These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, theoriginals shall prevail. The Company assumes no responsibility for this translation or for direct,
indirect or any other forms of damages arising from the translations.

(Securities Code: 7012)
June 3, 2022
Dear Shareholders:
Yasuhiko Hashimoto
Director, President and Chief
Executive Officer
Kawasaki Heavy Industries, Ltd.
1-1 Higashikawasaki-cho 3-chome,
Chuo-ku, Kobe
(Registered Office)
1-3 Higashikawasaki-cho 1-chome,
Chuo-ku, Kobe

NOTICE OF
THE 199th ORDINARY GENERAL MEETING OF SHAREHOLDERS
We would like to inform you that we will hold the 199th Ordinary General Meeting of
Shareholders of Kawasaki Heavy Industries, Ltd. (the “Company” or “KHI”) as described
below.
In addition, for this General Meeting of Shareholders, we will provide live streaming, ondemand streaming, and acceptance of questions in advance via the Internet andsmartphones, etc. We encourage you to use these options, particularly from theperspective of preventing the spread of and as a precaution against COVID-19.
Regarding the exercise of voting rights mentioned above, we kindly ask you to review
the “Reference Documents for the General Meeting of Shareholders” describedhereinafter, and exercise your voting rights by 5:00 p.m. on Thursday, June 23, 2022
(JST).

–1–

1. Date and Time:
2. Place:

Friday, June 24, 2022 at 10:00 a.m. (JST) (Door opens at
9:00 a.m.)
Kokusai Hall at The Kobe International House
1-6 Gokoudori 8-chome, Chuo-ku, Kobe

3. Meeting Agenda:
Matters to be reported:
1. The Business Report, Consolidated Financial Statements for the Company’s 199th
Fiscal Year (from April 1, 2021 to March 31, 2022) and results of audits of theConsolidated Financial Statements by the Accounting Auditor and the Audit andSupervisory Committee
2. Non-Consolidated Financial Statements for the Company’s 199th Fiscal Year(from April 1, 2021 to March 31, 2022)
Matters to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Partial Amendments to the Articles of Incorporation
Proposal No. 3: Election of Seven Directors (except Directors Serving as Audit
and Supervisory Committee Members)
Proposal No. 4: Election of Five Directors Serving as Audit and Supervisory
Committee Members
Proposal No. 5: Election of One Substitute Director serving as Audit andSupervisory Committee Member(Please refer to the “Reference Documents for the General Meeting of
Shareholders” hereinafter for information on each of the proposals.)–2–

4. Other matters regarding the General Meeting of Shareholders:(1) Concerning web disclosure
Among the documents to be submitted when sending the Notice, “Company Share
Options” and “System to ensure that Directors’ execution of duties complies with laws
and regulations and the Articles of Incorporation, other systems to ensure proper
execution of business and overview of operation status of such systems” in theBusiness Report, “Consolidated Statement of Changes in Net Assets” “Notes to theConsolidated Financial Statements” and “Non-consolidated Statement of Changes in
Net Assets” “Notes to the Non-consolidated Financial Statements” are posted on the
Company’s Website pursuant to laws and regulations as well as Article 16 of theCompany’s Articles of Incorporation, and they are not included in the Appendix
regarding matters to be reported. “Consolidated Statement of Changes in Net Assets”“Notes to the Consolidated Financial Statements” “Non-consolidated Statement of
Changes in Net Assets” and “Notes to the Non-consolidated Financial Statements”
have been combined with the Consolidated Financial Statements and the NonConsolidated Financial Statements for the auditing process when preparing the resultsof audits by the Audit and Supervisory Committee and the Accounting Auditor.
(2) Concerning amendments on the web
Any amendments to the Business Report, the Consolidated Financial Statements, theNon-Consolidated Financial Statements and the Reference Documents for the General
Meeting of Shareholders, will be posted on the Company’s Website.
(3) Concerning entrance of persons other than shareholders
Please note that persons other than shareholders who are able to exercise voting
rights, including representatives and their companions who are not shareholders, are
not permitted to enter the venue.
(4) Concerning photography, video and audio recording inside the General Meeting of
Shareholders
Photography, video and audio recording inside the General Meeting of Shareholders
is prohibited. We appreciate your cooperation.
(5) Concerning proceedings on the day of the General Meeting of Shareholders
Please note that the proceedings on the day of the General Meeting of Shareholders
will be conducted in the Japanese language. Please kindly accept that we will not be
preparing any interpreters.
(6) Concerning results of resolutions
For the results of resolutions of the General Meeting of Shareholders, please refer tothe Company’s website (please acknowledge that written notice of resolutions will not
be sent by mail).
The Company’s Website
https://www.khi.co.jp/ir/–3–

Guidance on Exercise of Voting Rights, Etc.
To prevent the spread of COVID-19 infections, we kindly ask you to consider visiting themeeting on the day of the General Meeting of Shareholders, taking much thought tohealth of the shareholders attending the meeting, including yourself, and exercising yourvoting rights for the meeting in advance via the Internet, smartphones or by the enclosed
voting form, as much as possible.
Exercise of Voting Rights in Writing
Please indicate your vote for or against the proposals on the enclosed Voting Rights
Exercise Form, and return it so that it is delivered by the above-mentioned exercise
date.
Exercise of Voting Rights via the Internet, etc.
Please exercise your voting right by logging on to the Internet website(https://www.web54.net) and entering the voting right exercise code and password
stated on the enclosed Voting Rights Exercise Form, and follow the online instructions
to submit your vote.

–4–Scanning QR code
“Smart Vote®”

Entering login ID andpassword

You can simply login to the website
for exercising voting rights without
entering your login ID and password.

Voting website:
https://www.web54.net

1 Please scan the QR code locatedon the right side of the Voting Rights
Exercise Form.

1 Please access the voting website.
2 Enter your “voting right exercisecode” on the Voting Rights Exercise
Form.

* “QR code” is a registeredtrademark
of
DENSO
WAVE
INCORPORATED.

3 Enter your “password” on the
Voting Rights Exercise Form.

2 Indicate your approval ordisapprovalbyfollowingtheinstructions on the screen.
Note that you can exercise yourvote via “Smart Vote®” only once.
If you need to change your vote after

4 Indicate your approval ordisapprovalbyfollowingtheinstructions on the screen.

having exercised your right, please
access the voting website, enter your“votingright

exercise

code”

and

“password” stated on the Voting Rights
Exercise Form to log in, and exercise
your voting right again.
*Please scan the QR code again toaccess the voting website.
Note:
If you duplicate your vote, i.e., if you exercise your voting rights both in writing and via theInternet, etc., we will consider only the vote cast via the Internet, etc. to be valid. Also, if you
vote a number of times, we will consider the final vote to be the valid one.

–5–

Live Streaming
We will provide a live streaming via the Internet to enable the viewing of the General
Meeting of Shareholders from outside the venue.
Please view by accessing the streaming website from the following URL or QR code andentering your ID and password.
1 Date and time of streaming
From 10:00 a.m. to the end time of the General Meeting of Shareholders on Friday,
June 24, 2022
* The streaming page will be available from around 30 minutes before the start

time of the General Meeting of Shareholders (9:30 a.m.).
2 How to watch on the day
Prepare your shareholder ID (= shareholder number) and password (= postal code),which are to be required on the shareholder authentication screen (log-in screen), in
advance before accessing to the following website for live streaming.
*Please make sure to have your shareholder number on hand before sending the
Voting Rights Exercise Form.
Website for live streaming

https://7012.ksoukai.jp

Shareholder“Shareholder number” (nine digits) stated in the Voting Rights▶
Exercise FormID
Password▶

“Postal code” (seven digits, with no hyphen) stated in the Voting
Rights Exercise Form

Instructions for Shareholder Authentication Screen (Log-in Screen)(i) Enter the “shareholder ID (= shareholder number)”(ii) Enter the “password (= postal code)”(iii) Click “Log-in”–6–

3 Points of attention
・ Participation via the live streaming is not deemed as attendance at the General Meeting of

Shareholders under the Companies Act, and you can neither ask questions nor exercise yourvoting rights on the day.
Please exercise your voting rights via the Internet or smartphones or in writing in advance.
・ In consideration of the privacy, etc. of shareholders attending in person, filming of the venue forthe live streaming will be limited to the images on screen and the area around officers’ seats.
However, please note that there may be cases in which shareholders in attendance areunavoidably filmed. We ask for your understanding in advance.
・ Communication charges, etc. for viewing are each shareholder’s responsibility.

Contact for enquiries concerning live streaming
Please contact the following if you have any concerns.
Shareholder ID (shareholder number) and password (postal code)
Sumitomo Mitsui Trust Bank, Ltd.
Dedicated phone line for Virtual General Meeting of Shareholders
Support0120-782-041 (available only in Japan)
Business hours: 9:00 a.m. to 5:00 p.m. on weekdays (JST)Live streaming (Viewing issues, etc.)
V-cube, Inc.
03-4213-4045
Date and time for inquiries: June 24 (the day of the General Meetingof Shareholders) from 9:00 a.m. to the end of the General Meeting of
Shareholders
Acceptance of enquiries in advance・ Please access the dedicated acceptance of questions website from the following
URL or QR code and enter your question.
・We will accept up to two questions related to the matters that are the purpose ofthis General Meeting of Shareholders.

・We plan to select matters that are thought to be of a high level of interest to
shareholders from among the questions, but please understand that we will not
be able to answer individual questions. Of the questions received in advance,
those not covered in the General Meeting of Shareholders will be used for futurereference.
Website for enquiries in advancehttps://7012.ksoukai.jp

Deadline of enquiries in advance▶ 5:00 p.m. on Thursday, June 16, 2022

Streaming following the conclusion of the General Meeting of Shareholders
The following URL or QR code will be available until September 30, 2022 tostream the day of the General Meeting of Shareholders.
The Company’s Website

https://www.khi.co.jp/ir/stocks/shareholders_meeting/–7–

Reference Documents for the General Meeting of Shareholders
Proposals and References

Proposal No. 1: Appropriation of Surplus
The Company considers the improvement of enterprise value, i.e., creating stableprofit that exceeds capital costs over the future, as being a fundamental policy, andreturn of profits to shareholders by enhancing shareholder value over the long term
through continuous, advanced research and development and innovative capital
investment, which is necessary for future growth, as being an importantmanagement issue.
In addition, in order to keep a balance between shareholder value and returning
profits to shareholders through dividends, the Company takes its overall financial
position into consideration, including free cash flow and debt-equity ratio (D/E
ratio) etc., in addition to future earnings trends, and, with stable dividends in mind,
has established 30% as the basis for the medium- to long-term dividend payout
ratio with respect to net income attributable to owners of parent.
The Company’s basic policy is to distribute dividend surplus twice a year as aninterim dividend and a year-end dividend. The Board of Directors determines theamount of the interim dividend and the shareholders determine the year-end
dividend at a General Meeting of Shareholders.
Based on the policy above, the year-end dividend for the 199th term will amount to¥20 per ordinary share of the Company for a total distribution of ¥3,357,637,460.
As a result, annual dividend will be ¥40 per ordinary share of the Company,
including interim dividend (¥20 per ordinary share of the Company).
In addition, the effective date for the dividends from surplus shall be June 27,
2022.
Type of dividend property

Cash

Dividend per share¥20

Total amount of dividend¥3,357,637,460

Effective date of dividends of surplus

June 27, 2022

–8–

Proposal No. 2: Partial Amendments to the Articles of Incorporation
1. Reasons for proposal
Accompanying the revised provisions provided for in the proviso to Article 1 of the
Supplementary Provisions of the Act Partially Amending the Companies Act (Act No.
70 of 2019) are to be enforced on September 1, 2022, the Company proposes to makethe following changes to its Articles of Incorporation of the Company since the systemfor providing informational materials for the general meeting of shareholders inelectronic format will be introduced.
(1) Taking measures for providing information that constitutes the content ofreference documents for the general meeting of shareholders, etc. in electronic
format is obligated to stipulate in the Articles of Incorporation, so paragraph (i)of Article 16 (Measures, etc. for Providing Information in Electronic Format) in
the proposed amendments is established.
(2) Among items for which the measures for providing information that constitutes
the content of reference documents for the general meeting of shareholders,etc. in electronic format will be taken, to enable the Company to restrict thescope to items designated by the Ministry of Justice Order to scope ofstatements in the paper-based documents to be delivered to shareholders whorequested the delivery of paper-based documents, paragraph (ii) of Article 16(Measures, etc. for Providing Information in Electronic Format) in the proposed
amendment will be established.
(3) Once the system for providing informational materials for the general meeting ofshareholders in electronic format is introduced, the provision of Article 16 of thecurrent Articles of Incorporation (Internet Disclosure and Deemed Provision ofReference Documents for the General Meeting of Shareholders, Etc.) will nolonger be required, so they will be deleted.
(4) The Company will also establish supplementary provisions regarding theeffective date of the aforementioned establishment and deletion of provisions.
Furthermore, these supplementary provisions shall be deleted after the date inparagraph (iii) of supplementary provisions has passed.

–9–2. Contents of proposed amendments
The contents of the proposed amendments are as follows.
(Underline indicates amendments.)
Current Articles of Incorporation

Proposed Amendments(Internet Disclosure and Deemed Provision ofReference Documents for the General Meetingof Shareholders, Etc.)
Art. 16: When the Company convenes a
general meeting of shareholders, if it
discloses information that is to bestated or presented in the reference
documents for the general meeting ofshareholders, business report, nonconsolidated financial statements andconsolidated financial statements
through the Internet in accordancewith the provisions prescribed by the
Ministry of Justice Order, it may bedeemed that the Company has
provided
this
information
toshareholders.

(Deleted)(Measures, etc. for Providing Information inElectronic Format)(Newly established)

Art. 16: When the Company convenes a
general meeting of shareholders, it
shall take measures for providing
information that constitutes thecontent of reference documents forthe general meeting of shareholders,etc. in electronic format.
(ii) Among items for which the measuresfor providing information inelectronic format will be taken, theCompany is not required to state allor some of those items designatedby the Ministry of Justice Order fromstatements in the paper-based
documents to be delivered toshareholders who requested thedelivery of paper-based documents
by the record date of voting rights.

(Newly established)(Supplementary Provisions)(Transitional Measures for Providing
Informational Materials for the General
Meeting of Shareholders in Electronic Format)(Newly established)

Art. 1:– 10 –The deletion of the Articles ofIncorporation Article 16 (Internet
Disclosure and Deemed Provision ofReference Documents for the General
Meeting of Shareholders, Etc.) before
amendments and the establishmentof the Articles of Incorporation Article
16 (Measures, etc. for Providing
Information in Electronic Format)
shall be effective from September 1,
2022.

Current Articles of Incorporation

Proposed Amendments(ii) Notwithstanding the preceding
paragraph, the Articles ofIncorporation Article 16 (Internet
Disclosure and Deemed Provision ofReference Documents for the General
Meeting of Shareholders, Etc.) before
amendments shall be valid forgeneral meetings of shareholders tobe held on days up until February 28,
2023.
(iii) The provision in this Article shall bedeleted on the date when six months
have elapsed from September 1,
2022 or three months have elapsed
from the date of the general meetingof shareholders in the preceding
paragraph, whichever is later.

– 11 –

Proposal No. 3:

Election of Seven Directors (except Directors Serving as

Audit and Supervisory Committee Members)
The terms of office for all eight Directors (except Directors serving as Audit andSupervisory Committee Members; the same shall apply hereinafter in this proposal) will
expire at the closing of this General Meeting of Shareholders. We propose to elect seven
Directors due to the change in management structure (reduction in number of Directors
by one) this fiscal year.
Candidates for Directors were nominated by the Board of Directors in accordance with
“Qualifications Expected of Directors,” which is described on page 35. The Company has
obtained a report to the effect that this nomination is appropriate from the Nomination
Advisory Committee, which consists mainly of independent outside officers.
The candidates for Directors are as follows:
No.

Name

Position, Duties, Significant concurrent
positions etc.

Attendance atmeetings of theBoard of Directors

1

Yoshinori Kanehana

Chairman of the Board

13/13

2

Yasuhiko Hashimoto

President and Chief Executive Officer

13/13

3

Katsuya Yamamoto

4

Hiroshi Nakatani

Outside5

Independent

6

Independent

7

OutsideOutsideJenifer Rogers

Senior Corporate Executive Officer,
Assistant to the President, in charge ofFinance, Human Resources, Legal &Compliance, and Corporate
Communication, and General Manager,
Human Resources Division
Senior Corporate Executive Officer,
Assistant to the President, in charge ofTechnology, Manufacturing/Production,
Procurement, TQM, General
Administration, and DX Strategy, incharge of North America ProjectManagement Task Force, and General
Manager, Corporate Technology Division
General Counsel Asia, Asurion Japan
Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.
Outside Director, Seven & i Holdings
Co., Ltd.

13/13

13/13

13/13

Hideo Tsujimura

13/13

Katsuhiko Yoshida

－/－

New
Independent(Notes) 1. There is no special interest relationship between each candidate and the Company.
2. The Company has entered into a Directors and Officers Liability Insurance (D&O Insurance)
contract as provided for in Article 430-3, Paragraph 1 of the Companies Act with aninsurance company. The insurance contract covers damages and court costs that may be
incurred by the insured arising from the insured’s act in connection with the execution of
his or her duties. (However, this excludes damages arising from an act undertaken withthe knowledge that such act was in violation of laws and ordinances). If each candidate
assumes the office as Director, the candidate will be included as an insured in the contract.

– 12 –

The Company plans to renew the insurance policy with the same contents at the next
renewal.

[Opinion of the Audit and Supervisory Committee]
The Audit and Supervisory Committee has concluded that the content of the proposal
regarding the election of Directors (except Directors serving as Audit and Supervisory
Committee Members) is appropriate, having examined whether the criteria for election,etc. has been set appropriately by the Board of Directors and whether deliberation in
the Nomination Committee has been conducted through an appropriate process.

– 13 –

Name(Date of Birth)No.

1Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Yoshinori
Kanehana(February 19,
1954)
13/13 (100%)

Apr. 1976

Joined Kawasaki Heavy Industries, Ltd.

Jun. 2012

Senior Vice President
General Manager, Marketing DivisionJun. 2013

Senior Vice President
President, Rolling Stock Company

Apr. 2016

Senior Executive Vice President
Assistant to the President

Jun. 2016

President

Apr. 2018

President and Chief Executive Officer

Jun. 2020

Chairman of the Board (present)

Number oftheCompany’s
shares held

36,000 shares(Of which, thenumber ofsharesto be
Reasons for nomination as candidate
grantedunder
Mr. Kanehana has been mainly engaged in business related
the stock
to technology and development of the rolling stock segmentof the Company and its overseas business for many years. compensationplan)
He assumed the office of Senior Vice President of the(7,000Company in 2012, Senior Executive Vice President of theshares)Company in April 2016, President of the Company in June
2016, and Chairman of the Board of the Company in 2020.
Presently, as Chairman of the Board, he has been
demonstrating outstanding leadership, thereby making asignificant contribution to the Company’s business growthand enhancing its enterprise value. Considering thesepoints, we have determined that he is suitable for a Director
and nominated him as a candidate for Director.

– 14 –

Name(Date of Birth)No.

2Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Yasuhiko
Hashimoto(May 15, 1957)
13/13 (100%)

Apr. 1981

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2016

Managing Executive Officer
In charge of promoting automation, General
Manager, Robot Business Division, Precision
Machinery Company

Apr. 2018

Managing Executive Officer
President, Precision Machinery & Robot
Company, in charge of promoting
automation

Jun. 2018

Director, Managing Executive Officer
President, Precision Machinery & Robot
Company, in charge of promoting
automation

Number oftheCompany’s
shares held

24,100 shares(Of which, thenumber ofshares to be
granted underJun. 2020
President and Chief Executive Officer
the stock(present)
compensation
Reasons for nomination as candidate
plan)
Mr. Hashimoto has been mainly engaged in businesses(8,000related to technology and development of the industrial
shares)robots business unit of the Company for many years. He
was appointed Director, Managing Executive Officer in 2018,
Director, Senior Corporate Executive Officer of the Company
in April 2020 and Director, President and Chief Executive
Officer in June 2020. Presently, as Director, President andChief Executive Officer, he has been demonstrating
outstanding leadership, thereby making a significant
contribution to the Company’s business growth andenhancing its enterprise value. Considering these points,
we have determined that he is suitable for a Director andnominated him as a candidate for Director.
Apr. 2020

Director, Senior Corporate Executive Officer
Assistant to the President– 15 –

Name(Date of Birth)
No.

3Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Katsuya
Yamamoto(November 21,
1957)

Number oftheCompany’s
shares held

Apr. 1981

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2017Managing Executive Officer
General Manager, Corporate Planning
Division

Jun. 2017

Senior Vice President
General Manager, Corporate Planning
Division

Apr. 2018

Director, Managing Executive Officer
General Manager, Corporate Planning
Division, in charge of Risk Management

Apr. 2019

Director, Managing Executive Officer, incharge of Corporate Planning, Investor
Relations, Corporate Communication andShip & Offshore Structure Company, General
Manager, Corporate Planning Division

Apr. 2020

Director, Senior Corporate Executive Officer
Assistant to the President, with overall
responsibility for finance and accounting,and human resources, and in charge of
Sustainable Development, Investor Relations 17,900 shares
and Corporate Communication(Of which, theDirector, Senior Corporate Executive Officer
number ofAssistant to the President, with overall
shares to be
responsibility for finance and accounting,granted underand human resources, and in charge ofthe stock
Sustainable Development, Investor Relations
compensation
and Corporate Communication, and Generalplan)Manager, Human Resources Division(5,100
Director, Senior Corporate Executive Officer
shares)Assistant to the President, in charge ofFinance, Human Resources, Legal &Compliance, and Corporate Communication,
and General Manager, Human Resources
Division (present)

Apr. 2021

13/13 (100%)
Apr. 2022

Reasons for nomination as candidate
Mr. Yamamoto has been mainly engaged in businesses
related to corporate planning and finance & accounting of
the plant & infrastructure segment and the precision
machinery segment of the Company for many years. He
was appointed Senior Vice President of the Company in2017 and Director, Senior Corporate Executive Officer of theCompany in 2020. Presently, as Director, Senior Corporate
Executive Officer, he has been in charge of Finance, Human
Resources,
Legal&
Compliance,
andCorporate
Communication, thereby making a significant contribution
to the Company’s business growth and enhancing its
enterprise value. Considering these points, we havedetermined that he is suitable for a Director and nominatedhim as a candidate for Director.
[Reference]“Sustainability”: This is the sustainability of society and the environment. The Company promotes
sustainable management, which it supports from the aspects of CSR, risk, legal affairs, etc., tocontribute to the future of society and the environment.

– 16 –

Name(Date of Birth)No.

4Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Hiroshi Nakatani(August 9, 1960)

Apr. 1984

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2016

Executive Officer
Deputy General Manager, Corporate
Technology Division, and General Manager,
Technical InstituteApr. 2019

Managing Executive Officer
General Manager, Corporate Technology
Division, General Manager, TechnicalInstitute, and Group Manager, Manufacturing
Improvement Center, in charge of IT
Strategy

Apr. 2020

Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, and Ship & Offshore
Structure Company, and General Manager,
Corporate Technology DivisionJun. 2020

Director, Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, and Ship & Offshore
Structure Company, and General Manager,
Corporate Technology DivisionNov. 2020

Director, Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, Cyber Security, and Ship &Offshore Structure Company, and General
Manager, Corporate Technology Division

Apr. 2021

Director, Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, and Cyber Security, andGeneral Manager, Corporate Technology
Division

Apr. 2022

Director, Senior Corporate Executive Officer,
Assistant to the President, in charge ofTechnology, Manufacturing/Production,
Procurement, TQM, General Administration,
and DX Strategy, in charge of North America
Project Management Task Force, andGeneral Manager, Corporate Technology
Division (present)

13/13 (100%)

Reasons for nomination as candidate
Mr. Nakatani has been mainly engaged in businesses related
to technical development and planning for many years. He
was appointed Director, Managing Executive Officer in 2020and Director, Senior Corporate Executive Officer of theCompany in 2022. Presently, as Director, Senior Corporate
Executive Officer, he has an overall responsibility forTechnology, Manufacturing/Production, Procurement, TQM,
General Administration, and DX Strategy, and North
America Project Management Task Force, thereby making asignificant contribution to the Company’s business growthand enhancing its enterprise value. Considering thesepoints, we have determined that he is suitable for a Director
and nominated him as a candidate for Director.

– 17 –

Number oftheCompany’s
shares held

10,000 shares(Of which, thenumber ofshares to be
granted under
the stockcompensation
plan)(3,300shares)[Reference]“Digital Transformation” “DX”: The reformation of products, services and business models based on
the needs of customers and society, which utilizes data and digital technologies to respond to
drastic changes in the business environment, as well as the reformation of business, organization,
processes and corporate culture.
“TQM”: Total Quality Management– 18 –

Name(Date of Birth)No.

5Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors
Sep. 1989

Joined Haight Gardner Poor & Havens (Atpresent: Holland & Knight LLP)

Dec. 1990

Registered as Attorney at Law admitted in
New York

Feb. 1991

Joined Industrial Bank of Japan Limited (Atpresent: Mizuho Bank, Ltd.)

Dec. 1994

Joined Merrill Lynch Japan Securities Co.,
Ltd.

Nov. 2000

Merrill Lynch Europe Plc

Jul. 2006

Bank of America Merrill Lynch (Hong Kong)

Jan. 2012

Bank of America Merrill Lynch (NY)Nov. 2012

General Counsel Asia, Asurion Asia Pacific
Limited (Hong Kong)

Nov. 2014

General Counsel Asia, Asurion Japan
Holdings G.K. (present)

Jun. 2015

Outside Director, Mitsui & Co., Ltd. (present)(Outside Director Jun. 2018
Candidate)Jun. 2019(Independent
Officer)Jan. 2021
Jenifer Rogers(June 22, 1963) May 2022

Outside Director, Kawasaki Heavy Industries,
Ltd. (present)

13/13 (100%)

Outside Director, Nissan Motor Co., Ltd.
(present)
President, American Chamber of Commercein Japan
Outside Director, Seven & i Holdings Co.,
Ltd. (present)[Significant concurrent positions]
General Counsel Asia, Asurion Japan Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.
Outside Director, Seven & i Holdings Co., Ltd.
Reasons for nomination as candidate and outline of
expected role
Ms. Rogers served as an in-house lawyer and counsel atfinancial institutions in Japan and overseas for many years.
Since 2018, as Outside Director of the Company, we havereceived helpful opinions and advice on importantmanagement decisions based on her extensive international
experience and deep insights into legal affairs, compliance,and risk management cultivated in those positions from astandpoint independent from the Company’s execution ofduties. Considering these points, we have expected her tocontinue to provide supervision leveraging her expertiseand knowledge and nominated her as a candidate for
Outside Director.

– 19 –

Number oftheCompany’s
shares held

2,400 shares

(Notes) 1. She is a candidate for Outside Director.
2. Her tenure as Outside Director of the Company will have been four years at theconclusion of this Ordinary General Meeting of Shareholders.
3. She has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with her after her election.
4. The Company has submitted notification to Tokyo Stock Exchange, Inc. that thecandidate has been appointed as Independent Officer as provided for by the
aforementioned exchange.

– 20 –

Name(Date of Birth)No.

6Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors
Apr. 1980

Joined Suntory Limited

Mar. 2004

Director, Suntory Limited

Apr. 2009Managing Executive Officer, Suntory
Holdings Limited
General Manager, R&D Planning Division, incharge of Intellectual Property Department

Mar. 2015

Senior Managing Director, Suntory Holdings
LimitedRepresentative Director, President & Chief
Executive Officer, Suntory Business Expert
Limited (At present: Suntory MONOZUKURI
Expert Limited)

Apr. 2015

Senior Managing Director, in charge ofIntellectual Property Department and R&D
Division, Suntory Holdings Limited

Mar. 2017

Director, Executive Vice President, Suntory
Beverage & Food Limited

Apr. 2017

Director, Executive Vice President, Chief
Operating Officer, MONOZUKURI Division
and Senior General Manager, Research &Development Department, Suntory
Beverage & Food Limited(Outside Director
Candidate)(Independent
Apr. 2020
Officer)
Hideo Tsujimura(June 6, 1954)
13/13 (100%)

Jun. 2020

Full-time Advisor, Suntory Holdings Limited(present)
Chairman, Suntory Foundation for Life
Sciences (present)
Outside Director, Kawasaki Heavy Industries,
Ltd. (present)

Reasons for nomination as candidate and outline of
expected role
Mr. Tsujimura has not only extensive management
experience but also deep insights into product development
and intellectual property, having served as Senior Managing
Director, in charge of Intellectual Property Department andR&D Division of Suntory Holdings Limited, Representative
Director, President & Chief Executive Officer of Suntory
Business Expert Limited, as well as Director, Executive Vice
President, Chief Operating Officer, MONOZUKURI Division
and Senior General Manager, Research & Development
Department of Suntory Beverage & Food Limited and otherimportant positions. Since 2020, as Outside Director of theCompany, we have received helpful opinions and advice on
important management decisions based on such extensive
management experience and deep insights into productdevelopment and intellectual property from a standpoint
independent from the Company’s execution of duties.
Considering these points, we have expected him to continue
to provide supervision leveraging his expertise andknowledge and nominated him as a candidate for Outside
Director.

– 21 –

Number oftheCompany’s
shares held

500 shares

(Notes) 1. He is a candidate for Outside Director.
2. His tenure as Outside Director of the Company will have been two years at the conclusionof this Ordinary General Meeting of Shareholders.
3. He has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with him after his election.
4. The Company has submitted notification to Tokyo Stock Exchange, Inc. that thecandidate has been appointed as Independent Officer as provided for by the
aforementioned exchange.
5. Although Suntory Beverage & Food Limited, where the candidate served as a managing
officer in the past, is not a business partner of the Company, the KHI Group has a trackrecord of transactions with the Group of Suntory Beverage & Food Limited and the KHI
Group. However, the annual average transactions between the Group of Suntory
Beverage & Food Limited and the KHI Group for the most recent five fiscal years accountfor less than 1% of the annual average net sales each for the said Group and the KHI
Group over the corresponding period. Consequently, we have determined that there is
no issue as to the independence of the candidate and he will be able to fulfil his role asan Independent Officer.

– 22 –

Name(Date of Birth)No.

7Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors
Apr. 1979

Joined Kao Soap Co., Ltd. (At present: Kao
Corporation)

Mar. 2014

Representative Director, Managing Executive
Officer, with overall responsibility for
Consumer Products Business Department, incharge of Kao Professional Services
Company, Ltd., Kao Corporation

Mar. 2015

Representative Director, Senior Managing
Executive Officer, with overall responsibility
for Consumer Products Business
Department, in charge of Kao Professional
Services Company, Ltd., Kao Corporation(Newlyappointed)(Outside Director Jan. 2017
Candidate)(Independent
Officer)
Katsuhiko Yoshida(April 5, 1954)-/- (-%)

Representative Director, Senior Managing
Executive Officer, with overall responsibility
for Consumer Products Business
Department, in charge of Kao Professional
Services Company, Ltd., with overall
responsibility for Marketing Development
Department, Kao Corporation

Number oftheCompany’s
shares held

－ shares

Reasons for nomination as candidate and outline of
expected role
Mr. Yoshida has not only extensive management experiencebut also deep insights into sales and marketing, having
served as Representative Director, Senior Managing
Executive Officer, with overall responsibility for Consumer
Products Business Department of Kao Corporation andother important positions. We have judged that he will beable to fully fulfil his role as an Outside Director supervising
the execution of duties and enhancing its enterprise value.
Considering these points, we have expected him to provide
supervision leveraging his expertise and knowledge andnewly nominated him as a candidate for Outside Director.

(Notes) 1. He is a candidate for Outside Director.
2. If the election of the candidate is approved and adopted, the Company will enter into alimited liability agreement pursuant to the provisions of Article 427, Paragraph 1 of theCompanies Act with the candidate. The liability under said agreement shall be limited toeither an amount of ¥10 million, or an amount specified by laws and regulations,whichever is higher.
3. The Company will submit notification to Tokyo Stock Exchange, Inc. that the candidate
has been appointed as Independent Officer as provided for by the aforementioned
exchange.
4. Although Kao Corporation, where the candidate served as a managing officer in the past,
is not a business partner of the Company, the KHI Group has a track record oftransactions with the Group of Kao Corporation and the KHI Group. However, the annual
average transactions between the Group of Kao Corporation and the KHI Group for themost recent five fiscal years account for less than 1% of the annual average net sales
each for the said Group and the KHI Group over the corresponding period. Consequently,
we have determined that there is no issue as to the independence of the candidate andhe will be able to fulfil his role as an Independent Officer.

– 23 –

Proposal No. 4:

Election of Five Directors Serving as Audit and Supervisory

Committee Members
The terms of office for all five Directors serving as Audit and Supervisory Committee
Members will expire at the closing of this General Meeting of Shareholders. Therefore,
we propose to elect five Directors serving as Audit and Supervisory Committee Members.
We have obtained the consent of the Audit and Supervisory Committee on this proposal.
Additionally, candidates for Directors serving as Audit and Supervisory Committee
Members were nominated by the Board of Directors in accordance with “Qualifications
Expected of Directors,” which is described on page 35. The Company has obtained areport to the effect that this nomination is appropriate from the Nomination Advisory
Committee, which consists mainly of independent outside officers.
The candidates for Directors serving as Audit and Supervisory Committee Members are
as follows:
Attendance
No.

Name

Position, Duties, Significant

Meetings of the

concurrent positions etc.

Board ofDirectors

2

New

3

Independent

4

Independent

5

OutsideOutsideOutsideAudit andSupervisory
Committee

13/13

17/17

－/－

－/－

13/13

17/17

Ryoichi Saito

13/13

17/17

Susumu Tsukui

－/－

－/－

Akio Nekoshima

1

Meetings of the

Nobuhisa Kato

Atsuko Ishii

Executive Officer in charge of
special mission assigned by the
President
Outside Director, Mitsui
Sumitomo Insurance Company,
LimitedOutside Director, NS Solutions
Corporation

New
Independent(Notes) 1. There is no special interest relationship between each candidate and the Company.
2. The Company has entered into a Directors and Officers Liability Insurance (D&O Insurance)
contract as provided for in Article 430-3, Paragraph 1 of the Companies Act with aninsurance company. The insurance contract covers damages and court costs that may be
incurred by the insured arising from the insured’s act in connection with the execution of
his or her duties. (However, this excludes damages arising from an act undertaken withthe knowledge that such act was in violation of laws and ordinances). If each candidate
assumes the office as Director serving as Audit and Supervisory Committee Member, thecandidate will be included as an insured in the policy. The Company plans to renew theinsurance contract with the same contents at the next renewal.

– 24 –

No.

Name(Date of Birth)

Akio Nekoshima(September 30,
1958)

1

Career Summary, Positions and Duties[Significant concurrent positions]Apr. 1982

Joined The Dai-Ichi Kangyo Bank, Limited(At present: Mizuho Bank, Ltd.)

Apr. 2006

Manager, Los Angeles Branch, Mizuho
Corporate Bank, Ltd. (At present: Mizuho
Bank, Ltd.), and President, Mizuho
Corporate Bank of California

Apr. 2009

General Manager, Americas Corporate
Banking Division No. 1, Mizuho Corporate
Bank of California

May 2012

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2013

Senior Manager, Europe, the Middle East andAfrica, and Group Manager, Overseas,
Marketing Division

Jul. 2013

General Manager, Finance & Accounting
Division

Apr. 2014

Executive Officer
General Manager, Finance & Accounting
Division

Attendance atmeetings of the Apr. 2016
Board of Directors
Apr. 201813/13 (100%)
Attendance atmeetings of the
Audit andSupervisory
Committee
17/17 (100%)

Executive Officer
General Manager, Marketing Division

Number oftheCompany’s
shares held

7,300 shares

Executive Officer
Staff officer to Audit & Supervisory Board
MemberJun. 2018

Audit & Supervisory Board Member

Jun. 2020

Director, Audit and Supervisory Committee
Member (present)

Reasons for nomination as candidate
Mr. Nekoshima has been engaged in businesses related tofinance and accounting and sales promotion, and overseas
business of the Company. He was appointed Executive
Officer in 2014 and Audit and Supervisory Board Member of
the Company in 2018 and Director, Audit and Supervisory
Committee Member of the Company in 2020. Presently, as
Full-time Audit & Supervisory Committee Member of theCompany, he has made a significant contribution toensuring the soundness of the Company’s management andenhancing its enterprise value. Considering these points,
we have determined that he is suitable for a Director
serving as Audit and Supervisory Committee Member andnominated him as a candidate for Director serving as Audit
and Supervisory Committee Member.

(Notes) 1. His tenure as Director, Full-time Audit & Supervisory Committee Member will have been
two years at the conclusion of this Ordinary General Meeting of Shareholders.
2. He has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with him after his election.

– 25 –

Name(Date of Birth)

No.

(Newlyappointed)
Nobuhisa Kato
(June 1, 1960)

2

Career Summary, Positions and Duties[Significant concurrent positions]Apr. 1983

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2017

Executive Officer
General Manager, Finance & Accounting
Division

Apr. 2019

Executive Officer
General Manager, Finance & Control Division

Number oftheCompany’s
shares held

6,200 shares

Executive Officer in charge of special mission(Of which, theassigned by the President (present)
number of
Attendance at
Reasons for nomination as candidate
sharesto bemeetings of the Mr. Kato has been mainly engaged in businesses related to
grantedunder
Board of Directors finance & accounting and control of the Company for many
the
stock
-/- (-%)
years. He was appointed Executive Officer of the Company
compensationin 2017. Presently, as the person in charge of special
plan)
Attendance at
mission assigned by the President, he has made a(1,300meetings of the significant contribution to ensuring the soundness of theshares)Company’s management and enhancing its enterprise
Audit andvalue. Considering these points, we have determined that
Supervisory
he is suitable for a Director serving as Audit andCommittee
Supervisory Committee Member and nominated him as a-/- (-%)
candidate for Director serving as Audit and Supervisory
Committee Member.

(Note)

Apr. 2022

If the election of the candidate is approved and adopted, the Company will enter into alimited liability agreement pursuant to the provisions of Article 427, Paragraph 1 of theCompanies Act with the candidate. The liability under said agreement shall be limited toeither an amount of ¥10 million, or an amount specified by laws and regulations,whichever is higher.

– 26 –

No.

Name(Date of Birth)

Career Summary, Positions and Duties[Significant concurrent positions]Apr. 1980

Joined Ministry of Labour (At present:
Ministry of Health, Labour and Welfare)Jul. 2009

Director-General, Osaka Labour Bureau,
Ministry of Health, Labour and Welfare

Jul. 2010

Deputy Director-General (in charge of equal
employment, child and family policy, andmeasures for declining birthrate), Ministry of
Health, Labour and Welfare

Sep. 2012

Director-General, Equal Employment, Childand Family Policy Bureau, Ministry of Health,Labour and Welfare

Jul. 2014

Director-General for General Policy and
Evaluation (in charge of labor), Ministry of
Health, Labour and Welfare

Oct. 2015

Director-General, Social Welfare and War
Victims’ Relief Bureau, Ministry of Health,Labour and Welfare(Outside Director
Jun. 2017
Candidate)(Independent
Jun. 2017
Officer)
Atsuko Ishii(November 17,
1957)

3

Outside Audit & Supervisory Board Member,
Kawasaki Heavy Industries, Ltd.
Outside Audit & Supervisory Board Member,
Mitsui Sumitomo Insurance Company,
LimitedJun. 2019

Outside Director, NS Solutions Corporation(present)

Jun. 2020

Outside Director, Audit & Supervisory
Committee Member, Kawasaki Heavy
Industries, Ltd. (present)

Attendance atmeetings of theJun. 2021
Outside Director, Mitsui Sumitomo Insurance
Board of Directors
Company, Limited (present)
13/13 (100%)[Significant concurrent positions]
Outside Director, Mitsui Sumitomo Insurance Company,
Attendance atmeetings of the Limited
Outside Director, NS Solutions Corporation
Audit andSupervisory
Committee
17/17 (100%)

Number oftheCompany’s
shares held

Reasons for nomination as candidate and outline of
expected role
Ms. Ishii has never involved in the management of acompany, except as an outside officer. However, she servedin the Ministry of Health, Labour and Welfare as DirectorGeneral of Osaka Labour Bureau, Deputy Director-General,
Director-General of Equal Employment, Child and Family
Policy Bureau, Director-General for General Policy and
Evaluation, and Director-General of Social Welfare and War
Victims’ Relief Bureau, and other important positions. She
was appointed Outside Audit & Supervisory Board Memberof the Company in 2017 and Outside Director, Audit &Supervisory Committee Member of the Company in 2020.
Ms. Ishii has made a significant contribution to ensuring thesoundness of the Company’s management and enhancing
its enterprise value based on her abundant experience anddeep insight on labor administration. Considering thesepoints, we have expected her to continue to provide
supervision leveraging her expertise and knowledge andnominated her as a candidate for Outside Director serving
as Audit and Supervisory Committee Member.

– 27 –

700 shares

(Notes) 1. She is a candidate for Outside Director.
2. Her tenure as Outside Director, Audit & Supervisory Committee Member will have been
two years at the conclusion of this Ordinary General Meeting of Shareholders.
3. She has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with her after her election.
4. The Company has submitted notification to Tokyo Stock Exchange, Inc. that thecandidate has been appointed as Independent Officer as provided for by the
aforementioned exchange.

– 28 –

No.

Name(Date of Birth)

Career Summary, Positions and Duties[Significant concurrent positions]Apr. 1974

Joined NSK Ltd.

Jun. 2006

Senior Vice President, Head of Corporate
Planning Division HQ, NSK Ltd.

Jun. 2011

Director, Representative, Executive Vice
President, Head of Corporate Strategy
Division HQ, Crisis Management Committee
Chairperson, NSK Ltd.

(Outside Director
Candidate)Jun. 2013(Independent
Jun. 2016
Officer)Jun. 2019
Ryoichi Saito(February 3,
1950)

4

Jun. 2020

Number oftheCompany’s
shares held

Senior Advisor, NSK Ltd.
Administrative Officer, NSK Ltd.
Outside Audit & Supervisory Board Member,
Kawasaki Heavy Industries, Ltd.
Outside Director, Audit & Supervisory
Committee Member, Kawasaki Heavy
Industries, Ltd. (present)

Reasons for nomination as candidate and outline of
expected role
Attendance atmeetings of the Mr. Saito served as Senior Vice President, Head of Corporate
Board of Directors Planning Division HQ, Director, Representative, Executive
Vice President, Head of Corporate Strategy Division HQ and13/13 (100%)
Crisis Management Committee Chairperson of NSK Ltd. andotherimportant positions. He was appointed Outside Audit
Attendance atmeetings of the & Supervisory Board Member of the Company in 2019 andOutside Director, Audit & Supervisory Committee Member
Audit andof the Company in 2020. Mr. Saito has made a significant
Supervisory
contribution
to ensuring the soundness of the Company’s
Committee
management and enhancing its enterprise value based on
17/17 (100%)
his extensive management experience and deep insights
into business planning, finance and accounting, and risk
management. Considering these points, we have expected
him to continue to provide supervision leveraging his
expertise and knowledge and nominated him as a candidate
for Outside Director serving as Audit and Supervisory
Committee Member.

800 shares(Notes) 1. He is a candidate for Outside Director.
2. His tenure as Outside Director, Audit & Supervisory Committee Member will have been
two years at the conclusion of this Ordinary General Meeting of Shareholders.
3. He has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with him after his election.
4. The Company has submitted notification to Tokyo Stock Exchange, Inc. that thecandidate has been appointed as Independent Officer as provided for by the
aforementioned exchange.
5. Although NSK Ltd., where the candidate previously served as business executive, is abusiness partner of the Company, the annual average transactions between the Groupof NSK Ltd. and the KHI Group for the most recent five fiscal years account for less than
1% of the annual average net sales each for the said Group and the KHI Group over thecorresponding period. Consequently, we have determined that there is no issue as to the
independence of Mr. Saito and he will be able to fulfill his role as an Independent Officer.

– 29 –

No.

Name(Date of Birth)

Career Summary, Positions and Duties[Significant concurrent positions]Apr. 1995(Newlyappointed)(Outside Director Apr. 1999
Candidate)
Apr. 2002(Independent
Officer)
Susumu Tsukui(May 3, 1969)
5

Number oftheCompany’s
shares held

Admitted to the Bar in Japan
Joined Kobe-Kaito Law Office
Joined Law Office ASHIYA
Established Ashiya Nishinomiya Citizen Law
OfficeManaging Partner, Ashiya Nishinomiya
Citizen Law Office (present)

Apr. 2006

Vice President, Hyogo-ken Bar Association

Apr. 2021

President, Hyogo-ken Bar Association

Attendance at
Reasons for nomination as candidate and outline ofmeetings of the expected role
Board of Directors Mr. Tsukui has never involved in the management of a－/－ (-%)
company, except as an outside officer. However, he served
as President of the Hyogo-ken Bar Association and otherimportant positions. He has abundant experience and deepAttendance atmeetings of the insight into legal affairs as an attorney. Considering thesepoints, we have expected him to provide supervision
Audit andleveraging his expertise and knowledge and newly
Supervisorynominated him as a candidate for Outside Director serving
Committee
as Audit and Supervisory Committee Member.
－/－ (-%)

300 shares(Notes) 1. He is a candidate for Outside Director.
2. If the election of the candidate is approved and adopted, the Company will enter into alimited liability agreement pursuant to the provisions of Article 427, Paragraph 1 of theCompanies Act with the candidate. The liability under said agreement shall be limited toeither an amount of ¥10 million, or an amount specified by laws and regulations,whichever is higher.
3. The Company will submit notification to Tokyo Stock Exchange, Inc. that the candidate
has been appointed as Independent Officer as provided for by the aforementioned
exchange.

– 30 –

Proposal No. 5:

Election of One Substitute Director serving as Audit andSupervisory Committee Member
We propose to elect one substitute Director serving as Audit and Supervisory Committee
Member to prepare for a contingency in which the Company does not have the number
of Directors serving as Audit and Supervisory Committee Members required by laws andregulations. We have obtained the consent of the Audit & Supervisory Committee on
this proposal. Additionally, a candidate for substitute Director serving as Audit andSupervisory Committee Member was nominated by the Board of Directors in accordancewith “Qualifications Expected of Directors,” which is described on page 35. The Company
has obtained a report to the effect that this nomination is appropriate from theNomination Advisory Committee, which consists mainly of independent outside officers.
The candidate for substitute Director serving as Audit and Supervisory Committee
Member is as follows:
Name(Date of Birth)(Newlyappointed)(Outside Director
Candidate)(Independent
Officer)
Yuka Hada(November 11,
1968)

Carrier Summary and Positions
Apr. 1999

Admitted to the Bar in Japan
Joined Kobe-Kaito Law OfficeJan. 2004

Partner, Kobe-Kaito Law OfficeJun. 2004

Financial Securities Inspector, Kinki Local Finance
Bureau, Ministry of Finance

Apr. 2012

Established H&S Law Office
Attorney at Law, H&S Law Office (present)

Apr. 2012

Vice President, Hyogo-ken Bar Association

Jun. 2015

Unaffiliated Director, Audit and Supervisory
Committee Member, The Hanshin Diesel Works,
Ltd. (present)

Jun. 2020

Outside Director, Audit & Supervisory Committee
Member, LIFEDRINK COMPANY, INC. (present)[Significant concurrent positions]Unaffiliated Director, Audit and Supervisory Committee
Member, The Hanshin Diesel Works, Ltd.
Outside Director, Audit & Supervisory Committee Member,
LIFEDRINK COMPANY, INC.
Reasons for nomination as candidate and outline of
expected roleMs. Hada has never involved in the management of a company,
except as an outside officer. However, she has extensive
experience and deep insights into legal affairs an attorney,
having served as Vice President of Hyogo-ken Bar Associationand other important positions. Considering these points, wehave expected that she will be able to fully fulfil her role ofauditing the Company from an independent position in the caseof a contingency in which the Company does not have thenumber of Directors serving as Audit and Supervisory
Committee Members required by laws and regulations, andnewly nominated her as a candidate for substitute Director
serving as Audit and Supervisory Committee Member.

– 31 –

Number of theCompany’s
shares held

－ shares(Notes) 1. The registered name of the candidate is Yuka Suzuki.
2. There is no special interest relationship between the candidate and the Company.
3. The Company has entered into a Directors and Officers Liability Insurance (D&O
Insurance) contract as provided for in Article 430-3, Paragraph 1 of the Companies Act
with an insurance company. The insurance contract covers damages and court costs that
may be incurred by the insured arising from the insured’s act in connection with theexecution of his or her duties. (However, this excludes damages arising from an act
undertaken with the knowledge that such act was in violation of laws and ordinances).
If the candidate assumes the office as Director serving as Audit and Supervisory
Committee Member, the candidate will be included as an insured in the policy.
4. Should the candidate be appointed Director serving as Audit and Supervisory Committee
Member, the Company will enter into a limited liability agreement pursuant to theprovisions of Article 427, Paragraph 1 of the Companies Act with the candidate. The
liability under said agreement shall be limited to either an amount of ¥10 million, or an
amount specified by laws and regulations, whichever is higher.
5. The candidate satisfies the requirements of the independence standards for outside
officers stipulated by the Company. Should Ms. Hada be appointed Director serving as
Audit and Supervisory Committee Member, the Company will submit notification to Tokyo
Stock Exchange, Inc. that she is appointed as Independent Officer as provided for by
the aforementioned exchange.

– 32 –

Reference[Skill Matrix if Proposal No. 3 and Proposal No. 4 are approved]
Expected Areas

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

Finance /Research
Institutions

●

●

●

Legal Affairs /Government●●

Global●●Corporate
Management

●

●

●

IT / DX /Security●

Sales /
Marketing●

Manufacturing(Technology /Development /Production /Quality)●

Human
Resources /Organizational
Management

Representative
Director,
President and
Chief
Executive
Officer●

Finance /Accounting

Yoshinori
Kanehana

Governance

Chairman of
the Board

Business
Strategy

Position at theCompany andName

Required Experience

Yasuhiko
Hashimoto
Representative
Director,
SeniorCorporate
Executive
Officer●●

Katsuya
Yamamoto
Representative
Director,
SeniorCorporate
Executive
Officer

●

●

●

●

HiroshiNakatani
OutsideDirector

●

●

●

●

Jenifer Rogers
OutsideDirector
Hideo
TsujimuraOutsideDirector
Katsuhiko
YoshidaDirector, Fulltime Audit andSupervisory
Committee
Member

●

●

●

●

●

●

●

Akio
Nekoshima
Director, Fulltime Audit andSupervisory
Committee
MemberNobuhisa Kato

– 33 –●

Expected Areas●

Atsuko Ishii
OutsideDirector, Audit
andSupervisory
Committee
Member●●●●Ryoichi Saito
OutsideDirector, Audit
andSupervisory
Committee
Member●SusumuTsukui– 34 –

Finance /Research
Institutions●

Legal Affairs /Government

Global●Corporate
Management●

IT / DX /Security●

Sales /
Marketing●

Manufacturing(Technology /Development /Production /Quality)●

Human
Resources /Organizational
Management●

Finance /Accounting

GovernanceOutsideDirector, Audit
andSupervisory
Committee
MemberBusiness
Strategy

Position at theCompany andName

Required Experience

[Qualifications Expected of Directors]
1. Deeply understand and agree to the management philosophy and vision of the KHI
Group
2. Be able to contribute to sustainable growth and enhancement of enterprise value inthe medium- to long-term
3. Hold companywide standpoints and have abundant and broad experience, deep
insight and expertise to do so
4. Be able to supervise the management and execution of business operations from an
independent and objective standpoint as a member of the Board of Directors
5. Be able to exercise one’s authority in an active and positive manner, or properly
express one’s opinions to the Board of Directors or the management* Directors serving as Audit and Supervisory Committee Members must be familiar with
the Company’s business or have deep insight and expertise in corporate management,
legal affairs, finance and accounting, administration and other fields from theperspective of ensuring the effectiveness of audits. At least one Director serving as
Audit and Supervisory Committee Member must have substantial knowledge about
finance and accounting.
[Independence Standards for Officers]
When the Outside Officer does not fall under all the following items, Outside
Officer is deemed to satisfy the independence requirements:
1. The Outside Officer presently serves or previously served in the last ten years as an
executive director, executive officer, operating officer or other important employee ofa company (including major subsidiaries designated by the Company) (hereinafter,
the “Home Company”) that has a business relationship with the KHI Group, where
the average amount of transaction from the said business for the last five fiscal years
exceeds 2% of average net sales of the KHI Group and the Home Company.
2. The Outside Officer serves as a specialist or consultant (corporation if it has judicial
personality) of legal, accounting or tax affairs and the average remuneration directly
received from the KHI Group (excluding remuneration for the Company’s officer) forthe last five fiscal years exceeds ¥10 million.
3. The Outside Officer serves as executive officer of a non-profit organization and theaverage donations from the KHI Group to the organization for the last five fiscal years
exceeds ¥10 million and exceeds 2% of the total revenue or the current balance ofthe organization.
4. Home Company of the Outside Officer is a major shareholder of the Company as it
holds 10% or more of total number of shares issued in KHI.
5. A relative of the Outside Officer within the second degree falls under the preceding
four items or serves as executive director, executive officer, operating officer or otherimportant employee of the KHI Group.
End– 35 –

Attachment:

Business Report(April 1, 2021 - March 31, 2022)
1. Overview concerning the Current Situation of Company Group(1) Business Progress and Results(i) General conditions
The overall orders received by the KHI Group on a consolidated basis for the
fiscal year under review increased due to growth in the Motorcycle & Engine,
Aerospace Systems and other segments. Consolidated net sales, as a whole,increased compared to the previous fiscal year due to increased sales in theMotorcycle & Engine and Precision Machinery & Robot segments, while salesof segments such as Aerospace Systems and Energy Solution & Marine
Engineering decreased.
In terms of profit, operating profit increased significantly compared to theprevious fiscal year mainly due to increased profits in the Motorcycle & Engine
and Aerospace Systems segments. Ordinary profit increased significantly due
to the improved operating profit despite decreases in equity in earnings ofaffiliates and gains/losses on foreign exchange. Profit attributable to ownersof parent increased significantly mainly as a result of the improvements inordinary profit.
As a result, the KHI Group’s consolidated orders amounted to ¥1,602.1 billion,
an increase of ¥199.7 billion from the previous fiscal year. Consolidated net
sales amounted to ¥1,500.8 billion, an increase of ¥12.3 billion from theprevious fiscal year. Operating income came to ¥45.8 billion, an improvementin operating profit of ¥51.1 billion from the previous fiscal year. Ordinary
income came to ¥29.9 billion, an improvement of ¥32.7 billion from theprevious fiscal year. Profit attributable to owners of parent came to ¥21.8
billion, an increase in profit attributable to owners of parent of ¥41.1 billion
from the previous fiscal year.
Effective from the current fiscal year, the accounting method for revenue
recognition has changed with the application of the Revenue Recognition
Accounting Standard, and the profit/loss calculation method for businesssegments has changed.
(ii) Operating conditions by business segment
Aerospace Systems segment
In the Aerospace Systems segment, despite a decrease due to the applicationof the revenue recognition accounting standard for component parts ofcommercial aircraft jet engine, orders received were ¥383.3 billion, an
increase of ¥53.7 billion from the previous fiscal year, mainly due to increase– 36 –

in orders received from the Ministry of Defense (MOD) in Japan and forcomponent parts of commercial aircrafts.
Net sales decreased ¥79.5 billion from the previous fiscal year to ¥298.2 billion
mainly due to decreased sales to MOD for component parts of commercial
aircrafts, as well as a decrease due to the application of the revenue
recognition accounting standard for component parts of commercial aircraft
jet engines.
Operating loss was ¥9.7 billion, an improvement of ¥21.9 billion from theprevious fiscal year despite the decrease in revenue, mainly due to improved
profitability of component parts of commercial aircrafts and component partsof commercial aircraft jet engines.
Rolling Stock segment
In the Rolling Stock segment, orders received were ¥71.5 billion, a decreaseof ¥5.5 billion from the previous fiscal year when there was a large order for
shinkansen trains, although orders were received for subway cars in thedomestic market.
Net sales decreased ¥6.5 billion from the previous fiscal year to ¥126.6 billion,
mainly due to a decrease in passenger cars for the US markets.
Operating profit increased ¥7.8 billion from the previous fiscal year, when
profitability of overseas projects fell due to the impact of COVID-19 infections,
resulting in ¥3.2 billion despite a decrease in revenue.
Energy Solution & Marine Engineering segment
In the Energy Solution & Marine Engineering segment, orders received were¥343.5 billion, an increase of ¥26.3 billion from the previous fiscal year mainly
due to orders for large-scale projects such maintenance and operation workof municipal waste incineration plants in the domestic market.
Net sales decreased ¥22.2 billion from the previous fiscal year to ¥297.3 billion,
mainly due to a decrease in construction volume of submarines for MOD andlower sales of gas turbine combined cycle power plants.
Operating profit decreased ¥9.1 billion from the previous fiscal year to ¥1.1
billion, mainly due to the decrease in revenue.

Precision Machinery & Robot segment
In the Precision Machinery & Robot segment, orders received were ¥271.8
billion, an increase of ¥12.4 billion from the previous fiscal year mainly due to– 37 –

an increase in orders for various robots, including those for semiconductor
manufacturing equipment.
Net sales increased ¥11.8 billion from the previous fiscal year to ¥252.6 billion
due to an increase in orders for various robots, including those forsemiconductor manufacturing equipment, and the depreciation of the yen.
Operating profit increased ¥2.5 billion from the previous fiscal year to ¥16.6
billion due to the increase in revenue.
Motorcycle & Engine segment
Net sales of the Motorcycle & Engine segment increased ¥111.2 billion fromthe previous fiscal year to ¥447.9 billion due to an increase in sales ofmotorcycles and general-purpose engines for North America, as well as anincrease in sales of motorcycles for Europe and Southeast Asia.
Operating profit increased ¥25.5 billion from the previous fiscal year to ¥37.3
billion despite higher prices of raw materials and parts, mainly due toincreased sales and the depreciation of the yen compared to the previous fiscal
year.
(Note)

The figure for orders received for the Motorcycle & Engine segment is presented
as the same figure for net sales since the segment mainly engages in make-tostock production.

Others segment
In the Others segment, consolidated net sales decreased ¥2.3 billion from theprevious fiscal year to ¥78.0 billion.
Operating profit increased ¥2.4 billion from the previous fiscal year to ¥2.8
billion.

Reference
Effective from the current consolidated fiscal year, the classification of thefollowing business segments has changed. Information by business segment
for the previous fiscal year has been prepared using the revised segmentclassification method.
Before the change
Aerospace Systems
Energy System &Plant Engineering
Precision Machinery &RobotShip & Offshore
Structure

Rolling Stock
Motorcycle & Engine
Others▶

After the change
Aerospace Systems
Rolling StockEnergy Solution &Marine Engineering
Precision Machinery &Robot– 38 –

Motorcycle & Engine
OthersReferencei) Orders received, net sales and operating profit/loss by segment(Billions of yen)Orders Received
Segment

Net sales

Operating Profit/Loss

AmountYear-on-Year
ChangeAmountYear-on-Year
ChangeAmountYear-on-Year
Change

383.3

53.7

298.2

(79.5)

(9.7)

21.9

71.5

(5.5)

126.6

(6.5)

3.2

7.8

Energy Solution &Marine Engineering

343.5

26.3

297.3

(22.2)

1.1(9.1)

Precision Machinery &
Robot

271.8

12.4

252.6

11.8

16.6

2.5

Motorcycle & Engine

447.9

111.2

447.9

111.2

37.3

25.5

84.0

1.4

78.0

(2.3)

2.8

2.4

–

–

–

–

(5.7)

(0.0)

12.3

45.8

51.1

Aerospace Systems
Rolling Stock

OthersAdjustment
Total

1,602.1

199.7

1,500.8(Notes) 1. Net sales recorded are for sales to external customers.
2. The figure for orders received for Motorcycle & Engine segment is presented as the same
figure for net sales since the segment mainly engages in make-to-stock production.

ii) ROIC and ROE
FY2020 (198th fiscal year)

FY2021 (199th fiscal year)

ROIC(1.0)%

3.5%

ROE(4.2)%

4.6%(Notes) 1. ROIC (return on invested capital) = EBIT (income before income taxes + interest expense)÷ Invested capital at the end of the period (debt obligation + shareholders’ equity)
2. ROE (return on equity) = Profit attributable to owners of parent ÷ {(shareholders’ equity
at the end of the previous period + shareholders’ equity at the end of the current period)
÷ 2}iii) Cash flows(Billions of yen)
FY2020 (198th fiscal year)

FY2021 (199th fiscal year)

Cash flows from operating activities

34.6

144.4

Cash flows from investing activities(37.3)(52.5)Cash flows from financing activities

23.0

102.3

– 39 –

(2) Trends in Assets and Income(i)Company group assets and income(Billions of yen)Item

The 196th
fiscal year

The 197th
fiscal year

The 198th
fiscal year

The 199th
fiscal year
(under review)

Orders received

1,588.7

1,513.5

1,402.4

1,602.1

Net sales

1,594.7

1,641.3

1,488.4

1,500.8

Operating profit (loss)

64.0

62.0

(5.3)

45.8

Ordinary profit (loss)

37.8

40.4

(2.8)

29.9

Profit (loss) attributableto owners of parent

27.4

18.6

(19.3)

21.8

Earnings per share (yen)¥164.34¥111.72¥(115.73)¥130.26

Total assets

1,838.8

1,957.8

1,963.2

2,022.7

Net assets

492.2

471.5

482.7

498.5

(Note)

With the change and refinement of the counting method of orders received for the Precision
Machinery & Robot segment, its orders received for the Fiscal 2018 (196th fiscal year) was
amended (¥1,585.9 billion previously).
Effective from the Fiscal 2021 (199th fiscal year), the accounting method for revenue
recognition has changed with the application of the Revenue Recognition Accounting Standard,
and the profit/loss calculation method for business segments has changed.

(ii) Company assets and income(Billions of yen)Item

The 196th
fiscal year

The 197th
fiscal year

The 198th
fiscal year

The 199th
fiscal year
(current)

Orders received

1,171.8

1,124.7

1,003.7

985.9

Net sales

1,195.1

1,250.3

1,098.6

892.2

Operating profit (loss)

15.2

20.4

(50.7)(15.8)

Ordinary profit (loss)

9.5

17.1

(35.5)

9.5

Net profit (loss)

15.0

10.8

(35.7)

21.2

Earnings per share (yen)¥90.37¥64.78¥(214.24)¥127.08

Total assets

1,499.6

1,609.2

1,630.5

1,471.3

Net assets

325.5

323.8

287.7

266.8

(Note)

Effective from the Fiscal 2021 (199th fiscal year), the accounting method for revenue
recognition has changed with the application of the Revenue Recognition Accounting Standard,
and the profit/loss calculation method for business segments has changed.
Due to the demerger of the Rolling Stock segment and the Motorcycle & Engine segment in
October 2021, figures for both segments are not included from the third quarter of Fiscal 2021
(199th fiscal year).

(3) Corporate Management Strategies in the Medium- to Long-Term andIssues to be Addressed
In November 2020, the KHI Group established its new vision statement, describing
what the KHI Group envisions becoming in 10 years ― “Group Vision 2030:
Trustworthy Solutions for the Future” and set forth its business policy to realize thevision as follows:– 40 –

(i) Fields that the KHI Group focuses on
The Group is focusing on the following three fields to provide timely solutions tovarious social issues, including the realization of a decarbonized society to protect
the global environment, measures to address the aging society and labor shortages
mainly in advanced countries, elimination of various regional disparities in medicalcare, prevention and fast recovery from natural disasters, and providing a stablesupply of various natural resources and energy.
“Creating a Safe and Secure Remote Society” - Creating New Value
through Remote Robots
The KHI Group aims to create a society where people can live safely and securely
in diverse fields, such as medical and healthcare, manufacturing, and industrial
infrastructure, using the Group’s remote-controlled robot technology, etc., andproposes new ways of working and living styles that enable all people toparticipate in society through the realization of a remote society.
“Mobility in the Near Future” - Responding Quickly to Changing Trends
in Movement of People and Goods
In order to quickly respond to changes and trends in the movement of people
and goods, such as the need for home deliveries and the increasing demand for
personal mobility due to changing lifestyles, the KHI Group will propose newmeans of transport and movement, such as helicopters and automated delivery
robots that autonomously transport goods, aiming to create a society where
affluent, smart, and seamless movement is possible.
“Energy and Environmental Solutions” – for stable supply of clean
energyThe KHI Group is building a world-leading hydrogen supply chain for the quick
realization of a carbon-neutral society. The KHI Group is also advancing
standalone carbon neutrality with the aim of achieving virtually zero CO2emissions by 2030 at sites in Japan focused on hydrogen power generation.
Economic security such as stable energy supply has become increasingly
important due to the recent international situation. Expectations for hydrogenthat can be produced in various methods at locations around the world haveincreased not only for the aim of becoming carbon neutral but also for energy
security aspects, and the KHI Group will accelerate initiatives to quickly achievea hydrogen-based society.
(ii) Scenario for growth
In the immediate future, mass production related businesses such as Motorcycle &Engine segment, which achieved record high profit in FY2021, and Precision
Machinery & Robot segment, which continues to perform well, will be the main
profit centers for the KHI Group as a whole. Subsequently, the full-fledged recovery
in aviation demand, including international flights, will steadily grow the profit frombusinesses in which products are made to order such as Aerospace Systems
segment, thereby driving the KHI Group’s growth. Furthermore, the KHI Group isaiming for other new businesses including hydrogen, medical robots and Near
Future Mobility to become revenue pillars, leading to a stable growth trajectory. In
order to realize this scenario for growth, the KHI Group will also review its businessmodel such as shifting from a product seller to a service seller to establish a highprofit structure.

– 41 –

The KHI Group will enact various measures to realize this growth scenario. As astructure for supporting growth going forward, from FY2021 we adopted a new
personnel system that allows employees to proactively contribute regardless of age
under the concept of taking on new challenges and commitment. The KHI Groupwill allocate competent human resources to posts where they can demonstrate theirpotential to the full and foster a corporate culture that allows us to constantly
advance various innovations. Furthermore, by promoting digital transformation(DX), the KHI Group is implementing initiatives to create new solutions through theutilization of data, enhance efficiency and value added in operational processes,
and speed up management decision making.
Geopolitical issues such as the higher price of resources and energy and disruptions
to the supply chain caused by Russia’s invasion of Ukraine are becoming
increasingly serious. The KHI Group is aiming for stable management by quickly
executing various measures particularly in relation to the newly launched structure
to advance economic security.
(4) Material Business Reorganization(i) Kawasaki Thermal Engineering Co., Ltd. Becomes a Wholly-Owned Subsidiary
Effective August 1, 2021, the Company conducted a share exchange making
the Company the wholly-owning parent company and Kawasaki ThermalEngineering Co., Ltd. as the wholly-owned subsidiary in the share exchange.
(ii)

Company Split of Rolling Stock and Motorcycle & Engine
The Company executed absorption-type company splits with an effective dateof October 1, 2021 for Kawasaki Railcar Manufacturing Co., Ltd., which wasestablished as a preparatory company related to the spin-off of the Company’s
Rolling Stock Company, and Kawasaki Motors, Ltd., which was established asa preparatory company related to the spin-off of the Company’s Motorcycle &Engine Company.

(iii) Company Split of Shield Tunnel Boring Machine and Other Businesses andEstablishment of a New Company, Jointly with Hitachi Zosen Corporation
Effective October 1, 2021, the Company transferred the shield tunnel boringmachine and civil engineering related businesses of the Company toUnderground Infrastructure Technologies Corporation, which was establishedthrough a joint incorporation-type company split with Hitachi Zosen
Corporation.

– 42 –

(5) Capital Investments, Etc.
In the KHI Group, capital investments were made predominantly for thedevelopment of facilities to accommodate new models and products in the
Aerospace Systems segment and to streamline production in the Precision
Machinery & Robot segment, and for the development of facilities to mainly handle
other new business-related matters. As a result, the KHI Group spent a total of¥53.5 billion (including spending on intangible assets) on capital investments in the
consolidated fiscal year under review. The investments were covered by internallygenerated funds and borrowed money.
Details of major investments in the respective segments are as follows:(Billions of yen)Segment

Investment
amounts in the
consolidated
fiscal year
under review

Major investments

Aerospace Systems

Facilities for streamlining production of aircrafts,
commercial aircraft engines and other products, etc.

10.7

Rolling Stock

Facilities for increasing rolling stock production, etc.

1.9

Energy Solution &Marine Engineering

Facilities for production of industrial machinery andstreamlining ship construction, etc.

4.4

Precision Machinery &Robot

Facilities for streamlining production of hydrauliccomponents and industrial robot production, etc.

11.5

Motorcycle & Engine
OthersFacilities for handling new models and products ofmotorcycles, etc.
New business-related facilities and information
facilities, etc.

13.5
11.2

Total

53.5

(6) Financing
Funds of ¥15.5 billion from long-term debt, ¥10.0 billion from domestic unsecured
straight bonds and short-term debts and other funds from various sources wereraised in the current consolidated fiscal year. The funds were allocated to suchitems as the scheduled payment for long-term debt, capital investments andworking capital.
(7) Principal Lenders(Billions of yen)
Lenders

Balance of borrowings
Long term

Short term

Total

Mizuho Bank, Ltd.

7.0

31.9

38.9

Sumitomo Mitsui Banking Corporation

7.0

14.0

21.0

Development Bank of Japan Inc.

17.8

0

17.8

Sumitomo Mitsui Trust Bank, Ltd.

13.5

1.6

15.1

MUFG Bank, Ltd.

4.5

8.6

13.1

– 43 –

- Toward the realization of a sustainable society Starting with the issuance of Sustainability Bonds* (SDG bonds) in July 2021, theCompany has been conducting financing (sustainable finance) that contributes toenvironmental and social sustainability. By proactively utilizing these sustainablefinance instruments, the Company will accelerate our sustainability management
efforts to realize our Group Vision 2030 “Trustworthy Solutions for the Future” andstrive to strengthen our engagement with stakeholders to contribute to theachievement of SDGs and realize a sustainable society.
* Bonds issued to finance specific projects that contribute to environmental and social
sustainability
Item

Issue date

Sustainability Bond

July 2021

Positive Impact Finance

August 2021

Sustainability Linked Loan

March 2022

Mizuho Eco FinanceMarch 2022

[Sustainable Finance Goals and KPIs]
The KHI Group believes that the use of sustainable finance will contribute toachieving Group Vision 2030 and ultimately the SDGs, and has established goals
related to sustainable finance. With the ratio of sustainable finance to long-termborrowings (excluding short-term working capital and short-term borrowings tomeet funding needs during the period) as the KPI, our goal is to finance half of ourlong-term borrowings by 2030 and all of our long-term borrowings by 2050
through sustainable finance.

– 44 –

(8) Major Parent Companies and Subsidiaries(i) Parent companies
Not applicable.
(ii) Major subsidiariesi) JapanCompany name
(Location)
Kawasaki Railcar
Manufacturing Co., Ltd.

CapitalThe
Company’s
percentageof equity
participation

Main business¥9,685 million

100%

Design, development, manufacture,
repair, sale and lease of rolling stock,railroad systems and components¥1,000 million

100%

Manufacture, sale, lease and repairof automobiles, bicycles, industrial
vehicles, other transportation
machinery/equipment, engines andrelated equipment¥600 million

70%

Sale of various types of industrial
machinery, petroleum, steel stock,
and air conditioning equipment, etc.

100%

Sale, repair and after-sales service ofgeneral-purpose gas turbine
generators and other industrial
machinery

Note 3

Sole distributor of motorcycles,
personal watercraft (“JET SKI®”),
general-purpose gasoline engines
and engine components in Japan

100%

Manufacture of aircraft components,
targeting systems, rocket
components, aerospace equipment
and marine equipment; repair,maintenance and remodeling ofaircraft

100%

Manufacture, sale, installation andafter-sales service for boilers, airconditioning equipment andabsorption-style heat pumps, etc.

¥1,200 million

100%

Design, manufacture, and sale ofcrushers, grinders, castings, andother equipment; design, execution
and supervision of engineering,
construction, installation ofmachinery and appliances¥120 million

Note 4

Design, manufacture, and sale ofsnow removal machinery, industrial
vehicles, etc.

(Kobe, Hyogo)
Kawasaki Motors, Ltd.
(Akashi, Hyogo)

Kawasaki Trading Co., Ltd.
(Kobe, Hyogo)
Kawasaki Machine Systems,
Ltd.

¥350 million(Osaka, Osaka)
Kawasaki Motors, Ltd.
(Akashi, Hyogo)

NIPPI Corporation(Yokohama, Kanagawa)Kawasaki ThermalEngineering Co., Ltd.

¥100 million¥6,048 million¥1,460 million(Kusatsu, Shiga)

EarthTechnica Co., Ltd.
(Chiyoda-ku, Tokyo)

NICHIJO CORPORATION(Sapporo, Hokkaido)(Notes) 1. “PWC” stands for “personal watercraft” and is a water scooter.
2. “JET SKI®” is a registered trademark of Kawasaki Motors, Ltd.
3. A wholly-owned subsidiary of Kawasaki Motors, Ltd.
4. Kawasaki Railcar Manufacturing Co., Ltd. has a 75% stake.
5. The status of share exchanges and company splits are described in “Material Business
Reorganization” on page 42.

– 45 –

ii) Overseas
Company name
(Location)

Kawasaki Motors Corp.,
U.S.A.
(United States)

Kawasaki Motors
Manufacturing Corp., U.S.A.
(United States)
Kawasaki Motors Enterprise(Thailand) Co., Ltd.
(Thailand)
Kawasaki Motors Europe
N.V.

The
Company’s
percentageof equity
participation

Main business

Note 3

Sale of motorcycles, ATVs (all-terrain
vehicles), utility vehicles, personal
watercraft “JET SKI®” and generalpurpose gasoline engines in the U.S.
and South and Central America

US$ 170
millionNote 3

Manufacture of personal watercraft“JET SKI®,” utility vehicles, ATVs
(all-terrain vehicles), rims for ATVs
and utility vehicles, general-purpose
engines and rolling stock and aircraftdoors

THB 1,900
millionNote 3

Manufacture and sale of motorcycles
in Thailand

EUR 64 million

Note 3

Sale of motorcycles, ATVs (all-terrain
vehicles), utility vehicles, personal
watercraft “JET SKI®” and generalpurpose gasoline engines in Europe

US$ 60 million

Note 4

Manufacture, sale, servicing
engineering of rolling stock

JPY 3,000
million100%

Manufacture of hydraulic pumps andhydraulic motors for construction
machinery, marine hydraulic products
and industrial robots

US$ 1 million

Note 5

Sale and servicing of industrial robots
in Americas

JPY 400
million100%

Sale and servicing of precision
machinery in China

RMB 10
millionNote 3

Import and sale of products andrelated business of Kawasaki Motors,
Ltd.

KRW 1,310
million50%

Manufacture, sale and servicing of
hydraulic equipment products forconstruction machinery and marine
hydraulic products in South Korea

JPY 1,680
million100%

Procurement of parts andcomponents of robots and related
equipment

US$ 80 million

Note 6

Manufacture and sale of motorcycles
in Indonesia

PHP 101
millionNote 7

Manufacture and sale of motorcycles
in the Philippines

Capital

US$ 165
million(Netherlands)
Kawasaki Rail Car, Inc.
(United States)
Kawasaki Precision
Machinery (Suzhou) Ltd.
(China)Kawasaki Robotics (U.S.A.),
Inc.
(United States)
Kawasaki Precision
Machinery Trading(Shanghai) Co., Ltd.

and(China)Kawasaki Motors(Shanghai), Ltd.
(China)Flutek, Ltd.
(South Korea)
Kawasaki Robotics(Kunshan) Co., Ltd.
(China)PT. Kawasaki Motor
Indonesia(Indonesia)
Kawasaki Motors (Phils.)
Corporation(Philippines)– 46 –

Company name
(Location)
Kawasaki Robotics (Tianjin)
Co., Ltd.
(China)Canadian Kawasaki Motors
Inc.

CapitalJPY 200
millionCAD 2 million

The
Company’s
percentageof equity
participation

Main business

100%

Sale and servicing of industrial
robots in China

Note 3

Sale of motorcycles, ATVs (allterrain vehicles), utility vehicles
and personal watercraft “JET SKI®”
in Canada(Canada)(Notes) 1. ATV stands for “All-Terrain Vehicle” and is an “off-road four-wheel vehicle.”
2. UV stands for “utility vehicle” and is a “multi-purpose four-wheeled vehicle.”
3. A wholly-owned subsidiary of Kawasaki Motors, Ltd.
4. A wholly-owned subsidiary of Kawasaki Motors Manufacturing Corp., U.S.A.
5. A wholly-owned subsidiary of Kawasaki Motors Corp., U.S.A.
6. Kawasaki Motors, Ltd. has a 90% stake.
7. Kawasaki Motors, Ltd. has a 50% stake.
8. There are 101 consolidated subsidiaries, including 24 companies (9 in Japan and 15
overseas) as major subsidiaries, and there are 20 companies which are accounted for using
the equity method.

(9) Company Group’s Main Business and Number of Employees
Segment

Main Business

Number of
Employees

Aerospace Systems

Manufacture and sale of aircraft, aircraft
engines, etc.

7,825

Rolling Stock

Manufacture and sale of rolling stock, snow
removal machinery, etc.

3,499

Energy Solution & Marine
Engineering

Manufacture and sale of energy-related
equipment and systems, marine propulsion
machinery and systems, industrial machinery,
environmental equipment, cryogenic storage
equipment, hydrogen-related facilities,
crushing machines, ships, etc.

8,138

Precision Machinery & Robot

Manufacture and sale of hydrauliccomponents, industrial robots, etc.

4,302

Motorcycle & Engine

Manufacture and sale of motorcycles, off-roadfour-wheel vehicles (SxS, ATV), personal
watercraft (“JET SKI®”), general purpose
gasoline engines, etc.

9,300

OthersCommerce, brokerage and mediation for saleand order reception and administration of
welfare facilities, etc.

2,228

Companywide common areas(Head Office Administration Department,
Research & Development Department, etc.)

1,295

–

36,587

Total(Notes) 1. Employees total 26,596 people in Japan and 9,991 people overseas.
2. The Company has 13,381 employees (average age: 40.5 years old; average years ofservice: 14.9 years)
3. UV is an abbreviation for “utility vehicle” and is a “multipurpose four-wheeled vehicle.”– 47 –

(10) Company Group’s Principal Offices and Plants
Name and location

Principal
officesHead office

Kobe Head Office (Kobe), Tokyo Head Office (Minato-ku, Tokyo): 2 Head
Offices

Branches

Sapporo Office (Sapporo), Sendai Office (Sendai), Nagoya Office(Nagoya), Osaka Office (Osaka), Hiroshima Office (Hiroshima), Fukuoka
Office (Fukuoka), Okinawa Office (Naha, Okinawa): 7 Offices

Plants, etc.

(Note)

Gifu Works (Kakamigahara, Gifu), Nagoya Works 1 (Yatomi, Aichi),
Nagoya Works 2 (Ama-gun, Aichi), Kobe Works, Hyogo Works, Seishin
Works, Nishi-Kobe Works (Kobe), Akashi Works (Akashi, Hyogo),
Kakogawa Works (Kakogawa, Hyogo), Harima Works (Kako-gun,
Hyogo), Sakaide Works (Sakaide, Kagawa), Technical Institute (Akashi,
Hyogo): 12 Works (including a Technical Institute)

Location of principal offices of major subsidiaries are provided in “(8) Major Parent Companies
and Subsidiaries.”(11) Other Important Issues concerning Current Situation of Company Groups
Not applicable.

– 48 –

2. Status of Shares (as of March 31, 2021)(1) Aggregate Number of Issuable Shares(2) Total Number of Shares Issued

336,000,000 shares
167,921,800 shares (Note 1)(including 39,927 treasury shares)(3) Number of Shareholders

121,730 persons(4) Major Shareholders (top 10)
Shareholder name

Number of shares
held

Shareholding ratio

thousand shares%

The Master Trust Bank of Japan, Ltd. (Trust Account)

26,362

15.7

Custody Bank of Japan, Ltd. (Trust Account)

14,171

8.4

Nippon Life Insurance Company

5,751

3.4

Kawasaki Heavy Industries, Ltd. Employees Shareholder
Association

4,934

2.9

Mizuho Bank, Ltd.

4,176

2.4

Kawasaki Heavy Industries, Ltd. Kyoueikai

3,957

2.3

BNYMSANV AS AGENT / CLIENTS LUX UCITS NON TREATY
1

3,092

1.8

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,783

1.6

STATE STREET LONDON CARE OF STATE STREET BANK AND
TRUST, BOSTON SSBTC A/C UK LONDON BRANCH CLIENTS– UNITED KINGDOM

1,902

1.1

JP MORGAN CHASE BANK 385781

1,861

1.1

(Notes) 1. The total number of outstanding shares increased by 841,268 shares due to the shareexchange on August 1, 2021, whereby Kawasaki Thermal Engineering Co., Ltd. became awholly-owned subsidiary.
2. The shareholding ratio is calculated after subtracting treasury shares (39,927 shares).

* Company share options are not applicable.

– 49 –

4. Company Officers(1)

Directors (as of March 31, 2022)
Position

Name

Areas of Responsibility within the Company andOther Significant Concurrent Positions

Representative
Director

Yoshinori Kanehana

Chairman of the Board

Representative
Director

Yasuhiko Hashimoto

President and Chief Executive Officer

Vice President and Senior Executive Officer, Assistantto the President, with overall responsibility fortechnology, production and procurement, and in
charge of TQM, General Administration, and North
America Project Management Task Force
Vice President and Senior Executive Officer, Assistantto the President, with overall responsibility for
finance and accounting, and human resources, andin charge of Sustainable Development, Investor
Relations and Corporate Communication, andGeneral Manager, Human Resources Division
Managing Executive Officer in charge of Corporate
Planning, Digital Transformation and Cyber Security,and General Manager, Corporate Technology Division

Representative
Director

Sukeyuki Namiki

Representative
Director

Katsuya Yamamoto

Director

Hiroshi Nakatani

Outside Director

Yoshiaki Tamura

Outside Director, DIC Corporation

Outside Director

Jenifer Rogers

General Counsel Asia, Asurion Japan Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.

Outside Director

Hideo Tsujimura

Director, Full-Time
Audit andSupervisory
Committee Member

Katsuyoshi Fukuma

Director, Full-Time
Audit andSupervisory
Committee Member

Akio Nekoshima

Outside Director,
Audit andSupervisory
Committee Member

Satoru Kohdera

Managing Partner, Higashimachi LPC

Outside Director,
Audit andSupervisory
Committee Member

Atsuko Ishii

Outside Director, Mitsui Sumitomo Insurance
Company, Limited
Outside Director, NS Solutions Corporation

Outside Director,
Audit andSupervisory
Committee Member

Ryoichi Saito(Notes) 1. The Company has registered all Outside Directors as Independent Officers with Tokyo Stock
Exchange, Inc. pursuant to the rules of that stock exchange.
2. Director, Full-Time Audit and Supervisory Committee Member Katsuyoshi Fukuma, who has
many years of experience with administration and accounting operations at the Company,
has substantial knowledge about finance and accounting.
Director, Full-Time Audit and Supervisory Committee Member Akio Nekoshima, who has
many years of experience with finance and accounting at the Company and Mizuho
Corporate Bank, Ltd. (including The Dai-Ichi Kangyo Bank, Limited, a precursor of thebank), has substantial knowledge about finance and accounting.

– 50 –

Outside Director, Audit and Supervisory Committee Member Ryoichi Saito, who has many
years of experience with finance and accounting at NSK Ltd., has substantial knowledge
about finance and accounting.

(2) Remuneration for Directors and Audit & Supervisory Board Members(Millions of yen)

Total amount of remuneration, etc. by category
Position andnumberTotalamount of
remuneration

Directors(excluding
Directors serving
as Audit andSupervisory
Committee
Members)
8 persons

424

277

69

9

69

Directors serving
as Audit andSupervisory
Committee
Members
5 persons

112

112

–

–

–

Total 13persons(including 6
persons from
OutsideDirectors)

537
(80)

389
(80)

69
(–)

9
(–)

69
(–)

(Notes)Monetary reward
PerformanceBasic
based
remuneration
remuneration

Stockpurchase
fund

Performancelinked stockcompensation

1. Stock remuneration represents the total amount recorded as expenses during the
fiscal year under review based on the performance-linked stock compensation plan
approved at the 198th Ordinary General Meeting of Shareholders held on June 25,
2021.
2. Figures shown in total columns represent the number of persons actually paid.

– 51 –

(i)Matters concerning resolution of a general meeting of shareholders
on remuneration for Directors
Subject

Directors (excluding
those serving as
Audit andSupervisory
Committee
Members)

Excluding Outside
Directors

Directors serving as
Audit andSupervisory
Committee
Members

Remuneration type

Cash

Remuneration limit andpoints¥800 million per year

·
Stock

Cash

·

Contribute up to ¥975
million to the trust every
three fiscal years
Maximum number ofpoints (shares) to be
granted per fiscal year:
50,000 points (50,000
shares)¥120 million per year

Meeting ofshareholders
resolution

Number of
Directors at
resolution

197th
Ordinary
General Meetingof Shareholders
June 25, 20208(including 3
OutsideDirectors)

198th
Ordinary
General Meetingof Shareholders
June 25, 2021

5 persons

197th
Ordinary
General Meetingof Shareholders
June 25, 20205(including 3
OutsideDirectors)(ii) Policy concerning the amount of remuneration and others to officers
or its calculation method(I) Remuneration for Directors (excluding Directors serving as Audit andSupervisory Committee Members)
The remuneration of the Directors of the Company was set within the
remuneration limit approved at the Ordinary General Meeting of Shareholders.
In light of the performance-linked stock compensation introduced in the
resolution of the 198th Ordinary General Meeting of Shareholders held on June25, 2021, the remuneration system (hereinafter “New Remuneration System”)
for Directors (excluding Directors serving as Audit & Supervisory Committee
Members) was revised at the Board of Directors meetings held on May 20,
2021 and June 25, 2021.
(i) Remuneration for Directors (excluding Directors serving as Audit andSupervisory Committee Member and Outside Directors. Hereinafter referred
to as “Subject Directors.”)
Based on the concept of “Pay for Mission (Reward for accomplishing what theCompany needs to accomplish)” toward the realization of Group Vision 2030
“Trustworthy Solutions for the Future” established in November 2020, theremuneration system is designed according to the responsibilities andperformance of each Director, and rewards contributions to the enhancementof corporate value in the medium and long term as well as in the short term,
while realizing shared value with shareholders and other stakeholders.
Since the remuneration year is set from July of the current year to June of thefollowing year, the remuneration amount from July 2021 to March 2022 will
be calculated using the New Remuneration System, while the remuneration
amount from April to June 2021 will be calculated using the remuneration
system (hereinafter “Old Remuneration System”) based on the Policy
concerning the Amount of Remuneration and others to Directors (excluding
Directors serving as Audit and Supervisory Committee Member) or its
Calculation Method decided at the Board of Directors meeting held on– 52 –

December 24, 2015. The determined remuneration amount will be divided
proportionally and paid monthly during the term of office.
Old Remuneration System (Remuneration from April to June 2021)
It consists of basic remuneration, performance-based remuneration, and stock
purchase funds.
・ Performance-based remuneration
Performance-based remuneration is determined by linking mainly to Profit
attributable to owners of parent (“Profit”), consolidated ROIC and the
ROIC of internal companies. The reasons for selecting these indicators are
as follows:
Indicator

Reason for Selection
Net income, which funds dividends, was selected as an indicator
Profitto incentivize Directors to increase shareholder value.
Consolidated ROIC was selected as an indicator because Kawasaki
Consolidated ROIC
has made ROIC management a part of its basic management
policy and aims to achieve ROIC of 8% or above.
Internal company ROIC was selected as an indicator because
Internal Company
Kawasaki aims to achieve ROIC of 8% or above at each internal
ROIC
company.
Note:
ROIC = EBIT (Income before income taxes + interest expense) /Invested
capital (Interest-bearing debt + Shareholders’ equity)

・ Stock purchase fundThe stock purchase fund is distributed for the purpose of sharing value
with shareholders and incentivizing Directors to enhance medium- tolong-term corporate value, with the entire amount contributed to theofficers’ stock ownership plan in order to purchase shares of the Company
on a continuous basis.
The Company sets the ratio of performance-based remuneration so thatthe ratio between basic remuneration, performance-based remunerationand stock purchase funds will be about 65%:25%:10% when ROIC is 8%.
Performance-based remuneration is based on performance for FY2019.
Actual results of the indicator for performance-based remuneration are as
follows:• Profit: ¥18.6 billion• Consolidated ROIC: 4.2%

• Each Internal Company ROIC: As stated in the following table.
Aerospace Systems
Precision Machinery &RobotRolling StockEnergy System & Plant
Engineering
Ship&
Offshore
8.8%Structure(7.2%) Motorcycle & Engine
8.0%– 53 –

10.4%
1.4%(2.6%)

New Remuneration System (Remuneration from July 2021 to March 2022)
It consists of base remuneration, short-term incentive-based remuneration,and long-term incentive-based remuneration.
Base remuneration and short-term incentive-based remuneration are paid in
cash. In addition, long-term incentive-based remuneration is a performancelinked stock compensation, with the aim of sharing profits and risks withshareholders and increasing incentives to contribute to the enhancement ofcorporate value over the medium to long term. The specific structure is asfollows.
・ Basic remuneration
Individual grades are determined based on the mission of each Subject
Director, and remuneration will be set accordingly.
・ Short-term incentive-based remuneration
Performance-linked compensation is based on the achievement level of
performance targets for a single fiscal year, and will be determined basedon the consolidated performance of the Group and the target
achievement level of each Subject Director. The indicator of theconsolidated performance of the Group is Profit attributable to owners ofparent (“Net Profit”), and it is set to encourage the steady achievement of
performance targets for a single fiscal year and the sharing of value
among shareholders. The payment ratio is as follows.
ProfitPayment ratio(%)

Under 00 to less than ¥25 billion¥25 billion to less than ¥45
billion¥45 billion to less than ¥70
billion¥70 billion or more

–
0-45
50-95
100-195200～

The achievement level of the goals of each Subject Director is determinedbased on the achievement level of the goals set by each Subject Director
in the previous fiscal year for short–term issues relating with thecompany as a whole, those in organizations under management of the
Director, as well as tasks in charge.
・ Long-term incentive-based remuneration
Utilizing the mechanism of a Board Benefit Trust, the Company will, in
principle, deliver shares of the Company stock when a Director retires
based on the points granted according to the tenure of office (fixed
points) and those granted according to the achievement level of goals of
the Subject Director (performance points), and provide cash benefits
equivalent to the amount of the share exchange value of the Company.

– 54 –

Points are divided into two categories: fixed points and performancepoints. For the fixed points, a fixed number of shares is granted based on
the length of tenure to share the value with shareholders.
For the performance points, shares are granted based on the achievementlevel of the goals of each Subject Director to work as an incentive toimprove corporate value over the medium to long term. The achievementlevel of the goals of each Subject Director is determined based on theachievement level of the goals set by each Subject Director in theprevious fiscal year for medium-term issues relating with the company as
a whole, those in organizations under management of the Director, as
well as tasks in charge.

The overall remuneration ratio comprising the base remuneration, short-term
incentive-based remuneration, and long-term incentive-based remunerationis set to be approximately “50%:30%:20%” when the consolidated
performance of the Group for the previous fiscal year achieves the target level
and the individual targets set by each Subject Director for the previous fiscal
year are achieved 100%.
Performance-linked compensation is based on performance for FY2020. Lossrelated to performance-linked compensation for this term was ¥19.3 billion.
(ii) Remuneration for Outside Directors (excluding Directors serving as Audit
and Supervisory Committee Members)
Fixed compensation that is not linked to performance due to the independent
nature of the work involved.
(iii) Method of determining remuneration
Remuneration for Directors (excluding Directors serving as Audit andSupervisory Committee Members) is determined by resolution of the Board of
Directors, within the range of remuneration, etc., in advance, based on the
deliberations of the Compensation Advisory Committee. The majority of themembers and the presiding chairman of the Compensation Advisory
Committee are Outside Directors.
By resolution of the Board of Directors, decision on individual remuneration ofeach Director (excluding Directors serving as Audit and Supervisory
Committee Member) may be left to the Director, President and Chief Executive
Officer. In such cases, in accordance with the policy concerning the amount of
remuneration and others to officers (excluding Directors serving as Audit andSupervisory Committee Member) or its calculation method, the amount of
remuneration, etc. are determined based on deliberations by theCompensation Advisory Committee.
The details of remuneration, etc. for each individual Director (excluding
Directors serving as Audit and Supervisory Committee Members) for the fiscal
year under review are determined by Representative Director, President andChief Executive Officer Yasuhiko Hashimoto, under the delegation of the Boardof Directors, as it is necessary to determine such details based on the Group’s– 55 –

performance and the responsibilities of each Director (excluding Directors
serving as Audit and Supervisory Committee Members). In delegating, for the
remuneration for the period from April to June 2021, the policy concerning theamount of remuneration and others to Directors (excluding Directors serving
as Audit and Supervisory Committee Members) or its calculation method
determined at the Board of Directors meeting held on December 24, 2015 isfollowed. For the remuneration from July 2021 to March 2022, the policy
concerning the amount of remuneration and others to Directors (excluding
Directors serving as Audit and Supervisory Committee Members) or its
calculation method determined at the Board of Directors meetings held on May
20, 2021 and June 25, 2021 is followed. Together, based on deliberations by
the Compensation Advisory Committee, we have determined that the policies
are in line.
(II) Remuneration for Directors serving as Audit and Supervisory Committee
Members
Fixed compensation that is not linked to performance due to the independent
nature of the work, and is decided through consultation among the Directors
serving as Audit and Supervisory Committee Members.
(iii) Activities of the Board of Directors and Compensation Advisory
Committee
Policy and systems related to remuneration for Directors (excluding Directors
serving as Audit and Supervisory Committee Members) are decided byresolution of the Board of Directors based on the deliberations of theCompensation Advisory Committee. A majority of the members and thepresiding officer of the Compensation Advisory Committee are Outside
Directors.
The Compensation Advisory Committee met 12 times in FY2021. In addition
to the matters described above, the committee discussed the form of thecorporate officer compensation system going forward.

(3) Overview of Limited Liability Agreement
The Company has, pursuant to the provisions of Article 427, Paragraph 1 of
the Companies Act, concluded a limited liability agreement with Outside
Directors Yoshiaki Tamura, Jenifer Rogers and Hideo Tsujimura, and Directors,
Full-Time Audit and Supervisory Committee Members Katsuyoshi Fukuma andAkio Nekoshima, and Outside Directors, Audit and Supervisory Committee
Members Satoru Kohdera, Atsuko Ishii and Ryoichi Saito. The liability undersaid agreement shall be limited to either an amount of ¥10 million, or an
amount specified by laws and regulations, whichever is higher.
(4) Overview of Directors and Officers Liability Insurance
The Company has concluded a Directors and Officers Liability Insurance (D&O
Insurance) contract prescribed in Article 430-3, Paragraph 1 of the Companies
Act with an insurance company for the Company’s Directors (excluding
Directors serving as Audit and Supervisory Committee Members), Executive
Officers, etc. The insureds do not bear insurance premiums. The insurance
policy covers damages and court costs that may be incurred by the insured
arising from the insured’s act in connection with the execution of his or her
duties. However, the policy does include certain exemption clauses, such as no– 56 –

compensation being given for liability attributable to acts in violation of laws
or regulations that were carried out with full knowledge of their illegality.
(5) Appointment of Full–time Audit and Supervisory Committee Members andReasons Therefor
The Company appoints those who are familiar with the Company’s internalaffairs as Full Time Audit and Supervisory Committee Members in order toenhance the effectiveness of the Audit and Supervisory Committee’s activities
by sharing information obtained in the course of performance of their duties
with all of the Audit and Supervisory Committee Members while making efforts
to develop environment of auditing, etc. and collect internal information as
well as supervising and verifying the status of establishment and operation of
the internal control system on a daily basis. To this end, the Company has
appointed Mr. Katsuyoshi Fukuma and Mr. Akio Nekoshima as Full Time Audit
and Supervisory Committee Members.
(6) Outside Officers(i) Concurrent managing officer positions at other companies and therelationship between the Company and said companies
Not applicable.
(ii) Concurrent Outside Officer positions at other companies and therelationship between the Company and said companies
Position

Name
YoshiakiTamuraOutsideDirector

OutsideDirector,
Audit andSupervisory
Committee
MemberJenifer
RogersAtsukoIshii

Significant concurrent positions

Relationships
with the Company

Outside Director, DIC Corporation
General Counsel Asia, Asurion Japan
Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.
President, American Chamber of Commercein Japan (retired in December 2021)
Outside Audit & Supervisory Committee
Member, Mitsui Sumitomo Insurance
Company, Limited (retired in June 2021)
Outside Director, Mitsui Sumitomo
Insurance Company, Limited

The Company does
not have any
important dealing orother special
relationship with thesaid companies.

Outside Director, NS Solutions Corporation(iii) Family relationships with managing officers or officers, of theCompany or of specific related business operators of the Company
Not applicable.

– 57 –

(iv) Main activities during the fiscal year under review
Attendance
Name

Board ofDirectors
meetings

Audit andSupervisory
Committee

YoshiakiTamura13/13
meetings–

Jenifer
Rogers

13/13
meetings–

Hideo Tsujimura

13/13
meetings–

Provision of opinions and outlines of duties
executed in connection with roles expected of
Outside Directors
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
management experience and deep insight
into manufacturing. Furthermore, as chair of
the Nomination Advisory Committee andCompensation Advisory Committee, he fulfills
an important role in deliberating on theappropriateness of the policy regarding
election of officers and proposals for officer
election, as well as the appropriateness ofthe policy on officer remuneration and the
remuneration system for officers, andreporting on each to the Board of Directors.
She has provided comments that contributeto ensuring the soundness of the Company’s
management and enhancing its enterprisevalue at the Board of Directors meetings
mainly based on her extensive international
experience gained at financial institutions inJapan and overseas and deep insights into
legal affairs, compliance, and risk
management.
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
management experience and deep insight
into product development and intellectual
property. Furthermore, as a member of theNomination Advisory Committee andCompensation Advisory Committee, he fulfills
an important role in deliberating on theappropriateness of the policy regarding
election of officers and proposals for officer
election, as well as the appropriateness ofthe policy on officer remuneration and the
remuneration system for officers, andreporting on each to the Board of Directors.

– 58 –

Attendance
Name

Board ofDirectors
meetings

Audit andSupervisory
Committee

SatoruKohdera13/13
meetings

17/17
meetings

AtsukoIshii

13/13
meetings

17/17
meetings

Ryoichi
Saito

13/13
meetings

17/17
meetings

Provision of opinions and outlines of duties
executed in connection with roles expected of
Outside Directors
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
experience as an attorney and deep insight
into legal affairs. In addition, he has madeefforts to develop auditing environment incooperation with other Audit & Supervisory
Committee Members by actively obtaining
information necessary for auditing.
She has provided comments that contributeto ensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on her abundant
experience in and deep insight into Japan’slabor administration. In addition, she has
made efforts to develop auditing
environment in cooperation with other Audit& Supervisory Committee Members byactively obtaining information necessary forauditing.
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
management experience and deep insights
into business planning, finance andaccounting, and risk management. In
addition, he has made efforts to develop
auditing environment in cooperation withother Audit & Supervisory Committee
Members by actively obtaining informationnecessary for auditing.
Furthermore, he has served as a member of
the Nomination Advisory Committee andCompensation Advisory Committee andplayed an important role in discussing
nomination of, and compensation for,
Directors, etc. and reporting to the Board of
Directors.

– 59 –

Message from Outside Director
The Board of Directors has further strengthened the supervision of execution andthe functions that provide the direction for the future. Furthermore, the reform of
the personnel system has also increased employee engagement by clarifying the
Yoshiaki Tamura

mission and quantifying evaluations.
We will promote the demonstration of leadership on a global scale, such as byconverting energy to hydrogen, realizing a remote society that easily crosses
national borders and seamless transportation that delivers goods and services tocustomers for a future society laid out in “Group Vision 2030.”
Four years have passed since I was appointed as an Outside Director, and various
changes have occurred during this time.
The Company changed from a company with an audit & supervisory board to acompany with audit and supervisory committee, which improved the corporate

Jenifer Rogers

governance of the KHI Group. Furthermore, I feel that the role of monitoring of theBoard of Directors is functioning well, as we take time to discuss themes thatstakeholders find important, such as sustainability and strategy.
Besides, proposals to reduce CO2, such as hydrogen-related products andsolutions, have been integrated as solutions for the issue of climate change in“Group Vision 2030.” As an Outside Director, I place importance on such initiatives
that will lead to sustainable growth of the KHI Group going forward.
The KHI Group is working to make significant changes by formulating a clear “Group
Vision 2030,” and introducing a new personnel system that eliminates senioritybased elements. We believe that the future of the KHI Group is bright as long as

Hideo Tsujimura

new businesses, such as medical robots and hydrogen-related businesses, aresteadily developed and aggressively invested for the future.
However, the profitability of existing businesses is a significant issue, and drastic
strategies, such as business model reform, are necessary. Leveraging technologicalcapabilities, integrity and trust, we anticipate challenges that defy conventional
wisdom.

– 60 –

Message from Outside Director, Audit and Supervisory Committee Member

Satoru Kohdera

With a high level of technological capabilities, the KHI Group carries out a wide
variety of manufacturing and leads the industry. In the current fiscal year, inwhich the impact of the COVID disaster still remains, we achieved v-shaped
recovery and returned to profitability.
Now we are steadily progressing toward the “Group Vision 2030” (realization ofa decarbonized and hydrogen-based society). Transactions of all businesses tothis end are realized with a legal basis, such as contracts, and depend on trust.
For the further development of business in the future, we anticipate to further
strengthening our legal relationships and compliance that accommodate our highlevel of technological capabilities.

Atsuko Ishii

The KHI Group will change and evolve by renewing its determination to solve
societal issues with technological capabilities and strengthening inter-company
relationships and technological synergy through the formulation of “Group Vision
2030.”
Going forward, I believe that increasingly speedy decision making and significant
judgments will be required, but the further control of risks through active
discussions and consideration from diversified perspectives, maintaining anorganization with a strong sense of morals, and strengthening governance areimportant foundations for increasing corporate value, and we will continue tofocus on this point.

Ryoichi Saito

The direction of our growth strategy and the structural reforms essential to it
have become clear.
Furthermore, we are quickly and steadily proceeding with the new personnel
system that increases the energy and efficiency of the organization as well asreforms related to DX.
Going forward, I believe that we must work as one and push forward to realize
our growth strategy. The KHI Group consists of a variety of businesses, and it israther difficult to understand the complete picture. However, through active
discussions at the Board of Directors meetings and various committee meetings
over these three years, I have gradually deepened my understanding of the KHI
Group.
I wish to diligently continue to study going forward to give even more appropriate
advice and carry out supervision.

– 61 –

4. Accounting Auditor(1) Accounting Auditor’s Name
KPMG AZSA LLC(2) Accounting Auditors’ Remuneration, Etc., for the Fiscal Year under
Review(i) Remuneration, etc. as an Accounting Auditor for the fiscal year underreview¥334 million(ii) Cash and other profits payable by the company or its subsidiaries tothe accounting auditors¥421 million(Notes) 1. The Audit and Supervisory Committee verifies the reasonableness of audit plans, audit
performance and progress, and estimate and calculation of remuneration regarding its
Accounting Auditor in accordance with the “Practical Guidelines for Cooperation withAccounting Auditors” issued by Japan Audit & Supervisory Board Members Association.
Following such verification, the Audit and Supervisory Committee determines whether itagrees to the amount of remuneration and other related costs payable to the Accounting
Auditor.
2. Under the audit agreement between the Company and its Accounting Auditor, remuneration,etc., for audits pursuant to the Companies Act and audits pursuant to the Financial
Instruments and Exchange Act are not separated, and they cannot be separated in apractical way. Consequently, the above amounts reflect total remuneration.
3. Of the Company’s major subsidiaries, some overseas subsidiaries have been audited bycertified public accountants or audit corporations (including those who possess equivalentqualifications in foreign countries) other than the Company’s Accounting Auditor.

(3) Details of Non-audit Services
Consulting services, etc., such as advice on addressing advisory remuneration
related to accounting peripheral operations and advice on IFRS adoption, as well asother agreed–upon procedures.
(4) Policy Regarding Determination of Dismissal or Non-reappointment of
Accounting Auditors
When it is recognized that the Accounting Auditor has engaged in an activity fallingunder any of causes for dismissal set forth in Article 340, Paragraph 1 of theCompanies Act, the Audit and Supervisory Committee shall dismiss the Accounting
Auditor with the approval of all the Audit and Supervisory Committee Members.
Besides, when the Audit and Supervisory Committee assesses independence inaccordance with laws and regulations etc., auditing system, status of executing
duties, and others in a comprehensive manner, and judges that there is a need forchange, it shall determine the contents of the proposal concerning dismissal andnon–reappointment of the Accounting Auditor to submit to the General Meeting of
Shareholders.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(Note)

Amounts in this Business Report are rounded down to the nearest unit.

– 62 –

Consolidated Balance Sheet(As of March 31, 2022)(Unit: Millions of yen)

Description(Assets)
Current assets

Amount1,297,781

Description(Liabilities)
Current liabilities

Amount987,328

Cash and deposits

114,469

Notes and accounts payable trade239,976

Notes and accounts receivable trade, and contract assets

418,625

Electronically recorded obligations- operating

104,336

Merchandise and finished goods

78,616

Short-term borrowings

96,108Work in process

419,954

Current portion of bonds payable

20,000

Lease liabilities

1,175

Raw materials and supplies

160,113

Income taxes payable

8,506

Other

109,911

Provision for bonuses

23,938Provision for construction
warranties

14,797

Provision for loss on construction
contracts

9,602

Allowance for doubtful accounts

Non–current assets
Property, plant and equipment
Buildings and structures, net(3,908)724,967444,262
168,409

Contract liabilities

256,189

Other

212,696

Non–current liabilities

536,896

Bonds payable

180,000

Long-term borrowings

194,297

Lease liabilities
Deferred tax liabilities

9,899
1,593

Machinery, equipment andvehicles, net

137,217

Land

58,383

Provision for the in service issuesof commercial aircraft jet engines

3,054

Leased assets, net

10,815

Other

41,249Construction in progress

20,224

Other, net

49,212Intangible assets

23,413

Investments and other assets

257,291

Investment securities

14,539Retirement benefit asset

200

Deferred tax assets

86,249Other

157,668

Allowance for doubtful accounts(1,366)Retirement benefit liability

Total liabilities(Net assets)
Shareholders’ equity

444,262
104,484

Capital surplus

55,526

Retained earnings

285,381

Treasury shares(1,129)

Accumulated othercomprehensive income

34,917

Valuation difference on availablefor-sale securities

1,424

Deferred gains or losses on hedges(191)

Foreign currency translation
adjustment

Non-controlling interests
2,022,748

1,524,225

Share capital

Remeasurements of defined
benefit plans

Total assets

106,803

Total net assets
Total liabilities and net assets– 63 –

23,585
10,09819,342498,5222,022,748

Consolidated Statement of Profit and Loss
(April 1, 2021 – March 31, 2022)(Unit: Millions of yen)

Description

AmountNet sales

1,500,879

Cost of sales

1,244,300

Gross profit

256,578

Selling, general and administrative expenses

210,772

Operating profit

45,805Non-operating income

9,342Interest income

1,106

Dividend income

865

Gain on sale of investment securities

2,120

Foreign exchange gains

569

Other

4,680

Non-operating expenses

25,213

Interest expenses

3,398

Share of loss of entities accounted for using
equity method

14,412

Loss on retirement of non–current assets

951

Other

6,451

Ordinary profit

29,934Extraordinary income

1,633

Gain on sale of non–current assets

1,633

Extraordinary losses

715

Impairment losses

715

Profit before income taxes

30,853

Income taxes - current

15,053

Income taxes - deferred(8,185)

Profit6,867
23,985

Profit attributable to non-controlling interests

2,183

Profit attributable to owners of parent

21,801– 64 –

Non–consolidated Balance Sheet(As of March 31, 2022)(Unit: Millions of yen)

Description

Amount(Assets)
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Raw materials and supplies
Work in process
Advance payments - trade
Prepaid expenses
Other
Allowance for doubtful accounts

Non–current assets
Property, plant and equipment
Buildings
Structures
Docks and building berths
Machinery and equipment
Vessels
Aircraft
VehiclesCurrent liabilities
Notes payable – trade
Electronically recorded obligations
7,296- operating
182,065
Accounts payable - trade60,227
Short–term borrowings
96,898
Accounts payable - other283,458
Accrued expenses
27,110
Income taxes payable
Contract liabilities
934
Provision for bonuses
133,450
Provision for construction(208)
warranties
Provision for loss on construction
contracts
Lease liabilities
Other
Non-current
liabilities
606,575
Bonds
payable298,140
Long-term borrowings
108,326
Lease liabilities
17,602
Provision for retirement benefits
2,289
Provision for the in service issues
91,873of commercial aircraft jet engines
Other
91
864,82173,589Land

20,667

Leased assets

8,520

Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Investments in capital ofsubsidiaries and associates
Distressed receivables
Deferred tax assets
Other
Allowance for doubtful accounts

Total liabilities

90,904
134,775
117,085
48,46578,825
1,052
194,134
12,625
5,561
2,654
716
46,372
470,884
180,000
194,252
8,062
57,887
3,054
27,627

Shareholders’ equity
Share capital
15,995
Capital surplus
11,697
Legal capital surplus
Other capital surplus
4,297
Retainedearnings
292,439
Otherretainedearnings
11,026
Reserve for special depreciation
Reserve for tax purpose
86,400reduction entry of non-current
assets35,963Retained earnings brought
1,147
forward79,813
Treasury shares
79,372 Valuation and translation(1,284) adjustments
Valuation difference on availablefor-sale securities
Deferred gains or losses on hedges
10,404

1,471,397

1,204,526(Net assets)

Total net assets
Total assets

733,642469

898
37,443

Intangible assets

Amount22

Tools, furniture and fixtures

Construction in progress

Description(Liabilities)

Total liabilities and net assets– 65 –

266,511
104,484
54,12654,126–109,029
109,029
866
4,957
103,205(1,129)
359
785
(426)

266,870
1,471,397

Non–consolidated Statement of Profit and Loss
(April 1, 2021 – March 31, 2022)(Unit: Millions of yen)

Description

AmountNet sales

892,203

Cost of sales

811,430

Gross profit

80,773

Selling, general and administrative
expenses

96,578Operating loss

15,804Non-operating income
Interest income

506

Dividend income

32,838

Other

3,368

36,713Non-operating expenses
Interest expenses

1,984

Foreign exchange losses

3,050

Loss on retirement of non–current assets

988

Other

5,307

11,331

Ordinary profit

9,578

Extraordinary income

1,633

Gain on sale of non-current assets

1,633

Extraordinary losses

715

Impairment losses

715

Profit before income taxes

10,497

Income taxes - current(5,248)

Income taxes - deferred(5,523)

Profit(10,772)
21,269– 66 –

Audit and Supervisory Committee’s audit report (duplicated copy)

Audit Report(English Translation)
The Audit and Supervisory Committee has conducted an audit concerning theperformance of duties by the Directors for the 199th fiscal year from April 1, 2021 toMarch 31, 2022, and hereby reports the auditing methods and their results as follows.
1. Auditing Methods and Their Contents(1) The Audit and Supervisory Committee received reports on a regular basis from
Directors, employees and other relevant personnel, sought explanations asnecessary, and provided opinions with respect to the contents of the Board of
Directors’ resolutions pursuant to 399-13, Paragraph 1, Item 1(b) and (c) of theCompanies Act and the status of the development and maintenance of thesystems that are maintained based on such resolutions (internal control systems).
The Committee also received reports from Directors, etc. and KPMG AZUSA LLC
on the status of the evaluation and audit of internal controls over financial
reporting under the Financial Instruments and Exchange Act and sought
explanations as necessary.
(2) In accordance with the auditing policies, audit plans and other relevant mattersestablished by the Audit and Supervisory Committee, the Committee, incoordination with the Auditing Department (Internal Audit Department) andother departments concerned, participated in important meetings, received
reports from the Directors, employees and other relevant personnel regarding
performance of their duties, sought explanations as necessary, examined
important documents and associated information, and studied the operations andfinancial positions at the head office and business offices.
Moreover, as for subsidiaries, the Committee communicated its intentions andexchange information with the Directors and Audit & Supervisory Board Membersof subsidiaries, including via online methods, and received business reports fromthe subsidiaries as necessary.
(3) The Audit and Supervisory Committee monitored and examined whether the
Accounting Auditor maintained their independence and implemented appropriate
audits, as well as received reports from the Accounting Auditor regarding theperformance of their duties and, as necessary, attended its audits and sought
explanations.
Also, the Audit and Supervisory Committee received notice from the Accounting
Auditor that “the system for ensuring that duties are performed properly”(matters set forth in each item of Article 131 of the Ordinance on Company
Accounting) has been prepared in accordance with the “Product Quality
Management Standards Regarding Audits” (issued by the Business Accounting
Deliberation Council (BACD)) and other relevant standards, and sought
explanations as necessary.
Based on the above methods, we examined the Business Report and supplementaryschedules, the non–consolidated financial statements (non-consolidated balance sheet,non-consolidated statement of income, non–consolidated statement of changes in net
assets, and notes to the non-consolidated financial statements) and their supplementaryschedules, as well as consolidated financial statements (consolidated balance sheet,consolidated statement of income, consolidated statement of changes in net assets, andnotes to the consolidated financial statements) related to the relevant fiscal year.
– 67 –

2. Results of Audit(1) Results of Audit of Business Report and Other Relevant Documents(i) In our opinion, the business report and the supplementary schedules are inaccordance with the related laws and regulations and the Articles ofIncorporation, and fairly represent the Company’s condition.
(ii) We have found no evidence of wrongful action or material violation of related
laws and regulations, nor of any violation with respect to the Articles ofIncorporation, related to performance of duties by the Directors.
(iii) In our opinion, the contents of the resolutions of the Board of Directors
related to the internal controls system are fair and reasonable. We have foundno matters on which to remark regarding the information contained in thisBusiness Report and the performance of duties by the Directors related tosuch internal controls system, including internal controls on financial reporting.
(2) Results of Audit of Non-consolidated Financial Statements and Supplementary
Schedules
In our opinion, the methods and results of audit employed and rendered by KPMG
AZSA LLC are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the methods and results of audit employed and rendered by KPMG
AZSA LLC are fair and reasonable.
May 19, 2022
Audit and Supervisory Committee, Kawasaki Heavy Industries, Ltd.

(Note)

Full-Time Audit and Supervisory Committee Member

Katsuyoshi Fukuma

Full-Time Audit and Supervisory Committee Member

Akio Nekoshima

Audit and Supervisory Committee Member

Satoru Kohdera

Audit and Supervisory Committee Member

Atsuko Ishii

Audit and Supervisory Committee Member

Ryoichi Saito

Audit and Supervisory Committee Members Satoru Kohdera, Atsuko Ishii and Ryoichi Saito
are Outside Directors as stipulated in Article 2, Item 15 and Article 331, Paragraph 6 of theCompanies Act.

– 68 –