AKEBONO REPORT 2016

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Corporate GovernanceCorporate Governance SystemAkebono has formulated the following corporate mission: “Through ’Friction and Vibration, their Control and Analysis, ’we are determined to protect, grow and support every individual life.” Under this corporate mission, we are creating new values through monozukuri (value-added manufacturing) and striving to increase shareholder value and corporate value even further in line with our corporate goals of “Customer needs rst”, “Technology realignment”, and “Establishing a global network”. As a maker of essential safety equipment, we believe that it is important to maintain and promote healthy and friendly relationship with all stakeholders including customers, shareholders, suppliers, our associates, and local communities in order to achieve sustainable growth and development.In line with this conviction, we have positioned the strengthening of corporate governance as an important management issue, establishing a solid governance structure consisting of such bodies as the Board of Directors and the Audit & Supervisory Board, with every Board member committed to maintaining the vigilant oversight of management.Akebono has adopted the “company with auditors” governance model. We have built a corporate governance system centered on the Board of Directors, Audit & Supervisory Board members, and the Audit & Supervisory Board. We introduced the Executive Ofcer System in April 2000 to clarify the responsibility and the authority for business execution, and to enhance management efciency.The Board of Directors meets regularly once a month, and extraordinary meetings are held as needed. In order to make prompt and accurate judgments on important management matters through sufcient discussion and reviews, Akebono established various important bodies, including the Management Council and the Basic Approach to Corporate GovernanceBoard of Executive Ofcers. These bodies operate in accordance with prescribed internal rules. Furthermore, to complement the functions of the Board of Directors and strengthen the transparency and soundness of management, the Company has established the Director Nomination Advisory Committee and the Director Compensation Advisory Committee. As regards the selection criteria and candidates for the Board of Directors, the Audit & Supervisory Board, and executive ofcers, the Board of Directors determines these by resolutions after receiving and considering contributions and advice from the Nomination Advisory Committee. In order to ensure that the compensation system applied to these ofcers possesses a high degree of objectivity and transparency, the Company receives reports about the basics of the system from the Compensation Advisory Committee.Management information and suchlike is shared through electronic media, thereby ensuring efcient information sharing among management ofcers. The execution status of business matters that have been decided is reported to the Board of Directors or the Board of Executive Ofcers, as appropriate, by the member of the Board or the executive ofcer who is in charge. This status is also periodically audited by the Audit & Supervisory Board members and the Internal Audit Department.The chairperson assigns a certain department (or an individual) as the secretariat of each internal important body. The secretariat is responsible for conducting paperwork such as notices of agenda and minutes.In order to ensure appropriate business execution by members of management, a three-way audit system is applied by means of the Audit & Supervisory Board members and the Audit & Supervisory Board, the independent auditor, and the Internal Audit Department. Audit & Supervisory Board Members attend essential management meetings, such as the Board of Directors meetings, to monitor the processes of important decision-making and the execution status of business operations. These members also exchange opinions with directors in order to examine without delay any matters that could have a serious impact on Akebono’s management or performance, and then respond promptly.The remuneration for directors and Audit & Supervisory Board members is determined by the Company’s rules and the compensation criteria are clearly disclosed. Compensation for directors consists of xed remuneration and performance-based remuneration. The xed portion is basic compensation for duties and is based on positions. The performance-based potion is determined based on the performance of the Company and individual directors. The total amount of directors’ remuneration is determined by the General Meeting of Shareholders, and the individual allocations are decided by the Board of Directors. The total amount of Audit & Supervisory Board members’ remuneration is also determined by the General Meeting Overview of Corporate Governance SystemApril 2000Introduced an Executive Ofcer SystemJune 2005- Reduced the number of directors from 25 to 12- Introduced an Outside Director System and elected one outside director - Established the Compensation Advisory Committee and introduced a performance-based remuneration system for directorsJune 2006Increased the number of outside Audit & Supervisory Board members from one to twoJune 2007Increased the number of outside directors from one to twoJune 2010Increased the number of outside Audit & Supervisory Board members from two to threeJune 2014Increased the number of outside directors from two to threeDecember 2015Established the Director Nomination Advisory CommitteeInitiatives to Strengthen Corporate Governance AKEBONO REPORT 201637