True to nature,the flavor of KAGOME

Japanese

Governance

Basic Views

In accordance with its corporate philosophy of “appreciation,” “nature” and “corporate openness,” the Company aims to achieve sustainable growth and improve the mid- to long-term value of the Company. The Company acknowledges corporate governance to be a critical management issue toward these objectives. The Company considers further strengthening of “autonomy” complemented by “heteronomous” to be the fundamentals of its corporate governance. It will ensure objectivity and transparency, forming a basis by designing its own concept of corporate governance adapted to the present day, while incorporating diverse outside viewpoints by working to attract more “Kagome Fan Shareholders” and leveraging the function of external directors among other things. The Company aims to deliver a high degree of accountability and achieve the “corporate openness” in its interactions with stakeholders, while employing the unique attributes and originality of Kagome.

Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions
(Overview of Current Corporate Governance System)

The Company has a corporate structure with an Audit and Supervisory Committee. The Company defines the main role of the Board of Directors as to decide management strategy and management policies and monitor their implementation, and the Company seeks to enhance the advisory function and strengthen the supervisory function of the Board of Directors and to increase its effectiveness by appointing three or more External Directors who satisfy the Standards for Judging the Independence of Independent External Directors of the Company. The Audit and Supervisory Committee sets a policy of having one or more standing Audit and Supervisory Committee members and uses internal control systems to audit the legality and appropriateness of the operations implemented by the Directors. Nomination and remuneration of Directors are deliberated by the Remuneration and Nomination Advisory Committee, in which Independent External Directors account for one half or more of its members. The results of the deliberation are advised to the Board of Directors which then determines the nomination and remuneration of Directors, thereby enhancing fairness and appropriateness.
Under its executive officer system, the Company uses set criteria to delegate implementation responsibilities and authority to its departments. The Company has established the Meeting of Executive Officers in order to convey and make known the Board of Directors’ resolutions and reported matters as well as to facilitate communication and coordination among executive officers. Moreover, the Management Meetings have been established under the leadership of the President to ensure business is executed agilely and through mutual coordination. Deliberations in the Management Meetings enable appropriate risk taking and also produce clear allocations of responsibilities, while enabling the Company to make decisions in an expedient manner.

Reasons for Adoption of Current Corporate Governance System

The Company chose a corporate structure with an Audit and Supervisory Committee to further separate business executive functions from supervisory functions, increasing the speed and flexibility of decisions on the business execution side while at the same time strengthening the business execution supervisory functions. The Company adopted the current system to increase the accountability of the Board of Directors and realize sustainable growth and improvement in corporate value over the medium and long term.

Corporate Governance Structure

Company with Audit & Supervisory Committee

Directors

Maximum Number of Directors Stipulated in Articles of Incorporation

17

Term of Office Stipulated in Articles of Incorporation

One year

Chairperson of the Board

Chairman (but not if the chairman is also the president)

Number of Directors

11

Nomination of External Directors

Nominated

Number of External Directors

5

Number of Independent External Directors

5

Reasons for Appointment

Name

Reasons for Appointment

Takayuki Hashimoto

Mr. Takayuki Hashimoto has extensive experience and knowledge of diversity promotion as a manager of a highly diversified global company, and the Company proposes his appointment to reflect his experience and knowledge in the management of the Company which aims for global personnel optimization. The Company believes that he will be able to properly execute the duties of external director of the Company from a far-reaching and sophisticated viewpoint.     The Company nominates him as independent director because he meets the requirements for an independent director set by the stock exchange and also meets the Standards for Judging the Independence of Independent External Directors of the Company.

Hidemi Sato

Dr. Hidemi Sato is enthusiastically expanding activities for food and nutrition education through classes on food and nutrition education, general lectures and mass media including television, newspapers and magazines, while engaging in research activities accompanied by many academic papers and presentations on food and nutrition education. The Company proposes her appointment as External Director to reflect her advice on management in light of realizing its medium- and long-term vision of helping solve social problems through food. Although she has never been involved in corporate management in the past, the Company believes that she will properly perform her duties as an External Director based on the above.

Kumi Arakane

Dr. Kumi Arakane has extensive experience and knowledge in corporate management, backed by her experience at KOSE Corporation in managing research and development, product development and quality assurance as a Doctor of Pharmacy, and engaging in managerial execution and supervision as a Director. In light of this track record, the Company proposes her appointment as External Director in the belief that she is suitable for providing advice for and supervising the management of the Company, which aims to achieve innovation-driven growth.

Tatsuya Endo

Mr. Tatsuya Endo has been engaged in many accounting audits and M&A cases for internationally and domestically listed companies as a tax accountant. He is proficient in corporate accounting and tax affairs, and has the extensive knowledge to oversee corporate management. Although he has never been involved in corporate management beyond serving as an External Director, the Company proposes his appointment in the belief that he is suitable for supervising the business execution of the Company as an External Director who is an Audit and Supervisory Committee Member.

Asako Yamagami

Ms. Asako Yamagami has been active as an attorney-at-law in the U.S., China and other countries internationally, and also has experience as an in-house attorney. She is proficient in corporate legal affairs, and has the extensive knowledge to oversee corporate management. Although she has never been involved in corporate management beyond serving as an External Director, the Company proposes her appointment in the belief that she is suitable for supervising the business execution of the Company as an External Director who is an Audit and Supervisory Committee Member.

Audit & Supervisory Committee

Committee’s Composition and Attributes of Chairperson

All Committee
Members

Full-time
Members

Internal
Directors

External
Directors

Chairperson

Audit &
Supervisory
Committee

3

1

1

2

Internal
Director

Matters Related to the Independence of Such Directors and/or Staff from Executive Directors

The Company has one standing Audit & Supervisory Committee member as a Director and employee to support the Audit & Supervisory Committee in its duties, and the Internal Audit Department is in charge of assisting said member. To ensure the independence of said Director and employee, the Company is required to obtain the prior consent of the Audit & Supervisory Committee when determining matters relating to authority to manage the personnel affairs of said Director and the head of the Internal Audit Department, including appointments, personnel changes and disciplinary action.

Cooperation among the Audit & Supervisory Committee, Accounting Auditors and Internal Audit Departments

The Company receives submission of an annual audit plan and a report of audit results from PricewaterhouseCoopers Aarata LLC with which it has concluded an audit agreement. Audit and Supervisory Committee Members are present at audits conducted by the audit corporation and also cooperate closely with the accounting auditor and the Internal Audit Department, exchanging information and opinions with them on a regular basis. The Company’s internal audits audit whether the business activities of each office are conducted properly and efficiently in compliance with laws and regulations, rules, management policies and management plans, and they aim to contribute to the rationalization of management and improvement of business efficiency. The Internal Audit Department monitors the reliability of financial reports from a neutral perspective as a business unit under direct supervision of the President and as the secretariat of the Audit and Supervisory Committee. It also directly audits the status of business execution of each business unit in the Group on a regular basis and endeavors to strengthen group governance. Any problems identified in audits are reported in a timely manner to the Audit and Supervisory Committee and the President and necessary measures and improvements are sought.

Voluntary Establishment of Nomination/Remuneration Committe

Committee’
s Name

All
Comm
ittee
Memb
ers

Full-
time
Memb
ers

Intern
al
Direct
ors

Extern
al
Direct
ors

Extern
al
Expert
s

Other

Chairperson

Committee
Corresponding
to Nomination
Committee

Remunerati
on and
Nomination
Advisory
Committee

5

0

1

3

0

1

Internal
Directors

Committee
Corresponding
to
Remuneration
Committee

Remunerati
on and
Nomination
Advisory
Committee

5

0

1

3

0

1

Internal
Directors

Supplementary Explanation

Kagome has a Remuneration and Nomination Advisory Committee that gives the Board of Directors advice concerning the determination of remuneration and other benefits for directors and other executives.

The Remuneration and Nomination Advisory Committee consists of at least three members, a majority of whom are independent external directors. The Remuneration and Nomination Advisory Committee deliberates matters such as a system of remuneration and level of remuneration that are appropriate to the management environment and company performance and the appropriateness of individual remuneration according to individual performance, from an objective and fair perspective.

Directors’ Remuneration

Disclosure of Individual Directors’
Remuneration

Selected Directors

As for Directors’ remuneration, the participants at the 72nd Annual General Meeting of Shareholders held on March 25, 2016 passed a resolution to separate the Directors (excluding members of the Audit and Supervisory Committee) and Directors who are members of the Audit and Supervisory Committee and set the total amounts to no more than 500 million yen for Directors (excluding members of the Audit and Supervisory Committee) and no more than 100 million yen for Directors who are members of the Audit and Supervisory Committee. The decision-making body and the procedures for Directors’ remuneration are specified as indicated below in the Company’s Rules on Remuneration for Directors and Executive Officers.
The remuneration for Directors (excluding members of the Audit and Supervisory Committee) is determined by the Board of Directors upon deliberations of the Remuneration and Nomination Advisory Committee, using the average level of the results of remuneration surveys participated in by large companies in Japan as the benchmark and taking into account other factors such as each Director’s social and relative position and level of contribution to the Company, in order to ensure the Company’s market competitiveness.
The remuneration for Directors who are members of the Audit and Supervisory Committee is determined through discussions of the Audit and Supervisory Committee.
For such decision-making, the Remuneration and Nomination Advisory Committee, which is an advisory body of the Board of Directors, deliberates on the establishment and revision of Directors’ remuneration and evaluation systems and the appropriateness of evaluation results, fixed amounts of remuneration, and performance-linked compensation.

Supporting System for External Directors

The Corporate Planning Department which is the secretariat of the Board of Directors explains and distributes reference materials for meetings of the Board of Directors, etc. to External Directors before meetings where necessary.

Organization chart for corporate governance