ＪＶＣケンウッド（6632） – [Delayed]Corporate Governance Report

Corporate Governance Report (Translation) Last Update: December 23, 2021 JVCKENWOOD Corporation EGUCHI Shoichiro Representative Director of the Board, President and Chief Executive Officer (CEO) Contact: Corporate Secretary Office 045-444-5233 Securities Code: 6632 https://www.jvckenwood.com/ The corporate governance of JVCKENWOOD Corporation (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile, and OtherBasic InformationThe Company believes that one of its most important management issues is to increase the transparency and efficiency of its management decision-making process and improve corporate value by strengthening corporate governance. To this end, we make it a basic policy to enhance our corporate governance through the establishment of a structure that calls for “the separation of management from the execution of businesses,” “the appointment of External Directors and External Audit & Supervisory Board Members,” and “the improvement of the function of checking by establishing an Internal Audit Division,” thereby strengthening the Company’s internal control system on a Group-wide basis. The Company has established its basic views and policy for corporate governance, based on each of the principles of the Corporate Governance Code, as the “JVCKENWOOD Corporate Governance Policy” (hereinafter referred to as “CG Policy”), and posted the CG Policy on the Company’s website. [CG Policy:] https://www.jvckenwood.com/en/corporate/governance/corporate_governance.html [Relevant Codes] The following is described in line with the Company’s Corporate Governance Code (including the Prime market principles) revised in June 2021. The Company does not implement certain principles of its Corporate Governance Code as of the submission of this report. The principles not implemented and the reasons are as follows: [Supplementary Principles 3-1 3) Sustainability initiatives] For the Group’s sustainability policy, refer to Paragraphs 11 and 12, Article 14 of the CG Policy. As for our specific sustainability efforts, etc., please refer to our corporate website. [URL of the website for sustainability disclosure] https://www.jvckenwood.com/en/sustainability.html In addition, the Board of Directors periodically receives reports on the efforts for investments in intellectual property rights. For detailed intellectual property activities, refer to our corporate website. [URL of the website for intellectual property management and utilization disclosure] https://www.jvckenwood.com/en/sustainability/economy/evolution/property.html However, the Group recognizes that collecting and analyzing the necessary data on how climate change risks and revenue opportunities may affect the Group’s business activities and revenues, etc., and disclosing information in accordance with TCFD or an equivalent framework, are issues to be addressed in the future. Based on the purpose of the items required by these Supplementary Principles, the Group will prepare for the implementation of incomplete items to enhance the disclosure of sustainability-related information. Specifically, the Group takes into consideration multiple scenarios including the “2°C or lower scenario” in line with the TCFD recommendations. It intends to examine and analyze opportunities that could potentially contribute to growth, such as rising demand for products that contribute to decarbonization and cost reduction by way of energy-saving and resource-saving efforts. Through this, the Group aims to promote information disclosure. [Supplementary Principle 4 -11 1) Concept, etc. on the diversity of the Board of Directors] The Company does not disclose the Skills Matrix as of the submission of this report. With regard to the Skills Matrix, toward the achievement of the Medium-term Management Plan VISION 2023, the Company defines abilities required to promote key themes presented in the Plan as skill items. The Company plans to hire appropriate human resources in consideration of the diversity and balance of individual characteristics for building its management system. Based on this policy, the Company is preparing to disclose the Skills Matrix in May 2022. In addition, the persons assigned as the Company’s External Directors of the Board have business relationships with the Company and business and management experience in adjacent fields (including experience, knowledge, expertise and personal relationships). They supervise its management by giving advice and recommendations that ensure the appropriateness and validity of the Board of Directors’ decisions from the standpoint of an objective third party who is independent from the Company’s business execution. For our concept of the balance of knowledge, diversity, and size of the Board of Directors as a whole, as well as a policy and procedures for assignment, refer to Paragraph 4, Article 16 of the CG Policy. [Disclosure Based on the Principles of the Corporate Governance Code] The Company makes the following disclosure based on the principles of the Corporate Governance Code. The Company has established its basic views and policy for corporate governance based on the principles of the Corporate Governance Code, as the CG Policy. For disclosure of some items regarding the principles of the Corporate Governance Code, please refer to each provision of the CG Policy. [CG Policy:] https://www.jvckenwood.com/content/dam/pdf/Corporate_Governance_Policy.pdf 1. Principle 1.4 Strategic shareholdings Please refer to Article 6 of the CG Policy. As a result of having progressively reduced the number of shares that the Company no longer needs to hold as much, the Company holds, as of March 31, 2021, four shares of strategic shareholdings (limited to listed shares), worth approximately 1.8 billion yen in total on the balance sheet. With regard to the shares held at this point in time, the Board of Directors verifies the Company’s need to hold them on an annual basis and disposes of shares that it is less significant to hold by comprehensively examining the benefits, risks, capital costs and other factors associated with holding for each individual share. Based on the policy above, the Corporate Strategy Department regularly verifies the Company’s need to hold investment shares held for a purpose other than net investment on an annual basis and reports the results to the Board of Directors to verify the feasibility of continuously holding investment shares. For the details of the status of shares held, please refer to our securities reports. [Securities reports are available on the Company’s website:] https://www.jvckenwood.com/jp/ir/library/securities.html (Japanese-only) 2. Principle 1.7 Related-party transactions Please refer to Article 7 of the CG Policy. 3. Supplementary Principle 2-4 1) Ensuring diversity in the appointment of core human resources Refer to Article 11 of the CG Policy. For the Group’s concept of respect for the diversity of individual employees and the utilization of employees (including measurable targets and the current status concerning, among others, the appointment of women, foreigners and mid-career employees), and the policy of human resource development, see the Company’s corporate website. [URL of the website for diversity and inclusion] https://www.jvckenwood.com/en/sustainability/social/diversity-inclusion.html [URL of the website for the Company’s human resource development] https://www.jvckenwood.com/en/sustainability/social/human_resources.html – 2 -4. Principle 2.6 Roles of corporate pension funds as asset owners Please refer to Article 12-2 of the CG Policy. 5. Principle 3.1 Full disclosure Please refer to Article 15 and 16, Paragraph 1 through 3 and 6 of the CG Policy. 6. Supplementary Principle 4.1.1 Specification of the scope and content of the matters delegated to management and disclosure of the summary thereof Please refer to Paragraph 5, Article 14 of the CG Policy. 7. Principle 4.9 Independence standards and qualifications for Independent External Directors Please refer to Article 18 of the CG Policy. 8. Supplementary Principle 4-10 1) Authority and roles, etc. of the Nomination Committee and theRemuneration CommitteeRefer to 2 and 3 of Paragraph 8, Article 14 of the CG Policy. For an overview of the Nomination and Remuneration Advisory Committee and the status of its activities, refer to “II. Business Management Organization and Other Corporate Governance Systems Regarding Decision-making, Execution of Business, and Oversight in Management, 1. Organizational Composition and Operation, Directors, Supplementary Explanation”. 9. Supplementary Principle 4.11.2 Disclosure of the status of the concurrent holding of position of Directors and Audit & Supervisory Board Members Please refer to Paragraph 1, Article 21 of the CG Policy. 10. Supplementary Principle 4.11.3 Analysis and evaluation of the effectiveness of the Board of Directors as a whole and disclosure of the summary of the results thereof The Company disclosed a summary of the results of an evaluation on the effectiveness of the Board of Directors on February 26, 2021. For details of the method of effectiveness evaluation and a summary of the results of evaluation, please refer to the Company’s website. [Summary of the results of effectiveness evaluation of the Board of Directors is available on:] https://www.jvckenwood.com/content/dam/pdf/en_210226_directors.pdf 11. Supplementary Principle 4.14.2 Disclosure of the training policy of Directors and Audit & Supervisory Board Members Please refer to Article 22 of the CG Policy. 12. Principle 5.1 Policy for constructive dialogue with shareholders Please refer to Article 4 of the CG Policy. -3 -2. Capital StructurePercentage of Foreign Shareholders more than 30% Name/Company Name Percentage (%) The Master Trust Bank of Japan, Ltd. (Trust Account) Custody Bank of Japan, Ltd. (Trust Account) INTERACTIVE BROKERS LLC DFA INTL SMALL CAP VALUE PORTFOLIO THE BANK OF NEW YORK MELLON 140040 THE BANK OF NEW YORK MELLON 140044 STATE STREET BANK AND TRUST COMPANY 505103 JP MORGAN CHASE BANK 385781 NORTHERN TRUST CO. (AVFC) SUB A/C NON TREATY BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT ACCOUNTS M LSCB RD Controlling Shareholder (Except for Parent Company) Parent Company — None Number of Shares Owned 22,216,900 8,498,300 4,237,425 2,570,630 2,482,000 2,241,990 2,207,900 2,203,956 2,183,200 2,168,087 13.55 5.18 2.58 1.57 1.51 1.37 1.35 1.34 1.33 1.32 Supplementary Explanation — 3. Corporate ProfileListed Stock Market and Market Section Fiscal Year-end Category of Industry Number of Employees (Consolidated) as of the End of the Previous Fiscal Year Net Sales (Consolidated) for the Previous Fiscal Year Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year Tokyo Stock Exchange First Section March Electric appliances 1,000 or more 100 billion yen to less than 1 trillion yen 50 or more to less than 100 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with ControllingShareholders——5. Other Special Circumstances Which May Have Material Impact on Corporate Governance-4 -II. Business Management Organization and Other Corporate Governance Systems Regarding Decision-making, Execution of Business, and Oversight in Management 1. Organizational Composition and Operation Structure of Organization Directors Company with an Audit & Supervisory Board Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation 1 year Chairperson of the Board External Director Number of Directors Appointment of External Directors Appointed Number of External Directors Number of External Directors Designated as Independent Directors External Directors’ Relationship with the Company (1) 9 9 3 3 Name Attributes Relationship with the Company* a b c d e f g i j k IWATA Shinjiro From Other Company HAMASAKI Yuji From Other Company ONITSUKA Hiromi From Other Company * Categories for “Relationship with the Company”: h “” When the Audit & Supervisory Board Member currently 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 currently 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 Executive of the Company or its subsidiary b Non-executive Director or executive of a parent company of the Company c Executive of a fellow subsidiary company of the Company d A party whose major client or supplier is the Company or an executive thereof e Major client or supplier of the Company or an executive thereof f Consultant, accountant, or legal professional who receives a large amount of monetary consideration or other property from the Company other than compensation as a Director/Audit & Supervisory Board Member g Major shareholder of the Company (or an executive of said major shareholder if the shareholder is a h Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or legal entity) f) (the Director himself/herself only) i Executive of a company with which the Company’s External Directors/Audit & Supervisory Board Members are mutually appointed (the Director himself/herself only) j Executive of a company or an organization that receives a donation from the Company (the Director himself/herself only) k Others – 5 -External Directors’ Relationship with the Company (2) Designation as Independent Director ○ Name IWATA Shinjiro Supplementary Explanation of the Relationship Reasons for Appointment The Company proposes to elect Mr. IWATA Shinjiro as an external director and expects his extensive experience, knowledge, professional views and personal relationships with regard to information & communication area, automobile-related area, and other areas obtained from his work at and management of listed companies outside the Group, will be utilized in the Company’s management. The Company also expects that he will be active in a position supervising the Company’s management by providing advice and proposals to the Company as an objective third party not involved in the Group’s business execution in order to ensure the appropriateness and properness of the decision-making process by the Board of Directors. Director (Outside Director) of A. L. I. Technologies Inc. No mutual relationship exists between A. L. I. Technologies Inc., where Mr. IWATA Shinjiro concurrently holds office, and the Company, such as business transactions including donations, mutual dispatch of directors or shareholding. Regarding companies where Mr. Iwata previously served as an executive, Hitachi, Ltd. and the Company had in the past and currently have business relations with regard to purchases and sales. Hitachi Automotive Systems, Ltd. (currently, Hitachi Astemo, Ltd.) and the Company had in the past and currently have business relations with regard to sales. Hitachi Kokusai Electronic Inc. and the Company had business relations with regard to sales in the past (no business relations in the consolidated fiscal year under review). And Hitachi Transport System, Ltd. and the Company had business relations with regard to purchases and sales in the past (no business relations in the consolidated fiscal year under review). However, the transactions with the Company in the past and the consolidated fiscal year under review amounted to less than one (1) percent of the consolidated net sales of the Company or each of these companies in each corresponding fiscal year and do not fall under major transactions for any of the companies. Moreover, no other mutual relationship exists between these companies and the Company, including donations, mutual dispatch of directors or shareholding. Mr. Iwata resigned as an executive of Hitachi, Ltd., Hitachi Automotive Systems, Ltd., Hitachi Kokusai Electronic Inc., and Hitachi Transport System, Ltd. about three (3) years ago, four (4) years ago, seven (7) years ago, and about three (3) years ago, respectively, and currently has no relationship with any of these companies. No mutual relationship exists between NACHI-FUJIKOSHI CORP., Hitachi Data Systems Corporation, Hitachi Global Storage Technologies, Inc. (currently, HGST, Inc.), Hitachi Koki Co., Ltd. (currently, Koki Holdings Co., Ltd.), or Benesse Holdings, Inc., where Mr. Iwata previously served as an executive, and the Company, such as business transactions including donations, mutual dispatch of directors or shareholding. In addition, Mr. Iwata has not been an operating officer or the like of the Company’s major business partners and major shareholders in the past other than that stated above. For these reasons, the Company regards him as independent. -6 -HAMASAKI Yuji ○ The Company proposes to elect Mr. HAMASAKI Yuji as an external director and expects his extensive experience, knowledge, professional views and personal relationships with regard to information & communication area, heavy electric-related area, and other areas obtained from his work at and management of listed companies outside the Group, will be utilized in the Company’s management. The Company also expects that he will be active in a position supervising the Company’s management by providing advice and proposals to the Company as an objective third party not involved in the Group’s business execution in order to ensure the appropriateness and properness of the decision-making process by the Board of Directors. Director & Chairman of MEIDENSHA CORPORATION Director of The Japan Electrical Manufacturers’ Association No mutual relationship exists between MEIDENSHA CORPORATION or The Japan Electrical Manufacturers’ Association, where Mr. HAMASAKI Yuji concurrently holds office, and the Company, such as business transactions including donations, mutual dispatch of directors or shareholding. Sumitomo Electric Industries, Ltd., where Mr. Hamasaki previously served as an executive, and the Company had business relations in the past with regard to purchases (no business relations in the consolidated fiscal year under review). However, the transactions amounted to less than one (1) percent of the consolidated net sales in each corresponding fiscal year of the Company or Sumitomo Electric Industries, Ltd., and do not fall under major transactions for either the Company or Sumitomo Electric Industries, Ltd. Moreover, no other mutual relationship exists between Sumitomo Electric Industries, Ltd. and the Company, including donations, mutual dispatch of directors or shareholding. Mr. Hamasaki resigned as an executive of Sumitomo Electric Industries, Ltd. more than ten (10) years ago and currently has no relationship with the company. Furthermore, Mr. Hamasaki has not been an operating officer or the like of the Company’s major business partners and major shareholders in the past other than that stated above. For these reasons, the Company regards him as independent. – 7 -ONITSUKA Hiromi ○ The Company proposes to elect Ms. ONITSUKA Hiroko as an external director and expects her extensive experience, knowledge, professional views and personal relationships with regard to electric, information industry, and other areas obtained through her work at and management of listed companies outside the Group, will be utilized in the Company’s management. The Company also expects that she will be active in a position supervising the Company’s management by providing advice and proposals to the Company as an objective third party not involved in the Group’s business execution in order to ensure the appropriateness and properness of the decision-making process by the Board of Directors. Auditor of eBook Initiative Japan Co., Ltd. Auditor of Yahoo Japan Corporation Outside Director (Independent Director) of Tokyo Electron Device Limited Tokyo Electron Device Limited, where Ms. ONITSUKA Hiromi concurrently holds office, had in the past and currently has business relations with the Company with regard to sales. However, the transactions with the Company in the past and in the consolidated fiscal year under review amounted to less than one (1) percent of the consolidated net sales of the Company or Tokyo Electron Device Limited in each corresponding fiscal year, and do not fall under major transactions for either the Company or Tokyo Electron Device Limited. Moreover, no other mutual relationship exists between Tokyo Electron Device Limited and the Company, including donations, mutual dispatch of directors or shareholding. Moreover, no other mutual relationship exists between eBook Initiative Japan Co., Ltd. or Yahoo Japan Corporation and the Company, including donations, mutual dispatch of directors or shareholding. Tokyo Shibaura Electric Co., Ltd. (currently, Toshiba Corporation, “Toshiba”), where Ms. Onitsuka previously served as an executive, had in the past and currently has business relations with the Company with regard to purchases, and the transactions between the Company and Toshiba in the fiscal year ended March 2013 amounted to about 4 billion yen, which was more than one (1) percent of the consolidated net sales of the Company at the time and less than one (1) percent of the consolidated net sales of Toshiba at the time. However, the transactions between Toshiba and the Company in the consolidated fiscal year under review are less than one (1) percent of the consolidated net sales of the Company or Toshiba in the consolidated fiscal year under review, and do not fall under major transactions for either the Company or Toshiba. Moreover, no other mutual relationship exists between Toshiba and the Company, including donations, mutual dispatch of directors or shareholding. Ms. Onitsuka resigned as an executive of Toshiba more than ten (10) years ago and currently has no relationship with the company. Toshiba Medical Systems Corporation (currently, Canon Medical Systems Corporation, “Toshiba Medical Systems”), where Ms. Onitsuka previously served as an executive, had in the past and currently has business relations with the Company with regard to purchases, and the transactions between the Company and Toshiba Medical Systems in the past and the consolidated fiscal year under review amounted to less than one (1) percent of the consolidated net sales of the Company or Toshiba Medical Systems in each corresponding fiscal year, and do not fall under major transactions for either the Company or Toshiba Medical Systems. Moreover, no other mutual relationship exists between Toshiba Medical Systems and the Company, including donations, mutual dispatch of directors or shareholding. Ms. Onitsuka resigned as an executive of Toshiba Medical Systems nine (9) years ago and currently has no relationship with the company. No mutual relationship exists between Z Holdings Corporation, where Ms. Onitsuka previously served as an executive, and the Company, such as business transactions including donations, -8 -mutual dispatch of directors or shareholding. In addition, Ms. Onitsuka has not been an operating officer or the like of the Company’s major business partners and major shareholders in the past other than that stated above. For these reasons, the Company regards her as independent. Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee Established Committee’s Name, Composition, and Attributes of Chairperson Committee Corresponding to Nomination Committee Committee Corresponding to Remuneration Committee Nomination and Remuneration Advisory Committee Nomination and Remuneration Advisory Committee Committee’s Name All Committee Members Full-time Members Directors External Directors Outside Experts Other Chairperson 4 0 1 3 0 0 4 0 1 3 0 0 External Director External Director – 9 -Supplementary Explanation The Company established the Nomination and Remuneration Advisory Committee, for which all of its External Directors serve as committee members, in December 2015, with the aim of strengthening the independence and objectivity of the functions of the Board of Directors. Since its establishment, the Nomination and Remuneration Advisory Committee has made proposals to JVCKENWOOD regarding candidate representatives for the Board of Directors, and reviewed the appropriateness of director candidates and directors’ compensation plans proposed by the representatives and others, and reported its opinions. The Board of Directors has determined director candidates and directors’ compensation, taking into consideration the opinions stated by the Nomination and Remuneration Advisory Committee. In accordance with the foregoing procedures, the Company determined, according to the reports submitted by the Nomination and Remuneration Advisory Committee, that the execution system was effective as of April 1, 2021 and determined candidates for Directors and Audit & Supervisory Board Member to be referred to the 13th Ordinary General Meeting of Shareholders held on June 25, 2021 as a corporate proposal, at the Board of Directors meeting held on February 26, 2021. With regard to executive compensation, the Company has provided for a method of determining the amount of remuneration for Directors and Executive Officers in accordance with internal rules. As to the establishment, revision and abolition of internal rules, the Nomination and Remuneration Advisory Committee comprised of a majority of Independent External Directors will review the appropriateness, etc. of proposals discussed by the Representative Director of the Board, etc. and submit a report to the Board of Directors, and the Board of Directors will determine the establishment, revision and abolition of the internal rules taking into consideration the details of the report. Details of individual remuneration for Directors, etc. will not be determined at the discretion of the Representative Director of the Board again. In the fiscal year ended March 2021, meetings of the Nomination and Remuneration Advisory Committee were held 17 times in total, and each committee member’s number of meetings attended and the attendance rate are as follows: – Mr. ABE Yasuyuki Number of Meetings Attended: – Mr. IWATA Shinjiro Number of Meetings Attended: – Mr. HAMASAKI Yuji Number of Meetings Attended: 17 17 17 (Attendance Rate: 100.0%) (Attendance Rate: 100.0%) (Attendance Rate: 100.0%) In addition, in April 2019, the Company added the Chief Executive Officer (CEO) to committee members of the Nomination and Remuneration Advisory Committee in order for External Directors who serve as committee members to share accurate internal information in a timely manner and to improve the effectiveness of the Nomination and Remuneration Advisory Committee. The procedures for deliberating a proposal and making determination regarding candidate representatives for the Board of Directors by the Nomination and Remuneration Advisory Committee are performed by three committee members who serve as External Directors except for the committee member who is the CEO. As of June 25, 2021, Mr. IWATA Shinjiro, Mr. HAMASAKI Yuji and Ms. ONITSUKA Hiromi, who serve as External Directors, and Mr. EGUCHI Shoichiro, who serves as CEO, serve as committee members, and Mr. HAMASAKI Yuji chairs the Nomination and Remuneration Advisory Committee by resolution of the Nomination and Remuneration Advisory Committee as of the same date. – 10 -Audit & Supervisory Board Members Establishment of Audit & Supervisory Board Established Maximum Number of Audit & Supervisory Board Members Stipulated in Articles of Incorporation Number of Audit & Supervisory Board Members 6 4 Coordination Among Audit & Supervisory Board Members, Accounting Auditors, and Internal Audit Division External Audit & Supervisory Board Members receive reports at the Audit & Supervisory Board meetings on monthly regular reports on the status of internal audits in which Full-time Audit & Supervisory Board Members interview with the Internal Audit Division (Corporate Audit Office), and ask questions and express their opinions at the Board of Directors meetings about internal audit result reports as necessary. External Audit & Supervisory Board Members also attend regular meetings with Accounting Auditors and Audit & Supervisory Board Members, receive reports from Accounting Auditors on Accounting Auditors’ annual audit plans and the status of accounting audits, and express their opinions as necessary. In addition, External Audit & Supervisory Board Members attend visiting audits of the division in charge of internal control (Internal Governance Office), and hear and express opinions as necessary about the status of construction and operation of the internal control system. Appointment of External Audit & Supervisory Board Members Number of External Audit & Supervisory Board Members Number of External Audit & Supervisory Board Members Designated as Independent Audit &Supervisory Board Members 3 3 Appointed -11 – External Audit & Supervisory Board Members’ Relationship with the Company (1) Name Attributes Relationship with the Company* a b c d e f g h k l m SAITO Katsumi From Other Company KURIHARA Katsumi From Other Company FUJIOKA Tetsuya From Other Company i j * Categories for “Relationship with the Company”: “” When the Audit & Supervisory Board Member currently 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 currently 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 Executive of the Company or its subsidiary b Non-executive Director or accounting advisor of the Company or its subsidiaries c Non-executive Director or executive of a parent company of the Company d Audit & Supervisory Board Member of a parent company of the Company e Executive of a fellow subsidiary company of the Company f A party whose major client or supplier is the Company or an executive thereof g Major client or supplier of the Company or an executive thereof h Consultant, accountant, or legal professional who receives a large amount of monetary consideration or other property from the Company other than compensation as an Audit & Supervisory Board Member i Major shareholder of the Company (or an executive of said major shareholder if the shareholder is a legal entity) j Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the Audit & Supervisory Board Member himself/herself only) k Executive of a company with which the Company’s External Directors/Audit & Supervisory Board Members are mutually appointed (the Audit & Supervisory Board Member himself/herself only) l Executive of a company or an organization that receives a donation from the Company (the Audit & Supervisory Board Member himself/herself only) m Others External Audit & Supervisory Board Members’ Relationship with the Company (2) Name SAITO Katsumi Designation as Independent Director ○ Supplementary Explanation of the Relationship Reasons for Appointment Director (Outside Director) of CHUCHIKU No mutual relationship exists between CHUCHIKU, where Mr. SAITO Katsumi concurrently holds office, and the Company, including donations, mutual dispatch of directors or shareholding. Furthermore, Idemitsu Kosan Co., Ltd. and Showa Shell Sekiyu K.K., where he previously served as a management executive, have no mutual relationship with the Company, including donations, mutual Mr. SAITO Katsumi was elected as an External Audit & Supervisory Board Member as he is expected to utilize his extensive experience, knowledge, professional views and personal relationships that were obtained through his work at and management of listed companies outside the Group for enhancement of the Company’s auditing. He is also expected to play an active role – 12 -Name Supplementary Explanation of the Relationship Reasons for Appointment Designation as Independent Director KURIHARA Katsumi ○ FUJIOKA Tetsuya ○ in auditing the Company’s management by providing proper advice and proposals at the Board of Directors and the Audit & Supervisory Board as an objective third party, separate from the Group. Mr. KURIHARA Katsumi was elected as an External Audit & Supervisory Board Member as he is expected to utilize his extensive experience, knowledge, professional views and personal relationships that were obtained through his work at and management of listed companies outside the Group for enhancement of the Company’s auditing. He is also expected to play an active role in auditing the Company’s management by providing proper advice and proposals at the Board of Directors and the Audit & Supervisory Board as an objective third party, separate from the Group. Mr. FUJIOKA Tetsuya was elected as an External Audit & Supervisory Board Member as he is expected to utilize his extensive experience, knowledge and professional views that were obtained through his extensive work at the finance & accounting division of listed companies outside the Group as well as management experience as Audit & Supervisory Board Member. He is also expected to play an active role in auditing the Company’s management by providing proper advice and proposals at the Board of Directors and the Audit & Supervisory Board as a third party, separate from the Group. dispatch of directors or shareholdings. Furthermore, Mr. Saito has not been an operating officer or the like of our major business partners and major shareholders in the past other than that stated above. For these reasons, the Company regards him as independent. Director (Outside Director) of NIPPON ANTENNA Co., Ltd. NIPPON ANTENNA Co., Ltd. (“NIPPON ANTENNA”), where Mr. KURIHARA Katsumi concurrently holds office, had in the past and currently has business relations with the Company with regard to purchases and Ricoh Company, Ltd. (“Ricoh”), where he previously served as a management executive, had in the past and currently has business relations with the Company with regard to purchases and sales. However, the respective companies’ transactions with the Company in the past and in the consolidated fiscal year under review amounted to less than one (1) percent of the consolidated net sales of the Company or the respective companies in each corresponding fiscal year, and do not fall under major transactions for either the Company or NIPPON ANTENNA and Ricoh. Moreover, no other mutual relationship exists between these companies and the Company, including donations, mutual dispatch of directors or shareholding. Furthermore, Mr. Kurihara has not been an operating officer or the like of our major business partners and major shareholders in the past other than that stated above. For these reasons, the Company regards him as independent. NEC Corporation (“NEC”), where Mr. FUJIOKA Tetsuya previously served as a management executive, had in the past and currently has business relations with the Company with regard to purchases and sales. However, NEC’s transactions with the Company in the past and in the consolidated fiscal year under review amounted to less than one (1) percent of the consolidated net sales of the Company or NEC in each corresponding fiscal year, and do not fall under major transactions for either the Company or NEC. Moreover, no other mutual relationship exists between NEC and the Company, including donations, mutual dispatch of directors or shareholding. In addition, no other mutual relationship exists between NEC Capital Solutions Limited, NEC Europe Ltd. (London), The NEC C&C Foundation, Council on Competitiveness-Nippon, or Public Interest Incorporated Association Shiba Houjinkai and the Company, including donations, mutual dispatch of directors or shareholding. Furthermore, Mr. Fujioka has not been an operating officer or the like of our major business partners and major shareholders in the past other than that stated above. For these reasons, the Company regards him as independent. – 13 -Independent Directors/Audit & Supervisory Board Members Number of Independent Directors/Audit & Supervisory Board Members 6 Matters Relating to Independent Directors/Audit & Supervisory Board Members The Company has designated all of its External Directors and External Audit & Supervisory Board Members as Independent Directors and Independent Audit & Supervisory Board Members who satisfy the qualifications therefor. The Company, when electing candidates for External Director and External Audit & Supervisory Board Members, works to ensure the effectiveness of the supervisory function of management based on experience, achievements, professional expertise, insights, and other attributes, as well as independence which avoids conflicts of interest with general shareholders. To this end, it elects candidates by confirming their business backgrounds and ensuring that they are not major shareholders of the Company or have never been engaged in the execution of business at the Company’s main business partners (whose transactions with the Company exceed 1% of the Company’s consolidated net sales) based on its criteria and policies for independence set out in accordance with the “Guidelines for the Governance of Listed Companies (III 5. (3)-2),” established by Tokyo Stock Exchange, Inc. On June 25, 2021, the Company appointed Mr. IWATA Shinjiro, Mr. HAMASAKI Yuji and Ms. ONITSUKA Hiromi as External Directors, and Mr. SAITO Katsumi, Mr. KURIHARA Katsumi and Mr. FUJIOKA Tetsuya as External Audit & Supervisory Board Members. – 14 -Incentive Policies for Directors Introduction of performance-based remuneration system Incentives Supplementary Explanation With regard to remuneration for Directors, the Company has provided for a method of determining the amount of remuneration in internal rules within the total amount of remuneration approved by resolution at the General Meeting of Shareholders. To be more specific, the amount of base remuneration of individual Directors is determined and paid after the amount of remuneration of individual Directors is set according to the base remuneration, position (such as Chairman, President, Deputy President, Senior Management Executive Officer and Senior Vice President) as well as job title (such as authority of representation, Chief Executive Officer, Chairman of the Board and Nomination and Remuneration Advisory Committee Member). With regard to remuneration for Executive Officers who do not concurrently serve as Directors, the Company has provided for a method of determining the amount of remuneration in internal rules resolved by the Board of Directors. To be more specific, the amount of base remuneration of individual Executive Officers is determined and paid after the amount of remuneration of individual Executive Officers is set according to the base remuneration, position (such as Senior Management Executive Officer and Senior Vice President) as well as job title. Internal rules only provide for the method of determining the amount of monetary remuneration, and the Company does not pay Directors and Executive Officers any remuneration other than money, such as stock or stock acquisition rights, as consideration for execution of their duties. As for Executive Officers including those who serve concurrently as Directors, the amount of remuneration of individual Executive Officers reflecting the factors linked to performance is paid as remuneration for Executive Officers by adjusting incentives by multiplying the individual base remuneration calculated in accordance with internal rules by a coefficient linked to profit and performance (the amount of change in core operating income and profit (loss)). The said method has been employed because the index is clear and it can promote incentives since the remuneration will be increased or decreased according to an increase or decrease in the company profit. The Board of Directors has made a decision on this method after the Nomination and Remuneration Advisory Committee has concluded in its deliberations that it is appropriate. No incentive adjustment is made for External Directors and Directors who do not concurrently serve as Executive Officers. In setting targets for incentive adjustment with regard to remuneration of Executive Officers in the consolidated fiscal year under review (the fiscal year ended March 2021), the Company has revised the internal rules and froze the implementation of such incentive adjustment in consideration of the impact of the spread of COVID-19 on performance. In addition, all Executive Officers voluntarily returned part of their fixed remuneration, and the Company promoted the COVID-19 Emergency Measures (CEM) project and the enhancement of business structure throughout the company as urgent countermeasures to promote control of cash outflows and cost reduction assuming the risk of a lower limit to sales. As a result of the implementation of such measures, the consolidated full-year results for the consolidated fiscal year under review exceeded the term-beginning earnings forecast (disclosed on August 3, 2020) due to company-wide urgent countermeasures, and all profit indicators showed a profit increase despite a year-on-year decrease in sales. The General Meeting of Shareholders has resolved not to pay bonuses to Directors of the Company. However, comprehensively taking into consideration performance in the consolidated fiscal year under review, the freeze on the incentive adjustment for Executive Officers, and the voluntary return of part of fixed remuneration as mentioned earlier, the 13th Ordinary General Meeting of Shareholders held on June 25, 2021 approved that five (5) Directors who concurrently serve as Executive Officers as of the end of the consolidated fiscal year under review (External Directors and four (4) Directors who do not concurrently serve as Executive Officers are not eligible for these bonuses to Directors) are paid bonuses to Directors, up to a total of 33.3 million yen (the total amount for up to three (3) months of the monthly remuneration for Executive Officers eligible for the bonuses), apart from the remuneration for Directors that was approved at the 11th Ordinary General Meeting of Shareholders held on June 20, 2019. Following the approval by this General Meeting of Shareholders, the specific amount to be paid to each Director was determined by the Board of Directors, within the limit approved by this General Meeting of Shareholders, based on the performance evaluation, etc. of each Director as an Executive Officer for the consolidated fiscal year under review, in accordance with an advisory procedure by the Nomination and Remuneration Advisory Committee comprised of a majority of Independent External – 15 -Directors. In addition, the Nomination and Remuneration Advisory Committee comprised of a majority of Independent External Directors has reported an opinion to the effect that the said bonuses to Directors are appropriate. In addition to the payment of the bonuses to Directors mentioned above, the Board of Directors of the Company has determined to pay bonuses to seven (7) Executive Officers who do not concurrently serve as Directors as of the end of the consolidated fiscal year under review in a maximum total amount of 38.4 million yen (the total amount for up to three (3) months of the monthly remuneration for Executive Officers eligible for the bonuses). Further, Directors and Executive Officers join the Executive Shareholding Association, and contribute a certain percentage of money from the determined monthly remuneration to the Executive Shareholding Association and acquire the stock of the Company corresponding to a certain amount of money on a monthly basis, whereby they manage the company from the perspective of shareholders, focusing on mid- to long-term performance. The Company has clarified the process for determining remuneration of individual Directors and Executive Officers within the amount of remuneration resolved by the General Meeting of Shareholders, following the report of the Nomination and Remuneration Advisory Committee and in accordance with internal rules resolved by the Board of Directors. Details of remuneration for individual Directors and Executive Officers have not been determined at the discretion of the Representative Director of the Board again. In addition, as to the establishment, revision and abolition of internal rules, the Nomination and Remuneration Advisory Committee comprised of a majority of Independent External Directors will review the appropriateness, etc. of proposals discussed by the Representative Director of the Board, etc. and submit a report to the Board of Directors, and the Board of Directors will determine the establishment, revision and abolition of the internal rules taking into consideration the details of the report. Details of individual remuneration for Directors, etc. will not be determined at the discretion of the Representative Director of the Board again. Moreover, with regard to remuneration, etc. of individual Directors, etc. for the consolidated fiscal year under review, the Board of Directors of the Company has confirmed that the details of remuneration, etc., the method of determination and the details of determined remuneration, etc. are consistent with the internal rules resolved by the Board of Directors, and that reports from the Nomination and Remuneration Advisory Committee have been respected, and concluded that they are in line with said determination policy. Recipients of Stock Options Supplementary Explanation ――― Remuneration for Directors Disclosure of Individual Directors’ Remuneration Supplementary Explanation No individual disclosure In the previous fiscal year ended March 31, 2021, the amount of remuneration and other financial benefits paid as consideration for business execution to Directors and Audit & Supervisory Board Members and the number of persons subject to payment for the year were 259 million yen and 17 persons in total. This breaks down to about 194 million yen for ten (10) Directors (with 48 million yen for three (3) External Directors) and 64 million yen for seven (7) Audit & Supervisory Board Members (with 18 million yen for four (4) External Audit & Supervisory Board Members). The Company does not pay bonuses, retirement benefits, or other monetary remuneration other than the above remuneration to Directors and Audit & Supervisory Board Members. However, the 13th Ordinary General Meeting of Shareholders held on June 25, 2021, approved that five (5) Directors who concurrently serve as Executive Officers as of the end of the consolidated fiscal year under review (External Directors and four (4) Directors who do not concurrently serve as Executive Officers are not eligible for these bonuses to Directors) are paid bonuses to Directors, up to a total of 33.3 million yen (the total amount for up to three (3) months of the monthly remuneration of Executive Officers eligible for the bonuses), apart from the remuneration of Directors resolved by the 11th Ordinary General Meeting of Shareholders held on June 20, 2019. – 16 -Following the approval by this General Meeting of Shareholders, the specific amount to be paid to each Director was determined by the Board of Directors, within the limit approved by this General Meeting of Shareholders, based on the performance evaluation, etc. of each Director as an Executive Officer for the consolidated fiscal year under review, in accordance with an advisory procedure by the Nomination and Remuneration Advisory Committee comprised of a majority of Independent External Directors. However, this amount is not included in a total amount of the remuneration mentioned above, because the bonuses will be paid in July 2021. In the consolidated fiscal year under review, the Company only pays monetary remuneration to Directors as consideration for execution of their duties, and has not introduced a system to grant the Company’s shares or stock acquisition rights as consideration for execution of their duties. Therefore, non-monetary remuneration, etc. will not be paid. The above compensation for Directors does not include salaries of those who are also company employees. In accordance with internal rules, the Company makes a distinction between compensation for Directors and compensation for Executive Officers who are employees. The number of Directors concurrently serving as employees who received salaries as employees was five (5) and the amount of salaries as employees paid by the Company to those five (5) Directors totaled 75 million yen. In addition to the payment of the bonuses to Directors who concurrently serve as Executive Officers mentioned above, the Board of Directors of the Company has determined to pay bonuses to seven (7) Executive Officers who do not concurrently serve as Directors as of the end of the consolidated fiscal year under review in a maximum total amount of 38.4 million yen (the total amount for up to three months of the monthly remuneration of Executive Officers eligible for the bonuses). As for Executive Officers including those who serve concurrently as Directors, the Company pays the amount of remuneration of individual Executive Officers reflecting the factors linked to performance as remuneration for Executive Officers by adjusting incentives by multiplying the individual base remuneration calculated in accordance with internal rules by a coefficient linked to profit and performance (the amount of change in core operating income and profit (loss)). To be more specific, the amount of remuneration provided for in internal rules according to positions and job titles of Executive Officers is adjusted with the performance evaluation for the previous fiscal year (the fiscal year ended March 2020) (reduced by the amount for 1.5 months at the maximum, or increased by the amount for 3 months at the maximum), and based on this amount, the fixed amount of remuneration for individual Executive Officers for the consolidated fiscal year under review (the fiscal year ended March 2021) is determined and paid as monthly remuneration (the fixed remuneration includes factors linked to performance and is paid in money). Regarding the results of the entire company in the previous fiscal year, the consolidated core operating income was approximately 5.6 billion yen, down from approximately 8.5 billion yen in the fiscal year ended March 2019, a decrease of approximately 2.9 billion yen year on year. Consolidated profit (loss) (profit attributable to owners of the parent company) was approximately 0.9 billion yen, down from approximately 3.8 billion yen in the fiscal year ended March 2019, a decrease of approximately 2.9 billion yen year on year. These led to the decrease in incentives as provided for in internal rules. The result of calculating the incentive adjustment for the previous fiscal year was reported at the Board of Directors meeting held on May 29, 2020. The individual fixed remuneration was determined after the adjusted incentives are deducted from the individual base remuneration for the consolidated fiscal year under review. None of the Directors or Audit & Supervisory Board Members of the Company receive 100 million yen or more in consolidated remuneration. Policy on Determining Remuneration Amounts or Calculation Methods Established Disclosure of Policy on Determining Remuneration Amounts or Calculation Methods Please refer to Article 15 of the CG Policy for the policy on determining remuneration amounts or calculation methods. [CG Policy:] https://www.jvckenwood.com/content/dam/pdf/Corporate_Governance_Policy.pdf At the 11th Ordinary General Meeting of Shareholders held on June 20, 2019, a proposal for the remuneration for Directors of the Company was approved by resolution, setting the amount of monthly remuneration to up to – 17 -36 million yen (monthly remuneration for External Directors accounting for up to 8 million yen). The number of Directors at the close of the 11th Ordinary General Meeting of Shareholders held on June 20, 2019 was nine (9) (of which, the number of External Directors was three (3)). In order to pay bonuses in money in addition to fixed remuneration and to enable future agile operation of remuneration for Directors integrated with bonuses, the 13th Ordinary General Meeting of Shareholders held on June 25, 2021 resolved to change the amount of remuneration for Directors, including bonuses and other monetary remuneration, from a monthly to an annual basis up to 432 million yen per year (of which, the remuneration for External Directors is up to 96 million yen per year). The above remuneration for Directors includes salaries as employees for Directors who concurrently serve as employees (including remuneration for Executive Officers), apart from stock remuneration, etc. The number of Directors at the close of the 13th Ordinary General Meeting of Shareholders held on June 25, 2021 was nine (9) (of which, the number of External Directors was three (3)), and the number of Directors who concurrently serve as Executive Officers was six (6). With regard to remuneration for Directors, the Company has provided for a method of determining the amount of remuneration in internal rules up to a total amount of remuneration approved by resolution at the General Meeting of Shareholders. To be more specific, the amount of base remuneration of individual Directors is determined and paid after the amount of remuneration of individual Directors is set according to the base remuneration, position (such as Chairman, President, Deputy President, Senior Management Executive Officer and Senior Vice President) as well as job title (such as authority of representation, Chief Executive Officer, Chairman of the Board and Nomination and Remuneration Advisory Committee Member). With regard to remuneration for Executive Officers who do not concurrently serve as Directors, the Company has provided for a method of determining the amount of remuneration in internal rules resolved by the Board of Directors. To be more specific, the amount of base remuneration of individual Executive Officers is determined and paid after the amount of remuneration of individual Executive Officers is set according to the base remuneration, position (such as Senior Management Executive Officer and Senior Vice President) as well as job title. Internal rules only provide for the method of determining the amount of monetary remuneration, and the Company does not pay Directors and Executive Officers any remuneration other than money, such as stock or stock acquisition rights, as consideration for execution of their duties. As for Executive Officers including those who serve concurrently as Directors, the amount of remuneration of individual Executive Officers reflecting the factors linked to performance is paid as remuneration for Executive Officers by adjusting incentives by multiplying the individual base remuneration calculated in accordance with internal rules by a coefficient linked to profit and performance (the amount of change in core operating income and profit (loss)). The said method has been employed because the index is clear and it can promote incentives since the remuneration will be increased or decreased according to an increase or decrease in the company profit. The Board of Directors has made a decision on this method after the Nomination and Remuneration Advisory Committee has concluded in its deliberations that it is appropriate. No incentive adjustment is made for External Directors and Directors who do not concurrently serve as Executive Officers. At the Board of Directors meeting held on May 14, 2021, the Company formulated VISION 2023, a new medium-term management plan with FY2021 as the start year. In addition, expecting that each Director will become better aware of achieving the VISION 2023 goals by reviewing the director remuneration system in conjunction with the formulation of VISION 2023, the Company determined to alter the remuneration system, such as introducing an effective incentive system to realize sustainable performance improvement over the short and medium to long term, in addition to fixed remuneration according to management responsibility and roles. The amended policy on details of remuneration, etc. for Directors, etc. is as follows. • Policy, etc. concerning the determination of the amount of remuneration, etc. for Directors, etc. and its calculation method The Company will make a 3-tiered director remuneration system consisting of fixed remuneration, short-term incentives (“STI”*1) and medium- to long-term incentives (“LTI”*2), and clarify the breakdown of the remuneration. To be more specific, the Company pays Directors fixed remuneration and STI up to the amended limit of remuneration for Directors approved at the 13th Ordinary General Meeting of Shareholders held on June 25, 2021 (“this General Meeting of Shareholders”) (up to 432 million yen per year (of which, the remuneration for External Directors is up to 96 million yen per year), including salaries as employees for Directors who concurrently serve as employees (including remuneration for Executive Officers)). In – 18 -addition, LTI is paid as stock remuneration (non-monetary remuneration, etc.) apart from the limit of remuneration for Directors described above. However, STI and LTI are not applicable to External Directors who independently monitor and supervise management, and Directors who do not concurrently serve as Executive Officers. The Company also pays the same fixed remuneration, STI and LTI to Executive Officers who do not concurrently serve as Directors. *1 STI: Short Term Incentive.*2 LTI: Long Term Incentive.With regard to remuneration for Directors, the Company has provided for a method of determining theamount of remuneration in internal rules resolved by the Board of Directors up to a total amount of remuneration approved by resolution at the General Meeting of Shareholders. To be more specific, for fixed remuneration, the amount of base remuneration of individual Directors is determined and paid as monthly remuneration after the amount of remuneration of individual Directors is set according to the base remuneration and job title (such as authority of representation, Chairman of the Board and Nomination and Remuneration Advisory Committee Member) of Directors. With regard to remuneration for Executive Officers, the Company has provided for a method of determining the amount of remuneration in internal rules resolved by the Board of Directors. To be more specific, with regard to fixed remuneration, the amount of base remuneration for individual Executive Officers is determined and paid as monthly remuneration after the amount of remuneration of individual Executive Officers is set according to the position (President, Deputy President, Senior Management Executive Officer and Senior Vice President, etc.) and job title (Chief Executive Officer, etc.). As bonuses, the Company plans to pay STI that is subject to adjustment linked to performance in each year (revenue, operating profit, capital efficiency indicators (ROE) and qualitative evaluation) between 0% (no payment) and 200% (twice as much as the base amount for calculation) of the base amount for calculation, calculated based on the amount of individual base remuneration. The Company adopted this method, considering it as appropriate for incentives because indicators can be clarified at the time of setting performance goals for each year and the amount of remuneration fluctuates according to changes in performance. The Board of Directors determined it after the Nomination and Remuneration Advisory Committee discussed and concluded it is appropriate, including the determination of specific indicators and adjustment coefficients linked to performance. STI is applicable to Executive Officers including those who concurrently serve as Directors. External Directors and Directors who do not concurrently serve as Executive Officers are not eligible for STI. In addition to the monetary remuneration under the internal rules (fixed remuneration and STI), the Company resolved to introduce a stock remuneration system using trusts (“this system”) as LTI for Directors of the Company (excluding External Directors and Directors who do not concurrently serve as Executive Officers). The introduction of this system was approved by this General Meeting of Shareholders. The purpose of this system is to raise Directors’ awareness of contributing to the improvement of medium- to long-term performance and the enhancement of corporate value by further clarifying the linkage between the remuneration for Directors and the value of the Company’s shares, and enabling Directors to share profit and risks arising from share price fluctuation with shareholders. The Company also plans to introduce a similar stock remuneration system for Executive Officers who do not concurrently serve as Directors. An outline of this system is as follows. [1] Eligibility for this systemDirectors of the Company (excluding External Directors and Directors who do not concurrently serve asExecutive Officers)[2] Initial covered periodFrom the fiscal year ending March 31, 2022 to the fiscal year ending March 31, 2024[3] The maximum amount of money that the Company contributes as funds necessary for the acquisition of theCompany’s shares to be granted to the eligible Directors under [1] during the covered period under [2](three (3) fiscal years)Total amount: 96 million yen[4] Method of acquiring the Company’s sharesDisposition of treasury shares or acquisition from a stock exchange (including off-hours trading)-19 -[5] Limit to the total number of po