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Corporate Governance

Corporate Governance Structure

The SWCC Group is working to increase the efficiency and speed of business execution by substantially delegating authority for business execution to Corporate Officers, while promoting the strengthening of auditing and supervisory functions centered on the Audit & Supervisory Committee.
In addition, by having clearly defined the authority and responsibility of the persons responsible (Corporate Officers in charge) for respective segments that are aligned with the SWCC Group's business segments (Energy and Infrastructure Business, Electrical Equipment and Components Business, and Communication and Industrial Device Business), we are promoting further enhancements to the revenue structure, which is no longer defined by individual business operating companies, and efficient management based on the performance indicator Return On Invested Capital (ROIC) and others.

Structure after the Ordinary General Meeting of Shareholders on June 25, 2024

Corporate Governance System Diagram

Skills Matrix for Directors and Auditors

Skill matrix of each Director

Name Essential skill Sales Overseas
business		 Accouting &
finance		 Engineering
Corporate
management		 Sustainability
Takayo Hasegawa ● ● ●
Tetsuo Komata ● ● ● ●
Yuji Sakakura ● ● ● ●
Seiichiro Ichikawa ● ● ●
Takashi Mukuno ● ● ● ●
Minako Nishimura ● ● ●
Futoshi Yamaguchi ● ● ●

Directors Compensation or Remuneration

Directors Remuneration

● Configuration chart

The remuneration for directors (excluding directors who are Audit and Supervisory Committee members) is comprised of a fixed remuneration and performance-linked remuneration.

Type

Percentage*1

Contents

Fixed

Remuneration

 100

It consists of a basic remuneration and an additional remuneration based on the duties and responsibilities of each director. The basic remuneration
corresponds to the position, as well as its importance and difficulty.

　

Performance-Linked
Remuneration

 45

The cash payment amount for annual performance-linked remuneration, which serves as a short-term incentive, is determined based on the degree of
achievement of the company performance indicators, which include the operating profit and ROIC target values multiplied by 105% of the operating
profit and ROIC performance forecast values announced at the beginning of the fiscal year, as well as ESG-related indicators. Specifically, it is determined
by the number of achievement items related to the internal adoption rate of renewable energy, greenhouse gas (CO2) emissions, the rate of lost-time injuries, and the engagement score.

The indicators, formulas, and mechanisms for annual performance-linked remuneration are as follows.



1.Company Performance Indicators

Remuneration is provided based on the achievement rate of operating profit (A) and the achievement rate of ROIC (B). The specific details are as follows.

· Achievement Rate of Operating Profit (A) = (Actual Operating Profit for the Period ÷ Target Operating Profit for the Period) × 100%

· Achievement Rate of ROIC (B) = (Actual ROIC for the Period ÷ Target ROIC for the Period) × 100%



2.ESG-Related Indicators

Remuneration is provided based on the number of achievement items among the internal adoption rate of renewable energy (C), greenhouse gas (CO2)
emissions (D), the rate of lost-time injuries (E), and the engagement score (F).



3.Reasons for Selecting Indicators

The achievement rate of operating profit in company performance indicators is set as a measure of profitability, while the achievement rate of ROIC is set as a measure of capital efficiency.

Furthermore, regarding ESG-related indicators, we identify socially significant issues as materiality, prioritize them, and develop specific action plans,
indicators, and KPIs categorized by theme.

We have established renewable energy adoption rate within the company, greenhouse gas (CO2) emissions, lost-time injury frequency rate, and engagement
score as ESG-related indicators that we consider particularly important for our company.

We recognize that achieving each of these target values will contribute to enhancing corporate value.



4.Formulas

Annual Performance-Linked Remuneration Amount = Fixed Remuneration × (Achievement Rate of Fiscal Year Objectives in Company Performance
(A × 50% + B × 50%) + Achievement Rate Based on ESG Indicators (Degree of achievement based on the number of achieved items among C, D, E, and F))


5. Achievement Rate of Fiscal Year Objectives (Percentage and Mechanism)

Type

Target Value

Percentage *2

Payment Rate

Company Performance

· Operating Profit

14.2 billion yen
(Published value 13.5billion yen)

20%

0-150%

Company Performance

· ROIC

9.1%
(Published value 8.7%)

20%

0-150%

ESG-Related

· Internal Adoption Rate of Renewable Energy *3

· Greenhouse Gas (CO2) Emissions

· Lost-Time Injury Frequency Rate

· Engagement Score

26%
Decrease by 40% compared to FY 2013
0.23 or lower
48

5%

0-125%


Restricted Stock Unit
(Long-Term
Incentive Compensation)

22.5

Restricted Stock Unit compensation is allocated from a certain percentage of the fixed remuneration.

We do not provide compensation in the form of Restricted Stock Units for directors, including audit committee members, who do not engage in executive
functions.
Note

1. The percentage for annual performance-linked remuneration is based on an assumption of 100% payment rate.
2. The percentages for the annual target indicators of company performance and ESG-related indicators are based on an assumption of 100% payment rate.
3. Renewable energy includes energy derived from non-fossil sources.

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