アシックス（7936） – [Delayed]Corporate Governance Report

Note: This document is a translation of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation. President, CEO and COO, Representative Director: Yasuhito Hirota March 29, 2022 ASICS Corporation Contact: Corporate Legal Department +81(0)50-1741-0828 Stock Ticker No.: 7936 URL: https://corp.asics.com/jp/ Corporate Governance Report The status of our corporate governance is as follows: I. Basic Policy on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information 1. Basic Policy The Company aims for sustainable growth of the Company and its subsidiaries and affiliates (“Group”) and long-term continuous improvement of corporate value by building firm relations of trust with our stakeholders including our shareholders, customers, the society, and our employees under the founding philosophy “ASICS SPIRIT.” In addition, the Company aims to contribute to the sustainable society by continuously providing attractive and eco-friendly products and services that please our customers under the Group-wide value of “Sound Mind, Sound Body” that embodied the Company’s founding philosophy. For this end, the Company continues to endeavor to build corporate governance that realizes healthy and highly transparent management, to enhance supervision of management, the audit function, internal control, the rigorous application of compliance, the improvement of transparency of management activities, etc. [Reasons for not implementing each principle of the Corporate Governance Code] The Group implements all of the principles set forth in the Corporate Governance Code (Revised in June 2021; including principles for the Prime markets applicable from April 2022). [Disclosure Based on Each Principle Set Forth in the Corporate Governance Code] 1. Management Philosophy [Principle 3-1(i)] The Company will operate healthy and highly transparent management, and will continuously improve corporate value in long term under the founding spirit of “ASICS SPIRIT” which includes the following founding philosophy, spirit, and visions, etc. Founding philosophy “Anima Sana In Corpore Sano: A sound mind, in a sound body.” 1 ASICS Spirit 1. Provide valuable products and services through sport to all our customers. 2. Fulfill our social responsibility and help improve conditions for communities around the world. 3. Share profits brought by our sound services with our shareholders, communities and employees. 4. Maintain a spirit of freedom, fairness and discipline, respectful of all individuals. Our Vision Create Quality Lifestyle through Intelligent Sport Technology Sportsman Spirit 1. A sportsman obeys the rules. 2. A sportsman commits to the spirit of fair play. 3. A sportsman always tries his best 4. A sportsman must compete until his team achieves the highest victory. 5. A sportsman must always continue to expand the limits of capabilities. 6. A sportsman should get up if he falls. He must keep trying until he succeeds. 2. Management Strategy [Principle 3-1(i)] (1) “VISION2030” and “Mid-Term Plan 2023” The Company’s “VISION2030” sets as follows: Keeping the founding philosophy of “A sound mind in a sound body.” as the core and aiming to realize the world where people all over the world will be involved in exercises and sports throughout their life and stay mentally and physically healthy, the Company aims, as its long-term policy, to provide products and services that will contribute to improve physical and mental health from a wider perspective. The Company is not merely employing the founding philosophy as a slogan, but rather putting it at the heart of its business, and envisions to “create a life style that everyone is satisfied mentally and physically through exercises and sports throughout their life.” In order to realize such vision, the Company will further develop its business model and will deploy three business domains simultaneously in 2030: (i) “Product” which are the current source of profit; (ii) “Facility and Community” to provide environments for sports; and (iii) “Analysis and Diagnosis,” soft services including provision of programs based on analysis and diagnosis utilizing data. The Company plans to expand its businesses in all business domains under the common themes, “digital,” “personal,” and “sustainable.” 2 As an important first three-year plan to realize “VISION2030,” the Company has set “Mid-Term Plan 2023.” In “Mid-Term Plan 2023” as well, “digital” and “sustainable” centered for realization of “VISION2030” are set as strategic plans, and it is made clear that the Company’s policy is to improve its profitability and to build stable financial base. To this end, (i) “Expand profit driver,” (ii) “Transform to profitable business,” and (iii) “Reinforce business foundation” are set as strategic priorities. Specifically, in (i) “Expand profit driver,” the Company aims to further expand the already profitable businesses (including performance running, Onitsuka Tiger, China business); in (ii) “Transform to profitable business,” the Company aims to transform businesses that are currently not fully profitable but are potentially profitable (including apparel business, Japan/North America/Europe); and in order to (iii) “Reinforce business foundation,” the Company will focus on creating innovation based on “digital, personal and sustainable,” reforming supply chain utilizing digital tools, strengthening and revitalizing human capital and diversity & inclusion. The Company will strengthen management foundation by further deepening category system, financial strategies, and balance sheet management. The Company will ensure to achieve the targets in “Mid-Term Plan 2023” through steady execution and monitoring in the governance system transformed last year. Furthermore, the Company will reinforce business foundation by further deepening the category system, financial strategies, and balance sheet management. Under the governance system newly transformed from last year, the Company will ensure to meet goals of these “Mid-Term Plan 2023” through steady implementation and monitoring. For details of “VISION2030” and “Mid-Term Plan 2023,” please see the Company’s website. ・VISION2030 and Mid-Term Plan 2023: https://corp.asics.com/en/investor_relations 3 4 (2) Efforts on Sustainability [Supplementary Principle 3-1-3] The Company’s spirit towards sustainability is summarized in the phrase “Sound Mind, Sound Body.” To continue to realize this into the future, it will be necessary to resolve both social issues and environmental issues simultaneously. “Sustainability” is one of the Company’s strategic targets. This means that “Sustainability” is not a theme of just one department, but it is a theme that our business in its entirety, and each and every employee working in the Company should make effort as his/her own issues. In order to encompass such “Sustainability” further deeply in our business, the Company is promoting the Company-wide efforts such as by holding a semi-annual meeting of the Sustainability Committee chaired by President, and by including “Sustainability” in individual targets in employee performance evaluation. The Company reviewed our materiality (material topics) in 2021 to concentrate on nine material topics themed around “People/Society,” “Products and Services,” “Environment,” and “Governance.” Among these topics, “mental and physical health” has been unanimously identified as the most material issue for ASICS, and all other material issues were essential to support “mental and physical health.” The Company’s Sustainability framework stands on two main pillars: “Contribution to People and Society” to help people to improve their mental and physical fitness and health through our business, and “Environmental Consideration” to protect the global environment where our future generations can enjoy sports. (i) Contribution to People and Society ASICS is thoroughly ensuring labor environment that is safe, hygienic, and respects human rights throughout its entire supply chain including its suppliers. The Company was one of the first Japanese companies to join the global initiatives such as the SAC, Sustainable Apparel Coalition, an international sustainability alliance for the fashion industry, and the Better Work Program of the International Labor Organization (“ILO”), and is promoting its efforts by the global standards. With regard to our suppliers in more than 20 countries around the globe mainly in the South East Asia, the Company is implementing a supply chain management program in compliance with the international standards of the ILO, etc. (ii) Environmental Consideration ASICS supports the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) and, as the first sporting goods company to set “Science Based Target,” the Company is promoting its effort towards the goal of net-zero carbon emissions aiming to keep the temperature rise due to global warming under 1.5˚C. As for our products, in addition to the fact that the Company uses recycled materials for more than 90% of new performance running shoe products starting from 2021, the Company is promoting recycle-based manufacturing aiming that the main material, polyester, will eventually be 100% recycled material for all products, including launching shoes and wear products made of recycled apparel and textile waste. For details of our sustainability efforts, please see the Company’s website. ・VISION2030, Mid-Term Plan 2023: https://corp.asics.com/en/investor_relations ・Sustainability website: https://corp.asics.com/en/csr ・Sustainability Report 2020: https://corp.asics.com/en/csr/csr_reporting ・Integrated Report 2020: https://corp.asics.com/en/investor_relations/library/integrated_report 5 • • (3) HR Strategy (i) Investment in Human Capital [Supplementary Principle 3-1-3] In the intensifying global competition, the Company believes that “Organizational Diversity” is essential in order to respond accurately to the diversifying market needs and to continue to create new business and additional values. To realize “VISION2030,” the Company aims to enhance its management foundation through “Organizational Diversity,” by “strengthening and utilizing human capital and promoting diversity & inclusion.” In Mid-Term Plan 2023, the Company will make efforts from three viewpoints in order to “realize more productive work-style by strengthening and utilizing human capital”: 1. Realize “Sound Mind, Sound Body” by employees Establishing satisfying-work corporate culture by promoting advanced work-style reform through digital transformation. 2. Develop talent to lead the business globally Seek from among employees the next generation management leaders, and enhance investment in developing human capital. 3. Diversity & inclusion • Utilize the diversity of employees to cultivate a culture where all opinions can be freely exchanged and respected to further enhance the Company. • Ensure 35% of all management positions are filled by women by 2023. The Company has been focusing on developing people based on the belief of our founder, Kihachiro Onitsuka, “A company is its people.” The Company will further continue its efforts in hiring human capital who will realize global management and diversity merits through continuously hiring new graduates and mid-career workers as well as handicapped, and in its human capital development and growth enhancement policies through cultivating a “culture of growth and development” by Career Development Support, Newly Promoted Training Program, and Global Leader Training Program, etc. For more details of HR Strategies, please see the Company’s website: 6 ・Application and Training website: https://corp.asics.com/en/career ・Learning & Development Program website: https://corp.asics.com/en/career/training/core (ii) Ensuring diversity within the Company including promotion of women’s participation [Supplementary Principle 2-4-1] As mentioned in the above section on “Investment in Human Capital,” the Company is aiming to foster satisfying-work corporate culture where diverse employees realize “Sound Mind, Sound Body.” For this end, the Company has the following views and targets, and is in the following situation with regard to promoting women, non-Japanese, and mid-career hires. The Company ensures diversity of its core human capital by actively developing and promoting female employees to accurately respond to the diverse needs of the market, among other things. The Company actively promotes non-Japanese employees as well in order to enhance global management system. In addition, the Company actively promotes employees with prior career (mid-career hired employees) who have professional skills in order to continue creating new businesses and new added values among other things. • Increase the ratio of female managers to 20% by 2023 • Maintain the current ratio (stated below) or hopefully increase the ratio of non-Japanese and mid-career hired employees • Ratio of female managers: 14.5% • Ratio of non-Japanese managers: 4.4% • Ratio of mid-career hired managers: 36.3% 1. The Company will promote Diversity and Inclusion (“D&I”) as its company-wide strategy. 2. The Company will provide its executives and managements with training opportunities on D&I (such as a session on unconscious bias). 7 • 3. The HR and each business division will cooperate in implementing OFF-JT and OJT that will promote further empowerment and development of female employees. 4. Actively develop and promote talented human capital regardless of their background (female, non-Japanese, mid-career hired). (4) Intellectual Property Strategy [Supplementary Principle 3-1-3] As mentioned in the Company’s vision “Create Quality Lifestyle through Intelligent Sport Technology,” technology is the source of competitive power of the Company’s businesses, and the Company is working on its businesses utilizing the latest technologies so as to provide products and services with which people of the world can realize healthy and happy life. The Company does not just protect its technologies with strong patents, but it also elevates them into “intellectual technologies” and strategically attain and utilize them as important tools that would strategically contribute to improve the Company ’ s corporate value. This encompasses business suggestions and management suggestions to ensure competitiveness in the aspect of intellectual properties though analysis of competitors’ strategies using IP land scape, not only traditional protection of rights by obtaining patents and trademarks for products developed by the Company. The Company continues to implement so-called “Intellectual Property Management” integrating these intellectual properties and management. To further promote this “Intellectual Property Management,” starting from 2022, the Company established “IP Strategy Committee” as an advisory board directly controlled by President composed of company-wide management executives (chief executives of each department). Through this company-wide organization, the Company plans to regularly discuss and incorporate into its management the intellectual strategies concerning the three themes of digital, personal, and sustainable raised in the Mid-Term Plan. The Company believes that the “ASICS” brand is the strongest intellectual property of the Company above all else, and will continuously aim to strengthen its intellectual property strategies based on the recognition that implementing “Intellectual Property Management” will protect the brand and improve the brand value, and will strategically contribute to improve the corporate value. 3. Basic Ideas and Basic Policy on Corporate Governance [Principle 3-1 (ii)] The Group has established the “Basic Policy on Corporate Governance” in accordance with the “ASICS SPIRIT” and “ASICS CSR Policy” to realize sustained improvement of corporate value at a global level. For details of Basic Policy on Corporate Governance, please see the Company ’ s website: https://corp.asics.com/en/investor_relations/management_policy/corporate_governance 8 4. Roles and Responsibilities of the Board of Directors [Supplementary Principle 4-1-1] The Board of Directors clearly sets forth the responsibilities of each Director, and the procedures for the performance of their duties in the Rules on the Segregation of Duties and the Limits of Authority or by the assigning of duties to Directors, etc. The Board of Directors also ensures that the Representative Director, and Executive Officers perform their duties. Board of Directors meetings are held regularly once a month to determine matters that legally require a resolution of the Board of Directors, important management policies of the Group, and important operational performance issues, as well as to supervise the performance of duties by Directors and Executive Officers, among other things. Based on the long-term vision and the mid-term plan established by the Board of Directors and the management plan for each business year, the Representative Director and Executive Officers set objectives for the whole company and also detailed objectives for each department and each subsidiary, and manage the achievement of objectives on a monthly and quarterly basis. In order to discuss the matters requiring a resolution of the Board of Directors and other important management issues of the Group, as well as to enhance the functions of the Board of Directors and achieve a flexible management decision-making system, the Company holds an Executive Board meeting regularly which the President and Exective Officers,etc. attend. 5. Structure to Ensure the Effectiveness of the Board of Directors (1) Expertise and experiences of Directors [Supplementary Principle 4-11-1] When the Board of Directors nominates candidates for Directors, it is necessary to select and nominate suitable individuals who can realize the Company’s management philosophy and execute business strategies, who are well versed in the Company’s business and possess abundant experience and knowledge. The Company also prepares a skill matrix that comprehensively shows experiences and expertise held by each Director when selecting Director candidates. Such matrix is disclosed in the notice of convocation of the General Meeting of Shareholders and Integrated Reports. With respect to Outside Directors, the Company has independently established the qualification standards and independence requirements in the “Selection Criteria for Independent Outside Directors” to ensure appropriate corporate governance, and candidates are nominated accordingly. Note that two (2) of the five (5) Outside Directors have experiences of management in other companies. 9 Note: 1. Mr.Motoi Oyama was appointed to be a Chairman and Director at the Board of Directors Meeting to be held on March 25, 2022. 2. Mr. Yasuhito Hirota was appointed to be a President and CEO, COO, Representative Director at the Board of Directors Meeting to be held on March 25, 2022. (2) Evaluation of Effectiveness of Board of Directors [Supplementary Principle 4-11-3] The Company conducted a survey (self-evaluation) of each Director in order to further ensure the effectiveness of the Board of Directors and to improve the functions thereof. The Company analyzed and evaluated the effectiveness of the Board of Directors in FY2020, and the results thereof were reported to the Board of Directors and discussed in detail. The Company promoted the efficient operation of the Board of Directors through enhancing prior explanations and regular reporting regarding important proposals to be discussed at Board of Directors meetings, newly categorizing major issues for discussion, and information sharing from those responsible for each category to Outside Directors. Highly Independent Outside Directors actively gave opinions from their professional viewpoint, contributing to constructive discussions. The Company also enhanced the reporting of IR and SR activities to reflect the shareholders’ opinions. These resulted in a positive evaluation that the Board of Directors has adequately fulfilled its supervisory function. The Nomination and Compensation Committee held meetings appropriately to discuss important matters such as the nomination of Directors and Executive Officers, performance evaluations, and changes to compensation systems. When adopting resolutions, the Board of Directors respects the opinions of the Nomination and Compensation Committee to ensure fairness and transparency. In 2021, the Company endeavored to ensure the further effectiveness and to enhance the functionality of the Board of Directors by enhancing major issues for discussion, exchange of opinions between Outside Directors and Executive Officers, and by strengthening discussion on diversity and succession plans of the Board of Directors, etc. (3) Policies and Procedures for Determining the Amount of Compensation for Senior Management and Directors [Principle 3-1 (iii)] 10 The Company’s compensation system shall provide incentives to contribute to the sustainable growth of the Company and to improve corporate value. It is the Company’s basic policy to ensure fairness and transparency in determining respective compensation for each Director, respecting the opinions of the Nominating and Compensation Committee. Compensations for senior management and Directors are composed of the fixed compensation, performance-linked bonus, and the Restricted Share Compensation Plan, and the level of the overall compensations shall be determined appropriately taking into consideration the market level. The ratio of the performance-linked bonus and the Restricted Share Compensation Plan shall be set so that such ratio will be greater as their degree of contribution to the business performance becomes larger in line with their job responsibilities and roles. Policies for determining the amount of compensation for Directors are indicated at this Report. (4) Policies and Procedures for Appointing or Dismissing Senior Management and Nominating Candidates for Directors (including those Who are Audit & Supervisory Committee Members) [Principle 3-1 (iv)] When the Board of Directors nominates senior management, it is necessary to select and nominate suitable individuals who can realize the Company’s management philosophy, execute business strategies, are well versed in the Company’s business, and possess abundant experience and knowledge. With respect to Audit & Supervisory Committee members, the Company has selected individuals who possess suitable level of insight regarding finance, accounting and legal affairs. With respect to Outside Directors, the Company has independently established the qualification standards and independence requirements in the “Selection Criteria for Independent Outside Directors” to ensure appropriate corporate governance, and candidates have been nominated accordingly. The details of nomination are described in the Corporate Governance Report (Other Matters Related to Independent Officers). The Company’s criteria for dismissing senior management are as follows: 1. Where a senior management has performed any act contrary to public order and morality; 2. Where a senior management has difficulty in continuing the performance of duties due to health reasons; 3. Where a senior management has seriously damaged the corporate value by negligence of duty; or 4. Where a senior management is not qualified to be a manager. The Board of Directors of the Company ensures fairness and transparency in its resolutions on nomination and compensation by respecting the opinions of the Nomination and Compensation Committee composed by the majority of Independent Outside Directors and chaired by an Outside Director. (5) Nomination, Appointment and Dismissal of Each Individual [Principle 3-1 (v)] The information on nomination, appointment and dismissal of each individual is published on the Company’s website. https://corp.asics.com/jp/investor_relations (6) Criteria for Independence and Qualification of Independent Outside Directors [Supplementary Principle 4-9] The Company has independently established its own criteria “Selection Criteria for Independent Outside Directors” in addition to the relevant requirements under the Companies Act, and candidates are nominated accordingly. Reasons for selecting each Independent Outside Director are described in this Report (Other Matters Related to Independent Officers). 11 (7) Utilization of Voluntary System [Supplementary Principle 4-10-1] The Company’s Board of Directors currently consists of eight Directors, the majority, five, of which is Independent Outside Directors. To ensure fair and transparent processes, the Company has established the Nomination and Compensation Committee composed by the majority of Independent Outside Directors. The Board passes resolutions on appointment of and compensation for Directors and Executive Officers and successor planning by respecting the opinions of the Nomination and Compensation Committee, including the viewpoints of skills and diversity. The Chair of the Nomination and Compensation Committee is appointed from among the Independent Outside Directors by resolution of the Committee. (8) Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit & Supervisory Board [Supplementary Principle 4-11-2] The Company ensures that individual Directors fulfill their roles and responsibilities, regardless of whether they are holding multiple offices, by taking the following measures: • The Company decides on an annual schedule for holding Board of Directors meetings and Audit & Supervisory Committee meetings at an early juncture and gives notice to Directors; • The Company distributes reference materials for Board of Directors meetings at least three days prior to the date set for the meeting, in principle; and • The Company explains the details of important matters to Outside Directors in advance or takes other measures to activate discussions at Board of Directors meetings. The concurrent holding of positions by Directors is disclosed every year in the notice of convocation of the General Meeting of Shareholders. For more details, please see the Company’s website: https://corp.asics.com/en/investor_relations (9) Training for Directors and Audit & Supervisory Board Members [Supplementary Principle 4-14-2] The Company believes that it is very important to creates opportunities to provide information so that Directors are able to understand and fulfill their roles and responsibilities effectively. In the case of Outside Directors, the Company provides opportunities to enable them to understand the unique characteristics of its business, such as by explaining the Company’s business strategy, visiting key business premises and sports events and other venues in various regions around the world. Examples of Outside Director activities in 2021 includes: · Exchanging opinions with the Chairman and President at individual meetings · Exchanging opinions with those responsible for each region at individual meetings · Attending financial results presentation meetings for investors · Observing the 2022 Spring/Summer Product Exhibition · Attending the new product release event (online) · Observing functional exercise-specific day care “Tryus” · Observing urban low-oxygen training facility “ASICS Sports Complex TOKYO BAY” As for newly appointed Officers, the Company provides training opportunities in and outside the Company with regard to businesses (finance/accounting, evaluation of corporate value, leadership, organizational innovation, management strategy, enterprise creation), the Companies Act and related laws, and risk management. After their appointment, the Company provides opportunities to learn the latest knowledge about revisions 12 of laws and other matters through seminars conducted by lawyers or other experts, as well as other opportunities to supply information in response to Directors’ request. The Company will continue strengthening the content of training to ensure more meaningful learning. 6. Policy for Constructive Dialogue with Shareholders [Principle 5-1] (1) Basic approach Under the value “Sound Mind, Sound Body,” the Company will, in order to sustainably develop along with the society and improve its corporate value in the long run, report and disclose timely and appropriately its decisions and business activities as well as their social and environmental impact, thereby fulfilling its accountability as a company. The Company believes that it is important to build mutual relationship of trust and a partnership with stakeholders including shareholders and investors that is beneficial for both parties through listening to them, and having dialogues with them, and understanding and respecting the respective interests and expectations for the Company. (2) IR Structure The Company has established the Disclosure Policy to disclose information to stakeholders including shareholders speedily, accurately and fairly, thereby contributing to constructive dialogue. In dialogues with and disclosing information to shareholders and investors, the department in charge of investor relations (“IR”) liaise closely with President, Executive Officer in charge of IR and related departments to provide sufficient information. (3) Manner of Dialogue Director in charge and Accounting and Finance Division in charge of IR are endeavoring to explain the management policy and business activities in accurate and easy-to-understand manner in liaison with the relevant departments such as Corporate Strategy, Legal/IP, Marketing, Public Relations, and Sustainability Division, etc. In addition to individual interviews and telephone conferences, the Company holds Financial Results Presentation Meetings quarterly, as well as facility tours, investment days, small meetings, etc., from time to time. For individual investors, the Company announces its management policy and business activities at its website, and holds Company Presentations for individual investors from time to time. (4) Feedback to the Management Opinions submitted from shareholders and investors in interviews, etc. are shared with the management as needed, and the Company endeavors to reflect them in managing the Company upon understanding the respective interests and expectations to the Company. (5) Insider Information management To manage insider information, the Company has established and is implementing internal rules including the Disclosure Policy and the Rules on Insider Transaction Restriction, and based on these rules, the Company is seeking appropriate management of information including preventing divulge of insider information in dialogues with the shareholders. (6) Records of Activities of FY2021 ・President: General Meeting of Shareholders; Dialogues with domestic and foreign institutional investors and analysts (55 times), Financial Results Presentation Meetings (4 times), and Investment Day (twice). ・Executive Officer of Accounting/Finance ： General Meeting of Shareholders; Dialogues with domestic and foreign institutional investors and analysts (202 times), Financial Results Presentation Meetings (4 times), and Investment Day (twice). ・Finance Department/Those in charge of IR: Dialogues with domestic and foreign institutional investors and analysts (87 times), Presentations for individual investors (3 times) 13 ・Legal/IP Division, Sustainability Division/Those in charge of SR: Dialogues with domestic and foreign institutional investors and analysts (11 times) 7. [Cross-Shareholdings Principle 1-4] (1) Policy on Cross-Shareholdings The Company engages in cross-shareholdings to build and strengthen business relationships and generate synergies. In addition, the Company may newly purchase shares out of expectation for sustained growth and medium- to long-term increase of corporate value. The Company’s Board of Directors will conduct a quantitative review of individual stocks held by cross-shareholding every year, and consider selling the stocks of which annual trading amount falls below the prescribed amount and for which the cost of capital outweighs the return on investment. Stocks considered for selling shall be reviewed in a comprehensive manner, taking into account the purpose and significance of holding. (2) Policy on Exercising Voting Rights When exercising voting rights associated with cross-shareholdings, the judgment will be based on whether or not the decision would lead to sustainable growth and medium- to long-term improvement in corporate value of both the Company and the investee company. In particular, with respect to resolutions which may have material influence on the economic profit of the Company, including but not limited to private equity placement through offering at low price and corporate reorganization, the Company will exercise its voting rights prudently, conducting dialogue with the investee company on the proposed resolution and other related matters if necessary. 8. Related Party Transactions [Principle 1-7] When conducting transactions with Company officers that involve conflicts of interest as defined by the Companies Act, the Company will obtain approval from the Board of Directors and report back the results of the transaction. Moreover, when the Company transacts with close relatives of its officers or with major shareholders, the Board of Directors will be informed beforehand depending on the size and importance of the transaction. In addition, the Company has established the Conflict of Interest Management Rules which determine the matters related to preventing overall acts that involve conflicts of interest, including interested transactions. The Company strives to strengthen the system of preventing acts involving conflicts of interest that are performed by officers and employees. 9. Exhibition of Functions as the Corporate Pension Asset Owner [Principle 2-6] The Company has a defined contribution pension plan for the welfare of its employees. The Company is not directly involved in management, etc. of corporate pension funds as the asset owner. However, to provide an environment allowing employees to form their assets stably, the department in charge of the corporate pension plan coordinates with the management company to maintain appropriate assortment of products and inform thereof, and also continuously provides training on asset management. 14 2. Capital Structure Percentage of shares held by overseas investors Over 30% [Principal Shareholders] Name The Master Trust Bank of Japan, Ltd. (Trust Account) MUFG Bank, Ltd. Custody Bank of Japan, Ltd. (Trust Account) Sumitomo Mitsui Banking Corporation Nippon Life Insurance Company JP MORGAN CHASE BANK 385632 THE BANK OF NEW YORK MELLON 140044 JP MORGAN BANK LUXEMBOURG S.A. 384513 STATE STREET BANK AND TRUST COMPANY 505001 SMBC Nikko Securities Inc. Controlling shareholders (except parent company) Parent company Supplemental Remarks 3. Corporate Attributes Number of Shares Held（Shares） Percentage （％） 23,372,700 7,858,405 6,670,200 6,607,913 5,679,066 5,055,826 4,292,946 4,121,100 3,902,185 12.77 4.29 3.64 3.61 3.10 2.76 2.35 2.25 2.13 3,179,000 1.74 Listed stock market and market section First Section of Tokyo Stock Exchange Fiscal year-end Industry December Other products Number of employees (consolidated) as of the end of the previous fiscal year 1,000 or more Sales (consolidated) as of the end of the previous fiscal year ¥100 billion or more and less than ¥1 trillion Number of consolidated subsidiaries as of the end of the previous fiscal year 50 or more and less than 100 None None 15 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholders None 5. Other Special Circumstances Which May Have Material Impact on Corporate Governance None II. Organizational Structure for Managerial Decision-Making, Execution, Supervision and Other Corporate Governance Structures 1. Organizational Structure and Operational Management Type of organization Company with Audit & Supervisory Committee [Board of Directors] Maximum number of Directors stipulated in the Articles of Incorporation Directors’ term of office stipulated in the Articles of Incorporation Chairperson of the Board of Directors Number of Directors Appointment of Outside Directors Number of Outside Directors Number of Outside Directors designated as Independent Directors Relationship with the Company (1) 14 1 year 8 Yes 5 5 Chairperson (excluding the case where the President) person concurrently serves as Name Attribute Hitoshi Kashiwaki Kazuo Sumi Makiko Yamamoto Miwa Suto Yasushi Yokoi From another company From another company Lawyer Certified Public Accountant Certified Public Accountant Relationship with the Company* j f d c e i b k a g h *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 16 close relative of the director fell under the category in the past. a. Executive of the Company or any of its subsidiary b. Executive or non-executive director of a parent company of the Company c. Executive of a fellow subsidiary company of the Company d. A party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides director compensation g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation) h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e and f) (the director i. Executive of an entity, between which and ASICS outside directors are mutually appointed (the director himself/herself himself/herself only) only) j. Executive of an entity that receives a donation from the Company (the director himself/herself only) k. Others Relationship with the Company (2) Name Hitoshi Kashiwaki Audit & Supervisory Committee member Independent Director ○ Supplemental information on corresponding items — Reason for appointment decision-making Since assuming the position of Outside Director in March 2016, Mr. Hitoshi Kashiwaki has fulfilled appropriate roles and including supervision with respect to management based on his abundant experience and professional perspective as a corporate manager in the information services industry. Also, as a chairman of the Nominating and Compensation Committee, he has striven to manage the active operation of the Committee, and has actively advised to improve the fairness and transparency of ASICS management. The Company and Mr. Kashiwaki involving the receipt of cash, etc., other than the payment of compensation for Directors, there is no danger of a conflict of interest with ordinary shareholders. There is no conflict of interest between and the Company the principal companies he serves concurrently. Therefore, Mr. Kashiwaki satisfies the for Company’s “Selection Criteria Independent Outside Directors” and is deemed to be independent. 17 Kazuo Sumi ○ — of transparency of the Nominating he Since assuming the position of Outside Director in March 2018, Mr. Kazuo Sumi has fulfilled appropriate roles including decision-making and supervision with respect to management based on his abundant experience and professional perspective as a corporate manager in the passenger railway industry. Also, as a and member has Compensation Committee, actively advised to improve the fairness and the Company’s management. Because there is no relationship between the Company and Mr. Sumi involving the receipt of cash, etc., other than the payment of compensation for Directors, there is no danger of a conflict of interest with ordinary shareholders. While the Company held shares in the company for which Mr. Sumi is a director, as of the time this Reference Documents are being prepared, those shares are planned to be sold by the end of February 2022. Moreover, there is no conflict of interest between the Company and the companies he serves concurrently. the Therefore, Mr. Sumi Company’s for Independent Outside Directors” and is deemed to be independent. satisfies “Selection Criteria 18 Makiko Yamamoto ○ — of decision-making the Nominating perspectiverelated Since assuming the position of Outside Director in March 2020, Ms. Makiko Yamamoto has fulfilled appropriate roles including and supervision with respect to management based on her abundant experience and professional to international and corporate legal affairs as an international attorney at law. Also,as a member and Compensation Committee, she has actively advised to improve the fairness transparency ofthe Company’s and management. Because there is no relationship between the Company and Ms. Yamamoto involving the receipt of cash, etc., other than the payment of compensation for Directors, there is no danger of a conflict of interest with ordinary shareholders. Although the Company entrusts legal work to other attorneys at Law at TMI Associates, at which Ms. Yamamoto serves as a partner, the compensation paid by the Company to TMI Associates amounts to less than 1% of the law office’s total compensation, and therefore, TMI Associates does not qualify as an organization that receives large amounts of money or other financial assets from the Group. There is no conflict of interest between the Company and the principal companies she serves concurrently. Therefore, Ms. Yamamoto satisfies the Company’s “Selection Criteria for Independent Outside Directors” and is deemed to be independent. 19 Miwa Suto ○ ○ — Yasushi Yokoi ○ ○ — 20 of she and acts (Audit companies the Nominating as board member, Since assuming the position of Outside Director Supervisory Committee Member) in March 2020, Ms. Suto has expressed appropriate opinions at the Board of Directors meetings and the and Supervisory Committee Audit meetings based on her abundant experience and professional perspective as a management consultant and certified public accountant. In addition, as a member and Compensation Committee, she has actively advised to improve the fairness and transparency of ASICS management. Because there is no relationship between the Company and Ms. Suto involving the receipt of cash, etc., other than the payment of compensation for Directors, there is no danger of a conflict of interest with ordinary shareholders. Although the Group has entered into official supplier contracts etc. with the Japan Volleyball Association, for which she for popularizing and promoting volleyball, she is not an executive member of the Association. There is no conflict of interest between the Company and the principal serves concurrently. the Therefore, Ms. Suto Company’s for Independent Outside Directors” and is deemed to be independent. Since assuming the position of Outside Director Supervisory Committee Member) in March 2020, Mr. Yasushi Yokoi has expressed appropriate the Board of Directors opinions at meetings and the Audit and Supervisory Committee meetings based on his abundant experience and professional perspective certified public a accountant. In addition, as a member of the Nominating and Compensation Committee, he has actively advised to improve the fairness and transparency of ASICS management. Because there is no relationship between the Company and Mr. Yokoi involving the receipt of cash, etc., other than the payment of compensation for Directors, there is no danger of a conflict of interest with ordinary shareholders. Moreover, there is no conflict of interest between the Company and the companies he serves concurrently. the Therefore, Mr. Yokoi satisfies Company’s for “Selection Criteria Independent Outside Directors” and is deemed to be independent. satisfies “Selection Criteria (Audit and as [Audit & Supervisory Committee] Committee Composition and Attributes of the Chairperson Audit & Supervisory Committee All committee members Full-time members Inside Directors Chairperson Outside Directors 3 1 1 2 Inside Director Any Directors and employees who are to assist the performance of duties of the Audit & Supervisory Committee Yes Matters concerning Independence of these Directors and Employees from the Executive Directors To assist the performance of duties of Audit & Supervisory Committee members and the Audit & Supervisory Committee, the Audit & Supervisory Committee Secretariat (2 members as of the date of submission of this document) has been established under the Audit & Supervisory Committee. The Audit & Supervisory Committee Secretariat may, based on instructions from the Audit & Supervisory Committee, request each department or each subsidiary to provide information necessary for audit, etc. The Audit & Supervisory Committee Secretariat liaise with and makes adjustments between the Internal Audit Department and the audit & supervisory board members of subsidiaries based on instructions from the Audit & Supervisory Committee, and assists the sharing of information on audit, etc. An employee of the Audit & Supervisory Committee Secretariat is not subject to the instructions and orders of any Director (excluding those who are Audit & Supervisory Committee members) regarding the operations within the scope of an order given by Audit & Supervisory Committee members. Furthermore, before any such employee is subject to transfer, personnel evaluation or disciplinary action, the prior approval of the Audit & Supervisory Committee is required. Cooperation between the Audit & Supervisory Committee, Accounting Auditor, and Internal Audit Department In performing the following roles and responsibilities, the Audit & Supervisory Committee has a system to provide appropriate judgment from an independent and objective standing, in light of its fiduciary duty to the shareholders. (1) Audit of the performance of duties of the Board of Directors The Company ensures highly independent auditing system as follows: • Appoint a full-time Audit & Supervisory Committee member from among the Audit & Supervisory Committee who regularly exchanges opinions with the Representative Director; • A full-time Audit & Supervisory Committee member attends important executive meetings including Executive Board meeting and states his/her opinions to perform highly effective audit; • The Audit & Supervisory Committee cooperates with the Internal Audit Department and the Accounting Auditor to perform effective audit regularly; and • The Audit & Supervisory Committee cooperates with the Outside Directors such as by exchanging opinions with them as needed. (2) Appointment and Dismissal of Audit & Supervisory Committee members 21 The Company appoints Directors who are Audit & Supervisory Committee members upon carefully considering qualification as Audit & Supervisory Committee members, including if they can fulfill their terms of office, if they are independent from executives, if they can maintain fair and unbiased attitude, if they can evaluate management. In addition, the Company has confirmed that Outside Directors who are Audit & Supervisory Committee members have no issues in terms of their independency. (3) Appointment and Dismissal of Outside Accounting Auditor As the Company is operating business around the world, it is desirable to appoint as an Accounting firms throughout many countries and regions of the world. For this end, the Audit & Supervisory Committee assesses the performance status of audit and evaluates the audit quality through audit reports, etc. of the Outside Accounting Auditor. It also examines independence and expertise of the Outside Accounting Auditor through exchange of opinions with the Outside Accounting Auditor and the confirmation of performance status of audit by the Outside Accounting Auditor. [Voluntary Committees] Any voluntary committee equivalent to the Nomination Committee or the Compensation Committee Yes Establishment of Voluntary Advisory Committees, Committee Composition, and Attributes of the Chairperson Committee Full-time members Inside Directors Outside Directors Outside experts Others Chairperson All committee members 7 0 5 0 0 2 2 7 0 5 0 0 Outside Director Outside Director Nomination and Compensation Committee Nomination and Compensation Committee Voluntary committee equivalent to the Nomination Committee Voluntary committee equivalent to the Compensation Committee Supplemental Remarks The Company has the Nomination and Compensation Committee to ensure fairness and transparency in decisions on nominating and compensating Directors and Executive Officers. The majority of the members of the Nomination and Compensation Committee shall be Independent Outside Directors, and when the Board of Directors adopts a resolution to nominate and compensate Directors and Executive Officers, it shall do so respecting the opinions of the Nomination and Compensation Committee. The Chairperson shall be appointed from among Independent Outside Directors by a resolution of the Nomination and Compensation Committee. (Activities in 2021) Number of meetings held: 6Main items for deliberation: 22 • Performance evaluation and performance-linked bonus for Directors and Executive Officers in FY2020 • Setting of objectives for Directors and Executive Officers in FY2021 • Selection of Director candidates and Executive Officer candidates • Review of the compensation systems for Directors and Executive Officers • Examination of succession plans (Composition of the Nomination and Compensation Committee) Outside Director Hitoshi Kashiwaki (Chairperson of the Committee) Outside Director Kazuo Sumi Outside Director Makiko Yamamoto Outside Director Miwa Suto Outside Director Yasushi Yokoi Chairperson and Director Motoi Oyama President, CEO and COO, Representative Director Yasuhito Hirota [Independent Officers] Number of independent officers 5 Other Matters Relating to Independent Officers The Company designates all of outside officer who satisfies the qualification as an independent officer. In order to ensure proper corporate governance, the Company prescribes its own unique “Selection Criteria for Independent Outside Directors” concerning the aptitude and independence of outside Directors. The contents of these provisions are as follows. Article 1 (Requirements of Outside Directors) 1. The requirements of an Outside Director the Company are prescribed herein. 2. The requirements of Outside Directors shall be satisfied at the time of election and during the period of office. Article 2 (Requirements concerning the Aptitude of Outside Directors) An outside officer shall possess a proven track record, abundant experience and expertise as a corporate executive, attorney at law, certified public accountant, or an academic, as required to carry out business expansion at a global level while strengthening corporate governance in the Company and its subsidiaries and affiliates (“Company Group”) that operates its business globally. Article 3 (Requirements concerning the Independency) 1. In order to secure the outside officer’s independence from the Company Group, each of the following items shall be satisfied. (1) The Outside Director shall have never been an officer, executive officer (“Officer”), accounting advisor, or employee of the Company Group. (2) The outside officer shall not be and have not been over the past five years; a. (i) A major shareholder of the Company Group (a shareholder who holds 10% or more of total voting rights, including indirect holding), or an employee, etc. (i.e., executive Director or employee who executes business) of an organization that is a major shareholder of the Company Group (ii) An employee, etc. of an organization for which the Company Group is a major shareholder (the same shall apply hereinafter) b. A main lender of the Company Group (a lender to whom the Company Group owes, at the end of respective fiscal year, the amount equivalent to or more than 2% of the value of the 23 Company’s consolidated total assets; the same shall apply hereinafter), or an employee etc. of a main lender of the Company Group (if the main lender is a corporate group, then the group shall satisfy this item; the same shall apply hereinafter) c. An employee, etc. of a lead-manager securities company of the Company Group d. (i) A major business partner of the Company Group (a business partner with 2% or more of consolidated net sales during one fiscal year; the same shall apply hereinafter) or an employee, etc. of a major business partner (ii) A person for whom the Company Group is a major business partner or an employee, etc. of an organization for whom the Company Group is a major business partner e. A person belonging to the auditing firm that is the Accounting Auditor of the Company Group f. A person who receives from the Company Group large amounts of money or other financial assets (10 million yen or more in one fiscal year) as a consultant, accounting specialist or legal expert besides the remunerations as an outside Director, or a person belonging to an organization that receives large amounts of money or other financial assets (1% or more of net sales for one fiscal year of the aforesaid organization) from the Company Group g. A person who receives a large donation (10 million yen or more in one fiscal year) from the Company Group or a person belonging to an organization that receives a large donation from the Company Group h. A person in a reciprocal relationship with the Company Group concerning the status as officers (3) The outside officer shall not be a close relative (i.e., spouse or relative within two degrees of kinship) of the following persons. a. A person who is currently or was an officer or important employee of the Company Group b. A person who falls under any items listed in Sub-paragraph (2), Paragraph 1 of Article 3 (excluding unimportant employees and those who belong to such an organization) 2. Notwithstanding the Paragraph above, if a person is recognized as not having any conflict of interest with ordinary shareholders were the person to become an outside Director, and unanimously agreed by other outside Directors who satisfy the requirement stipulated in the Paragraph above, such person may be appointed outside Director, pursuant to the Companies Act. In this case, such facts and the reasons for appointment shall be stated in the Reference Documents for General Meeting of Shareholders, the Securities Report and other relevant documents. [Incentives] Implementation of measures to provide incentives to Directors Introduction of a performance-linked compensation plan and stock option system Supplemental Remarks on This Item The 65th Ordinary General Meeting of Shareholders held on March 28, 2019 introduced the Restricted Share Compensation plan. The content of this plan is as follows. Specific contents and the total number of Restricted Shares allotted to the eligible Directors of the Company 1. Allotment of Restricted Shares and payment therefor The Company provides the eligible Directors of the Company with monetary compensation claims not exceeding the above total annual amount as compensation concerning Restricted Shares, based on a resolution of the Board of Directors of the Company. Each Director is allotted the Restricted Shares through in-kind contribution, etc. of the monetary compensation claims. The Board of Directors of the Company determines the paid-in amount of Restricted Shares based on the closing price of the Company’s common shares at the Tokyo Stock Exchange on the business day immediately prior to the day on which the Board of Directors resolves to issue or dispose of the Restricted 24 Shares (if the Company’s common shares are not traded on that day, the closing price on the trading day immediately prior to it), within a range that is not particularly favorable to Directors who subscribe the Restricted Shares. The above monetary compensation claims are provided on the condition that the eligible Directors of the Company have consented to the above in-kind contribution and have executed the Restricted Share Allotment Agreement containing the provisions set forth in 3. below. 2. Total number of Restricted Shares In each fiscal year, the total number of Restricted Shares allotted to the eligible Directors of the Company shall not exceed 800,000. However, on or after the day this proposal is resolved, the total number of Restricted Shares may be adjusted reasonably if the Company’ s common shares are split or consolidated (including allotment of the Company’s common shares without consideration) or similar circumstances requiring the adjustment of the total number of allotted Restricted Shares arise. 3. Content of the Restricted Share Allotment Agreement The Restricted Share Allotment Agreement to be executed between the Company and a Director who will be allotted the Restricted Shares based on a resolution of the Board of Directors shall include the following provisions: (1) Provisions for transfer restriction A Director who is allotted the Restricted Shares shall not transfer, pledge, establish a security interest by way of assignment, advance, bequeath or otherwise dispose of the Restricted Shares allotted to him or her to any third party during a period specified by the Board of Directors of the Company within the range of three to five years (hereinafter referred to as the “Restricted Period”). (2) Acquisition of Restricted Shares without consideration The Company shall automatically acquire the Restricted Shares allotted to a Director of the Company without consideration (hereinafter referred to as the “Allotted Shares”) if the Director who is allotted the Restricted Shares resigns or retires from all of the positions as a Director, Executive Officer or an employee of the Company or its subsidiaries before the Restricted Period expires, except in cases where there are any reasons considered justifiable by the Board of Directors of the Company. Of the Allotted Shares, if there are shares for which the transfer restriction has not been released in accordance with the grounds to release the transfer restriction as set forth in (3) below at the time when the Restricted Period of (1) above expires, the Company shall automatically acquire these shares without consideration. (3) Release of the transfer restriction The Company shall release the transfer restriction on all or part of the Allotted Shares at the time when the Restricted Period expires, in accordance with the Company’s performance such as net sales and operating income ratio as well as the level of attainment of other indicators set by the Board of Directors of the Company for the fiscal year in which the Allotted Shares are allotted, provided that the Director who is allotted the Restricted Shares held any of the positions as a Director, Executive Officer or an employee of the Company or its subsidiaries throughout the Restricted Period. However, if the Director resigns or retires from all of the positions as a Director, Executive Officer or an employee of the Company or its subsidiaries before the Restricted Period expires for any reasons that the Board of Directors of the Company considers justifiable, the number of Allotted Shares for which the transfer restriction is released and the timing thereof shall be adjusted reasonably as necessary. (4) Treatment in case of reorganization, etc. The Company shall reasonably adjust the number of Allotted Shares for which the transfer restriction is released, and the timing thereof by a resolution of the Board of Directors of the Company, in cases where the General Meeting of Shareholders of the Company approves, during the Restricted Period, a proposal for a merger agreement under which the Company becomes the disappearing company, a share-exchange agreement or share-transfer plan under which the Company becomes a wholly-owned subsidiary, or any other proposal regarding reorganization, etc. (or the Board of Directors of the Company approves it, if such 25 reorganization, etc. does not require the approval of the General Meeting of Shareholders of the Company). (5) Other matters to be determined by the Board of Directors Othe