On the Release of Bridgestone’s First
Corporate Governance Code Report
The Bridgestone Corporation, as part of its efforts in working towards the achievement of its ultimate
goal of “becoming a truly global company” and of being “Dan-Totsu” in all aspects of its business, is in
the process of further enhancing its corporate governance.
This process of enhancement and reform has been implemented on an ongoing basis since the company
was first established in order to respond over time to the changing conditions and issues deemed
important, and in order to ensure that the quality of management and the transparency of decision
making processes was constantly improved.
Commencing with the inclusion in 2010 of Independent Non-Executive members to the Board of
Directors, and continuing to this day with the establishment of a range of discretionary board advisorycommittees, auditing structures, the enhancement of management objectivity by the introduction of the
Global Executive Committee, and the adoption of the “Company with Nominating Committee, etc.”
model of corporate governance in March 2016, over the past five years. Bridgestone has implemented acomprehensive restructuring of its governance policies and procedures.
It is our intention to fully employ this governance structure in order to further strengthen internal
controls, promote timely decision making, and continue to realize the ever more effective and efficientplanning and execution of our business activities.
Starting with this report, Bridgestone will use the Corporate Governance Code as a new tool forevaluating our governance policies and systems and communicating our approach and progress in theirachievement to our stakeholders.
On behalf of everyone here at Bridgestone, I thank you for your ongoing support and understanding andlook forward to hearing your response to this report and your evaluation of our efforts to date as we
strive to create a company that we can all be proud of.
September 2016

Masaaki Tsuya

Member of the Board
CEO and Representative Executive Officer
Concurrently Chairman of the Board
Bridgestone Corporation

Section 1: Securing the Rights and Equal Treatment of Shareholders
General Principle 1
Companies should take appropriate measures to fully secure shareholder rights and develop an
environment in which shareholders can exercise their rights appropriately and effectively.
In addition, companies should secure effective equal treatment of shareholders.
Given their particular sensitivities, adequate consideration should be given to the issues andconcerns of minority shareholders and foreign shareholders for the effective exercise of shareholder
rights and effective equal treatment of shareholders.

The Company recognizes that it is essential for the sustainable development of the business tocollaborate with various stakeholders and that our shareholders constitute our primary
stakeholder. Based on this understanding, the Company strives to develop an environment
wherein shareholders can adequately exercise their rights by providing them with a wide variety
of information and opportunities to exercise their rights.
Moreover, the Company endeavors to secure the rights of minority and foreign shareholders
and thereby seeks to secure the substantive equality of the rights of all shareholders.

Principle 1.1 Securing the Rights of Shareholders
Companies should take appropriate measures to fully secure shareholder rights, including voting
rights at the general shareholder meeting.

The Company endeavors to ensure the rights of shareholders by managing operations in orderto ensure timely disclosure of not only statutory disclosure documents but also of otherinformation in both Japanese and English, by conducting the Annual General Shareholders’Meeting in a manner such that the voting rights of all shareholders can be exercised effectively,
and by ensuring adequate time and opportunity for dialogue between management andshareholders.

Supplementary Principle 1.1.1
When the board recognizes that a considerable number of votes have been cast against a proposalby the company and the proposal was approved, it should analyze the reasons behind opposing votes
and why many shareholders opposed, and should consider the need for shareholder dialogue andother measures.

Based upon the understanding that the Annual General Shareholders’ Meeting is theCompany’s highest decision-making body, the Company takes the results of shareholders’1execution of their voting rights as an important indication of their intent. The Board of Directors
therefore formally analyses the reasons and causes for proposals where the total votes in
opposition exceed 20%.

Supplementary Principle 1.1.2
When proposing to shareholders that certain powers of the shareholders’ meeting be delegated tothe board, companies should consider whether the board is adequately constituted to fulfill its
corporate governance roles and responsibilities. If a company determines that the board is indeed
adequately constituted, then it should recognize that such delegation may be desirable from theperspectives of agile decision-making and expertise in business judgment.

In order to further promote the separation between the executive and supervisory functions
and further strengthen the supervisory role of the board, the Company has adopted the“Company with Nominating Committee, etc.” model of corporate governance. Moreover, in
addition to establishing the committees legally required under this model, the Company has
established a Governance Committee comprised entirely of Independent External Directors, allof whom meet the Company’s benchmark for independence (hereinafter referred to as“Independent Directors”). The Governance Committee serves as an advisory body to the Board of
Directors with the objective of ensuring that the Company maintains the structures andprocesses needed to ensure appropriate levels of governance.
The Articles of Incorporation currently stipulate that the Board of Directors is responsible fordecisions such as determining the level of interim dividend payouts. In the event of further suchdelegations of authority by the General Shareholders’ Meeting to the Board of Directors, theCompany will continue to enhance its structures and procedures of governance in order todischarge these responsibilities while ensuring the necessary levels of expertise in, and timelinessof, its decision making.

Supplementary Principle 1.1.3
Given the importance of shareholder rights, companies should ensure that the exercise ofshareholder rights is not impeded. In particular, adequate consideration should be given to the special
rights that are recognized for minority shareholders with respect to companies and their officers,
including the right to seek an injunction against illegal activities or the right to file a shareholder
lawsuit, since the exercise of these rights tend to be prone to issues and concerns.

The Company has established a “Share Handling Regulations” which formally stipulates
procedures for the exercising of the rights of minority shareholders and any other procedures inrelation to shares in order to ensure that shareholders are able to exercise their rights in full.

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Principle 1.2 Exercise of Shareholder Rights at General Shareholder Meetings
Companies should recognize that general shareholder meetings are an opportunity for constructive
dialogue with shareholders, and should therefore take appropriate measures to ensure the exercise ofshareholder rights at such meetings.

The Company has and will continue to make every effort to ensure that shareholders areprovided with the services and support necessary to ensure that they are able to exercise theirrights at the General Shareholders’ Meeting including such measures as scheduling the Meeting
to avoid clashing with the “peak period” for holding General Shareholders’ Meetings in Japan,
early dispatch of proxy statements, provision of an online voting platform, and provision of
information in English.

Supplementary Principle 1.2.1
Companies should provide accurate information to shareholders as necessary in order to facilitate
appropriate decision-making at general shareholder meetings.

Taking the requests from shareholders into consideration, the Company attempts to provide
clear and relevant information to shareholders in a manner intended to facilitate their decision
making. This includes providing more comprehensive information regarding candidates forboard membership and publishing the “Guidelines for Determining the Independence of Board
Members,” and including forecasts on earnings in the financial report.

Supplementary Principle 1.2.2
While ensuring the accuracy of content, companies should strive to send convening notices forgeneral shareholder meetings early enough to give shareholders sufficient time to consider theagenda. During the period between the board approval of convening the general shareholder
meeting and sending the convening notice, information included in the convening notice should be
disclosed by electronic means such as through TDnet1 or on the company’s website.
1 TDnet: The Tokyo Stock Exchange operates a real-time internet service (Timely Disclosure network) which distributes the information provided
by listed companies on a timely basis in accordance with its listing rules.

The Company strives to ensure adequate time for deliberation of Shareholders’ meeting
agenda items by sending convening notices as early as possible and in advance of the deadline
prescribed by the Companies Act in Japan. In addition, in cases where board approval is madeon proxy items before sending the convening notice, notification of such is made at the time ofthe decision online via the Company website.

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Supplementary Principle 1.2.3
The determination of the date of the general shareholder meeting and any associated dates should
be made in consideration of facilitating sufficient constructive dialogue with shareholders andensuring the accuracy of information necessary for such dialogue.

The Company strives to promote the accessibility of the General Shareholders’ Meeting bymeasures including scheduling the Meeting to avoid clashing with the “peak period” for holding
General Shareholders’ Meetings in Japan.

Supplementary Principle 1.2.4
Bearing in mind the number of institutional and foreign shareholders, companies should take steps
for the creation of an infrastructure allowing electronic voting, including the use of the Electronic
Voting Platform, and the provision of English translations of the convening notices of generalshareholder meeting.

In consideration of the fact that overseas investors hold around 30% of corporate shares
publicly issued (28.409% as of June 30, 2016), the Company has introduced an Electronic
Voting Platform and provides convening notices in English on its corporate website along with awide range of other material and data for investors in English.

Supplementary Principle 1.2.5
In order to prepare for cases where institutional investors who hold shares in street name express aninterest in advance of the general shareholder meeting in attending the general shareholder meetingor exercising voting rights, companies should work with the trust bank (shintaku ginko) and/or
custodial institutions to consider such possibility.

The Articles of Incorporation of the Company restricts the exercise of voting rights at Annual
Shareholders’ Meetings to nominee shareholders or their proxies.
In consultation with the trust bank which manages the shareholders’ registry as the agent of
the Company, and, taking into consideration both domestic and international implications, legal
obligations, social trends and operational issues, the Company will continue to monitor thesituation regarding the attendance of investors who are not registered on the shareholders’registry.

Principle 1.3 Basic Strategy for Capital Policy
Because capital policy may have a significant effect on shareholder returns, companies should
explain their basic strategy with respect to their capital policy.

4The Company, in full recognition of the importance of the interests of shareholders, aims tostrengthen the foundations of the business in order to promote future growth. As part of its
basic policy for the enhancement of business performance the Company has set an annual ROE
target of 12%.
While maintaining levels of internal reserves sufficient to enable future investments in order tomaintain growth, the Company endeavors to balance the need to maintain a strong financial
position with that of ensuring an appropriate level of return to its shareholders. In overall
consideration of quarterly business performance, current financial position, mid-term
profitability forecasts, investment plans and cash flow, the Company strives to meet shareholder
expectations for returns by setting dividends in a stable and sustainable level within aconsolidated payout ratio range of between 20% to 40%.

Principle 1.4 Cross-Shareholdings
When companies hold shares of other listed companies as cross-shareholdings2, they should
disclose their policy with respect to doing so. In addition, the board should examine the mid- tolong-term economic rationale and future outlook of major cross-shareholdings on an annual basis,taking into consideration both associated risks and returns. The annual examination should result inthe board’s detailed explanation of the objective and rationale behind cross-shareholdings.
Companies should establish and disclose standards with respect to the voting rights as to theircross-shareholdings.
2 Cross-shareholding: There are cases where listed companies hold the shares of other listed companies for reasons other than pure investment
purposes, for example, to strengthen business relationships. Cross-shareholdings here include not only mutual shareholdings but also unilateral
ones.

The Company maintains a policy whereby it will not hold shares in other companies otherthan those which are of strategic importance, necessary to maintain or enhance business
partnerships, or contribute to business profitability. As part of this policy, the rationality of all
such strategic holdings must be reviewed by the Board of Directors and their retention
approved on an annual basis.
In exercising its voting rights for strategically held shares the Company will consider thecontent of proposals in terms of the investment strategy as approved by the Board in addition totheir impact on enhancing profitability and sustainable business growth, corporate governanceand shareholder return.

Principle 1.5 Anti-Takeover Measures
Anti-takeover measures must not have any objective associated with entrenchment of the
management or the board. With respect to the adoption or implementation of anti-takeover measures,
the board should carefully examine their necessity and rationale in light of their fiduciary responsibility
to shareholders, ensure appropriate procedures, and provide sufficient explanation to shareholders.

5The Company has no anti-takeover measures in place and currently has no plans to introduce
any such measures. Shareholders will be fully informed in advance of the nature and reason forany such measures should they be deemed necessary in the future.

Supplementary Principle 1.5.1
In case of a tender offer, companies should clearly explain the position of the board, including any
counteroffers, and should not take measures that would frustrate shareholder rights to sell their sharesin response to the tender offer.

In any instance where the shares of the Company are made the target of a tender offer bid
the Board of Directors will clearly convey its position on such bid to its shareholders and will not
act in such a manner as to interfere improperly with any shareholder in the exercising of theirrights to accept any such offer.

Principle 1.6 Capital Policy that May Harm Shareholder Interests
With respect to a company’s capital policy that results in the change of control or in significant
dilution, including share offerings and management buyouts, the board should, in order not to unfairly
harm the existing shareholders’ interests, carefully examine the necessity and rationale from theperspective of their fiduciary responsibility to shareholders, should ensure appropriate procedures, andprovide sufficient explanation to shareholders.

After due consideration by the Board of Directors and in accordance with appropriate
procedures, the Company will provide shareholders with explanations of the rationality andneed for any changes in capital policies that would result either in changes of control orsignificant dilution.

Principle 1.7 Related Party Transactions
When a company engages in transactions with its directors or major shareholders (i.e., related party
transactions), in order to ensure that such transactions do not harm the interests of the company or
the common interests of its shareholders and prevent any concerns with respect to such harm, theboard should establish appropriate procedures beforehand in proportion to the importance andcharacteristics of the transaction. In addition to their use by the board in approving and monitoringsuch transactions, these procedures should be disclosed.

In accordance with its Regulations of the Board of Directors, the Company requires that any
transactions between Directors and Executive Officers and the company or its subsidiaries, andany transactions with other corporations which may constitute a conflict of interest with theCompany, must be authorized in advance and subsequently monitored by the Board of Directors.
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The Regulations also stipulate that Directors obtain prior approval for any transactions withcorporations that hold 5% or more of the Company’s total shares. The Regulations further requirethat any such approved transactions must be reported to the Board on an ongoing basis annually.

Section 2: Appropriate Cooperation with Stakeholders
Other Than Shareholders
General Principle 2
Companies should fully recognize that their sustainable growth and the creation of mid- to long-term
corporate value are brought about as a result of the provision of resources and contributions made by arange of stakeholders, including employees, customers, business partners, creditors and local
communities. As such, companies should endeavor to appropriately cooperate with these stakeholders.
The board and the management should exercise their leadership in establishing a corporate culture
where the rights and positions of stakeholders are respected and sound business ethics are ensured.

In order to ensure sustainable growth and corporate value creation over the mid to long term,in awareness of the necessity to maintain appropriate and favorable working relationships with
important stakeholders other than shareholders, such as its various external partners andcommunities and other entities that constitute irreplaceable assets, the Company actively
participates in group-wide CSR activities aimed at the promotion of sustainability and diversity.
Moreover, under the leadership of the Board and Corporate Management, each individual
officer and employee of the Company is encouraged to act in accordance with the “Bridgestone
Essence” [the statement of the Company Principles] in order to create a corporate culture inwhich the rights and interests of stakeholders are respected and the highest levels of businessethics are realized.

Principle 2.1 Business Principles as the Foundation of Corporate Value Creation
Over the Mid- to Long-Term
Guided by their position concerning social responsibility, companies should undertake theirbusinesses in order to create value for all stakeholders while increasing corporate value over the midto long-term. To this end, companies should draft and maintain business principles that will become
the basis for such activities.

The Company has encapsulated its corporate philosophy as the Bridgestone Essence which
it takes as the foundation of all corporate activity. Taking the founder’s corporate creed of“Serving Society with Superior Quality” as its unchanging mission, all officers and employees of
the Company are encouraged to embody the four corporate foundations encapsulated within
the Essence: “Seijitsu-Kyocho” [Integrity and Teamwork], “Shinshu-Dokuso” [Creative
Pioneering], “Genbutsu-Genba” [Decision-Making Based on Verified, On-Site Observations],
7

and “Jukuryo-Danko” [Decisive Action after Thorough Planning] in their everyday activities.
Moreover, in order to realize value creation beneficial to all stakeholders and enhance thelong-term creation of corporate value, the Bridgestone Essence is employed as the foundation in
the formulation and implementation of the Company’s strategic mid-term business plans.

Principle 2.2 Code of Conduct
Companies should draft and implement a code of conduct for employees in order to express theirvalues with respect to appropriate cooperation with and serving the interests of stakeholders andcarrying out sound and ethical business activities. The board should be responsible for drafting andrevising the code of conduct, and should ensure its compliance broadly across the organization,
including the front line of domestic and global operations.

In order to fulfil its responsibilities to all its stakeholders the Company has updated its
formulation and implementation of its Corporate Philosophy. Following the rewording of its“Corporate Philosophy” in 2011 the Company has renewed its commitment to stakeholders by
releasing a series of mission statements commencing with the “Environmental Mission
Statement,” “Safety Mission Statement” and culminating in the release in 2015 of the “Quality
Mission Statement.” Using these statements as its foundation the Company is currently renewing
and reinforcing its mission throughout its business activities globally.
In order to realize its conviction that the “management of business itself is CSR” and to ensurethat its activities were consistent across all members of the corporate group, the Company
formulated a list of “22 CSR Focus Points” in 2007. While continuing in these activities as thefundamental basis of its business, the Company will adjust these 22 CSR Issues on an ongoingbasis in order to constantly align them with the demands and needs of society and, byintegrating the policies and activities needed for their achievement into the mid-term businessstrategic plan, strive to enhance its ability to respond to the needs of its stakeholders.

Supplementary Principle 2.2.1
The board should review regularly (or where appropriate) whether or not the code of conduct isbeing widely implemented. The review should focus on the substantive assessment of whether thecompany’s corporate culture truly embraces the intent and spirit of the code of conduct, and notsolely on the form of implementation and compliance.

The Board of Directors is regularly apprised of the Company’s CSR plans and theirimplementation and formally monitors and evaluates their progress.

8Principle 2.3 Sustainability Issues, Including Social and Environmental Matters
Companies should take appropriate measures to address sustainability issues, including social andenvironmental matters.

In accordance with its mission of “Serving Society with Superior Quality” the Company
considers it important that it not only generate profits, but also contributes to society as a whole.
As the leader in the industry, the Company strives to achieve ongoing growth as a business while
taking responsibility for the future and contributing to the development of a sustainable society.
Based upon this approach, the Company seeks not only to act in compliance with the rules andsocial norms that form the basis of a corporation’s foundation, but also to contribute to theresolution of social issues by the application of advanced technologies and innovation, create
value for customers and society, and build relationships of trust by contributing to thedevelopment of society. Having assessed key social issues from a diverse range of perspectives,
the Company has identified Mobility, People and the Environment as issues for prioritization
within its activities in order to contribute to the realization of a sustainable society.

Supplementary Principle 2.3.1
With the recognition that dealing with sustainability issues is an important element of risk
management, the board should take appropriate actions to this end. Given the increasing demandand interest with respect to sustainability issues in recent years, the board should consider addressingthese matters positively and proactively.

The Company realizes that issues related to sustainability including human rights, safety, andresponsible procurement are critical for its survival as a business and has actively engaged intheir promotion through its “22 CSR Focus Points” and their management.
The Company will, throughout its global organization, continue to engage in activities related
to these core issues as it endeavors to respond to the demands and needs of its stakeholders.

Principle 2.4 Ensuring Diversity, Including Active Participation of Women
Companies should recognize that the existence of diverse perspectives and values reflecting avariety of experiences, skills and characteristics is a strength that supports their sustainable growth. As
such, companies should promote diversity of personnel, including the active participation of women.

In 2009, in order to provide a workplace environment wherein people expressing different
values and individuality may work and grow, the Company released a document entitled “OurGroup’s stance for ‘Respect of Diversity’” wherein it declared its official goal of becoming a
corporation where individuals of different cultures and customs will be respected, those atdifferent life stages may enjoy security in their work, and each individual’s abilities may be
9nurtured and developed.
As a concrete example of these efforts, the Company has introduced policies aimed atpromoting career advancement and employment opportunities for women including childcare,nursing support and flexible working arrangements for employees whose spouse has been
relocated.

Principle 2.5 Whistleblowing
Companies should establish an appropriate framework for whistleblowing such that employees canreport illegal or inappropriate behavior, disclosures, or any other serious concerns without fear of
suffering from disadvantageous treatment. Also, the framework should allow for an objective
assessment and appropriate response to the reported issues, and the board should be responsible forboth establishing this framework, and ensuring and monitoring its enforcement.

The Company has established Compliance Hotlines and Cartel Related Activity Reporting
Hotlines and Bribery and related Activity Reporting Hotlines and has promoted their usage byawareness campaigns both online using the corporate intranet and throughout facilities by
information posters. Hotline usage rates and the issues thereby identified are reported to theBoard of Directors and the Audit Committee on a regular basis.

Supplementary Principle 2.5.1
As a part of establishing a framework for whistleblowing, companies should establish a point ofcontact that is independent of the management (for example, a panel consisting of outside directors3).
In addition, rules should be established to secure the confidentiality of the information provider andprohibit any disadvantageous treatment.
³ Outside director: A director who satisfies certain requirements such as not holding specific positions, including the position of executive
director, in the company or its subsidiaries (Article 2, Paragraph 15 of the Companies Act). Furthermore, matters such as not holding a specificposition in the parent company or other subsidiaries and not having specific kinship ties with controlling shareholders will be also required foroutside directors after the 2014 amendments to the Companies Act.

The Company has established contact points for whistleblowers in the form of both internaland external Compliance Consultation Hotlines in addition to externally operated Hotlines for
Cartel Related Activity Reporting and Bribery and related Activity Reporting operated
independently of the Company by legal experts (lawyers). The Company has also created formal
rules and guidelines to ensure the fair treatment and protect the privacy of any employees using
these hotlines or acting otherwise as whistleblowers.

10Section 3: Ensuring Appropriate Information Disclosure andTransparency
General Principle 3
Companies should appropriately make information disclosure in compliance with the relevant laws
and regulations, but should also strive to actively provide information beyond that required by law.
This includes both financial information, such as financial standing and operating results, andnon-financial information, such as business strategies and business issues, risk and governance.
The board should recognize that disclosed information will serve as the basis for constructive
dialogue with shareholders, and therefore ensure that such information, particularly non-financial
information, is accurate, clear and useful.

The Company, in addition to making appropriate disclosures of financial information including
financial standing and operating results and non-financial information including businessstrategies, issues, risk and corporate governance in compliance with relevant laws andregulations, in order to promote the transparency and impartiality of its decision making
processes and effective corporate governance also strives to disclose information deemed
appropriate even in the absence of legal obligations to do so.
The Company intends to continue to enhance the disclosure of information with the highest
possible levels of accuracy and usability on its corporate website.

Principle 3.1 Full Disclosure
In addition to making information disclosure in compliance with relevant laws and regulations,companies should disclose and proactively provide the information listed below (along with thedisclosures specified by the principles of the Code) in order to enhance transparency and fairness indecision-making and ensure effective corporate governance:i) Company objectives (e.g., business principles), business strategies and business plans;ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;iii) Compensation committee policies and procedures in determining the remuneration of the senior
management and directors;iv) The policies and procedures of the board or nominating committee in the appointment of thesenior management and the nomination of directors candidates; andv) Explanations with respect to the individual appointments and nominations based on iv).

i) The Company provides access to the Bridgestone Essence and its mid-term business plan(“Mid-term Management Plan”) on the corporate website as follows.
“the Bridgestone Essence”:
http://www.bridgestone.com/corporate/philosophy/index.html“Mid-term Management Plan”:
11http://www.bridgestone.com/corporate/library/mid_term/pdf/mid-term15.pdfii) The company outlines its basic approach and policies for promoting corporate governancebased on each principle of the Corporate Governance Code in the first paragraph on page 8of the Annual Report for 2015 as shown on the corporate website as follows:
http://www.bridgestone.com/corporate/library/annual_report/pdf/bs_annual_2015_operational.pdfiii) The Compensation Committee’s policies and procedures in determining the remuneration ofmembers of senior management and Directors are detailed in the following attachment.
iv) 1. Nominating Policy for the candidates for appointment to the Board
When nominating candidates for Board membership, the Company considers thecharacter and judgment of each individual, their experience and expertise and their level ofdedication and commitment to performing the duties expected of a member of the Board.
(1) Members of the Board other than Outside Directors
The Company takes into account the following:• The candidate’s scope of knowledge and experience regarding the business andits operations.
• The level of the candidate’s ability to formulate business plans and targets
based upon an insightful understanding of the changing business environment.
(2) Outside Directors
The Company takes into account the following:• The candidate’s expertise, experience and ability to make judgments from an
independent perspective.
• The candidate’s absence of connections with the Company that would
undermine their independence from the Company (specifically, their ability tomeet the conditions for independence as set out in the Company’s criteria on
outside directors’ independence).
The Nominating Committee will choose candidates in an appropriate manner inaccordance with fair and transparent guidelines and policies for the election and dismissalof the Members of the Board.
2. Nominating Policy for Executive Officers
When nominating Executive Officers, the Company considers if the candidate possesses
the depth and scope of experience and expertise relevant to the business and the ability to
implement business plans and meet performance targets based upon an insightful
understanding of the changing business environment.
The Nominating Committee in accordance with the succession plan of theRepresentative Executive Officer submits proposals as appropriate for election and dismissal
to the Board of Directors.
The Nominating Committee also deliberates the validity of proposals for the election anddismissal of candidates for positions as Executive Officers other than Representative
Executive Officers.
v) The Company states the reason for nomination, summary of career to date and a list ofimportant posts concurrently served in other corporations or organizations for each12

candidate for nomination to Board membership in the convocation notice and reference
documents for the Annual General Shareholdersˇ Meeting, Business Report and Corporate
Annual Report.
The current appointment status of Executive Officers is outlined in the annual Business
Report and Corporate Annual Report.

Supplementary Principle 3.1.1
These disclosures should add value for investors, and the board should ensure that information is
not boiler-plate or lacking in detail.

The Company makes every effort to ensure that information is disclosed in a manner which
is both easily understandable and of benefit to stakeholders.

Supplementary Principle 3.1.2
Bearing in mind the number of foreign shareholders, companies should, to the extent reasonable,
take steps for providing English language disclosures.

In light of the fact that approximately 30% of total corporate shares are held byoverseas investors, the Company prepares an English version of its Annual Report which it
makes publicly available on the corporate website. In addition, the Company also provides
English translations of its consolidated financial statement, mid-term business plan(“Mid-term Management Plan”), reference documents and notice of Annual General
Shareholders’ Meeting on its corporate website.

Principle 3.2 External Auditors
External auditors and companies should recognize the responsibility that external auditors owe
toward shareholders and investors, and take appropriate steps to secure the proper execution of audits.

In recognition of the responsibility of External Accounting Auditors to perform appropriate
accounting audits on behalf of shareholders and investors, the Company acts in compliancewith the following Supplementary Principles as indicated below.

Supplementary Principle 3.2.1
The audit committee should, at minimum, ensure the following:i) Establish standards for the appropriate selection of external auditor candidates and proper
evaluation of external auditors; and13ii) Verify whether external auditors possess necessary independence and expertise to fulfill their
responsibilities.

i) The Audit Committee has established standards for the appointment and evaluation ofExternal Accounting Auditors.
ii) The Audit Committee, in accordance with these standards, (1) monitors the External
Accounting Auditors performance of its duties, (2) monitors the content and compensation for
non-auditing duties entrusted to the External Accounting Auditors by the Audit Committee,and (3) receives reports regarding the quality management systems of the External Accounting
Auditors in order to verify their impartiality and professional qualifications.

Supplementary Principle 3.2.2
The board and the audit committee should, at minimum, ensure the following:i) Give adequate time to ensure high quality audits;ii) Ensure that external auditors have access, such as via interviews, to the senior management
including the CEO and the CFO;iii) Ensure adequate coordination between external auditors and each of the member of the audit
committee (including attendance at the audit committee), the internal audit department andoutside directors other than the member of the audit committee; andiv) Ensure that the company is constituted in the way that it can adequately respond to any
misconduct, inadequacies or concerns identified by the external auditors.

i) The Audit Committee requires that the External Accounting Auditor allocates sufficient timeto perform their audits and, by means of receiving reports by the External Accounting
Auditor on their audit plans, implementing the agreement procedures for determining thecompensation of the External Accounting Auditor, and verifying audit reports by theExternal Accounting Auditor, ensures that sufficient time is devoted to performing audits
and that audits are performed at the high quality levels required.
ii) In the event that the External Accounting Auditor requests time to meet with the CEO,COO and or CFO such arrangements and scheduling are made.
iii) 1. Audit Committee
Adequate coordination between the External Accounting Auditor and members of the
Audit Committee is achieved through audit reports by the External Accounting Auditor
at Audit Committee meetings, regular meetings between the External Accounting
Auditor and members of the Audit Committee outside of Audit Committee meetings,
and the attendance of Audit Committee members at site visits and audit reviews heldby the External Accounting Auditor.
2. Internal Audit Division /Independent Directors
Adequate coordination with the Internal Audit Division is achieved by their participation14

as observers in Audit Committee meetings where External Accounting Auditors share
information regarding the audit plan and findings, and with other Independent
Directors who do not serve on the Audit Committee via information provided by the
Audit Committee.
iv) In the event the External Accounting Auditor uncovers fraudulent activity and calls forappropriate countermeasures, or indicates problems or other issues, the Company will inaccordance with the nature of the situation indicated instigate investigation by the Audit
Committee, order reports from executive departments, provide directors with advice,warnings and or injunctions, report to the Board of Directors and undertake all measuresnecessary to identify the cause, rectify and prevent recurrence of the issue identified.

Section 4: Responsibilities of the Board
General Principle 4
Given its fiduciary responsibility and accountability to shareholders, in order to promote sustainablecorporate growth and the increase of corporate value over the mid-to long-term and enhanceearnings power and capital efficiency, the board should appropriately fulfill its roles andresponsibilities, including:(1) Setting the broad direction of corporate strategy;(2) Establishing an environment where appropriate risk-taking by the senior management is
supported; and(3) Carrying out effective oversight of directors and the management (including shikkoyaku4 andso-called shikkoyakuin5) from an independent and objective standpoint.
Such roles and responsibilities should be equally and appropriately fulfilled regardless of the form ofcorporate organization – i.e., Company with Kansayaku Board (where a part of these roles andresponsibilities are performed by kansayaku and the kansayaku board), Company with Three
Committees (Nomination, Audit and Remuneration) or Company with Supervisory Committee.
4 Shikkoyaku: According to the Companies Act, Companies with Three Committees (Nomination, Audit and Remuneration) must appoint one ormore shikkoyaku from directors or non-directors by a resolution of the board and delegate business administration to shikkoyaku. Also, authority
to make certain kinds of business decisions may be delegated to shikkoyaku.
5 Shikkoyakuin: There are cases where a Company with Kansayaku Board or a Company with Supervisory Committee creates positions with thetitle of “shikkoyakuin” for persons who are delegated by the board a certain range of discretion regarding business administration. Unlike
shikkoyaku in Companies with Three Committees (Nomination, Audit and Remuneration), shikkoyakuin is not a statutory position.

The Board fulfills its responsibility to promote sustainable corporate growth and enhance
corporate value over the mid to long term by the following means:(1) By focusing upon matters related to fundamental policies such as the “Bridgestone Essence”(the Corporate Philosophy), and upon issues related to the sustained growth and long term
value enhancement of the corporation, such as the formulation of mid to long term businessstrategies, sustainable corporate growth and related issues, the Board seeks to maintain aseparation between supervisory and executive functions.
15

(2) In order to facilitate the timely and effective decision making required to implement thepolicies and strategies approved by the Board, the Board delegates a certain degree ofauthority to the executive.
(3) In addition to the establishment of the statutory and discretionary committees, the Board iscomprised on a majority of independent directors in order to ensure both the objectivity andeffectiveness of its supervisory function.

Principle 4.1 Roles and Responsibilities of the Board (1)The board should view the establishment of corporate goals (business principles, etc.) and thesetting of strategic direction as one major aspect of its roles and responsibilities. It should engage inconstructive discussion with respect to specific business strategies and business plans, and ensure thatmajor operational decisions are based on the company’s strategic direction.

The Board focuses its deliberations upon critical issues related to the sustained growth andlong term value enhancement of the corporation such as the corporate philosophy andformulation of mid to long term strategic plans and the monitoring of their achievement. In
order to implement the most important strategic decisions of the Board with group-wide
implications the Company has established a Global Executive Committee (“Global EXCO”)
comprised of key executives from across the global organization which determines and oversees
implementation of such policies and strategies.

Supplementary Principle 4.1.1
The board should clearly specify its own decisions as well as both the scope and content of thematters delegated to the management, and disclose a brief summary thereof.

The Company, in accordance with its articles of incorporation and applicable laws, stipulates in
the Regulations of the Board of Directors that the Board of Directors is the highest decision
making body within the Company and is responsible for the following:
1. formulating fundamental management policy
2.
3.

nomination of directors
establishment and monitoring of internal control systems

4. determination of important operational issues
5. other matters as legally required.
By delegating authority for the determination of other issues to the executive, the Company
seeks to implement decision making in a timely manner.

16

Supplementary Principle 4.1.2
Recognizing that a mid-term business plan (chuuki keiei keikaku) is a commitment to shareholders,the board and the senior management should do their best to achieve the plan. Should the company
fail to deliver on its mid-term business plan, the reasons underlying the failure of achievement as wellas the company’s actions should be fully analyzed, an appropriate explanation should be given to
shareholders, and analytic findings should be reflected in a plan for the ensuing years.

The Company locates the mid-term strategic plan (”Mid-term Management Plan”) as a tool ofbusiness reform and innovation and implements it accordingly. The plan, while set to a five-year
period, is refined yearly on a rolling basis in accordance with assessments of changes in thebusiness environment and achievement of the targets set out therein.
Both the qualitative and quantitative targets set in each yearly review, along with theirrespective levels of achievement, are disclosed via press conferences, posted on the corporatewebsite (see link below), and openly communicated in meetings with investors.
http://www.bridgestone.com/corporate/library/mid_term/pdf/mid-term15.pdf

Supplementary Principle 4.1.3
Based on the company objectives (business principles, etc.) and specific business strategies, theboard should engage in the appropriate oversight of succession planning for the CEO and other top
executives.

The Nominating Committee determines the selection process and qualifications required ofpotential successors of the Representative Executive Officer (CEO and COO), and identifies andevaluates candidates while reporting as needed to the Board.
Additionally, the Committee assesses the adequacy of the succession planning undertaken by
the Representative Executive Officer and voices its opinion as necessary.
The Nominating Committee subsequently determines the final candidate for succession to theposition of Representative Executive Officer and submits this determination to the Board.

Principle 4.2 Roles and Responsibilities of the Board (2)The board should view the establishment of an environment that supports appropriate risk-taking by
the senior management as a major aspect of its roles and responsibilities. It should welcome proposals
from the management based on healthy entrepreneurship, fully examine such proposals from an
independent and objective standpoint with the aim of securing accountability, and support timely anddecisive decision-making by the senior management when approved plans are implemented.
Also, the remuneration of the management should include incentives such that it reflects mid- tolong-term business results and potential risks, as well as promotes healthy entrepreneurship.

17

The Company considers technological and business model innovation to be among the mostcritical management issues it faces and has accordingly established and continues to enhanceorganizations and processes for their promotion and achievement.
Important policies and plans regarding innovation are approved by the Board after due
deliberation involving a majority of independent directors and with due consideration of theinterests of shareholders and society at large. The decisions of the Board are then implemented
by the CEO and COO. The Company remunerates executives including the CEO and COO in partusing stock options which are linked to the long term performance of the business based upon
the outcomes of these decisions.

Supplementary Principle 4.2.1
In order for management remuneration to operate as a healthy incentive for sustainable growth, theproportion linked to mid- to long-term results and the balance of cash and stock should be set
appropriately.

Remuneration for management is comprised of a fixed monthly payment, an annual performance based
bonus payment, and a performance linked variable allocation of stock options planned and designed by
the Compensation Committee to incentivize the creation of corporate value on the mid to long term.

Principle 4.3 Roles and Responsibilities of the Board (3)The board should view the effective oversight of the management and directors from an
independent and objective standpoint as a major aspect of its roles and responsibilities. It should
appropriately evaluate company performance and reflect the evaluation in its assessment of the senior
management.
In addition, the board should engage in oversight activities in order to ensure timely and accurate
information disclosure, and should establish appropriate internal control and risk management systems.
Also, the board should appropriately deal with any conflict of interests that may arise between thecompany and its related parties, including the management and controlling shareholders.

The Board of Directors evaluates the Company’s performance and reflects this evaluation in its
assessment and compensation of management. The Board of Directors also monitors quarterly financial
performance and other important performance indicators, internal control systems including risk
management systems, policies for internal control and their levels of achievement, and annually reviews
the results of the J-SOX control system as required under Japan’s Financial Instruments and Exchange Law.
Moreover, the Company requires that any potential conflict of interest trades by management beapproved in advance by the Board. Although the Company does not have a controlling shareholder, it
requires that any deals involving an entity holding 5% or more of the Company’s stock on a voting
rights basis be approved of in advance by the Board of Directors and subsequently monitored andreported annually to the Board.
18

Supplementary Principle 4.3.1
The board should ensure that the appointment and dismissal of the senior management are based onhighly transparent and fair procedures and reflect the results of company performance.

Appointments and dismissals of senior management are determined by the Board of Directors
after consideration by the Nominating Committee, which is comprised entirely of independent
directors, upon the basis of the respective individual’s performance and suitability.

Supplementary Principle 4.3.2
The establishment of effective internal control and proactive risk management systems forcompliance and financial reporting has the potential of supporting sound risk-taking. The board should
place priority on the appropriate establishment of such systems and the oversight of whether theyeffectively operate, and should not limit itself to the examination of compliance with respect tospecific business operations.

The Board of Directors receives regular reports and monitors the management and operationof the compliance and internal control system including the control system required under the
Financial Instruments and Exchange Act (J-SOX).

Principle 4.4 Roles and Responsibilities of the Member ofthe Audit Committee and the Audit Committee
The audit committee should bear in mind their fiduciary responsibilities to shareholders and makedecisions from an independent and objective standpoint when executing their roles and responsibilities
including the audit of the performance of directors’ duties, appointment and dismissal of external
auditors and the determination of auditor remuneration.
Although so-called “defensive functions,” such as business and accounting audits, are part of the roles
and responsibilities expected of the member of the audit committee and the audit committee, in orderto fully perform their duties, it would not be appropriate for the member of the audit committee andthe audit committee to interpret the scope of their function too narrowly, and they should positively
and proactively exercise their rights and express their views at board meetings and to the management.

The Audit Policy set out annually by the Audit Committee states that it should perform its
duties from an independent and unbiased perspective and contribute to the sound developmentof the Company. In accordance with this policy the Audit Committee supervises the performanceof directors, sets the compensation for and appoints and dismisses External Accounting Auditors.
Additionally, the Audit Committee actively collects information and voices its opinion atmeetings of the Board of Directors in accordance not only with issues of legality but also in
regards to the adequacy of policies and deliberations.
19Supplementary Principle 4.4.1
Given that more than half of the audit Committee must be composed of outside director and thatthe system needed to execute the duties must be decided in board of directors in accordance with
the Companies Act, the audit committee should, from the perspective of fully executing its roles andresponsibilities, increase its effectiveness through an organizational combination of the independenceof the former and the information gathering power of the latter. In addition, the member of audit
committee or the audit committee should secure cooperation with outside directors who are not themember of audit committee so that such directors can strengthen their capacity to collectinformation without having their independence jeopardized.

The Company, as a Company with Nominating Committee, etc. in accordance with theCompanies Act of Japan, has established an Audit Committee comprised of a majority of
independent directors. In addition, in order to enhance the Audit Committee’s capacity to collectinformation, two of the committee members are currently full-time appointees who attend
important corporate meetings in addition to Board Meetings, receive regular reports fromexecutives, attend meetings held in operating divisions and actively engage in the collection of
information within the company. In order to assist the Audit Committee the Company has
appointed a full-time executive officer in charge of audits who is in charge of the Auditing
Department established to support the Audit Committee. Information gathered by the full-time
audit committee members, along with that gathered by the executive officer in charge of audits, isreported to the Audit Committee in order to enhance the effectiveness of audits by promoting theobjectivity and impartiality of their deliberations.
Moreover, in addition to the regular reports on Audit Committee activities to the Board of
Directors, access to information by independent directors not serving on the Audit Committee isprovided through committees and other meetings comprised exclusively of independent directors.

Principle 4.5 Fiduciary Responsibilities of Directors
With due attention to their fiduciary responsibilities to shareholders, the directors and the
management of companies should secure the appropriate cooperation with stakeholders and act in
the interest of the company and the common interests of its shareholders.

There are currently seven Independent Directors serving on the Board. Each Independent
Director actively participates in Board and committee meetings and promotes the considerationof shareholder and stakeholder interests. All Directors and Executive Officers act in the interestof the Company and its shareholders in accordance with the business policies and strategicplans determined by the Board.

20Principle 4.6 Business Execution and Oversight of the Management
In order to ensure effective, independent and objective oversight of the management by the board,
companies should consider utilizing directors who are neither involved in business execution nor haveclose ties with the management.

Among the eleven directors currently serving on the Board, nine are non-executive directors
including seven who qualify as Independent Non-Executive Directors.

Principle 4.7 Roles and Responsibilities of Independent Directors
Companies should make effective use of independent directors 6 , taking into consideration the
expectations listed below with respect to their roles and responsibilities:i) Provision of advice on business policies and business improvement based on their knowledge andexperience with the aim to promote sustainable corporate growth and increase corporate value
over the mid- to long-term;ii) Monitoring of the management through important decision-making at the board including theappointment and dismissal of the senior management;iii) Monitoring of conflicts of interest between the company and the management or controllingshareholders; andiv) Appropriately representing the views of minority shareholders and other stakeholders in theboardroom from a standpoint independent of the management and controlling shareholders.
6 Independent director: The listing rules of securities exchanges provide that the outside directors, as defined in the Companies Act, areindependent directors where they satisfy independence criteria of securities exchanges and the company determines that they do not have thepossibility of conflicts of interest with its shareholders.

In addition to the establishment of a Governance Committee as an advisory committee to the Boardof Directors comprised entirely of Independent Directors, the Company strives to promote the role ofIndependent Directors by the following means:i) The Company strengthens its corporate governance by nominating independent directors with awealth of experience and expertise from a wide variety of different backgrounds and disciplines todeliberate management policies and strategies at the Board level.
ii) Executive officers are nominated and dismissed by the Board in accordance with the determinationsof the Nominating Committee which is comprised exclusively of Independent Directors.
iii) The Company requires that any outside dealings by executive officers and Directors that
constitute a potential conflict of interest with the Company be approved by the Board in advancein accordance with the Regulations of the Board of Directors where they are subsequently
monitored by all members of the Board including Independent Directors. Although the Company
does not have a controlling shareholder, it requires that any deals involving an entity holding 5%
or more of the Company’s stock on a voting rights basis be approved of in advance by the Boardof Directors and subsequently reported to the Board on an annual basis.
iv) In order to ensure the objectivity of external directors the Company has established its own
21Independence Standard. Currently seven Independent Directors serve on the Board of which allseven meet the conditions set out under this standard for independence thereby ensuring thatthey objectively represent the interests of shareholders and other stakeholders and have noconflicts of interest with general shareholders.

Principle 4.8 Effective Use of Independent Directors
Independent directors should fulfill their roles and responsibilities with the aim of contributing tosustainable growth of companies and increasing corporate value over the mid- to long-term. Companies
should therefore appoint at least two independent directors that sufficiently have such qualities.
Irrespective of the above, if a company in its own judgement believes it needs to appoint at least
one-third of directors as independent directors based on a broad consideration of factors such as theindustry, company size, business characteristics, organizational structure and circumstances surrounding
the company, it should disclose a roadmap for doing so.

Currently, seven members of the board qualify as Independent Directors.

Supplementary Principle 4.8.1
In order to actively contribute to discussions at the board, independent directors should endeavor
to exchange information and develop a shared awareness among themselves from an independentand objective standpoint. Regular meetings consisting solely of independent directors (executive
sessions) would be one way of achieving this.

As a Company with Nominating Committee, etc., Independent Directors comprise themajority of both the Company’s Board of Directors and, Audit Committee, while theNominating, Compensation and other discretionary committees are comprised entirely of
Independent Directors thus enabling a higher level of information exchange and opportunities
to share awareness between independent directors.

Supplementary Principle 4.8.2
Independent directors should endeavor to establish a framework for communicating with the
management and for cooperating with the member of the audit committee or the audit committeeby, for example, appointing the lead independent director from among themselves.

Meetings are held on a regular basis between Independent Directors and members ofcorporate management in order to ensure a sufficient degree of information exchange.

22Principle 4.9 Independence Standards and Qualification for
Independent Directors
Boards should establish and disclose independence standards aimed at securing effective independence
of independent directors, taking into consideration the independence criteria set by securities exchanges.
The nominating committee should endeavor to select independent director candidates who are expected
to contribute to frank, active and constructive discussions at board meetings.

The Company has established its own Standard of Independence entitled the “guidelines fordetermining whether outside directors are sufficiently independent” which is made publicly available
online from the following link: (http://www.bridgestone.com/corporate/library/index.html).
Furthermore, in order to further strengthen corporate governance, the Nominating
Committee selects candidates for board membership with rich experience and expertisefrom a wide variety of different backgrounds and disciplines.

Principle 4.10 Use of Optional Approach
In adopting the most appropriate organizational structure (as stipulated by the Companies Act) thatis suitable for a company’s specific characteristics, companies should employ optional approaches, asnecessary, to further enhance governance functions.

The company has adopted the governance model of the “Company with Nominating
Committee, etc.” and, in addition to the mandatory committees required within this model, hasestablished Governance and Compliance Committees to serve as advisory committees to theBoard in order to further enhance the input from Independent Directors.

Supplementary Principle 4.10.1
If the organizational structure of a company is either Company with Kansayaku Board or Company
with Supervisory Committee and independent directors do not compose a majority of the board, inorder to strengthen the independence, objectivity and accountability of board functions on thematters of nomination and remuneration of the senior management and directors, the company
should seek appropriate involvement and advice from independent directors in the examination ofsuch important matters as nominations and remuneration by, for example, establishing optional
advisory committees under the board to which independent directors make significant contributions.

This principle does not apply to the Company since it has adopted the “Company with
Nominating Committee, etc.” model of corporate governance.

23Principle 4.11 Preconditions for Board and Audit Committee EffectivenessThe board should be well balanced in knowledge, experience and skills in order to fulfill its roles andresponsibilities, and it should be constituted in a manner to achieve both diversity and appropriate size.
In addition, at least one person who has appropriate expertise on finance and accounting should be
appointed as the member of the audit committee.
The board should endeavor to improve its function by analyzing and evaluating effectiveness of theboard as a whole.

The Board of Directors is currently comprised of two internal directors concurrently serving as
representative executive officers, two non-executive internal directors (non-independent) andseven Independent Directors each with extensive experience and expertise in different
professional and academic fields. In addition, the Audit Committee includes Mr. Seiichi Sasa who
is a certified public accountant and an expert with considerable experience in the fields offinance and accounting.
The Board is currently engaged in an ongoing process of deliberating and evaluating potential
future measures to further strengthen and promote corporate governance throughout theCompany.

Supplementary Principle 4.11.1
The nominating committee should have a view on the appropriate balance between knowledge,
experience and skills of the board as a whole, and also on diversity and appropriate board size.
Consistent with its view, the board should establish policies and procedures for nominating directors
and disclose them along with its view.

The Nominating Committee by selecting internal directors who serve as representative
executive officers, non-executive internal directors who serve as full-time members of the Audit
Committee, and Independent Directors with extensive experience and expertise from a wide
variety of disciplines and fields, seeks to maintain diversity and, at the same time, overallbalance in board membership composition. Additionally, it is the basic policy of the Company
that the Board should be of sufficient size so as to enable adequate debate and deliberation.
The policies and procedures for nominating directors are set out in principle 3-1 (iv).

Supplementary Principle 4.11.2
Outside directors and other directors should devote sufficient time and effort required toappropriately fulfill their respective roles and responsibilities. Therefore, where directors also serve as
directors, kansayaku or the management at other companies, such positions should be limited to areasonable number and disclosed each year.

24

As disclosed in the Annual Business Report and reference documents distributed at the Annual
General Shareholders’ Meeting for 2016, the attendance rate for all External Directors andAuditors was close to 100%. As part of the process for considering candidates for nomination to
the board their concurrent commitments to other companies and organizations, including
board memberships, are reviewed and taken into consideration. Other commitments for all
directors are reviewed annually and reported in the Annual Business Report.

Supplementary Principle 4.11.3
Each year the board should analyze and evaluate its effectiveness as a whole, taking into
consideration the relevant matters, including the self-evaluations of each director. A summary of theresults should be disclosed.

The Company, in order to maintain the ongoing enhancement of corporate governance engages in
the analysis and evaluation of the function of the Board.
The Company has sought to strengthen its corporate governance by continually reforming its
governance systems and processes and enhancing the quality of its management and thetransparency of its business decisions, resulting in the strengthening the supervisory role of the Boardand enhancement of the transparency of business decisions by the Executive (as a part of this process
the Company introduced Independent Directors in 2010, introduced the dual executive roles of CEO
and COO in 2012, and between 2013 and 2014 established Nominating, Compensation,
Governance and Compliance committees as advisory committees to the board, established the global
executive management committee (”Global Executive Committee”) in 2014 and adopted theCompany with Nominating Committee, etc. model of corporate governance in 2016).
As a part of this governance reform the Company has acted to increase the separation between theexecutive and supervisory functions by assigning appropriate levels of authority to executive
management and facilitating rigorous and productive discussion and consideration at the Board levelby focusing deliberations on matters concerning ongoing growth and mid to long term valueenhancement of the business including the determination of fundamental management policies andmid to long-term business strategies.
Board meetings are held at least once a month and the average attendance rate of all directors is
close to 100%. Moreover, in addition to scheduling time for free discussion at regular Board meetings,
holding ad hoc briefing sessions attended by all board members, and regular consultation sessions for
information and opinion exchange between the CEO, COO and independent directors, the directors
jointly monitor the board’s ability to fulfil its function and debate potential measures by which its
performance may be enhanced.
As a part of its transition to the Company with Nominating Committee, etc. governance model the
Company increased the number of independent directors from four to seven in March 2016 thereby
establishing a government structure wherein two thirds of all board positions are held by independent
external directors. Moreover, in addition to the deliberations held in the Nominating andCompensation Committees, regular reports by the Committee Chairs regarding25

progress and issues identified to the Board facilitate the enhancement of information sharing
and further promote the performance of the Board as a whole.
Considering overall Board performance and the evaluation of individual Board members, theBoard will continue to implement a formal annual evaluation of its performance considering its
achievements and the results of the self-evaluation of respective Board members and disclose
these results as part of its ongoing efforts to achieve ever higher levels of governance andbusiness performance.

Principle 4.12 Active Board Deliberations
The board should endeavor to foster a climate where free, open and constructive discussions andexchanges of views take place, including the raising of concerns by outside directors

The Company provides all Independent Directors with preliminary briefings of all items on the
Board agenda in order to promote a full understanding of all issues involved and promoterigorous debate and deliberation.

Supplementary Principle 4.12.1
The board should ensure the following in relation to the operation of board meetings and shouldattempt to make deliberations active:i) Materials for board meetings are distributed sufficiently in advance of the meeting date;ii) In addition to board materials and as necessary, sufficient information is provided to directors by
the company (where appropriate, the information should be organized and/or analyzed topromote easy understanding);iii) The schedule of board meetings for the current year and anticipated agenda items are
determined in advance;iv) The number of agenda items and the frequency of board meetings are set appropriately; andv) Sufficient time for deliberations

The Company endeavors to promote open and comprehensive deliberations by the Board of
Directors by the following means:i) As stipulated in internal regulations, material relating to Board agenda items must be
delivered to Directors at least two days in advance.
ii) The Corporate Planning Department implements preliminary briefing sessions on Board
agenda items for external directors and responds to all questions and requests for
additional information arising therefrom.
iii) The annual schedule of the Board of Directors and the regular agenda items to bedeliberated at each meeting are determined by the end of the previous year after
coordination and consultation in advance with all Board members.
iv) The Company sets guidelines defining issues that must be submitted to the Board of26

Directors and plans the agenda and frequency of Board meetings accordingly.
v) The Company allocates time for deliberation for each Board meeting, based upon the timerequired to deliberate similar agenda in the past where appropriate. In cases where
deliberations cannot be concluded within the allocated time frame, they will continue until
such time as they can be concluded satisfactorily.

Principle 4.13 Information Gathering and Support Structure
In order to fulfill their roles and responsibilities, directors should proactively collect information, andas necessary, request the company to provide them with additional information.
Also, companies should establish a support structure for directors, including providing sufficient staff.
The board should verify whether information requested by directors is provided smoothly.

Board members obtain information through regular executive reports to the Board andCommittees and are able to request any additional information they may deem necessary forthe fulfillment of their roles and responsibilities. The Board and relative Committees actively
monitor the quality and speed of responses to these requests for additional information.
In addition, in order to promptly and fully respond to requests for support and informationfrom Independent Directors the Company provides administrative and clerical support via thecorporate planning division, executive administration office and internal auditing office.

Supplementary Principle 4.13.1
Directors, including outside directors, should request the company to provide them with additional
information, where deemed necessary from the perspective of contributing to transparent, fair, timely
and decisive decision-making. In addition, the member of the audit committee, including the outside
directors, should collect information appropriately, including the use of their statutory investigation
power.

Directors may at any time lodge requests for additional information at the executive
administration office to which all executive and operating divisions are required to respondpromptly. In addition, members of the Audit Committee share among themselves information which
they may have gained independently or through the support of the internal auditing office.

Supplementary Principle 4.13.2
Directors should consider consulting with external specialists at company expense, where they deem
it necessary.

The company provides Directors with access at corporate expense to external experts
including consultants and lawyers at their request.

27

Supplementary Principle 4.13.3
Companies should ensure coordination between the internal audit department and directors. In
addition, companies should take measures to adequately provide necessary information to outside
directors. One example would be the appointment of an individual who is responsible forcommunicating and handling requests within the company such that the requests for information
about the company by outside directors are appropriately processed.

In order to promote coordination between the internal auditing office and directors theCompany appoints a full-time executive officer in charge of auditing in order to support the
Audit Committee. In addition, in order to promptly and fully respond to requests for support andinformation from Independent Directors the Company provides administrative and clericalsupport via the corporate planning division and executive administration office.

Principle 4.14 Director Training
New and incumbent directors should deepen their understanding of their roles and responsibilities asa critical governance body at a company, and should endeavor to acquire and update necessary
knowledge and skills. Accordingly, companies should provide and arrange training opportunities
suitable to each director along with financial support for associated expenses. The board should verify
whether such opportunities and support are appropriately provided.

Directors are given briefings regarding their responsibilities, corporate policies andprocedures, and provided opportunities to enhance understanding of their roles andresponsibilities through training sessions, and factory and facility visits at the Company’s
expense. The Board of Directors formally reviews the effectiveness of these training activities onan annual basis.

Supplementary Principle 4.14.1
Directors, including outside directors, should be given the opportunity when assuming their position
to acquire necessary knowledge on the company’s business, finances, organization and other matters,
and fully understand the roles and responsibilities, including legal liabilities, expected of them.
Incumbent directors should also be given a continuing opportunity to renew and update suchknowledge as necessary.

The Company provides newly appointed Members of the Board and Executive Officers withbriefings regarding the Company’s mid-term business plan, business operations, responsibilities
and rights of board members and other relevant policies and procedures before appointment. In
addition to training sessions for Members of the Board and Executive Officers held once every
two months, opportunities to visit the company factories and facilities are also provided.
28

Supplementary Principle 4.14.2
Companies should disclose their training policy for directors.

In order to enable directors to fully exercise their supervisory function the Company provides
newly appointed directors with detailed briefings regarding the Company’s midterm plan,
operations, the responsibilities of directors as set forth within the Corporate Regulations for
Directors and other relevant regulations. Subsequent to their appointment, all directors areinvited to participate in regular training sessions covering a variety of topics chosen to promote
their understanding of issues with relevance to the company’s activities. Independent Directors
also participate in regular site visits to factories and corporate facilities in order to promote theirunderstanding of the environment and issues facing the Company. Additional training sessions
may be held at the request of directors on an ad hoc basis regarding topics deemed relevant.

Section 5: Dialogue with Shareholders
General Principle 5
In order to contribute to sustainable growth and the increase of corporate value over the mid- tolong-term, companies should engage in constructive dialogue with shareholders even outside thegeneral shareholder meeting.
During such dialogue, senior management and directors, including outside directors, should listen to
the views of shareholders and pay due attention to their interests and concerns, clearly explain business
policies to shareholders in an understandable manner so as to gain their support, and work for developing
a balanced understanding of the positions of shareholders and other stakeholders and acting accordingly.

In order to achieve sustainable growth and enhance corporate value over the mid to longterm, the Company considers that it is important to consider the opinions and expectations ofshareholders when formulating business policies.
The Company has therefore established a specialist department to manage IR (Investor
Relations) which, by facilitating discussions with shareholders and investors by both individualand financial performance meetings for analysts, aims to promote better understanding of theCompany’s business strategy and establish a system whereby it can respond appropriately to theopinions and expectations voiced by shareholders.

Principle 5.1 Policy for Constructive Dialogue with Shareholders
Companies should, positively and to the extent reasonable, respond to the requests from shareholders
to engage in dialogue (management meetings) so as to support sustainable growth and increase corporate
value over the mid- to long-term. The board should establish, approve and disclose policies concerning themeasures and organizational structures aimed at promoting constructive dialogue with shareholders.
29The Company has established a department specifically to respond to requests for individual
meetings with shareholders. The Company not only holds financial performance meetings foranalysts and discussions with investors but also offers plant visits and a range of opportunities topromote dialogue with shareholders. The corporate policy for promoting dialogue withshareholders is as follows:
The Company proactively engages in dialogue with shareholders and investors in order toachieve sustainable business growth and enhance corporate value over the mid to long term.
In order to promote constructive engagement with shareholders and investors in addition to
engaging in the fair and impartial disclosure of information in accordance with Japan’s Financial
Instruments and Exchange Act and the regulations of stock exchanges where the Company’s
shares are listed, it is the basic policy of the Company that, even in the absence of such legal
requirements, information considered by the Company to be of relevance to shareholders andinvestors, and which can be released, should also be disclosed in a timely and ongoing manner.
In this manner the Company seeks to promote the understanding of its performance andoperations in order that its corporate value be accurately assessed.
The Company has established a dedicated IR unit reporting directly to the CFO to manage
relations with shareholders and investor dialogue. Coordinating on an ongoing basis with the
Corporate Planning, General Affairs, Finance, Legal, Public Relations, and Sales departments the
IR Unit serves to promote constructive dialogue with shareholders by disclosing not only
financial data but also information of a non-financial nature.
In addition to regular communication with domestic and overseas investors in order topromote their understanding of business strategies, financial conditions, and operations, theCompany also conducts quarterly press meetings regarding its financial results for institutional
investors, and also organizes small meetings and factory visits. Additional opportunities whereby
the CEO and CFO visit investors within Japan and overseas in order to facilitate directcommunication are also being organized. Communication with individual shareholders is also
being promoted by the release of quarterly financial performance reports and press releases on
the corporate website.
Information from shareholders obtained through these activities are compiled into reports
which are reviewed and discussed at internal meetings held at relevant departments,
transmitted to executive management and reported to the Board.
In addition to IR activities the Company also engages in Shareholder Relations (SR) activities
whereby representatives of the Company will visit shareholders in order to explain the
Company’s business policies, approach towards and structure of governance, and corporate
proposals for the Annual General Shareholders’ Meeting.
However, the Company does not engage in shareholder and or investor dialogue in periods
preceding earnings announcements in order to avoid the risks related to insider information andhas established rules and procedures for the internal management of potential insider
information.

30

Supplementary Principle 5.1.1
Taking the requests and interests of shareholders into consideration, to the extent reasonable, thesenior management and directors, including outside directors, should have a basic position to engage indialogue (management meetings) with shareholders.

The IR department is responsible for facilitating dialogue with shareholders. In cases where it isdeemed necessary members of the Board of Directors including the CEO and or COO may
participate in meetings with shareholders depending upon the nature of requests, objectives andcontent of the topics to be discussed.

Supplementary Principle 5.1.2
At minimum, policies for promoting constructive dialogue with shareholders should include thefollowing:i) Appointing a member of the management or a director who is responsible for overseeing andensuring that constructive dialogue takes place, including the matters stated in items ii) to v)
below;ii) Measures to ensure positive cooperation between internal departments such as investor relations,
corporate planning, general affairs, corporate finance, accounting and legal affairs with the aimof supporting dialogue;iii) Measures to promote opportunities for dialogue aside from individual meetings (e.g., generalinvestor meetings and other IR activities);iv) Measures to appropriately and effectively relay shareholder views and concerns learned throughdialogue to the senior management and the board; andv) Measures to control insider information when engaging in dialogue

The Company policy for the promotion of constructive dialogue with shareholders is outlined
above in Principle 5-1.

Supplementary Principle 5.1.3
Companies should endeavor to identify their shareholder ownership structure as necessary, and it isdesirable for shareholders to cooperate as much as possible in this process.

The Company conducts regular surveys twice yearly to determine shareholder composition.
The information thus obtained is used for IR activities both overseas and domestically.

Principle 5.2 Establishing and Disclosing Business Strategy and Business Plan
When establishing and disclosing business strategies and business plans, companies should articulate31their earnings plans and capital policy, and present targets for profitability and capital efficiency. Also,
companies should provide explanations that are clear and logical to shareholders with respect to theallocation of management resources and specific measures that will be taken in order to achieve theirplans and targets.

The Company formulates and announces a mid-term business plan on an annual basis. As a partof this plan the Company sets targets for return on equity (ROE), return on assets (ROA), and ratioof operating profit on sales which it discloses along with reports on progress to date regarding
issues which are defined as significant within the plan and details regarding the measures being
taken to manage them.

[Attachment] Principle 3.1 iii)
A. Policy for setting directors’ and executive officers’ remuneration
The Company has adopted “Principles for Remuneration Setting,” with four elements: to attract
and cultivate superior talent, to support a competitive remuneration level, to provide motivation
for the execution of business strategies, and to provide motivation for enhancing shareholder
value. Based on these principles, the Company sets remunerations for directors and executive
officers that reflect factors such as our performance results and business size, commensurate with
their tasks and responsibilities, and also takes into consideration the remuneration levels of othermajor global companies in Japan.
a. Remuneration for directors• Remuneration for directors who are concurrently officers is comprised of fixed payments
and variable payments. Fixed payments are composed of base reward for businessexecution, allowance for directors commensurate with their tasks and responsibilities,
and allowance for executive officers commensurate with their tasks and responsibilities.
Variable payments are composed of bonuses vary depending on the Company’s
performance, and stock-compensation-type stock options designed for enhancing
motivation for mid-to long-term corporate value and promoting the sharing of value withshareholders.
• Remuneration for directors who are not officers is comprised of fixed payments by basereward and allowance for directors. This remuneration system takes into considerationthat they contribute to mid- to long-term business results and corporate value by
participating in management at the positions separated from business operation.
b. Remuneration for executive officers• Remuneration for executive officers is comprised of fixed payments and variable
payments. Fixed payments are composed of base reward for business execution,
allowance for executive officers. Variable payments are composed of bonuses varydepending on the Company’s performance, bonuses vary depending on the half year32

performance by their business responsibilities, and stock-compensation-type stock
options.
*Stock-compensation-type stock options can be exercised from the day after theirretirement
B. Process for setting directors’ and executive officers’ remuneration• The Compensation Committee determine directors’ and executive officers’ individual
remuneration. The committee consists of only outside director. The committee shall determine
the policies on directors’ and executive officers’ remuneration. Based on the policies, thecommittee deliberates on remuneration general matters such as composition, plan, and levelof amounts, determine the remuneration amounts by the grades. For the bonuses varydepending on the Company’s performance, the committee provides quantitative andqualitative evaluation on its calculation to be applied. The committee also deliberates the
directors’ and executive officers’ remuneration paid by the subsidiary, in the case they areconcurrently executives at the subsidiaries.

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