Messages from Outside Directors
Diverse human resources as the dynamo for innovation

Takeshi Ogita

Independent Outside Director(Chairperson of the Board of Directors)
Apr. 1980 Joined Sankyo Co., Ltd.
July 2004 Corporate Officer, Head of New Drug Development Division, Sankyo Co., Ltd.
Apr. 2007 	Executive Officer, Head of Pharmaceutical Technology Division, Daiichi Sankyo Co., Ltd.
June 2009 Member of the Board, Senior Executive Officer, Daiichi Sankyo Co., Ltd.
Apr. 2014	Member of the Board, Senior Executive Officer, Head of Vaccine Business Intelligence
Division, Daiichi Sankyo Co., Ltd.
		
Representative Director and President, Kitasato Daiichi Sankyo Vaccine Co., Ltd.
Apr. 2017	Guest Professor, Graduate School of Creative Science and Engineering, Waseda University
June 2018 Outside Director, Japan Hades Co., Ltd. (current)
June 2020 Director, TS TECH (current)
June 2022 Chairperson of the Board of Directors, TS TECH (current)

Increasing the effectiveness of the Board of Directors to achieve
our 2030 Vision
Since being appointed as chairperson of the Board of Directors
in June 2022, I have been fortunate to benefit from the diverse
range of experience and knowledge possessed by my fellow
Board members. Our active discussions have enabled decisionmaking that contributes to the enhancement of corporate value.
The move to appoint an outside director as chairperson of theBoard of Directors took place in 2020. The following year, wetransitioned to “a company with an Audit and Supervisory Committee” structure and established the Nomination and Compensation Committee as a voluntary advisory body to the Board of
Directors. By taking steps like these, we have continued to movetoward our aim: constructing a highly objective and transparent
corporate governance system. At the same time, appropriate
authority is delegated to executive officers, making for a systemthat enables prompt decision-making by the Board of Directors
and serves to deepen discussions on agenda items.
For example, the Board receives monthly reports on consolidated results and business segments. However, these meetings are not just a reporting exercise; they also involve
discussions on issues related to deviations from formulatedplans and how to respond to those issues. Board decisions on
how various matters should be handled are then conveyed tothe executive team. Similarly, the Board also receives a monthly
report on product quality, with information on the status of delivery defects at each business site shared with directors. Continuously providing high-quality products is one of our strengths,
and indeed, the lifeline on which our business depends. Although the work of quality control is not something that may be
immediately apparent, for a manufacturer like us, it is a criticalcornerstone for protecting our business. It is therefore of theutmost importance to make it clear to people at all worksitesthat the Board of Directors is constantly appraised of the situation in a regular reporting process. To those who may think thisapproach is micro-management, I would suggest that “God is in

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the details.” I very much appreciate the Board’s commitment togetting involved in the minutiae of business operations.
The 14th Medium-Term Management Plan concluded at theend of March 2023. During the past three years, the Group’s
operations have been severely impacted by unprecedentedchanges in the external environment, including the COVID-19
pandemic and global semiconductor supply shortages. In theface of such circumstances, I believe that the company deserves
praise for being able to secure a certain level of revenue andprofit. This is truly thanks to the efforts of all employees, whohelped us deliver stable product supply through strengthened
cooperation both inside and outside the Group, implement newwork styles, and make thorough cost reductions. In addition, we
have made progress on various measures preparing for futurebusiness growth, including growing sales in new business areas
and announcing our next-generation automotive cabin, “XR
Cabin.” In the area of ESG performance, we made significant
progress by identifying material issues and setting out mediumto long-term targets for these. The 15th Medium-Term Management Plan is formulated with a view to driving even further
progress, and it reflects management’s determination to achieve
our 2030 Vision. A plan is only meaningful, however, if it is duly
implemented. The Board of Directors will carefully monitor
progress on the achievement of the medium- to long-term targets and provide guidance as necessary.
Three years have passed since I was appointed an outside
director, and my abiding sense is that TS TECH is a “diligent company grounded in technology.” Looking ahead, it is likely that thepace of change will continue to quicken. I hope that everyone in
the company, from young employees to management, will continue to work together to face all challenges, so that we can deliver our advanced technologies to the world, while firmly
maintaining the technologies and culture we have built so far.

The year 2022 will be remembered as a time of struggle thatwas fraught with unforeseen social situations and great challenges, ranging from delayed market recovery following the
COVID-19 pandemic to semiconductor supply shortages, andthe impact of the conflict in Ukraine. Under these circumstances, the TS TECH Group pressed forward with various initiatives,seeking not only to survive but to achieve further growth, basedon our vision statement of being “A company dedicated to realizing people’s potential” and “A company sincerely appreciatedby all.”First, with regard to “A company dedicated to realizing people’s potential,” in Japan, where companies are facing labor
shortages due to an aging society and falling birthrate, it is people who are the most important management asset for a company’s efforts to remain sustainable. Sustainability isunderpinned by diversity and inclusion (D&I), and the strengthof management commitment is the decisive factor in this area.
The TS TECH Group positions fostering D&I as an importantmanagement challenge. We aim to build a corporate culturethat is accepting of the individual characteristics and background of every employee, including gender, age, nationality,
religion, culture, and background, and empowers each individual to make the most of his or her abilities. To achieve this aim, weare following a dual approach of reforming awareness across allorganizations and implementing specific measures to respondto challenges that minorities face. Although it will take time forthese initiatives to bear tangible results, we have made a solid
start in fostering the kind of corporate culture we aspire to.
One of the immediate challenges we face is women’s
under-representation in management and executive positions.
The low proportion of women in the automotive industry’s workforce has been a perennial challenge. TS TECH is in a position
similar to the rest of the industry, in that there are fewer womenthan men who have built a career track record. That situation

notwithstanding, seeing how women working on our front lines
truly shine in their jobs, I believe that in the not-so-distant future
the many measures we are implementing now will bear fruit andwe will see female executives who were employees.
Next, with regard to being “A company sincerely appreciated by all,” in a period of dizzying change for the automotive industry, if we are to continue to provide value that pleases our
stakeholders, we must continue to create innovation. The TS
TECH Group is actively engaged in various initiatives to boost
competitiveness, including focused efforts on digital transformation, such as automation of production processes and
AI-enabled data analysis. What is more, in the period of the 15th
Medium-Term Management Plan, with an eye on the next generation of vehicles, we are stepping up our efforts to develop newtechnologies in line with our growth strategy of “securing cabincoordination capacity.“ In order to continue to provide new value
in the future as technological innovation accelerates, it is vitally
important that we build strategic alliances with companies thatpossess technologies that can be applied anywhere in the world,at home or overseas. The key will be whether we can conclude
future-oriented technological alliances. In addition, our corporate
culture, which values both the diverse ideas that young talentbrings in and vigorous discussion, is a true asset for the company.
Providing mutual reinforcement by engaging in exchanges withother companies via technological partnerships, coupled with thedevelopment of the younger people in our workforce, should ultimately help to further accelerate innovation.
While the period of transformation the automotive industry
is currently facing brings with it the risk of major market shifts, it
could also provide our company with significant opportunities.
As an outside director, I will continue to take part in management discussions with an objective perspective and contributeto promotion of the 15th Medium-Term Management Plan.

Kaori Matsushita
Independent Outside Director

Apr. 1982 Joined FUJITSU LIMITED
Apr. 2007	General Manager of Project Management Department, Alliance Management Division,
Global Strategy Headquarters of FUJITSU LIMITED
Sep. 2013 Diversity Mentor of FUJITSU LIMITED
Apr. 2016 Senior Director, Global Marketing Headquarters of FUJITSU LIMITEDMay 2019 CEO of K&L Consulting LLC (current)
June 2020	Outside Director and Audit & Supervisory Committee Member of Taisei Oncho Co., Ltd. (current)
May 2022 Outside Director of Belc CO., LTD. (current)
June 2022 Director, TS TECH (current)

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Messages from Outside Directors

Hajime Hayashi

Independent Outside Director, Audit and Supervisory Committee Member(Chairperson of the Nomination and Compensation Committee)
Apr. 1983 Joined Mie Labor Management Center
Apr. 1986 Registered as an attorney		
Joined Owaki & Sumi Law Office
Apr. 1989 Joined Meiwa Law Office
May 1996 Representative, Sazanka Law Office (current)
June 2020 Auditor, TS TECH
June 2021 Director, TS TECH (Audit and Supervisory Committee Member) (current)
June 2023 Chairperson of the Nomination and Compensation Committee (current)

Independent Outside Director, Audit and Supervisory Committee Member
Apr. 1997 Appointed as an Assistant Judge (Tokyo District Court)
June 2000 Registered as an attorney (affiliated with Dai-ni Tokyo Bar Association)
Aug. 2002 Admitted to the New York State Bar Association
Mar. 2015	Elected as an International Fellow of the American College of Trust and Estate Counsel (current)
Apr. 2017	Elected as an Academician of the International Academy of Estate and Trust Law (current)
Dec. 2020 Representative, Tokyo Heritage Law Firm (current)
June 2021 Director, TS TECH (Audit and Supervisory Committee Member) (current)Management-led efforts to reform awareness will lead toenhanced corporate value

Solid governance and being a great place to work are our strengths

In June 2021, the company established the Nomination andCompensation Committee as a voluntary advisory body to theBoard of Directors. I have been a member of the committee
since its inception. In June 2023, I was appointed chairperson,
and in that role I am working to ensure that the committee’s
activities serve to enhance corporate value by strengthening
governance of the nomination and compensation processes.
The primary role of the Nomination and Compensation
Committee is to report to the Board of Directors on matters relating to the selection, dismissal, and compensation of directors
and executive officers. In order to ensure objective and transparent decision-making, of the five members of the committee,
three are outside directors, to ensure that deliberations benefit
from external perspectives.
The criteria for the selection of candidates are stipulated in
the regulations of the Board of Directors, and the selection of
persons is made in accordance with these criteria. For executive
officers, it is necessary to select people who possess the foresight and decision-making abilities necessary to lead an organization, who are bright and open-minded and capable ofembodying the Group’s vision statement of being “A company
dedicated to realizing people’s potential” and “A company sincerely appreciated by all.” As an outside director, I engage in impartial deliberations to determine whether the identified
candidates are suitably qualified for the position. As for internal
candidates, it is important to take steps such as spending more

In recent years, TS TECH has strengthened its corporate governance framework, including transitioning to “a company with an
Audit and Supervisory Committee” structure, as well as increasing the number of outside directors. The Board of Directors ischaired by Takeshi Ogita, an outside director, who ensures thatproceedings are conducted appropriately from an objective andindependent standpoint. The other outside directors are Kaori
Matsushita, a woman who brings her experience and expertisein D&I and computer systems to the Board, and Hajime Hayashi
and myself, who bring legal-related knowledge as attorneys. All
outside directors engage actively in making recommendations.
When I previously raised legal-related questions in response toa report about the initiation of business transaction with a newcustomer, TS TECH staff responded by engaging in negotiations
with the customer and later reported to the Board of Directors
that, “We were able to reduce future risks by taking actions
in line with your observations.” This is just one small example toillustrate how the views of outside directors are thoroughlyreflected in management and business execution, and how thevarious experience and knowledge that outside directors possess is helping to strengthen the effectiveness of the Boardof Directors.

time with them in order to discern their qualities and personalities in greater depth, not relying only on the written informationthat is submitted.
With an eye on the next generation, another important
agenda item for deliberation is succession planning. While executive officers are required to have general management skills, inorder to win in a fast-changing automotive industry, the TS TECH
Group needs talent capable of spearheading change and reform. Working together with other committee members and thepersonnel division, I will focus on leveraging our collective
knowledge and taking an out-of-the-box perspective in selecting and developing successors.
Current officer compensation* is comprised of base compensation (60%), performance-linked compensation (25%), andstock-based compensation (15%), although there is room to debate whether this weighting is ideal for further enhancing management awareness. Also, regarding performance-linked
compensation, it is necessary to consider indicators linked tothe materiality KPIs as part of management’s responsibility toensure sustainability. Without being bound by convention andwith the aim of taking the next step forward, I aim to contributeto further enhancement of corporate value by engaging in active discussions in the Nomination and Compensation Committee and other bodies.
* Compensation for Directors and Operating Officers, excluding Outside Directors
and Directors who are members of the Audit and Supervisory Committee.

Overview of the compensation system

The company determines the amount of each form of compensation according to a compensation table, in accordance with rank, individual performance, and other factors.
For performance-linked compensation, from the perspective of value sharing with shareholders and employees, average percentages for the past three years forconsolidated revenue and consolidated operating income, together with the rate of change over the previous fiscal year in dividend amount and the number of months of
employee bonuses have been selected as performance indicators for the index.
Specifically, the company calculates the compensation amounts by multiplying a performance-linked compensation index coefficient calculated using the formula below by
the amounts for each rank in the compensation table.
Performance-linked
percentage for the past three
Average percentage for the past threeof change inRate of change in number of＝（ Average＋ terms＋ Rate＋ months）÷ 4compensation coefficientterms for consolidated revenue
for consolidated operating income
dividend amountof employee bonuses* Each performance indicator is equally weighted. The performance-linked compensation index coefficient is limited to a maximum of 150%, and there is no minimum.

Reference: The performance-linked compensation index coefficient as determined for fiscal 2023 is detailed below.
• Average percentage for the past three terms for consolidated revenue: 132.5%• Average percentage for the past three terms for consolidated operating income: 20.3%• Rate of change in dividend amount: 133.3%• Rate of change in number of months of employee bonuses: 100.0%

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Tomoko Nakada

TS TECH Integrated Report 2023

One outstanding governance-related challenge is the aspiration to appoint a non-Japanese director. There are many issues that need to be considered for such an appointment, andit may take some time for this to occur. However, in order toensure that the Group can make further progress as a global
company, the appointment of a non-Japanese director who understands and can put the TS TECH Philosophy into practicewould be a significant decision.
One of the material issues identified by the company is to“offer rewarding working environments in which each and every
employee makes the most of their diverse talents,” and this will
be key to enhancing corporate value, going forward. One youngman, who has been able to fully utilize flextime work with nocore hours, coupled with paid leave, to balance work andchild-rearing, said with a smile, “No other company is so easy towork for.” Looking across the company it is evident that the
number of women in management positions is being steadily
addressed. Through efforts to date, I feel that we have all become more accepting of each other’s diversity, and that a foundation has been laid that will empower us all to work withenthusiasm. I look forward to seeing efforts continue to enablea diverse group of talented people to give their best in management positions and eventually as executive officers.

Greeting from new outside director

I have built my career to date at the UBE Group, a chemical and machinery
manufacturer. With a uniquely manufacturing-oriented mindset that shares
similarities with that at TS TECH, yet equipped with insights from a different
industry, I believe that it is my responsibility to engage in discussions that contribute to the enhancement of corporate value. In addition, based on my financial and legal knowledge and the knowledge I acquired as a corporate auditor
in a previous position, I will work actively to make proposals as a member ofthe Audit and Supervisory Committee, in order to uphold the soundness andappropriateness of corporate management.
Improving corporate governance is synonymous with making appropriate use of all management resources and increasing corporate value, and it
will help the company to embody its vision statement of being “A company
dedicated to realizing people’s potential” and “A company sincerely appreciated by all.” I am committed to do my part in implementing richly diverse andtransparent management, and building a solid corporate foundation.

Kenichi Naito

Independent Outside Director, Audit and Supervisory
Committee Member
Apr. 1982 Joined Ube Industries, Ltd. (currently UBE Corporation)
May 2002	General Manager of Administration Dept.,
Ube Techno Eng Co., Ltd. (currently UBE
MACHINERY CORPORATION, Ltd.)
June 2008	Director, General Manager of Administration
Center, Ube Techno Eng Co., Ltd.
June 2014	Managing Director, Executive General
Manager of Administration Dept.,
T&U ELECTRONICS CO., LTD.
June 2017 Auditor, UBE EXSYMO CO., LTD.
June 2023	Director, TS TECH (Audit and Supervisory
Committee Member) (current)

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