(Translation)
Kao Corporation
Corporate Governance
Last updated on August 9, 2024
Kao Corporation
Yoshihiro Hasebe, President and CEO
Contact: Legal+81-3-3660-7111
TSE Code: 4452
www.kao.com/global/en/
I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information

1. Basic Views
In order to sustainably enhance corporate value over the long term while working to realize a Kirei
World in which all life lives in harmony, which is our purpose of our corporate philosophy “TheKao Way”, and to become an essential company in a sustainable world, Kao positions corporate
governance as a top-priority management issue and continuously strengthens governance in both
systems and operations. Kao’s corporate governance is a framework for transparent, fair, promptand decisive decision-making. It takes into account the perspectives of all stakeholders andresponds in a timely and appropriate manner to changes that are increasingly diverse, complex, anddifficult to predict so that we can contribute to society and continuously enhance corporate value.
The foundations of our efforts to achieve this are establishing and operating the necessary
management structures and internal control systems, implementing the necessary measures in atimely manner, and demonstrating accountability. In addition, we work to understand social trends
at all times and actively engage in dialogue with stakeholders to review the status of corporate
governance from time to time and implement appropriate and necessary countermeasures andimprovements.
<Definitions>
As used in these matters to be disclosed, the definitions of the following terms shall be as follows:“ Management” means Executive Directors and Executive Officers.
“ Senior Management” means Executive Officers with titles.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
Kao Corporation (hereinafter referred to as “the Company”) implements all principles inaccordance with those established in the Corporate Governance Code.
[Disclosure Based on the Principles of the Corporate Governance Code]Disclosures under this item are described in the “Kao Corporate Governance Policy (hereinafterreferred to as the "Policy")” and “Disclosure Based on the Principles of the Corporate GovernanceCode” in later of this report. As a result of the establishment of the Policy on July 5, 2023,
Disclosure Based on the Principles of the Corporate Governance Code has been revised.
The Policy is available on the Company’s website.
www.kao.com/global/en/corporate/policies/corporate-governance/[Actions to implement management that is conscious of cost of capital and stock price]
Regarding Actions to implement management that is conscious of cost of capital and stock price,please refer to the [Principle 5 2] Establishing and Disclosing Business Strategy and Business Planon Disclosure Based on the Principles of the Corporate Governance Code.

12. Capital Structure
Foreign Shareholding Ratio: More than 30%[Status of Major Shareholders] [Updated]
Name / Company Name
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
JPMorgan Securities Japan Co., Ltd.
STATE STREET BANK WEST CLIENT - TREATY 505234
SMBC Nikko Securities Inc.
JP MORGAN CHASE BANK 385632
JAPAN SECURITIES FINANCE CO., LTD.
Nippon Life Insurance Company
JP MORGAN CHASE BANK 385781
National Mutual Insurance Federation of Agricultural Cooperatives
Controlling Shareholders (except for Parent
Company)
Parent Company(As of June 30, 2024)
Number ofPercentage
Shares(%)
83,384,800
17.90
31,675,800
6.80
14,882,969
3.20
9,429,867
2.02
8,748,977
1.88
7,225,699
1.55
6,934,500
1.49
6,691,215
1.44
6,366,783
1.37
6,074,000
1.30

None
None

Supplementary Information [Updated] The number of shares in the list above may include the number of shares held in trusts or subject
to share administration.
 The ratio of shareholding for each shareholder above has been calculated based on the number ofissued shares excluding treasury shares.
1. The amendment to the large shareholdings report filed by BlackRock Japan Co., Ltd. and11 other persons on April 20, 2022, which is open to the public, stating that they held
shares of the Company as shown below as of April 15, 2022. However, these shareholdings
were not included in the above list of major shareholders because the Company could notconfirm the number of beneficial shares.
Number of shares
Ratio of shareholding
Name(thousand shares)(percentage)
BlackRock Japan Co., Ltd. and34,5397.27
11 other persons
2. The amendment to the large shareholdings report filed by Nomura Securities Co., Ltd. andthree other persons on April 19, 2024, which is open to the public, stating that they held
shares of the Company as shown below as of April 15, 2024. However, these shareholdings
were not included in the above list of major shareholders because the Company could notconfirm the number of beneficial shares.
Number of shares
Ratio of shareholding
Name(thousand shares)(percentage)
Nomura Securities Co., Ltd. and26,964
5.79
three other persons
3. The amendment to the large shareholdings report filed by Sumitomo Mitsui Trust AssetManagement Co., Ltd. and another person on July 19, 2024, which is open to the public,
stating that they held shares of the Company as shown below as on July 15, 2024.
However, these shareholdings were not included in the above list of major shareholders
because the Company could not confirm the number of beneficial shares.
Ratio of shareholding
Number of sharesName(thousand shares)(percentage)
Sumitomo Mitsui Trust AssetManagement Co., Ltd. and28,5706.13
another person2

4. The amendment to large shareholdings report filed by Mitsubishi UFJ Trust and Banking
Corporation and two other persons on July 29, 2024, which is open to the public, statingthat they held shares of the Company as shown below as of July 22, 2024. However, theseshareholdings were not included in the above list of major shareholders because theCompany could not confirm the number of beneficial shares.
Number of shares
Ratio of shareholding
Name(thousand shares)(percentage)
Mitsubishi UFJ Trust andBanking Corporation and two
17,9543.85
other persons

3. Corporate Attributes
Listed Stock Market and Market Section
Fiscal Year-End
Type of Business
Number of Employees (consolidated) as of the End of
the Previous Fiscal YearSales (consolidated) as of the End of the Previous
Fiscal Year
Number of Consolidated Subsidiaries as of the End of
the Previous Fiscal YearTokyo Stock Exchange, Prime Market
December 31
ChemicalsMore than 1,000
More than ¥1 trillion
From 100 to less than 300

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with
Controlling Shareholder
None
5. Other Special Circumstances which may have Material Impact on Corporate
Governance
None
II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form

Company with Audit & Supervisory Board
Members
Details of the information about Audit & Supervisory Board Members are reported on the Japan
Audit & Supervisory Board Members Association’s website.
www.kansa.or.jp/support/el009_130711_2.pdf[Directors]
Maximum Number of Directors Stipulated in Articles
of Incorporation
Term of Office Stipulated in Articles of Incorporation
Chairperson of the Board
Number of Directors
Number of Outside Directors
Number of Independent Directors

0 (Not stipulated)
1 yearOutside Director
844Outside Directors’ Relationship with the Company (1)NameAttributes
Relationship with the Company (*)
a
b
c
d
e
f
g
h
i
j
k
Osamu Shinobe
From another company△
Eriko Sakurai
From another company△
Takaaki Nishii
From another company〇
Makoto Takashima From another company△*Categories for “Relationship with the Company”*“ ○ ” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past;*“●” when a close relative of the director presently falls or has recently fallen under the category;“▲” when a close relative of the director fell under the category in the past

3

a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

Executive of the Company or its subsidiaries
Non-executive director or executive of a parent company of the Company
Executive of a fellow subsidiary company of the Company
A party whose major client or supplier is the Company or an executive thereof
Major client or supplier of the listed company or an executive thereof
Consultant, accountant or legal professional who receives a large amount of monetaryconsideration or other property from the Company besides compensation as a director
Major shareholder of the Company (or an executive of the said major shareholder if theshareholder is a legal entity)
Executive of a client or supplier company of the Company (which does not correspond to anyof d, e, or f) (the director himself/herself only)
Executive of a company, between which and the Company outside directors/Audit &Supervisory Board Members are mutually appointed (the director himself/herself only)
Executive of a company or organization that receives a donation from the Company (thedirector himself/herself only)
Others

Outside Directors’ Relationship with the Company (2)Name

Designation as
Independent
Director

Supplementary Explanation of
the Relationship

Reasons of Appointment

Osamu Shinobe○

Mr. Shinobe previously had
executive authority at ALL
NIPPON AIRWAYS CO., LTD.,but ceased to have such
authority from April 2017. ALL
NIPPON AIRWAYS CO., LTD.
provides public transportation
services as an airline company,
and the Kao Group engages inregular transactions with ALL
NIPPON AIRWAYS CO., LTD.
and its group companies in termsof the directors, officers andemployees of the Company using
its services as a means oftransportation in making
business trips, however, theamounts involved in suchtransactions account for lessthan 0.1% of the ALL NIPPONAIRWAYS group’s consolidated
net sales and the Kao Group’s
consolidated net sales for thelatest fiscal year, respectively.
While there are transactions tosell Kao Group’s products to
ALL NIPPON AIRWAYS group,
the amounts involved in suchtransactions account for lessthan 0.1% of the ALL NIPPONAIRWAYS group’s consolidated
net sales and the Kao Group’s
consolidated net sales for thelatest fiscal year, respectively.
He previously had executive
authority at the Japan Instituteof International Affairs, butceased to have such authority
from June 2023. The Company
pays membership fees to the(i) He has considerable
experience and expertise inrelation to global corporate
management and risk
management, gleaned principallyfrom his time in the maintenancesections of an international
airline which carries both cargoand passengers where safety andsecurity took top priority. He
has been actively presenting
opinions and proposals indeliberations of the Board of
Directors concerning material
matters in the management of
the Kao Group, based on his
considerable experience andexpertise. Since March 2022, hehas demonstrated outstanding
leadership as the Chairperson of
the Board in enhancing theeffectiveness of the Board of
Directors toward enhancing thecorporate value. The Company
expects him to continue tosupervise the management of the
Kao Group as an Independent
Outside Director by leveraging
his wealth of experience andhigh level of insight. and forthis reason nominates him as a
candidate to continue as an
Outside Director. If this
proposal is approved, it isexpected that Mr. Shinobe will
be He was reappointed as the
Chairperson of the Board of
Directors and newly appointed
as the Chairperson of theCompensation Advisory4Institute; however, the ratios of
the amount involved in suchtransactions account for lessthan 0.1% of the Institute’s
ordinary income and the KaoGroup’s consolidated net sales
for the latest fiscal year,
respectively.

Eriko Sakurai○

Ms. Sakurai previously had
executive authority at Dow
Chemical Japan Limited, butceased to have such authority
from July 2022. As a Japanesesubsidiary of a US chemical
manufacturer, Dow Chemical
Japan Limited manufactures,
imports, and sells various
chemical products and provides
technical services. The KaoGroup conducts transactions
related to the purchase of raw
materials, etc. with the corporategroup to which Dow Chemical
Japan Limited is affiliated;
however, the amounts involvedin such transactions account forless than 0.1% of such group’s
consolidated net sales and lessthan 0.5% of the Kao Group’s
consolidated net sales for thelatest fiscal year.

5

Committee for Directors andExecutive Officers at the Boardof Directors meeting following
AGM held on March 22, 2024.
ii) The Company determined thatnone of the requirements forprior discussion as provided in
Section III. 5. (3) 2 of the“Guidelines Concerning Listed
Company Compliance, etc.” ofthe TSE applies to him, and alsothat he has the necessary
independence based on the“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of
Kao Corporation” established by
the Company in line with theabove guidelines.
i) She has a wealth of experiencein global companies, including
many years of corporate
management at the Japanesesubsidiary of a US chemical
manufacturer with global
business operations, as well as
supervision of management as an
Outside Director at several major
manufacturers and financial
institutions. Based on her
experience in the chemicalindustry, she also has a highlevel of expertise in theChemical Business, which
comprises the two key pillars of
the Kao Group together with theConsumer Products Business.
From this perspective, she has
been actively giving opinions
and making proposals at Boardof Directors meetings. In
addition, she has been providing
advice based on her experiencein planning and executing humanresources strategies such as
remuneration, developing andplacement of human capital inglobal business. The Company
expects her to continue tosupervise the management of the
Kao Group as an Independent
Outside Director by leveraging
her wealth of experience andhigh level of insight. She was
newly appointed as the
Chairperson of the Committee
for the Examination of theNominees for Directors andAudit & Supervisory Board
Members at the Board of
Directors meeting at the Board

of Directors following AGM heldon March 22, 2024.

Takaaki Nishii○

Mr. Nishii previously had
executive authority at AjinomotoCo., Inc., but ceased to havesuch authority from June 2022.
The Ajinomoto Group is engaged
in business that uses amino acids
as raw materials, and there areraw material purchasing andother relations between the
Ajinomoto Group and the KaoGroup. However, the amounts
involved in such transactions
accounted for less than 0.5% of
the Ajinomoto Group’s
consolidated net sales and lessthan 0.1% of the Kao Group’s
consolidated net sales for thelatest fiscal year, respectively.
He also has executive authority
at FINET, INC. The Kao Grouppays usage fees for services
provided by FINET, INC.;
however, the amounts involvedin such transactions accounted
for less than 0.1% of FINET,
INC.’s net sales and the KaoGroup’s consolidated net sales
for the latest fiscal year,
respectively.

ii) The Company determined thatnone of the requirements forprior discussion as provided in
Section III. 5. (3) 2 of the“Guidelines Concerning Listed
Company Compliance, etc.” ofthe TSE applies to her, and alsothat she has the necessary
independence based on the“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of
Kao Corporation” established by
the Company in line with theabove guidelines.
i) He has been involved incorporate management for many
years at a food manufacturer
with global business operations,and has displayed strong
leadership in transforming thecompany’s corporate culture andcontinuously enhancing
corporate value. He has also held
important positions in the humanresources department andoverseas subsidiaries, and has
extensive knowledge of humancapital strategies and businessoutside Japan. From thisperspective, he has been actively
giving opinions and making
proposals at Board of Directors
meetings. In addition, he has
been providing advice on how tosupervise the Board of Directors
based on his experience in
implementing effective
governance reforms. The
Company expects him tocontinue to supervise themanagement of the Kao Group as
an Independent Outside Director
by leveraging his wealth ofexperience and high level of
insight.
ii) The Company determined thatnone of the requirements forprior discussion as provided in
Section III. 5. (3) 2 of the“Guidelines Concerning Listed
Company Compliance, etc.” ofthe TSE applies to him, and alsothat he has the necessary
independence based on the“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of6

MakotoTakashima○

Mr. Takashima previously had
executive authority at Sumitomo
Mitsui Banking Corporation, butceased to have such authority
from April 2023. Although the
Kao Group has transactions with
the Sumitomo Mitsui Financial
Group, such as the use of
corporate credit cards, the ratiosof the amount involved in suchtransactions account for lessthan 0.1% of the Sumitomo
Mitsui Financial Group’s
consolidated ordinary income
and the Kao Group’s
consolidated net sales for thelatest fiscal year, respectively. In
addition, although the KaoGroup has regular banking
transactions with and borrows
from the Sumitomo Mitsui
Financial Group, the amountborrowed by the Kao Group
from the group as of the end of
the latest fiscal year accounts
for less than 1.5% of the total
consolidated assets of the KaoGroup.

7

Kao Corporation” established by
the Company in line with theabove guidelines.
i) He has considerable
experience, expertise, and ability
in global corporate managementthat responds to change,
including many years ofexperience in international
operations and corporate
planning at a major financial
institution, followed by service
as a manager in the changing
business environment of the
global financial industry. The
Company expects him tosupervise the management of the
Kao Group as an Independent
Outside Director by leveraging
his wealth of experience andhigh level of insight.
ii) The Company determined thatnone of the requirements forprior discussion as provided in
Section III. 5. (3) 2 of the“Guidelines Concerning Listed
Company Compliance, etc.” ofthe TSE applies to him, and alsothat he has the necessary
independence based on the“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of
Kao Corporation” established by
the Company in line with theabove guidelines.

Voluntary Establishment of Committee(s) Corresponding toNomination Committee or Remuneration Committee

Established

Committee’s Name, Composition, and Attributes of Chairperson
Committee Corresponding to
Remuneration Committee

All Committee Members

Committee Corresponding toNomination Committee
Committee for the Examinationof Nominees for Directors andAudit & Supervisory Board
Members5

Full-time Members

00Inside Directors

01

Outside Directors

44Outside Experts

0

0

Other

1

0

Chairperson

Outside Director

Outside Director

Committee’s Name

Compensation Advisory Committee
for Directors and Executive Officers
5

Supplementary Explanation
The Company has established the Committee for the Examination of Nominees for Directors andAudit & Supervisory Board Members and the Compensation Advisory Committee for Directors andExecutive Officers which fulfill functions similar to the nominating committee and compensationcommittee of a “company with committees.”
Details of each committee are described in "Policy 2.2 Voluntary Establishment of Committees"
and “Disclosure Based on the Principles of the Corporate Governance Code” [Principle 3.1 (iii)]
Directors’ Remuneration, [Principle 3.1 (iv)] Policy on Nomination of Director and Audit &Supervisory Board Member Candidates and Senior Management and Procedures for the Nomination
and Dismissal of Directors and Audit & Supervisory Board Members and the Appointment andDismissal of Senior Management.
In addition, the composition of the committee members was reviewed in order to promote
specialized and focused deliberations in each committee.
[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory
Board
Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles ofIncorporation
Number of Audit & Supervisory Board
Members

Established
0 (Not stipulated)
58

Cooperation among Audit & Supervisory Board Members, Accounting Auditors and Internal Audit
Departments■Cooperation between Audit & Supervisory Board Members and the Accounting Auditor
Audit & Supervisory Board Members work together with the Accounting Auditor and theDepartment of Internal Audit to improve the effectiveness of audits.
For more information, please see 2. Matters on Functions of Business Execution, Auditing,Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance
System), II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Oversight in Management.
Appointment of Outside Audit & Supervisory Board
Appointed
Members
Number of Outside Audit & Supervisory Board
3
Members
Number of Independent Audit & Supervisory Board
3
Members
Outside Audit & Supervisory Board Members’ Relationship with the Company (1)NameAttributeab

Relationship with the Company (*)
c
d
e
f
g
h
i
j
k

Hideki Amano
CPA
Nobuhiro Oka
Attorney-at-law〇
Saeko Arai
CPA
*Categories for “Relationship with the Company”* “○” when the Audit & Supervisory Board Member presently falls or has recently fallen under the
category;“△” when the Audit & Supervisory Board Member fell under the category in the past;* “●” when a close relative of the Audit & Supervisory Board Member presently falls or has
recently fallen under the category;“▲” when a close relative of the Audit & Supervisory Board Member fell under the category in
the past
a.
b.
c.
d.
e.
f.
g.
h.

Executive of the Company or its subsidiaryNon-executive director or accounting advisor of the Company or its subsidiaries
Non-executive director or executive of a parent company of the Company
An Audit & Supervisory Board Member of a parent company of the Company
Executive of a fellow subsidiary company of the Company
A party whose major client or supplier is the Company or an executive thereof
Major client or supplier of the Company or an executive thereof
Consultant, accountant or legal professional who receives a large amount of monetaryconsideration or other property from the Company besides compensation as an Audit &Supervisory Board Member
i. Major shareholder of the Company (or an executive of the said major shareholder if theshareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to anyof f, g, or h) (the Audit & Supervisory Board Member himself/herself only)
k. Executive of a company, between which and the Company outside directors/Audit &Supervisory Board Member are mutually appointed (the Audit & Supervisory Board Member
himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the Audit& Supervisory Board Member himself/herself only)
m. Others

9lmOutside Audit & Supervisory Board Members’ Relationship with the Company (2)Designation as
Independent Audit &Supervisory Board
Member

Supplementary
Explanation of
the Relationship

Hideki Amano

○

None

Nobuhiro Oka○

Mr. Oka serves as a
Professor at the
Keio University
Law School, and is
involved inbusiness execution.
The Company
conducts joint
research andtransactions related
to the advisory of
research guidancewith Keio
University;
however, theamounts of suchtransactions
account for lessthan 0.1% of theuniversity’s income
from education
activities and the
Kao Group’s net
sales for the latest
fiscal year,
respectively.

Name

10

Reasons of Appointment(i) Mr. Amano has a high level ofprofessional expertise as a certified
public accountant. Based on his
experience and insight gained fromworking globally at a major auditing
firm as a member of management, he
has served as an Audit &Supervisory Board Member of theCompany since March 2017,
effectively auditing the Kao Group,
which operates globally, from a
professional perspective. The
Company expects that he will tomake full use of his experience inthe auditing of the entire Kao Group.
(ii) The Company determined thatnone of the requirements for priordiscussion as provided in Section
III.5 (3) 2 of the “Guidelines
Concerning Listed Company
Compliance, etc.” of the TSE applies
to him, and also that he has thenecessary independence based on the“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of Kao
Corporation” established by theCompany in line with the above
guidelines.
(i) He, in his career as an attorney
and a university professor, has
obtained considerable professional
expertise and experience in relation
to corporate legal affairs andcorporate governance. Having served
as an audit & supervisory board
member of principal subsidiary of
the Company since 2014, he also has
expertise in relation to the businessof the Kao Group. He has served asan Audit & Supervisory Board
Member of the Company since March
2018, conducting effective audits
from a professional perspective
including group governance. The
Company expects that he will tomake full use of his experience inthe auditing of the entire Kao Group.
(ii) The Company determined thatnone of the requirements for priordiscussion as provided in Section
III.5 (3) 2 of the “Guidelines
Concerning Listed Company
Compliance, etc.” of the TSE applies
to him, and also that he has thenecessary independence based on theSaeko Arai

None

○

“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of Kao
Corporation” established by theCompany in line with the above
guidelines.
(i) Ms. Arai has served as an outside
director and outside audit &supervisory board member forseveral companies, leveraging her
extensive knowledge of accounting
and finance as a certified public
accountant to support corporate
management such as establishinginternal control systems. In addition
to management experience as CFO ofa venture company, she also has
extensive international experience,
including serving as a representativeof a U.S. corporation. The Company
has determined that she will be able
to use these experience andknowledge in the auditing of theGroup.
(ii) The Company determined thatnone of the requirements for priordiscussion as provided in Section
III.5 (3) 2 of the “Guidelines
Concerning Listed Company
Compliance, etc.” of the TSE applies
to her, and also that she has thenecessary independence based on the“Standards for Independence ofOutside Directors/Audit &Supervisory Board Members of Kao
Corporation” established by theCompany in line with the above
guidelines.

[Independent Directors/Audit & Supervisory Board Members]
Number of Independent Directors/Audit &7
Supervisory Board Members
Matters relating to Independent Directors/Audit & Supervisory Board Members
All Outside Directors and all Audit & Supervisory Board Members of the Company meet
qualification for Independence and the Company has reported these members to the TSE as
Independent Directors/Audit & Supervisory Board Members.
 The Company’s Policy for Independence of Outside Directors/Outside Audit & Supervisory
Board Members
The Company has adopted at a meeting of its Board of Directors the “Standards for Independenceof Outside Directors/Audit & Supervisory Board Members of Kao Corporation”, with theunanimous consent of its Audit & Supervisory Board Members. The purpose of establishing theseStandards is to provide clear criteria for an outside director/Audit & Supervisory Board Member toqualify as an independent director/Audit & Supervisory Board Member.
Please read these Standards on the Company’s website.
www.kao.com/content/dam/sites/kao/www-kao-com/global/en/about/pdf/governance_002.pdf
 Regular Exchange of Information Solely among Independent Outside Directors and Outside
Audit & Supervisory Board Members
To promote discussions from diverse perspectives, independent Outside Directors and Outside
Audit & Supervisory Board Members hold meetings exclusively to exchange information and share

11

awareness of issues related to the Company’s management and the activities of the Board of
Directors, development of future Senior Management, and other matters. Also, newly appointed
members who attended the meeting expressed their view that they were reassured by the fact thatoutside members can make their proposals directly to the Company through frank exchanges of
opinions undertaken at the meeting.
[Incentives]
Incentive Policies for Directors

Performance-based Remuneration

Supplementary Explanation
It is described in the following “Disclosed Details of Policy for Determining Amount andCalculation Method of Remuneration” in Remuneration for Directors.
Recipients of Stock Options
Supplementary Explanation
The Company grants stock options to applicable stock option grantees for the purpose of further
increasing the Company’s corporate value by aligning the interests of the stock option grantees
with those of the shareholders of the Company. The Company selects as stock option grantees
Inside Directors and Executive Officers, who are in charge of management and conform to thispurpose.

12

[Director Remuneration]
Disclosure of Individual Directors’
Remuneration

Selected Director

Supplementary Explanation
The remuneration, etc., paid to Directors and Audit & Supervisory Board Members for FY2023(million yen)

Category

Directors(including, inparentheses, Outside
Directors)
Audit & Supervisory
Board Members(including, inparentheses, Outside
Audit & Supervisory
Board Members)
Total(including, inparentheses, Outside
Directors and Outside
Audit & Supervisory
Board Members)Components of Remuneration
Long-term incentive
Short-termcompensation
incentive(Performance-based sharecompensation
incentive plan)(performanceVariable
based bonus)
Fixed portion
portionNumber ofMembers

Aggregate
Amount ofRemuneration,
etc.

Base
Salary

12
(5)

674
(89)

490
(89)

82
(－ )

66
(－ )

36
(－ )

6
(3)

120
(47)

120
(47)

－
(－ )

－
(－ )

－
(－ )

18
(8)

794
(136)

610
(136)

82
(－ )

66
(－ )

36
(－ )

Notes:
1. The above numbers of Directors/Audit & Supervisory Board Members include two Inside Directors and one
Inside Audit & Supervisory Board Member who resigned at the conclusion of the 117th Annual General Meetingof Shareholders held on March 24, 2023.
2. The variable portion of the long-term incentive compensation (performance-based stock compensation will befinalized as the fiscal year under review falls on the final year of the Mid-term Plan “K25.” Initially, the applicable
period was set to five fiscal years up to the fiscal year ending December 31, 2025. However, since the Mid-term
Plan “K27” was announced, the period is expected to be changed to three fiscal years up to the fiscal year ended
December 31, 2023. As the amount of provision for long-term incentive compensation recognized for the current
fiscal year is 112 million yen, while the amount of reversal of provision for prior years based on the degree ofachievement of “K25” is 46 million yen, the difference between them is shown in the table above.
For Directors of foreign nationals, we plan to pay cash equivalent to the variable portion of long-term incentive
compensation (performance-based stock compensation).
3. The maximum amounts of remuneration, etc. are as follows:(1) Maximum aggregate amount of monetary remuneration, etc., to be paid to Directors:
An annual amount of 630 million yen (as resolved at the 101st Annual General Meeting of Shareholders held on
June 28, 2007). The Company had 15 Directors (including two Outside Directors) at the time such resolution
was adopted. Such maximum aggregate amount includes the maximum annual amount of 100 million yen to be
paid to Outside Directors (as resolved at the 110th Annual General Meeting of Shareholders held on March 25,2016) but does not include the salary amounts, etc. to be paid to Directors who also serve as employees of theCompany, for their service as employees. The Company had seven Directors (including three Outside Directors)
at the time such resolution was adopted.
Based on a resolution adopted at the 115th Annual General Meeting of Shareholders held on March 26, 2021,
the Company has introduced a performance-based share incentive plan for its Directors (excluding Outside
Directors) and its Executive Officers, which shall be applicable separately from the maximum aggregate amountof monetary remuneration, etc., for the Directors. Under this share incentive plan, trust money of up to 3.65
billion yen is contributed concerning the fiscal years subject to the Company’s mid-term plan (the initial period
to be covered being the period of five fiscal years from the fiscal year ended December 31, 2021 to the fiscal
year ending December 31, 2025), and the Company’s shares are acquired through a trust and are then vested,etc., through the trust, based on the evaluation indicators consisting of growth potential evaluation indicators(such as the degree of growth in overall business sales and profit, etc.), ESG potential evaluation indicators (suchas evaluation by external indicators), and management potential evaluation indicators (such as evaluation ofmanagement activities by the Company’s employees). The Company had four Directors (excluding Outside
Directors) at the time such resolution was adopted.

13

(2) Maximum aggregate amount of remuneration, etc., to be paid to Audit & Supervisory Board Members:
An annual amount of 120 million yen (as resolved at the 113th Annual General Meeting of Shareholders held on
March 26, 2019). The Company had five Audit & Supervisory Board Members (including three Outside Audit& Supervisory Board Members) at the time such resolution was adopted.
4. Aggregate amount of remuneration, etc. paid to Outside Directors and Outside Audit & Supervisory Board
Members by the Company’s subsidiaries, etc., other than the aggregate amount of remuneration, etc. paid to
Outside Directors and Outside Audit & Supervisory Board Members:
Remuneration paid to one Outside Audit & Supervisory Board Member for his service as an Audit & Supervisory
Board Member of Kao Group Customer Marketing Co., Ltd. was 4 million yen.
Policy on Determining Remuneration
Amounts and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
The purpose of the Company’s compensation system for Directors, Audit & Supervisory Board
Members and Executive Officers is as follows:•Securing and retaining diverse and excellent talent to establish and improve competitive
advantages;•Promoting prioritized measures for continuous increases in corporate value; and•Sharing interests in common with shareholders.
Remuneration of Directors, other than Outside Directors, and Executive Officers consists of (a) abase salary, (b) a bonus as short-term incentive compensation, and (c) performance-based share
incentive plan as long-term incentive compensation, and is designed to provide an impetus forcontinuing annual improvement in business results and medium-to-long-term growth. Linkage of
remuneration to business results increases with rank and takes into account the responsibilities ofeach position and individual performance. An overview of the components of remuneration is asfollows:(a) Base salary
A base salary is paid as fixed monthly remuneration in an amount determined in accordance with
duties as a Director or Executive Officer and rank.
(b) Bonus as short-term incentive compensation
When the bonus payment rate is paid at 100%, the bonus is set at 50% of the base salary for the
President and CEO, 40% of the base salary for the Executive Officers with titles other than the
CEO and 30% to 35% of the base salary for other Executive Officers. In order to achieve“profitable growth,” the Company determines the bonus payment rate by looking at sales and profit
results against the single-year target, improvement from the previous year’s results, businessresults that reflect the achievement level of single-year target EVA, which is a management index
that the Company holds in high regard as an indicator to measure the degree of corporate value,
and the results of individual evaluation. The bonus payment rate is set within a range of 0% to
200%.
The net sales and profit targets have been made consistent between Directors, other than Outside
Directors, and Executive Officers and employees so that they can work together to achieve them.
These targets are different from the figures in the announced forecasts, taking into account acertain level of relevance and consent as the companywide goals. On the other hand, regarding the
EVA target, the Company has set target based on publicly announced performance forecasts as
executive performance indicators (The target value for bonus calculation may exceed theannounced performance forecast.). In the process of individual evaluation, the Company has put inplace a process of evaluation by Outside Directors and Outside Audit & Supervisory Board
Members to ensure objectivity and transparency of the evaluation.
The single-year targets for these evaluation indicators for the fiscal year under review were sales(sales calculated based on the accounting standards used before the adoption of IFRS 15) of 1,676.0
billion yen, profit (gross profit minus selling, general administrative expenses) of 124.8 billion yen,with EVA single-year target of 24.2 billion yen. The actual results were sales of 1,634.8 billion yen,profit of 93.7 billion yen, and EVA of 14.9 billion yen. In addition to the above, the percentage
improvement from the results of the previous fiscal year is used as an evaluation indicator for sales

14and profit. The rate of business performance-based remuneration based on these results for the fiscal
year under review came in at 58.59%.
(c) Performance-based share incentive plan as long-term incentive compensation
Company shares, etc., are delivered to Directors, other than Outside Directors, and Executive
Officers based on factors such as the degree of achievement of the key performance targets
adopted under the Mid-term Plan “K25.” (Initially, the applicable period was set to five fiscal
years up to the fiscal year ending December 31, 2025. However, since the Mid-term Plan “K27”
was announced, the period has been changed to three fiscal years up to the fiscal year ended
December 31, 2023.) This performance-based share incentive plan comprises two parts: a variable
portion in which Company share, etc. is delivered in accordance with the degree of achievement oftargets adopted under the mid-term plan, etc., and a fixed portion in which a certain number ofCompany share, etc. is delivered annually. The purpose of the variable portion of the system is toprovide an impetus for achieving the targets of the Company’s mid-term plan as well as to increase
the link between performance and compensation over the medium to long term. The purpose of the
fixed portion of the system is to strengthen shared interest with the Company’s shareholders bypromoting the holding of shares by the Directors, other than Outside Directors, and Executive
Officers. The variable portion accounts for 70% of shares delivered, with the fixed portion
accounting for 30%. When the variable coefficient for the variable portion of the system is at
100%, the yearly share remuneration amount is set at approximately 30% to 50% of a base salary.
The variable portion is delivered after the Director, etc. retire, reflecting their achievement level.
The fixed portion is delivered after the end of each fiscal year. A portion of the amount isdelivered in Company shares and the remainder is delivered in the amount of Company sharescashed within the trust for delivering shares.
In calculating the variable coefficient, in order to promote “contributing to an ‘enrichedsustainable society’ and growing the businesses of the company through proactive engagement in
ESG activities and investment,” which is the goal of “K25,” “growth potential evaluation (degreeof growth in overall business sales and profit, etc.)”; “ESG potential evaluation (evaluation by
external indicators, status of realization of internal indicators, etc.)”; and “management potential
evaluation (evaluation of management activities by our employees, etc.)” are used as evaluation
indicators and evaluations are made based on the degree of achievement. Depending on the resultsof evaluating these indicators, the range will be from 0% to 200% and the shares will be issued
after the performance is confirmed. Through an overall evaluation of these indicators based on the
degree of achievement as of the end of FY2023 and subsequent assessments by the Compensation
Advisory Committee for Directors and Executive Officers, the variable coefficient for “K25” hasbeen determined at 80% by the Board of Directors.
Compensation for the Outside Directors and Audit & Supervisory Board Members, who hold aposition independent from the Company’s business execution function, is limited to a fixedmonthly salary.
The Company has no retirement bonus system for the Directors or Audit & Supervisory Board
Members.
At a Board of Directors meeting, the Company revised the ratio of performance-based
remuneration to total remuneration for Directors, excluding Outside Directors, and Executive
Officers subject to shareholders’ approval of “Partial Revision of the Amount and Other Terms andConditions of Performance Shares, etc. for Directors, etc.” at the 118th Annual General Meeting of
Shareholders to better incentivize them to contribute to enhancing corporate value and achieving
performance targets.

15

Details of revisions to the ratios of short-time incentive compensation (bonus) and long-term
incentive compensation (performance-based stock compensation)
Short-term incentive
Long-term incentive compensationcompensation(performance-based stock
Category(bonus)compensation)
Before revision After revision Before revision
After revision
President and
50% of base
100% of baseCEOsalarysalaryExecutive
Officers with
30% to 100% of
titles40% of base 50% to 70% of 30% to 50% ofbase salarybase salary(excludingsalarybase salaryPresident andCEO)
Other Executive 30% to 35% of 30% to 50% of
Officers
base salarybase salary*The levels of base salary will not be revised in FY2024.
In calculating the coefficient of variation for long-term incentive compensation, in order tobecome a company with "Global Sharp Top" business as stated in "K27" and to promote aggressive
governance to achieve this goal, the Company will use the existing evaluation indicators of"growth potential evaluation (degree of growth of overall business sales and profits, etc.)," "ESG
potential evaluation (evaluation by external indicators, status of realization of internal indicators,etc.)," “management potential evaluation (evaluation of management activities by our employees,etc.)” are used as evaluation indicators and evaluations are made based on the degree ofachievement. In addition, the Company will introduce new evaluation indicators of "EVA
(economic value added)" and "TSR (total shareholder return)" and conduct evaluation based on the
degree of achievement of those indicators. Moreover, non-Japanese directors, to whom long-term
incentive compensation had been paid in cash, have been added to the scope of this system in orderto motivate them to further increase the share price.
Process for Determining the Amount of Remuneration
The compensation system and compensation standards for the Directors and Executive Officers,
including details of individual remuneration for the Directors are examined by the Compensation
Advisory Committee for Directors and Executive Officers and determined by the Board of
Directors. The Compensation Advisory Committee for Directors and Executive Officers comprises
the Company’s Representative Director, President and CEO, and all of the Company’s Outside
Directors. As such, over half of the Committee’s members are independent. The chairperson iselected from among the Outside Directors.
In determining the details of compensation for individual Directors for the current fiscal year, theCompensation Advisory Committee for Directors and Executive Officers performed acomprehensive review of the draft proposal, including consistency with the objectives of theCompany’s remuneration for Directors prior to submitting its report, and based on the results of
the Board of Directors’ confirmation of the details of the Committee’s review and report, the Boardof Directors has determined that the compensation details are consistent with the objectives of theCompany’s remuneration for Directors, etc.
Compensation standards for Audit & Supervisory Board Members are determined by discussions of
the Audit & Supervisory Board. Furthermore, the Company has established a Compensation
Advisory Committee for Audit & Supervisory Board Members, and examines the validity andtransparency in the decision-making process of compensation amounts for Audit & Supervisory
Board Members from an objective perspective. The committee is composed of all Outside Audit &Supervisory Board Members, the President and CEO, and one Outside Director. The chairperson iselected from among the Outside Audit & Supervisory Board Members.
Compensation standards for Directors, Executive Officers, and Audit & Supervisory Board
Members are determined each year after ascertaining standards at other major manufacturers of asimilar size, industry category, and business type to the Company and other companies that arecomparable to the Company in terms of the direction of management strategies and business form,
using officer compensation survey data from an external survey organization. In the future, when
deemed necessary based on the Company’s executive structure and the market level of16compensation for Directors, we may consider revising the maximum amounts of monetary
remuneration (630 million yen annually (including 100 million yen per year for Outside Directors,
and excluding salary amounts, etc. to be paid to Directors who also serve as employees of theCompany for their service as employees) and submit a proposal of the revision to an Annual
General Meeting of Shareholders of the Company to seek for shareholders’ approval.
[Supporting System for Outside Directors and Outside Audit & Supervisory Board Members]
To allow for active discussions at meetings of the Board of Directors, the Board of Directors
Secretariat provides Outside Directors and Outside Audit & Supervisory Board Members with
sufficient explanations by distributing materials on matters such as the background, purposes, andcontent of the respective agenda items, as necessary, prior to the meeting of the Board of
Directors.
Outside Audit & Supervisory Board Members are supported by staff who assist their duties.
Furthermore, under this support system, administrative divisions such as the Department ofInternal Audit, and the Legal Department and Finance & Accounting Department provide theOutside Audit & Supervisory Board Members with assistance upon their request.
[Status of Persons who have retired from Representative Director and President, etc.]
Name of Consultants, Advisors, etc. who have retired from Representative Director andPresident, etc.

Name

Title/
PositionMichitaka
SawadaSpecialAdvisorDescription of Tasks

Form andConditions ofServices (Full-time,Part-time, Paid or
Unpaid, etc.)

Date of
Retirement
from
President,
etc.

Term

Activities of externalorganizations andgovernment agencies(not involved in the
Company's management)

Part-time,
no compensation

December31, 2020

Two years(No
renewal)

Total number of Consultants, Advisors, etc. whohave retired from Representative Director andPresident, etc.

1

Others
2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions (Overview of Current Corporate Governance System)■Outline of the Current Corporate Governance Structure
The Company has introduced, within the framework of a “Company with an Audit & Supervisory
Board*,” the Executive Officer system in order to separate the supervision function from theexecution function. Following the conclusion of the 118th Annual General Meeting of Shareholders
held in March 2024, the Company has: eight (8) Directors, including four (4) Outside Directors;
five (5) Audit & Supervisory Board Members including three (3) Outside Audit & Supervisory
Board Members; and 31 Executive Officers (including Executive Officers concurrently serving on
the Board of Directors. As of March 22, 2024). All Outside Directors and all Outside Audit &Supervisory Board Members maintain their neutrality, independent from the Company’s
management. In order to improve the transparency and other aspects of discussions in the Board of
Directors, an Independent Outside Director has become the chairperson of the Board after the108th Annual General Meeting of Shareholders held in March 2014. The term of office for
Directors and Executive Officers is one (1) year.
Information on the Company’s Corporate Governance Structure and Initiatives is available on the
Company’s website.
www.kao.com/global/en/corporate/policies/corporate-governance/structure/*Information concerning reasons for adopting a company with an Audit & Supervisory Board,please see "Policy 2.1 Company with Audit & Supervisory Board”

17

・ Board of Directors
Activities of the Board of Directors in FY2023
Title

Name

Attendance Rate100%
(15 out of 15 meetings)
100%
Representative Director
Yoshihiro Hasebe(15 out of 15 meetings)
100%
Representative Director
Masakazu Negoro(11 out of 11 meetings)
100%
Director
Toru Nishiguchi(11 out of 11 meetings)
100%
Director
David J. Muenz(15 out of 15 meetings)
100%
Outside Director
Osamu Shinobe(15 out of 15 meetings)
100%
Outside Director
Chiaki Mukai(15 out of 15 meetings)
100%
Outside Director
Nobuhide Hayashi(15 out of 15 meetings)
100%
Outside Director
Eriko Sakurai(15 out of 15 meetings)
100%
Outside Director
Takaaki Nishii(11 out of 11 meetings)
Full-time Audit &100%
Yasushi Wada
Supervisory Board Member(11 out of 11meetings)
Full-time Audit &100%
Sadanao Kawashima
Supervisory Board Member(15 out of 15meetings)
Outside Audit & Supervisory100%
Hideki Amano
Board Member(15 out of 15meetings)
Outside Audit & Supervisory
100%
Nobuhiro Oka
Board Member(15 out of 15meetings)
Outside Audit & Supervisory
100%
Takahiro Nakazawa
Board Member(15 out of 15meetings)* During FY2023, 15 meetings of the Board of Directors were held. After Mr. Masakazu Negoro,
Mr. Toru Nishiguchi and Mr. Takaaki Nishii took office as Directors, and Mr. Yasushi Wada
took office as Audit & Supervisory Board Member, 11 meetings of the Board of Directors were
held.
Director, Chair

Michitaka Sawada

Major topics discussed by the Board of Directors
In FY2023, the Board of Directors, in accordance with the Board of Directors' approach confirmed
in FY2022, focused its deliberations on the following points.
<How the Board of Directors should function>
Kao’s Board of Directors will conduct a substantial delegation of authority to the executive
organizations, and further strengthen its monitoring function to encourage appropriate risk-taking
by management and prompt and bold decision-making. In particular, the Board will effectively
supervise the appropriate allocation of management resources, including human capital, and theadequate implementation of strategies by management. It also recognizes that it is the
responsibility of the Board to develop internal controls and risk and crisis management systems,
and will build and operate these systems appropriately.
 Monitoring of the progress of the Mid-term plan and issues
The Board of Directors monitored business indicators and the progress of the Kao Group's Midterm plan "K25" at monthly meetings, and held an interim review of K25 to discuss structuralreforms and growth strategies. As a result of the interim review of K25, the Kao Group Mid-Term
Management Plan "K27" was re-formulated, and discussions and implementation of structuralreforms are in progress.
 Human capital strategy
The Board of Directors confirmed the recognition of issues in the human capital strategy and the18direction of response to the issues found therein and discussed the human capital strategy torealize the Company’s growth strategy. It was pointed out that it is necessary to further deepen thediscussion on the requirements, training, and acquisition of human resources to take charge of thegrowth strategy. The Board will continue to ensure that time is set aside for discussion and that thegrowth strategy is implemented. The Board also continue to deliberate on the progress and results
following the introduction of the new human capital revitalization system OKR (Objectives and
Key Results), which encourages employees to take on new challenges. The Board will ensure thatdiverse challenges in various Group locations will increase and expand, and that further
collaboration will be promoted through dialogue.
 Sustainability (Climate Change Risks/Human Rights, etc.)
The Board of Directors received reports on the Kao Group's initiatives, including global ESG
trends and the incorporation of "decarbonization" and "biodiversity" strategies into business plans,and confirmed their promotion status. The Board will continue to review issues related tosustainability.
 Establishment and Operation of Internal Control System
The Board of Directors was confirmed that the internal control system has been established and isoperating without any major problems.
In addition to the above, monthly reports on execution are made by directors who concurrently
serve as executive officers, and reports on matters deliberated by the Management Board are madeby the executive officer in charge.
・ Audit & Supervisory Board
The activities of the Audit & Supervisory Board are described in "Disclosure Based on the
Principles of the Corporate Governance Code" [Principle 4.4] Roles and Responsibilities of
Audit & Supervisory Board Members and the Audit & Supervisory Board
・ Accounting Auditor
The Company executed an audit contract with Deloitte Touche Tohmatsu LLC with respect toaudits required under the Companies Act and the Financial Instruments and Exchange Law.
The names of the certified public accountants (CPA) who engaged in the audit for FY2023 (ended
December 31, 2023) and the composition of the assistants in the audit are as follows:
Name of the CPAs engaged in the audit:
Designated Limited Liability Partner/Engagement Partner: Junichi Yamanobe, Koji Inoue andYuichiro NakashimaComposition of assistants in the audit:
15 CPAs and 44 others
The accounting firm, Deloitte Touche Tohmatsu LLC as the Company’s Accounting Auditor,
ensures, in accordance with applicable laws, regulations, etc., that none of its employees who
become involved in the audits of the Company will be involved in such audit for more than 7
accounting periods and a lead engagement partner is not involved for more than five consecutive
accounting periods. The Company executed an audit contract with Deloitte Touche Tohmatsu LLC
with respect to audits required under the Companies Act and the Financial Instruments andExchange Law, and pays remuneration to the accounting firm in accordance with this contract.
Response to Accounting Auditors:
In order to ensure the reliability of disclosure information related to the Company’s financial
results and the quality of our audits, the Company understands the audit plan formulated by the
Accounting Auditors and ensures sufficient audit time. Accounting Auditors cooperate with the
President & CEO and Executive Officers responsible for overseeing accounting and finance, Audit& Supervisory Board Members, and the Department of Internal Audit through regular meetings andinformation exchanges. In the event that Accounting Auditors discover fraud, the Accounting
Auditors immediately report to the Company, and works with Audit & Supervisory Board Members
and the Department of Internal Audit, to implement an appropriate response system.
Appointment of Accounting Auditors:
The Audit & Supervisory Board gathered information from the Accounting Auditors on the qualityof audits, including the independence of the Accounting Auditor, the auditing system, and the19status of implementation of audits. The Audit & Supervisory Board also exchanged opinions at
joint meetings with Company’s Accounting and Finance Department and Department of Internal
Audit, and then evaluated the appropriateness of the reappointment of the Accounting Auditors.
As a result, the quality control system is in place, ongoing improvement activities are being
implemented, and the auditing system within the auditing firm is also functioning effectively.
The integrated auditing system for domestic Group companies is also functioning, and theprovision of information to Audit & Supervisory Board members is also good.
The Audit & Supervisory Board confirmed that information sharing was good for each overseas
Group company by establishing a cooperative system with each Accounting Auditor.
Furthermore, risk awareness using IT and appropriate proposals and advice for improving audit
efficiency are being made, and effective communication with related departments is also being
attempted.
Based on these results and the status of the response to the pre-approval process for non-assurance
services, the Audit & Supervisory Board determined that it was appropriate to reappoint Deloitte
Touche Tohmatsu LLC, recognizing the audit methods, results, and quality as appropriate.
The Audit & Supervisory Board also exchanged opinions on the continuing audit period androtation of the current auditing firm.
Collaboration between Audit & Supervisory Board Members, the Accounting Auditor, theDepartment of Internal Audit, and Outside Directors
Audit & Supervisory Board Members and the Department of Internal Audit which is in charge ofinternal audit receive explanations from the Accounting Auditor on audit plans, priority audit items
and accounting audit results (quarterly review and annual audit) and major audit considerations,and exchange opinions with the Accounting Auditors on a regular and necessary basis.
The Audit & Supervisory Board Members and the Accounting Auditors hold meetings to exchange
opinions with domestic and overseas companies’ Accounting Auditors and share issues of eachcompany. For non-assurance services provided by Accounting Auditors and group companies,
policies and procedures are stipulated in the regulations, and these services are performed based ona process approved in advance by the Audit & Supervisory Board Members.
The Audit & Supervisory Board Members share with all Directors, including the Outside Directors,
the audit plans and audit findings of the Accounting Auditors at meetings of the Board of Directors
and at meetings for exchange of opinions. Furthermore, when deemed necessary by the Directors,
the Audit & Supervisory Board Members are provided with opportunities to exchange information
directly with the Accounting Auditors to ensure efficiency and sufficient collaboration.
The Audit & Supervisory Board Members and the Department of Internal Audit exchange opinions
on audit plans, findings from on-site hearings, internal audit results, etc., not only at regularmeetings (four times a year) but also as necessary. In addition, the Vice President of the
Department of Internal Audit attends meetings of the Audit & Supervisory Board and meetings forexchange of opinions among Group auditors as appropriate. In addition, the Vice President of the
Department of Internal Audit attends meetings of the Audit & Supervisory Board and theConference of Auditors for Domestic Group Companies as appropriate.
The Department of Internal Audit strives for mutual cooperation with the Accounting Auditors,
sharing information as appropriate on the maintenance and evaluation of internal control overfinancial reporting and the status of internal audit activities.
■Summary of Directors and Officers Liability Insurance
The Company has entered into a directors and officers liability insurance contract with aninsurance company, as provided for in Article 430-3, Paragraph 1 of the Companies Act, insuring
the Directors, Audit & Supervisory Board Members, and Executive Officers, etc., of the Company
and the Kao Group. This contract covers compensation for damages and legal costs that may be
incurred by the insured if they receive a claim for damages as a result of their actions (including
omissions) committed by them in connection with their duties as officers, etc. of the Company and
the Kao Group. However, the contract does not cover damages arising from actions taken by the
insured with the knowledge that they were in violation of the law, so as not to impair theappropriate execution of duties by the insured. Insurance premiums are covered by the Company
and the Kao Group.

20

3. Reasons for Adoption of Current Corporate Governance System
The Company has made continuous efforts to improve its corporate governance structure in orderto respond changes in the business and management environment. The Company will continue toexamine the issue of corporate governance structure improvement as part of its managerial
challenges. The Company considers it appropriate to make efforts to improve its corporate
governance structure through establishing the Committee for the Examination of the Nominees andthe Compensation Advisory Committee for Directors and Executive Officers , on the basis of its
current structure as a “Company with an Audit & Supervisory Board*” which has the Board of
Directors (consists of four (4) Inside Directors and four (4) Outside Directors) and the Audit &Supervisory Board (consists of two (2) Inside Audit & Supervisory Board Members and three (3)Outside Audit & Supervisory Board Members.)
The reasons for the Company's selection of a company with Audit & Supervisory Board aredescribed in "Policy 2.1 Company with Audit & Supervisory Board.
The policy is available on the Company's website below.
www.kao.com/global/en/corporate/policies/corporate-governance/

21III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting
RightsSupplementary Explanations
Early Notification The Company strives for the early disclosure of the convocation notice of its Annualof General
General Meeting of Shareholders (“AGM”) every year so that our shareholders canShareholder
fully examine agenda items of AGM. Prior to the dispatching of the printed
Meetingconvocation notice, on February 22, 2024, the Company uploaded and disclosed iton the Timely Disclosure Network of the Tokyo Stock Exchange and on the
Company’s website for the AGM to be held on March 22, 2024.
（ www.kao.com/global/en/investor-relations/stock-information/shareholdersmeeting/）
The printed copy of convocation notice was dispatched on March 7, 2024.
Allowing
The exercise of voting rights by electromagnetic means was started at the Annual
Electronic
Exercise of Voting General Meeting of Shareholders held in 2006.
RightsParticipation in
The use of an electronic voting right exercise system for institutional investors
Electronic Voting(“Platform” operated by ICJ, Inc.) was also started at the Annual General Meeting
Platformof Shareholders held in 2006. Furthermore, in order to encourage the exercise of
voting rights by the foreign shareholders, who hold close to 50% of the Company's
total shares, the Company conducts surveys on shareholders who actually own theshares and provides them with the summary of the notice of Annual General
Meeting of Shareholders in English. The Company also encourages the exercise of
voting rights by Japanese Institutional Investors at analyst meeting and interviews
for full-year financial results.
Providing
English translation (summary) of the convocation notice is published on the
Convocation
Company’s website on the same day as Japanese.
Notice in English
Other<Determination of an Appropriate Date for the Annual General Meeting of
Shareholders>
The Company decides on a date for its Annual General Meeting of Shareholders
within the three-month period after the fiscal year-end by designing a schedulepremised on providing sufficient time for deliberation by shareholders who havereceived a convocation notice and ensuring a sufficient number of days for an auditof the financial statements by the Accounting Auditor then considering factors
including securing an assembly hall with the capacity to hold the attendees and days
when Directors and Audit & Supervisory Board Members, including Outside
Directors/Audit & Supervisory Board Members, and Executive Officers can attend.
<Providing Appropriate Information to Shareholders>The Company works toenhance the content of its convocation notices for Annual General Meetings ofShareholders by conducting regular revisions to proactively incorporate informationconsidered conducive to appropriate judgments by shareholders, in addition to items
required by law. Also, it provides institutional investors and others with explanation
as necessary. At the Annual General Meeting of Shareholders, the Company
provides shareholders with easy-to-understand explanations of the main parts of thebusiness report, major issues and the medium-to-long-term outlook using projected
images and a thorough question-and-answer session.
<Response in the Event a Considerable Number of Votes are Cast against a Proposalby the Company>
For proposals against which a considerable number of votes have been cast at theAnnual General Meeting of Shareholders, after conducting an analysis of the causes,
including confirmation of matters such as benchmarks for the exercise of voting
rights by institutional investors, the Company works to gain understanding of its
stance through explanations to institutional investors by sending letters or
conducting direct dialogues. In addition, the Company takes the advice and opinions
of institutional investors seriously and uses them to reconsider and improve items
related to such proposals against which votes were cast.

22

<Delegation of Powers of the General Meeting of Shareholders to the Board of
Directors>
The Company enables the delegation of certain powers of the Annual General
Meeting of Shareholders, such as issuing an interim dividend and exempting
Directors and Audit & Supervisory Board Members from liability, to the Board of
Directors. Such delegation is premised on the attendance at Meetings of the Boardof Directors (eight (8) Directors and five (5) Audit & Supervisory Board Members)of the seven (7) outside members, who consist of four (4) Independent Outside
Directors, and the three (3) independent Outside Audit & Supervisory Board
Members, representing half of attendees, thus maintaining a structure for
conducting checks from the perspective of shareholders.
<Posting Videos from Annual General Meeting of Shareholders>
The Company has posted videos of the business report including the presentation by
the chairperson on the Company’s website. The videos are available only inJapanese. (www.kao.com/global/en/investor-relations/stockinformation/shareholders-meeting/)
2. IR Activities
Supplementary Explanations
Preparation andPublication ofDisclosure
PolicyRegularInvestor
Briefings forAnalysts andInstitutional
Investors

RegularInvestor
Briefings forOverseas
Investors

Posting of IR
Materials on
WebsiteThe Company has established and published Disclosure Guidelines
which set forth its commitment to strict compliance with the Companies
Act, the Financial Instruments and Exchange Law, the rules set down by
the Tokyo Stock Exchange (TSE) and other applicable laws andregulations. In Addition, based on the revision of the Financial
Instruments and Exchange Law in April 2018, Kao Disclosure
Guidelines have been updated, which takes into account fair disclosure.
The Company’s Disclosure Guidelines are published on the Company’s
website.
www.kao.com/global/en/investor-relations/disclosure/
Financial results briefings are held on the date of the announcement offull-year and interim financial results. A business management overview
and management policy are reported and explained by the President andCEO, and the actual and expected corporate performance are reported
and explained by the officer, Responsible for Management Finance(Accounting and Finance, Business Structure Reforms,
Procurement, Human Capital Strategy). For the first quarter and thethird quarter, the Company holds conference calls. As part of aconstructive dialogue with a view to enhance the corporate value, small
meetings between the President and CEO and analysts and institutional
investors are held. Furthermore, the Company holds briefings on new
strategies, initiatives, and businesses whenever necessary.
To hold constructive dialogues with a view to enhance the corporate
value and to facilitate the exercise of voting rights, the President andCEO engages in direct dialogue with various institutional investors andholds timely dialogue with various institutional investors on topics suchas ESG and other matters. Also, other members of the management
engage in direct dialogue with institutional investors in Asia
adequately, and they explained the Company’s management policy, as
well as matters such as the managerial environment and businessperformance and outlook, and answered questions subsequently asked
by investors. In recent years, the Company continues to hold meetings
using online tools. In addition, the executive officer in charge and IR
staff participate in conferences hosted by securities companies asappropriate, and hold dialogues with various institutional investors
regarding management policies and business performance.
Reports of financial results, annual securities reports, quarterly reports,
quarterly securities reports, notices of convocation of shareholders
meetings, integrated report, and presentation materials at shareholders
meetings and financial results briefing sessions are published on the
Company’s website. Furthermore, reports of financial results, notices of23

Explanation byRepresentative(s)of the Company

Yes

Yes

Establishmentof Department
and/or Manager
in Charge of IR
Other

convocation of shareholders meetings and presentation materials at
financial results briefing sessions are translated into English andpublished on the Company’s website. Presentation materials atshareholders meetings in Japanese and English are disclosed promptly
at the same time on the Company’s website. From fair disclosure
perspectives, Q&As from various meetings such as interim and full-year
financial results briefings and conference calls are disclosed in script inJapanese and English. Financial results briefings videos are posted on
the website as well.
In September 2021, the investor information website was redesigned to
expand public information and improve convenience, and the Company
has continued to add and update information since then.
Investor information in Japanese: www.kao.com/jp/investorrelations/Investor information in English:
www.kao.com/global/en/investor-relations/
Corporate Strategy performs IR functions, aiming to reinforce strategic
disclosure of information, communicate with securities analysts andinstitutional investors, hold events and disclose information on thewebsite. A total of seven members respond to IR issues at the head of
one Vice President.
<Measures aimed at Shareholders>Since 2021, the Company has been holding online events to inform
more shareholders about Kao’s ”Yoki-Monozukuri” and ESG initiatives.
<Measures aimed at institutional investors>
The Company conducts exchanges of opinions with multiple
institutional investors in Japan and outside Japan regarding how topromote constructive dialogues and ESG and makes use of suchexchanges to improve information disclosure and daily IR activities.
Also, the Company held a seminar on Kao Group Mid-term Plan 2020
(K20).
<Published Integrated Report>
The Company releases the Kao Integrated Report, which covers bothfinancial and non-financial information. Kao's Financial Report is alsoavailable in PDF format.
Integrated Reportwww.kao.com/global/en/investor-relations/library/reports/Financial
Reportwww.kao.com/global/en/investor-relations/library/financialreport/<External Evaluation>
The Company received Commendation Award in 2023 Internet IR Award
by Daiwa Investor Relations Co. Ltd and Companies’ Website Ranking“AAA Website” by Nikko Investor Relations Co., Ltd.

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations
Stipulation of
The Kao Way, an essence of the Company's corporate philosophy, declares, " AsInternal Rules
one, we create a Kirei life for all - providing care and enrichment for the life of all
for Respecting
people and the planet; As one Kao, we work together with passion to provide
the Position ofcomprehensive care and enrichment to create a Kirei life – a cleaner, more
Stakeholders
beautiful, and healthier life for all people and the planet. Through innovation thatprovides excellent value, we share joy and create a safer, more harmonious world
for all.” The "Vision" section of the Kao Way further states, " To be closest to theindividual and beyond their expectation; By deeply knowing and understanding ourworld and its people, we aim to improve people’s lives beyond their expectations
for a future where humans and nature thrive together."
Furthermore, the Principles of Corporate Ethics in “Kao's Business Conduct
Guidelines” state, "Kao Corporation seeks to be an honest and exemplary company,
guided by sensible and fair actions and driven by a fundamental adherence to24

ImplementationofEnvironmental
Activities, CSR
Activities etc.

ethical principles that go beyond mere compliance with laws to earn the true
respect of all stakeholders. The Business Conduct Guidelines also give specificguidance about respecting the standpoint of stakeholders.
< Evaluation of ESG Measures>
Selected for the A List for climate change, forest, and water by CDP and Supplier
Engagement Leader by CDP
The Company has been selected as the A List for climate change, forest, and waterby CDP based on the CDP's environmental response survey of the companies
surveyed worldwide seven years in a row. The Company has been included in the
climate change A List for the fifth time, the forest A list for the fourth time, and thewater security A List for the seventh time. Also, the Company has been recognized,
for the seventh consecutive year, as a Supplier Engagement leader for its initiatives
in reducing carbon emissions and tackling climate change across its supply chain
by CDP, an international non-profit organization that drives companies andgovernments to reduce their greenhouse emissions.
*CDP: CDP is a not-for-profit charity that runs the global disclosure system forinvestors, companies, cities, states and regions to manage their environmental
impacts.
Included in Stock Indices for ESG Investing・ FTSE4Good Index
・ FTSE Blossom Japan Index
・ FTSE Blossom Japan Sector Relative Index
Index developed by FTSE Russell, a unit of the London Stock Exchange Group.
Companies that satisfy its environment, social, and governance standards are
selected for the index.
・ MSCI ESG Leaders Indexes
・ MSCI Japan ESG Select Leaders Index
・ MSCI Japan Empowering Women (WIN) Select Index
Indexes developed by U.S.-based MSCI. Companies with excellent environment,social, governance (ESG) ratings are selected for the indexes.

Development of
Policies on
Information
Provision to
Stakeholders

Other

For information on other external evaluations, please visit the following website.
www.kao.com/global/en/sustainability/pdf/recognition/
Details on Kao's sustainability-related initiatives can be found at following
websites.
Kao Sustainability Report:
www.kao.com/global/en/sustainability/pdf/
The Company has established Disclosure Guidelines which set forth its
commitment to timely, accurate, and impartial disclosure of information toshareholders, investors, and all stakeholders in strict compliance with theCompanies Act, the Financial Instruments and Exchange Law, the rules set down by
the Tokyo Stock Exchange (TSE) where the Company’s shares are listed, as well asother applicable laws and regulations. In Addition, based on the revision of the
Financial Instruments and Exchange Law in April 2018, Kao Disclosure Guidelines
have been updated, which takes into account fair disclosure.
www.kao.com/global/en/investor-relations/disclosure/<Measures to Promote Diversity>
Recognizing that the vitality born from diversity supports our business growth, theCompany expresses its aim and principles of action in the Kao Way, the Company’s
corporate philosophy, and shares it widely. The Company established and disclosed
its Diversity, Equity, and Inclusion (DE&I) Policy in 2023. For individuals and theCompany to grow together, we aim to strengthen the organization by bringing
together employees of diverse backgrounds, respecting each other, and accepting
each individual’s perspective and way of thinking; and to create an environment
where each individual can maximize his/her ability and individuality. The Company
discloses information on its initiatives through the Sustainability Report, Kao
Integrated Report, and other reports.
Please see below for Sustainability Report, Integrated Report and Diversity, Equity

25

and Inclusion Policy.
・ Kao Sustainability Reportwww.kao.com/global/en/sustainability/pdf/
・ Kao Integrated Reportwww.kao.com/global/en/investor-relations/library/reports/
・ Diversity, Equity and Inclusion Policy
www.kao.com/global/en/sustainability/walking-the-right-path/inclusive-diverse/dei/With regard to core positions, the Company securing diversity by thoroughly
evaluating and promoting them based on individual abilities that do not rely on
attributes.
With regard to promotion of women to managerial positions, among other efforts,
the Company has set a target to have a proportionate ratio of female managers in
Kao Group companies in Japan to the ratio of female employees in Kao Group
companies in Japan by 2030, creates a compatible environment for diverse work
methods and encourages female manager candidates to participate in outside crossindustry study groups. On December 31, 2023, the percentage of female employees
in Kao Group companies in Japan was 56.0% and the percentage of female
employees in managerial positions in Kao Group companies in Japan was 24.6%(22.4% last year).
With regard to non-Japanese employees, the Company strives to secure excellent
human resources regardless of nationality, such as by setting a certain target value.
The Company has set a target to have a proportionate ratio of non-Japanesemanagers in Kao Group companies in Japan to the ratio of non-Japanese employees
in Kao Group companies by 2030. On December 31, 2023, the percentage of nonJapanese employees in Kao Group companies in Japan was 0.6% and the percentage
of non-Japanese employees in executive positions in Kao Group companies inJapan was 0.4%.
With regard to mid-career hires, the Company intends to actively recruit specialist
human resources from outside the company in order to acquire experience andknowledge that are not available within Kao and to aggressively develop new
businesses in the future, the Company is going to actively recruit specialists fromoutside the Company. On December 31, 2023, the percentage of mid-career
employees in Kao Group companies in Japan was 36.3% and the percentage of midcareer employees in managerial positions in Kao Group companies in Japan was
18.0% (18.5% last year). The Company has set a target to have a proportionate ratioof mid-career employees in managerial positions of Kao Group companies in Japanto the percentage of mid-career employees in Kao Group companies in Japan.
<Evaluation of Initiatives to Promote Diversity>
Kao Group’s philosophy and initiatives to promote diversity and inclusion, as wellas the organizational culture in which employees can play active roles regardless ofgender or other attributes, have been highly evaluated. In 2018, the Company was
included in MSCI Japan Empowering Women Index (WIN)* 1 , and in 2019, 2020,
2021, 2022 and 2023 selected for inclusion in the Bloomberg Gender-Equality
Index* 2 . Also, the Company was selected as a “Nadeshiko Brand* 3 ” in 2013, 2015,2018 and 2020 and "Semi-Nadeshiko Brand" in 2019 and 2021. Also, the Company
was selected “Diversity Management Selection 100 Project* 4 ” in 2013, the year it
was established and in 2019, received the Prime Minister's Award for “Leading
Companies Where Women Shine* 5 .”* 1 MSCI Japan Empowering Women Index (WIN): Index by U.S.-based MSCI:
Companies with outstanding assessments for empowering women and promoting
gender diversity are selected from among the MSCI Japan IMI Top 500 Index.
* 2 Bloomberg Gender-Equality Index: Index developed by U.S.-based Bloomberg to
track the performance of those companies most committed to transparency ingender reporting and to advancing women globally.
* 3 Nadeshiko Brand: The Tokyo Stock Exchange and the Ministry of Economy,
Trade and Industry jointly select and publicize enterprises listed on the first section26

of the Tokyo Stock Exchange that are exceptional in encouraging women's successin the workplace from 2013.
* 4 Diversity Management Selection 100: The Ministry of Economy, Trade andIndustry selects enterprises that create innovation and conduct business which leads
to creation of value, by utilizing various human resources and by giving them
opportunities to fully show their competence.
* 5 Leading Companies Where Women Shine: The Gender Equality Bureau Cabinet
Office publicly recognizes companies that disclose information about their policies,
initiatives, and results of promoting women to managerial and executive positions,and from this information demonstrate outstanding achievements.
<Measures to Promote the Health of Employees>
Based on the Kao Group Health Declaration established in 2008, the Company isengaged in health management mobilizing a robust organizational framework led bya dedicated department and involving the participation of the employer, the healthinsurance union and industrial healthcare staff and also the Company provides
equitable health support opportunities for employees and their families. In addition,
the Company is promoting practical health promotion activities in which employees
and their families participate by incorporating products and health solution services
developed from analysis of basic internal and external health information andhealth care knowledge into the Company's health management. Outstanding
initiatives are made available outside the company through the Kao GENKI Project.
In 2022, the Company renewed the Kao Group Health Declaration, declaring that
the Company will expand its activities beyond employees and their families tocorporations, local governments, and consumers.
Due to the positive evaluation of the Company’s measures and results, it was
selected as a “Health and productivity management brand” ninth time and also
recognized by METI, for the eighth consecutive year, as a Certified Health andProductivity Management Organization (White 500) for its outstanding practice of
health-conscious management.
Also, in March 2021, the Company won the Development Bank of Japan Inc.’shighest rating in its “DBJ Employees' Health Management Rated Loan Program” asa company that is particularly superior in terms of its consideration for the healthof its employees. This is the third time Kao has been given this highest rating. The
last time was in 2012 when the Program was first introduced. Kao successfully
procured financing under preferential conditions as provided by the Program.
*Loans with discounted interest rates according to the Rating
DBJ evaluates the health management efforts of corporations and applies threedifferent interest levels based on the result of the evaluation.
<Most Ethical Company in the World>
Kao was Selected as the "World's Most Ethical Companies 2024" of the U.S. thinktank Ethisphere Institute. Kao is the only Japanese company that has been selected
for 18 consecutive years since the award was established in 2007.
*World’s Most Ethical Companies: The Ethisphere Institute is a leadinginternational think tank focused on developing and sharing best practices inbusiness ethics and corporate social responsibility. For the World's Most EthicalList, it surveys and evaluates companies the world over in five categories: ethics
and compliance programs, corporate citizenship and responsibility, culture of
ethics, governance and third-party management.
The Kao Group upholds the founder's value of "walking the right path" at the coreof all corporate activity. Kao’s Business Conduct Guidelines are also sharedthroughout the Kao Group around the world as a code of corporate conduct for
putting the Kao Way into practice. The Company uses and practices theseguidelines as a foundation to return to when we are unsure of our decisions, as a
guideline for our daily work, and as the basis for realizing sustainable developmentof the Company and society.

27

IV. Matters Related to the Internal Control System
Basic Views on Internal Control System and the Progress of System Development
The Company has established an Internal Control Committee chaired by the President and CEO. An
important task of the committee is to develop a management structure, organization and systemthat facilitates legally compliant, efficient, sound and highly transparent management that aims toconsistently enhance corporate value, and for this objective, the Company implements thefollowing systems:
1. Systems to Assure Appropriate Business Operations of the Company
The Board of Directors made the following resolution with respect to the “Policy regarding theDevelopment of the Internal Control System” on January 1, 2023.
Basic Policy Regarding the Internal Control System
The Company has established an Internal Control Committee chaired by the President and Chief
Executive Officer. An important task of the committee is to develop a management structure,organization and system that facilitates legally compliant, efficient, sound and highly transparent
management that aims to consistently increase corporate value, and for this objective, theCompany implements the following systems:(1) A system to ensure that execution of duties of Directors and employees of the Company and its
subsidiaries conforms to laws and the Articles of Incorporation
Directors, Executive Officers and employees of the Company and its subsidiaries (Kao Group)
should act with integrity based on “Kao’s Business Conduct Guidelines (BCG),” which governs
compliance with laws, the Articles of Incorporation, internal rules and social ethics. The
Compliance Committee, chaired by the Director or Executive Officer in charge of compliance,
promotes Kao Group’s compliance as a whole. On the basis of the provision of BCG which
declares Kao’s position to reject any relationship with anti-social forces, the Company promotes
cooperation with governmental agencies, etc. and collection and management of information
regarding anti-social forces and establishes and maintains its internal system. Monitoring by thedepartment in charge of internal control/committee, internal audit by the Department of Internal
Audit as well as notices and reports to the Compliance Reporting Hotline from concerned parties
in and outside the Company enable Kao to quickly gauge the state of compliance, work to quickly
resolve any issues that arise, and take appropriate steps to prevent the recurrence of similar cases.
(2) A system for retention and management of information concerning Directors’ execution of theirdutiesInformation (minutes, decision records and their relevant materials, account books and records,
and other information and the like) related to the Directors’ execution of their duties is properly
retained and managed according to the document retention and management policies and otherrelated policies. The Directors, Audit & Supervisory Board Members and employees designated bythem may access such information at any time.
(3) Rules and other systems concerning management of risk of losses by the Company and its
subsidiaries
With regard to the risk of losses, the Company regards potential negative impact on managementtargets and business activities as “risks” and the manifestation of such risks as a “crises,” and has
established systems for appropriate risk and crisis management. Based on the Risk and Crisis
Management Policy, the Risk & Crisis Management Board, chaired by the Director or Executive
Officer in charge of risk and crisis management, ascertains the progress of cross-divisional
Company-wide risk management and establishes a plan for the preparation and application of risk
and crisis management activities. Based on this policy and plan, departments concerned with riskor subsidiaries appropriately manage risk by ascertaining and assessing risks, formulating andimplementing necessary countermeasures, and other activities. In addition, after deliberation by
the Management Board, the President and Chief Executive Officer specifies major Company-widerisks as corporate risk and appoints a person to appropriately manage such risk. When a crisis
occurs, the Company responds promptly by establishing an organization for countermeasurescentered on this person in charge for corporate risk, and on departments concerned with risk or
subsidiaries for other types of risk. In addition, depending on the magnitude of the impact on theGroup as a whole, the Company also establishes a countermeasures headquarters with the President
and Chief Executive Officer or other person as its general manager. Management of theabovementioned risks and crises is reported to and discussed at the Meeting of the Board of28

Directors or the Management Board on a regular basis as well as in a timely fashion whenevernecessary.
(4) A system to ensure that Directors of the Company and its subsidiaries efficiently execute theirdutiesAfter determining the direction to be focused on in a mid-term business plan, the Board of
Directors reflects such direction in the mid-term plans of each department and subsidiary. The midterm plans are reviewed annually by the Board of Directors and the Management Board, andnecessary adjustments are made in response to the progress of the plans and changes in thebusiness environment. The Management Board reviews, monthly or whenever appropriate, theprogress of the revenue and expenditure plan and other important business plans of each divisionand subsidiary, extracts the main issues and then implements measures in response. In order toseparate supervision and execution functions and to ensure the effectiveness of these functions andto accelerate execution, the decision rules for the Board of Directors and the Management Board
including items that arise from subsidiaries are established and reviewed as necessary.
(5) A system to ensure the appropriateness of business operations in the Company and its
subsidiaries
The Internal Control Committee and related committees promote various policies to make sure thatthe business activities of the Kao Group conform to laws and the respective Articles ofIncorporation. In addition, they promote and monitor efforts to ensure the appropriateness andefficiency of business operations throughout the Kao Group, and report regularly to the Board of
Directors. Representative Directors, Directors and Executive Officers in charge of business
operations provide guidance for the development of appropriate internal control systems for
subsidiaries, according to their respective duties.
(6) A system concerning reporting to the Company regarding execution of duties of Directors of
the Company’s subsidiaries
The Company applies the Subsidiaries rules (Policy Manual) to all subsidiaries, which requireprior approvals of or reporting to the Company. The Company requires them to gain priorapprovals or make a report on important management matters to the Board of Directors,
Management Board or an executive officer who are in charge of the subsidiary in accordance withsuch rules as well as the decision and reporting rules for the Board of Directors and Management
Board, In addition, Directors of the Company’s subsidiaries, regularly or as necessary, discuss orreport to the periodic meetings held every month in principle and established by each business areaor functional area which supports business. Also, the Department in charge of internal control andthe Department of Internal Audit regularly or as necessary, monitor the state of implementation ofprior approvals or reporting based on the rules.
(7) A system to ensure the reliability of financial reports
In order to ensure the reliability of financial reports, the Company evaluates, improves anddocuments in writing the state of the Company’s internal control system and the process ofbusiness operations based on the principles of the Internal Control Committee and the Board of
Directors confirms these activities regularly.
(8) Employees to be assigned if Audit & Supervisory Board Members request staff to assist in theirdutiesIn the event that a request is made by Audit & Supervisory Board Members for the assignment ofstaff to provide assistance to conduct their audits effectively, the Directors should assign
employees after discussing the selection of specific personnel with the Audit & Supervisory Board
Members.
(9) Independence of employees in the preceding paragraph from Directors and ensuring
effectiveness of instruction by Audit & Supervisory Board Members to such employees
In assignment, evaluation, transfer and disciplinary action of or to employees who assist in theduties of Audit & Supervisory Board Members, the prior consent of the Audit & Supervisory Board
Members should be obtained. Instructions by the Audit & Supervisory Board to such employees
should not be restricted unreasonably, and such employees must follow the instructions.
(10) A system for Directors, Executive Officers and employees of the Company and Directors,
Auditors and employees, etc. of the Company’s subsidiaries to report to Audit & Supervisory
Board Members of the Company

29

Audit & Supervisory Board Members may attend meetings of the Management Board, the Internal
Control Committee and related committees, and may access the minutes, decision records andother documents of important meetings at any time. They may also receive activity reports fromthe head of each division and subsidiary regularly or as necessary. In addition, Directors,
Executive Officers and employees of the Company and Directors, Auditors and employees ofsubsidiaries, etc. should promptly report to Audit & Supervisory Board Members when any factthat may potentially cause significant harm to the Company or to its subsidiaries or any fact of aserious violation of laws or the Articles of Incorporation occurred or when those fact werereported. Compliance Committee reports information delivered to Compliance Hotline andDepartment of Internal Audit reports audit results to Audit & Supervisory Board Members
regularly or as necessary. Auditors of subsidiaries share audit results with Audit & Supervisory
Board Members of the Company at the Conference of Auditors for Domestic Group Companies
held periodically.
(11) A system to ensure that those who made such reports in the preceding paragraph shall notreceive any disadvantageous treatment due to his/her submission of the reports
Directors and employees of Kao Group who made reports to Compliance Hotline or to Audit &Supervisory Board Members, etc. shall not receive any disadvantageous treatment due to his/her
submission of the reports and the Company stipulates prohibiting any disadvantageous treatment in
Kao Business Conduct Guideline and ensures compliance of this rule.
(12) Policy concerning payment or reimbursement of expenses pertaining to execution of duties by
Audit & Supervisory Board Members including advance payment of expenses and reimbursement
procedure, etc.
In the event of requests for appropriation to the fiscal year budget for the payment of expenses andother expenditures arising in the execution of the duties of Audit & Supervisory Board Members, abudget is accordingly provided. When expenses provided for in the budget arise, or when thenecessity arises for the execution of non-budgeted emergency or additional auditing or other duties
and Audit & Supervisory Board Members charge expenses pertaining to execution of their duties ordebt disposal, the Company shall promptly accept such requests, except in the cases set forth in
Article 388 of the Companies Act.
(13) A system to ensure that audits by Audit & Supervisory Board Members are conductedeffectively
In order to conduct efficient and effective audits, Audit & Supervisory Board Members shallmaintain close cooperative relationships, including the exchange of information, with the
Accounting Auditor, Department of Internal Audit, the departments and committees in charge ofinternal control, the auditors of subsidiaries, etc., and the departments in charge of internal audits.
In addition, Audit & Supervisory Board Members are entitled to hold meetings with Representative
Directors, Outside Directors and representative directors of important subsidiaries, independently
receive support from outside specialists such as lawyers and certified public accountants whennecessary.

30

(14) Implement of a system to ensure the appropriateness of business operations
The Board of Directors conducts periodic reviews of implement of a system to ensure theappropriateness of Kao Group’s business operations, and includes the summary of state of
implement in the business report.
2. Outline of Management of Systems to Assure Appropriate Business Operations of theCompany
Based on the above policies, the Company has established an Internal Control Committee
chaired by the Representative Director, President and CEO to set up and properly operate its
internal control system. Principal efforts made during this fiscal year, which are considered to
be important in terms of internal control, include the following:
Efforts Concerning Compliance
The Compliance Committee, chaired by the Managing Executive Officer responsible forcompliance, promotes and facilitates initiatives, involving both domestic and overseas KaoGroup companies, such as by improving relevant regulations, including the Kao BusinessConduct Guidelines (BCG), which is the code of conduct for implementing the Kao Way, as well
as by carrying out educational and awareness activities and setting up and properly operating
the Compliance Hotline.
The following efforts are made in order to reduce material compliance risks: In the event of a compliance violation, the Company has implemented through system to
immediately report to the senior management or Audit & Supervisory Board Members. For allreported/consulted incidents, we confirm and assess how these incidents have been addressed,
while taking into account the evaluation and suggestions, from a third-party perspective, of an
outside attorney who attends the monthly Compliance Committee Secretariat Meeting as anadvisor. For the incidents that require special attention, we identify the incidents that could
constitute material compliance violations and conduct a root cause analysis. We then implement
countermeasures against these incidents in cooperation with the departments in which suchpotential compliance violations took place in a bid to prevent their recurrence. The Compliance
Committee, which is convened quarterly, confirms the status of countermeasures taken by thedepartments in which the incidents took place or the departments that are principally in charge ofthe issues involved, to reduce the risk of similar incidents taking place in any other departments.
 The Compliance Hotline (counselors and lawyers) is put in place both outside and inside theCompany. During the current fiscal year, we received 639 reports and consultations (including
inquiries). For all reported and consulted incidents, we conducted fact-finding investigations into
the incidents where investigations were requested, and resolved each incident one by one, while
implementing necessary measures based on the awareness that there are issues that we should
address to maintain a positive workplace climate as the Company. We have also worked to foster
an “open corporate climate” that would make it easier for people both inside and outside theCompany to voice their opinions, thereby preventing the spread and prolongation of complianceviolations.
 In an effort to prevent compliance violations, Chairperson of the Compliance Committee posted
poster conveying the importance of raising one's voice, and the managers of each organization
sent out compliance messages to maintain and raise the compliance awareness of each and every
one of their employees. The managers of each organization sent out compliance messages tomaintain and raise the compliance awareness of everyone. Further, a BCG verification test andcompliance awareness survey was conducted on all global Kao Group employees (excluding
temporary and part-time employees). In addition, the Company provides enlightening
information on compliance case studies via the intranet of Kao Group, and in Japan, it builds
compliance awareness using posters with a four-frame cartoon printed on them.
 Tasks were identified based on the analysis of evaluation items obtained from the principal
external evaluation organizations. The improvement measures for these tasks were added tofuture activity plans.
Practical examples for FY2023 include: (1) outsourcing the Compliance Hotline to an outsideservice provider to make it easier for whistleblowers to voice their opinions (by opening the
Hotline for longer hours and also on weekends and holidays), (2) implementing a process toverify, after a certain period of time, whether the measures to prevent the reoccurrence ofcompliance violations that have been conducted by the department where the complianceviolations occurred which dig into the root cause of such violations have been effective, (3)sharing the information about reported/consulted incidents, communicating the lessons learnt

31

from these incidents, and implementing activities to encourage the exchange of opinions among
the employees within an organization so they can recognize the differences in opinions withothers, (4) creating and putting up posters themed on compliance in multiple languages as aneffort to keep all employees informed of compliance information issued by the Company, and (5)continuing to conduct self-evaluation on compliance activities to identify issues and consider
taking measures to improve the situation in the future.

Efforts Concerning Risk and Crisis Management
By identifying risks that have a particularly large impact on management and require enhanced
responses, as “corporate risks,” we determined the themes and owners of such risks (those
responsible to address these themes: Executive Officers) at the Management Board.
Specifically, we worked to strengthen measures for risk themes, including major earthquakes,
natural disasters and BCP; serious quality issues; geopolitical risk; cyber-attacks and protectionof personal information; and reputation risk. Through the investigation into these risk themes,
we identified material risks that hamper the achievement of the Mid-term Plan “K27,”
confirmed the progress of these measures and issues on a global scale, and made clear the issues
that constitute material risks or bottleneck issues.
While we had addressed the global COVID-19 pandemic by establishing the Emergency
Response Headquarters (headed by the President and CEO) in 2020, we dissolved theEmergency Response Headquarters in February 2023 in view of the changes in characteristics ofthe virus and the state of infections, etc., to transition to a stage where we treat COVID-19 as
endemic.
Efforts Concerning Subsidiary Management
The executive officers in charge provide guidance on the establishment and operation of theinternal control system to subsidiaries in accordance with the segregation of duties.
Overseas subsidiaries are required to internally share information concerning any material risks
and the measures to be taken, at the time of management meetings at such subsidiaries. In
addition, risks that may be identified by the respective subsidiaries based on instructions givenby the Company are reported to the Company’s departments that are principally in charge of thematters involved, along with the measures to be taken.
At periodic meetings established based on the businesses and the functions for supporting suchbusinesses, agenda items have been submitted and reports made whenever necessary, based on
the criteria for submission of agenda items. In addition, the Company confirmed that proposals
and reports have been made in accordance with regulations, etc., by receiving checklists fromeach department responsible for internal control and by conducting site visits by the Department
of Internal Audit.
Regarding important matters of subsidiaries, agenda items were submitted and reports weremade from subsidiaries to the Company whenever necessary, in accordance with the Subsidiary
Management rules, known as the “Policy Manual,” that set forth matters for which thesubsidiaries should obtain prior approval from or report to the Company. Based on the “Policy
Manual,” all matters pointed out by the Department of Internal Audit are shared among directors
and officers of the relevant subsidiaries, at the time of management meetings at such
subsidiaries, along with the measures to be taken and the results thereof and are reported to theCompany’s departments that are principally in charge of the matters involved.
2. Basic Views on Eliminating Anti-Social Forces
The Company has made the following declaration in Kao's Business Conduct Guidelines, as well as
stating establishment of system in above Basic Policy Regarding the Internal Control System. The
Company has familiarized all employees of Kao Group companies with this policy and posted
Kao's Business Conduct Guidelines on the Company's website.
We shall not engage in any activities which are detrimental to society. Furthermore, we shallresolutely resist pressure by any individual, group or organization to support such activities.
 We shall maintain a resolute attitude against activities which are unlawful or contrary to the
public welfare.
 We shall not participate in any activities that are illegal or contrary to the public welfare
regardless of any competing pressure to do so.

32

We shall reject any relationship with groups that act contrary to the public welfare, and shallnot yield to any attempt of blackmail or threat. We shall not involve ourselves in any activities
or conduct which offends social norms or morality, such as money laundering, offers of illegal
interest, etc.

On the basis of provision above, the Company promotes cooperation with governmental agencies
etc. and collection and management of information regarding anti-social forces and establishes andmaintains its internal system under normal circumstances.
Please see the reference material “Status of Corporate Governance System” in the “Appendices” at
the end of this policy.
V. Other
1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

Not Adopted

Supplementary Explanation
The Company has not submitted a proposal for anti-hostile takeover measures to the Annual
General Meeting of Shareholders. However, the Company considers the adoption of anti-hostile
takeover measures to be a crucial management issue and is giving ongoing consideration topreparations for a hostile takeover with a close attention to the legal system, public trends andother matters.
The Company wants its shareholders to hold its stock for the long term, and therefore believes
that it should provide profit to long-term shareholders by raising its corporate value over the longterm through vigorous business activities that increase EVA as well as by enhancing shareholder
returns through dividends and other measures. The Company believes that by increasing corporate
value and enhancing shareholder returns, it will raise its stock price and market capitalization,
thus making it difficult to conduct a hostile takeover that is counter to shareholder profit.
The Company believes that concurrently increasing trust in its Management by gaining
understanding from all stakeholders of its contributions to society through activities forsustainability and other measures is a major deterrent to hostile takeovers.
In addition, in the event of a tender offer for the Company’s stock, the Company will request an
explanation of measures for improving the corporate value of the Kao Group from the tender offer
or and disclose its own stance to shareholders.
2. Other Matters Concerning to Corporate Governance System■Outline of Organization for Timely Disclosure
Internal policies regarding timely disclosure of the Company’s information is as follows:
1. Basic Position of Timely Disclosure
To earn the trust and support of society, the Company is committed to timely, accurate and fairdisclosure of information to its shareholders, investors and all other stakeholders. The Company
strictly adheres to the Japanese Companies Act and the Financial Instruments and Exchange
Law and other regulations, as well as the regulations set down by Tokyo Stock Exchange (TSE),
Inc., and promptly discloses information in accordance with the Securities Listing Regulations.
In addition, the Company proactively discloses information of social relevance pertaining to the
Kao Group.
2, Internal System of Timely Disclosure
The Company has established a system which the secretariat of Disclosure Committee
consolidates the management of material corporate information including all the decisions,occurrence of material facts and earnings information of the Company and of the Company’s
subsidiaries. The Disclosure Committee reviews whether certain material corporate
information should be disclosed pursuant to the Securities Listing Regulations of TSE in
consultation with relevant divisions such as Accounting & Finance, Legal, Public Relations,
R&D and Production. If necessary, the Committee decides the contents, time and methods of
disclosure after getting an approval of Representative Director and CEO, or if absent, one of theother Representative Directors or Corporate Information Handling Officer registered at TSE.
In principle, Representative Director or its assignees discloses information by TDnet, and press

33

conference and posting of news release if necessary, in accordance with the decision by theCommittee. The information registered at TDnet will also be promptly posted on the Kao
website. The Public Relations manages the disclosed information.
The system for the secretariat of Disclosure Committee to collect material corporate
information is as follows:(1) Decisions by the Company
The secretariat shall be informed of all proposals and reports at the meetings of Management
Board and Board of Directors of the Company. All decisions that are required to be disclosed
shall always be made at the meetings of Management Board and Board of Directors of theCompany. Therefore, the secretariat is aware of all the decisions.
(2) Occurrence of Material Fact
Immediately after any of the officers and employees of the Company has the knowledge ofoccurrence of a material fact or the possibility thereof, he or she is required to inform thesecretariat of such information.
(3) Earnings Information
Accounting and Finance Division prepares earnings information of the Company, which is
concurrently audited by the Accounting Auditor of the Company. Management Board and Boardof Directors of the Company deliberate earnings information and its main items with analytic
data before disclosure thereof.
Burden of the end of term audit by Accounting Auditor is reduced by conducting interim audits,which enables the Company to accurately and timely disclose earnings information.
(4) Information regarding Subsidiaries
Immediately after any of the officers and employees of the Company in charge of subsidiaries
has the knowledge of occurrence of a material fact or the possibility thereof regarding
subsidiaries for which he or she is responsible, he or she is required to inform the secretariat ofsuch information.

34

Corporate Governance Structure(As of March 22, 2024)

Shareholders Meeting【Audit】

Appointment/Dismissal

Appointment/Dismissal【Supervision/Decision-Making】
Inquiry

Audit & Supervisory
Board

Audit

Compensation
Inquiry
Advisory
Committee for
Audit &
Supervisory Recommen
Board-dationMembers

Appointment/Dismissal

3 Independent Outside and2 Full-time Audit & Supervisory
Board Members

Collaboration

Board of Directors

4 Independent Outside Directors and4 Inside Directors
Recommendation
Chairperson: Independent Outside Director
Directors and Audit & Supervisory Board
Members attend the meetings

Office of the Audit &Supervisory Board

Committee for the Examination ofNominees for Directors and Audit &Supervisory Board Members

Accounting Auditor

Inquiry

Compensation Advisory
Committee for Directors andExecutive Officers
Recommendation

Supervision
Decision-Making

Audit

Department ofInternal Audit

Report【Business Execution】

President & CEO

Collaboration

ESG Managing
Committee

Management Board

Internal Audit

Executive Officers
Business, Function, Corporate Function

Auditors

Subsidiaries/Affiliates
35

Internal Control
Committee

System Improvement/
MonitoringChart regarding Timely Disclosure
Timely disclosure by registering on Tdnet (＊1)
Disclosed by Representative Director or its
assignees, and managed by Public Relations.

Timely disclosure

The Disclosure Committee reviews whether certain material corporate information should be disclosed pursuant to the Securities
Listing Regulations of TSE in consultation with relevant divisions(＊2). If necessary, the Committee decides the contents, time andmethods of disclosure after getting an approval of Representative Director and CEO.

Decisions by the Board of Directors

Deliberationｓ by the Management Committee ( ＊3)

The secretariat of Disclosure Committee consolidates the management of material corporate information.
InformInformOfficers and employees of the Company
in charge of such subsidiaries

Officers and employees of the Company responsible forsuch material corporate information★Decisions by subsdidiaries★Occurrence of Material Fact
★Earnings Information
regarding subsidiaries★Decisions by the Comany★Occurrence of Material Fact
★Earnings Information
regarding the Company＊1: Disclosure by press conference and posting of news release, if necessary, in addition to registering at TDnet and posting on the Kao website.
＊2: Relevant divisions consulted by Disclosure Committee are Accounting & Finance, Legal, Public Relations, R&D and Production etc.
＊3: The Management Committee is a board which deliberates the most important issues other than the Board of Directors.

36

The Disclosure based on the principles of the Corporate Governance Code other than those described in the Kao
Corporate Governance Policy (hereinafter referred to as the "Policy") are as follows.
The Policy is available on the Company’s website.
www.kao.com/global/en/corporate/policies/corporate-governance/

Disclosure Based on the Principles of the Corporate Governance Code[Principle 1.4] Cross-Shareholdings*
Based on the policy described in “Policy 5.1.3 Cross-Shareholdings,” the rationality of continuing to hold crossshareholdings and the review of the number of shares resulted in 42 strategic stockholdings as of the end of
December 2023 (the total amount on the balance sheet increased from ¥6,156 million to ¥6,668 million). Of these,
for listed stocks, two were all sold in 2023. Regarding unlisted stocks, the Company acquired two new stocks in
2023. Prior to the corporate governance code became effective in 2015, the Company held 83 issues (¥9,384
million) as of December 31, 2014.
All voting rights at annual general meetings of shareholders held during 2023 by companies in which theCompany holds shares were used to approve proposals, because there were no proposals that raised concerns ofdamage to the corporate value of the relevant company.
*Cross-Shareholdings: 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.
[Principle 1.7] Related Party Transactions
In addition to the items listed in “Policy 5.1.4 Related Party Transactions,” to obligate Directors, Audit &Supervisory Board Members, Executive Officers and employees of the Kao Group to act with priority on theinterests of the Kao Group, the Company has established the “Kao Guidelines on Preventing Conflicts of Interest”
after their approval by the Board of Directors. Because the Company has no major shareholders who hold 10% of
more of its stock, the Kao Group has not established procedures for approval of transactions with major
shareholders.
[Supplementary Principle 2.4.1] Measures to Promote Diversity
The Company's approach to ensuring diversity and its efforts to promote it, as well as its human resources
development policy to ensure diversity, are described in “Policy 5.3.2 Promotion of Women, Non-Japanese andMid-career Employees” and “III Implementation of Measures for Shareholders and Other Stakeholders 3.
Measures to Ensure Due Respect for Stakeholders (Other, Measures to Promote Diversity).”[Principle 2.6] Roles of Corporate Pension Funds as Asset Owners
As described in “Policy 5.6 Roles of Corporate Pension Funds as Asset Owners.”[Principle 3.1(i)] Corporate Philosophy, Mid-term Business Plan
 Corporate Philosophy“The Kao Way” has been prescribed as a corporate philosophy which constitutes the foundation of the businessactivities of the Kao Group.
(1) Mission
As one, we create a Kirei life for all – providing care and enrichment for the life of all people and the planet
As one Kao, we work together with passion to provide comprehensive care and enrichment to create a Kirei
life – a cleaner, more beautiful, and healthier life for all people and the planet. Through innovation thatprovides excellent value, we share joy and create a safer, more harmonious world for all.
The Japanese word kirei describes something that is clean, well-ordered, and beautiful all at once. For Kao, thisconcept of Kirei not only describes appearance but also attitude—a desire to create beauty for oneself, for otherpeople, and for the natural world around us. At Kao, Kirei is the value we want to bring to everyday life
through our brands, products, technologies, solutions, and services—now and in the future.
(2) Vision
To be closest to the individual and beyond their expectation
By deeply knowing and understanding our world and its people, we aim to improve people’s lives beyond their
expectations for a future where humans and nature thrive together.

37

(3) Values
1) Integrity as the only choice2) Yoki-Monozukuri in plan & action3) Innovation for today & tomorrow(4) Principles
1) We care for people & the planet2) We think from the Genba
3) We trust, respect, and need each other4) We act with courage(For further details regarding “The Kao Way,” please see www.kao.com/global/en/corporate/purpose/kaoway/) Mid-term Business Plan
On August 3, 2023, the Company formulated and announced K27, which revised the Kao Group Medium-Term
Management Plan (K25). The management policy set in "K25" remains unchanged, but the specific growthaxis has been clarified.
Thus far, the Kao Group has developed its business for nearly 130 years, mainly in the areas of cleanliness,beauty, and health, according to the changes of the times. Today, faced with compelling social issues such as
the global pandemic and global environmental issues, the responsibilities and roles of companies areundergoing significant changes. For the future, the Kao Group will take on new challenges with the aim ofestablishing an economy where all of the following are realized: the wholehearted satisfaction and enrichmentof the lives of people globally and the sustainability of the world.
As part of this effort, we will aim to create a new business that is not an extension of a conventional business,but instead is in the new area of “Save lives, protect people.” This challenge involves starting an “AnotherKao” business that contributes to solving people’s urgent problems by making the most of our core technologythat we have not to date been able to use fully.
By contributing to an “enriched sustainable world” and growing the businesses of the company throughproactive engagement in ESG activities and investment, the Kao Group will aim to be an essential company ina future world.
Outline of Kao Group Mid-term Plan K27
 VisionProtecting future lives
Sustainability as the only path
 Concept
Kirei—Making Life Beautiful K27 Basic Policy
1. Become an essential company in a sustainable world
2. Transform to build robust business through investment
3. Maximize the power and potential of employees
Introduce ROIC company-wide, decisively implement structural reforms and aim to be a company that sustains“Global Sharp Top*” businesses.
*Global sharp Top: Contributes as global No.1 with leading-edge solutions that address the critical needs ofcustomers.
Target of Kao Group Mid-term Plan K27
 ROIC: 11.0% or more
 EVA: 70.0 billion yen or more
 Operating Income: Record-high operating income (FY2019 211.7 billion yen)
 Sales outside Japan*: 800.0 billion yen or more
* Sales outside Japan are based on the location where the sales were recognized.
(For further details regarding “K27,” please see P23 onward of earning conference presentation materialwww.kao.com/global/en/investor-relations/library/presentations/)[Principle 3.1(ii)] Basic Views on Corporate GovernanceAs described in “Policy 1 Basic Views on Corporate Governance.”[Principle 3.1(iii)] Directors' Remuneration
The policy and process for determining executive compensation are described in "Policy 4.1 Policy and 4.2
Decision Process."
For further information, please see “Disclosure of Policy on Determining Amounts and Calculation Methods, II.
38

Business Management Organization and Other Corporate Governance System regarding Decision-making,Execution of Business, and Oversight in Management.”
Compensation Advisory Committee for Directors and Executive Officers
The status of attendance, and specific agenda items are as follows.
Title
Name*2

Attendance Rate

Chairperson

Outside Director

Nobuhide Hayashi

100% (8 out of 8 meetings)

MemberOutside Director

Osamu Shinobe

100% (8 out of 8 meetings)

MemberOutside Director

Chiaki Mukai

100% (8 out of 8 meetings)

MemberOutside Director

Eriko Sakurai

100% (8 out of 8 meetings)

MemberOutside Director

Takaaki Nishii

100% (7 out of 7 meetings) *MemberRepresentative Director

Yoshihiro Hasebe

100% (8 out of 8 meetings)* During FY2023, 8 meetings of the Compensation Advisory Committee for Directors and Executive Officers were
held. After Mr. Takaaki Nishii took office as Director, 7 meetings of the Committee were held.
*2 On July 5, 2023, the composition of the Compensation Advisory Committee for Directors and Executive
Officers was reviewed with the purpose of promoting specialized and intensive deliberations in the Committee.
Before the change to the composition of the Committee, there were three meetings that were held of which Mr.
Michitaka Sawada, Mr. Hideki Amano, Mr. Nobuhiro Oka, and Mr. Takahiro Nakazawa attended all three of them.
In addition, there were two meetings of the Committee held since the appointment of Representative Director
Masakazu Negoro and before the review of the composition of the Committee on July 5, 2023, of which heattended both of them.

Major topics discussed by Committee members:
In FY 2023, the committee members discussed the overall nature of executive compensation and the level ofcompensation. The committee also exchanged opinions on policies for revising the compensation structure toachieve “K27” management goals and enhance corporate value. The committee also discussed the amount ofexecutive compensation for FY2024 and revision of Performance-based share incentive plan, and decided on thecontent of the report to the Board of Directors.
Compensation Advisory Committee for Audit & Supervisory Board
Described in "Policy 2.2.3 Compensation Advisory Committee for Audit & Supervisory Board."
The status of attendance, and specific agenda items are as follows.
Title
Chairperson
MemberMemberOutside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member

Name

Attendance Rate

Hideki Amano

100% (1 out of 1 meetings)

Nobuhiro Oka

100% (1 out of 1 meetings)

Takahiro Nakazawa

100% (1 out of 1 meetings)

MemberOutside Director

Osamu Shinobe

100% (1 out of 1 meetings)

MemberRepresentative Director

Yoshihiro Hasebe

100% (1 out of 1 meetings)

Major topics discussed by Committee members:
The amount of remuneration for Audit & Supervisory Board members for FY2023 was deliberated prior todeliberation by the Audit & Supervisory Board.
[Principle 3.1(iv)] Policy on Nomination of Director and Audit & Supervisory Board Member Candidates
and Senior Management and Procedures for the Nomination and Dismissal of Directors and Audit &Supervisory Board Members and the Appointment and Dismissal of Senior Management
・Nomination Policy
It is described in “Policy 3.2 Composition of the Board of Directors” and “3.7 Structure of the Audit &Supervisory Board and Execution System.”
Furthermore, Senior Management are nominated with emphasis on their understanding of the businessenvironment and of the status of the Kao Group’s businesses and management in order to deal with suchenvironment necessary to plan the business strategies, and on their experience and ability to display strong
leadership in quickly and properly executing the business strategies set by the Board of Directors.
39

・Nomination Procedure
It is described in “Policy 3.3 Appointment and Term of Office of Directors” and “3.8 Appointment and Term of
Office of Audit & Supervisory Board Members.”
The frequency of meetings of the Committee for the Examination of Nominees for Directors and Audit &Supervisory Board Members in FY2023, the status of attendance, and specific agenda items are as follows.
Title

Name

Attendance Rate

Chairperson

Outside Director

Chiaki Mukai

100% (3 out of 3 meetings)

MemberOutside Director

Osamu Shinobe

100% (3 out of 3 meetings)

MemberOutside Director

Nobuhide Hayashi

100% (3 out of 3 meetings)

MemberOutside Director

Eriko Sakurai

100% (3 out of 3 meetings)

MemberOutside Director

Takaaki Nishii

100% (3 out of 3 meetings)

MemberOutside Audit & Supervisory
Board Member

Nobuhiro Oka

100% (3 out of 3 meetings)

Furthermore, with the appointment by the Chairperson, President and CEO attends the meeting to contribute bysubmitting necessary and sufficient documents for an examination (including a summary of the new management
structure, incorporating a classification of duties of the Directors and Executive Officers, in addition to materials
related to the subjects of the examination) to each member of the Committee and work to enhance the examination
by making arrangements such as creating opportunities for nominees and the Committee members to meet
beforehand.
Major topics discussed by Committee members:
In FY2023, the committee members discussed the composition of the Board of Directors, the structure of theBoard of Directors and Audit & Supervisory Board Members, and the CEO's succession plan and submitted
reports to the Board of Directors. Committee members discussed the skills, diversity, and term of officerequirements of directors and Audit & Supervisory Board Members. The committee members also discussed theCEO's succession plan with regard to the development plan for the candidates for the CEO who were selectedbased on the personnel requirements, how to narrow down the candidates in the
future, and the points of contact between the candidates and the Board of Directors.
Further, the procedure for determining the dismissal of Directors and Audit & Supervisory Board Members is inaccordance with the Companies Act. In case that the CEO, Directors and Audit & Supervisory Board Members
should be dismissed, the Committee would be convened timely and conduct deliberations. Then, it would report to
the Board of Directors for further deliberations and resolutions.
With regard to Senior Management, the titles and responsibilities of all nominees of Executive Officers arereported to the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board
Members and decisions are subsequently made by the Board of Directors. In case that Senior Management should
be dismissed, the Board of Directors conducts deliberations in a timely manner.
[Principle 3.1(v)] Explanations with Respect to Individual Nominations and Appointments of Directors,
Audit & Supervisory Board Members and Senior Management
The Company states the reasons for the election of candidates for all candidates for Directors and Audit &Supervisory Board Members in the Notice of Convocation of the annual general meeting of shareholders. The
following are the reasons for the election of eight (8) Directors and one (1) Audit & Supervisory Board Member
elected at the 118th Annual General Meeting of Shareholders held on March 22, 2024. In addition, the reasons forthe appointment of other four (4) Audit & Supervisory Board Members are described below.
As of March 22, 2024
Position
Name
Age Gender The reasons for the election of candidates
Directors
Yoshihiro Hasebe
63
M
Over many years, Mr. Hasebe has been involved in
R&D activities, which is the driving force behind“Yoki-Monozukuri,” the provision of innovative
products that contribute to creating a world where alllife can coexist and flourish. He has also taken
leadership in carrying out strategic digitaltransformation in his role as Senior Vice President,
Strategic Innovative Technology, Global. In January
2021, he was appointed as Representative Director,
40

Masakazu Negoro

64

M

Toru Nishiguchi

62

M

President and Chief Executive Officer. In line with
Kao’s vision of “protecting future lives,” he isstrongly promoting the building of businesses that go
beyond extensions of conventional businesses, aswell as the enhancement of operational productivity
by using digital technology and maximizing thepower and potential of employees. In 2023, theCompany reviewed the Kao Group Mid-term Plan
“K25” and formulated “K27,” which aims to sustain“Global Sharp Top” businesses while decisively
implementing structural reforms. The Company has
determined that he will be able to contribute tofurther enhancing the corporate value of the KaoGroup by using his leadership as well as his
experience and expertise in the planning anddeliberation of management strategies, etc. at theBoard of Directors and supervision of execution.
Mr. Negoro has for many years been involved in theChemical Business, which comprises the two key
pillars of the Kao Group together with the Consumer
Products Business, and has contributed to the global
expansion of the Chemical Business. He also has
experience in management of the Company’s
overseas subsidiaries related to the Chemical
Business. In January 2019, he assumed the positionof Senior Vice President, Procurement, Global.
Based on the Policies for Procurement, he has
worked with business partners to ensure traceabilityof the entire supply chain and promoted activities tosolve social issues such as natural resource
protection, environmental conservation, safety, andhuman rights. In addition, as the officer in charge ofaccounting and finance, he has engaged inconstructive dialogue with stakeholders at Earnings
Conferences and other events. In 2023, the Company
introduced Return on Invested Capital (ROIC) ineach business and strengthened business portfolio
management to deepen Economic Value Added(EVA) management, as well as promoted structuralreforms that will serve as the foundation forachieving “K27.” Having determined that he will
utilize the aforementioned experience andknowledge, to contribute to enhancing the corporate
value of the Kao Group.
Over many years both in Japan and overseas, Mr.
Nishiguchi has been involved in productdevelopment, namely, the core function of “YokiMonozukuri” and also in the marketing activities forcommunicating the essential value of such products
to consumers. In recent years, he has led theCompany’s Consumer Products Business, and isfamiliar with the global competitive environment,changes of consumers and business partners, theexpectations from stakeholders surrounding the KaoGroup, and the strengths and tasks for the KaoGroup. He also has global experience such as inmanagement of the Company’s important overseas
subsidiaries in China and other Asian countries. In
addition, as the Responsible for Consumer Products,
Global, he decisively and swiftly promotes theestablishment of “Global Sharp Top” businesses. The
Company has determined that he will be able tocontribute to enhancing the corporate value of the
Kao Group by using his experience and expertise in41

David J. Muenz

63

M

Osamu Shinobe(Outside andIndependent)

71

M

Eriko Sakurai(Outside andIndependent)

63F

the planning and deliberation of management
strategies, etc. at the Board of Directors and in the
supervision of execution.
Mr. Muenz has contributed to the global
implementation of “Yoki-Monozukuri” at our US
subsidiary, through his involvement in R&D andmarketing in the fields of skin care and hair careoutside Japan. In July 2018, he was appointed as
Senior Vice President, ESG, Global of the Company,
and in January 2019 he was appointed as Executive
Officer. He led the development of the ESG strategy“Kirei Lifestyle Plan” announced in 2019, and he has
played a central role in promoting this strategy since
its development. He has regularly reported specific
ESG activities throughout the Kao Group to theBoard of Directors and promoted oversight of the
progress of the ESG strategy. The Company has
determined that he will be able to contribute tofurther enhancing the corporate value of the KaoGroup by using his ESG-related insight and global
experience and expertise in the planning anddeliberation of management strategies, etc. at theBoard of Directors and supervision of execution.
Mr. Shinobe has considerable experience andexpertise in relation to global corporate management
and risk management, gleaned principally from histime in the maintenance sections of an international
airline which carries both cargo and passengers
where safety and security took top priority. He has
been actively presenting opinions and proposals indeliberations of the Board of Directors concerningmaterial matters in the management of the KaoGroup, based on his considerable experience andexpertise. Since March 2022, he has demonstrated
outstanding leadership as the Chairperson of theBoard in enhancing the effectiveness of the Board of
Directors toward enhancing the corporate value. The
Company expects him to continue to supervise themanagement of the Kao Group as an Independent
Outside Director by leveraging his wealth ofexperience and high level of insight.
He was reappointed as the Chairperson of the Boardof Directors and newly appointed as the Chairpersonof the Compensation Advisory Committee for
Directors and Executive Officers at the Board of
Directors meeting following AGM held on March 22,2024.
Ms. Sakurai has a wealth of experience in global
companies, including many years of corporate
management at the Japanese subsidiary of a US
chemical manufacturer with global business
operations, as well as supervision of management as
an Outside Director at several major manufacturers
and financial institutions. Based on her experience inthe chemical industry, she also has a high level ofexpertise in the Chemical Business, which comprises
the two key pillars of the Kao Group together with
the Consumer Products Business. From thisperspective, she has been actively giving opinions
and making proposals at Board of Directors
meetings. In addition, she has been providing advice
based on her experience in planning and executing
human resources strategies such as remuneration,
developing and placement of human capital in global
42

Takaaki Nishii(Outside andIndependent)

64

M

Makoto Takashima(Outside andIndependent)

65Mbusiness. The Company expects her to continue tosupervise the management of the Kao Group as an
Independent Outside Director by leveraging her
wealth of experience and high level of insight. She
was newly appointed as the Chairperson of theCommittee for the Examination of the Nominees for
Directors and Audit & Supervisory Board Members
at the Board of Directors meeting at the Board of
Directors following AGM held on March 22, 2024
Mr. Nshii has been involved in corporate
management for many years at a food manufacturer
with global business operations, and has displayedstrong leadership in transforming the company’s
corporate culture and continuously enhancing
corporate value. He has also held important positionsin the human resources department and overseas
subsidiaries, and has extensive knowledge of humancapital strategies and business outside Japan. From
this perspective, he has been actively giving opinions
and making proposals at Board of Directors
meetings. In addition, he has been providing advice
on how to supervise the Board of Directors based on
his experience in implementing effective governancereforms. The Company expects him to continue tosupervise the management of the Kao Group as an
Independent Outside Director by leveraging his
wealth of experience and high level of insight.
Mr. Takashima has considerable experience,expertise, and ability in global corporate
management that responds to change, including
many years of experience in international operations
and corporate planning at a major financial
institution, followed by service as a manager in thechanging business environment of the global
financial industry. The Company expects him tosupervise the management of the Kao Group as an
Independent Outside Director by leveraging his
wealth of experience and high level of insight.

43

Position
Audit &
Supervisory
Board
Members

Name
Yasushi
Wada

Age
64

GenderM

Sadanao Kawashima

64

M

Hideki Amano(Outside andIndependent)

70

MNobuhiro Oka(Outside andIndependent)

60

M

44

The reasons for the election of candidates
Mr. Wada has held important positions in thedepartments responsible for process engineering andproduct quality management at the Company, andhas a deep understanding and extensive knowledgeof production sites. He also has experience pursuing“Yoki-Monozukuri” and quality at a high level. In
addition, he has a global perspective gained fromextensive experience in operations related to
production outside Japan. Having served as theofficer in charge of legal affairs and Chairperson of
the Compliance Committee, he also has knowledgeof legal affairs and risk management. The Company
has determined that he will be able to use theseexperience and knowledge in the auditing of theGroup. (117th Annual General Meeting of
Shareholders)
Mr. Kawashima has considerable expertise in financeand accounting, having worked in accounting andfinance for many years and held key positions in
Investor Relations and Internal Audit. In addition, he
has a wealth of experience in group management,
including being stationed at overseas subsidiaries andserving as an Auditor of affiliated company.
Furthermore, he has contributed to enhancing theeffectiveness of audits by Audit & Supervisory Board
Member as an Audit & Supervisory Board staff
member since March 2019. The Company has
determined that he will be able to make full use of
his experience and expertise in the auditing of the
Kao Group. (115th Annual General Meeting of
Shareholders)
Mr. Amano has a high level of professional expertiseas a certified public accountant. Based on his
experience and insight gained from working globallyat major auditing firm as a member of management,
he has served as an Audit & Supervisory Board
Member of the Company since March 2017,
effectively auditing the Kao Group, which operates
globally, from a professional perspective. In view ofthese facts, the Company has determined that it
would be most suitable if he were to continue toaudit the Kao Group as an Independent Outside
Audit &
Supervisory Board Member. Although he has neverbeen directly involved in company management, theCompany considers, based on the above reasons, that
Mr. Amano will properly perform his duties as an
Outside Audit & Supervisory Board Member. (115th
Annual General Meeting of Shareholders)Mr. Oka, in his career as an attorney and a university
professor, has obtained considerable professional
expertise and experience in relation to corporate legal
affairs and corporate governance. Having served as
an audit & supervisory board member of principal
subsidiary of the Company since 2014, he also has
expertise in relation to the business of the KaoGroup. He has served as an Audit & Supervisory
Board Member of the Company since March 2018,
conducting effective audits from a professional
perspective including group governance. In view ofthese facts, the Company has determined that it
would be most suitable if Mr. Oka were to continue
auditing as an Independent Outside Audit &Saeko Arai
(Outside andIndependent)

60

Supervisory Board Member. (116th Annual General
Meeting of Shareholders)
Ms. Arai has served as an outside director andoutside audit & supervisory board member forseveral companies, leveraging her extensive
knowledge of accounting and finance as a certified
public accountant to support corporate management
such as establishing internal control systems. In
addition to management experience as CFO of aventure company, she also has extensive international
experience, including serving as a representative of aU.S. corporation. The Company has determined that
she will be able to use these experience andknowledge in the auditing of the Group.. (118th
Annual General Meeting of Shareholders)F[Supplementary Principle 3.1.3] Initiatives on Sustainability, and Information on Investments in Human
Capital and Intellectual Properties(1) Initiatives on Sustainability
By integrating ESG into the core of its company management, the Company drives business growth and better
serve consumers and society through its enhanced products and services. Recognizing its responsibility as anenterprise that provides products which people use on a regular basis in their daily lives, the Kao Group takes
active steps to reduce the environmental footprint of its products throughout the entirety of the productlifecycle.
In July 2018, the ESG division was newly established headed by a non-Japanese. Also, the Sustainability
Committee renamed the ESG Committee and had promoted global initiatives. In April 2019, the Company
launched the Kirei Lifestyle Plan, its ESG strategy, which incorporates 19 key leadership actions. In June
2021, the ESG Committee was re-established as an ESG Managing Committee to enhance the speed of ESG
activities, and in addition to formulating policies and strategies related to ESG activities, the Company also
added the role of approving ESG-related investments.
*Kirei is a Japanese word that represents the concept of cleanliness, beauty, health, purity and fairness.
For information on Kao Group’s sustainability, please see the following website:
Sustainability: www.kao.com/global/en/sustainability/
Kao Sustainability Report: www.kao.com/global/en/sustainability/pdf/
In addition, Kao Sustainability Report has been complied with reference to the recommendations fordisclosure given by the Task Force on Climate-related Financial Disclosures (TCFD).
Furthermore, in April 2022, the Company established the ESG Steering Committee in conjunction with the
ESG Committee to ensure and promptly implement ESG initiatives. The topics of these issues aredecarbonization, plastic packaging, human rights and DEI and chemical stewardship.
GRI/ISO 26000 table/TCFD Index: www.kao.com/global/en/sustainability/pdf/research-index/(2) Information on Investments in Human Capital“People” are the Company's greatest asset. To realize Kao Group Mid-term Plan "K27" and "Maximize thepower and potential of employees," The Company is promoting Global Sharp Top humanresources/organizational management through a well-balanced investment in human capital. By drawing out
the unlimited potential of each of the Company’s diverse human resources and maximizing their vitality as anorganization, we will create an environment and culture where individuals and the Company can growtogether. Based on this policy, the Company is investing in more forward-looking and aggressive humanresources, with dialogue as the core.
In 2023, as part of the Kao Group's DX promotion in Japan, the Company launched the DX Adventure
Program, which is designed to improve the digital skills of all Group employees. The program was introduced
for approximately 28,000 Kao Group employees working in Japan, tailored to the needs and levels of
individuals and divisions. The Company plans to expand the program globally from 2024.
Kao Group (global consolidated) education and training expenses per employee in FY 2023 were 37 thousandyen (116% year on year) and 14.05 hours (108% year on year).
(3) Information on Investments in Intellectual Properties
The Company has been creating innovations that change lives by combining discoveries and inventions
obtained through Essential Research that identifies phenomena and objects with the eyes of science with theneeds of consumers, and converting them into product design and value information. The expectations andtrust of consumers cultivated through this is the foundation of our strong brand power, which is widely
recognized in the world. In addition, to “make a company with a global presence, valuable to society,” the45Company is keeping an eye on issues that arise not only in Japan but also on a global scale, and establishedmanagement strategies to meet the expectations of consumers around the world. To promote research anddevelopment in line with this management strategies, the Company believes that it is essential to invest in
human resources and activity costs in the Research and Development Department and intellectual property
acquisition, which is the result of research and development activities, and the Company is actively
implementing such investment.
Among these, investment in intellectual property is the securing of patents, design rights, trademarks, andother "intellectual property" such as inventions resulting from research and development, new businessmodels, and the creation of new businesses, as well as naming, etc. conceived as symbols of brands, etc., topromote business activities to realize high profitability, and to promote the diffusion of technologies for the
public good by opening them up to the public. The Company is also working to promote the diffusion oftechnologies for the public good by opening them up to the public.
The Intellectual Property Department plays a key role by strategically applying for, acquiring and exercisingrights relating to patents and technology-based designs, which are indicators of key company values from theperspective of technology development capability, in a broad range of fields. For designs and trademarks
based on designs, the Brand Legal Department collaborates closely with business divisions to file applications,obtain rights and enforce rights while taking cost-effectiveness into consideration. Research and development
expenses and the number of patents and trademarks held are listed on the website below.
Kao by the Numbers: www.kao.com/global/en/corporate/
Recently, the Company has been pursuing measures against counterfeit products in Asia and other regions.
The Intellectual Property Department and the Brand Legal Department work together to optimize Kao Group's
overall intellectual property portfolio and reduce the risks associated with intellectual property.
[Principle 4.1] Roles and Responsibilities of the Board (1)In order to properly carry out the formulation of the business strategies including the improvement of profitability
and capital efficiency, their execution, and the supervision and audit of execution, it is extremely important toplace persons with the diverse experience and knowledge, high level of expertise and insight necessary for these
purposes in a well-balanced fashion as the Directors and Audit & Supervisory Board Members who attend theBoard of Directors meetings and as the Management that lead execution. By doing so, the Company believes it
can raise the level of management by enabling each to properly fulfill their respective roles and duties as follows:
1） The members of Management, who have diverse experience and knowledge regarding the operation of eachof the Kao Group’s businesses and divisions, conduct discussions based on their understanding of thebusiness environment in which the Company operates and the strengths and issues of the Kao Group to
create proposals for the business strategies. In the event that consideration from more diverse perspectives,
including evaluation of risks, is appropriate when planning and otherwise dealing with business strategies,
the members of Management strive to utilize external experts.
2） Inside Directors and Full-time Audit & Supervisory Board Members who are familiar with the status of the
Kao Group’s management and businesses, its strengths and issues, and other matters, and Outside Directors
and Outside Audit & Supervisory Board Members with diverse experience and knowledge of business andother areas, a high level of expertise and insight, and a neutral, objective perspective deliberate from theirdiverse perspectives, including evaluating risks, at Board of Directors meetings and make decisions on
proposed business strategies submitted by the Management.
3） The members of Management quickly and properly execute the business strategies utilizing their respective
diverse experience and knowledge.
4） Each year, the members of Management ascertain changes in the business environment that forms thepremises of the business strategies, consider the status of progress of the strategies, issues in theirachievement and response to such issues, the necessity of changes to the strategies and other matters andreport to the Board of Directors.
5） In response to the above report from the members of Management, the Outside Directors and Outside Audit& Supervisory Board Members through their diverse perspectives supervise and audit whether the businessstrategies and other matters have been executed properly and makes decisions on the necessity of changing
the business strategies and other matters at the Board of Directors meetings.
[Supplementary Principle 4.1.1] Scope of Matters Delegated to the Management
The Company has established the regulations of the Board of Directors and deliberation and reporting standards
for the Board of Directors and the Management Board to clearly set forth the matters to be deliberated on andreported at Board of Directors meetings and the matters to be delegated to the Management Board, which makes
decisions on execution.
As set forth in [Principle 4.1] above, the purpose of these regulations and standards is to realize the separation ofsupervision and execution by mainly having the Board of Directors conduct deliberations from various
perspectives, including evaluation of risks, and deciding on the medium-to-long-term direction of management in46

the business strategies and, regarding the execution of the business strategies, delegate wide-ranging authority to
the Management Board, which is mainly composed of members with the position of Managing Executive Officer
or higher who have abundant experience in business execution as persons responsible for core businesses ordivisions, to accelerate decision-making and management. The Management Board, in turn, is expected to conduct
proper supervision by making clear the matters to be reported to the Board of Directors.
For example, the matters regarding basic management policies, basic business strategies, key investment
strategies, mid-to-long-term plans, annual budgets and important personnel changes have been set forth as
requiring deliberations by the Board of Directors. Purchases of assets through merger and acquisition, investment
or other means and debts including borrowings are decided by the Management Board, in principle. However,among these matters, extremely important items or items involving large outlays are submitted to the Board of
Directors.
[Principle 4.4] Roles and Responsibilities of the Audit & Supervisory Board
Activities of Audit & Supervisory Board Members
The Audit & Supervisory Board Members are entrusted by shareholders to audit Directors’ execution of duties
from an independent standpoint, and thus, are engaged in auditing activities to achieve sound and sustainablegrowth of the Company and the Group and establish governance that meets the trust of stakeholders. Accordingly,
we provide in the Audit Report a more detailed explanation of the activities of the Audit & Supervisory Board
Members during the fiscal year under review to enhance the transparency of audits and the effectiveness of
dialogue with stakeholders as below.
1. Audit policy
During the fiscal year under review, as the business environment remained uncertain in the face of risinggeopolitical risks and other factors, we were required to make a major transformation toward achieving profitable
growth. Under these circumstances, with a shared sense of urgency and necessity of reforms recognized bymanagement, the Company adopted a policy to audit the progress of implementation of management strategies
and response to management environmental risks, while conducting auditing activities, including ESG related
activities, in view of the requests and views of society and stakeholders.
<Particularly important points in Audit & Supervisory Board Members’ activities>■Lively exchange of opinions
The Audit & Supervisory Board Members attend meetings of the Board of Directors, the Management Board andother important meetings with regard to auditing the duties of Directors. They put emphasis on confirming
decision-making process for reaching resolutions, and express their opinions as appropriate.
■Dialogue with people at the actual sites (Genba)
In addition, the Audit & Supervisory Board Members conduct on-site audits and interviews of each division andsubsidiary and affiliates. By placing importance on dialogue with people at the actual sites (Genba), they confirm
the degree of how well corporate strategy is being shared and whether proactive efforts are being made. They also
identify any issues that occur at Genba. At least one Outside Audit & Supervisory Board Member has participatedin approximately 60% of the interviews.
2. Composition and execution of duties of the Audit & Supervisory Board
The Audit & Supervisory Board consists of five Audit & Supervisory Board Members (two Full-time Audit &Supervisory Board Members and three Outside Audit & Supervisory Board Members). The Full-time Audit &Supervisory Board Members with extensive internal execution experience and diverse knowledge, and Outside
Audit & Supervisory Board Members with their respective expertise (certified public accountant, attorney-at-law)and abundant knowledge gained from experience as officers of other companies share audit-related information ina timely manner and conduct deliberations from various perspectives.
The Office of the Audit & Supervisory Board was established directly under the Audit & Supervisory Board, toassist the Audit & Supervisory Board Members with their duties and to allow the members to serve concurrentlyas Auditors of subsidiaries.

47

3. Deliberations by the Audit & Supervisory Board
Number of
Attendance rate of Audit &Duration: Average of 1 hour and 51 minutes
meetings held: 11 Supervisory Board Members:
all members marked 100%
Main agenda of the Audit & Supervisory Board
26 resolutions: Audit policy, division of duties,
9 matters considered: Audit findings on critical auditing
critical auditing items, annual plan, audit report,
items, revision of Audit & Supervisory Board rules,
Audit & Supervisory Board rules, internal control closely monitoring issues concerning internal control,
matters, Accounting Auditor matters (including
exchange of opinions with Representative Directors andagreement on compensation, and deliberation on
Outside Directors, confirmation of the effectiveness
reappointment), appointment and compensation of evaluation process, etc.
Audit & Supervisory Board Members, etc.
Irrespective of agenda items at the Audit & Supervisory Board meetings, opinions regarding medium- to longterm issues are exchanged freely as needed.
<Evaluation of the effectiveness of the Audit & Supervisory Board>
Each year, the Board sets evaluation items, with a focus on critical auditing items, and evaluates the effectivenessof the Board from a multifaceted and objective perspective. For the fiscal year under review, throughcomprehensive and unfettered discussions at the Audit & Supervisory Board meetings based on the self-evaluationby each Audit & Supervisory Board Member, the exchange of opinions with Representative Directors, andfeedbacks from Outside Directors and other related parties, it was concluded that the system of the Board as awhole was functioning effectively.
The Audit & Supervisory Board observed and assessed, at Genba, the degree of utilization of ROIC in eachbusiness segment and the progress of structural reforms, which are part of management strategies; compiled theresults of such observation and assessment into a proposal and shared the proposal with Directors. The Board willcontinue to observe the ROIC in each business segment. As for the threefold auditing structure, to further
strengthen the collaboration between three organizations, we understand that we need to share auditing plans andissues with other organizations.
The issues identified through the effectiveness evaluation will be reflected in auditing activities and critical
auditing items for the next fiscal year so that the effectiveness of the Board will be further improved.

48

4. Critical auditing items, achievements and evaluation of effectiveness
Divisionof audit
Activity results and evaluation
Audit methodof effectiveness
FullOutside
time
Attend meetings of the Board of Directors to All Audit & Supervisory Board
confirm the status of deliberations andMembers attended all✓✓
resolutions, and express opinions if necessary meetings. All of them actively
expressed their opinions.
Attend important meetings such as the
Attendance rate was 100%,
Management Board to confirm decisionreviewed decision-making
process and commented on✓—
making process, request explanations asnecessary, and expressed opinions in a timely matters to be considered.
mannerMeetings to exchange opinions with
Kao: Representative Directors
management(three times). Outside
Directors (two times),
Executive Officers with titles(six times)
Important subsidiaries:
Representative Directors (twotimes)
Exchanged frank opinions✓✓
regarding management issues,
future governance., etc.
Status ofDiscussed the priority levels ofexecution ofrisks and issues with Outside
duties by
Directors, and shared the
Directors
results of such discussions
with Representative Directors,
etc. to deepen understanding
On-site audits and interviews of worksites,
107 times
divisions, domestic and overseas subsidiaries - Emphasis placed on dialogue
and affiliates(using half the hours of(During on-site inspections and hearings, we interviews for the exchange ofalso confirm priority audit items such as
opinions)
internal control.)- Confirmed the improvement
At any✓status at a later date, seeking fortime
the completion of reporting on
audit findings. Shared thefindings with executive officers
as appropriate along withexcellent on-site initiatives
Attend the Committee for the Examination of 7 times
the Nominees for Directors and Audit &Supervisory Board Members and—✓Compensation Advisory Committee for
Directors and Executive Officers- Systematize the Kao Group’s structure of- Under a system in which
Audit & Supervisory Board (the Company,
members of the Office of theaffiliates, and subsidiaries)
Audit & Supervisory Board- Improve the effectiveness of auditing
concurrently serve as Auditors
activities tailored to each company’sof subsidiaries
characteristics, under the unified management - All Auditors of subsidiaries
Effectivenessof the Groupand affiliates regularly
At anyof the Group✓exchanged opinions to identify
timegovernanceand review risks (five times).
Provided training to improvetheir skills- Conducted effectivenessevaluation of the Auditors atimportant subsidiaries
Criticalauditing items

49

Divisionof audit
Activity results and evaluation
Audit methodof effectiveness
FullOutsidetime- Exchange opinions between the Accounting Exchanged opinions (15Auditor, Audit & Supervisory Board Members times), and reported to theand related departments
Board of Directors meetings- Report accounting audit results to the Board (two times)of Directors meetings- Audit plan, accounting audit
results, key audit matters,
disclosure of non-financial✓✓
information, non-assurance
services management, audit
quality, etc.
-Held global meetings to
exchange opinions with domestic
and overseas auditors and sharedissues of each company- Hold interviews with the departments inEvery quarter or semi-annuallycharge of the second line of internal control- Confirmed that voluntary- Attend the meetings or check the minutes of inspection and monitoring
Internal Control Committee and major
were firmly in place and issues
subordinate committees
had been improved
At any✓- Check the response status of the Compliance - Expressed opinion on matters
time
Hotlinereported to the hotline and how
these matters were handled.
Confirmed that the progress
Development
was seen in the hotline systemand operation
Collaboration with the Department of Internal - Held regular meetings (fourof internal
Audit which is the division responsible fortimes) to share audit plans andcontrolinternal auditing
issues- Vice President of the
At anyDepartment of Internal Audit✓
time
attended the Audit & Supervisory
Board meetings and the meetings
to exchange opinions amongauditors of the Group, as needed.
Evaluation of the construction and operation status Generally valid✓—of the internal control system using a checklist
Investigate into requests of society and- Looked into how the
stakeholders for information disclosure of the Company had responded toCompany and confirmed its disclosure status such requests.
and external evaluations
Confirmed that the system for
Proactive
promoting and the status of✓—
information disclosure weredisclosure
generally satisfactory- Promoted the disclosure ofactivities of the Audit &Supervisory Board Members
Criticalauditing items

50

[Principle 4.6, 4.9, Supplementary 4.10.1] Effective Utilization of Independent Directors and Audit &Supervisory Board Members, etc.
The Company uses a structure with the appropriate number of independent Outside Directors and Outside Audit &Supervisory Board Members who satisfy the “Standards for Independence of Outside Directors/Corporate
Auditors of Kao Corporation” (hereafter, the “Standards for Independence”) to provide a check on the status of
deliberations of the Board of Directors from an objective perspective independent of the Company’s Management
so that the Company’s management judgment is not biased toward the logic of persons inside the Company.
For further details regarding the Standards for Independence, please see
www.kao.com/content/dam/sites/kao/www-kao-com/global/en/about/pdf/governance_002.pdf(For information concerning appointment of Independent Directors and Audit & Supervisory Board Members,
etc., please see “Outside Directors’ Relationship with the Company (2)” in “Directors” below, as well as “Outside
Audit & Supervisory Board Members’ Relationship with the Company (2)” in “Audit & Supervisory Board
Members,” II Business Management Organization and Other Corporate Governance Systems regarding Decisionmaking, Execution of Business, and Oversight in Management)
・Status of Appointment of Independent Directors and Audit & Supervisory Board Members, etc.
Four (4) of the eight (8) Directors are Outside Directors, all of whom satisfy the Standards for Independence.
Three (3) of the five (5) Audit & Supervisory Board Members are Outside Audit & Supervisory Board
Members, all of whom satisfy the Standards for Independence.
・Chairperson of the Board of Directors
In the current structure, independent Outside Director acts as Chairperson of the Board of Directors as ameasure to further increase the neutrality and independence of the Board of Directors.
・Communication and Cooperation among Independent Directors, Audit & Supervisory Board Members andManagement
The Chairperson of the Board of Directors takes the role of promoting communication and cooperation withmembers of Management and Audit & Supervisory Board Members. All the Audit & Supervisory Board
Members, including the independent Outside Audit & Supervisory Board Members, and the Representative
Directors hold meetings to exchange opinions multiple times during the year and from July 2018 all Outside
Directors and Audit & Supervisory Board Members (including full-time) have started to hold periodic meetings
to exchange information and opinions.
[Supplementary Principle 4.11.1] Stance on Balance among Knowledge, Experience and Skills, and on
Diversity and Size of the Board of Directors
In addition to the matters described in "Policy 3.2 Composition of the Board of Directors, 3.2.1, 3.2.2 and 3.2.3,”
at the Board of Directors (attended by Directors and Audit & Supervisory Board Members), Directors provide
broad direction regarding the business strategies and Directors and Audit & Supervisory Board Members
deliberate on their appropriateness and the risks related to their realization and other matters in an objective andmultidimensional fashion. They also supervise and audit the status of execution. To conduct these tasks, theCompany considers it important for such individuals coming from inside and outside the Company with diverse
knowledge, experience, and abilities to conduct constructive discussions.
The Kao Group Mid-term Plan 2027 “K27” includes the vision of “Protecting future lives.” To accomplish this,the Company’s management is executing business in line with the Company’s strategies of (1) becoming anessential company in a sustainable world, (2) transforming to build robust business through investment, and (3)maximizing the power and potential of employees.
The Board of Directors considers it important for Inside and Outside Directors and Audit & Supervisory Board
Members to complement each other with each of their knowledge, experience, and abilities, and to be able todemonstrate high effectiveness as a whole, in order to supervise that management is implementing businessexecution in a framework for transparent, fair, prompt and decisive decision-making accordance with the above
strategies.
(See Skills Matrix of the Board of Directors below)[Supplementary Principle 4.11.2] Status of Concurrent Duties of Outside Directors and Outside Audit &Supervisory Board Members
The status of important concurrent positions held by Outside Directors and Outside Audit & Supervisory Board
Members is stated in the Convocation Notice of the 118th Annual General Meeting of Shareholders.
(Please see www.kao.com/global/en/investor-relations/stock-information/shareholders-meeting/)
In addition, as stated in "Policy 3.3.2", the Company limits the number of concurrent positions of Directors or
Audit & Supervisory Board Members of the Company's Directors in listed companies to three (3) excluding theCompany, in principle.

51

[Supplementary Principle 4.11.3] Analysis and Evaluation of Effectiveness of the Board of Directors Taken
as a Whole and Summary of the Results Thereof
On an annual basis, an evaluation is conducted at a meeting of the Board of Directors in order to make
improvements aimed at enhancing the effectiveness of the Board of Directors. Based on the idea that the roles andresponsibilities of the Board of Directors must be shared by the entire Board of Directors, the Company believes
that it is effective for all members who participate in meetings of the Board of Directors, including Audit &Supervisory Board Members, to conduct an evaluation using a method that entails expressing their own opinions
and engaging in free and open discussion. However, the Company also recognizes the usefulness of an objective
evaluation by a third party, with an eye to introducing activities that further enhance the effectiveness of the Boardof Directors.
For the FY2023 evaluation, prior to the self-assessment at the meeting of the Board of Directors held in January2024, a survey of the ten Directors and five Audit & Supervisory Board Members was conducted on the topics
below. Feedback on the results was then provided before the meeting, during which the Board engaged in
discussions and exchanged opinions with a focus on areas where there is room for improvement. The Committee
for Examination of Nominees for Directors and Audit & Supervisory Board Members and the Compensation
Advisory Committee for Directors and Executive Officers were evaluated at the same time. Furthermore, third
parties provided advice on the formulation and analysis of questionnaire items so that objective perspectives can bereflected in the questionnaires and analysis.
The following is a summary.
Results of the FY2023 Evaluation of the Effectiveness of the Board of Directors
Overall, it was found that the Board of Directors has adequately exercised its supervisory functions, and that its
effectiveness has been maintained. However, the evaluation also identified issues to be addressed in order to further
improve the Board’s effectiveness, and opinions were shared regarding future initiatives.


Agenda Item Selection and Discussions
FY2022 Issues

FY2023 Initiatives

 The issues to beaddressed in order toachieve the Mid-term
Plan K25 and theinterim summary
needed to be discussed
in greater depth,
including quantitatively.

 K25 interim summary
was performed, andstructural reforms andgrowth strategies werediscussed.
 Focus topics for eachbusiness segment werereported.
 Business statusindicators and theprogress status of K25
were monitored throughmonthly meetings ofthe Board of Directors.

 Stakeholder relations
strategies needed to be
discussed.

 Reports were presented
at meetings of theBoard of Directors
before and after IR
activities.

FY2023 Evaluation andIssues Based on the results of
the K25 interim
summary, the Mid-term
Plan K27 wasreformulated, andprogress was made inboth discussing andimplementing structuralreforms.
 Further discussion isneeded regarding
growth strategies andbusiness segments thatare experiencing issues.
 Further improvements
should be made tomonitoring ofmanagement indicators
under ROIC
management.
 Deliberations are being
conducted with greaterattention paid to key
stakeholders, including
investors.
 Growth strategies need
to be demonstrated moreclearly.

52

Future Initiatives
 Set the time for ongoing
discussions at meetingsof the Board of
Directors, while also
being aware of theintegration of growthstrategies andchallenged businesses
with ESG strategies.
 Evolve the method ofmanagement indicators
to be monitored andreport regularly on theperformance against
such management
indicators.

 Continue to engage indeliberations while
paying attention to key
stakeholders and how todemonstrate growthstrategies.

FY2022 Issues

FY2023 Initiatives

 Further discussions
were needed regarding
how human capital
strategies relate tobusiness strategies.

 Discussed humancapital strategies andhuman capital structuralreforms.

FY2023 Evaluation andIssues Discussions anddecisions on the
structural reforms in
relation to humancapital are positively
evaluated.
 It is necessary to
deepen discussions
regarding what isrequired of the humancapital responsible for
growth strategies, andhow to develop andacquire said humancapital.

Future Initiatives
 Further discuss concrete
human capital strategies
linked to the growthstrategies at meetings ofthe Board of Directors.

Structure, Status of Operation and Deliberations of the Board of Directors
FY2023 Evaluation and
FY2022 Issues
FY2023 Initiatives
Issues There were times when  Defined the indicators
 The Board of Directors
the level of reportingthat are needed in order
is appropriately
was too granular,
to achieve K25 (andfulfilling its supervisory
resulting in unfocused
K27).
functions.
discussions.
 A presentation format
 Presenters should makewas used at meetings ofdiscussion points clear.
the Board of Directors.
 Ongoing deliberations
 Corporate governance The disclosure of thewere needed regarding
was discussed, andcorporate governancethe necessary elements
official policy waspolicy is commendable.
for realizing the vision
formulated and
The composition of theof the Board of
disclosed.
Board of Directors was
Directors, as well as thein line with theBoard’s composition.
corporate governancepolicy.

53

Future Initiatives
 Use the presentation
format at all meetingsof the Board of
Directors, and clearly
indicate discussion
points.
 The composition of theBoard of Directors,
including diversity of
Directors (skills,
women and global
human capital), will be
discussed on an
ongoing basis.



Results of the FY2023 Evaluation of the Effectiveness of the Committee for Examination of Nominees for
Directors and Audit & Supervisory Board Members
The Committee engaged in sufficient discussions regarding the composition of the Board of Directors, the structureof the Board of Directors, including Directors and Audit & Supervisory Board Members, and the succession plan
for appointing future CEO. It reported its findings to the Board of Directors, and it was found that the overall
effectiveness of the Committee has been maintained. Opinions were shared regarding future initiatives to further
improve the Committee’s effectiveness.
FY2022 Issues

FY2023 Initiatives

 Ongoing deliberations
was needed regarding
the vision of the Boardof Directors, as well as
the Board’s
composition.
 There was a need forongoing verification anddeeper discussions
regarding the succession
plan.

 There were ongoingdeliberations regarding
the necessary elements
for realizing the visionof the Board of
Directors, as well as theBoard’s composition.
 There were ongoingdeliberations regarding
the succession plan.

FY2023 Evaluation andIssues Discussions were
sufficient.
 More concrete
discussions are needed
regarding human capitalrequirements andtraining plans.

Future Initiatives
 Continue deliberating on
the vision of the Boardof Directors, as well as
the Board’s diversity.
 Continue discussions
regarding the succession
plan.



Results of the FY2023 Evaluation of the Effectiveness of the Compensation Advisory Committee for Directors
and Executive Officers
The Committee devoted sufficient time to in-depth discussions of the overall compensation system for Directors
and Executive Officers, compensation standards and other relevant topics, and it was found that its effectivenesshas been maintained.
FY2022 Issues

FY2023 Initiatives

 There was a need forongoing deliberations
regarding thecompensation system for
Directors and Executive
Officers.

 Discussed from theconcept of a policy on
the compensation
system for Directors andExecutive Officers
overall.

54

FY2023 Evaluation andIssues Deliberations wereconducted appropriately.

Future Initiatives
 Continue to perform
verifications anddeliberations.

[Supplementary Principle 4.14.2] Measures for Directors and Audit & Supervisory Board Members to
improve understanding and knowledge required to fulfill their roles and duties
The training will be conducted in accordance with the policy described in "Policy 3.9 Training for Directors andAudit & Supervisory Board Members.”＜Details of Current Efforts＞

As future candidates for Director or Audit & Supervisory Board Member, participation by Executive Officers
in training programs held by external institutions to acquire the skills and knowledge and attain the deep
discernment required of top managementExplanation of the Companies Act, corporate governance and related issues upon inauguration

Explanation of the business strategies, details of businesses, operating structure and other matters upon
inauguration

Visits to main factories and major business sites, etc.
Lectures to foster well-rounded character and insight as a top management
Lectures on the Companies Act, corporate governance and other matters by experts and lectures on useful
information regarding management by top management of other companies and knowledgeable persons

Briefings on compliance, including prevention of insider trading[Principle 5.1] Policy for Constructive Dialogue with Shareholders
As described in “Policy 5.2 Constructive Dialogue with Shareholders, etc. and Enhancement of Information
Disclosure.”
For further details regarding IR Related Activities, etc., please see “2. IR Activities” in “III Implementation of
Measures for Shareholders and Other Stakeholders.”
For further details regarding Disclosure Guidelines
www.kao.com/global/en/investor-relations/management-information/disclosure/[Principle 5.2] Establishing and Disclosing Business Strategy and Business Plan
In establishing and disclosing business strategies and business plans, companies are required to have an accurate
understanding of their cost of capital.
The Company’s capital policy follows a basic strategy of securing a sound financial structure to make investments
for sustainable growth and tolerate the related risks, and to make stable, continuous returns to shareholders. To
realize this policy, the Company uses Economic Value Added (hereinafter “EVA**”) and Return On Invested
Capital (hereinafter “ROIC”), a management indicator that takes capital cost into account, as its main indicator andworks to enhance its corporate value by improving EVA. Guided by EVA and ROIC management which places
importance on both continuous enhancements in corporate value and long-term profits for all stakeholders, theCompany develops its business strategy and business plan.
The Company manages all equity and interest-bearing liabilities as subject of capital cost and intends to optimize
capital cost from the viewpoint of safety and capital efficiency. For equity, the Kao Group aims for a streamlined
and sound structure from a medium- to long-term perspective with efficiency in mind and, while maintaining
interest-bearing liabilities at a moderate level, aims to maintain high credit ratings which will allow it to procure
capital for large-scale investments. The Company is not subject to significant capital regulations except for general
requirements under the Companies Act and others.
Although the Company emphasizes shareholder returns, it realizes that investment for growth will meet the
expectations of its stakeholders, and therefore prioritizes such investment. In addition to providing stable dividends,
the Company uses surplus funds to flexibly conduct share repurchases while the Kao Group aims to continuously
increase dividends to reflect improvement in business results.
In addition to making returns to shareholders and improving EVA and ROIC, the Company retains the capitalnecessary to conduct investments for growth in a timely fashion and to ensure sufficient soundness to deal withsituations that exceed assumptions.
**EVA is a monetary metric defined as NOPAT less capital cost. EVA is a registered trademark of Stern Stewart &Co.
For more information on EVA, please see below.
www.kao.com/global/en/investor-relations/management-information/economic-value-added/
For more information on EVA's goals.
Management Strategy and Mid-term Plan 2027 (K27)www.kao.com/global/en/corporate/strategy-and-mid-term-plan/

55

Earnings Conference
www.kao.com/global/en/investor-relations/library/presentations/
For more information on deepen EVA-driven management
P37, Integrated Reportwww.kao.com/content/dam/sites/kao/www-kao-com/global/en/investor-relations/pdf/reports-fy2023e-all001_01.pdf

56

Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size of the Board of Directors/Skill Matrix

Attributes

Experience / Knowledge / Expertise
Consumer

Human
ChemicalTerm of office

GenderNationality Management

Globalgoods

capitalEnvironment/

IT /Legal/risksocietyDX

management accounting

industryindustry

Yoshihiro Hasebe

8 years

Male

Japan

✓

✓

✓

Directors

Masakazu Negoro

1 year

Male

Japan

✓

Toru Nishiguchi

1 year

Male

Japan

✓

✓

David J. Muenz

2 years

Male

✓

✓

Osamu Shinobe

6 years

Male

UnitedStates
Japan

✓

✓

✓

✓

✓

✓

✓

Takaaki Nishii

1 year

Male

Japan

✓

✓

Makoto Takashima

–

Male

Japan

✓

✓

✓

✓

- Experience in the Company’s Chemical Business and management experienceat overseas subsidiaries (Chemical Business)- Experience at the Company’s Procurement, Global (including promotion ofsustainability activities in procurement)- Experience as the Company’s officer responsible for Finance Department- Experience in the Company’s Consumer Products Business- Experience in management and global marketing at the Company’s overseas
subsidiaries
- MBA

✓

✓

✓

- Experience in the Company’s Research and Development (including
experience in global operations, and knowledge of fundamental and applied
technologies and matter cycle research) (Doctor of Engineering)- Experience at the Company’s overseas business promotion projects- Experience as the Company’s Senior Vice President of Strategic Innovation
Technology, Global- Experience as the Company’s officer responsible for Human Capital
Development✓- Experience in research and business at the Company’s overseas subsidiary- Experience in the Company’s ESG, Global✓✓

2 years Female Japan

Main reasons for marking “✓”

strategy✓

Eriko Sakurai

Finance /Research✓- Experience as the top executive of a major international airline (including
experience as Chairman of CSR and Environmental Management Committee)✓- Experience as the head of a global division and the regional head of a major
U.S. chemical company- Experience in overall human resources strategy including compensation,
development, and assignment in global businesses- Knowledge of sustainability in the chemical field✓- Experience as the top executive of a major food company- Experience in the management of overseas subsidiaries- Experience in the human resources department

✓

✓

57

- Experience as the top executive of a major financial institution- Experience in international and corporate planning departments

Attributes

Experience / Knowledge / Expertise
Consumer

Human
ChemicalTerm of office

GenderNationality Management

Globalgoods

capitalEnvironment/

IT /Legal/risksocietyDX

management accounting

industryindustry

Audit & Supervisory Board Members

Yasushi Wada

1 year

Male

Japan

Sadanao Kawashima

3 years

Male

Japan

Hideki Amano

7 years

Male

Japan

Nobuhiro Oka

6 years

Male

Japan

Saeko Arai–

Female Japan

Main reasons for marking “✓”

strategy✓✓

Finance /Research✓- Experience in the Company’s Product Quality Management- Experience at the Company’s global production sites- Experience in the Company’s process engineering development and plant
management

✓

✓

✓

✓

- Experience in the Company’s Finance Department- Experience in the Company’s Department of Internal Audit✓- Certified Public Accountant- Served overseas and the head of the global audit network for the Asia-Pacificregion- Experience in human capital strategy, risk management, etc., as the COO of
audit and consulting operations- Attorney-at-Law- Ph.D. in Law (Chuo University)- Professor at Keio University Law School

✓

✓

✓

✓

- Certified Public Accountant- Experience as a representative of a U.S. corporation- Experience as a partner of an IT venture company

The areas of experience, knowledge, and expertise of each Director and Audit & Supervisory Board Member that are particularly expected of them are marked with a “✓.”58

Experience/
knowledge/expertise
Management

GlobalConsumer goods
industry
Chemical industry

Human capital strategy

Research

Environment/society

IT/digital transformation(DX)

Legal/risk management

Finance/accounting

Reasons for selection as experience/knowledge/expertise
In order to effectively supervise the business execution by management, it is usefulfor Directors to have their own experience as top management. We believe that theirexperience as top management is necessary for the Company’s management to realize
appropriate risk-taking and aggressive governance that encourages prompt and bolddecision-making.
As part of its global strategies, the Company aims to provide one-of-a-kind value thatis less likely to be involved in fierce competition with competitors and pricecompetition. We will also accelerate global growth by shifting to a local production
for local consumption model based on local value, cost performance, andmanufacturing. In order to properly offer advice and supervise the execution of these
activities, we believe that it is necessary to have experience and insight inmanagement positions outside Japan and at non-Japanese companies.
In order to effectively supervise business execution by management, it is necessary to
discuss matters from a higher perspective with taking a bird’s-eye view of theCompany’s entire business domain. To this end, it is important to have a deep
understanding of the business environment and market characteristics in the consumer
goods and chemical industries, which are the Company’s business domains, as well as
to gain insight into future prospects. Regarding the execution of business, including
marketing, we are actively delegating authority to executive officers with specialized
expertise in order to speed up decision-making and execution.
The Company has formulated a human capital strategy based on its corporate strategy,
and has defined roles and human resource requirements that will be necessary for
future growth, rather than as an extension of existing strategies. The Company isworking to secure human resources by systematically developing and appointing themfrom outside organizations. We believe that it is necessary to supervise the adequacy
and progress of this human capital strategy from expert knowledge and experience.
The Company’s research is the driving force behind generating constantly innovativeand high-value products. The Company is committed to Essential Research and uses
its accumulated technological assets to create innovation. We believe that it isnecessary to supervise whether we are able to maintain and develop a research systemthat continues to generate innovation, and whether we are able to expand our businessand increase our corporate value while effectively using the created technologicalassets.
In April 2019, the Company announced its ESG Strategy, the Kirei Lifestyle Plan, andbegan ESG management. In order to realize a Kirei World in which all life lives inharmony, which is our purpose, we will implement the Kirei Lifestyle Plan based on
corporate strategies that are integrated with the ESG Strategy, in consideration ofsocial changes and demands. We believe that it is necessary for the Board of Directors
to supervise these matters appropriately in light of public trends.
In order to realize K27, we believe that innovative initiatives that actively utilize IT
and digital transformation, such as new business creation, digital marketing anddigital communications, which are not an extension of existing initiatives, areessential. With regard to experience, knowledge, and expertise related to IT/DX, wewill utilize executive officers and external human resources to complimentsupervision by the Board of Directors.
Various risks are expected to arise in daily corporate activities, as well as in thecreation of new businesses and business innovation. The Company believes that it is
an important challenge in management to recognize these risks, manage themappropriately, and respond strategically, proactively, and ex post facto to legal
matters.
It is a natural responsibility to ensure the reliability of financial reporting that
influences investment decisions. In order to achieve sustainable growth in corporate
value, it is essential to conduct management in consideration of the improvement of
profitability and capital efficiency, based on appropriate capital allocation from acompany-wide perspective. For this reason, we believe that the Board of Directors
needs experience, knowledge, and expertise in finance and accounting.

59

List of the state of implementation of Corporate Governance Code

Implementation
StatusCorporate Governance Code
GeneralPrinciple
Section 1:
Securing theRights andEqual
Treatment of
Shareholders

Principle

1.1

1.2

1.3

1.4

1.5

Section 2:
Appropriate
Cooperation
with
Stakeholders
Other Than
Shareholders

Corresponding articles in the Kao Corporate Governance Policy,
this report or on the Company's website

Supplemonetary Comply Explain
Principles-●

Policy 5.1.1 Securing the Rights of Shareholders and Equality

1.1.1

●

"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exerciseof Voting Rights" in "III. Implementation of Measures for Shareholders and Other
Stakeholders"

1.1.2

●

"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exerciseof Voting Rights" in "III. Implementation of Measures for Shareholders and Other
Stakeholders"

1.1.3

●

The Company respects and complies the code.

-●"1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting
Rights" in "III. Implementation of Measures for Shareholders and Other Stakeholders"

1.2.1

●

"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exerciseof Voting Rights" in "III. Implementation of Measures for Shareholders and Other
Stakeholders"

1.2.2

●

"Early Notification of General Shareholder Meeting" in "1. Measures to Vitalize the General
Shareholder Meetings and Smooth Exercise of Voting Rights" in "III. Implementation of
Measures for Shareholders and Other Stakeholders"

1.2.3

●

"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exerciseof Voting Rights" in "III. Implementation of Measures for Shareholders and Other
Stakeholders"

1.2.4

●

"Allowing Electronic Exercise of Voting Rights", "Participation in Electronic Voting Platform"and "Providing Convocation Notice in English" in "1. Measures to Vitalize the General
Shareholder Meetings and Smooth Exercise of Voting Rights" in "III. Implementation of
Measures for Shareholders and Other Stakeholders" in the report

1.2.5

●

The Company respects and complies the code.

Basic Strategy for Capital
Policy●Policy 5.1.2 Basic Strategy for Capital Policy-●

・Policy 5.1.2 Basic Strategy for Capital Policy and 5.1.3 Cross-Shareholdings
・[Principle 1.4] Cross-Shareholdings in "Disclosure Based on the Principles of the
Corporate Governance Code"

1.4.1

●

Policy 5.1.3 Cross-Shareholdings

1.4.2

●

Policy 5.1.3 Cross-Shareholdings-●"1. Adoption of Anti-takeover Measures" in "V. Other"

1.5.1

●

"1. Adoption of Anti-takeover Measures" in "V. Other"

Securing the Rights ofShareholders

Exercise of Shareholder
Rights at General
Shareholder Meetings

Cross-Shareholdings

Anti-Takeover Measures

1.6

Capital Policy that May
Harm Shareholder
Interests-●

The Company respects and complies the code.

1.7

Related Party
Transactions-●

・Policy 5.1.4 Related Party Transactions
・[Principle 1-7] Related Party Transactions in "Disclosure Based on the Principles of the
Corporate Governance Code"●・[3.1(i)] Corporate Philosophy, Mid-term Business Plan in "Disclosure Based on the
Principles of the Corporate Governance Code"・"The Kao Way": www.kao.com/global/en/corporate/purpose/kaoway/-●"Kao Business Conduct Guidelines":www.kao.com/content/dam/sites/kao/www-kaocom/global/en/about/pdf/compliance_all.pdf

2.2.1

●

"Kao Business Conduct Guidelines":www.kao.com/content/dam/sites/kao/www-kaocom/global/en/about/pdf/compliance_all.pdf-●

・Policy 5.5 Sustainability
・Kao Sustainability: www.kao.com/global/en/sustainability/

2.3.1

●

・Policy 5.5 Sustainability
・Kao Sustainability: www.kao.com/global/en/sustainability/

2.1

2.2

2.3

Business Principles as
the Foundation of
Corporate Value Creation
Over the Mid- to LongCode of Conduct

Sustainability Issues,
Including Social andEnvironmental Matters60

Implementation
StatusCorporate Governance Code
GeneralPrinciple

Principle●

・Policy 3.2 Composition of the Board of Directors
・"Other" in "3. Measures to Ensure Due Respect for Stakeholders" in "III. Implementationof Measures for Shareholders and Other Stakeholders"・"We trust, respect, and need each other" in "Principles" in The Kao Way:
www.kao.com/global/en/about/policies/kaoway.html

2.4.1

●

・Policy 3.2 Composition of the Board of Directors
・Policy 5.3.2 Promotion of Women, Non-Japanese and Mid-career Employees
・[Supplementally Principle 2.4.1] Measures to Promote Diversity in "Disclosure Based on
the Principles of the Corporate Governance Code"・"Other" in "3. Measures to Ensure Due Respect for Stakeholders" in "III. Implementationof Measures for Shareholders and Other Stakeholders"・Kao Sustainability Report: www.kao.com/global/en/sustainability/pdf/sustainabilityreport/
・"Kao Integrated Report": www.kao.com/global/en/investor-relations/library/reports/-●"Compliance Hotlines": www.kao.com/global/en/about/policies/compliance/compliancecontact.html

2.5.1

●

"Compliance Hotlines": www.kao.com/global/en/about/policies/compliance/compliancecontact.html

2.6●

・Policy 5.6 Roles of Corporate Pension Funds as Asset Owners-●"Disclosure Guidelines": www.kao.com/global/en/investor-relations/managementinformation/disclosure.html(i)●[Principle 3.1(i)] Corporate Philosophy, Mid-term Business Plan in "Disclosure Based on the
Principles of the Corporate Governance Code"

(ii)

●

・Policy 1. Basic Views on Corporate Governance・"1. Basic Views," in "I. Basic Vies on Corporate Governance, Capital Structure, Corporate
Profile and Other Basic Information"

(iii)

●

・Policy 4.1 Policy and 4.2 Decision Process
・[Principle 3.1 (iii) ]Directors' Remuneration in "Disclosure Based on the Principles of the
Corporate Governance Code"

(iv)

●

・Policy 2.2.1 Committee for the Examination of Nominees for Directors and Audit &Supervisory Board Members
・Policy 3.3 Appointment and Term of Office of Directors
・[Principle 3.1(iv)]Policy on Nomination of Director and Audit & Supervisory Board Member
Candidates and Senior Management and Procedures for the Nomination and Dismissal of
Directors and Audit & Supervisory Board Members and the Appointment and Dismissal of
Senior Management in "Disclosure Based on the Principles of the Corporate Governance
Code"

(v)

●

[Principle 3.1(v)] Explanations with Respect to Individual Nominations and Appointments of
Directors, Audit & Supervisory Board Members and Senior Management in "Disclosure
Based on the Principles of the Corporate Governance Code"

3.1.1

●

The Company respects and complies the code.

3.1.2

●

English website: www.kao.com/global/en/●

・Policy 5.3.1 Human Capital Investment
・[Supplementally Principle 3.1.3] Initiatives on Sustainability, and Information on
Investments in Human Capital and Intellectual Properties in "Disclosure Based on the
Principles of the Corporate Governance Code"・Kao Sustainability: www.kao.com/global/en/sustainability/
・Kao Sustainability Report: www.kao.com/global/en/sustainability/pdf/
・GRI/ISO 26000 table/TCFD Index: www.kao.com/global/en/sustainability/researchindex/-●"2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions" in "II Business Management Organization and Other Corporate
Governance Systems regarding Decision-making, Execution of Business, and Oversight inManagement”

3.2.1

●

"2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions" in "II Business Management Organization and Other Corporate
Governance Systems regarding Decision-making, Execution of Business, and Oversight inManagement”

-

2.4

2.5

2.6
Section 3:
3.1
Ensuring
Appropriate
Information
Disclosure andTransparency

Ensuring Diversity,
Including Active
Participation of Women

Whistleblowing

Roles of Corporate
Pension Funds as Asset
OwnersFull Disclosure

3.1.3

3.2

Corresponding articles in the Kao Corporate Governance Policy,
this report or on the Company's website

Supplemonetary Comply Explain
Principles

External Auditors

61

Implementation
StatusCorporate Governance Code
GeneralPrinciple

Principle

3.2.2

●

"2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions" in "II Business Management Organization and Other Corporate
Governance Systems regarding Decision-making, Execution of Business, and Oversight inManagement”-●

・Policy 3.1 How the Board of Directors Should Function
・[Principle 4.1] Roles and Duties Responsibilities of the Board in "Disclosure Based on the
Principles of the Corporate Governance Code"

4.1.1

●

[Supplementary Principle 4.1.1] Scope of Matters Delegated to the Management in"Disclosure Based on the Principles of the Corporate Governance Code"

4.1.2

●

[Principle 3.1(i)] Corporate Philosophy, Mid-term Business Plan in "Disclosure Based on the
Principles of the Corporate Governance Code"●・Policy 3.4 Succession Plan
・"Supplementary Explanation" in "Committee’s Name, Composition, and Attributes of
Chairperson" in "II. Business Management Organization and Other Corporate Governance
Systems regarding Decision-making, Execution of Business, and Oversight in Management”-●

・Policy 4.3 Remuneration System
・[Principle 4.1] Roles and Responsibilities of the Board in "Disclosure Based on the
Principles of the Corporate Governance Code"・"Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods, II.
Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
・[Principle 3.1(iii)]Directors' Remuneration in "Disclosure Based on the Principles of the
Corporate Governance Code"

4.2.1

●

・Policy 4.3 Remuneration System

Section 4:
Responsibilitiesof the Board

4.1

Roles andResponsibilities of theBoard (1)

4.1.3

4-2.

Roles andResponsibilities of theBoard (2)

4.2.2

-

4.3.1

4.3

Roles andResponsibilities of theBoard (3)Corresponding articles in the Kao Corporate Governance Policy,
this report or on the Company's website

Supplemonetary Comply Explain
Principles

4.3.2

4.3.3

4.3.4

●

・Policy 5.3.1 Human Capital Investment
・"Activities of the Board of Directors" in "2. Matters on Functions of Business Execution,
Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current
Corporate Governance System)" in "II. Business Management Organization and Other
Corporate Governance Systems regarding Decision-making, Execution of Business, andOversight in Management"
・"Policies for ESG Activities”:www.kao.com/global/en/sustainability/policy/●

・Policy 3.3 Appointment and Term of Office of Directors
・[Principle 3.1(v)] Policy on Nomination of Director and Audit & Supervisory Board Member
Candidates and Senior Management and Procedures for the Nomination and Dismissal of
Directors and Audit & Supervisory Board Members and the Appointment and Dismissal of
Senior Management in "Disclosure Based on the Principles of the Corporate Governance
Code"・"Kao Integrated Report":www.kao.com/global/en/investor-relations/library/reports/●

・Policy 3.3 Appointment and Term of Office of Directors
・[Principle 3.1(iv)] Policy on Nomination of Director and Audit & Supervisory Board
Member Candidates and Senior Management and Procedures for the Nomination andDismissal of Directors and Audit & Supervisory Board Members and the Appointment andDismissal of Senior Management in "Disclosure Based on the Principles of the Corporate
Governance Code"●・Policy 3.3 Appointment and Term of Office of Directors
・[Principle 3.1(iv)] Policy on Nomination of Director and Audit & Supervisory Board
Member Candidates and Senior Management and Procedures for the Nomination andDismissal of Directors and Audit & Supervisory Board Members and the Appointment andDismissal of Senior Management in "Disclosure Based on the Principles of the Corporate
Governance Code"●・Policy 3.3 Appointment and Term of Office of Directors
・[Principle 3.1(iv)] Policy on Nomination of Director and Audit & Supervisory Board
Member Candidates and Senior Management and Procedures for the Nomination andDismissal of Directors and Audit & Supervisory Board Members and the Appointment andDismissal of Senior Management in "Disclosure Based on the Principles of the Corporate
Governance Code"●・"Activities of the Board of Directors" in 2. Matters on Functions of Business Execution,
Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current
Corporate Governance System)" in "II. Business Management Organization and Other
Corporate Governance Systems regarding Decision-making, Execution of Business, andOversight in Management"
・"Basic Views on Internal Control System and the Progress of System Development" in Ⅳ.
Matters Related to the Internal Control System
・Kao Integrated Report: www.kao.com/global/en/investor-relations/library/reports/

62

Implementation
StatusCorporate Governance Code
GeneralPrinciple

Principle

Corresponding articles in the Kao Corporate Governance Policy,
this report or on the Company's website

Supplemonetary Comply Explain
Principles-●

・Policy 3.6 How the Audit & Supervisory Board Should Function
・The Company respects and complies the code.

4.4.1

●

・Policy 3.7 Structure of the Audit & Supervisory Board and Execution System
・[Principle 4.4] Roles and Responsibilities of the Audit & Supervisory Board in "Disclosure
Based on the Principles of the Corporate Governance Code"

4.5

Fiduciary Responsibilities
of Directors and Audit &Supervisory Board
Members●

The Company respects and complies the code.

4.6

Business Execution andOversight of theManagement-●[Principle 4.6, 4.9,Supplementally Principle 4.10.1] Effective Utilization of Independent
Directors and Audit & Supervisory Board Members, etc. in "Disclosure Based on the
Principles of the Corporate Governance Code"

4.7

Roles andResponsibilities ofIndependent Directors-●[Principle 4.6, 4.9,Supplementally Principle 4.10.1] Effective Utilization of Independent
Directors and Audit & Supervisory Board Members, etc. in "Disclosure Based on the
Principles of the Corporate Governance Code"-●[Principle 4.6, 4.9,Supplementally Principle 4.10.1] Effective Utilization of Independent
Directors and Audit & Supervisory Board Members, etc. in in "Disclosure Based on the
Principles of the Corporate Governance Code"

4.8.1

●

Matters relating to Independent Directors/Audit & Supervisory Members, Independent
Directors, 1. Organizational Composition and Operation, II. Business Management
Organization and Other Corporate Governance System regarding Decision-making,Execution of Business, and Overnight in Management

4.8.2

●

[Principle 4.6, 4.9,Supplementally Principle 4.10.1] Effective Utilization of Independent
Directors and Audit & Supervisory Board Members, etc. in "Disclosure Based on the
Principles of the Corporate Governance Code"

4.4

4.8

Roles andResponsibilities of Audit& Supervisory Board
Members and the Audit& Supervisory Board

Effective Use of
Independent Directors

4.8.3

4.9

4.10

-

-

Not applicable

Independence Standards
and Qualification for
Independent Directors●

・[Principle 4.6, 4.9,Supplementally Principle 4.10.1] Effective Utilization of Independent
Directors and Audit & Supervisory Board Members, etc. in "Disclosure Based on the
Principles of the Corporate Governance Code"・Standards for Independence of Outside Directors/Audit & Supervisory Board Members of
Kao Corporation: www.kao.com/content/dam/sites/kao/www-kaocom/global/en/about/pdf/governance_002.pdf-●"Voluntary Establishment of Committee(s) Corresponding to Nomination Committee orRemuneration Committee" in "II. Business Management Organization and Other Corporate
Governance Systems regarding Decision-making, Execution of Business, and Oversight inManagement”●

・Policy 2.2 Voluntary Establishment of Committees
・Policy 3.3 Appointment and Term of Office of Directors
・Policy 3.4 Succession Plan
・[Principle 4.6, 4.9,Supplementally Principle 4.10.1] Effective Utilization of Independent
Directors and Audit & Supervisory Board Members, etc. in "Disclosure Based on the
Principles of the Corporate Governance Code"・"Voluntary Establishment of Committee(s) Corresponding to Nomination Committee orRemuneration Committee" in "II. Business Management Organization and Other Corporate
Governance Systems regarding Decision-making, Execution of Business, and Oversight inManagement”●

・Policy 3.2 Composition of the Board of Directors
・Policy 3.5 Evaluation on Effectiveness of the Board of Directors
・[Supplementally Principle 4.11.1] Stance on Balance among Knowledge, Experience andSkills, and on Diversity and Size of the Board of Directors in "Disclosure Based on the
Principles of the Corporate Governance Code"・[Supplementally Principle 4.11.3] Analysis and Evaluation of Effectiveness of the Board of
Directors Taken as a Whole and Summary of the Results Thereof in "Disclosure Based on
the Principles of the Corporate Governance Code" in "Disclosure Based on the Principles of
the Corporate Governance Code"Use of Optional Approach
4.10.1

Preconditions for Board
and Audit & Supervisory
Board Effectiveness-63

Implementation
StatusCorporate Governance Code
GeneralPrinciple

Principle

4.11

4.12

4.13

4.14

Active Board
Deliberations

Information Gatheringand Support Structure

Director and Audit &Supervisory Board
Members Training

Section 5:
Dialogue with
Shareholders

4.11.1●・Policy 3.2 Composition of the Board of Directors
・[Supplementally Principle 4.11.1] Stance on Balance among Knowledge, Experience andSkills, and on Diversity and Size of the Board of Directors in "Disclosure Based on the
Principles of the Corporate Governance Code"・[ Principle 3.1(v)] Explanations with Respect to Individual Nominations and Appointmentsof Directors, Audit & Supervisory Board Members and Senior Management in "Disclosure
Based on the Principles of the Corporate Governance Code"4.11.2●・Policy 3.3 Appointment and Term of Office of Directors
・[Supplementally Principle 4.11.2] Status of Concurrent Duties of Outside Directors andOutside Audit & Supervisory Board Members

4.11.3●・Policy 3.5 Evaluation on Effectiveness of the Board of Directors
・[Supplementally Principle 4.11.3] Analysis and Evaluation of Effectiveness of the Board of
Directors Taken as a Whole and Summary of the Results Thereof in "Disclosure Based on
the Principles of the Corporate Governance Code"-●

The Company respects and complies the code.

4.12.1●"Supporting System for Outside Directors and Outside Audit & Supervisory Board
Members" in 1. Organizational Composition and Operation" in "II. Business Management
Organization and Other Corporate Governance Systems regarding Decision-making,Execution of Business, and Oversight in Management"-●(10), (11) and (12) in "Basic Views on Internal Control System and the Progress of System
Development" in "Ⅳ. Matters Related to the Internal Control System"

4.13.1●(10) in "Basic Views on Internal Control System and the Progress of System Development"in "Ⅳ. Matters Related to the Internal Control System"

4.13.2●(12) and (13) in "Basic Views on Internal Control System and the Progress of System
Development" in "Ⅳ. Matters Related to the Internal Control System"

4.13.3●・"Activities of the Board of Directors" in "2. Matters on Functions of Business Execution,
Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current
Corporate Governance System)" in "II. Business Management Organization and Other
Corporate Governance Systems regarding Decision-making, Execution of Business, andOversight in Management"
・(13) in "Basic Views on Internal Control System and the Progress of System
Development" in "Ⅳ. Matters Related to the Internal Control System"
・Kao Integrated Report: www.kao.com/global/en/investor-relations/library/reports/-●

・Policy 3.9 Training for Directors and Audit & Supervisory Board Members
・[Supplementally Principle 4.14.2] Measures for Directors and Audit & Supervisory Board
Members to improve understanding and knowledge required to fulfill their roles and duties
in "Disclosure Based on the Principles of the Corporate Governance Code"4.14.1●・Policy 3.9 Training for Directors and Audit & Supervisory Board Members
・[Supplementally Principle 4.14.2] Measures for Directors and Audit & Supervisory Board
Members to improve understanding and knowledge required to fulfill their roles and duties
in "Disclosure Based on the Principles of the Corporate Governance Code"4.14.2●・Policy 3.9 Training for Directors and Audit & Supervisory Board Members
・[Supplementally Principle 4.14.2] Measures for Directors and Audit & Supervisory Board
Members to improve understanding and knowledge required to fulfill their roles and duties●

・Policy 5.2 Constructive Dialogue with Shareholders, etc. and Enhancement of Information
Disclosure
・[Principle 5.1] Policy for Constructive Dialogue with Shareholders in "Disclosure Based on
the Principles of the Corporate Governance Code"

5.1.1

●

・Policy 5.2 Constructive Dialogue with Shareholders, etc. and Enhancement of Information
Disclosure
・[Principle 5.1] Policy for Constructive Dialogue with Shareholders in "Disclosure Based on
the Principles of the Corporate Governance Code"

5.1.2

●

・Policy 5.2 Constructive Dialogue with Shareholders, etc. and Enhancement of Information
Disclosure
・[Principle 5.1] Policy for Constructive Dialogue with Shareholders in "Disclosure Based on
the Principles of the Corporate Governance Code"

5.1.3

●

"Participation in Electronic Voting Platform" in "1. Measures to Vitalize the General
Shareholder Meetings and Smooth Exercise of Voting Rights" in "III. Implementation of
Measures for Shareholders and Other Stakeholders"-

5.1

Corresponding articles in the Kao Corporate Governance Policy,
this report or on the Company's website

Supplemonetary Comply Explain
Principles

Policy for Constructive
Dialogue with
Shareholders

64Implementation
StatusCorporate Governance Code
GeneralPrinciple

Principle

5.2

Corresponding articles in the Kao Corporate Governance Policy,
this report or on the Company's website

Supplemonetary Comply Explain
Principles-●

・Policy 5.3.1 Human Capital Investment
・[Principle 3.1(i)] Corporate Philosophy, Mid-term Business Plan in "Disclosure Based on
the Principles of the Corporate Governance Code"・[Principle 5.2] Establishing and Disclosing Business Strategy and Business Plan in"Disclosure Based on the Principles of the Corporate Governance Code"

5.2.1

●

・[Principle 5.2] Establishing and Disclosing Business Strategy and Business Plan in"Disclosure Based on the Principles of the Corporate Governance Code"・Kao Integrated Report: www.kao.com/global/en/investor-relations/library/reports/

Establishing andDisclosing Business
Strategy and BusinessPlan65