京浜急行電鉄（9006） – [Delayed]Corporate Governance

Corporate Governance Last Updated: April 20, 2022 Keikyu Corporation Yukihiro Kawamata, President Contact: Public Relations and Marketing Department +81-45-225 -9350 Securities Code: 9006 https://www.keikyu.co.jp/ The corporate governance of Keikyu Corporation (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information 1. Basic Views Update The Company views Corporate Governance as a base for all business in the Keikyu Group and as a concept that forms the basis of management. As a corporate entity responsible for a service that is a lifeline for many, the Company group (the “Group”) works to ensure the highest level of safety in all aspects of its business, while seeking appropriate cooperation with stakeholders such as customers, shareholders, investors, local communities, suppliers, employees, and society as a whole, as well as working in harmony with the environment. These measures are aimed at achieving sustainable growth and at raising corporate value over the medium- to long-term, in pursuit of which goals the Group implements initiatives to strengthen corporate governance on a continuous basis, aiming for establishing a highly transparent and objective corporate governance system, based on the Group Philosophy (business principles and code of conduct), Basic Policies on Sustainability, and the Long-Term Vision. [Reasons for Non-compliance with the Principles of Japan’s Corporate Governance Code] Update The Company’s statements here are based on the Corporate Governance Code revised in June 2021. (The basic principles for the Prime Market to be applied effective from April 4, 2022 are also included.) [Supplementary Principle 3.1.3 Sustainability initiatives, etc.] (Sustainability initiatives (*This item complies with the principles of Japan’s Corporate Governance Code.)) All the Company’s business operations that support infrastructure for social life, such as our public transport operations, conform to ESG concepts. The Company has set forth a corporate sustainability strategy as one of the strategies in the Keikyu Group Integrated Management Plan and it positions ESG initiatives as a base of management. Moreover, the Company has formulated non-financial KPI in May 2021 to ensure the rigorous application of ESG management across the entire Group and to aim to improve corporate value and achieve the long-term vision. Going forward, the Company aims to achieve the long-term vision by providing visualization of its progress in corporate value improvement while advancing highly transparent ESG management. (Disclosure based on TCFD and equivalent frameworks) In terms of information to be disclosed related to the global issue of climate change, the Company aims to help realize a decarbonized society, and in November 2021, it announced its endorsement of the TCFD recommendations established by the Financial Stability Board (FSB). Going forward, in accordance with the framework of the TCFD recommendations, we aim to disclose climate-related financial information for June 2022, and we are proceeding with the relevant considerations. (Investment in human capital and intellectual property, etc. (*This item complies with the principles of Japan’s Corporate Governance Code.)) The Company is involved in a diverse range of business operations, including transport, real estate, leisure services, and retailing, and it believes that receptiveness to a variety of “values” and “work-styles,” unprejudiced by affiliation, age, gender, nationality, or career, is an essential attribute for corporate management. Moreover, in addition to the establishment of a person in charge of diversity promotion inside the Personnel Department, 1 as part of its corporate sustainability strategy set forth in the Keikyu Group Integrated Management Plan, the Company has set the indicators (and targets) of the paternity leave for men with children ratio (100% by the end of FY2025) and the female manager ratio (10% by the end of FY2025). Aside from the above, the Company will ensure the appropriate protection, management and use of its intellectual property and work to prevent damage to the Group’s brands. For details regarding communication with employees, please refer to the Company’s website (https://www.keikyu.co.jp/company/csr/employee.html). [Disclosure Based on the Principles of Japan’s Corporate Governance Code] Update As well as being discussed in this report, the Company’s corporate governance initiatives are disclosed in materials available on the Company’s website, including the Corporate Governance Guidelines, the notice of the General Meeting of Shareholders, the Securities Report and the Keikyu Group Integrated Report, for your reference. Details of disclosure items based on the principles of Japan’s Corporate Governance Code are as follows: [Principle 1.4 Cross-Shareholdings] (Policy on Cross-Shareholdings) The Company maintains cross-shareholdings in cases where there is a meaningful argument to be made with regard to business cooperation, the building and strengthening of collaborative relationships, or the Company’s business strategy, that such cross-shareholdings can contribute to achieving sustainable growth in the business and raising corporate value over the medium- to long-term. In situations where the importance of holding stock has become diluted, cross-shareholding will be gradually reduced. Every year, the rationale for holding each stock is subject to both quantitative and qualitative verification at meetings of the Board of Directors, resulting in an integrated judgment as to whether to maintain a particular cross-shareholding, and as to the number of shares that should be held. (Standards for Exercising Voting Rights with Regard to Cross-Shareholdings) The Company exercises its voting rights with regard to cross-shareholdings having first considered, based on internal standards, the business situation of each company, whether there has been major misconduct, and, if necessary, having engaged in dialogue with the issuing company. The details of the proposals are then scrutinized to ascertain whether they contribute to raising the corporate value and shareholder value of the Company over the medium- to long-term, before a comprehensive judgment is formed on their compatibility with the purpose of cross-shareholding. [Principle 1.7 Related Party Transactions] Based on the “Accounting Standard for Related Party Disclosures” and the “Guidance on Accounting Standard for Related Party Disclosures,” the Company confirms whether transactions with related parties exist, evaluates the importance of any such transactions, and, in the case of transactions that are subject to disclosure, discloses them in materials such as its Securities Report. In accordance with Articles 356 and 365 of the Companies Act, in the event that a Director intends to conduct a transaction with a competitor, or a transaction that involves a conflict of interest, permission for the content of the transaction shall be obtained in advance from the Board of Directors, and after the transaction in question has been completed, the results shall be reported to the Board of Directors, and disclosed in the notice of a General Meeting of Shareholders. [Supplementary Principle 2.4.1 Ensuring Diversity When Promoting Core Personnel, Etc.] Aside from establishing the indicator (and setting the target) of female manager ratio (10% by the end of FY2025), the Company is actively working to facilitate mid-career hiring in order to address the transforming business portfolio, and acquire diverse viewpoints and values, and mid-career hires are being given similar career path opportunities to management positions as those followed by new graduate hires. As a result of reforms made to the personnel system from 2018, career paths are being established for personnel with specialist knowledge and practical experience in various fields, and a wide range of personnel are being accepted through mid-career hiring. Moreover, regarding foreign-national employees, the Company practices fair hiring selection unprejudiced by nationality. After joining the Company, the same career paths are established irrespective of nationality, and 2 the Company has not set objectives regarding the placement for core personnel positions specifically for foreign nationals. In the Keikyu Group, many foreign nationals are employed to play active roles at the front line of our service provision. [Principle 2.6 Roles of Corporate Pension Funds as Asset Owners] In terms of the operational structure for corporate pension, as for personnel, the person in charge of corporate pension administration attends seminars, training sessions, etc., in order to improve their specialist knowledge in relation to corporate pensions, and as for operations, a Pension Asset Management Committee has been established, composed of members from the Personnel Department and Management Strategy Department, which provides a system that enables monitoring of the state of pension asset management and of the stewardship activities of the managing institution. Moreover, the Pension Asset Management Committee includes members selected from among labor union executives, such that the opinions of employees are incorporated in asset management, and so that conflicts of interest between the Company and employees (the beneficiaries) come under appropriate supervision. [Principle 3.1 Full Disclosure] (1) Company objectives (e.g., business principles), business strategies and business plans In order to achieve sustainable growth and facilitate increase in corporate value over the medium- to long-term, the Company formulates Long-Term Business Strategy, and Medium-Term Business Plan and Long-Term Vision based on the Group Philosophy, and works to enhance provision of information by disclosing these on the Company’s website and elsewhere. For details of the Keikyu Group Integrated Management Plan, please refer to the Company’s website (https://www.keikyu.co.jp/ir/policy/vision/index.html). (2) Basic views and policies on corporate governance As a corporate entity responsible for a service that is to maintain lifeline, the Group works to ensure the highest level of safety in all aspects of its business, while seeking appropriate cooperation with stakeholders such as customers, shareholders, investors, local communities, suppliers, employees, and society as a whole, as well as working in harmony with the environment. These measures are aimed at achieving sustainable growth and at raising corporate value over the medium- to long-term, in pursuit of which goals the Group continues to implement initiatives to further strengthen corporate governance, based on the Group Philosophy, Basic Policies on Sustainability and the Long-Term Vision. (3) Policies and procedures for the Board of Directors when determining remuneration for Directors With regard to remuneration plans, the Company has laid down a “Policy for Determining the Content of Remuneration, etc. for Individual Directors and Executive Officers.” Taking into consideration the unique nature of the Group’s operations, remuneration for Director is determined weighing in, with emphasis, the Director’s contribution in raising corporate value and operating performance over the medium- to long-term, and to having shared values with shareholders, in addition to the short-term operating performance. Proposals for the remuneration of Directors are prepared by the Representative Director and President, and after undergoing deliberation by the Nomination and Remuneration Advisory Committee, the amount of remuneration is determined by the Board of Directors. The contents of the policy for determining remuneration are described in Policy for Determining Remuneration Amounts or Calculation Methods Thereof under [Director Remuneration] in II. 1. Organizational Composition and Operation of this report. (4) Policies and procedures for the Board of Directors when appointing and dismissing Directors and when nominating candidates for Director and Audit & Supervisory Board Member When nominating candidates for Director, the Board of Directors takes into account the experience and skills of the individuals in question, and nominates individuals who can, not only as an operative member, recognize the changes in the business conditions in which the Group operates and consider its corporate social responsibility, as well as verify and determine the Group’s growth strategy, properly supervise the execution of that strategy and increase the corporate value of the Group over the medium- to long-term. In addition, in cases where the Board of Directors determines that a Director has infringed laws and regulations, the Articles of Incorporation, or internal rules of the Company, or otherwise failed to fulfill the role and responsibilities 3 required of a Director, dismissal of the individual in question shall be proposed at the General Meeting of Shareholders. Proposals for the election or dismissal of Directors placed on the agenda of a General Meeting of Shareholders shall be prepared by the Representative Director and President in accordance with the “Criteria for Electing and Dismissing Directors” prescribed by the Board of Directors, and determined by the Board of Directors after undergoing deliberation by the Nomination and Remuneration Advisory Committee. When nominating candidates for Audit & Supervisory Board Member, the Board of Directors nominates individuals who have the knowledge, experience and skills to audit the performance of duties by Directors appropriately, fairly and efficiently. Proposals or the election or dismissal of Audit & Supervisory Board Members on the agenda of a General Meeting of Shareholders shall be prepared by the Representative Director and President, and determined by the Board of Directors after obtaining approval of the Audit & Supervisory Board. (5) Explanation of the individual appointment and dismissal of Directors and the individual nomination of candidates for Director or Audit & Supervisory Board Member by the Board of Directors, based on (4) above Individual reasons for the appointment or dismissal of Directors and nomination of candidates for Director or Audit & Supervisory Board Member are disclosed in the notice of the General Meeting of Shareholders. [Supplementary Principle 4.1.1 Determination and Disclosure of Scope of Matters Delegated to Management] In order to enable more in-depth discussions at meetings of the Board of Directors that further facilitate the development of the Company, matters not specified in the “Board of Directors Rules” as issues to be resolved by the Board of Directors are discussed and decided by the Group Management Committee so as to speed up decision-making. [Supplementary Principle 4.2.2 Formulation of Basic Policies on Sustainability] Based on the Group Philosophy, the Company has formulated Basic Policies on Sustainability, aiming to create a better cycle of “contributing to sustainable growth of society” and “sustainable growth of the Keikyu Group.” In addition, the Company has set forth a corporate sustainability strategy as one of the strategies in the Keikyu Group Integrated Management Plan and positioned ESG initiatives as a base of management. Furthermore, the Company has designated important sustainability issues for the Company and formulated the value creation model, which is aimed at enhancing corporate value, and disclosed these in the Keikyu Group Integrated Report. In addition, the Company has established the Sustainability Committee and, as matters related to business strategies, the Sustainability Committee considers and discusses sustainability, including the TCFD recommendations and other responses to climate change, while working with the Risk Management Committee, etc. to build a system for promoting ESG initiatives. [Principle 4.8 Effective Use of Independent Outside Directors] The Board of Directors shall elect as Independent Outside Directors a number of expert individuals with diverse experience and broad insight, to comprise at least one-third of the Directors. The Board of Directors receives useful advice derived from the specialized and wide-ranging viewpoints of the Independent Outside Directors, and as well as incorporating this into the management of the Group, it requests suitable opinions and counsel in relation to the performance of duties by Directors, so as to strengthen the supervision of management. [Principle 4.9 Independence Standards for Independent Outside Directors] When nominating candidates for Independent Outside Director and Independent Outside Audit & Supervisory Board Member, in order to effectively ensure the candidates’ independence, the Board of Directors nominates candidates that fulfill the Company’s “Independence Criteria for Outside Officers,” prescribed by the Board of Directors, which are based on the independence criteria laid down by financial instruments exchanges. [Supplementary Principle 4.11.1 Views on Total Balance of Knowledge, Diversity and Size of the Board of Directors] In accordance with the prescriptions of the Articles of Incorporation, the Board of Directors shall consist of up to 19 individuals, with a composition that takes into account the balance of knowledge, experience, ability and area of expertise, as well as diversity in gender and other aspects, for the Board of Directors as a whole. 4 The Company shall in principle select at least two individuals from among the Inside Directors to be Representative Directors, and shall elect a number of Independent Outside Directors that comprise at least one-third of the Directors in order to ensure a highly effective management supervision function. The Company determines the required skills (knowledge, experience, capabilities) of Directors based on the medium- to long-term management strategies and management issues. Inside Directors are required to have skills relating to business divisions or administrative divisions along with a deep understanding of the Company’s business. Outside Directors, meanwhile, are required to have expertise, abundant experience and broad insight that can be applied to the supervision of business execution. For a skill matrix showing the major expertise, experience and insights for each Director, Audit & Supervisory Board Member and Executive Officer, please refer to the Company’s website (https://www.keikyu.co.jp/ir/policy/governance.html) and the “Skill Matrix” at the end of this report. [Supplementary Principle 4.11.2 Concurrent Positions of Outside Officers] Directors and Audit & Supervisory Board Members, including Independent Outside Directors and Independent Outside Audit & Supervisory Board Members, shall devote the time and effort necessary to appropriately fulfill their roles and responsibilities to perform the duties of Director and Audit & Supervisory Board Member. Concurrent positions shall be limited to a reasonable extent, with important concurrent positions being disclosed in notices of General Meeting of Shareholders, etc. [Supplementary Principle 4.11.3 Analysis and Evaluation of the Effectiveness of the Board of Directors] (Outline) In order to improve the effectiveness of the Board of Directors, each Director shall perform an annual assessment of the Board of Directors. Based on the results of this assessment, the issues raised shall be deliberated and utilized in the management of the Board of Directors going forward. In order to obtain straight and honest opinions from the interviewees, since FY2018, the task of collecting and tabulating the results of the questionnaire survey has been consigned to an external party. (Overview of Results of FY2020 Effectiveness Evaluation) In FY2020, each Director was aware that an increasing higher standard of corporate governance is being demanded from stakeholders, etc. and confirmed that the standards for evaluating effectiveness in the questionnaires they each completed are becoming more stringent. Furthermore, while examining for responses to issues confirmed in the FY2019 effectiveness evaluation, discussion on the importance of risk management was given greater attention at the Board of Directors meetings. As a result, a decision was made to revise the system for proposing agenda items for Board of Directors meetings and the composition and subject matter of proposals made to the Board of Directors in order to facilitate suitable operation of risk management. In future, it will be necessary to further enhance the system and its operation for examining the content and frequency of submitting items to the agenda in order to enable deeper discussion. (Future Issues) In addition to the issues already mentioned above, the following issues have been newly recognized from the FY2020 effectiveness evaluation. ・Narrow down the number of examination items. ・Enhance discussion on management plans, management risks and ESG. ・Active involvement in formulating and implementing the successor-development plan for CEO. ・Enhance monitoring function through construction and operation of internal control system. ・Strengthen cooperation between the Internal Audit Department and the Board of Directors. The Board of Directors has confirmed that it will strive to maintain and improve the effectiveness of the Board of Directors by continuously working on these matters in the future. [Supplementary Principle 4.14.2 Training Policy for Directors and Audit & Supervisory Board Members] In order to facilitate sustainable growth for the Group and increase its corporate value over the medium- to long-term, the Company implements training to assist in enhancing the skills of officers. The Company works to strengthen the managerial capabilities of Directors and Executive Officers through officer training which is also enlightened by the business environment and external affairs. In addition, Audit & Supervisory Board Members are active participants in external training events, etc., and work diligently to master the knowledge required to fulfill their responsibilities as Audit & Supervisory Board Members. Moreover, when Outside Directors and Outside Audit & Supervisory Board Members assume office, they are provided with summary information on the Group that covers its businesses, finances, and organization, in addition to which measures 5 such as tours of Group facilities are taken as necessary, to further deepen their understanding of the Group. [Principle 5.1 and Supplementary Principle 5.1.1 Policy for Constructive Dialogue with Shareholders] Management of the Company (including Outside Directors), beginning with the President, actively promotes dialogue with shareholders, and a framework for IR activities has been put in place, with the Officer in charge of IR at its center. Specifically, aside from conducting investor briefings, teleconferences, and individual meetings, in which representatives of management participate, the Company also works to create opportunities for dialogue with shareholders and investors through holding small meetings, in which Outside Directors also participate, and participating in IR conferences inside Japan. [Supplementary Principle 5.2.1 Formulating and Disclosing the Management Strategies, Etc.] To address the rapidly changing business environment, the Company has formulated the policy to reform the business portfolio based on selection and concentration starting with strengthening real estate business, and announced this policy in the Keikyu Group Integrated Management Plan. Moreover, the Keikyu Group will make timely and appropriate disclosure on the initiatives to revise the business portfolio and the current status of the portfolio in line with said policy. 2. Capital Structure Foreign Shareholding Ratio Less than 10% [Status of Major Shareholders] Update Name Number of Shares Owned (Shares) Shareholding Ratio (%) 12.33 3.66 3.33 3.02 2.92 1.99 1.95 1.82 1.71 1.19 The Master Trust Bank of Japan, Ltd. (Trust Account) Nippon Life Insurance Company Custody Bank of Japan, Ltd. (Trust Account) Mizuho Bank, Ltd. The Bank of Yokohama, Ltd. Custody Bank of Japan, Ltd. (Retirement Benefit Trust Account for Sumitomo Mitsui Trust Bank, Limited) Seibu Railway Co., Ltd. Meiji Yasuda Life Insurance Company Custody Bank of Japan, Ltd. (as trustee for Retirement Benefit Trust of Mizuho Trust & Banking Co., Ltd.) JP MORGAN CHASE BANK 385781 Controlling Shareholder (except for Parent) Parent – N/A 33,946,500 10,076,384 9,177,700 8,317,609 8,028,367 5,488,500 5,383,500 5,000,000 4,716,000 3,263,811 Supplementary Explanation – 3. Corporate Attributes Fiscal Year-End Listed Stock Market and Market Section Update Tokyo Stock Exchange Prime Market March 6 Type of Business Number of Employees (Consolidated) at End of the Previous Fiscal Year Net Sales (Consolidated) for the Previous Fiscal Year Number of Consolidated Subsidiaries at End of the Previous Fiscal Year Land Transportation 1,000 or more From ¥100 billion to less than ¥1 trillion From 10 to less than 50 4. Policy for Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder – – 5. Special Circumstances Which May Have Material Impact on Corporate Governance II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Supervision in Management 1. Organizational Composition and Operation Organization Form Company with audit & supervisory board members [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board 19 1 year Number of Directors Appointment of Outside Directors Number of Outside Directors Number of Independent Officers Designated from among Outside Directors Outside Directors’ Relationship with the Company (1) Name Attribute Yoshinori Terajima Tamaki Kakizaki Sawako Nohara From another company Academic From another company Chairman (excluding the case where the person concurrently serves as President) 9 Appointed 3 3 Relationship with the Company* f g h d e c i b j a 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; and “” when a close relative of the director fell under the category in the past a. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary b. Non-executive director or executive of the parent of the Company c. Executive of a fellow subsidiary of the Company 7 d. Party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof f. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a h. Executive of a client or supplier of the Company (which does not correspond to any of d., e., or f.) (the i. Executive of a corporation to which outside officers are mutually appointed (the director himself/herself corporation) only) director himself/herself only) j. Executive of a corporation that receives a donation from the Company (the director himself/herself only) k. Other Outside Directors’ Relationship with the Company (2) Designation as Independent Officer Name Yoshinori Terajima Supplementary Explanation of the Relationship Mr. Terajima was formerly serving as Director of Nippon Life Insurance Company (retired in July 2018), with which the Company has transactions such as borrowing of funds. However, because the amount of borrowing accounts for less than 10% of the total amount of borrowing of the Company, the company does not fall under the criteria, “a major lender of the Company” (a financial institution with which the Company was relying on, with no substitute, for its funds procurement at the end of the most recent business year) as stipulated in the “Independence Criteria for Outside Officers.” At the conclusion of the Annual General Meeting of Shareholders held on June 28, 2018, the Company abolished countermeasures against large-scale purchases of the Company’s shares (Takeover Defense Measures). However, in order to appropriately receive advice on takeover risks, etc. based on abundant experience after the abolition, the Company has set up the Corporate Value Analysis Committee made up of persons who are independent of the Company. She has served as a member of the Corporate Value Analysis Committee since June 2019. 8 Reasons for Appointment Mr. Terajima has once been involved in the management of a major life insurance company and obtained abundant experience and broad insight related to fund management and investment projects, etc., and hence, the Company expects him to play a role in leveraging his experience and insight in his duties in supervising business execution, etc. of the Company. The Company considers that he has properly performed his duties as Outside Director of the Company since June 2018 and hence, appointed him again as an Outside Director. He is unlikely to have a conflict of interest with general shareholders, and has no special interests with the Company. Therefore, the Company designated him as an independent officer. Ms. Kakizaki is a university professor specialized in the field of internal controls and internal audit, an outside officer of companies including an airport terminal building operation company, and also a former outside officer of a major pharmaceutical company. She has obtained abundant experiences and broad insights in these areas and hence, the Company expects her to play a role in leveraging her experience and insight in her duties in supervising business execution, etc. of the Company. The Company considers that she has properly performed her duties as Outside Director of the Company Tamaki Kakizaki Name Designation as Independent Officer Supplementary Explanation of the Relationship Sawako Nohara ――― Reasons for Appointment since June 2020 and hence, and appointed her again as an Outside Director. She is unlikely to have a conflict of interest with general shareholders, and has no special interests with the Company. Therefore, the Company designated her as an independent officer. Ms. Nohara has abundant experience and broad insight as manager of a company related to business and marketing strategies in the IT business, as an outside officer of a major pharmaceutical company, etc. and as an expert member of government committees. The Company expects her to play a role in leveraging her experience and insight in her duties in supervising business execution, etc. of the Company, and hence, the Company judges her to be qualified to serve as a Director of the Company and appointed her as an Outside Director. She is unlikely to have a conflict of interest with general shareholders, and has no special interests with the Company. Therefore, the Company designated her as an independent officer. Voluntary Establishment of Committee(s) Equivalent to Nominating Committee or Remuneration Committee Established Committee’s Name, Composition, and Chairperson’s Attributes Committee’s Name Total Committee Members Full-time Members Inside Directors Outside Directors Outside Experts Other Chairperson Committee Equivalent to Nominating Committee Nomination and Remuneration Advisory Committee Committee Equivalent to Remuneration Committee Nomination and Remuneration Advisory Committee 5 5 0 0 2 2 3 3 0 0 0 0 Outside Director Outside Director Supplementary Explanation In order to improve the transparency, objectivity and accountability of the Board of Directors in the decisions of the appointments, remuneration, and successor-development plan of Directors, the Nomination and Remuneration Advisory Committee, the majority of which consists of Independent Outside Directors and which is chaired by an Independent Outside Director, has been established as an advisory body to the Board of Directors. 9 [Audit & Supervisory Board Members] Establishment of Audit & Supervisory Board Maximum Number of Audit & Supervisory Board Members Stipulated in Articles of Incorporation Number of Audit & Supervisory Board Members 4 Established 5 Cooperation among Audit & Supervisory Board Members, Accounting Auditor and Internal Audit Department The Company’s Audit & Supervisory Board Members meet with the Accounting Auditor on a regular basis to discuss such matters as the audit plan for the fiscal year and audit results. In addition, Audit & Supervisory Board Members may attend the audits of the Accounting Auditor at any time. Audit & Supervisory Board Members and the Internal Audit Department are also in constant communication for information gathering, reporting on the implementation status of internal audits, etc. Appointed Appointment of Outside Audit & Supervisory Board Member Number of Outside Audit & Supervisory Board Members Number of Independent Officers Designated from among Outside Audit & Supervisory Board Members 3 3 Outside Audit & Supervisory Board Members’ Relationship with the Company (1) Name Attribute Akira Moriwaki Takashi Suetsuna Osamu Sudoh From another company Other Attorney at law Relationship with the Company* g i j h d e f k c a b 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 audit & supervisory board member presently falls or has recently fallen under the category; and “” when a close relative of the audit & supervisory board member fell under the category in the past a. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary b. Non-executive director or accounting advisor of the Company or its subsidiary c. Non-executive director or executive of the parent of the Company d. Kansayaku of the parent of the Company e. Executive of a fellow subsidiary of the Company f. Party whose major client or supplier is the Company or an executive thereof g. Major client or supplier of the Company or an executive thereof h. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an audit & supervisory board member i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation) j. Executive of a client or supplier 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 corporation to which outside officers are mutually appointed (the audit & supervisory board l. Executive of a corporation that receives a donation from the Company (the audit & supervisory board member himself/herself only) member himself/herself only) 10 Outside Audit & Supervisory Board Members’ Relationship with the Company (2) m. Other Name Designation as Independent Officer Supplementary Explanation of the Relationship Mr. Moriwaki has once served as Managing Executive Officer of Mizuho Trust & Banking Co. Ltd. (retired April 2013), with which the Company has transactions such as borrowing of funds. However, because the amount of borrowing accounts for less than 10% of the total amount of borrowing of the Company, the company does not fall under the criteria, “a major lender of the Company” (a financial institution with which the Company was relying on, with no substitute, for its funds procurement at the end of the most recent business year) as stipulated in the “Independence Criteria for Outside Officers.” Akira Moriwaki Reasons for Appointment Mr. Moriwaki has once served as an executive officer responsible for corporate planning operations and asset management of major financial institution, and as the president of an asset management company, obtaining abundant experience and broad insight into these areas. He serves as Outside Audit & Supervisory Board Member of the Company since June 2018. The Company considers that he has properly performed his duties in supervising business management and hence, appointed him as an Outside Director. He is unlikely to have a conflict of interest with general shareholders, and has no special interests with the Company. Therefore, the Company designated him as an independent officer. Mr. Suetsuna has served as Chief of Kanagawa Prefectural Police Headquarters and Deputy Superintendent General of the Tokyo Metropolitan Police Department, and as a former outside officer of a major general trading company, has abundant experience and broad insights in these areas. He serves as Outside Audit & Supervisory Board Member of the Company since June 2016. The Company considers that he has properly performed his duties in auditing business management and hence, appointed him as an Audit & Supervisory Board Member. He is unlikely to have a conflict of interest with general shareholders, and has no special interests with the Company. Therefore, the Company designated him as an independent officer. Takashi Suetsuna – 11 Name Designation as Independent Officer Osamu Sudoh Supplementary Explanation of the Relationship At the conclusion of the Annual General Meeting of Shareholders held on June 28, 2018, the Company abolished countermeasures against large-scale purchases of the Company’s shares (Takeover Defense Measures). However, in order to appropriately receive advice on takeover risks, etc. based on abundant experience after the abolition, the Company has set up the Corporate Value Analysis Committee made up of persons who are independent of the Company. He has served as a member of the Corporate Value Analysis Committee since June 2019. Reasons for Appointment Mr. Sudoh has high expertise in corporate legal affairs as an attorney at law and serves as an outside officer of total entertainment company, etc., and obtained abundant experiences and broad insight into these areas. He serves as Outside Audit & Supervisory Board Member of the Company since June 2016. The Company considers that he has properly performed his duties in auditing business management and hence, appointed him as an Audit & Supervisory Board Member. He is unlikely to have a conflict of interest with general shareholders, and has no special interests with the Company. Therefore, the Company designated him as an independent officer. [Independent Officers] Number of Independent Officers 6 Matters relating to Independent Officers The Company designates all officers qualified to be independent officers as such. In order to ensure the independence of Outside Officers at the Company in substantial terms, the Company stipulates “Independence Criteria for Outside Officers,” and evaluates the independence of Outside Officers in accordance with these standards. [Independence Criteria for Outside Officers] Outside Directors or Outside Audit & Supervisory Board Members of the Company must not fall under any of the following categories if they are to be considered independent. 1. An executing person of the Company and its group companies (hereinafter, collectively the “Company”) 2. A major shareholder of the Company, or an executing person of a company that is a major shareholder of 3. A person who is a major lender of the Company, or an executing person of a company that is a major the Company lender partner 4. A person for whom the Company is a major trading partner or an executing person of a company for which 5. A person who is a major trading partner of the Company or an executing person of a company which is a the Company is a major trading partner major trading partner of the Company 6. A person receiving donations or financial assistance in an amount exceeding a certain threshold from the Company, or a director or other executing person of a corporation, or group such as a union, etc. receiving donations or financial assistance in an amount exceeding a certain threshold from the Company 7. An attorney-at-law, certified accountant, tax accountant or consultant who receives money or other property benefits in an amount exceeding a certain threshold from the Company other than director remunerations 8. A person who belongs to a corporation, such as a law firm, audit corporation, tax accountant corporation, or consulting firm; or a group, such as a union that receives money or other property benefits in an amount exceeding a certain threshold from the Company 9. An outside director or an outside Audit & Supervisory Board Member of another company with which the 12 Company holds an outside director mutual appointment relationship 10. A person who falls under the category described in Item 1 above for the past 10 years, or a person who falls under the category described in any of the Items 2 to 9 above for the past 5 years 11. If a person with an important position falls under the category described in any of the Items 1 to 9 above, then the spouse or relative within the second degree of kinship of such person (Notes) 1. The term “executing person” refers to an “executive director, executive officer (shikkoyaku or shikkoyakuin), or person or employee equivalent to this.” 2. The term “major shareholder” in Item 2 means “a person (or a company) who holds 10% or more of the total voting rights of the Company directly or indirectly at the end of the most recent business year.” 3. The term “a person (or a company) who is a major lender of the Company” in Item 3 means “a financial institution or other large creditor with which/whom the Company was relying on, with no substitute, for its funds procurement at the end of the most recent business year.” 4. The term “a person (or a company) for whom/which the Company is a major trading partner” in Item 4 means a “person (or a company) who has received payments from the Company in an amount equivalent to 2% or more of the consolidated annual net sales of that person (or company) in the latest business year.” 5. The term “a person (or a company) who is a major trading partner of the Company” in Item 5 means a “person (or a company) who has made payments to the Company in an amount equivalent to 2% or more of the consolidated annual net sales of the Company in the latest business year.” 6. The term “a certain threshold” in Items 6 and 7 means “10 million yen per year.” 7. The term “a certain threshold” in Item 8 means “2% or more of the total net sales of the corporation, or group such as a union in the latest business year.” 8. The term “outside director mutual appointment relationship” Item 9 means “a relationship where the executing person of the Company in the latest business year is an outside director or an outside Audit & Supervisory Board Member of another company and an executing person of that other company is an outside director or an outside Audit & Supervisory Board Member of the Company.” 9. The term a “person with an important position” in Item 11 means “a person holding a position of general manager or higher with authority equivalent to that of an executing person.” 10. Any matters not stated herein that may significantly affect the judgment of independence shall be managed appropriately. Implementation of Measures to Provide Incentives to Directors Measures other than performance-linked remuneration and share options [Incentives] Supplementary Explanation The Company has introduced a Remuneration Plan for Officers that emphasizes not only short-term operating performance, but also contributions to raising corporate value and operating performance over the medium- to long-term, as well as having values in common with those of shareholders. The Director remuneration consists of fixed remuneration and the Representative Director remuneration (fixed remuneration and performance-linked remuneration). In addition to fixed remuneration of an amount determined by position, Executive Officer remuneration consists of a bonus of an amount determined in relation to operating performance, etc., for each fiscal year. Furthermore, a stock remuneration plan was introduced for Inside Directors and Executive Officers in order to cultivate shared values with shareholders and encourage managerial practices with a focus on improving corporate value and operating performance over the long-term. Recipients of Share Options Supplementary Explanation – [Director Remuneration] Disclosure of Individual Directors’ Remuneration No individual disclosure 13 Supplementary Explanation [FY2020] Total amount of remuneration for Directors and Audit & Supervisory Board Members 1. Portion from April 2020 to June 2020 (before introduction of the stock remuneration plan) Thirteen Directors: ¥89 million Four Audit & Supervisory Board Members: ¥17 million 2. Portion from July 2020 to March 2021 (after introduction of the stock remuneration plan) Twelve Directors: ¥218 million Four Audit & Supervisory Board Members: ¥52 million (1) The amount of remuneration paid to Directors was approved as ¥550 million or less per year (¥30 million or less of which to be paid to Outside Directors and which excludes employee salaries of Directors concurrently serving as employees) at the 93rd Annual General Meeting of Shareholders held on June 27, 2014. At the 97th Annual General Meeting of Shareholders held on June 28, 2018, it was resolved to revise the amount of remuneration paid to Outside Directors to ¥75 million or less per year, while keeping the total annual limit unchanged at ¥550 million. (2) The amount of remuneration paid to Audit & Supervisory Board Members of the Company was resolved as ¥95 million or less per year at the 93rd Annual General Meeting of Shareholders held on June 27, 2014. (3) Of the foregoing amount, the amount of remuneration paid to six Outside Officers was ¥68 million. (4) The above 1. includes two Directors (including one Outside Director) who retired at the conclusion of the 99th Annual General Meeting of Shareholders held on June 26, 2020. (5) Since the introduction of the executive officer system, there has been no payment of employee salaries of Directors. Policy for Determining Remuneration Amounts or Calculation Methods Thereof Established Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof 1. Basic Policy for Determining Amounts of Remuneration, etc. or Calculation Methods Thereof As a corporate group supporting residents and visitors around the railway lines, the Group’s operations are characterized by having its members cooperate with each other to generate synergies in order to develop the areas around its railway lines while ensuring that safety and security are the highest priorities. Taking into consideration the unique nature of the Group’s operations, remuneration for Directors of the Company is determined emphasizing contributions in raising corporate value and operating performance over the medium- to long-term, and having values in common with those of shareholders, in addition to the short-term operating performance. Furthermore, when determining remuneration, employee salaries, trends at other companies, survey data from external research organizations and other factors are taken into account. 2. Policy for Determining Amounts of Individual Remuneration (1) Fixed remuneration and Representative Director remuneration (fixed remuneration) i Fixed remuneration Directors: Determined based on a comprehensive consideration of societal standards, management activities, etc. Executive Officers: Determined based on a comprehensive consideration of societal standards, management activities, balance with employee salaries, etc. ii Representative Director remuneration (fixed remuneration) Representative Director and Chairman: Determined based on a comprehensive consideration of societal standards, responsibilities as Representative Director, role as Chairman specialized for the supervisory function of business execution, etc. Representative Directors other than Representative Director and Chairman: Determined based on a comprehensive consideration of societal standards, responsibilities as Representative Director, management activities, etc. (2) Representative Director remuneration (performance-linked remuneration) and bonus i Representative Director remuneration (performance-linked remuneration) Representative Directors other than Representative Director and Chairman: Determined based on a comprehensive quantitative and qualitative evaluation and an evaluation of operating performance. ii Bonus 14 Executive Officers: Determined based on a comprehensive quantitative and qualitative evaluation and an evaluation of operating performance. (3) Stock remuneration Inside Directors and Executive Officers: According to the Officer Stock Benefit Regulations established by the Company’s Board of Directors, the Company grants points to each officer, and the Company’s shares, etc. are delivered to each officer upon their retirement, in principle, according to the number of points granted. When the Company’s shares are delivered, each point granted to Directors, etc. is converted into one share of the Company’s common shares. For information about the “Policy for Determining the Content of Remuneration, etc. for Individual Directors and Executive Officers,” please refer to the Corporate Governance Guidelines posted on the Company’s website (https://www.keikyu.co.jp/ir/ policy/pdf/governance_guideline.pdf). [Supporting System for Outside Directors and/or Outside Audit & Supervisory Board Members] For Outside Directors, the General Affairs Department assists in practical matters related to meetings of the Board of Directors, the General Meeting of Shareholders, and other general business issues. For Outside Audit & Supervisory Board Members, staff independent of business execution are assigned, and assist in conveying information and audit operations. [Status of Persons Who Have Retired from a Position Such as Representative Director and President] Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company Name Title/Position Responsibilities Masaru Kotani Advisor Tsuneo Ishiwata Advisor Toshihiro Matsumoto Counselor Operations outside the Company such as financial community activities Operations outside the Company such as financial community activities Responding to requests for advice from the Company Working Form and Conditions (Full-time/Part-time, Paid/Unpaid, etc.) Date of Retirement from Position Such as President Term of Office Part-time and paid June 26, 2015 1 year Part-time and paid June 29, 2021 1 year Full-time and paid – 1 year Total Number of Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company 2 Other Matters The “Date of Retirement from Position Such as President” in “Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company” above indicates the date at which the person in question retired from office as Director or Audit & Supervisory Board Member. Appointment, dismissal and remuneration for Advisors and Counselors, are determined by the Board of Directors after deliberation by the Nomination and Remuneration Advisory Committee, based on rules prescribed for advisors and counselors. Advisors and Counselors are not involved in the management of the Company. 15 2. Matters on Functions of Business Execution, Audit and Supervision, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System) The Company believes that the management of the Board of Directors, etc. is performed appropriately and in a timely fashion, and that decision-making is conducted swiftly and correctly, and has thus maintained the existing Audit & Supervisory Board system. The Board of Directors, which consists of nine individuals, including three Outside Directors, decides and reports on important business matters and other matters prescribed by laws and regulations or by the Articles of Incorporation, and also supervises the execution of duties. Also, in order to improve the transparency, objectivity and accountability of the Board of Directors in the decisions of the appointments, remuneration, and successor-development plan of Directors, the Nomination and Remuneration Advisory Committee, the majority of which consists of Independent Outside Directors and which is chaired by an Independent Outside Director, has been established as an advisory body to the Board of Directors. Furthermore, for the purpose of achieving the strengthening of the supervisory function of management by the Board of Directors and the strengthening of the business execution functions required of the business executing divisions, the Company shall introduce an executive officer system, and at the meetings of the Group Management Committee, made up of Executive Officers and full-time Audit & Supervisory Board Members, important items such as business plans shall be formulated and operation plans, etc. shall be decided. In addition, the Audit & Supervisory Board, which is composed of four members, including three Outside Audit & Supervisory Board Members, reports on the state of the audits being conducted by each Audit & Supervisory Board Member, and forms audit opinions. In addition to auditing the business situation of the Group and conducting audits of the legality of the execution of business by Directors, each Audit & Supervisory Board Member attends important meetings of the Board of Directors and the Group Management Conference and states their opinion as required. The Audit & Supervisory Board Members and the Representative Director and President meet periodically in relation to execution of duties and audits, and actively exchange opinions on the issues that the Company should confront, the environment for audits by Audit & Supervisory Board Members, important audit issues and other matters. Furthermore, the Audit & Supervisory Board Members hold periodic meetings with the Accounting Auditor and take other measures to maintain close cooperation, while actively exchanging opinions and information. The term of service for Directors is set at one year, in order to clarify the business responsibilities of the Directors for the fiscal year, and to enable the construction of a business structure that allows prompt response to changes in the business environment. In recognition of its social responsibility as a company whose business is centered on its role as a public transport institution, the Company maintains a Board of Directors consisting mainly of Directors with a detailed understanding of the Group’s business and strategy, in order to realize improvements in corporate value over the medium- to long-term by ensuring the safety of products and services, which is a prerequisite for remaining in business. Having Outside Officers participate in the business from an independent standpoint results in the promotion of a more transparent and objective corporate governance system, which is the rationale for the adoption of the above-mentioned structure. For the Group as a whole, the Group Presidents Meeting, attended by presidents of the various Group companies, Executive Officers and General Managers, etc. of the Company, is held periodically with the aims of discussing ways to more thoroughly inculcate business policies for the Group as a whole, and of sharing business information. For internal audits, the Inquiry and Auditing Group Operating Department (14 members), an organization that reports directly to the President, conducts audits of the internal control system across all operations of the Group, as well as working to reinforce coordination with related departments. During audits by Audit & Supervisory Board Members, two dedicated staff assist in the duties of the Audit & Supervisory Board Members. With regard to accounting audits, Ernst & Young ShinNihon LLC, with which the Company has concluded an audit agreement, seeks to improve the accuracy and transparency of accounting processes through periodic audits and other measures. The three certified public accountants that executed these duties during the fiscal year under review were Yasushi Eguchi (five consecutive years of auditing), Masanobu Saito (one consecutive year of auditing), and Koji Kojima (five consecutive years of auditing). The number of assistants for the accounting audit operations came to 36, of which nine were certified public accountants, with 27 working in other capacities. The Inquiry and Auditing Group Operating Department and the Audit & Supervisory Board Members are in constant communication in relation to such matters as information gathering and the state of progress for internal audits. Audit & Supervisory Board Members meet with the Accounting Auditor on a regular basis to discuss such matters as the audit plan for the fiscal year and audit results. In addition, Audit & Supervisory 16 Board Members may attend the audits of the Accounting Auditor at any time. The Accounting Auditor and the Inquiry and Auditing Group Operating Department share information on the state of progress of internal audits, etc., by periodic meetings and other means. As described above, the Company has put in place a system characterized by mutual links between internal audits, audits by Audit & Supervisory Board Members, and accounting audits. In addition to this, the Company’s full-time Audit & Supervisory Board Members and the Group company Audit & Supervisory Board Members hold periodic Group Audit & Supervisory Board Member Meetings to further enrich and strengthen Group audits. 3. Reasons for Adoption of Current Corporate Governance System The Company believes that the management of the Board of Directors, etc. is performed appropriately and in a timely fashion, and that decision-making is conducted swiftly and correctly, and has thus maintained the existing Audit & Supervisory Board Member system. The Board of Directors, which consists of nine individuals, including three Outside Directors, meets once a month in principle to decide and report on important business matters and other matters prescribed by laws and regulations or by the articles of incorporation, and also supervises the execution of duties. Furthermore, the Group Management Committee, made up of Executive Officers and full-time Audit & Supervisory Board Members shall hold meetings in principle three times every month where a basic policy of important items concerning management and matters such as individual implementation plans for each division shall be decided. In addition, the Audit & Supervisory Board, which is composed of four members, including three Outside Audit & Supervisory Board Members, meets at least once every quarter in principle to report on the state of the audits being conducted by the various Audit & Supervisory Board Members, and form the audit opinions of the Audit & Supervisory Board. In addition, in order to improve the transparency, objectivity and accountability of the Board of Directors in the decisions of the appointments, remuneration, and successor-development plan of Directors, the Nomination and Remuneration Advisory Committee, the majority of which consists of Independent Outside Directors and which is chaired by an Independent Outside Director, has been established as an advisory body to the Board of Directors. III. Implementation of Measures for Shareholders and Other Stakeholders 1. Measures to Energize General Meeting of Shareholders and Smooth Exercise of Voting Rights Early Notification of General Meeting of Shareholders Allowing Electronic or Magnetic Exercise of Voting Rights Participation in Electronic Voting Platform and Other Efforts to Enhance the Voting Environment for Institutional Investors Providing Convocation Notice in English (Translated Fully or Partially) Other Supplementary Explanations Notice of Annual General Meeting of Shareholders held in June 2021 sent out 3 weeks before date of the Meeting. Since the Annual General Meeting of Shareholders held in June 2011, the Company has allowed electronic or magnetic exercise of voting rights. Since the Annual General Meeting of Shareholders held in June 2011, the Company has participated in the electronic voting platform for institutional investors operated by ICJ, Inc. Since the Annual General Meeting of Shareholders held in June 2015, the notice for the Annual General Meeting of Shareholders is partially translated into English and posted on the Tokyo Stock Exchange’s website and the Company’s website. Since the Annual General Meeting of Shareholders held in June 2015, from the viewpoint of providing information promptly, the notice for the Annual General Meeting of Shareholders has been posted on the Tokyo Stock Exchange’s website and on the Company’s website four weeks before the event is held, and before the materials are mailed. The Company is also taking initiatives to revitalize the General Meeting of Shareholders by such means as more visual presentations of the Business Report, as well as taking steps to allow smoother exercise of voting rights. The results of exercise of the voting rights are posted on the Company’s website (available in Japanese only). 17 2. IR Activities Preparation and Publication of Disclosure Policy Regular Investor Briefings for Individual Investors Regular Investor Briefings for Analysts and Institutional Investors Posting of IR Materials on Website Establishment of Department and/or Manager in Charge of IR Other URL: http://www.keikyu.co.jp/company/ir/stock/meeting.html Supplementary Explanations Supplementary Explanations The Company has formulated the “Disclosure Policy,” posted on the Company’s website (available in Japanese only). URL: https://www.keikyu.co.jp/ir/policy/disclosure.html Online briefings for individual investors are held. Explanation by Representative Yes Yes Investor briefings for analysts and institutional investors are held in May and November of each year, in which the presentations are performed primarily by the President and the Executive Officer in charge of Management Strategy Department. IR materials disclosed include financial results, supplementary materials on the financial results, other timely disclosure materials, securities re