Corporate Governance

Ever since its foundation, KOKUYO has always followed a philosophy of enriching the world through our products. While this philosophy remains central to our entrepreneurial spirit, we now use the phrase “Be Unique” to express our philosophy and value-creating ethos in a way that is relevant to today’s challenges, in a world that is undergoing tumultuous changes. “Be Unique” expresses the idea that we produce products and services that deliver experience value, stimulating creativity and celebrating uniqueness.
What has supported our continued growth down the years is the warm trust we have built up with our shareholders, customers, supply-chain partners, employees, communities, and other stakeholders. We recognize that these stakeholder relationships are tangible and intangible assets that constitute the source of our value as an organization. Safeguarding these assets is a major strategic priority.
As well as safeguarding stakeholder relationships, we commit to making our organizational structures and processes efficient, transparent, and fair so that we remain true to our brand values and sustain long-term value creation.

We have a longstanding commitment to separating business execution from management oversight. Back in 2011, we started reserving places on the Board of Directors for independent directors and established the Nominating & Compensation Committee to advise the board about nominations and director compensation. In 2015, we had a CEO succession. Since 2020, an independent director has served as chair of the Board of Directors. We took another important step in enhancing corporate governance in 2024: We transitioned our corporate structure from that of a “company with a board of auditors” to that of a “company with a nominating committee and other committees.” The move took effect when it was approved by shareholders at the 77th Annual General Meeting of Shareholders, held on March 28, 2024. The three designated committees enables better corporate governance.

The Board of Directors has nine members, six of whom are independent directors. One of these independent directors serves as the board’s chair. All directors serve one-year renewable terms. This setup helps ensure a dynamic board, capable of responding swiftly to changing business conditions.

The Board of Directors holds regular monthly meetings, as well as ad-hoc meetings when necessary.

The board’s role of supervising management is separated from its role of executing the company’s business. With this separation, the board can both devote sufficient time to discussing matters of strategic importance (such as making decisions about the company’s policies and business strategies) and focus on supervising the management.

The Nominating Committee has three members. All members are independent directors, including the chair, who is elected by the members.
The committee considers proposals concerning the election and dismissal of directors to be submitted to the General Meeting of Shareholders. It also considers proposals concerning the election and dismissal of shikko-yaku (a legal title describing an executive who bears fiduciary duties; in English, our shikko-yaku are known as “corporate officers”) and shikko-yaku-in (a non-legal title describing an executive who bears no fiduciary duties; in English, our shikko-yaku-in are known as “corporate executive officers” or “managing officers”), as well as a representative corporate officer and corporate officers with specific titles.
The committee has a total membership of between three and five members, with independent outside directors making up the majority of members. Moreover, as a general rule, the committee’s chair is elected by the members from among the independent outside directors.
The committee has a total membership of between three and five members, with independent directors making up the majority of members. As a general rule, the committee’s chair is elected by the members from among the independent directors. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

The Audit Committee has four members. Three of the members are independent outside directors, including the chair who is elected by the members.
The committee audits the execution of the company’s business by corporate officers and directors, prepares audit reports, and decides on proposals for appointing or dismissing (or not reappointing) the accounting auditor. To ensure that audits are effective, the members regularly liaise with the heads of KOKUYO’s business units and corporate divisions and coordinate closely with their counterparts in KOKUYO’s Internal Audit Division and in key KOKUYO subsidiaries.
The committee has a total membership of between three and five members, with independent outside directors making up the majority of members. Moreover, the committee’s chair is elected by the members from among the members who have previous experience of serving as members. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

The Compensation Committee has three members, all of whom are outside directors. The chair is elected from among the outside directors.
The committee designs the compensation system for directors, corporate officers, and managing officers, and sets the compensation amounts to be paid to each recipient.
The committee has a total membership of between three and five members, with independent outside directors making up the majority of members. Moreover, as a general rule, the committee’s chair is elected by the members from among the independent outside directors. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

Internal auditing is undertaken by the Audit Office. The office follows an internal audit plan, approved by the Audit Committee to evaluate whether the company’s compliance and control processes are reasonable and working effectively. It reports the results to the Audit Committee and Representative Corporate Officer. The office does not report the results of its audits to the Board of Directors directly, but the Audit Committee may report the results to the board as appropriate.
The office members attend regular meetings with Audit Committee members to report findings and share opinions on the auding structures and auditing operations, and to enable close coordination in auditing. The members also hold regular meetings with departments responsible for internal controls and risk management to share opinions and coordinate activities. Additionally, they attend regular tripartite audit meetings to coordinate with the accounting auditor and share opinions as necessary.

See our corporate governance reports to see how we are complying with the items set out in the TSE’s Corporate Governance Code.

Set out below are KOKUYO’s Criteria for the Independence of Independent Outside Directors.
(1) The Independent Director’s near relatives within the second degree of kinship do not currently serve, or have not served within the past three years, as a Director, Corporate Officer or Auditor of the Company or a subsidiary of the Company.
(2) If the company where the Independent Director currently serves as executive director, corporate officer or employee receives payments from the Company or a subsidiary of the Company as consideration for the provision of products or services or makes such payments to the Company or a subsidiary of the Company, the amount of those transactions did not exceed 2% of the consolidated sales of either company in any one of the past three fiscal years.
(3) The Independent Director did not receive compensation (excluding compensation as a Director of the Company) exceeding 25 million yen from the Company as a legal, accounting or tax professional, or consultant (if the party receiving those assets is a corporation, association or other organization, each term above shall refer to the person belonging to that organization) in any one of the past three fiscal years.
(4) Any one of the donations, loans or debt guarantees from the Company to an organization where the Independent Director serves as an officer who executes business did not exceed 10 million yen in any one of the past three fiscal years.
(5) The Independent Director is not a major shareholder (a person who holds shares with 10% or more of the total voting rights), and does not serve as executive or full-time auditor, of the Company or a subsidiary of the Company.
(6) There are no mutual exchange of directors, corporate officers or managing Officers between the organization where the Independent Director serves in a concurrent position and the Company or a subsidiary of the Company.
(7) There are no other significant conflicts of interest between the Independent Director and the KOKUYO Group.

Since 2011, we have periodically evaluated the effectiveness of the Board of Directors (identifying issues, analyzing feedback, verifying effectiveness) to uncover issues with the way the Board of Directors currently operates and identify how it should be improved. Outlined below is the evaluation process undertaken in FY2025 along with the results of the evaluation. Guided by these results, we are taking further measures to increase board effectiveness.

【Evaluation process】
1. Interviews about board effectiveness by third-party interviewers
Interviewees: All directors
Interview period: October and November 2025
Interviewer: A third party
Interview items: Various themes that support the effectiveness of the board such as its roles, composition, agenda, discussions and operation

2. Questionnaire survey
Respondents: All directors
Survey period: October 2025
Survey items: Rating of each theme (overall evaluation, director composition, board operation, contents of deliberations, support structure, the three statutory committees, and the executive structure) on a five-point scale, along with a space for free, descriptive comments

3. Board review meetings
Attendees: Non-executive directors
When held: Immediately after a monthly board meeting
Meeting agenda: The proceedings of the board meeting on that day

4. Discussion and summary at board meetings
Attendees: All directors
Meeting agenda: Progress made in key board themes for FY2025, board effectiveness
When held: October 2025, December 2025

Summary of overall evaluation in FY2025
The board effectiveness evaluation conducted by a third-party organization in FY2025 found that the board satisfied the effectiveness criteria on the whole and that it is functioning properly.
Since KOKUYO transitioned to being a company with a nominating committee and other committees, the board has actively discussed M&As, large projects, and other important agenda items in terms of finance, strategy, and risks from multiple perspectives, including those of the independent outside directors. In particular, the deepened discussions on disciplined judgments about growth investments and alignment with the long-term vision were praised as a steady improvement of the board’s supervisory functions.
The issues identified for the future include enhancing the sophistication of the group governance foundations to support global business expansion and speed of growth. In concrete terms, it was shared that there is a need to continuously work on enhancing the monitoring structure to greater facilitate the delegation of authorities to the executive side and restructuring of the risk management process.
Moreover, we confirmed that we will also deepen discussions with a medium- to long-term outlook, mainly through the Nominating Committee, on strengthening the next-generation management structure to support sustainable improvement in corporate value.
Going forward, through these initiatives, we will further deepen coordination between oversight and execution and strive to evolve our corporate governance structure into one that is highly transparent and effective.

We will design and operate a system of compensation for corporate officers based on the following aims to provide motivation to achieve the fourth medium-term plan that we have positioned as one to steer us to significant growth toward realizing our long-term vision CCC2030.

1. Basic Policy
(1) Realize management sustainability by attracting and retaining the necessary talent
・ Set a competitive level compared to the benchmark group of companies based on the roles and responsibilities of officer
(2) Provide sustained motivation to enhance corporate value in the medium- to long-term
・ Give incentives to achieve short-term and medium- to long-term financial and non-financial targets toward enhancing corporate value and achieving the long-term vision and medium-term plan
・ Place emphasis on medium- to long-term initiatives while deterring excessive risk-taking and compliance violations
(3) Gain the trust of diverse stakeholders by possessing transparency, rationality, and simplicity
・ Fulfill our accountability to shareholders and other stakeholders by designing a rational and simple compensation system based on transparent procedures

2. Compensation structure
Corporate officers (who may also be serving as directors)

Configuration of compensation
Compensation for corporate officers has four components intended to remunerate the recipients for executing the company’s business.

Compensation ranks and compensation grades
There are five compensation ranks for corporate officers (reflecting the level of responsibility) and three grades of compensation per rank. Each compensation grade has separate reference values for basic salary, short-term incentive compensation, and long-term incentive compensation I and II. The Compensation Committee verifies and decides on these reference values after reviewing external survey data on the levels of basic compensation that comparable companies pay for similar levels of responsibility (using benchmarks such as Japanese companies of a similar scale).

Determination of the compensation payment rates
The variable rate increases as the compensation grade rises. The following are the payment rates for the standard basic salary, short-term incentive compensation, and long-term incentive compensation I and II of the representative corporate officer and president.

Outside directors and inside non-executive directors

Configuration of compensation
Compensation for directors has the following components taking into account remuneration for important decision-making and oversight of business execution, whether the recipient is full-time or part-time, and participation in committees.

3. Return of compensation (clawback provision)
We have introduced a clawback provision in relation to long-term incentive compensation II to improve compensation governance.
This provision covers when a material accounting error resulting from misconduct by the recipient of the compensation has been discovered, when the Board of Directors has resolved to amend financial statements after the fact due to misconduct by the recipient of the compensation, or when the recipient of the compensation has materially violated laws and regulations or the internal regulations of our group in relation to the execution of duties, and company shares have been granted or money has been paid without considering the aforementioned circumstances. In this case, based on a resolution of the Compensation Committee, we may acquire the company shares granted at no cost (or, if the applicable shares have already been disposed of, request the payment of an amount of money equivalent to the proceeds of that disposal) or request the return of the cash paid from the recipient of the compensation.

Corporate officers whose total compensation in FY2025 was 100 million yen or more

In order to sustainably improve its corporate value, we have the following policy: While we generally avoid entering into cross-shareholding arrangements and have committed to reducing our cross-held shares, we will retain the such shares if they continue to offer strategic value (for example, if they help foster beneficial business relationships).

• 

  Takehiro Kamigama

  Independent Director
  Chairperson of the Board of Directors
  

• 

  Shinichiro Omori

  Independent Director
  Compensation Committee Chair

• 

  Riku Sugie

  Independent Director
  Nominating Committee Chair
  Compensation Committee Member

• 

  Yoko Toyoshi

  Independent Director
  Nominating Committee Member
  Audit Committee Chair

• 

  Yuko Gomi

  Independent Director
  Audit Committee Member
  Compensation Committee Member

• 

  Kazuhiro Saito

  Independent Director
  Audit Committee Member
  Nominating Committee Member

• 

  Katsuaki Tojo

  Director
  Audit Committee Member

• 

  Hidekuni Kuroda

  Director
  Representative Corporate Officer, President and CEO

• 

  Toshio Naito

  Director
  Corporate Officer
  Managing Officer of the Corporate Planning Division and CSO