京セラ（6971） – Corporate Governance Report

control. Corporate Governance Report Last Update: April 6, 2022 Kyocera Corporation President and Representative Director: Hideo Tanimoto Contact: General Affairs Division, Securities Section +81-75-604-3500 Securities Code: 6971 https://global.kyocera.com The corporate governance of Kyocera Corporation (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views Kyocera Corporation has adopted through its Board of Directors Meeting the “Kyocera Group Basic Policy for Corporate Governance and Internal Control” as follows: September 21, 2018 Enforced: October 1, 2018 Kyocera Corporation Board of Directors Kyocera Group Basic Policy for Corporate Governance and Internal Control The Kyocera Group has made “Respect the Divine and Love People” its corporate motto and “to provide opportunities for the material and intellectual growth of all our employees, and through our joint efforts, contribute to the advancement of society and humankind” as its management rationale. The Kyocera Group always strives to maintain equity and fairness and faces all situations with courage and conscience, as well as intends to realize transparent systems for corporate governance and internal Under such corporate motto and management rationale, the Board of Directors is implementing a basic policy for corporate governance and internal control as described below. – 1 – This statement of basic policy sets forth such basic policy in accordance with Article 362, paragraph (5) and paragraph (4), item (vi) of the Companies Act, and Article 100, paragraphs (1) and (3) of the Regulation for Enforcement of the Companies Act, which require the establishment of a system to ensure that the conduct of business by the Directors will be in compliance with all applicable laws and regulations and the Articles of Incorporation and to ensure the proper conduct of business by Kyocera Corporation (the “Company”) and the Kyocera Group as a whole. I. Corporate Governance 1. Basic Policy for Corporate Governance The Board of Directors of the Company defines the corporate governance of Kyocera Group to mean “structures to ensure that Directors conducting the business manage the corporations in a fair and correct manner”. The purpose of corporate governance is to maintain soundness and transparency of management and to achieve fair and efficient corporate management through which the management rationale of the Kyocera Group can be realized. The Board of Directors shall permeate the “Kyocera Philosophy”, which is the basis of the management policy of the Kyocera Group, in all Directors and employees working in the Kyocera Group, and establish a sound corporate culture. The Board of Directors shall establish proper corporate governance through the exercise of the Kyocera Philosophy (Note). Note: The “Kyocera Philosophy” is a corporate philosophy and life philosophy created through integration of the thoughts of the founder of the Company regarding management and life. The “Kyocera Philosophy” incorporates a wide range of matters relating to basic thoughts on management and methods of undertaking day-to-day work, based on the core criterion of “what is the right thing to do as a human being”. 2. System for Corporate Governance The Board of Directors of the Company determines, pursuant to the basic policy described in 1 above, the below-outlined system for corporate governance of the Company, which is the core company within the Kyocera Group, to ensure that the conduct of business by the Directors is in compliance with all applicable laws and regulations and the Articles of Incorporation. The Board of Directors will constantly seek the ideal system for corporate governance and always evolve and develop its existing corporate governance system. – 2 – (1) Organs of Corporate Governance The Board of Directors shall establish a corporate structure in which the Audit & Supervisory Board Members and the Audit & Supervisory Board will serve as organs of corporate governance pursuant to the provisions of the Articles of Incorporation, as approved by the General Meeting of Shareholders of the Company. Directors of the Company shall strictly observe the following to ensure the effective audit by the Audit & Supervisory Board Members and the Audit & Supervisory Board: (i) Matters relating to employees to facilitate the tasks of Audit & Supervisory Board Members (including matters relating to the independence of such employees from the Directors and matters to the ensure effectiveness of instructions from the Audit & Supervisory Board Members to such employees） Representative Directors shall allocate certain employees upon the request of the Audit & Supervisory Board Members through prior discussion with the Audit & Supervisory Board Members to assist in their tasks and the Audit & Supervisory Board. Such employees while still subject to the work rules of the Company, shall be under each of the Audit & Supervisory Board Members’ instruction and supervision relating to their tasks. Representative Directors shall not set a limit unfairly to such instruction and supervision. The personnel matters such as transfer, treatment (including evaluation) and disciplinary action relating to such employees shall be made through prior discussion with the Audit & Supervisory Board Members. (ii) System for reporting to the Audit & Supervisory Board Members by Directors and employees and other related parties, and other systems relating to reporting to the Audit & Supervisory Board Members (including the system to ensure that the reporting party shall not be treated adversely due to such report) In the event that any Director becomes aware of any matter that breaches or may breach any law or regulation or the Articles of Incorporation, or in the event that any Director becomes aware of any matter that may cause substantial damage to the Kyocera Group, he or she shall immediately report thereon to the Audit & Supervisory Board. In addition, in the event that any of the Audit & Supervisory Board Members or the Audit & Supervisory Board requests a report from any Director pursuant to the Regulations of the Audit & Supervisory Board, such Director shall comply with such request. – 3 – Representative Directors shall cause the internal audit department to report regularly the status of the internal audit to the Audit & Supervisory Board Members. In addition, upon request from the Audit & Supervisory Board Members, Representative Directors shall cause any specified department(s) to report the status of their conduct of business directly to the Audit & Supervisory Board Members. Representative Directors shall also maintain a “Kyocera whistleblower system (to the Audit & Supervisory Board),” established by the Audit & Supervisory Board , under which all related parties including Directors, employees, suppliers and customers of the Kyocera Group may submit complaints directly to the Audit & Supervisory Board. Representative Directors shall not treat adversely the party who submitted the report to the Audit & Supervisory Board, such as transfer or disciplinary action, because of such report. (iii) Matters relating to the policy for handling of costs and claims which may incur in the course of the execution of the tasks of the Audit & Supervisory Board Members Representative Directors shall accept request from Audit & Supervisory Board Members for reimbursement of costs in accordance with the Regulations of the Audit & Supervisory Board and shall make payment thereof accordingly. (iv) Other systems to ensure the effective audit by the Audit & Supervisory Board Members In the event that Representative Directors are requested by any of the Audit & Supervisory Board Members to effectuate any of the following matters, as necessary to establish a system to ensure the effective audit by the Audit & Supervisory Board Members, Representative Directors shall comply with such requests: a. Attendance at important meetings; b. Inspection of minutes of important meetings, important internally approved documents and important agreements, etc.; and c. Meetings with Representative Directors to exchange opinions regarding management of the Company in general. (2) Kyocera Philosophy Education Representative Directors of the Company shall undertake “Kyocera Philosophy Education” from time to time in order to permeate the “Kyocera Philosophy” into the Directors (including themselves) and employees of the Kyocera Group. – 4 – II. Internal Controls 1. Basic Policy for Internal Controls The Board of Directors of the Company defines the internal controls of the Kyocera Group to mean “systems to be established within the corporate organization to achieve management rationale and master plans in a fair manner, in order for the Directors undertaking management of the Company to The Board of Directors of the Company will establish internal controls through practice of the effectuate management policy”. “Kyocera Philosophy”. 2. System for Internal Controls Under the policy as described in 1 above, the Board of Directors shall cause Representative Directors to establish the systems described below. In addition, the Board of Directors shall constantly evolve and develop such systems, seeking an ideal system of internal controls. (1) Management and maintenance of information relating to conduct of business by Directors Representative Directors shall establish the “Kyocera Disclosure Committee” as a system for making timely and appropriate disclosure of information and for properly maintaining information relating to the conduct of business by the Directors in accordance with applicable laws and regulations and the internal rules of the Company. (2) Internal rules and systems relating to management of risk of loss of the Kyocera Group, and systems to ensure that conduct of business by all employees of the Kyocera Group and Directors of the Company’s subsidiaries is in compliance with applicable laws and regulations and the Articles of Incorporation Representative Directors shall create a risk management department in order to establish a risk management system for the Kyocera Group. Representative Directors shall also establish systems to undertake necessary actions from time to time. Representative Directors shall establish “Employee Consultation Corners” as an internal complaint reporting system within the Kyocera Group, so that employees who become aware of any matter that breaches or may breach laws or regulations or the Articles of Incorporation or other internal rules can report thereon. The employee consultation corners will take – 5 – appropriate action in respect of reports received thereby, which shall be treated in accordance with the Law for Protection of Reporters in the Public Interest. Besides, Representative Directors shall establish the system to take actions as necessary. (3) Systems to ensure efficient conduct of business by Directors Representative Directors shall clearly delegate authority and related responsibility by establishing an Executive Officer system to achieve efficient and effective conduct of business. Representative Directors shall cause the Executive Officers to report the status of their conduct of business to the Board of Directors, etc. and, accordingly, a system shall be maintained under which Representative Directors can verify whether business is conducted efficiently. (4) Other System to ensure appropriate conduct of business at the Kyocera Group In addition to the matters described in (1) through (3) above, as a system to ensure the appropriate conduct of business at the Kyocera Group and for efficient operation of the Kyocera Group, Representative Directors shall establish the Kyocera Group Management Committee. Such Committee shall discuss important matters relating to the Kyocera Group and receive reports relating thereto. Representative Directors shall also establish departments to support appropriate and efficient execution of business of each of the companies in the Kyocera Group, and an internal audit department in order to conduct audits regularly to evaluate the appropriateness of the conduct of business at the Kyocera Group. [Reasons for Non-compliance with the Principles of the Corporate Governance Code] The Company has complied with all principles of the Corporate Governance Code. [Disclosure Based on the Principles of the Corporate Governance Code] (Updated) 1.3 Basic Strategy for Capital Policy It is our management policy to become a “highly growing, highly profitable company,” and we consider that it is important to work to increase shareholder returns through expansion of our business. At the same time, in order to ensure business continuation in any business environment, we believe that it is to the benefit of shareholders from a long-term perspective that we maintain a high equity ratio and a strong financial basis. Based on the above beliefs, we are making aggressive investments directed toward growth, including enhancement of production capacity, investment in research and development, conduct of mergers and acquisitions, etc. We are also actively utilizing capital and improving our capital efficiency in order to realize sustainable business development by conducting a structural reorganization aimed at improving profitability. – 6 – In addition, we continue to consider various types of returns to shareholders, such as increases in dividends, and conduct of repurchase of own shares when appropriate. 1.4 Cross-Shareholdings Policy regarding cross-holding including unilateral holding of shares (seisaku hoyuu kabushiki): We engage in cross-holding or unilateral holding of shares with the objective of improving our business value in the medium to long-term, focusing on corporate growth through maintenance of business relationships, realization of profits through shareholdings, and the issuing companies’ social significance. As a result of a yearly examination of its shareholdings, the Company reduces shares when it deems that holding such shares offers no significance. The Company founded Daini Denden Inc. (current KDDI Corporation) based on its management philosophy, “contributing to the advancement of society and humankind,” and holds shares in KDDI Corporation. The Company plans to maintain its shares in KDDI Corporation to pursue a strategic alliance with the aim of increasing its corporate value over the medium to long terms. Review of cross-holdings and unilateral holdings of shares: Kyocera Group Management Committee and our Board of Directors conduct an annual review of all cross-holdings including unilateral holdings of shares to assess whether continued holding of the relevant shares is appropriate, taking into account business needs, such as maintenance and/or enhancement of business relationships and efficiency in use of assets considering its cost of capital, with respect to individual shares. For any shares as to which a justifiable reason for holding them cannot be identified, we decrease our holdings of such shares through discussions with the issuing We sold some of our cross-holdings of shares in the fiscal year ended March 2021 as a result of such companies. review. Exercise of voting rights: The Company exercises its voting rights represented by its holdings based on a comprehensive judgment, verifying whether each proposal continues to conform to the Company’s shareholding policy and whether the issuing company’s management policy and strategy remain consistent with the Company’s business philosophy. The Company also examines whether each proposal submitted will contribute to a medium- to long-term increase in corporate value and the common interests of shareholders, or whether it will cause a decrease in management efficiency or damage to the Company’s financial health. – 7 – 1.7 Related Party Transactions We have a system as mentioned below in order to ensure that when we engage in transactions with our Directors and Audit & Supervisory Board Members or major shareholders (i.e., related party transactions), such transactions do not harm the interests of the Company or the common interests of our shareholders: a) All competitive transactions or transactions involving conflict of interest are made subject to resolution of the Board of Directors, requiring such transaction to be approved by the Board of Directors in advance and to make its performance report to the Board of Directors. b) Regarding the transactions with a Director and an Audit & Supervisory Board Member or any of their close relatives (those within the second degree), confirmation is regularly secured from all Directors and Audit & Supervisory Board Members every year using a questionnaire prepared to investigate into whether any such transactions are conducted. c) Regarding the related party transactions, disclosure is made pursuant to the applicable laws and regulations, including the Companies Act and the Financial Instruments and Exchange Act. 2.4.1 Ensuring Diversity in the Promotion to Core Human Resources For the Company to become energetic and attractive and continue to grow and take on challenges into the future, it is important to respect the individuality and values of each employee and allow diverse human resources to work with job satisfaction. Based on this idea, the Company plans to actively develop human resources and improve its internal environment. It is taking steps to support the active participations of diverse human resources, for instance with a range of educational programs to support employee career development, improvement of work-life balance support systems, an increase in career path options, and global human resource development programs. The status and goals for ensuring diversity in the promotion to core human resources are descried below. < Female employees > Since 2006, the Company has been pursuing a number of initiatives to encourage the involvement of women, and the number of women in managerial positions has been steadily rising. As of September 2021, the ratio of women in the position of section manager or higher was approximately 4% and the ratio of women in the position of executive officer or higher was approximately 8%. The Company will aim for a double-digit female manager ratio (section manager and higher) at the earliest stage possible. < Non-Japanese employees > The Company actively recruits non-Japanese human resources to implement global business management. Multiple non-Japanese managers (section manager and higher) and multiple non-Japanese executive officers in the management of overseas subsidiaries have been appointed. As of September 2021, the ratio of non-Japanese employees in the position of executive officer or higher was approximately 5%. The Company plans to continue recruiting skilled non-Japanese human resources who will contribute to the globalization of the Company’s business. – 8 – < Mid-career employees > The ratio of mid-career employees (including those who had become the Company’s employees through M&A; the same applies to the following) to all employees as of September 2021 was approximately 50%. The ratio of mid-career employees to all employees in the position of section manager or higher was also approximately 50%. As such, the Company believes that it is recruiting and promoting diverse human resources. The Company plans to step up the active promotion of mid-career employees. 2.6 Roles of Corporate Pension Funds as Asset Owners We have adopted a contract-type defined-benefit company pension plan. In connection with the management of our pension arrangements, we have put in place systems to ensure stable asset building and an appropriate company pension scheme, by establishing a department specializing in pension management and assigning specialists to work there. We also retain an external consulting firm. A periodic report on the pension plan’s investment status is made by the relevant specialized department to the Pension Investment Management Committee and Kyocera Group Management Committee for review. We also entrust invested assets to multiple domestic and international investment institutions and leave portfolio selection and exercise of voting rights to the discretion of such investment institutions, so that no conflicts of interest will arise between beneficiaries of the company pension plan and the Company. 3.1 Full Disclosure i) Management Rationale and so on It is our management rationale “to provide opportunities for the material and intellectual growth of all our employees, and through our joint efforts, contribute to the advancement of society and humankind.” For realization of this management rationale, we are working to put into practice the “Kyocera Philosophy,” which is our corporate philosophy setting forth importance of conducting business management in a fair and honest way, basing its fundamental judgments on a precept that “what is the right thing to do as a human being.” By putting into practice “Kyocera Philosophy,” we aim at contributing to the construction of mutual trust with all our stakeholders and sustainable development of Kyocera Group and sound development of the society. Please refer to the websites below for “Kyocera Philosophy” and the message from the management: https://global.kyocera.com/philosophy/index.html https://global.kyocera.com/company/summary/message.html The target management indexes and mid- to long-term managerial strategies and issues to be addressed are disclosed, together with the management rationale and basic policies, in the statutory materials and Integrated Reports and other similar documents. – 9 – ii) Basic views and guidelines on corporate governance based on each of the principles of the Code The Board of Directors of the Company has established “Kyocera Group Basic Policy for Corporate Governance and Internal Control” based upon the above-mentioned management rationale for the purpose of realizing highly transparent corporate governance and internal control as we courageously proceed forward with thoroughly fair and righteous spirit pursuant to our conscience. iii) Board policies and procedures in determining the remuneration of the senior management and Directors Our policies and procedures in determining the remuneration are disclosed in the Corporate Governance Report and the Financial Report. According to such policies and procedures, proposed remuneration is subject to prior review by the Nomination and Remuneration Committee, the majority of which consists of Outside Directors, and is then subject to approval by resolution of the meeting of the Board of Directors. iv) Board policies and procedures in the appointment/dismissals of the senior management and the nomination of Directors and Audit & Supervisory Board Members candidates Our policies and procedures related to the appointment of executive officers are disclosed in the Corporate Governance Report and the Financial Report. According to such policies and procedures, proposed candidates are subject to prior review by the Nomination and Remuneration Committee, the majority of which consists of Outside Directors, and are then subject to approval by resolution of the Board of Directors, followed by approval by resolution of the Shareholders’ Meeting. Any removal of a member of the senior management is also subject to prior consideration by the Nomination and Remuneration Committee, following which the Board of Directors shall remove the relevant senior management member. v) Explanations with respect to the individual appointments/dismissals and nominations based on iv) The reasons for selection of individual candidates for the Directors and Audit & Supervisory Board Members are disclosed in the proxy statement. Any removal of a member of the senior management is disclosed in our website. （Proxy Statement/Report of General Shareholders Meeting : https://global.kyocera.com/ir/s_info/meeting.html） – 10 – 3.1.3 Initiatives on Sustainability In a global situation where we are facing numerous social issues, the Company believes that connecting the solution of social issues to business and contributing to society is important for a company seeking sustained growth. To achieve the sustainable development of both the Kyocera Group and society, the Kyocera Group incorporates engaging in sustainable management and providing value that leads to the solution of social issues into its business strategies based on its management rationale. The Company’s initiatives on sustainability and the progress of investments in human capital and intellectual properties are disclosed in its integrated reports, on its sustainability website, and on its intellectual property website. In addition, the Company positions the problem of climate change as an important management issue and discloses risks and opportunities associated with climate change based on the TCFD framework in its integrated reports and on its sustainability website. (Integrated Report : https://global.kyocera.com/sustainability/catalog/index.html) (Sustainability Website : https://global.kyocera.com/sustainability/index.html) (Intellectual Property Website : https://global.kyocera.com/intellectual-property/) 4.1.1 Specification of delegation to the management As regards the matters prescribed in the Companies Act or other laws and ordinances, matters set forth in the Articles of Incorporation of the Company, matters resolved by the General Shareholders Meeting to be delegated to the Board of Directors and other matters that are material to the management of the Company, we require them to be resolved upon by the Board of Directors. With respect to the matters that relate to the business, assets and funds, among those matters, we have established, and put into practice, certain criteria regarding evaluation of importance for submission to the resolution by the Board of Directors. Further, in order to further expedite swift decision-making and managerial efficiency, we have introduced an executive officer system, in which other specific matters of execution of business are taken charge of by the executive officers under the direction of the President and Representative Director appointed by the Board of Directors. 4.9 Independence Standards and Qualification for Independent Directors The company has formulated the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” based on the independence standards prescribed by the financial instruments exchanges as follows. [Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members] The Company judges that an Outside Director and an Outside Audit & Supervisory Board Member who is not fallen under any of the following items is independent of the Company. (1) An executive (note 1) of the Group (note 2). – 11 – (2) A person who has been an executive (including a non-executive Director when judging the independence of an Outside Audit & Supervisory Board Member) of the Group in the past 10 years (note 3). (3) A major business partner of the Group (a business partner whose payments to the Group or payments received from the Group in the most recent fiscal year represent 2% or more of the consolidated net sales of either the Group or the business partner) or an executive thereof. (4) A person who is a consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property (10 million yen or more per year in the case of individuals, and 2% or more of the total income per year in the case of a body) from the Group, besides compensation as a Director or an Audit & Supervisory Board Member. (5) A person who belongs to audit firms which are the Accounting Auditors of the Group. (6) A person who receives a large donation or subsidy (donation or subsidy of 10 million yen or 2% of the total income of the person per year, whichever is greater) from the Group or an executive thereof. (7) A major shareholder (a shareholder who holds shares with 5% or more of total voting rights at the end of the most recent fiscal year) of the Company or an executive thereof. (8) An executive of the company which accept Directors or Audit & Supervisory Board Members (both full-time and part-time) from the Group, its parent companies or subsidiaries (except when the company, its parent companies or subsidiaries belong to the Group). (9) A person who has fallen under any of items (3) through (8) above in the past three years. (10) A spouse or relative within the second degree of kinship, of a person who falls under any of items (1) through (9) above (limited to the person in an important position (note 4)). (11) Any other person who is likely to have serious conflicts of interest with general shareholders. Note positions. manager. 1 An “executive” means an Executive Director, Operating Officer, Executive Officer or other person or employee similar thereto. 2 “The Group” means the Company or its subsidiaries. 3 When judging the independence of an Outside Director who was a non-executive Director or an Audit & Supervisory Board Member of the Group (in the case of an Outside Audit & Supervisory Board Member who was an Audit & Supervisory Board Member of the Group) at any time in the past 10 years, “the past 10 years” means the 10 years prior to his or her appointment to those 4 An “important position” means a Director, Audit & Supervisory Board Member, Executive Officer, Operating Officer, or an employee who executes important operations, such as a general – 12 – 4.10.1 The Policy, Mandates, Roles, and Other Elements of the Independence of the Composition of the Committee The Company has established a Nomination and Remuneration Committee to ensure the objectivity and transparency of the procedures to determine nomination and remuneration. The Nomination and Remuneration Committee adequately deliberates on the nomination of the senior management and Directors (including succession plans), their remuneration, and other important matters, taking into account perspectives such as gender and other types of diversity and personal skills. The policy, mandates, roles, and other elements of the independence of the composition of the Company’s Nomination and Remuneration Committee are as follows: < Policy of independence of the composition > Independent Outside Directors comprising a majority of the Committee members ensure its independence. < Mandates and roles > In response to inquiries of the Board of Directors, the Committee deliberates on 1, matters concerning the appointment and dismissal of Directors, 2, matters concerning remuneration of Directors, and 3, matters concerning the appointment and dismissal of executive officers and reports the results to the Board of Directors. Beyond such inquiries, the Committee also provides the Board of Directors with advice as appropriate. possessed by the Directors 4.11.1 Views on the balance, diversity and size of the Board of Directors and the key skills The Company considers that the Board of Directors must be equipped with the following skills from 1 to 5 to be able to suggest general directions of the Kyocera Group’s growth strategies, discuss the appropriateness, risks, and other factors of such directions from objective and diverse perspectives, and appropriately oversee the status of business operations. 1. Global management 2. Sales / Marketing 3. Technology 4. Financial affairs / Accounting 5. Legal affairs / Risk management The key skills possessed by the current Directors are presented in Attachment 1. The Company’s nomination policy for the appointment of Directors is to balance the skills required of the Board of Directors and ensure diversity, including race, ethnicity, gender, nationality, work experience, and age groups on the assumption of electing individuals having an adequate understanding of the Kyocera Group, who in terms of managing the Kyocera Group excel in their “personal qualities,” “capability” and “insight.” Based on such policy, the Board of Directors is well balanced in skills and it is constituted in a manner to achieve both diversity and appropriate size. The – 13 – Company elects one independent Outside Director with management experience in other companies. The procedure for appointing Directors is disclosed in Principle 3.1. 4.11.2 Additional post at other companies by Director and Audit & Supervisory Board Members Where the Directors and Audit & Supervisory Board Members, including Outside Directors and Outside Audit & Supervisory Board Members, also serve for other companies, the situation of such service is disclosed annually in the notice of the General Shareholders Meeting, the Business Report, Financial Report and Corporate Governance Report and other similar documents. 4.11.3 Analysis and evaluation of effectiveness of the Board of Directors as a whole and summary of the results. The Company analyzes and evaluates the effectiveness of the Board of Directors as a whole, and discloses a summary of the results once per year, in order to obtain an appropriate understanding of the current condition of the Board of Directors and to achieve more effective operation. The Company conducted an effectiveness evaluation questionnaire to all Directors and all Audit & 1. Evaluation method Supervisory Board Members. 2. Questionnaire Items The Company conducted quantitative and qualitative evaluations based on a four-point scale and free descriptions regarding (1) through (4) below. (1) Administration and deliberation of the Board of Directors (Provision of information, agenda items, frequency of meetings, time for deliberations, free and open discussions and exchanges of views, support from the secretariat, etc.) (2) Composition of the Board of Directors (Size, member balance, diversity, etc.) (3) Roles and Responsibilities of the Board of Directors (Discussion of the broad direction of corporate strategy, oversight of the Management, management of subsidiaries, etc.) (4) Optional Nomination and Remuneration Committee (Agenda items, frequency of meetings and time for deliberations) 3. Summary of Evaluation Results and Future Initiatives As a result of the evaluations, we confirmed that the effectiveness of the Board of Directors has been generally ensured, and that the following points have been evaluated in particular: – The composition of the Board of Directors was changed last year and the number of Internal Directors was reduced. This has resulted in a more appropriate size and composition of the Board of Directors. – 14 – – Reports on current status and strategies of the business were presented to Outside Directors multiple times throughout the year. This has helped to deepen their understanding of the Company’s business and has increased opportunities for them to exchange opinions with the Executives. In addition, the Board of Directors has been working to improve the issues identified in the previous evaluations by enhancing explanations on business strategies and providing more information. Based on the results of the evaluations of this time, the Board of Directors will promote the following initiatives to further improve its effectiveness: shareholders and investors’ opinions. – Further enhance agenda items related to internal control and risk management, as well as – Increase the weight of discussions on the direction of Kyocera Group, including company-wide strategies and deepen those discussions. 4.14.2 Training policy The Directors and Audit & Supervisory Board Members are given, at the time of their assumption of office, explanations concerning the details of the business of the Company and their respective roles and responsibilities that are considered necessary in order for them to perform their roles and fulfil their responsibilities. Further, even after assumption of office, if a Director or Audit & Supervisory Board Member requests, a training tailored to meet the individual requests are given and opportunities for advancement of necessary knowledge are offered or introduced, or financial support for the necessary expenses for such purposes are provided, according to their individual situations. 5.1 Policy for Constructive Dialogue with Shareholders The Company provides explanatory meetings and opportunities for separate dialogues in a proactive and continuous basis in an effort to have constructive dialogue with the shareholders and the investors. Aided by appointing of an executive officer who is in charge of supervision of IR activities of the Company, we have an organizational structure aimed at ensuring cooperation among related organizational units and promoting constructive dialogue with shareholders to construct a long-term relationship of mutual trust with the shareholders and investors. When having dialogue with the shareholders and investors, the Company makes it a basic rule to endeavor to disclose information in a timely and fair manner. Based upon this rule, the contents and scope of disclosure are determined through joint efforts of the management and related organizational units so as to ensure that the insider information is appropriately controlled. Further, the materials of the financial settlement briefings or other various disclosure information is made widely available through “Investor Relations” on the Company’s website. (Investor Relations : https://global.kyocera.com/ir/index.html ) – 15 – In this connection, the opinions, etc. of the shareholders and investors that are obtained through dialogue with them are reported to the management. 2. Capital Structure Foreign Shareholding Ratio More than 30% [Status of Major Shareholders (as of September 30, 2021)] Name / Company Name Number of Shares Owned Percentage (%) The Master Trust Bank of Japan, Ltd. (Trust Account) Custody Bank of Japan, Ltd.(Trust Account) The Bank of Kyoto, Ltd. SSBTC CLIENT OMNIBUS ACCOUNT Kazuo Inamori Inamori Foundation KI Enterprise Co., Ltd. Stock Purchase Plan for Kyocera Group Employees Custody Bank of Japan, Ltd. (Stock Investment Trust Account) STATE STREET BANK WEST CLIENT – TREATY 505234 Controlling Shareholder (except for Parent Company) Parent Company N/A N/A 77,302,200 26,730,400 14,436,248 12,619,367 10,212,330 9,360,000 7,099,366 6,559,283 5,820,600 5,516,100 21.33 7.37 3.98 3.48 2.82 2.58 1.96 1.81 1.61 1.52 Supplementary Explanation In addition, There are 15,167,147 of treasury shares other than mentioned above. Share ownership ratios are calculates after deduction of the treasury shares. – According to the amended report filed with EDINET system on July 8, 2021, Mitsubishi UFJ Financial Group, Inc. and its related partners held shares as of June 8, 2020, as shown below. Despite this report, they are not included in the above list of major shareholders because Kyocera is not able to confirm the number of shares beneficially owned by them from Kyocera’s shareholders records as of September 30, 2021. Name / Shares owner (in thousands) / Ownership (%) MUFG Bank, Ltd. 5,077 (1.34) Mitsubishi UFJ Trust and Banking Corporation 6,841 (1.81) Mitsubishi UFJ Kokusai Asset Management Co., Ltd. 6,871 (1.82) – 16 – Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 937 (0.25) Total 19,725 (5.22) 3. Corporate Attributes Fiscal Year-End Type of Business Listed Stock Market and Market Section (Updated) Tokyo Stock Exchange (Prime Market) Number of Employees (consolidated) as of the End of the Previous Fiscal Year Sales (consolidated) as of the End of the Previous Fiscal Year March Electric Appliances More than 1000 More than 1 trillion yen Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year From 100 to less than 300 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder N/A 5. Other Special Circumstances which may have Material Impact on Corporate Governance Kyocera Group establishes its corporate governance through practicing “Kyocera Philosophy”. For such purpose, based on “Kyocera Philosophy” and “Basic Policy for Kyocera Group Corporate Governance and Internal Control 1.2.(2)”, the Company holds not only the seminars for the new employees and gives daily guidance at workplace to them, but also holds seminars for executive management people and other employees in Japan. Besides, the Company holds seminars for the executive management people of the Group companies overseas. The Company intends to continue to hold such seminars by adding new programs. The Company also distributes “Kyocera Philosophy Pocketbook” to the employees including those of the materials subsidiaries. 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 – 17 – [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board Number of Directors Number of Outside Directors Number of Independent Directors 20 persons 2 years 9 persons 3 persons 3 persons Company Chairperson Outside Directors’ Relationship with the Company (1) Name Attribute Atsushi Aoyama Academic Akiko Koyano Lawyer Eiji Kakiuchi From another company Relationship with the Company* a b c d e f g h i j k ▲ △ ○ * Categories for “Relationship with the Company” * ”○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category in the past * “●” when a close relative of the director presently falls or has recently fallen under the category; “▲”when a close relative of the director fell under the category in the past 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 business partner is the Company or an executive thereof e. Major business partner of the listed company or an executive thereof f. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director/Audit & g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is h. Executive of a business partner of the Company (which does not correspond to any of d, e, or f) (the Supervisory Board Member a legal entity) director himself/herself only) – 18 – i. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board Members are mutually appointed (the director himself/herself only) j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only) k. Others Outside Directors’ Relationship with the Company (2) Name Independent Explanation of Reasons of Appointment Atsushi Aoyama Professor of Graduate He has abundant knowledge and Designation as Supplementary Director the Relationship ○ School of Technology experience as well as exceptional Management, insight in the area of technology Ritsumeikan University management, which creates technological developments and He has served as a innovation, and carries out research Professor of Graduate related to research and development School of Technology and product development processes. Management, Ritsumeikan After taking office as an Outside Director, he has played a role in giving University. The precise advice and supervision of University and the general corporate activities of the Company had a Company, such as by proactively Technical Assistance making recommendations regarding Agreement (600 the utilization of AI and IoT based on thousand yen) in the academic knowledge. The Company field of electronic nominated him as an Outside Director devices in the past, but because the Company has judged that no agreement with the he can adequately accomplish his Graduate School of duties as an Outside Director of the Technology Company, based on the above- Management where he mentioned reasons. serves as a Professor. He has two relatives (Reason for nomination as independent within the second Director) degree who used to be executives of Kyocera – 19 – in the past. The relationship between Ritsumeikan However, over 30 years University and the Company shown in have passed after the the left Column and the fact that his retirement of the close relatives were our executives in relative who retired the past, do not affect his later and currently no independency. relative works in Kyocera. And because he meets the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” which was formulated by the Company based on the independence standards prescribed by the financial instruments exchanges, the Company judged that he is not have any conflict of interest with the shareholders in general of the Company. Therefore, the Company nominated him as an independent Director. [Thoughts of the Company with respect to the independence of Outside Director of the Company.] The Company thinks that it is important to retain a person, who has outstanding “personality”, “capability” and “insight” as an Outside Director of the Company and to have such person supervise the Company’s management from an objective point of view. Upon satisfaction of the above mentioned criteria, in order to establish a system for appropriately supervising the company’s management from an independent standpoint, the Company nominated three (3) independent – 20 – Akiko Koyano Attorney-at-law She has abundant experience and ○ Partner Attorney-at-law exceptional insight in various areas as of Koyano LPC an attorney, such as corporate law, and Outside Directors who are not have any conflict of interest with the shareholders in general of the Company. has wide-ranging knowledge into social issues, such as gender equality. After taking office as an Outside Director, she has played a role in giving precise advice and supervision of general corporate activities of the Company, such as by proactively making recommendations from a legal perspective and recommendations related to diversity. The Company nominated her as an Outside Director because the Company has judged that she can adequately accomplish her duties as an Outside Director of the Company, based on the above-mentioned reasons. (Reason for nomination as independent Director) Because she meets the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” which was formulated by the Company based on the independence standards prescribed by the financial instruments exchanges, the Company judged that she is not have any conflict of interest with the shareholders in general of the Company. Therefore, the Company – 21 – Eiji Kakiuchi Representative He has abundant experience and ○ nominated her as an independent Director. [Thoughts of the Company with respect to the independence of Outside Director of the Company.] The same as the reason set out in the column for the reason for nomination of Mr. Atsushi Aoyama as Outside Director. Director, Chairman, exceptional insight in corporate Member of the Board management as he serves as top of SCREEN Holdings management of a corporate group that Co., Ltd. He is the operates business globally. The Company has nominated him as an Outside Director as he will be able to Representative Director adequately fulfill his duties as an of SCREEN Holdings Outside Director and play a role in Co., Ltd. giving appropriate advice and Although the Company supervision of general corporate engages in transactions activities of the Company, mainly from relating to the sale of his perspective as a manager, based on ink jet printer heads, his experience and insight. etc. with the SCREEN Group, the amounts of (Reason for nomination as independent the applicable business Director) transactions represent The relationship between the SCREEN less than 0.3% of the Group and the Group shown in the left consolidated net sales Column does not affect his of either the Group or independency. the SCREEN Group. And because he meets the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” which was formulated by the Company based on the independence standards prescribed by the financial instruments – 22 – exchanges, the Company judged that he is not have any conflict of interest with the shareholders in general of the Company. Therefore, the Company nominated him as an independent Director. [Thoughts of the Company with respect to the independence of Outside Director of the Company.] The same as the reason set out in the column for the reason for nomination of Mr. Atsushi Aoyama as Outside Director. Committee Corresponding to Committee Corresponding to Nomination Committee Remuneration Committee Nomination and Remuneration Nomination and Remuneration Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Established Remuneration Committee Committee’s Name, Composition, and Attributes of Chairperson All Committee Members 4 persons Committee’s name Full-time Members Inside Directors Outside Directors Outside Experts Other Chairperson Supplementary Explanation Committee 1 person 3 persons 0 0 0 Committee 4 persons 1 person 3 persons 0 0 0 None None We endeavor to improve transparency by establishing and operating our Nomination and Remuneration Committee, which consists of all Outside Directors and Chairman of the Board, and – 23 – by subjecting any matters regarding the appointment and/or remuneration of the senior management and/or Directors to comprehensive discussion and approval by this Committee. At the time of the last update of this report, there are four members: Aoyama Outside Director, Koyano Outside Director, Kakiuchi Outside Director and Yamaguchi Chairman. Meetings were held two (2) times in the fiscal year ended March 2021, to discuss proposals for appointment of the senior management and Directors and remuneration of Directors, and reported the results to the Board of [Audit & Supervisory Board Member] Establishment of Audit & Supervisory Board Established Maximum Number of Audit & Supervisory Board Member Stipulated in Articles of 6 persons Number of Audit & Supervisory Board 4 persons Cooperation among Audit & Supervisory Board Members, Accounting Auditors and Internal Audit [Cooperation between Audit & Supervisory Board Members and Accounting Auditor.] They hold regular meetings every quarter to discuss the audit plan, the result of the audit, and so on. Besides, they meet from time to time to discuss the substance of audit and exchange information. [Cooperation between Audit & Supervisory Board Members and the internal audit division.] They report with each other and discuss the status and result of the audit in a timely manner. Besides, they meet from time to time to discuss the substance of audit and exchange information. Directors. Incorporation Member Departments Appointment of Outside Audit & Supervisory Board Member Member Board Member Number of Outside Audit & Supervisory Board Number of Independent Audit & Supervisory Appointed 2 persons 2 persons – 24 – Outside Audit & Supervisory Board Member’s Relationship with the Company (1) Name Attribute Hitoshi Sakata Lawyer Masaaki Akiyama CPA Relationship with the Company* a b c d e f g h i j k l m * Categories for “Relationship with the Company” * ”○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category in the past * “●” when a close relative of the director presently falls or has recently fallen under the category; “▲”when a close relative of the director fell under the category in the past 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 business partner is the Company or an executive thereof g. Major business partner of the Company or an executive thereof h. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a Audit & Supervisory i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is Board Member a legal entity) j. Executive of a business partner 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, between which and the Company outside directors/Audit & Supervisory Board Members are mutually appointed (the Audit & Supervisory Board Member himself/herself only) l. Executive of a company or organization that receives a donation from the Company (the Audit & Supervisory Board Member himself/herself only) m. Others – 25 – Outside Audit & Supervisory Board Member’s Relationship with the Company (2) Name Audit & Explanation of Reasons of Appointment Designation as Independent Supplementary Supervisory the Relationship Board Member ○ Attorney-at-law Mr. Hitoshi Sakata has extensive Partner Attorney-at-law experience and deep insight as an of Oike Law Office attorney, as well as great familiarity with corporate legal practice and overseas intellectual property rights. Since assuming office as an Outside Audit & Supervisory Board Member of the Company, he has undertaken effective audit activities, applying an objective and independent perspective. The Company accordingly has judged that he will continue to conduct overall audits of the corporate activities of the Company in an appropriate manner. (Reason for nomination as independent Audit & Supervisory Board Member.) Because he meets the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” which was formulated by the Company based on the independence standards prescribed by the financial instruments exchanges, the Company judged that he is not have any conflict of interest with the shareholders in general of the Company. Therefore, the Company nominated him as an independent Audit & Supervisory Board Member. Hitoshi Sakata – 26 – [Thoughts of the Company with respect to the independence of Outside Audit & Supervisory Board Member of the Company.] The Company thinks that it is important to retain a person, who has outstanding “personality”, “capability” and “insight” as an Outside Audit & Supervisory Board Member of the Company and to have such person supervise the Company’s management from an objective point of view. Upon satisfaction of the above mentioned criteria, in order to establish a system for appropriately auditing the company’s management from an independent standpoint, the Company nominated two (2) independent Outside Audit & Supervisory Board Members who are not have any conflict of interest with the shareholders in general of the Company. experience and deep insight as a certified public accountant and has substantial knowledge of finance and accounting. Since assuming office as an Outside Audit & Supervisory Board Member of the Company, he has undertaken effective audit activities, applying an objective and independent perspective. The Company accordingly has judged that he will continue to conduct overall audits of the corporate activities of the Company in an appropriate manner. ○ CPA Mr. Masaaki Akiyama has extensive Masaaki Akiyama – 27 – (Reason for nomination as independent Audit & Supervisory Board Member.) Because he meets the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” which was formulated by the Company based on the independence standards prescribed by the financial instruments exchanges, the Company judged that he is not have any conflict of interest with the shareholders in general of the Company. Therefore, the Company nominated him as an independent Audit & Supervisory Board Member. [Thoughts of the Company with respect to the independence of Outside Audit & Supervisory Board Member of the Company.] The same as the reason set out in the column for the reason for nomination of Mr. Hitoshi Sakata as Outside Audit & Supervisory Board Member. [Independent Directors/Audit & Supervisory Board Members] Number of Independent Directors/Audit & Supervisory Board Members 5 persons Matters relating to Independent Directors/ Audit & Supervisory Board Members All five (5) Outside Directors/Audit & Supervisory Board Members are designated as Independent Directors/ Audit & Supervisory Board Members pursuant to the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members” which was formulated based on the independence standards prescribed by the financial instruments exchanges. Please refer to [4.9 Independence Standards and Qualification for Independent Directors] of [Disclosure Based on the Principles of the Corporate Governance Code] in “1. Basic Views” in “I. Basic Views on Corporate – 28 – Governance, Capital Structure, Corporate Profile and Other Basic Information” about the “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members”. [Incentives] Supplementary Explanation Incentive Policies for Directors Performance-linked Remuneration, Other For the Company’s performance-linked remuneration system and other measures for granting incentives, please refer to “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods ” in [Director Remuneration] in “1. Organizational Composition and Operation” in “II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management” in this report. In the fiscal year ended March 31, 2021, the ratio of Bonuses to Directors to the total amount of directors’ remuneration (excluding outside directors) was 35%, and the ratio of Restricted Stock Compensation to Directors of directors’ remuneration (excluding outside directors) was 14%, both of which are generally considered to be in the appropriate range at present. Recipients of Stock Options Supplementary Explanation – [Director Remuneration] Supplementary Explanation was as set out below. Disclosure of Individual Directors’ Selected Directors Remuneration The amount of remuneration for 15 Directors of the Company for the fiscal year ended March 31, 2021 Amount of Remuneration 367 million yen (Include Outside Director 39 million yen) 1. Basic Remuneration 205 million yen (Include Outside Director 39 million yen) 2. Performance-linked remuneration (Bonuses to Directors) 116 million yen 3. Non-monetary remuneration (Restricted Stock Compensation) 46 million yen – 29 – Note: out below. Aside from the remuneration in the above, the aggregate amount of remuneration to Directors (excluding Outside Directors) was 366 million yen in remuneration for services as employees or Executive Officers for those Directors who serve as such. With respect to any Director who receives remuneration in the amount of 100 million yen or more on consolidated basis, the amount of remuneration for each such Director is individually disclosed as set Goro Yamaguchi 115 million yen (Kyocera Corp