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 27, 2023

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	●	●				●
Dongcheng Zhang	●	●	●	●
Yuji Sakakura	●	●		●	●
Seiichiro Ichikawa	●	●				●
Takashi Mukuno	●	●	●	●
Minako Nishimura	●	●				●
Takashi Togawa	●	●			●

Directors Compensation or Remuneration

Directors Remuneration

● Composition of Remuneration

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

Type	Ratio ※1	Contents
Fixed remuneration	100	Fixed remuneration consists of base remuneration and additional remuneration based on the duties and responsibilities of each director.Base compensation shall be commensurate with the position and the degree of importance and difficulty of the position.
Performance-linked remuneration	35	The monetary amount of annual performance-linked compensation, which is short-term incentive compensation, is determined based on the achievement of operating income and ROIC performance forecasts announced at the beginning of the fiscal year and ESG-related indicators (specifically, the rate of internal adoption of renewable energy, CO2 emissions, and the rate of lost time injuries). The compensation indexes and formulas and the annual performance-linked structure are as follows. (1) Company Performance Indicators Payments are based on the percentage of (A)Operating income achieved and (B)The percentage of ROIC achieved. Specific details are as follows. (A) Operating income achievement rate = (Current year operating income forecast / Current year operating income target) x 100% (B) ROIC achievement rate = (Current year ROIC forecast / Current year ROIC target) x 100% (2) ESG-related indicators The payment will be based on the number of items achieved out of the following: C: percentage of renewable energy introduced into the company, D: CO2 emissions, and E: frequency rate of lost time injuries. (3)Reason for selecting indicator Operating income achievement rate is set as an indicator of profitability, and ROIC achievement rate is set as an indicator of capital efficiency. In terms of ESG-related indicators, we have identified social issues that have a significant impact as materiality, identified priority issues, and formulated specific action policies, indicators, and KPIs for each theme. We believe that achieving each of these targets will lead to an increase in corporate value.? (4)Formula Annual performance-linked remuneration amount = fixed remuneration amount x (annual target achievement in company performance (A x 50% + B x 50%) + annual target achievement in ESG-related matters (achievement level according to the number of items achieved among C, D and E)) (5) Achievement of Annual targets (Percentage and Mechanism) Fiscal year target indicators Ratio　※2 Payment rate Corporate Performance ・Operating income 15％ 0～150% Corporate Performance ・ROIC 15％ 0～150% ESG-related ・In-house renewable energy adoption rate ・Greenhouse gas (CO2) emissions ・Lost time injury frequency rate 5％ 0～150%
Restricted stock compensation (long-term incentive compensation)	17.5	Restricted stock compensation is a fixed percentage of the fixed compensation to be paid. Compensation for the grant of restricted stock shall not be paid to directors (including directors who are members of the Audit and Supervisory Committee) who do not engage in the execution of business.

Note
1. The percentage of annual performance-linked compensation is based on the assumption of a 100% payout ratio.
2. The annual target indicators of company performance and ESG-related percentages are based on the assumption that the payment rate is 100%.