Corporate Governance

• Basic Approach & Policy
• Company Institutions
• List of Directors
• Training for Officers
• Evaluation of the Effectiveness of the Board of Directors
• Executive Remuneration
• Cross-Shareholdings
• Status of Audits

Basic Approach & Policy

Haseko Corporation has made it a basic policy of its corporate management to contribute to society and win society's confidence through its business operations that put customers first. The Company has also positioned reinforcement of corporate governance as one of its utmost management priorities as it recognizes that it is indispensable to secure management transparency and objectivity for maximizing corporate value in a stable manner over the long term and ensuring shareholders’ interests.

As part of its effort to achieve sustained growth and enhance corporate value over the medium- to long-term, the Company has formulated its Basic Policy on Corporate Governance and posted it on its website.

• Basic Policy on Corporate Governance

Company Institutions

Haseko Corporation has adopted an Audit & Supervisory Board system as a corporate institution. Under this system, the Board of Directors of Haseko Corporation serves as the institution where directors with expert knowledge and experience in various business sectors conduct decision-making on managerial issues and supervise execution of duties of other directors. As for monitoring of management operations, the Company’s system provides the Audit & Supervisory Board, the majority of which are outside Audit & Supervisory Board members, with the monitoring function from an objective and neutral standpoint from outside through implementation of audits. On top of these functions, starting in June 2016, Haseko appointed outside directors with abundant experience and track record to occupy at least one-third of the Board of Directors, so that they shall provide appropriate opinions and advice in order to further activate discussions at the Board of Directors and enhance the function to monitor business management. With this system in place, we are making efforts to build an optimum system for the Company, taking into consideration the balance between the operation of the Board of Directors and the monitoring functions. In addition, the appointments of both inside directors and outside directors one woman each, and we are continuing to work towards ensuring the diversity of the Board of Directors.

Decisions on certain matters authorized by the Board of Directors are made by the Management Council, Business Operation Council, and Technology Operation Council, each of which limits the participation of directors to a certain extent. In doing so, we have developed a system to separate the functions of decision-making and supervising such decision-making, so that each director can supervise the execution of duties by other directors. In addition, the Management Council is also responsible for the function of discussing in advance the important issues to be decided by the Board of Directors.

Details of company institutions

• The Board of Directors holds regular meetings once a month and extraordinary meetings as necessary, and is responsible for important decision-making and regular reports on matters related to management. In addition, operating officers make reports on business operations on a regular basis to the Board.
  The Regulations of Board of Directors stipulate that a director who has a special interest in a resolution of the Board of Directors may not participate in said resolution. Furthermore, these regulations stipulate that any business which may cause a conflict of interest between the Company and directors, including directors conducting business with competing entities, business involving the Company and directors, business involving the Company with the director acting as a third party, and any debt guarantees provided for directors, shall be subject to the approval of the Board of Directors.

• The Nomination and Remuneration Committee is an advisory body for the Board of Directors, in order to secure objectivity, transparency, and fairness of the procedures related to the nomination, remuneration, etc. of directors and enhance corporate governance. The committee comprises all independent Outside Directors and an equivalent or below number of Representative Directors, etc.
  The Nomination and Remuneration Committee met four times in FY2025, with all members in attendance (except for absences due to illness).

  The succession plan for the President and Representative Director was discussed extensively with all outside directors at the Nomination and Remuneration Committee to establish the specific candidate pool and selection process. When selecting an appointment, the Nomination and Remuneration Committee reviews the backgrounds of all directors and screens candidates based on the succession plan.

• The Company has established the Management Council and two operation councils - the Business Operation Council and the Technology Operation Council - to facilitate prompt and flexible decision-making on matters related to daily business operations to the extent they are authorized by the Board of Directors. Participation of directors in the Management Council and the two operation councils are limited to a certain level, so that the functions of decision-making and supervising such decision-making are divided and clarification is made for the responsibilities and authority for these functions. Moreover, the Management Council is responsible for the function of discussing in advance the important issues to be decided by the Board of Directors.
• The Risk Management Committee is held once every quarter and on an ad hoc basis as necessary whenever any material risk has arisen. It examines and determines the establishment, amendment or abolishment of internal rules on risk management and risk prevention plans, etc., and discusses and decides on the implementation policies and specific measures for risk management, among other things.
• The Sustainability Committee has been established as a subcommittee of the Board of Directors. It is chaired by the Company’s President and comprises the directors (and other officers) in charge of each division and the presidents of Group companies, among others. In addition to deliberating and deciding on important matters relating to sustainability, the committee reviews the status of related activities; proposals from this committee are reported to and resolved on by the Board of Directors. In addition, a Sustainability Promotion Conference has been established as a subcommittee of the Sustainability Committee to discuss and deliberate on practical matters.

List of Directors

For a list of Directors and Audit & Supervisory Board members, please see Management Team.
For the independence criteria for outside officers, please see the appendix of Basic Policy on Corporate Governance.

• Management Team: About HASEKO
• Appendix of Basic Policy on Corporate Governance: Independence Criteria for Outside Officers

• Corporate Governance: About HASEKO
• Messages from Outside Directors

Training for Officers

The Company has put in place an education system for Directors, Audit & Supervisory Board members, Operating Officers, other officers and employees to provide education and training relevant to their positions.
For Directors and Audit & Supervisory Board members, the Basic Policy on Corporate Governance stipulates that the Company will organize programs that offer seminars, etc., for acquiring essential knowledge and information, offer and help find training opportunities, and provide relevant financial support, and in accordance with this policy, the Company pays the costs of seminars and other programs in which Directors and Audit & Supervisory Board members have participated for self-development.
For Outside Directors, the Company provides an orientation program soon after they take office, where representatives from each department of the Company’s Corporate Management Division and each of the other divisions as well as from Group companies join to make presentations about businesses, operations, the Company’s current status and major issues facing the Company. In addition, the Company also offers them opportunities to visit the Company’s facilities and construction sites to promote their understanding of the Company’s businesses and individual projects. For outside Audit & Supervisory Board members, the Company provides various reference materials about the Company, while also inviting them to participate in some of the visits to the Company’s facilities and construction sites, to help deepen their understanding of the Company’s businesses.
For operating officers as well as department managers and higher-level managers, the Company provides its Executive Leader Development Program, a training program that includes, among others, a New Managing Executive Officer Training Course, New Officer Training Course, School of New Corporate Management, and Corporate Management Course. The Company ensures that these training courses not only cover knowledge essential to their current positions, but also include knowledge necessary for Directors and Audit & Supervisory Board members, with the aim of nurturing future candidates for Director and Audit & Supervisory Board member.

Evaluation of the Effectiveness of the Board of Directors

We analyzed and evaluated the effectiveness of the Board of Directors for FY2025 in accordance with the Basic Policy on Corporate Governance, and confirmed that the Board of Directors held constructive and active discussions and was sufficiently effective.

• Examples of Discussion Points at Meetings of the Board of Directors: Integrated Report p. 69

Executive Remuneration

Matters regarding the policy for determination of the amount and calculation method of the remuneration, etc. of Company officers

In accordance with the Basic Policy on Corporate Governance, the remuneration of directors is determined by resolutions of the Board of Directors based on the criteria for payment of remuneration of Directors prepared by the President in consideration of discussions at the Nomination and Remuneration Committee, which is comprised of all the independent outside directors, as well as of representative directors, etc., numbering not more than the independent outside directors. In addition, remuneration for Audit & Supervisory Board members is determined through consultation among the Audit & Supervisory Board members, within the limits of the remuneration amounts approved by resolution of the General Shareholders’ Meeting. The Nomination and Remuneration Committee met four times during the current fiscal year to discuss the basic remuneration for directors and to reaffirm the criteria for paying such remuneration. In addition, the committee discussed the calculation formula for performance-linked remuneration and the application of performance coefficients based on the achievement status of performance indicators, and unanimously approved a proposal to be submitted to the Board of Directors. The proposal was resolved on as presented at the Board of Directors meeting held on May 15, 2026.
Furthermore, the amount of monetary remuneration for directors was approved by resolution at the 109th Ordinary General Meeting of Shareholders held on June 26, 2026, shall be a maximum amount of 1,500 million yen per year (provided that, of the 1,500 million yen, 1,000 million yen shall be paid as bonuses for directors on the condition that dividend of surplus is paid on common stock). The number of Directors was 12 at the time of closing of said Ordinary General Meeting of Shareholders. It was also resolved at the 100th Ordinary General Meeting of Shareholder held on June 29, 2017 that, separately from the above maximum amount of monetary remuneration, a performance-linked share award scheme for directors (excluding outside directors) shall be introduced as a measure to help enhance the Company’s business performance and corporate value over the medium- to long-term and that a maximum amount of 320 million yen shall be contributed to the scheme for every five fiscal years. In addition, it was resolved at the 104th Ordinary General Meeting of Shareholders held on June 29, 2021, that the scheme shall be reset with the additional condition that the maximum number of shares to be repurchased every five fiscal years shall be 360 thousand shares. The number of directors (excluding outside directors) at the time of closing of the Ordinary General Meeting of Shareholders pertaining to the initial implementation of the scheme was 8, and the number of directors (excluding outside directors) at the time of closing of the Ordinary General Meeting of Shareholders pertaining to the scheme’s re-establishment was also 8. Furthermore, at the 109th Ordinary General Meeting of Shareholders held on June 26, 2026, a resolution was passed to allocate up to 1,680 million yen every five fiscal years for the performance-linked stock remuneration scheme for directors (excluding outside directors), and to set the maximum number of shares to be acquired every five fiscal years at 630 thousand shares. The number of directors (excluding outside directors) at the time of closing of said Ordinary General Meeting of Shareholders was 7.
A resolution has been passed to limit the annual monetary remuneration for Audit & Supervisory Board members to 150 million yen. The number of Audit & Supervisory Board members at the time of closing of said Ordinary General Meeting of Shareholders was 5.

Summary of the remuneration system for directors

(a) Remuneration structure

• Directors’ remuneration consists of basic remuneration (fixed remuneration) and performance-linked remuneration.

(b) Basic remuneration

• Basic remuneration is a fixed, standard amount determined based on the Director’s position and paid once a month.
• The amount of basic remuneration is determined based on a comprehensive consideration of the position, duties, and term of office of each Director, taking into consideration the Company’s business performance, the level of employee salaries, and the level of remuneration of directors at comparable companies.

(c) Performance-linked remuneration

• Performance-linked remuneration consists of executive bonuses and stock remuneration.
• Given that this system serves as an incentive to achieve business plan targets and enhance corporate value, and in light of the growing need for management practices that take into account the cost of capital and stock prices, as well as response to climate change and human capital management, the system is designed to adjust remuneration based on the degree to which performance and corporate value targets are met. As the medium-term business plan sets consolidated ordinary income as a specific numerical target, we use the actual consolidated ordinary income and the degree to which it meets the initial forecast performance indicators. For directors at the level of Executive Vice President and below, the performance coefficient is determined by taking into account the performance of the divisions they are responsible for.
• With regard to indicators for enhancing corporate value, we measure performance based on the degree to which the Company achieves its target values for earning power, capital efficiency, human capital (including health and safety), and response to climate change.
• In principle, outside directors and Audit & Supervisory Board members are not eligible for performance-linked remuneration.

(d) Ratio of basic remuneration to performance-linked remuneration (executive bonuses and stock remuneration)

• The ratio of basic remuneration: executive bonuses : stock remuneration is approximately 46: 42: 12. The ratio of basic remuneration: performance-linked remuneration for directors (excluding outside directors) is determined based on a fixed formula in accordance with a structure that allows for adjustment commensurate with business performance.

Total amount of remuneration, etc. by officer category, total amount by type of remuneration, etc., and number of eligible officers for the fiscal year 2025

Cross-Shareholdings

In the case where holding shares of our business partners will help facilitate the operation of business, Haseko’s policy is to hold shares as cross-shareholdings in accordance with the Guidelines for Asset Acquisition in Facilitating Transactions that is separately prescribed.
The guideline states that the total book value for assets acquired shall be about a prescribed amount of the consolidated net assets.
Haseko examines cross-shareholdings individually in terms of medium- to long-term economic rationale and future projections annually at a Board of Directors meeting, and if any shares are determined to be without merit in holding, then those shares will be reduced or otherwise reconsidered. The Board of Directors confirms the status in transactions for the businesses relevant to the cross-shareholdings once every year, including annual amounts of orders received and purchase amounts for those businesses to deliberate the feasibility of continuing shareholding.

Issues for which number of shares increased in FY2025

There are no relevant matters.

Status of Audits

Status of audits by Audit & Supervisory Board members

Haseko Corporation is a company with the Audit & Supervisory Board. It consists of five Audit & Supervisory Board members, of which two are full-time and three are outside, and meets once every month and on an ad hoc basis as necessary.
At meetings of this board, deliberations and discussions are held and resolutions are made on specific matters including the formulation of audit plans such as audit policies and division of duties, preparation of audit reports, evaluation of Accounting Auditors, judgments on whether to reappoint Accounting Auditors in accordance with the Policy on Decisions for the Dismissal or Non-Reappointment of Accounting Auditors, and consent to audit fees and other related matters.
The Audit & Supervisory Board also receives reports from directors, operating officers, presidents of Group companies, and other such parties, and also receives activity reports from full-time Audit & Supervisory Board members. All Audit & Supervisory Board members attend monthly liaison meetings with the Audit Department and the Risk Management Department, where they share information and exchange views based on regular reports on the status of development and operation of internal control systems, evaluations of internal controls related to financial reporting, and other relevant matters. In addition, all Audit & Supervisory Board members hold separate meetings with representative directors and outside directors respectively, to exchange views and ensure effective communication.

The two full-time Audit & Supervisory Board members cooperate with each other to conduct audit activities including an audit of the Company’s internal control system. More specifically, the Audit & Supervisory Board members attend the Management Council, Business Operation Council, Technology Operation Council, Risk Management Committee, Sustainability Committee, and other important meetings, observe internal audits, interview directors and other officers and employees about the status of business operations as necessary, and inspect approval documents, minutes, meeting materials, and reports, among others. The Audit & Supervisory Board members also hold a Group Audit & Supervisory Board members’ Liaison Meeting to cooperate with Group companies’ Audit & Supervisory Board members.
In accounting audits, all the Audit & Supervisory Board members meet with Ernst & Young ShinNihon LLC., the Accounting Auditor of the Company, to receive the explanations of accounting audit plans, interim reviews, and accounting audit reports from the Accounting Auditor. As necessary, the full-time Audit & Supervisory Board members interview the Accounting Department and the Accounting Auditor.

Status of internal audits

In internal audits, the Internal Auditing Department comprised of 12 members conducts internal audits of information management, risk management, etc. and assesses internal control over financial reporting. Whenever internal control issues are found in an accounting audit, information on the issues is communicated to each division, and improvements to resolve the issues are considered. At the same time, as part of the assessment of internal control, the Internal Auditing Department obtains the information, gives feedback to each division, and monitors the progress of improvements made in each division. The Internal Auditing Department also reports the status of such improvements to the President, the Board of Directors, the Audit & Supervisory Board, and the Accounting Auditor.
Further, the Internal Auditing Department carries out such activities while reporting the status of them to the Audit & Supervisory Board as appropriate in order to coordinate the roles of internal audits with the roles of audits by the Audit & Supervisory Board and ensure consistency between these roles. Audit & Supervisory Board members observe internal audits, receive the reports of internal audit results, and exchange information about in-house status with the Internal Auditing Department as appropriate.
Furthermore, as an initiative to ensure the effectiveness of internal audits, the Company's internal rules establish a system whereby the results of internal audits are reported directly not only to the President but also to the Board of Directors, the Audit & Supervisory Board members, and the Audit & Supervisory Board, thereby establishing and implementing a dual reporting structure.