ヤマハ発動機（7272） – Corporate Governance Report

Yamaha Motor Co., Ltd. Corporate Governance Report Last Update: March. 24, 2022 Yamaha Motor Co., Ltd. President: Yoshihiro Hidaka Contact: Corporate Planning Div. +81 -538-32-1122 Securities Code: 7272 https://global.yamaha-motor.com The corporate governance of Yamaha Motor Co., Ltd. is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views The Company’s Management Principles and Management Strategies Yamaha Motor’s corporate objective is to be a “Kando* Creating Company.” We aspire to offer new excitement and a more fulfilling life for people all over the world. To this end, we provide unique and high-quality products and services made available through our technology to interweave human logic with sensibility by continuously striving to achieve “the unique style of Yamaha Motor’s engineering, manufacturing and marketing,” aiming at creating “new, original and innovative ideas and messages,” “technology that creates joy and trust among customers,” “attractive designs to express Refined Dynamism,” and “power to build up a lifetime relationship with customers.” We make ongoing efforts to gain recognition from our various stakeholders that “the unique style of Yamaha Motor” constitutes the “Yamaha” brand, and to make our products and services the lifelong preferred choice for stakeholders. We believe that these efforts will enable us to achieve sustainable growth and enhance our medium- to long-term corporate value. We are carrying out measures to achieve sustainable growth and enhancement of corporate value under our Long-term Vision (ART for Human Possibilities : Let’s strive for greater happiness), with an eye on the 2030 and the Medium-Term Management Plan that runs for three years from 2022. In the new Medium-Term Management Plan, we have clarified the positioning of our businesses based on sales growth rate and return on invested capital (ROIC) to manage our business portfolio and appropriately allocate management resources. Specifically, we will strengthen the earning power of our core businesses, invest in new and growing businesses contributing to a more sustainable world, and accelerate digital initiatives and co-creation to boost our growth potential, and thereby raise our corporate value. Under the medium-term financial indicators, we will aim for capital efficiency and increase economic value by building a structure capable of generating a 15% level of ROE and a 9% level of ROIC. In the new Medium-Term Management Plan, in addition, adding sustainability as a new pillar, we will create social value by contributing to society with a focus on carbon neutrality, and by connecting people and thriving as company. We will enhance our corporate value by linking these economic and social values to raise our “YAMAHA” brand value. *Kando is a Japanese word for the simultaneous feelings of deep satisfaction and intense excitement that we experience when we encounter something of exceptional value. Basic Views on Corporate Governance To ensure the implementation of the Company’s growth strategies for the future, Yamaha Motor’s Board of Directors establishes an environment that supports management’s appropriate risk-taking and decisive decision-making activities, and multilaterally understands and appropriately oversees issues and risks associated with the implementation of the Company’s management strategies from the viewpoint of fulfilling responsibilities to various stakeholders including shareholders and investors. This structure is designed to implement speedy and decisive decision-making, and appropriate, transparent and fair supervision and monitoring as the Company’s corporate governance. Accordingly, we formulate the following corporate governance guidelines and put them into practice in an appropriate manner. Ensuring shareholders’ rights and equality, and basic views on dialogue with shareholders Appropriate collaboration with various stakeholders Appropriate information disclosure and ensuring transparency Responsibilities of the Board of Directors, etc. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Attachment 1 Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members Attachment 2 Policies to promote constructive dialogue with shareholders – 1 – “Yamaha Motor’s Corporate Governance Guidelines” For the full text, please visit our website https://global.yamaha-motor.com/ir/governance/pdf/corporate_governance_guidelines-e.pdf [Reasons for Noncompliance with the Principles of the Corporate Governance Code] Descriptions in this report are based on the revised Corporate Governance Code issued in June 2021, which includes matters relating to the Prime Market of the Tokyo Stock Exchange, which are scheduled to be applied from April 2022. Yamaha Motor complies all of the principles of its Corporate Governance Code. [Disclosure Based on the Principles of the Corporate Governance Code] Principle 1-4 Cross-shareholdings Basic policies on cross-shareholdings Yamaha Motor intends to hold shares under cross-shareholdings when it is deemed necessary and appropriate in order to enhance corporate value and achieve a medium- to long-term growth. The Board of Directors annually examines each cross-shareholding to determine whether the significance of shareholdings is appropriate and the Board of Directors appropriately discloses a summary of the results. In addition, Yamaha Motor upholds a policy to reduce cross-shareholdings if the shareholdings cannot be justified. For the fiscal year under review, Yamaha Motor, based on this policy, examined the appropriateness of holding each issue by the Board of Directors and sold a portion of the shares held under cross-shareholdings. • Shareholdings of Yamaha Corporation Yamaha Motor was established by spinning off the motorcycle division from Nippon Gakki Co., Ltd. (current Yamaha Corporation). Today, the two companies’ management is conducted separately, with both using the same “Yamaha” brand. We are undertaking various measures in collaboration with Yamaha Corporation through the “Joint Brand Committee” and under the “Yamaha Brand Charter” and “Joint Brand Regulations.” Both companies appropriately monitor measures for mutual sustainable growth through shareholdings and dispatching Directors. We believe that maintaining and improving the shared value of the “Yamaha” brand by building a monitoring and collaborating relationship with Yamaha Corporation will contribute to the medium- to long-term enhancement of Yamaha Motor’s corporate value. • Basic policies on exercise of voting rights Yamaha Motor does not take a uniform approach in determining whether to approve or disapprove when exercising voting rights associated with cross-shareholdings; instead, it thoroughly examines and discusses whether the decisions contribute to the medium- to long-term enhancement of corporate value of the issuing company, and comprehensively assesses potential damage to its own corporate value. We may request further explanations on agenda items when necessary and make decisions on approval or disapproval. We exercise particular caution in examining and discussing our decision to exercise voting rights in the following situations. – Continued poor business performance; – Concerns over governance are confirmed, such as scandals; and – Other situations in which the corporate value of the issuer or Yamaha Motor may be damaged. Principle 1.7 Related party transactions Supplementary Principle 2.4.1 Ensuring diversity When carrying out related party transactions, transactions with competitors, and transactions involving any conflict of interests, we set out appropriate procedures according to the degree of importance and the nature of those transactions as per the Board of Directors’ Rules and the Decision-making Rules, etc. The Board of Directors deliberates upon and resolves these transactions to protect the interests of the Company and all of its shareholders. The status of transactions is reported to the Board of Directors, which is in charge of monitoring said transactions. To ensure sustainable growth, Yamaha Motor places importance on incorporating various perspectives and values reflecting different experiences, skills, and attribution. Therefore, we aim to secure diverse human resources. To this end, we have established a Global Human Resources Development Division at the corporate headquarters to implement globally common, training programs to develop senior management and to adopt a global human resource system designed for developing and appointing individuals with a competitive – 2 – edge. We also work on creating an organization that can effectively make use of global experience and knowledge. To facilitate global management, we promote talented individuals for senior management positions regardless of gender, age, nationality, background or any attributes. With regard to management executives at overseas subsidiaries in particular, we actively promote local talent, aiming to attain a localized ratio of 55%. At the same time, we strive to develop headquarters talent on an ongoing basis, to create an organization that can maximize management potential by mutually complementing experiences and skills with locally developed talent. In addition, to promote career development for women, we have disclosed our target and promoting to double the number of women in management positions at the Yamaha Motor by 2020 (32) compared with 2014, and triple by 2025 (48) in our Integrated Report, however the number has reached to 38 at the end of 2021, we set the target as 56 by the end of 2024 under the new Medium-Term Management Plan. We have also set the target to increase the ratio of women in management positions to 13 % in 2024 compared with 10.8% in 2021 for the entire Yamaha Motor Group. We will continue to promote initiatives toward these goals. The ratio of career hires to management positions at the headquarters is about the same as that of new graduates. We will continue to promote people to management positions based on their character and ability, regardless of the type of employment. Principle 2.6 Roles of Corporate Pension Funds as Asset Owners Yamaha Motor manages its pension assets through THE PENSION FUND OF YAMAHA MOTOR. In order to ensure the stable management of pension assets, the Fund has formulated a “Basic Policy on the Management of Pension Assets .” In accordance with this policy, Yamaha Motor carries out initiatives based on the guidelines of the Ministry of Health, Labour and Welfare, including reporting to the Conference of Representatives on the selection of fund managers and the results of evaluations. In managing the pension assets, the Fund, in an effort to maximize benefits of beneficiaries, consults with the Asset Management Committee comprising members selected from employers and representatives of the beneficiaries with appropriate qualifications for the management of pension assets, upon hiring asset management consultants and considering their recommendations. Principle 3-1 Full disclosure (1) The Company’s objectives (business principles, etc.), business strategies and business plans. Please refer to “1-1 Basic Views,” mentioned above in this Report. Please visit our website “Long-term Vision” and “Medium-term Management Plan.” https://global.yamaha-motor.com/jp/ir/management/mtp/ (2) Basic views and guidelines on corporate governance “Yamaha Motor’s Corporate Governance Guidelines” For the full text, please visit our website https://global.yamaha-motor.com/ir/governance/pdf/corporate_governance_guidelines-e.pdf (3) Board policies and procedures in determining the remuneration of senior management and directors 1) Policies on determining the amounts of remuneration for directors / audit & supervisory board members or the calculation method thereof (i) Basic Direction ・Aiming to be a “Kando Creating Company,” the Company strives to encourage employees to perform their duties in accordance with the Company’s Management Principles and Behavioral Guidelines. ・The Company has positioned achieving the corporate targets in the Medium-term Plan etc. as strong motivators in working toward realizing the Company’s long-term vision. ・In order to function as sound incentives toward the Company’s sustainable growth, the proportions of remuneration linked to short-term results and performance of duties etc. (performance-based bonus) and remuneration linked to medium- to long-term results and corporate value (performance-based share remuneration) will be set appropriately. ・The remuneration is to be at a level which can attract and retain the diverse and highly-capable human resources appropriate to the roles and responsibilities to be carried out by Executives of the Company. *Kando is a Japanese word for the simultaneous feelings of deep satisfaction and intense excitement that we experience when we encounter something of exceptional value. – 3 – (ii) Remuneration Structure Remuneration for Directors of the Company is comprised of basic compensation (fixed remuneration), performance-based bonus, and performance-based share remuneration. The proportions of basic compensation: performance-based bonus: performance-based share remuneration for the President and Representative Director is set at roughly 40%: 30%: 30% of the reference amount. For other Executives, the amounts are determined bearing in mind their duties and remuneration level etc., with reference to the remuneration of the Representative Director. For Outside Directors and Audit & Supervisory Board Members, only the fixed basic compensation is provided in light of their roles to supervise and advise the management from an objective and independent standpoint. (iii) Individual Remuneration Items and Their Details Basic compensation An annual amount of basic compensation is determined for each position, and one-twelfth of said amount is provided in cash each month. Performance-based bonus The performance-based bonus is comprised of only “whole-company performance-based bonus” for the Representative Director, and a “whole-company performance-based bonus” and an “individual performance-based bonus” for other Directors. The ratio of whole-company performance-based bonus: individual performance-based bonus is set at around 2:1 of the reference amount for Directors excluding the Representative Director (around 1:3 of the reference amount for Executive Officers who do not also work as Directors). From the perspective of providing incentives for achieving short-term performance targets, the “whole-company performance-based bonus” for Directors is drawn from a total amount obtained by multiplying a certain proportion 0.19% (Executive Officers who do not also work as Directors’ certain proportion is 0.08%) of “net income attributable to owners of parents” by evaluation coefficients (times 0-2) based on the “consolidated total assets operating income ratio (ROA),” and distributed to each Executive based on coefficients etc. determined for each position. The maximum amount of said total amount is 0.5% of net income attributable to owners of parents in the previous fiscal year. In addition, the abovementioned evaluation coefficients are adjusted after discussion by the Executive Personnel Committee based on the achievement of consolidated net sales and operating income targets, overall degree of progress regarding initiatives in the Medium-term Plan, resolving materiality (important social issues) in ESG evaluations, etc. from outside of the company, toward realizing the long-term vision, and occurrence of other matters affecting corporate value and brand value. The “individual performance-based bonus” is comprised of the “financial evaluation-based portion” and the “non-financial evaluation-based portion,” with the ratio set at 1:1 of the reference amount. The financial evaluation-based portion component is determined within the scope of 0-2 times the reference amount specified for each position, bearing in mind the extent of target achievement and results compared with the previous fiscal year etc. for financial evaluation indicators set in advance (net sales, operating income, consolidated total assets operating income ratio (ROA), etc. for the responsible division). The non-financial evaluation-based portion component is determined within the scope of 0-2 times the reference amount specified for each position, bearing in mind the degree of progress, etc. for non-financial evaluation indicators set in advance (initiatives in the Medium-term Plan, etc., development of successor Executives and company management candidates, contribution to corporate value and brand value, etc.). Performance-based share remuneration With regard to share remuneration, as part of the continuous review of the remuneration system for Directors, the Company has changed from existing system of remuneration of share with restriction on transfer that determines the number of shares to be provided in conjunction with the Company’s TSR (Total Shareholder Return) evaluation, with the aims of further promoting the sharing of value between the Directors, etc. of the Company and all shareholders, and providing appropriate incentives to continuously enhance the medium- to long-term corporate value of the Company. For Executive Officers who are non-residents, instead of issuing shares, cash to purchase ordinary shares in the Company equivalent to the reference amount determined for each position is provided through the Company’s Director Shareholding Association. (iv) Procedures for Determination In order to ensure the appropriateness of, as well as the transparency and feasibility of the discussion process regarding policies for determining the remuneration of Directors, such determination is carried out by the Board of Directors after discussions and reporting by the Executive Personnel Committee, which is an advisory body regarding nominations and remuneration that the Company establishes – 4 – voluntarily and is composed of a majority of Outside Directors. Determination of individual remuneration amounts for each Director based on the said policies is carried out by at the Board of Directors after discussions and reporting by the Executive Personnel Committee. In addition, the specific amounts of basic compensation for Audit & Supervisory Board Members are determined through discussions by Audit & Supervisory Board Members. (4) Board policies and procedures in the appointment /dismissal of senior management and the nomination of Director and Audit & Supervisory Board Member candidates From the viewpoint of maintaining an overall balance in terms of knowledge, experience and ability, and in consideration of diversity and size, the composition of the Board of Directors and Audit & Supervisory Board are defined as follows: 1. The Articles of Incorporation stipulate the number of Directors to be up to fifteen (15), and the number of Audit & Supervisory Board Members to be up to five (5). 2. Regardless of gender, age, nationality or any attributes, executives must adequately understand the viewpoints and standpoints of various stakeholders including shareholders, and must have long-term visions, abundant experience, extensive insight, and a high degree of expertise in addition to appropriate human characteristic elements such as ethical views and fairness. 3. Directors of the Company shall be individuals who can deal with the diversity of customer’ special characteristics, products, business operations, and functions, as well as global aspects of markets. 4. Outside Directors shall be individuals who have professional insight in management, and experience in global corporate management, or professional insight and knowledge of the industry that will complement the knowledge, experience and ability of the Board of Directors. 5. At least one-half (1/2) of Audit & Supervisory Board Members shall be made up of Outside Audit & Supervisory Board Members, including those who have sufficient insight in areas such as accounting, legal affairs and management administration. Yamaha Motor has established an Executive Personnel Committee, which is involved in nominations and remuneration, as a voluntary advisory body of the Board of Directors, to improve transparency and objectively in appointments and dismissals of executives and determining their remuneration, among other objectives. To ensure the transparency of the deliberation, as well as to ensure the objectivity and validity of matters reported to the Board of Directors’ meetings, the majority of the members of the Executive Personnel Committee consists of Outside Directors, and the meeting of the Executive Personnel Committee is held more than six times a year, in principle. In the role related to “nominations,” the Executive Personnel Committee deliberates upon the appointments and dismissals of the Chief Executive Officer (CEO), Directors, Audit & Supervisory Board Members and Executive Officers, as well as the selection of candidates for such senior management positions and their development plans, while confirming future management strategies and personnel requirements for putting them into practice, among other things. As part of initiatives to strengthen governance, a system has introduced for making judgements based on reviewing and assessing the operations of the CEO. More specifically, there is a round-table conference with the CEO headed by Outside Director, and through strategic dialogues with CEO, the conference carries out non-financial evaluations regarding matters including the status of operations of the individual in question as a top-level manager, based on looking at whether the individual in question has the qualities needed to serve as the CEO of the Company and is appropriately demonstrating such. The results are reported from the Executive Personnel Committee to the Board of Directors, and then a decision is made regarding the appointment of the CEO and other Executive Officers. Thus, governance is established in which the most suitable and best top-level managers execute business operations, based on a process in which objectivity and fairness are ensured. (5) Explanations of individuals appointments when nominating candidates for Directors and Audit & Supervisory Board Members Katsuaki Watanabe (Chairman and Representative Director) The Company nominated Katsuaki Watanabe as a Director for the following reasons: he has personality traits required of a Director such as high ethics and fairness. With his experience and business track records as Vice President and Representative Director of the Company since 2018 and others, he is highly capable in corporate management that is required to deal with a variety of values as well as expertise in the procurement and manufacturing fields. Accordingly, he is expected to contribute to increasing the corporate value of the Group and enhancing the management supervisory capabilities of the Board of Directors. Yoshihiro Hidaka (President and Representative Director, President and Chief Executive Officer) The Company nominated Yoshihiro Hidaka as a Director for the following reasons: he has personality traits required of a Director such as high ethics and fairness. With his experience and business track records as Vice President of Yamaha Motor Corporation, U.S.A., Executive General Manager of MC – 5 – Business Unit and Chief General Manager of Corporate Planning & Finance Center of the Company and others, he is highly capable in the corporate management that is required to deal with a variety of values and has expertise in the management control and business strategy fields. Accordingly, he is expected to contribute to increasing the corporate value of the Group and enhancing the management supervisory capabilities of the Board of Directors. Heiji Maruyama (Director, Senior Executive Officer) The Company nominated Heiji Maruyama as a Director for the following reasons: he has personality traits required of a Director such as high ethics and fairness. With his experience and business track record as Chief General Manager of the Powertrain Unit, Executive General Manager of Automotive Business Unit, and so on, he is highly capable and has expertise in the fields of technology and business. Accordingly, he is expected to contribute to increasing the corporate value of the Group and enhancing the management supervisory capabilities of the Board of Directors. Satohiko Matsuyama (Director, Senior Executive Officer) The Company nominated Satohiko Matsuyama as a candidate for Director for the following reasons: he has personality traits required of a Director such as high ethics and fairness. With his experience and business track records as Chief General Manager of Manufacturing Center of the Company and others, he is highly capable and has expertise in the manufacturing field. Accordingly, he is expected to contribute to increasing the corporate value of the Group and enhancing the management supervisory capabilities of the Board of Directors. Motofumi Shitara (Director, Senior Executive Officer) The Company nominated Motofumi Shitara as a Director for the following reasons: he has personality traits required of a Director such as high ethics and fairness. With his experience and business track records as Director and President of Yamaha Motor India Pvt. Ltd., Deputy Chief General Manager of Corporate Planning & Finance Center, and Executive General Manager of ME Business Unit, Marine Business Operations of the Company and other, he is highly capable and has expertise in the finance and management control fields. Accordingly, he is expected to contribute to increasing the corporate value of the Group and enhancing the management supervisory capabilities of the Board of Directors. Takuya Nakata (Independent Outside Director) The Company nominated Takuya Nakata as an Outside Director in the belief that he will provide the Company’s management with valuable advice and supervision based on his wide range of insights and his ample experience of management in general gained from his position as the Director, President and Representative Executive Officer of Yamaha Corporation, by which the Company aims to increase the value of the Yamaha brand commonly used by both companies. He meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc. and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of his designation as an Independent Outside Director. Takehiro Kamigama (Independent Outside Director) The Company nominated Takehiro Kamigama as an Outside Director in the belief that he will provide valuable advice and supervision regarding the Company’s management based on his wide range of insights and his ample experience of management and technology, through his experiences in various managerial positions, including the representative director of a global company. He meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc. and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of his designation as an Independent Outside Director. Yuko Tashiro (Independent Outside Director) The Company nominated Yuko Tashiro as an Outside Director in the belief that she will provide valuable advice and supervision regarding the Company’s management based on her wide range of insights and her ample experience of management based on her experiences in various managerial positions, including financial managers and the representative directors of several companies. She meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc. and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of her designation as an Independent Outside Director. Tetsuji Ohashi (Independent Outside Director) The Company nominated Tetsuji Ohashi as an Outside Director in the belief that he will provide valuable advice and supervision regarding the Company’s management based on his wide range of insights and his ample experience of management and manufacturing, through his experiences in – 6 – various managerial positions, including the representative director of a global company. He meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc, and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of his designation as an Independent Outside Director. Jin Song Montesano (Independent Outside Director) The Company nominated Jin Song Montesano as an Outside Director in the believe that she will provide valuable advice and supervision regarding the Company’s management based on her wide range of insights and her ample experience of management overall and in the areas of human resources, general affairs, public affairs, IR, and external affairs, through her experiences in various managerial positions in corporate affairs of a global company. She meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc, and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of her designation as an Independent Outside Director. Kenji Hironaga (Full-time Audit & Supervisory Board Member) The Company nominated Kenji Hironaga as a Full-time Audit & Supervisory Board Member in the belief that he has personality traits required of a Full-time Audit & Supervisory Board Member such as high ethics and fairness and possesses extensive expertise in the human resources, labor, and business management fields based on his experience and business track records as General Manager of Human Resources Development Division of the Company and others and that he will utilize his accumulated experience and insights for audits as he has been engaged in appropriate audits of the Company as a Full-time Audit &Supervisory Board Member since taking office as a Full-time Audit & Supervisory Board Member. Junzo Saito (Full-time Audit & Supervisory Board Member) The Company nominated Junzo Saito as a Full-time Audit & Supervisory Board Member in the belief that he, who took office as Executive Officer of the Company in 2015, has personality traits required of a Full-time Audit & Supervisory Board Member such as high ethics and fairness and the he will utilize his accumulated experience and insights for audits with extensive expertise in the legal, human resource, labor, and business management fields. Masatake Yone (Independent Outside Audit & Supervisory Board Member) The Company nominated Masatake Yone as an Outside Audit & Supervisory Board Member in the belief that he will utilize his extensive expertise as an attorney and his ample knowledge and experience as an outside director / audit & supervisory board member at corporations in performing his duty as the Company’s Outside Audit & Supervisory Board Members. He meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc. and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of his designation as an Independent Outside Audit & Supervisory Board Member. Eriko Kawai (Independent Outside Audit & Supervisory Board Members) The Company has nominated Eriko Kawai as an Outside Audit & Supervisory Board Member in the belief that she will utilize her abundant experience at international companies and international organizations, experience and track record as a top-level manager, and high level of expertise regarding finance and accounting in order to perform her duties as an Outside Audit & Supervisory Board Member of the Company. She meets the requirements for independence stipulated by the Tokyo Stock Exchange, Inc. and the “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” and the Tokyo Stock Exchange, Inc. has been duly notified of her designation as an Independent Outside Audit & Supervisory Board Member. Supplementary Principle 3-1-3 (1) Initiatives for Sustainability While promoting the management principles “creating value that surpasses customer expectations,” “establishing a corporate environment that fosters self-esteem,” and “fulfilling social responsibilities globally,” Yamaha Motor formulates policies on social responsibilities for each stakeholder, namely, customers, employees, business partners, the environment, the community, and shareholders and investors in the Basic Policies of Sustainability. Sustainability Committee, comprising nine (9) Executive Officers with specific posts, has been established to address issues related to sustainability and deliberate measures related to risk management and compliance. Yamaha Motor Group has signed the United Nations Global Compact as an expression of participation in the creating of global frameworks for the realization of sustainable growth, and has been working on solving – 7 – important social issues such as “environment and resources,” “transportation, education, and industry,” “innovation,” and “human capital management” in order to contribute to the achievement of Sustainable Development Goals (SDGs). In particular, in the area of environmental conservation activities, we have established the Environmental Plan 2050 and are working in the areas of climate change, resource recycling, biodiversity, and management to achieve carbon neutrality throughout all of the life cycles by 2050. Going forward, we will introduce these measures, report on their progress, and so on for stakeholders. Specific content in this regard is disclosed on the Yamaha Motor website and Integrated Report. https://global.yamaha-motor.com/about/csr/ https://global.yamaha-motor.com/about/csr/the_environment/plan-2050/ https://global.yamaha-motor.com/ir/integrated-report/integrated2021/ (2) Initiatives for Human Capital Yamaha Motor regard employee engagement as a key indicator to introduce common global engagement indicators focusing on diversity and inclusion and human resource development as initiatives for increasing engagement in our Medium-Term Management Plan. As part of our efforts to foster and encourage diversity and inclusion, we have created and put in place employee development programs around the world, with the aim of enhancement of global human capital. To facilitate global management, we promote talented individuals for senior management positions regardless of gender, age, nationality, background or any attributes. With regard to management executives at overseas subsidiaries in particular, we actively promote local talent, aiming to attain a localized ratio of 55%. In addition, we have continued to promote global recruitment, and disclosed in the integrated report our target of over 10% of new graduates in regular positions at headquarters. The target has been achieved, and we will continue our efforts. In addition, to promote career development for women, we have disclosed our target and promoting to double the number of women in management positions at Yamaha Motor by 2020 (32) compared with 2014, and triple by 2025 (48) in our Integrated Report, however the number has reached to 38 at the end of 2021, we set the target as 56 by the end of 2024 under the new Medium-Term Management Plan. We have also set the target to increase the ratio of women in management positions to 13 % in 2024 compared with 10.8% in 2021 for the entire Yamaha Motor Group. We will continue to promote initiatives toward these goals. With regards to human resource development, we will enhance online and on-demand learning platform aiming to establish frameworks that provide equal opportunities for personal growth to all employees. In addition, we will be promoting new way of working that considers work-life balance so that employees can improve their work efficiency and enrich their time off. Specific content in this regard is disclosed in the Integrated Report (pp48-49) and in our Presentation of Long-term Vision and Medium-term Management Plan (pp11). https://global.yamaha-motor.com/jp/ir/integrated-report/integrated2021/ https://global.yamaha-motor.com/ir/management/mtp/pdf/2022/2022medium-plan-e.pdf (3) Initiatives for Intellectual Properties Yamaha Motor promotes its global intellectual property strategies toward creating, protecting, and utilizing its intellectual property rights to raise both corporate and brand value. Under the banner of “IP for Business,” Yamaha Motor carries out its intellectual property tasks based on its Four Policy Pillars of Intellectual Property Activities. Four Policy Pillars of Intellectual Property Activities i. ii. iii. iv. Move one step ahead of conventional intellectual property activities that consist primarily of intellectual property creation linked to product and technology development in existing business Pursue intellectual property activities that preempt technological developments and the expansion of business areas by looking beyond our existing technologies and markets Indicate advanced fields that target further preemption and business area expansion through analysis of the intellectual property landscape Contribute to management decisions and strategy formulation from the perspectives of intellectual property analysis and market and technological growth analysis The Company believes that an important objective of management is to further raise the value of the Yamaha brand and make it shine. Based on our view that design contributes to management and branding, we established the Design Center in fiscal 2012 before restructuring it as the Creative Center in fiscal 2020 to boost the drivers of the brand, and we engage in a range of initiatives aimed at enhancing brand value. – 8 – Specific content in this regard is disclosed in the Integrated Report (pp34-37, pp40-41). https://global.yamaha-motor.com/jp/ir/integrated-report/integrated2021/ Supplementary Principle 4-1-1 Overview of Delegation to Management In accordance with “Yamaha Motor’s Corporate Governance Guidelines,” matters to be judged and determined by the Board of Directors and matters to be delegated to Executive Officers are as follows: (1) Matters to be judged and determined by the Board of Directors 1. Determining matters provided for in laws and regulations and the Articles of Incorporation 2. Overseeing the execution of Directors’ duties 3. Determining strategies and policies 4. Determining Corporate Philosophy, Code of Ethics, Basic Policies on Internal Control, Basic Policies on Sustainability, Governance Policies on the Yamaha brand, Long-term Management Visions, Medium-Term Management Plan, etc. 5. Overseeing execution of business operations Oversight of the implementation of business portfolio strategies, approval of annual management plans, approval of financial statements, oversight of the execution of duties, approval of internal auditing plans, oversight of the status of development of internal control systems, handling of issues related to sustainability, and risk management systems in accordance with Basic Policies on Internal Control, etc. (2) Matters to be delegated to Executive Officers 1. Matters related to the execution of business operations Formulating business portfolio strategies and decision-making on the execution thereof, formulating the Medium-Term Management Plan, annual management plans and other plans and decision-making on the execution thereof, preparing the draft of financial results, formulating individual business strategies, decision-making on the execution of operations such as development, production and sales, handling of issues related to sustainability, developing risk management systems, and other related matters 2. Other matters delegated by the Board of Directors, excluding matters to be judged and determined by the Board of Directors Principle 4-9 Independence standards and qualification for Independent Directors In addition to the required criteria for independence stipulated by Tokyo Stock Exchange, Inc., the Company has formulated its own “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members” to evaluate the independence and objectivity of Outside Directors and Outside Audit & Supervisory Board Members. Summary of “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members” Ⅰ．Independent Outside Directors / Audit & Supervisory Board Members may not be: 1. Employees or former employees of the company 2. Major shareholders 3. Individuals in a “major customer” relationship with our corporate group 4. Individuals from companies that have accepted a director from the Yamaha Motor Group 5. Individuals with a vested interest in the Yamaha Motor Group 6. Individuals who might have a conflict of interest with our general shareholders Moreover, Independent Outside Directors / Audit & Supervisory Board Members may not have individuals who are second-degree relatives, or cohabiting relatives, of any of those mentioned above in 1 through 5. Ⅱ．Individuals, despite being applicable to any of the 2 to 5 above, may be elected as independent outside directors / audit & supervisory board members of the company if they, in view of their personality and insight, are believed suitable as independent outside directors / audit & supervisory board members of the company on the condition that the individuals meet the requirements of an outside director as required under the Companies Act, and that a public disclosure is made to explain the reasons for electing them as independent outside directors / audit & supervisory board members of the company. – 9 – For the full text of Yamaha Motor’s “Standards for Selecting Independent Outside Directors / Audit & Supervisory Board Members,” please visit: https://global.yamaha-motor.com/ir/governance/pdf/independent_en.pdf Supplementary Principle 4-10-1 Appropriate involvement and advice of independent directors by establishing an independent nomination committee and remuneration committee Yamaha Motor has established an Executive Personnel Committee, which is involved in nominations and remuneration, as a voluntary advisory body of the Board of Directors, to improve transparency and objectivity in appointments and dismissals of executives and determining their remuneration, among other objectives. To ensure the transparency of the deliberation process, as well as to ensure the objectivity and validity of matters reported to the Board of Directors’ meetings, the majority of the members of the Executive Personnel Committee consists of Outside Directors, and the meeting of the Executive Personnel Committee is held more than six times a year, in principle. In the role related to “nominations,” the Executive Personnel Committee deliberates upon the appointments and dismissals of the Chief Executive Officer (CEO), Directors, Audit & Supervisory Board Members and Executive Officers, as well as the selection of candidates for such senior management positions and their development plans, while confirming future management strategies and personnel requirements for putting them into practice, among other things. As part of initiatives to strengthen governance, a system has been introduced for making judgements based on reviewing and assessing the operations of the CEO. More specifically, there is a round-table conference with CEO headed by Outside Director , and through strategic dialogues with CEO, the conference carries out non-financial evaluations regarding matters including the status of operations of the individual in question as a top-level manager, based on looking at whether the individual in question has the qualities needed to serve as the CEO of the Company and is appropriately demonstrating such. The results are reported from the Executive Personnel Committee to the Board of Directors, and then a decision is made regarding the appointment of the CEO and other Executive Officers. Thus, governance is established in which the most suitable and best top-level managers execute business operations, based on a process in which objectivity and fairness are ensured. In the role related to “remuneration,” the Executive Personnel Committee deliberates upon and determine the evaluation standards and remuneration system for the CEO, Directors and Executive Officers. The Executive Personnel Committee also evaluates the performance of the Company and individuals based on contributions to medium- to long-term corporate growth and business performance for the said fiscal year, in order to deliberate upon the compensation linked to performance within the limits of total remuneration resolved at the General Meeting of Shareholders. The current members are as follows: Chairman and Representative Director Katsuaki Watanabe Chairman: Committee member: President and Representative Director Yoshihiro Hidaka Committee member: Outside Director (Independent) Committee member: Outside Director (Independent) Committee member: Outside Director (Independent) Committee member: Outside Director (Independent) Committee member: Outside Director (Independent) Supplementary Principle 4-11-1 Takuya Nakata Takehiro Kamigama Yuko Tashiro Tetsuji Ohashi Jin Song Montesano A view of the overall balance in terms of knowledge, experience and ability, and of the diversity and size of the Board of Directors Please refer to “Principle 3-1 (4) Board policies and procedures in the appointment of senior management and the nomination of Director and Audit & Supervisory Board Member candidates” of “Disclosure Based on the Principles of the Corporate Governance Code,” mentioned above in this report. The skills possessed by each director and auditor are disclosed in the integrated report (pp63) and the notice of convocation as a skills matrix. https://global.yamaha-motor.com/jp/ir/integrated-report/integrated2021/ https://global.yamaha-motor.com/ir/shareholder/meeting/pdf/2021/2021shm_notice_e.pdf Supplementary Principle 4-11-2 Status of Directors and Audit & Supervisory Board Members who also serve as directors, etc., at other companies – 10 – Yoshihiro Hidaka (President and representative Director) Outside Director of Yamaha Corporation Takuya Nakata (Independent Outside Director) Director, President and Representative Executive Officer of Yamaha Corporation President of Yamaha Music Foundation Takehiro Kamigama (Independent Outside Director) Outside Director of OMRON Corporation External Director of SoftBank Corp. Outside Director of KOKUYO Co.,Ltd. Yuko Tashiro (Independent Outside Director) Auditor (External) of McDonald’s Holdings Company (Japan), Ltd. Director, Chairman of the board of Accordia Golf co., Ltd. Chairman of the board of NEXT GOLF MANAGMENT Co., Ltd. Tetsuji Ohashi (Independent Outside Director) Chairperson of the Board and Representative Director of Komatsu Ltd. Vice Chair of KEIDANREN Outside Director of Nomura Research Institute, Ltd. Jin Song Montesano (Independent Outside Director) Director, Executive Officer, Executive Vice President, Human Resources and General Affairs, Public Affairs, Investor Relations, External Affairs, and Corporate Responsibility, and Chief People Officer of LIXIL Corporation Masatake Yone (Independent Outside Audit & Supervisory Board Member) Outside Director of GCA Corporation Outside Corporate Auditor of BANDAI NAMCO Entertainment Inc. Outside Director of Skymark Airlines Inc. Senior Consultant of Mori Hamada & Matsumoto Eriko Kawai (Independent Outside Audit & Supervisory Board Member) Outside Director, Daiwa Securities Group Inc. Outside Director, CMIC HOLDINGS CO., Ltd. Professor Emeritus of Kyoto University Outside Director of Mitsui Fudosan Co., Ltd. Supplementary Principle 4-11-3 Disclosure of summary of analysis, evaluation and results regarding effectiveness of the Board of Directors Yamaha Motor analyzes and evaluates for maintaining and enhancing the effectiveness of the Board of Directors as a whole on a yearly basis pursuant to “4-6. The Board Evaluation” of our “Corporate Governance Guidelines” and discloses a summary of the results thereof. A summary of the evaluation process and evaluation results for the fiscal year 2021 on under review is as follows. The effectiveness of the Board of Directors was evaluated for all members of the Board of Directors, including Outside Directors and Outside Audit & Supervisory Board Members using the following process with the Corporate Planning Division acting as the secretariat. • Up-dated self-evaluation survey by a questionnaire incorporating support from third-party organization, based on seven evaluation perspectives regarding the aim of the Board of Directors. (Evaluation perspectives) 1) Roles and responsibilities of Directors and the Board of Directors 2) Relationships between the Board of Directors and senior management (Executive Officers) 3) Organizational design and composition of the Board of Directors, etc. 4) Qualifications held and knowledge of Directors and the Board of Directors 5) Deliberation at the Board of Directors Meetings 6) Relationships and dialogue with shareholders 7) Dealing with stakeholders other than shareholders – 11 – ・ Conduct surveys of the Board of Directors, analyze survey results, and conduct interviews from an objective perspective by a third-party ・ Conduct evaluation and analysis from the perspective of the revised Corporate Governance Code (June 2021) ・ Share the results of the evaluation of effectiveness and deliberate in the issues to be addressed at the Board of Directors Meetings based on the results of analysis Amid a significantly changing business environment, it was confirmed that the Board of Directors of the Company continued to proactively hold effective discussions and implement initiatives to realize the medium- to long-term enhancement of corporate value and sustainable growth, and its effectiveness had been sufficiently assured for achieving the long-term vision towards 2030. As with the previous fiscal year it was highly evaluated that the Board of Directors of the Company in particular has duly respected opinions of Outside Directors and Audit & Supervisory Board Members (Outside) and an environment has been created in which open, constructive discussion and exchange of opinions are possible. In addition, an evaluation by a third party confirmed that there were no significant differences in the perception of the effectiveness of the Board of Directors in comparison to their self-evaluations. In the previous fiscal year, the agenda items identified were” greater deliberation on risk management by the Board of Directors,” “improvement of diversity of the Board of Directors and examination of successor plans,” “greater deliberation for responses to changes in the management environment and for appropriate risk-taking,” and “strengthened supervision of the operational status of the whistleblowing system.” In response, bearing in mind an adherence to the concept of Bad News First, the Board of Directors increased responses, including a review of medium- to long-term strategies in light of the COVID19 pandemic, and held discussions on the diversity of the company management, human resource training, and employee engagement. As a result, although sufficient evaluations were obtained from the perspective of the aim of the Board of Directors with regard to all agenda items, it was also confirms that there is room for a further improvement and it was recognized that there is a need for continuous efforts. In this fiscal year, based on the revisions to the Corporate Governance Code, we analyzed and derived more issues in the self-evaluation surveys conducted by questionnaire. Based on the above analysis results, the Board of Directors of the Company recognizes the following points as issues and seeks to resolve them in order to improve the effectiveness of the Board of Directors. Issue ① Deepen discussions on the business portfolio Issue ② Implement comprehensive discussion on sustainability Issue ③ Strengthen the supervision of the Board of Directors with regard to the status of the prevalence of risk sensitivity on the ground Issue ④ Continue initiatives to ensure diversity, including the Board of Directors and company management Issue ⑤ Issues related to the operation of the Board of Directors (further enhancement of communication opportunities between Outside Directors and internal Directors, hybrid meetings involving face-to-face meetings and online meetings, ideal communication opportunities, etc.) The Company will continue to push ahead with constant improvement measures to address the issues highlighted based on the evaluation, and make efforts for further enhancement of effectiveness, while having third parties involved in its evaluation process. Supplementary Principle 4-14-2 Training for Directors and Audit & Supervisory Board Members – 12 – (1) Directors and Full-time Audit & Supervisory Board Members are required to attend a third-party-hosted training program upon their appointment, to deepen their understanding of their respective duties and responsibilities, and corporate governance. The cost of attending this training is borne by the Company. (2) Opportunities for briefings and question-and-answer sessions concerning the status of corporate governance, trends in management, management issues, progress of the Medium-Term Management Plan, and other topics, are provided to candidates for Outside Directors and Outside Audit & Supervisory Board Members before their appointment to help them gain an understanding of the present situation regarding management and an awareness of issues. Then, after they have been appointed, they are given tours of worksites, including overseas bases, in order to deepen their understanding of the current situation regarding the Company and the Company’s customers. (3) All Directors and Audit & Supervisory Board Members attend the Executive Discussion meeting held more than once a year. These committees provide opportunities to openly discuss and exchange opinions and information on Yamaha Motor’s medium- to long-term management strategies and important management issues, through which they can mutually sharpen the management sense. (4) In order for the Company’s Outside Directors and Audit & Supervisory Board Members to contribute actively to discussions of the Board of Directors, meetings are held on a regular basis so that Outside Directors can collect sufficient information without there being any effect on their independence, and meetings consisting only of Independent Outside Directors / Audit & Supervisory Board Members are held so that information can be exchanged and understanding can be shared in a mutual manner based on independent and objective perspectives. Principle 5-1 Policies to promote constructive dialogue with shareholders (1) Systems for managing dialogue with shareholders To enhance dialogue with shareholders and investors, a division in charge of IR and SR has been set up within the Corporate Planning & Finance Center. The President and Representative Director serves as the responsible person in charge of dialogue, and the Director who manages corporate planning & finance serves as the officer in charge. This dedicated division works in cooperation with divisions in charge of each theme to establish a structure that can provide beneficial information to shareholders and investors. When shareholders and investors have personal requests, the President and Representative Director, Directors, Audit & Supervisory Board Members and Executive Officers interview them to the extent possible, taking into account factors including the purpose of the interview, the degree of importance and the party requesting the interview. (2) Policies on collaboration with internal divisions, etc., assisting dialogue with shareholders To engage in rational and smooth dialogue with shareholders and investors, the division in charge of IR and SR takes the initiative in collaborating with related divisions, sharing information and knowledge, examining the direction of dialogue, and preparing disclosure materials. (3) Measures to enhance methods of dialogue other than individual interviews Financial results briefing sessions are held on a quarterly basis for the press, analysts, and institutional investors. In addition, briefing sessions to explain Yamaha Motor’s medium- to long-term management strategies, business operations and products, and other important topics, are held as necessary. We strive to carry out favorable communication with shareholders and investors overseas through various means including individual visits (including online meeting) and briefing sessions for overseas investors. We endeavor to carry out comprehensible communication with individual investors through measures including participation in events sponsored by newspaper publishers and securities companies, briefing sessions for individual investors, and dedicated website pages for individual investors. (4) Sharing information including opinions from shareholders with management Opinions, inquires, and other information obtained from shareholders and investors through dialogue is collected and sorted by the IR and SR Division, then shared with management and Directors (including Outside Directors). In addition, the officer in charge strives to share information with the Board of Directors, Executive Committee, and other individuals and committees as necessary. (5) Insider information management Yamaha Motor separately formulates disclosure policies on insider information management, based on which it fully enforces fair disclosure and takes appropriate actions. We refrain from having dialogue concerning financial results during the period between the day following of the end of each quarter and the date of the release of financial results (“silent period”). – 13 – 2. Capital Structure Foreign Shareholding Ratio 30% or more [Status of Major Shareholders] Name / Company Name Number of Shares Owned Percentage (%) The Master Trust Bank of Japan, Ltd. (trust account) Custody Bank of Japan, Ltd. (trust account) Yamaha Corporation Toyota Motor Corporation SSBTC CLIENT OMNIBUS ACCOUNT SMBC Nikko Securities Inc. Mizuho Bank, Ltd. JPMorgan Securities Japan Co., Ltd. The Shizuoka Bank, Ltd. STATE STREET BANK WEST CLIENT-TREATY 505234 Controlling Shareholder (except for Parent Company) Parent Company — None Supplementary Explanation 56,083,200 17,767,400 15,642,790 12,500,000 9,827,768 9,642,400 8,277,247 6,515,205 5,649,508 5,416,440 16.21 5.14 4.52 3.61 2.84 2.79 2.39 1.88 1.63 1.57 Notes: 1. In the Change Report Pertaining to the Report of Possession of Large Volume (No.1) which is available for public inspection as of November 19, 2021, it is stated that BlackRock Japan Co., Ltd. and its eight joint holders own 21,206,957 shares as of November 15, 2021. Although the Company has not been able to confirm the number of shares actually held as of December 31, 2021, they are not included in the above list of major shareholders. 2. Sumitomo Mitsui Trust Bank, Limited and its joint holders, Sumitomo Mitsui Trust Asset Management Co., Ltd. and Nikko Asset Management Co., Ltd., held 21,456,800 shares as of December 15, 2021, according to the Change Report Pertaining to the Report of Possession of Large Volume (No. 27) available for public inspection as of December 21, 2021. However, Yamaha Motor has not confirmed the actual number of shares held at the end of the fiscal year on December 31 of 2021 under review. Accordingly, they are not included in the above Status of Major Shareholders. 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 Year Sales (consolidated) as of the End of the Previous Fiscal Year Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year Tokyo Stock Exchange, First Section December Transportation Equipment More than 1000 More than ¥1 trillion From 100 to less than 300 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder — 5. Other Special Circumstances Which May Have Material Impact on Corporate Governance YAMAHA MOTOR ROBOTICS HOLDINGS CO., LTD is a listed subsidiary of Yamaha Motor, and Yamaha Motor respects the independence of this subsidiary’s business operations. 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 – 14 – [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 Appointment of Outside Directors Number of Outside Directors Number of Independent Directors 15 One year Chairman and Director 10 Appointed 5 5 Outside Directors’ Relationship with the Company (1) Name Attribute a From another company Takuya Nakata Takehiro Kamigama From another company From another company Yuko Tashiro From another company Tetsuji Ohashi Jin Song Montesano From another company * Categories for “Relationship with the Company” * g h Relationship with the Company* f i △ ○ ○ △ 〇 d e c b j k “○” 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 * a. Executive of the Company or its subsidiaries 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 th