Special Feature

2Efforts to strengthen corporate
governance
Aiming for the sustainable growth andfor the improvement of the corporate
value over the medium to long term

Responses and efforts up
till now

Major efforts towards the strengthening of the corporate governance

We have been working on strengthening the corporate
governance since 2008, including increasing the numberof the Outside Officers. In response to the establishmentof the “Corporate Governance Code” by Tokyo Stock
Exchange, Inc. in June 2015, we have implemented
various efforts such as the formulation of basic policies
on the corporate governance and starting among whichis effectiveness of the Board of Directors evaluation.
We will continue to work on the improvement of thecorporate governance by the positioning and thestrengthening of the corporate governance as an effort
to improve the corporate value being as one of ourimportant measures to strengthen the management.

2003

2008
2010

- The number of the Directors was reduced (The term of service of the Directors wasreduced from two years to one year.).
- The executive officers system was introduced.
-S tarted the effort to increase the number of the Outside Officers.
-E stablished the Compensation Committee.

2014 tructured the Audit & Supervisory Board members, to 3 people from in-house and-S
3 people from outside.

2015

 stablished the Independence Standards for the Outside Officers.
-E-E
 stablished the Nominating/Compensation Committee, former Compensation Committee.
-S tarted the evaluation of the effectiveness of the Board of Directors, and thesummary of the result was published. (annually conducted)
 stablished “Guidelines on Corporate Governance”.
-E

2016

2017

- A n Outside Director was appointed as the chairman of the Nominating/Compensation Committee.
- The Chairman became the Director without the representative right of the Board ofDirectors.
-R evision of the officer’s compensation system.
- The number of the Outside Directors was changed to the current 5 members.

- As a process to evaluate the effectiveness of the Board of Directors, the Chairman
conducted the interviews.

Board meeting and related organizations
Our corporate governance structure consider that theeffectiveness of the audit on the execution of the duties by theDirectors is secured, based on the coordination with theaccounting auditors and the internal auditing department, whilemaintaining the institutional independence of the Audit &Supervisory Board Members and of the Audit & Supervisory
Board from the Board of Directors. And we adopted the “Audit& Supervisory Board” type of the governance organization.

As our policy, the Outside Officers are expected to makesuggestions from various viewpoints and angles in thediscussion of the Board of Directors, and people with different
knowledge and backgrounds are selected.
With respect to the selection of the officers, the Board ofDirectors makes a decision by consulting the Nominating/Compensation Committee which is constituted of the majority of themembers by the Outside Directors, and is based on their report.

Expertise of the Outside Officers
OutsideDirectors

Sumitaka Mr. Fujita has served for many years in a key positions on the management such as a Chef Financial
FujitaOfficer (CFO) and has a wealth of knowledge and experience on general business management
including financial accounting. He also has a high perception of the corporate governance.
Nobuyoshi
SomaMr. Soma has served for many years in key positions such as President and Chairman of themanufacturer which operates business in adjacent areas to our Group, and he has a wealthof knowledge and experience on the corporate management in general.

Osamu
Tsukamoto

Mr. Tsukamoto has a long experience of involvement in the industrial policy at the Ministry ofEconomy, Trade and Industry, and has a high perception on the technologies and thedevelopment of the new businesses.

TatsuoTeratani

Mr. Teratani has a high perception as an engineer based on long years of the experience inthe car electronics related design at a major automobile manufacturer.

Akira
Mr. Nakamoto has served for long years in key positions such as President and Chairman ofNakamoto a major precision equipment manufacturer, and has an extensive knowledge and experiencein the corporate management in general.

10Outside
YuzuruAudit &Fujita
Supervisory
BoardTakashi
Members
Tsukamoto

Mr. Fujita has served for many years in key positions such as President and Chairman of alife insurance company and has an extensive knowledge and experience in overall corporate
management, including the financial accounting.

Kunihiko
Sakai

Mr. Sakai has a high perception in fields such as: the corporate governance, the legal risk
associated with management and its compliance to regulations, capitalizing his longexperience as a legal professional including its foreign one.

Board of Directors
Chairmanof the Board- A position of non-executive
without the representative right.
- Connect between the Outside Directors
and the Executive Directors.

Chairman
The ExecutiveDirectors
6 members

Discussion
and decision
Supervising

President and other generalmanagers and division
managers of the major
businesses are concurrently
appointed as directors.

Audit &Supervisory
Board Members
6 members

Mr. Tsukamoto has served for many years in key positions such as Chairman and a director
in charge of finance in a financial institution and has an extensive knowledge and experiencein overall corporate management, including financial accounting.

OutsideDirectors
5 members

3 of them areindependent directors.
Draw attention
Make opinions

All 3 members areindependent directors.

Outside Directors
In-house- Company manager - Government experience- Technical engineer - Financial, accounting expert- Legal affairs, Risk management expert- Governance expert - Global management experiencer

OutsideVariety of human resources with wealth of knowledge
and experiences such as shown above.
At June 22, 2018

FURUKAWA ELECTRIC GROUP SUSTAINABILITY REPORT 2018

■N ominating/Compensation

Outside Officers MeetingCommittee

We have established the Nominating/Compensation Committee with a majority of the members
from the Outside Directors, aiming to supplement
the supervisory function of the Board of Directors.
The Committee deliberates succession plan of theofficer and of the president, the officer compensation and others, aiming to ensure the objectivity
and transparency regarding these matters.
Recently, in 2016 the officer compensation
system was revised, and in 2017 the new President
was appointed based on the succession plan,these were resolved at the General Meeting ofShareholders or the Board of Directors after thedeliberation at the Committee.

The Outside Officers meeting is regularly held for the purpose ofexchanging information, sharing recognition among the Outside Officers
based on the objective position, and for reporting their opinions sharedwith the Board of Directors if necessity.
The Committee consists of all Outside Directors and Audit &Supervisory Board Members, and the Secretary of the Outside Officers
is elected from the independent outside directors.
In FY2017, the meeting washeld three times with discussion
about the management issues
in general and the managementof the Board of Directors.

Nomination/Compensation Committee 6 directors

Chairman:
Outside Director

In-house Outside
At June 22, 2018

Effectiveness of the Board of Directors evaluation
Evaluation items on the effectivenessof the Board of Directors

In every year since the FY2015, we have been working on analyzing andevaluating the effectiveness of the Board of Directors for the purpose ofimproving the function of the Board of Directors, through a continuousprocess. Through the process, the necessary measures are taken in order toimprove or further strengthen the issues reported through the verification on
the suitability of the function as the Board of Directors.
In FY 2017, which was the third time, in addition to have a questionnaires
for all the members of the Board of Directors and the Audit & Supervisory
Board members, an individual interview was conducted by the Chairman, forthe purpose of a deeper understanding of the response to the questionnaires.
Thus more substantive analysis and evaluation were implemented.

-E ffectiveness of the Board of Directors.
 anagement of the Board of Directors.
-M-S ystem related to support and cooperation with the OutsideOfficers.
 oles and expectation for the Audit & Supervisory Board Members.
-R-R elationship with the shareholders and other stakeholders.
 thers-O(The Board of Directors in general, individual and peer evaluation,
Responsibility of the Board of Directors)

FY 2017 Flow of the Board of Directors effectiveness evaluation.
Sept.
Questionnaire

Implementation ofthe anonymousquestionnaire.

Oct.

Nov.

Individualquestionnaires bythe Chairperson
Newly implemented inFY 2017, aiming at adeeper understandingof the responses tothe questionnaire.

Nov. to Jan.
MultipleDiscussions
by the Board ofDirectors

Outside officers
Meeting
Compilation of theopinions on the resultsof the questionnaire.

Confirmation of thestatus of ensuring theeffectiveness of theBoard of Directors.

Jan.

Next FY

Completion ofthe analysis
and evaluation
Publish the analysis
and evaluation
results.

The Businessexecution and themanagement of theBoard of Directors
based on the actions.

Various activities by the Outside Officers
Keynote lecture by an Outside Director.

Plant tour

In order to enhance information awareness tothe Outside Officers, opportunities are offered toparticipate in our research and development
presentations and plant tours.
In FY 2017, a tour in Hiratsuka Works washeld. Also, the Outside Officers attended theresearch and development presentations that areheld annually in each plant. In Yokohama Works,
an Outside Director presented a keynote lecture.

FURUKAWA ELECTRIC GROUP SUSTAINABILITY REPORT 201811