Basic concept

JTEKT continuously strives to enhance corporate governance in order to fulfill its corporate social responsibility and increase its corporate value.

Promotion structure

JTEKT holds Board of Directors meetings every month where, in addition to items stipulated by law and the Articles of Incorporation, deliberations take place and decisions are made pertaining to the Medium-Term Business Plan aimed at realizing MVV. This includes management strategies (business plan, personnel, organizational, capital and investment measures) aimed at achieving the Medium-Term Business Plan, as well as oversight of the execution of duties by directors. Furthermore, two independent directors from outside the company were appointed to strengthen the supervising function of the Board of Directors. In addition, subcommittees under the Board of Directors, such as Executive Director Meetings, Management Meetings, and Companywide Registered Meetings, are held to fulfill deliberations on individual matters and supervise the performance of duties by managing officers. 

To ensure a transparent, fair, prompt and efficient management, JTEKT has opted for a company with an Audit & Supervisory Board to inspect directors' execution of duties, which consists of four auditors, two of whom are outside auditors (of which one is independent outside auditor). Additionally, the staff members in Corporate Auditors Department assist Audit & Supervisory Board members.Regarding internal auditing, Audit Department, which reports directly to senior management, inspects the business execution of each function and business division and the effectiveness of internal controls, reporting the results to representative directors and the Audit & Supervisory Board to ensure auditing independence. In accounting audits, Audit & Supervisory Board members receive reports and explanations from accounting auditors, confirming the appropriateness of auditing methods and results as well as the independence of accounting auditors.
In addition, in order to enhance the efficacy of these audits, Audit & Supervisory Board members, the accounting auditor and Audit Department regularly hold discussions to exchange information and engage in mutual cooperation.

Corporate Governance System

Operation of Board of Directors and other meetings

In the Board of Directors held in FY2024, discussions were conducted not only on the approval and execution of the annual business plan, but also on the formulation of the Second Medium-Term
Business Plan and the efficient allocation of management resources necessary to achieve it.

Particular emphasis was placed on reviewing the structure of our group businesses, including the consolidation and reorganization of subsidiaries and reassessment of business domains, as part of structural reforms aimed at realizing an optimal group structure.

Our company has established internal criteria for matters to be submitted to the Board of Directors and the Senior Executive Officers Meetings, based on both the content and monetary impact on management. This ensures that deliberations are focused on truly important management issues. Matters that do not meet these criteria, as well as preliminary discussions prior to submission to the Board, are reviewed by various company-wide committees organized by function. Under this framework, authority is delegated to the respective CxOs and division heads, who bear responsibility for decision-making.

　

Attendance of Officers

Category	Name	Board of Directors		Audit & Supervisory Board		Executive Compensation  Meeting		Executive Personnel  Meeting
		Number of  Meetings	Number of  Attendances	Number of  Meetings	Number of  Attendances	Number of  Meetings	Number of  Attendances	Number of  Meetings	Number of  Attendances
President，Member of the Board	Yoshihito Kondo	12	12	-	-	-	-	2	2
Senior Executive Officer，Member of the Board	Takumi Matsumoto	14	14	-	-	-	-	-	-
Senior Executive Officer，Member of the Board	Kouichi Yamanaka	14	14	-	-	-	-	-	-
Outside Directors	Kazunari Kumakura	14	14	-	-	-	-	-	-
Independent Outside Directors	Ikuji Ikeda	12	11	-	-	-	-	2	2
Independent Outside Directors	Yumiko Sakurai	14	14	3	3	-	-	2	2
Audit & Supervisory Board Member	Makoto Sano	14	14	13	13	-	-	-	-
Audit & Supervisory Board Member	Kouichi Tsujita	14	14	13	13	-	-	-	-
Outside Audit & Supervisory Board Member	Yasushi Matsui	14	14	13	13	-	-	-	-
Outside Audit & Supervisory Board Member	Akiko Miyakawa	12	12	10	10	-	-	-	-

(Note) 1 The attendance records for Yoshihito Kondo, Ikuji Ikeda, and Akiko Miyakawa reflect the number of meetings held and attended since their appointment as officers in June 2024.
　　　2 Yumiko Sakurai's attendance record includes the period during which he served as an auditor of our company.

Progress toward Enhanced Governance

JTEKT recognizes that corporate governance enhancements are an important management issue, thus we are engaged in efforts to reform and strengthen our corporate structure including the formulation of guidelines in response to the Corporate Governance Code and annual implementation of the PDCA cycle.
In November 2019, we reviewed matters to be referred to the Board of Directors and delegated decision-making authority with regard to items of low importance to the Executive Director Meetings, revising the Board of Directors regulations for the purpose of setting aside more time for Board of Director deliberation of management strategy and other, more important items.
In April 2020, the existing "managing officer system" was abolished and a new "senior management system" was introduced. As a result, this has enabled the promotion of talented young employees and the flexible assignment or withdrawal of human resources in important posts, which has significantly reduced the number of directors.
In Jan. 2021 Reform of officer system（①Abolition of director roles such as deputy president, senior managing director, and managing director, ②Name integration to Senior Executive Officer, ③Expansion of Senior management system) contributed to the slimming and flattening executive system, the speeding up management decisions, the promoting delegation of authority, further speeding up decisions on replacement, flexible promotion and withdrawal (expansion). As a result, the number of officers has also been significantly reduced.

Main Governance Reform Initiatives

Date	Measures	Purpose
June 2005	Introduction of executive officer system	Separation of management supervision and executive function
May 2006	Publication of Corporate Governance Report	Summarize, organize and disclose the key information on corporate governance
Jan. 2008	Establishment of Global Internal Audit Department	Audit of general tasks such as adequacy and legal compliance of management and procedures
June 2013	Appointment of foreign executive officer	To ensure executive officers diversity
June 2015	Appointment of two outside directors	Strengthening management oversight function
Feb. 2016	Establishment of Executive Officer Personnel Appointment Review Meeting (consisting of President and Independent outside directors)	To ensure the adequacy of personnel of executive officers
June 2016	Establishment of Executive Remuneration Meeting (consisting of President and Independent outside directors)	To ensure fairness and appropriateness in determining executive compensation
Mar. 2017	Establishment of Council for Enhancement of Corporate Value	Discussion on new value creation for improving sustainability
Oct. 2017	Establishment of Risk Management Department	Manage risks systematically to avoid or reduce them
June 2018	Increased number of outside directors by one, to a total of three	Further strengthening management oversight function
June 2019	Appointment of a female outside member of the Audit & Supervisory Board	To ensure greater executive officers diversity
Nov. 2019	Revision of Board of Directors Rules	Narrow down the agenda and devote the deliberation time of the Board of directors to the consideraton of more important matters
Apr. 2020	Introduction of Senior management system	Enables the selection of young employees to important posts and the flexible appointment and withdrawal of human resources to important posts
Jan. 2021	Review of officer system	①Abolition of director roles such as deputy president, senior managing director, and managing director ②Name integration to Senior Executive Officer, ③Expansion of Senior management system
June. 2022	The number of outside directors became one-third of all directors.	It can ensure the effectiveness of oversight function by the Board of Directors that assure independent and objective corporate management.
June. 2024	Appointment of a female outside directors	To ensure greater executive officers diversity

Group Governance

In order to engage in fair, transparent and efficient Group management, JTEKT is engaged in the following initiatives at our domestic and overseas subsidiaries.

• 1. We share items including MVV and the Medium-Term Business Plan, with the business plan progress confirmed at reviewing meeting on business of subsidiaries.
• 2. We require prior consultation or post-reports on important matters based on the "Prior Consultation and Reporting System Standards." Important matters concerning Group management are deliberated and decided by the Company committees.
  Also, regarding major subsidiaries, we confirm that the decision-making process is functioning properly within the subsidiary.
• 3. We developed the "JTEKT Group Business Management Guidelines" and require the establishment of internal control systems.
  We also require the prompt reporting of serious financial, safety, quality, environment and disaster risks.
• 4. We require the establishment of compliance systems based on the "Global Conduct Guidelines."
  We also conduct regular compliance inspections based on checklists provided by JTEKT.

Outside directors

JTEKT appoints outside directors who fulfill requirements for outside directors and possess experience and insight within their field. They are also selected based on the excellence of their character and viewpoints, and for their high ethical standards, perspectives, and knowledge in accordance with the JTEKT policy for appointing directors.
Furthermore, JTEKT conducts the appointment of outside members of the Audit & Supervisory Board from a perspective of audit neutrality and objectivity.

Appointment of Outside Directors and Outside Members
of the Audit & Supervisory Board

Title	Name	Main reasons (experience, insight, etc.) for appointment	Independent Director	Attendance record in FY2022 (attended/held)
				Board of Directors	Audit & Supervisory Board
Director	Ikuji Ikeda	Rich experience  as a manufacturing business executive and broad insight into corporate governance	○	11/12	-
Director	Yumiko Sakurai	Considerable knowledge relating to financial and accounting matters as a certified public accountant	〇	14/14	3/3 (Member of the Audit & Supervisory Board until June 2024)
Member of the Audit & Supervisory Board	Yasushi Matsui	Rich experience and broad insight relating to corporate governance as a manufacturing business executive	-	14/14	13/13
Member of the Audit & Supervisory Board	Akiko Miyakawa	Considerable knowledge relating to financial and accounting matters as a certified public accountant	〇	12/12	10/10

The attendance records for Ikuji Ikeda and Akiko Miyakawa reflect the number of meetings held and attended 
since their appointment as officers in June 2024.

Provision of Information to Outside Directors

The Liaison Meeting for Outside Directors and Auditors is held the day before Board of Directors' meetings. This provides an opportunity for the outside directors and auditors to all meet at the same time, receive materials and explanations concerning the deliberation agenda items, and exchange opinions among themselves, thereby creating an environment in which they can actively participate in deliberation and reporting matters at Board of Directors' meetings.Information on management topics other than the agenda items is also shared by the Meeting, and the outside directors and auditors can express their opinions on new business and other topics under consideration.

Nomination of Director and Audit & Supervisory Board Member Candidates

JTEKT has established the "Executive Officer Personnel Appointment Review Meeting " consisting of President and Independent outside directors as a voluntary committee to enhance objectivity in the nomination of candidates for directors and Audit & Supervisory Board Members and in the consideration of the selection and dismissal of Senior Executive Officer and Senior Management.

Directors and Audit & Supervisory Board Members Remuneration

JTEKT has designed its executive compensation system with the aim of achieving Medium-to Long-Term Business Plan and promoting business execution from the perspective of shareholders. Specifically, 30% of directors' compensation is performance-based, and one-third of that is paid in company stock. The KPI used to calculate performance-based compensation includes business profit, employee safety, and product quality indicators and targets.
The design of the executive compensation system and the determination of executive compensation amounts are reviewed by the "Executive Compensation Meeting," an ad hoc committee composed of the President and CEO and independent outside directors, to enhance the objectivity of discussions regarding executive compensation.  
The Executive Compensation Review Committee references data from external research institutions to confirm our compensation levels and proposes and discusses the following items:
① Monthly compensation for the FY2025, and a bonus payment proposal reflecting the performance of the FY2024  
② Directions for revising the compensation system for the next fiscal year and beyond 

The remuneration of directors (excluding outside directors) is shown in the figure below.

Payment method	Cash compensation		Stock compensation(Restricted Stock)
Types of Compensation	Fixed (Monthly)compensation	Variable(Performance-linked) compensation	Variable(Performance-linked) compensation
Rough Ratios	70%	20%	10%
Yearly limit on compensation	800million yen		100million yen
Paid on	Monthly	Yearly（The day after the ordinary general meeting of shareholders）
Policy and Indicators	Set the base amount for each position	Calculate from the compensation table based on the following indicators a. Business profit b. Achievement of KPI of Safety and Quality	50% of the standard compensation calculated based on business profit (accrording to the left column)is granted as stock compensation.
Process	(1) Formulated a compensation draft based on the above policy and indicators (2) At "Executive Remuneration Meeting" consisting of President and Independent outside directors established, the proposed compensation in (1) will be discussed. ＜Deliberations＞ ・Consistency with decision policy and need for review ・Confirmation of indicator performance evaluation ・Remuneration levels by position（Comparison with companies of similar size to ours based on executive compensation survey data from an external research organization） (3) To be determined by the President of the Board of Directors by resolution of the Board of Directors based on the results of deliberations at the Executive Remuneration Meeting. (4) The allocation of stock compensation (number of shares) is decided by a resolution of the Board of Directors

The amount of remuneration for each Audit & Supervisory Board member is determined through discussions among Audit & Supervisory Board Members.

※1. The above amounts include those for three directors, who retired from the post of director at the conclusion of the 124th Annual General Meeting of Shareholders held on June 25, 2024.

※2. The above amount of performance-linked compensation includes the unpaid amount which was booked as bonus provision for directors in the previous fiscal year.
(6 Directors, 55million yen)

※3.The amount of stock-based remuneration above is the amount recorded as expenses during the fiscal year to shares with transfer restricted stock granted as post-delivery stock remuneration.

※4. Yumiko Sakurai resigned as Audit & Supervisory Board Member at the 124th Annual General Meeting of Shareholders and was appointed as a director. Therefore, the number of Directors and the amount of remuneration are stated as follows: for the period as Audit & Supervisory Board Member (Outside Audit & Supervisory Board Member), as Audit & Supervisory Board Member; and for the period as Director (Outside Director), as Director.

Effectiveness the Efficacy of the Board of Directors

(1) Method
JTEKT conducts a survey on "the effectiveness of the Board of Directors" once a year for directors and audit & supervisory board members (self-evaluation by written questionnaire).
Our survey consists of a questionnaire with 18 questions (rated on a five-point scale) and a free response section regarding "Board of Directors composition," "Board of Directors operations," "Board of Directors discussions," and "Board of Directors monitoring functions."
 In this survey, we evaluate whether the contents of deliberations and operation methods at the Board of Directors are appropriate and review them as necessary based on evaluations.
From FY2024, we will incorporate questionnaire evaluations conducted by external organizations into our effectiveness evaluations so that we can objectively understand and assess our situation and issues by comparing ourselves with other companies.
Our company aims to operate a Board of Directors that enhances corporate value through transparent, fair, and swift decision-making by diligently addressing each issue.

(2) Overview of FY2024 Evaluation
■Initiatives for FY2024
In FY2024, we were able to enhance our organizational structure, including the diversity of the Board of Directors and cooperation with the internal audit department, and enrich discussions on medium- to long-term value creation through the formulation of the Second Medium-Term Business Plan.
The results of our activities in FY2024 in response to the issues identified in FY2023 are as follows.

■Issues for FY2024 and plans for FY2025
In FY2025, we will aim to realize a Board of Directors capable of making even more swift and decisive decisions, in collaboration with the Corporate Strategy Council and the Sustainability Council, in order to support the realization of the Second Medium-Term Business Plan. The remaining issues for FY2024 and the activity plan for FY2025 are as follows.

Cross-Shareholdings

(1)Holding policy
JTEKT holds cross-shareholdings with the aim of maintaining and strengthening long-term, stable relationships with business partners, from the perspective of improving corporate value over the medium to long term. We have been considering reducing holdings of stocks that no longer align with our holding objectives, or whose benefits and risks are deemed not commensurate with our capital costs. However, during the Second Medium-Term Business Plan period (FY2024-FY2026), we have established the policy of achieving "zero holdings" of such stocks (listed stocks) with the aim of improving capital efficiency to generate funds for initiatives aimed at transforming into a solution provider. Regarding non-listed stocks, we will reconsider their holding significance while considering their compatibility with our business, and we will continue to engage in careful dialogue with the companies we have invested in while considering reductions.

(2) Reduction of policy-held shares
During the current fiscal year, after gaining sufficient understanding through dialogue with investee companies, we sold all shares in three of the 13 listed cross-shareholdings held at the end of the previous fiscal year and sold a portion of the shares in six other companies.

(3) Details of verification by the Board of Directors regarding whether to continue holding shares
At each annual Board of Directors, we verify the appropriateness and economic rationality of the purpose of holding each cross-shareholding. Specifically, we determine whether the benefits to be obtained from holding the shares and the ROE of the issuing company is commensurate with our capital costs, among other factors, and then verify the appropriateness of holding the shares.

(4) Criteria for exercising voting rights attached to cross-shareholdings
JTEKT has established the following criteria for exercising voting rights attached to cross-shareholdings, and will respond appropriately in accordance with these criteria.
JTEKT generally respects management decisions made by corporate management, provided that the company in question has not engaged in antisocial behavior and does not disregard shareholder interests, such as by providing shareholder returns that are significantly disproportionate to those of society at large. In the event of misconduct or antisocial behavior by a company or its management, JTEKT will deem this to be a serious issue in terms of corporate governance and will exercise its voting rights in a manner that contributes to the improvement of corporate governance.