Value Creation Story

Business Overview

ESG Activities

Corporate Information

GovernanceTo retain the trust of all of our stakeholders, KOITO recognizes the importance of ethical standards and theestablishment of a sound management structure. We have identiﬁed enhancing “corporate governance” as one ofour materiality and promoting several activities.

Members of the Board of Directors, Audit and Supervisory Board,
Nomination Committee and Remuneration Committee (as of June 29, 2022)◎ChairCorporate Governance

Board of Directors

Board of Directors
9 Directors(including 3 Outside
Directors)

Consult

Appointment/removal

Consult**

Representative Directors

Nomination Committee
5 Directors(including 3 Outside
Directors)

Audit and Supervisory Board
4 Audit & Supervisory Board Members(including 2 Outside Audit &Supervisory Board Members)

Remuneration Committee
5 Directors(including 3 Outside
Directors)*Deliberate and resolve
draft and policy

Directors

Operational
audit

Collaboration

Collaboration

Corporate Ofﬁcers
Each Department

Audit

Auditing Section

Financial audit

Independent Auditors

Audit & Supervisory
Board Members

Election/dismissal

Election/dismissal

Election/dismissal

Election/dismissal

Directors

General Meeting of Shareholders

Audit andSupervisory Board○Members

Nomination
Committee

Remuneration
Committee

Chairman and CEO

Masahiro Otake

○

◎

◎

President and COO

Michiaki Kato

◎

○

○

Executive Vice President

Kenji Arima○

Executive Vice President

Masami Uchiyama○

Senior Managing Director

Hideharu Konagaya○

Senior Managing Director

Katsuyuki Kusakawa○

Outside Director

Haruya Uehara

○

○

○

Outside Director

Kingo Sakurai

○

○

○

Outside Director

Chika Igarashi

○

○

○

Standing Audit & Supervisory Board Member

Mitsuo Kikuchi○◎

Standing Audit & Supervisory Board Member

Koichi Sakakibara○○

Outside Audit & Supervisory Board Member

Yukinobu Suzuki○○

Outside Audit & Supervisory Board Member

Hiroshi Kimeda○○

Collaboration

Inside Directors/Audit Members

Board of Directors

Outside Directors/Audit Members

Audit and Supervisory Board

Ratio of Outside Directors
Board of Directors

Composition

Frequency

Function

Structure54

9 Directors (6 inside Directors + 3 outside Directors)
Chaired by the President

4 Audit & Supervisory Board Members(2 inside members + 2 outside members)

Once per month in principle

Eight times (FY 2022)

The Board of Directors discusses, reports, andmakes decisions on matters stipulated in the
Board of Directors Regulations, including thosematters stipulated by laws, regulations, and the
Articles of Incorporation, and supervises theexecution of Directorʼs business execution.

The Audit and Supervisory Board Members
participate in the Board of Directors and otherimportant meetings and committees, review
signiﬁcant authorization documents, and audit
the performance of directors. They aremonitoring the structure and operations of theinternal control system.

● All Audit and Supervisory Board Members attend● Other than the Board of Directors, the standing

meetings of the Board of Directors to monitor
Directorʼs business operations.
●The Managing Committee (chaired by the
President), a body to aid the Board of Directors,
is comprised of full-time Directors andCorporate Ofﬁcers. The committee meets, threetimes per month in principle, determines
business execution, reports on progress, andfollows up on business execution.
●The governance structure is being reinforced;
new proposal agendas are required to beapproved at the Managing Committee and thento the Board of Directors.

KOITO INTEGRATED REPORT 2022

Audit and Supervisory Board Members attend
the Managing Committee and other important
meetings, constantly monitor the Directorʼsbusiness execution and express opinions asneeded.
●Improving its auditing functions through close
collaboration between Audit and Supervisory
Board Members, the Internal Audit
Department, and independent auditors byholding periodic meetings and let themexchange information and opinions as needed.

67%

33%

3 Outside
Directors

6 Inside
Directors

Audit andSupervisory Board

50% 50%2 Inside
Directors

2 Outside
Directors

Remuneration
Committee

Nomination Committee

40%

2 Inside
Directors

40%

60%

2 Inside
Directors

3 Outside
Directors

60%

3 Outside
Directors

Main Proposals and Reports at the Board of Directors (from April 2021 to March 2022: 12 meetings)
Proposals

Reports

Total

Ratio

Business strategies, sustainability and governance

18

9

27

33%

Settlement, dividends and other ﬁnancial matters

7

9

16

19%

Internal control, risk management and compliance

4

4

8

10%

HR, appointment and remuneration

15

3

18

22%

Other matters

3

10

13

16%

47

35

82

100%

Total

KOITO INTEGRATED REPORT 2022 55

Value Creation Story

ESG Activities

Corporate Information

Election Policy for Directors and Audit and Supervisory Board Members

Director Effectiveness Evaluation

KOITOʼs policy is to elect a person who is capable of responding to expectations of shareholders as a Director, hasenough experience and advanced knowledge of business administration, and can fulﬁll the duties and responsibilities of a
Director as a Director candidate.
Based on this policy, the nomination committee deliberate and resolve a draft of Director candidates, and then the
Director candidates are determined by the Board of Directors. As a consultative body of the Board of Directors, thenomination committee consists of three independent outside Directors and two inside Directors, in order to ensure
objectivity and transparency of the nominations of the director candidates.
Each Director has a thorough knowledge of the respective business management. Including outside Directors, KOITO
regards Directorʼs knowledge, experience, and capabilities as diverse and well balanced. KOITO will continue to consider
the appropriate structure for the Board of Directors.
As for the election of Audit and Supervisory Board Members, KOITO expects candidates to have a good personality anda strong sense of ethics to accurately, fairly, and efﬁciently execute the audits of the execution of Director duties.

KOITO conducts annual surveys to evaluate the effectiveness of the Board of Directors. The Board of Directors evaluates
itself based on the survey ﬁndings.
The following is the outline of the results of analyzing and evaluating the effectiveness of the Board of Directors.

Specialties and Experience of Directors
Corporate
Sales,Engineering,
Management Procurement
R&D

Production, Quality
Management,
Safe & Environment

Overseas
Segment

Finance &Accounting

Corporate
Planning,
Legal, Personnel○○

Chairman and CEO

Masahiro Otake

○

○

○

President and COO

Michiaki Kato

○

○

○

Executive Vice President

Kenji Arima○○

Executive Vice President

Masami Uchiyama○

Senior Managing Director

Hideharu Konagaya○

Senior Managing Director

Katsuyuki Kusakawa○

Outside Director

Haruya Uehara○

Outside Director

Kingo Sakurai

Outside Director

Chika Igarashi

○

○

○

○
○

○
○

○

○

○
○

○
○
○
○

*Note: Above chart does not represent all skill of each Director.

Outside Directors and Audit and Supervisory Board Members
KOITOʼs policy on electing outside Directors is to appoint persons who satisfy the requirements for outside Directors in
the Companies Act and requirements for independency in the independency standard for the independent ofﬁcer system
of Tokyo Stock Exchange.
Outside Directors shall have abundant knowledge and experience in corporate administration. Outside Audit andSupervisory Board Members shall have technical knowledge of laws and ﬁnance. Both outside Directors and Audit andSupervisory Board Members are elected upon a decision at a General Meeting of Shareholders.

1. The Board of Directors meets monthly, in principle, and promptly and properly discusses important agenda items
based on the Board of Directors Regulations.
2. Prior to the beginning of the ﬁscal year, the annual meeting schedules are announced to Directors and Audit andSupervisory Board Members, including its outside members, making it easier for them to attend the meetings. To
facilitate discussion on management issues of the Board of Directors, the matters to be deliberated and reported
at the meeting and the content of the materials are discussed in advance.
3. In addition to Directors, who have experience in the various business divisions such as management, sales, technical,
production and others, the Board of Directors also receives advice and proposals from outside Directors with extensive
knowledge and experience of corporate management, or with expertise in legal and ﬁnancial matters. The Board of Directors
ensures sufﬁcient time and discusses management issues from a variety of perspectives.

The Board of Directors also operates by reﬂecting the opinions of outside Directors, such as adding the results ofself-evaluations, contents put on the agenda of the Managing Committee, trends in the industry, and the latest technicaltrends to the matters to be reported.
The Board of Directors will continue to further reinforcing its functions as the highest decision-making entity andimproving the speed of making administrative decisions to increase its effectiveness.

Remuneration of Directors
It was approved at the 119th Ordinary General Meeting of Shareholders held on June 27, 2019 that the amount of remuneration, etc. for Directors shallbe no more than ¥1.5 billion a year. In addition, it was approved at the 115th Ordinary General Meeting of Shareholders held on June 26, 2015, that,apart from the amount of remuneration, etc., for Directors, the amount of remuneration, etc., related to subscription rights as stock compensation-type
stock options for Directors shall be no more than ¥200 million a year.
The Directorsʼ remuneration system consists of ﬁxed remuneration, paid monthly, and performance-linked remuneration. Based on our internal
standards on Directorʼs remuneration, KOITO comprehensively determines the amount of remuneration by taking several factors into account:corporate performance, the amount of dividends to shareholders, remuneration amount of other companies, the amount of employeesʼ salaries, as wellas the Directorʼs management capabilities, achievements, and their contributions.
The ﬁxed remuneration amount is calculated by setting a basic amount in based on the size of the role of each Director and their position, thensetting the upper and lower limit amount for each position, the status difference by position, and the difference by the number of years in the position.
Performance-linked remuneration is evaluated and decided based on the belief that it is important to comprehensively consider the goals andachievements of each ﬁscal yearʼs performance (net sales, proﬁts, etc.) and each Directorʼs contribution.
The goal of stock compensation-type stock options is to motivate company managers to contribute to improving business performance andcorporate value in the medium- to long-term by sharing the beneﬁt of rising stock prices and the risk of falling stock prices with shareholders. The
number of stock options granted is based on each Directorʼs status of business execution and level of contribution, etc., and Directors are able toexercises their options once they have lost their position as Director.
The Board of Directors consults with the remuneration committee regarding the policy to determine the remuneration of all and each Director.
The remuneration of each Director is determined by consultations among the Representative Directors, based on the above determination policy
authorized by the Board of Directors. To ensure objectivity and transparency of the Directorsʼ remuneration determination procedure and others, theremuneration committee, an advisory body to the Board of Directors, consists of two inside Directors and three independent outside Directors.
The remuneration of each Audit and Supervisory Board Members has been determined by consultations among Audit and Supervisory Board
Members. For outside Directors, only ﬁxed remuneration is paid, and no performance-linked remuneration is paid.

Status of Audits
Based on the annual audit plans, KOITOʼs Internal Audit Department, an independent organization, conducts audits of
the operations of internal control over ﬁnancial reporting, as well as audits of the legality and appropriateness ofoperations against company-wide departments and KOITOʼs subsidiaries. The departments and subsidiaries implement
the necessary improvements to improve internal control. The Internal Audit Department reports the results of the audits
to Directors and Audit and Supervisory Board Members, and exchanges information with the Audit and Supervisory Board
Members and the independent auditors on the status of audits to facilitate mutual cooperation.
Other than attending and expressing opinions at the Board of Directors, Audit and Supervisory Board Members audit
the execution of Directorsʼ duties, legality and appropriateness of KOITOʼs decision-making based on their knowledge
and experience in each specialized ﬁeld. In addition to Audit and Supervisory Board Membersʼ on-site audits andinterviews with administrative divisions, Audit and Supervisory Board Members attend the audits performed by the
independent auditors and the Internal Audit Department. Audit and Supervisory Board Members strive to improve theeffectiveness of audit by maintaining collaboration with relevant parties, including outside Directors by exchanging
information as needed.

56

Business Overview

KOITO INTEGRATED REPORT 2022

The number of
eligible members

Breakdown of remuneration
Fixed remuneration(million yen)

Performance-linked remuneration(million yen)

Total remuneration(million yen)

Directors

15

786

349

1,136

Audit and Supervisory Board Members

5

103

ー

103

Total

20

890

349

1,239

Notes: 1. The above table includes one retired Director and one retired Audit and Supervisory Board Member at the conclusion of the 121st Ordinary General Meeting of Shareholders
held on June 29, 2021.
2. Aggregate remuneration for the outside Directors and outside Audit and Supervisory Board Members, a total of four individuals, was ¥55 million (ﬁxed remuneration only).
3. In addition to the above, KOITO resolved to abolish its Directorsʼ and Audit and Supervisory Board Membersʼ executive retirement bonuses payment system at the conclusionof the 112nd Ordinary General Meeting of Shareholders held on June 28, 2012 and to grant executive retirement bonuses, at the time of the retirement of each person involved,
to cover the period in post up to the abolition of the system to Directors and Audit and Supervisory Board Members continuing in post subsequent to the conclusion of theaforementioned General Meeting of Shareholders. On the basis of this resolution, an executive retirement bonus of ¥63 million was paid to one retired Director.
These amounts included ¥40 million, which were transferred from provision for Directorsʼ retirement beneﬁts included in the total remuneration, etc. to executives in thebusiness report for past years.
4. Besides the above, one outside Audit and Supervisory Board Member receives executivesʼ remuneration of ¥0 million from Koito Insurance Services Co., Ltd., KOITOʼs
subsidiary.
5. For Performance-linked remuneration, recurring proﬁt is used as an indicator since it reﬂects the overall results of KOITOʼs management activities, and the remuneration is
calculated giving consideration to the year-on-year change in this indicator. The amounts listed for recurring proﬁt for the ﬁscal year under review and for the previous ﬁscal
year are the amounts presented in the non-consolidated statements of income.

KOITO INTEGRATED REPORT 2022 57

Value Creation Story

ESG Activities

Corporate Information

Basic Policy of Internal Control System

Shareholdings

The Basic Policy of the Internal Control System is set as follows to improve and reinforce internal control.

Based on KOITOʼs management strategies and plans, we believe that strengthening business relations with othercompanies is essential to expanding our business and achieving sustainable growth.
From this perspective, we comprehensively consider the issues and hold shares that are held for purposes other thanpure investment. With regard to shareholdings, we regularly scrutinize and verify whether they are commensurate withdividend yields and the cost of capital, while also keeping in mind reductions, in order to determine the appropriatenessof stockholdings.

1. System ensuring that Directors and employees execute
their business duties in compliance with laws and regulations and the Companyʼs Articles of Incorporation
The Compliance Committee, the Compliance Department,
the Internal Audit Depar tment, whistle-blower internalreporting system, and other organizations and systems, aswell as the Code of Corporate Ethics and other relevant regulations, will be developed and enhanced based on the
KOITO Group Corporate Behavior Charter.
At the same time, KOITOʼs Directors, Corporate Ofﬁcers,
and employees will receive education familiarizing themwith the organizations, systems, and regulations.
2. System for the preservation and administration of information on Directors executing their business duties
Regulations will be developed and enhanced to appropriately preserve and administer minutes of the General Meeting of Shareholders, the Board of Directors, the Managing
Committee, and other information on the Directors executing their business duties.
3. Regulations and other systems for managing the risk of loss
Risk Management Regulations and other regulations andsystems for managing risk will be developed to avoid andeliminate material risks that could threaten the Companyʼsviability, and to minimize the impact when they arise. At thesame time, KOITOʼs Directors, Corporate Ofﬁcers, and employees will receive education and training on risk management.
4. System for ensuring the ef ﬁcient execution of businessduties by Directors
The Board of Directors and the Managing Committee meetings will be held regularly. Meanwhile, the Board of Directorsʼ Regulations, the Managing Committeeʼs Regulations,and other regulations pertaining to the execution of business duties by the Directors, as well as the Corporate Ofﬁcer system and other organizations and systems, will be
developed and enhanced to ensure the efﬁcient executionof business duties by the Directors.
At the same time, the business duties will be executed
according to speciﬁc plans that each division develops every
ﬁscal year based on the Presidentʼs policy.
5. System for ensuring appropriate business execution by the
corporate group comprising KOITO and its subsidiaries
KOITO and its group companies will acknowledge the
KOITO Group Corporate Behavior Charter and develop asystem for ensuring and administering the appropriate execution of business duties as follows.
ａ.KOITO clariﬁes matters to be reported in the Subsidiary
Company Management Regulations and other regulations and improves repor ting sys tem. Al so, KOITO
requests regular business reports to the group companies.
ｂ.KOITO comprehensively and thoroughly manages risks ofthe entire group based on the Subsidiary Company Management Regulation and other regulations.
If actions of the group companies are insufﬁcient, KOITO
provides instructions and corrective actions.
ｃ.KOITO requests its group companies to develop andimprove regulations, organizations, and systems for regular meetings of the Board of Directors and the executionof duties by the Directors.
Ofﬁcers serve in multiple posts in important group companies.

58

Business Overview

KOITO INTEGRATED REPORT 2022

ｄ. KOITO ensures that group companies stay in compliancewith laws and regulations based on the KOITO Group
Corporate Behavior Charter and other regulations. Also,
KOITOʼs Management Depar tment and Internal Audit
Department conduct audit and ﬁnancial audit of groupcompanies.
KOITO also clariﬁes matters requiring approvals in theSubsidiary Company Management Regulations and otherregulations so that the applicable business operations areto be executed upon approval by KOITO.
6. Matters pertaining to the status of certain employees, independence from Directors, and the effectiveness of instruction in the event the Audit and Supervisory Board Members
request such employees to assist in the execution of theirdutiesAn Audit and Supervisory Board Membersʼ Ofﬁce will beestablished to help the Audit and Supervisory Board Members execute their duties under the instructions and ordersof the Audit and Supervisory Board Members and the Audit
and Supervisory Board.
Moreover, assignment of personnel to the Audit andSupervisory Board Membersʼ Ofﬁce shall be decided upon
approval by the Audit and Super visor y Board to ensure
independence from the Directors.
7. System for Directors and employees of KOITO and its subsidiaries to repor t to the Audit and Super visor y Board
Members and for preventing unfair treatment of the Directors and employees for reporting to the Audit and Supervisory Board Members
Directors, Corporate Ofﬁcers, and employees of KOITO andits group companies shall report to the Audit and Supervisory Board Members when they learn of matters of material
impact on the Company, serious violations of laws, regulations, and the Companyʼs Ar ticles of Incorporation, andother issues of compliance.
Moreover, each Audit and Supervisory Board Member
shall exercise their own discretion in reporting the ﬁndings
from such repor ts to the Audit and Super visor y Board.
Meanwhile, the Companyʼs organization and systems will
be developed and enhanced to rigorously prevent the unfair
treatment of the Directors, the Corporate Ofﬁcers, and theemployees for reporting to the Audit and Supervisory Board
Members.
8. Policy on expenses arising when the Audit and Supervisory
B o ar d M e mb e r s e xe cu t e t he ir du tie s and s y s t e m f or
enabling the Audit and Supervisory Board Members to conduct effective audits
The Company will pay all necessary expenses involved in
the Audit and Supervisory Board Membersʼ execution of
their duties.
The Audit and Supervisory Board Member will monitor
and audit the execution of business duties at the Company
by means that include attending the Board of Directors, theManaging Committee, the Compliance Committees andother relevant conferences and committees, and examining
important documents.
The Audit and Supervisory Board Members will exchange
opinions periodically or as needed with Directors, Corporate Of ﬁcers, ﬁnancial auditors, and the Internal Audit
Department, among others.

●Basic Standards and Policy for Classiﬁcation of Investment SharesWith respect to the classiﬁcation of investment shares held for pure investment purposes and otherwise, KOITO
designates shares held solely for the purpose of receiving proﬁts from changes in the value of shares or dividends onshares as investment shares for pure investment purposes, and as other shares for investment shares held for purposes
other than pure investment.

●Basic Policy for Voting Rights
The exercise of voting rights is not based on a uniform standard, but rather is based on the perspective of whether it willlead to sustainable corporate growth and enhancement of corporate value over the medium- to long-term.
■Number of brands and amount posted in balance sheet

Unlisted shares

Other shares

Amount posted inbalance sheet(March 31, 2021)

Brands for which we
increased ourshares in FY 2022

Brands for which we
decreased ourshares in FY 2022

Amount posted inbalance sheet(March 31, 2022)

16 brandsーー

16 brands¥ 2,104 millionーー¥ 2,102 million

49 brands

1 brand

11 brands

43 brands¥ 22,987 million¥ 5,787 million¥ 1,606 million¥ 29,214 million*Stocks whose number of shares ﬂuctuated due to the consolidation of shares, stock splits, stock transfers, stock exchanges, mergers, and otherorganizational reorganizations are not included.

KOITO INTEGRATED REPORT 2022 59

Value Creation Story

Business Overview

ESG Activities

Corporate Information

Compliance
KOITO aims to continue being a company that is trusted by all stakeholders and declares in the KOITO Group Corporate
Behavior Charter that “we will comply with all applicable laws and regulations and will engage in fair, transparent, andfree market competition, as well as proper trade, and responsible procurement,” and “in our global corporate activities,
we will also comply with international rules and local laws, respect local culture and customs, and maintain soundrelationships with government and government agencies.” KOITO has identiﬁed reinforcement of “compliance” as one ofour materiality. To foster an organization and atmosphere to place importance on compliance, the entire KOITO Group iscommitted to engage in compliance activities.

Compliance Management Structure
To strengthen our compliance system, KOITO has established the Compliance Committee, Compliance Promotion Ofﬁce,
Internal Audit Ofﬁce, and whistle-blowing desk (Corporate Ethics Consulting Desk). The Compliance Committee meetsregularly to conﬁrm and follow up on the action plans and results of the Compliance Promotion Ofﬁce and the Internal
Audit Ofﬁce, the operational status of the Corporate Ethics Consulting Desk, and responses to risks.
Personnel in charge of compliance are also appointed at the domestic and overseas subsidiaries to strengthen
compliance and grasp the compliance status in close collaboration. In this way, KOITO promotes compliance-related
initiatives in the entire Group.

●Anti-corruption Initiatives●Prevention of Anti-competitive Practices

Through establishing the “Antimonopoly Act
Regulations” and implementing internal education
periodically, KOITO is working to prevent corruption, suchas bribery, extortion, fraud, embezzlement, money
laundering, conﬂicts of interest, illegal ﬁnancing topolitical parties and facilitation payments.
The penalties imposed in the event of violations of laws
are stipulated in our internal regulations.
Nobody in the Group was ﬁned or dismissed forcorruption in FY 2022.

Through establishing the “Antimonopoly Act
Regulations” and implementing internal education,
KOITO is working to prevent anti-competitive practices,such as market division, price-ﬁxing, abuse of dominantposition and dumping.
When KOITO employees come into contact withcompetitors, we conduct ex-ante and ex-post reviews toensure that they do not engage in conduct that may
violate the Antimonopoly Act.
With the attendance of Audit and Supervisory Board
Members, the Internal Audit Department conducts annual
audit to departments concerned with the Antimonopoly
Act and Subcontract Act, and the ﬁndings are reported to
the Compliance Committee. If any problems were foundduring the audit, the details of the improvement are also
reported to the Committee.
The penalties imposed in the event of violations of laws
are stipulated in our internal regulations.
Nobody in the Group was ﬁned or dismissed foranti-competitive practices in FY 2022.

Reinforcement of Compliance●Fostering Compliance Awareness
KOITO strives to foster employee awareness of compliance by distributing a portable “Ethics Card”
to all employees so that the KOITO Group Corporate Behavior Charter can be a behavior standard
for employees. We also conduct an annual Corporate Ethics Survey for all employees to gauge thelevel of awareness, understanding, and implementation of the KOITO Group Corporate Behavior
Charter. Results of the survey are reported to the Board of Directors and Compliance Committee.
According to the results of the FY 2022 survey, awareness of the KOITO Group Corporate Behavior
Charter was 97%, and employeeʼs ratio who “act to gain customersʼ satisfaction and trust,” “comply
with relevant laws and internal rules,” and “respect human rights” all accounted for 100%,
maintaining a high level of awareness, understanding and implementation.

●Compliance Education●Prevention of Harassment

KOITO provides compliance education in the job-rankbased and theme-based training in various ﬁelds, such as
the Antimonopoly Act, the Subcontract Act, andharassment for employees. Compliance training byoutside instructors is also provided to Directors,
Corporate Ofﬁcers, Deputies and Managers.
In addition, KOITO also provides compliance education
to suppliers. We are asking suppliers to ensure complianceat the annual procurement policy brieﬁng session.

KOITO regularly conducts harassment surveys for all
employees. In the survey, subordinates evaluate thebehavior of supervisors (managers such as department
managers and section chiefs, as well as management
supervisors such as subsection chiefs) in the workplace.
Supervisors assess the differences between theirperceptions and evaluation results, and work to prevent
harassment by formulating and posting “My Pledge to
Eliminate Harassment.”

Strengthening Compliance in the Supply Chain
In order to further strengthen our fair procurement activities, KOITO periodically holds “Compliance training session” foremployees of relevant administrative divisions and business partners (subcontractors and others). In FY 2022, a total of
314 people participated in this training, and we are working to improve their knowledge of procurement activities.

Whistle-blowing System
KOITO has established “corporate ethics consulting
desks” inside and outside the company which allows
employees to report or consult on compliance andharassment issues. After investigating all cases reported
or consulted, we are taking appropriate measures andreport them to the Board of Directors and the Compliance
Committee.
When operating the Corporate Ethics Consultation
Desk, we take thorough care of human rights, such asprotecting the privacy of whistle-blowers and consultants
and preventing disadvantages, so that users can reportand consult with peace of mind. The penalties for
disadvantageous treatment of whistleblowers are clearlystipulated in our internal regulations.

■Number of consultations received(cases)50

KOITO INTEGRATED REPORT 2022

4

1

42

40
3

36

30

32
1

20

25

22

10

0

60

■Inside consultation desk
■Outside consultation desk

2018

2019

2020

2021

2022

(FY)

KOITO INTEGRATED REPORT 2022 61

Value Creation Story

ESG Activities

Corporate Information

Risk Management

Information Security

KOITO enriches and reinforces comprehensive risk management to properly identify diversifying and complex risks,prevent risks from becoming materialized, and minimize damage in case problem occurs.
Departments are assigned to risk management, including the implementation of measures to reduce and avoid risks anddaily management. The Quality Assurance Department is assigned risks associated with the safety of products, theProcurement Headquarters handles risks in the supply chain, and the Safety Environment Department handles risks ofnatural disasters. As such, each department assess relevant risks and implement preventive measures. Ofﬁcers of assigned
responsible departments act as the general managers. In addition, training on individual risks is provided to employees.
If risks become actual problems, the basic protocol is to report the incidents to the Board of Directors, the highest
decision-making entity of the business administration, and such problems are swiftly and properly handled under the
direction of the top administrators.

KOITO has identiﬁed “information security” as one of our materiality, and ensuring the protection of personal
information and conﬁdential information based on the Information Security Policy while implementing proper
information security measures to materialize safe and thorough management.
We have established a cyber security system that can detect the latest viruses and abnormal conditions at all sites,
including domestic and overseas afﬁliates. At the same time, we have established CSIRT (specialized team that deals withinformation security issues) at each site to ensure an immediate response in the event of an emergency.

recognizes that the appropriate management of

Based on our basic policy “to prioritize human lives and maintain business
continuity,” KOITO examines disaster control, initial response, andrestoration work to ﬁnd problems and re-evaluate and reinforce BCP
activities based on lessons learned through natural disasters such as theGreat East Japan Earthquake, Kumamoto Earthquake, heavy rains,
typhoons, and expected damage caused by the Nankai Trough Earthquake.
To control damage from natural disasters, such as earthquakes, KOITO
implements aseismic reinforcement of production site buildings, anti-fallmeasures for facilities and equipment, installation of emergency
earthquake notiﬁcation systems, regular disaster drills including
evacuation and ﬁreﬁghting, all-employee safety conﬁrmation drills, andgeneral inspections of the maintenance and management of evacuationroutes. KOITO also intends to minimize the damage caused by disasters by
hosting lectures on how to check hazard maps and evacuation.
To prevent ﬁre, KOITO makes efforts to reinforce the system to ensure
quick extinguishing through thorough management of hazardous materials
and combustibles, such as organic solvents, increased installation andrearrangement of ﬁre extinguishing equipment to prepare for ﬁre, andimplementation of initial ﬁreﬁghting training.
In addition, on-site inspections on safety, ﬁre, and disaster prevention arebeing conducted at subsidiaries and suppliers. Subsidiaries in Japan are
also mutually inspecting and improving each otherʼs production sites in
Subsidiaries Mutual Safety Inspections to improve the safety, ﬁre, anddisaster prevention level in the entire Group and the supply chain.

information is a critical management issue, and has
formulated an “Information Security Policy” to gain thetrust of customers and society at all times.
KOITO intends, from now on, to comply with thisInformation Security Policy, maintaining and improving
information security by protecting information assets
from various threats and handling information
appropriately.

systemKOITO has appointed a Chief Information Security Ofﬁcer■ Fireﬁghting training using ﬁre hydrant

reviewed and improved regularly. With this CISO andmanagement system, KOITO makes every possible effort
to protect all information assets held by us and comply
with laws, regulations, and other rules related to
information security.
2. Development of internal information security-related
rules
KOITO develops internal rules based on our Information■ Online disaster control seminar by Regional
Management Center of Central Shizuoka

Security Policy to have a clear policy for the handling of
not only personal information but also all otherinformation assets, and makes all employees and business
partners fully aware of KOITOʼs strict measures against
information leaks etc.
3. Implementation of appropriate information security

The KOITO Group monitors computers and networks of
the Group as a whole, including its domestic and overseas
afﬁliates, and is building CSIRT (Computer Security
Incident Response Team), capable of responding
immediately to any cyber-attacks or abnormal conditions
on a global basis.
KOITOʼs information security is managed by the
Information System Department, along with General
Affairs Department and Compliance Promotion Ofﬁce.
Furthermore, each department periodically checks for
information security risks and implements a PDCA cycle
to continuously improve security.

・Formulating rules for domestic and overseas business trips,
and implementing measures to prevent infectious diseases
・Introducing online meetings
・Measuring outside visitorsʼ temperature and requesting them tohand sanitizing and wearing mask.

Information Security Management System
In order to protect information assets from the risk ofleaks, theft, alternation, etc., the KOITO Group operates
information security management based on management
standards for the conﬁdentiality, integrity, andavailability of information. In particular, major functional
divisions are assuring information security and promoting
the improvement of security reliability. Divisions fordesign, development, sales, purchasing and quality
management of automotive lighting equipment andothers have acquired ISO 27001, an international
standard for information security.
The KOITO Group will continue to strive to further
maintain and improve information security by improving
our information security management system throughcontinuous PDCA cycle and by expanding the scope of
certiﬁcation within the Group.

measures
KOITO implements organizational, physical,
technological, and personal security management
measures so that information assets of KOITO are notsubjected to unauthorized access, destruction, leakage, oralteration. These measures shall be adjusted and adapted

・Hygiene in prevention (wearing masks and hand sanitizing)・Periodically disinfecting areas where an unspeciﬁed number of people touch, such as doors, switches, etc.
・Installing partitions in ofﬁces, meeting rooms, and dining halls
・Implementing staggered eating
・Avoiding three Cs (closed spaces, crowded places, and close-contact settings) in daily life and implementing “new normal”
・Actions in line with the measures requested by the prefectural governments to prevent infectious diseases

KOITO INTEGRATED REPORT 2022

management system that enables prompt implementation
the society at all times. This management system shall be●Major countermeasures against infections

・Restricting employees to use public
transportation for commuting regarding theinfection status at our site location
・Introducing teleworking in administrative andindirect departments
・Measuring employeesʼ temperature whenentering the ofﬁce etc.

(CISO) and established an information securityof security information measures, to gain the trust from

Putting the highest priority on the safety of customers, business partners, employees and their families, the KOITO Grouphas implemented various measures based on requests from the government and local governments for the purposes of
preventing the spread of COVID-19 infections. We will continue to utilize telework and online meetings to reduce the riskof infections and to promote smooth operations and improve efﬁciency.

●Business travels and meetings

Organization for Information Security Activities

1. Establishment of information security management

KOITOʼs Response to the Spread of COVID-19 Infections●Commuting

Information Security Policy
KOITO MANUFACTURING CO., LTD. (“KOITO”)

Natural Disaster Risks

62

Business Overview

to changes when technological and social needs arise.
4. Implementation of internal information security audits
KOITO regularly conducts internal information security
audits to verify that security measures are functioning
effectively in the course of business operations, inaccordance with relevant laws and internal regulations andrules.
5. Enhancement of information security literacy
KOITO provides thorough security education/training toemployees etc. so that all people dealing with our
information assets perform their duties with information
security literacy. KOITO also continues to provide its
employees with education/training to respond to

Information Security Measures
To strengthen information security measures against
cyberattacks, KOITO has established internal regulations
based on its Information Security Policy and is
implementing various cyber security measures, including
the establishment of a Group-wide monitoring system
and an incident response system. We are seeking to build
a strategic information management system that not only
appropriately manages conﬁdential and personal
information, but also manages and utilizes intellectual
property and other intangible assets.
In addition, KOITO periodically conducts internal andexternal intrusion tests by external specialist agencies tothoroughly inspect and conﬁrm security vulnerabilities
and strive to improve information security.

ever-changing circumstances.

KOITO INTEGRATED REPORT 2022 63

Value Creation Story

Fostering Awareness of Information Security

Business Overview

ESG Activities

Corporate Information

Tax Policy

To prevent information security incidents, KOITO strives to foster awareness within the company by holding annual
information security training sessions for all employees.
In addition, targeted email drills are conducted once a year for all employees. The results are reported to Managing
Committee and IT Meetings, and necessary measures are taken.
Moreover, KOITO periodically provides information on information security to all employees via email, introducing
examples of information security, precautions for teleworkers and alert anticipated targeted email attacks.
To our suppliers, we are asking them to implement information security-related measures, and conducting necessary
assessments and improvements using checklists and other means.

The KOITO Group recognizes the importance of paying appropriate taxes and promotes sound tax activities inaccordance with the tax laws and policies of each country and region while striving to build the proper tax governancesystem.

Tax Policy
1.Tax Compliance
KOITO MANUFACTURING CO., LTD. (“KOITO”) and its subsidiaries (“the KOITO Group”) comply with tax codes
as well as relevant laws and regulations, ﬁle the proper tax returns and pay taxes in each country and region

Intellectual Property Management

where we conduct businesses.

The KOITO Group places intellectual properties as the source of international competitiveness and develops businessstrategies by integrating R&D and intellectual property strategies. KOITO will continue to encourage activities to create
intellectual properties and work to protect and utilize the intellectual property rights appropriately. At the same time, wewill respect the intellectual property rights of others and strive to prevent infringements.

64

The KOITO Group strives to properly comply with the tax laws, systems and administrative operations in each country
with the cooperation between Group companies in an effort to minimize tax risks.
from each Group company.

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

R&D expenditures (billion yen)

36.1

34.0

36.1

32.6

34.0

Number of patents applied

800

1,230

1,130

938

867

2,630

2,890

2,830

2,813

2,900

Organization for Intellectual Property
Management

Measures to Prevent Violation ofIntellectual Property

The KOITO Group makes effort to reinforce theintellectual property management system of the entire
Group to acquire intellectual property rights, conclude
licensing contracts, and respond to the violation of rights
globally by developing a management system with
KOITO MANUFACTURING at the center to establish andexecute intellectual property strategy integrated withbusiness strategies.

Given the importance of intellectual properties, the
KOITO Group provides training on intellectual property
rights through the job-rank based education to increase
the awareness of every employee.
In addition, KOITO has introduced a patent researchsystem available to all researchers and designers to avoid
violating intellectual property rights of others andpreventing future conﬂicts.

KOITO INTEGRATED REPORT 2022

2.Tax Governance System

The tax risks of the KOITO Group are managed under the discretion of the Chief Financial Ofﬁcer according to reports■R&D expenditures and number of patents

Number of patents held

The KOITO Group does not engage in tax avoidance using tax havens, or use tax planning that does not coincidewith business conditions.

In addition, the KOITO Group will seek the advice and guidance of external experts for any complex risks or grave
matters of concern to respond after investigation, evaluation and deliberation.

3.Transfer Pricing
The KOITO Group will adhere to armʼs length transaction principles with understand of the OECD Transfer Pricing
Guidelines and domestic tax Base Erosion and Proﬁt Shifting (BEPS) to set the price of transactions between Group
companies.
In addition, the KOITO Group will seek the advice and guidance of external experts as necessary to reduce the tax
risks related to transfer pricing.

4.Elimination of Dual Taxation
The KOITO Group applies tax treaties to eliminate dual taxation on the same economic proﬁts from multiple countries
and regions.

5.Relationship with Tax Authorities
The KOITO Group properly responds to any inquiries and requests for information from the tax authorities in eachcountry and region where it does business with good faith and in a timely manner in an effort to build and maintain
good relationships founded in trust with tax authorities.
If any question arises between the KOITO Group and tax authorities about tax practices, the understanding of tax
codes or other tax-related matters, the KOITO Group will work together with each tax authority to resolve the matter inquestion.

KOITO INTEGRATED REPORT 2022 65

Value Creation Story

Business Overview

ESG Activities

Corporate Information

Executive Management (as of June 29, 2022)
Chairman and CEO

President and COO

Outside Director

Masahiro Otake

Michiaki Kato

Haruya Uehara

Kingo Sakurai

April
June
June
June
June
June
June

April 1982 Joined KOITO
October 2004 General Manager ofEuro-American Operations
June 2005 Director
June 2011 Managing Director
June 2012 Managing Corporate Ofﬁcer
June 2013 Director and Managing
Corporate Ofﬁcer
June 2017 Senior Managing Director
June 2021 President (present position)

April 1969 Joined The Mitsubishi Trustand Banking Corporation (currently Mitsubishi UFJ Trus t
and Banking Corporation)
June 1996 Director
June 1998 Managing Director
June 2001 Senior Managing Director
June 2002 Director, Deputy President
April 2004 President
October 2005 P r e s i d e n t , M i t s u b i s hi UFJ
Trust and Banking Corporation
June 2008 Chairman
April 2012 Senior Adviser
June 2013 O u t s i d e D ir e c t o r, KOI T O(present position)
J u l y 2018 Senior Advisor, Mit subishi
UFJ Trust and Banking Corporation (present position)

March 1972 Registered as certiﬁed public
accountant
June 1983 Independent Auditor, KOITO
June 2009 Resigned Independent AuditorJ u l y 2009 Adviser (part time), KOITO
June 2017 Out side Dire c tor (pres ent
position)

1977 Joined KOITO
1987 Director
1993 Managing Director
1999 Senior Managing Director
2005 Executive Vice President
2007 President
2015 Chairman (present position)

Reason for appointment：

Reason for appointment：

Mr. Masahiro Otake has acquired extensive experience and a high level of
insight through previously serving as President. He has also been involved
with KOITOʼs management as a Director, and has contributed signiﬁcantly tothe improvement of KOITOʼs performance and corporate value.

Mr. Michiaki Kato has acquired extensive experience and a high level of insight
through serving as President and in other positions. He has also been involved
with KOITOʼs management as a Director, and has contributed signiﬁcantly tothe improvement of KOITOʼs performance and corporate value.

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)
Reason for appointment：

Executive Vice President

Executive Vice President

Kenji Arima

Masami Uchiyama

April 1977 Joined KOITO
January 2005 Direc tor, Koito Europe NV(KENV)
June 2005 Director, KOITO
June 2011 Managing Director
June 2012 D i r e c t o r a n d M a n a g i n g
Corporate Ofﬁcer
June 2013 Senior Managing Director
June 2019 E x e c u t i v e V i c e P r e s i d e n t(present position)
Engineering Headquar ters,
Sales Headquarters, In chargeof Mobility Strategy Department, Research & Development D ep ar tment and DX
Promotion (present position)

Reason for appointment：

Reason for appointment：

April 1983 Joined KOITO
June 2005 General Manager of Personnel Department
June 2007 Director
June 2011 Managing Director
June 2012 D i r e c t o r a n d M a n a g i n g
Corporate Ofﬁcer
June 2017 Senior Managing Director
June 2021 E x e c u t i v e V i c e P r e s i d e n t(present position)
Produc tion Headquar ter s ,Shizuoka Plant, In charge of
S hi z u o k a G e n e r al A f f a ir s
Depar tment, Logistics
Department, Safety Environment Depar tment, Production Contr ol D ep ar tment ,Electronics Products Production D epar tment and CN
Promotion (present position)

Since joining KOITO, Mr. Kenji Arima has acquired extensive experience and ahigh level of insight through serving as Head of Engineering Headquarters,
Sales Headquar ters and in other positions. He has also been involved with
KOITOʼs management as a Director, and has contributed signiﬁcantly to theimprovement of KOITOʼs performance and corporate value.

Since joining KOITO, Mr. Masami Uchiyama has acquired extensive experiencea n d a hi g h l e v e l o f in si g h t t hr o u g h s e r v in g a s H e a d o f P r o du c t i o n
Headquarters and in other positions. He has also been involved with KOITOʼsmana g em e n t a s a Dir e c t or, and ha s co n tr ibu t e d sig ni ﬁ c an tly t o t h eimprovement of KOITOʼs performance and corporate value.

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)

Number of the Board of
Directors attended (FY 2022)

66

Katsuyuki Kusakawa

April 1987 Joined KOITO
April 2006 General Manager of Accounting Department
June 2009 Director
June 2012 Corporate Ofﬁcer
June 2013 Managing Corporate Ofﬁcer
June 2015 D i r e c t o r a n d M a n a g i n g
Corporate Ofﬁcer
June 2017 S enior Managing Dir e c tor(present position)
Finance & Accounting Headquarters, Procurement Headquarters (present position)

Reason for appointment：

Reason for appointment：

April 1980 Joined Toyota Motor Co., Ltd.
(c u r r e n t l y To y o t a M o t o r
Corporation)
January 2009 Seconded to Toyota Motor
Sales, U.S.A., Inc.
March 2011 Standing Adviser, KOITO
June 2011 Managing Director
June 2012 D i r e c t o r a n d M a n a g i n g
Corporate Ofﬁcer
June 2019 S enior Managing Dir e c tor(present position)
In charge of Corporate Planning Depar tment , Compliance Department, Personnel
Depar tment, Cost Administration Depar tment and DX
Promotion (present position)

Since joining KOITO, Mr. Hideharu Konagaya has acquired extensive experienceand a high level of insight through serving as Head of Finance & Accounting
Headquarters, Procurement Headquarters and in other positions. He has also
been involved with KOITOʼs management as a Director, and has contributed
signiﬁcantly to the improvement of KOITOʼs performance and corporate value.

Since joining KOITO, Mr. Kat suyuki Kusakawa has acquired ex tensive
experience and a high level of insight through ser ving as Deputy Head ofEngineering Headquarters and in other positions. He has also been involved
with KOITOʼs management as a Director, and has contributed signiﬁcantly tothe improvement of KOITOʼs performance and corporate value.

KOITO INTEGRATED REPORT 2022

12/12 (100%)

Number of the Board of
Directors attended (FY 2022)

11/12 (92%)

Outside Director

Chika Igarashi
April 1997 Registered as an attorney
Joined a law ﬁrm in TokyoJ u l y 2006 Jo in e d A s a hi L a w O f ﬁ c e s(c ur r e n tl y Nis himur a &Asahi) (present position)
June 2007 Registered as an attorney atlaw in New York State
June 2022 O u t s i d e D ir e c t o r, KOI T O(present position)
Reason for appointment：
Ms. Chika Igarashi is an attorney so that her knowledge and experience may
be re ﬂec ted in KOITOʼs management and she may fulﬁll a super visor yfunction from this perspective.

Senior Managing Director

Senior Managing Director

12/12 (100%)

Number of the Board of
Directors attended (FY 2022)

Reason for appointment：
Mr. Kingo Sakurai is a certiﬁed public accountant, so that his knowledge andexperience may be reﬂected in KOITOʼs management and he may fulﬁll asupervisory function from this perspective.

11/12 (92%)

Hideharu Konagaya

Number of the Board of
Directors attended (FY 2022)

Mr. Haruya Uehara ser ves as Senior Advisor to Mitsubishi UFJ Trust andBanking Corporation, so that his knowledge and experience may be reﬂectedin KOITOʼs management and he may fulﬁll a supervisory function from thisperspective.

Outside Director

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)

KOITO INTEGRATED REPORT 2022 67

Executive Management (as of June 29, 2022)

Reason for appointment：

Standing Audit and Supervisory Board Member

Standing Audit and Supervisory Board Member

Mitsuo Kikuchi

Koichi Sakakibara

April 1968 Joined KOITO
April 1995 General Manager, Production
Control Department
June 1999 Director
June 2005 Managing Director
June 2006 Senior Managing Director
June 2009 Executive Vice President
June 2013 Standing Audit and Supervisory Board Member (present
position)

April 1975 Joined KOITO
June 1999 General Manager of ProductDevelopment Department
June 2001 Director
June 2007 Managing Director
June 2009 Senior Managing Director
June 2013 Executive Vice President
June 2021 Standing Audit and Supervisory Board Member (present
position)

Since joining KOITO, Mr. Mitsuo Kikuchi has acquired extensive experienceand a high level of insight through serving as Head of Sales Headquar ters,
Deputy Head of Production Headquarters and in other positions. He has also
been involved with KOITOʼs management as a Director, so that his knowledge
and experience may be reﬂected to strengthen KOITOʼs auditing activities.

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)

Number of Audit and Supervisory
Board attended (FY 2022)

8/8 (100%)

Number of Audit and Supervisory
Board attended (FY 2022)

6/6 (100%)

Outside Audit and Supervisory Board Member

Outside Audit and Supervisory Board Member

Yukinobu Suzuki

Hiroshi Kimeda

April 1965 Joined Sendai Regional Taxation Bureau
J u l y 1990 A s sis t a n t D ir e c t o r, L ar g e
Enterprise Examination Division, Large Enterprise Examination and Criminal Investigation Department, National
Tax Agency
J u l y 1995 D e p u t y D is t r i c t D ir e c t o r,
Hachioji Tax Ofﬁce
December 1995 A c quir e d qu al i ﬁ c a t i o n a s
certiﬁed tax accountant
J u l y 2005 Director-General, Takamatsu
National Tax Tribunal
J u l y 2009 Adviser (part time), KOITO
January 2010 Audit and Supervisory Board
M e mb e r, Koi t o Insur an c e
Ser vices Co. , Ltd. (present
position)
June 2016 Outside Audit and Supervisor y B o ar d M e mb e r, KOITO(present position)

Reason for appointment：

Reason for appointment：

April 1993 P ub l i c P r o s e c u t o r, To k y oDistric t Public Prosecutors
Ofﬁce
April 1997 Public Prose cutor, Spe cial
Inves tigation Depar tment ,Tokyo District Public Prosecutors Ofﬁce
August 1998 Visiting scholar, Notre Dame
Law School in U.S.A.
June 1999 Public Prosecutor, Criminal
Af fairs Bureau, Minis tr y ofJustice
June 2001 Assistant Division Chief, Planning and L e gal Division ,Financial Services Agency
August 2002 Re gis ter e d as an a t tor ney
Joined Nishimura & Partners(c ur r e n tl y Nis himur a &Asahi) (present position)
December 2011 Out side Direc tor, Advance
Create Co. , Ltd. (present
position)January 2019 Outside Audit and Supervisor y B o ar d M e mb e r, KOITO(present position)

Mr. Yukinobu Suzuki is a certiﬁed tax accountant, so that his knowledge andexperience may be reﬂected to strengthen KOITOʼs auditing activities.

Mr. Hiroshi Kimeda is an attorney, so that his knowledge and experience may
be reﬂected to strengthen KOITOʼs auditing activities.

Number of the Board of
Directors attended (FY 2022)

12/12 (100%)

Number of the Board of
Directors attended (FY 2022)

11/12 (92%)

Number of Audit and Supervisory
Board attended (FY 2022)

8/8 (100%)

Number of Audit and Supervisory
Board attended (FY 2022)

8/8 (100%)

Senior Managing
Corporate Ofﬁcer

Managing
Corporate Ofﬁcer

Corporate Ofﬁcer

Jun Toyota

Hideo Yamamoto

Koichi Toyoda

Kohei Yamasaki

Takayuki Katsuda

Mamoru Murakoshi

Kirk Gadberry

Atsushi Inoue

Masahiro Otake

Kazuhiro Aoshima

Masatoshi Yoneyama

Yuji Higashi

Masayasu Ito

Toshiyuki Katsumata

Hideki Ochiai

Masayuki Otake

Kakuya Yamamoto

Masataka Choji

Koji Shimakura

Eisuke Shibata
Takahito Otake

68

Reason for appointment：

Since joining KOITO, Mr. Koichi Sakakibara has acquired extensive experiencea n d a hi g h l e v e l o f in si g h t t hr o u g h s e r v in g a s H e a d o f P r o du c t i o n
Headquarters and in other positions. He has also been involved with KOITOʼsmanagement as a Director, so that his knowledge and experience may bereﬂected to strengthen KOITOʼs auditing activities.

KOITO INTEGRATED REPORT 2022