolution by the Executive officer’s meeting according to regulations.
In FY2022, we conducted preliminary risk assessments on nine cases. Including these, we have not yet
identified any cases that have caused new losses. Preliminary risk assessment plays an important role inmanaging risk prior to the start of a project.
There are four key parts to preliminary risk assessment, as follows.
(1) Identify and assess the high risk factors of EPC project such as risk of construction works and project profit and take necessary measures to the project.
(2) Identify and assess contract risk such as commercial and technical conditions regard to tenders, partnerships etc., and enhance risk management to therelatives.
(3) Analyze risk from multiple perspectives by third party experts and take measures to reduce risk.
(4) Through discussions, encourage the unit proposing the action to provide information necessary for management decision-making, such as relevance tobusiness strategy, appropriateness of risk estimates, and feasibility of various plans.

As mentioned above, in the preliminary risk assessment, we evaluate not only financial risks, but projectrisks, operation risks, etc. The Corporate Policy Planning Group and the Internal Control Promotion
Division serve as the secretariat for assessments, and their supervising officers determine whether ameeting needs to be held. Other units involved include the General and Legal Affairs Division, the
Accounting and Financing Group, and the Sales Planning & Administration Group.
During M&A, a third-party unit performs the due diligence. Besides doing a financial investigation of thetarget company, we also evaluate it from an ESG perspective to strengthen risk management. This
includes the target’s corporate culture, legal compliance systems including human rights concerns,
compliance with environmental regulations, labor conditions, occupational health and safety, and otherfactors.

Policies, Plans, and Targets

Business Continuity Plan (BCP)
Basic BCP Policy
The Meiden Group Basic BCP Policy stipulates the Meiden Group’s basic policy on business continuity,business continuity targets, and response in the event of a disaster, etc., and is applied at each business
unit and subsidiary.
(1) In the event of a disaster, it is our utmost priority to ensure the safety of all employees, their family members, and customers.
(2) We contribute to swift reconstruction and recovery from disasters, considering our corporate social responsibility as a company that supports social
infrastructure.

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(3) Limit impact on customers and Meidensha’s businesses as much as possible.

Medium-term Management Plan 2024 Initiatives
We will promote the Medium-term Management Plan 2024, paying particular attention to the following
items relating to disaster-prevention and BCP.
・

Ongoing BCP initiatives
・Moving from an earthquake-based BCP to an “all-hazard” BCP that applies to a range of risks

・

Establishing a BCP and creating systems to maintain, evaluate, and confirm its effectiveness・

Continuing education and training, and ensuring that each employee is involved with BCP
initiatives

・・

Extending the BCP to overseas subsidiaries, and creating a BCP with a global perspective

Improving corporate and organizational resilience・

Encouraging independent promotion of BCPs by business units, and work to improve Disaster
responsiveness by company organization

・・Considering alternative production sites for important operations

Contributing to society and communities
・Contributing to disaster-resilient community development by supplying Meidensha’s BCP
products and corporate BCP initiatives to communities and society

System

BCM Promotion System

Under the BCM Committee, which determines the Meiden Group’s BCP policy and measures, the Meiden
Group established the Corporate BCP Promotion Committee, BCP promotion committees for eachbusiness, BCP liaison committees at domestic subsidiaries, the Working Group to Consider Priority
Businesses, and the Working Group to Handle and Protect Employees, and promotes BCP throughout theGroup.
Initiatives

Third Natural Disaster Response Headquarters Drill
In September 2022, we conducted a company-wide natural disaster response headquarters drill to verify
the effectiveness of BCPs that had been created. In the hypothetical scenario used for the drill this time,
the Numazu Plant was hit by a Nankai Trough earthquake centered on the east side of Suruga Bay on a

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Meiden Group Sustainability 2023

Sunday night, with Numazu Works the first production site to be damaged. Since the disaster occurred ona non-working day and at night, the initial response was not to gather in one place, but rather to organize
information on just a portal site that would be set up when the disaster happened. Subsequently, staff
verified and confirmed events particular to a damaged production site, including trade-offs between
customer response and plant restoration when several days had already passed since the disaster
happened, based on damage information prepared in cooperation with Numazu Works.
We will revise BCPs in light of the various issues identified during the training.

Scenes from the drill (Headquarters)

Scenes from the drill (Numazu Works)

Disaster Response Drill at Numazu Works
In March 2023, we brought a mobile power supply vehicle to Numazu Works to prepare for power outages
at the site. In conjunction with the introduction of the vehicle, we conducted a drill to verify the process ofrequesting the vehicle and dispatching it to the site in the event of a power outage, as well as the work to
be performed at the site. For the drill, we did in fact cut power to a portion of the plant. Participants
restored electricity by connecting to the mobile power supply vehicle. This allowed us to confirm how the
work would actually be performed. On the day of the event, an outside company provided drone footageof the drill. We have also discussed the usefulness of drones in times of disaster.
The Meiden Group will improve on issues identified during the drill to help create better BCP measures.

A scene at the drill

Drone footage

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Meiden Group Sustainability 2023

Start of Works BCP Liaison Committee
To improve disaster prevention and BCP at each production site (works), we launched the Works BCP
Liaison Committee in November 2022. In the event of a disaster, works must set up an area disaster
response headquarters to deal with a wide range of issues such as responding to personnel in the area,
gathering information from their factories and other units and subsidiaries, and managing stockpiles.
However, each works had established its own methods of responding and there was no interaction withothers. The new liaison committee organizes disaster prevention and BCP-related issues at each works
and discusses solutions to each one. This has enhanced disaster prevention and BCP systems at each
works.
This effort continues in FY2023 to strengthen the disaster response capabilities of each works.
Establishing BCPs at Overseas Subsidiaries
Meiden Group subsidiaries outside Japan have also begun establishing BCPs. Japanese and local staff
work together to design the optimal BCP for each company. This effort is starting with the ASEAN region,
India, and China. Subsidiaries in these regions aim to complete their BCP manuals by the end of FY2023.
We are committed to advancing this initiative to ensure business continuity for the entire Meiden Group,
including overseas subsidiaries.
Employee Education on Disaster Prevention and BCP
Disaster prevention and BCP training is included in the curriculum of personnel education for each level of
employment and is provided continually. In FY2022, we gave training for new employees and mid-careerhires. We have also visited regional offices in Japan to conduct extensive awareness-raising initiatives,
including disaster prevention and BCP training for local employees and training for BCP staff of Group
companies.
In addition, we created a training video to further spread the word about our disaster prevention and BCP
efforts. The video will be released in FY2023 and we will work to ensure that all Group employees view it.

New-employee training (online)

Employee BCP training video

PolicyStrengthening Information Security Management
The Meiden Group understands that ensuring the security of the information we handle is a most criticalissue. We therefore protect information assets from disasters, accidents, criminal acts, errors, and otherthreats. We also maintain and enhance information management to prevent leaks, tampering, theft, or
loss.

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Meidensha Basic Information Security Policy
1.

Purpose and Scope of Information Security

Meidensha (hereinafter the “Company”) is aware that ensuring security of information assets handled
by the Company is a major management issue for the Company, and protects information assets fromthreats such as disasters, accidents, crime, negligence, and cyber risks.
By establishing and maintaining information security management, we aim to prevent information
security incidents such as leakage, falsification, or theft of information, build relationships of trust witha range of interested parties, including shareholders and customers, and improve corporate value of
the Company.
This basic policy applies to all personnel who handle information assets managed by the Company.
2.

Legal Compliance, etc.

The Company complies with obligations imposed by laws and agreements that relate to businessactivities.
Everyone involved with business activities ensures thorough compliance with matters required by laws
and regulations, obligations imposed by agreements, this policy, and internal management regulations
relating to information security.
3.

Establishment and Maintenance of Information Security

The Company provides for information security management such as by nominating an Information
Security Manager and an Information Security Business Unit Managers, and establishing an office, hasestablished regulations and procedures, etc., based on the Basic Information Security Policy, andcontinuously maintains and improves information security.
SystemInformation Security Control System

Information Security Management
The Meiden Group conducts information security audits of Meidensha and subsidiaries, mainly throughthe Information Security Committee, and verifies and evaluates whether security measures are actually
being implemented and function.
At present, some of Meidensha and its domestic subsidiaries have received Information Security
Management System (ISMS) certification.

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Initiatives

In fiscal 2022, we are continuing to implement initiatives to reinforce information security for the entire
Meiden Group.
Analysis of Incidents and Countermeasures for Each Cause
The Meiden Group is working to implement sustainable security measures in the areas of “prediction,”“defense,” “detection,” and “response.”
We analyze and implement both hardware and software measures to protect data from unauthorized
logins, etc., and virus infections from suspicious emails, such as targeted email attacks, as well as
measures mainly aim at combatting human factors such as theft, loss, or mishandling of information
devices. We introduced the Security Operation Center (SOC) in fiscal 2017, established a detection
system that operates 24 hours per day, 365 days per year, and in fiscal 2019, we installed next-generation
antivirus software on all computers, in order to enhance detection.
We established the Meiden Computer Security Incident Response Team (CSIRT) and joined the Nippon
CSIRT Association in order to enhance response. In addition, we have begun strengthening information
security measures for customers of our products and services so they can better respond to
cyberattacks, which have become increasingly sophisticated in recent years. We are also establishinginternal systems to speed up incident response.
Information Security Education and Training
All of the Meiden Group’s officers, employees, dispatch workers, and contract workers, etc., engage in
information security education. In fiscal 2022, we conducted e-learning on information security threats
based on case studies. The e-learning was attended by 90% of employees, plus materials were sent tothose who were unable to attend online.
We continue to conduct suspicious email drills as education about cyber attacks such as targeted email
attacks.
Going forward, we will continue to strengthen hardware and software measures and continue to conductpersonnel measures, such as information security education and suspicious email drills. We will continue
to roll out measures for information security on a group-wide basis.

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Enhancement of Supply Chain Information Security
Since FY2017, we have continuously conducted activities to enhance our suppliers’ information security.
We ensure that suppliers are aware of information security measures as management issues, and we
hold training and information sessions as required.
We continue to support our business partners’ efforts to strengthen information security. We do sothrough four measures designed to prevent information security incidents: awareness raising, education,
visitations, and information sharing.
・Awareness raising: We have strengthened and encouraged our business partners’ voluntaryenhancements of information security by utilizing the SECURITY ACTION program of the Informationtechnology Promotion Agency, Japan (from FY2021). We also recommend that our business
partners acquire stars (logos) representing their level of efforts to address information security tomake evaluation more visible.

・

Education: We provide group training at each works and share information on information security
measures and risk case studies at production plan briefing sessions.

・

Visitations: We perform on-site diagnosis of information security risks during visits to business
partners.

・

Information sharing: We publish an information security newsletter and provide educational content
on the online Supplier Portal.

In this way, we are continuing to conduct activities to enhance information security throughout the entire
supply chain.

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HOME

Sustainability

Corporate GovernanceCompliance

Compliance

PolicyCompliance Policy
The Meiden Group fully understands domestic and overseas laws, including those relating to corporate
activities, customs, and all other social norms and spirit. The Meiden Group complies with and respects
these, and has developed the Meiden Group Code of Conduct to constantly maintain a high standard ofcorporate ethics and social decency.
In accordance with this code of conduct, the Meiden Group aims to sincerely engage in activities to live
up to the trust of customers and society. Directors, executive officers, and general managers of
Meidensha and each Group company play a central role in promoting compliance in each of theirworkplaces, in accordance with the Meiden Group Compliance Promotion Rules.

SystemCompliance System
Meidensha has enhanced and constructed a compliance promotion framework that is an important pillarof risk management, by integrating the Legal Affairs Division and the Enterprise Risk Management
Division into the Governance Headquarters in April 2022. The Legal Affairs Division is the office
responsible for the Compliance Committee, which is chaired by the member responsible for compliance,and convenes twice each year to determine compliance action plans.
Based on these action plans, the staff business units, led by the Legal Affairs Division, conduct
compliance training for all Group companies on observing antitrust laws, preventing corruption andharassment, and other issues. In addition, the Compliance Committee secretariat handles matters related
to compliance reporting and works to resolve any legal issues that arise. These compliance-related
activities are reported during regular meetings of the Compliance Committee and at meetings of theBoard of Directors.
Each workplace has a compliance manager, who reports matters being discussed at the workplace andissues that have been discovered that relate to compliance, to the Legal Affairs Division. The Compliance
Committee shares information reported to it with compliance managers through compliance training, etc.
This strengthens communication and reporting systems.

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Each Japanese company in the Meiden Group has a similar compliance committee and compliancemanager system to Meidensha. Moreover, we take a survey of overseas Group companies that helps us
continually develop our internal control system such as promoting understanding of on-the-groundconditions of compliance systems at each company.
Compliance System

Whistleblower System on Compliance
The Meiden Group has a whistleblower system for compliance. This is to prevent illegal actions andmisconduct and to solve problems as early as possible.
The internal whistleblower system includes the internal reporting system (Compliance Hotline) dealing
with a broad range of compliance issues including breaches of laws such as the Antimonopoly Act,
breaches of general anti-corruption regulations such as those dealing with bribery, other breaches ofinternal or external rules, and labor problems and the Harassment Consultation Hotline, which is
specifically designed to deal with harassment. The External Hotline is a hotline operated by outside
lawyers for early detection and rectification of unlawful acts, etc. We also provide a whistleblower hotline
exclusively for use by our suppliers. In conjunction with the 2022 enforcement of the revised
Whistleblower Protection Act, we have made our whistleblower hotlines easier to understand and revised
and improved relevant regulations and systems, such as strengthening protection of whistleblowers. We
have also finished setting up whistleblower hotlines at all Group companies, including those overseas.
The external hotline (Compliance Hotline) enables employees to lodge reports using a dedicated email
address. The external hotline is handled by a law firm, and may be used by employees of the Meiden
Group (including retirees), temporary staff and subcontractors, and suppliers.
These internal and external systems can both be used anonymously, and accept a wide range of reports.
The Legal Affairs Division works with relevant departments to investigate reports that are brought to theexternal hotline and, if necessary, consults with lawyers to deal with them. We are working to increase thedependability of management of information, such as the names of whistleblowers, and thewhistleblower system as a whole, in accordance with national guidelines, to ensure that whistleblowers
are not disadvantaged by using the system.
In FY2022, the Meiden Group received 59 reports and consultations, of which we thoroughly confirmed
which cases required a response and dealt with them accordingly. The Audit Department conducts
internal audits of the operation of the system.

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System to Respond to Individual Incidents
Managers who become aware of illegal or inappropriate activities are obligated to promptly report themto their immediate superior. The system ensures that reports reach responsible officers. Compliancebreaches that are detected internally, such as illegal or inappropriate activities, are investigated andhandled under the direction of the head of the business unit, who serves as a member of the Compliance
Committee. We work to introduce cases that cause compliance problems or which may do so throughcompliance training and to thus prevent their reoccurrence as appropriate.

Initiatives to Avoid Infringement of Human Rights
Harassment Prevention System
Harassment is one of the compliance issues regarding which consultation is most frequently sought, so
we established the Harassment Prevention Committee to create a system that is specifically designed tohandle harassment issues, and we are working to centralize handling of confidential information andresponses as well as enhance activities to promote understanding.
When a report of harassment is made, responses are required that are considerate of personal
relationships, and particularly those of the reporter, so we created a system to avoid infringement of
human rights by establishing a hotline that is specifically designed to deal with harassment issues andcreating an environment that is conducive to talking about issues. In addition, we are working to raiseawareness about our anti-harassment measures. For example, the scope of the anger management
training for managers was extended to other employees as well starting in FY2022. Our goal is to firmly
entrench these lessons in the Meiden Group and provide better guidance.

Anger management training

Unconscious bias seminar

Unit

FY2020

FY2021

FY2022

Times

3

8

26

People

91

289

2,350

Times

-

2

2

People

-

200

321

Initiatives

Compliance Training
The Meiden Group conducts compliance training every year, in order to maintain and improve awarenessof compliance and internal control systems while collecting opinions from workplaces. In FY2022, we
conducted individual training online for locations around Japan, and there were a total 4,336 participantsin the Group. At this training, in addition to making reports concerning the status of compliance activities
to employees of each company in the Meiden Group, such as compliance managers, we conductededucation concerning the Antimonopoly Act, the Subcontract Act, harassment, and environmental laws.
We also conducted individual presentations on compliance as part of training for each level of new staff,
leaders, and managers of each Group company.

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Human rights education for officers and employees

Policy, System, and Initiatives

Anti-corruption Measures
Meidensha stipulated “absolute prohibitions” through a resolution of the Board of Directors' Meeting on
December 26, 2012. These “absolute prohibitions” prohibit profit-sharing with national public servants,
correspondence with competitors, etc., such as bid-rigging or cartel behavior, collection of confidential
information such as target prices and job prices from customers, etc. “Absolute prohibitions” arethoroughly enforced within the Group.
In 2016, we developed the Meiden Group Bribery Prevention Policy in order to prevent corruption, which
includes bribery. The principles were revised in 2020. They have been disseminated throughout the Group
once more in two volumes – the Meiden Group Bribery Prevention Policy and the Guidelines for the
Meiden Group Bribery Prevention Policy.
As our anti-corruption policy, in 2016, we developed the Meiden Group Bribery Prevention Policy. We
reorganized it in 2020 into two parts – the Meiden Group Bribery Prevention Policy and the Guidelines for
the Meiden Group Bribery Prevention Policy – which we are using to remind members of the Group about
our stance.
Group Corporate Code of Conduct toward Globalization
The Meiden Group revised the Meiden Group Corporate Code of Conduct in 2022 in consideration ofsustainability management, and is increasing awareness of employees with regard to compliance withlaws and other social norms and contributing to the realization of a sustainable society. The revised
Corporate Code of Conduct includes a commitment by the Meiden Group to contribute to the realizationof a sustainable society. We also promise to conduct business honestly and fairly to prevent bribery andother forms of corruption; respect human rights; create workplaces where employees can play an activerole; protect the environment; cooperate with society; manage information; practice timely disclosure; andmanage risk. It also defines the responsibilities that top management has with respect to the Corporate
Code of Conduct. The Board of Directors approved the revised Corporate Code of Conduct. We are
educating Meiden Group employees around the world by compiling this code of conduct in addition to thecorporate philosophy system and guidance into a booklet in three languages (Japanese, English andChinese).
Furthermore, we are broadly expanding our compliance education activities such as by releasing the
Meiden Group Bribery Prevention Policy and the Guidelines for the Meiden Group Bribery Prevention
Policy in the same three languages.
These regulations and policies are available on the Group-common web portal.
Meiden Group Corporate Code of Conduct Japanese

Meiden Group Corporate Code of Conduct English

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Meiden Group Corporate Code of Conduct Chinese

Meiden Group Anti-Bribery Policy (PDF：440KB)

Officer Training
Meidensha conducts training for officers of the executive officer level and above, with a focus oncompliance with the Antimonopoly Act. In FY2022, we conducted Antimonopoly Act compliance training
administered by outside instructors, reviewed the basics, and considered case studies.

Policy and Initiatives

Tax
Tax Policy
The Meiden Group is aware that ensuring transparency of tax matters and payment of tax is its corporatesocial responsibility, and understands and complies with the principles of the taxation law of eachcountry and region in which it conducts its global business activities. We contribute to the prosperity ofeach country and region by paying tax appropriately according to the application of a preferential tax
system that avoids double taxation through normal procedures and complies with the aims of eachsystem.
Furthermore, our policy is to refuse to engage in international tax avoidance, such as by complying with
the OECD* Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and refusing
to use tax havens according to business circumstances.
Going forward, we will work to build friendly and healthful relationships with tax agencies through timely
and appropriate provision of information and responding sincerely in the event of advance rulings and tax
audits.
* OECD：Organization for Economic Co-operation and Development

Results Data

Compliance Data
FY2022 Breaches of the Law, etc., in Japan and Overseas (Whole Meiden Group)・Criminal cases or administrative penalties resulting from violation of competition laws in Japan andabroad: NA・

Criminal cases or administrative penalties resulting from bribery or other corrupt practices: NA・

Criminal cases or administrative penalties resulting from other major legal or regulatory violations:
NA

Consultations and Reports Through the Compliance Hotline
Number of Consultations and Reports Received Through the Compliance Hotline (Only Meidensha*)212

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Number of consultations and reports

Unit

FY2020

FY2021

FY2022

Cases

53

52

59

* Includes incidents at subsidiaries referred through the Meidensha Hotline.
Compliance-Related Training
Times Compliance Training Conducted and Number of Participants (Entire Meiden Group)Unit

FY2020

FY2021

FY2022

Times

11

11

4 + video viewing

Participants

1,338

1,711

4,336

New staff education

Participants

213

275

262*

Leader training

Participants

110

110

123

New manager training level 1

Participants

90

92

94

Participants

10

10

―

Compliance Training

Education by level(compliance presentations)

Training for overseas management candidates (compliancepresentations)* Includes subsidiaries and employees hired in mid-career

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HOME

Sustainability

Corporate GovernanceDialogues with Shareholders and Investors

Dialogues with Shareholders and Investors

Basic Approach and the IR & SR System
When any shareholder wishes to discuss with Meidensha’s ideas that will contribute to the medium- tolong-term improvement of our corporate value, our policy is that our management will engage in suchdialogue to the extent possible.
We have established a system whereby each special department for IR and SR under the IR & SR Director
works to strengthen external communication while simultaneously enhancing communication andcreating opportunities for discussions with shareholders, including institutional investors. These activities
are also regularly reported to and discussed by the Board of Directors.

Initiatives

Results Briefings
We hold financial results briefings twice a year in May and October (or November). In FY 2022, we
distributed a video of the financial results briefing explained by President to analysts and institutional
investors who had registered for the briefing on the day of the presentation. Q&A sessions were held thenext business day, with the session for the May Annual Results Briefing conducted via teleconference andthe session for the November Mid-Term Results Briefing held via Zoom in a webinar format.
Financial Results

Sustainability Briefings (ESG Briefings)
We held our second ESG briefing in November 2022. We changed the name to ”Sustainability Briefing”
and gave presentations on “Progress in Sustainability Management,” “Initiatives in Smart Maintenanceand Substation Products That Make Up Green Extra-High Voltage Substations,” and “Initiative to Becomea Hydropower Service Provider.”40 analysts and institutional investors joined the briefing and it was the opportunity to deepen
understanding of Meidensha’s ESG vision and initiatives through Q&A sessions with President & Executive
Officer Miida and Senior Managing Executive Officer Tamaki.
Event materials

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Individual Business Briefings (Small Meetings)
Since FY 2018, we have held small meetings once a year. We set a different business theme each year
and create an opportunity to better understand our business by giving presentations and holding Q&A
session with the relevant managing officers.
9 analysts attended the February 2023 small meeting at the Nagoya Works (Kiyosu City, Aichi). After areport on the overall state of business by President & Executive Officer Miida, Senior Managing Executive
Officer Mochizuki gave a presentation on “Our Efforts and Vision for the EV Business” before taking
questions from those in attendance. This meeting also provided an opportunity to tour the EV Factory
involved in the mass production of integrated motor inverters and the production line of the Ceramic
Membrane Production Unit.
Event materials

Initiatives for Individual Investors
Since FY2022, Meidensha has exhibited at the IR EXPO hosted by the Nagoya Stock Exchange. During
this two-day event, about 200 individual investors visited our booth and learned about our business,growth strategy, shareholder return policy, and more.

Main IR & SR Activities in FY2022
Individual Sessions

NumberBreakdown of Investor Type

Domestic Investors

77

Analyst: 43
Fund Manager: 34

Overseas Investors

32

Analyst: 11
Fund Manager: 21

Total

109

(Note: There were 41 meetings with securities analysts not listed above for a total of 150 meetings withinvestors.)

Opinions of Analysts and Institutional Investors
We publish a quarterly IR report that includes the opinions and requests given at results briefings andindividual meetings and this report is given to directors, executive officers, heads of business units, theStaff Business Unit, managers, and others. The main themes that came up in discussions with analysts
and institutional investors in FY2022 are as follows.
・The impact on performance and countermeasures following the sharp rise in the cost of materials,
energy, and logistics, and the emergence of geopolitical risks・View of the future outlook and capital investment of the EV Business

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・

Measures for improved profitability of overseas businesses and a timeline for achievement

Results of Conversations with Stakeholders
This section will introduce some case that we reflected the opinions and realizations we received throughconversations with analysts, institutional investors, and shareholders to our activities.
1)

Introduce relative TSR (Total Shareholder Return) into director’s compensation benchmarks
We were told that it would be good to introduce performance-based compensation with relative TSR as an index in addition to the conventional stock acquisitioncompensation in the medium- to long-term incentive compensation from fiscal 2023. This would make the director compensation system and benchmarks alignmore closely with stakeholder interests.

2)

Disclose the reasons (including definitions) behind the skills matrix selection
We received feedback that we should establish items with more specific definitions of the skills required for the Board of Directors to function. Therefore,
starting with the Notice of Convocation of the 159th Ordinary General Meeting of Shareholders to be held in June 2023, we disclosed the “Skills Required to theBoard of Directors and the Reasons.”

Going forward, we will continue to proactively communicate with our shareholders and investors byenhancing opportunities for dialogue through financial results briefings and individual IR/SR, as well by
expanding information disclosure on our website and in reports and other publications.

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