Basic Policy on Corporate Governance

Through fair and efficient corporate activities, the Company aims to earn the trust of our shareholders, customers, suppliers, local communities, employees, and other stakeholders, and to make further contribution to the international community in order to continue to grow and develop as a sustainable company. To achieve this goal, the Company recognizes that continuous improvement of corporate governance is essential, and as a top priority management issue, we are actively working on various measures.
In consideration of the meaning of the respective principles of the Corporate Governance Code, the Company will make continuing efforts to ensure the rights and equality of the shareholders and the effectiveness of the Board of Directors and the Audit & Supervisory Board as well as to upgrade the internal control system.
Also, in order to be trusted further by society and stakeholders, we will disclose information quickly in a fair and accurate manner prescribed in laws and regulations and actively disclose information that we consider is beneficial to deepen their understanding of the Company. Thus we will further enhance the transparency of the Company.

Corporate Governance Report
https://www.globalsuzuki.com/ir/library/governance/pdf/report.pdf

Corporate Governance System

The Company has adopted the current system with the thought of statutory company auditor system being the foundation and establishment of optional committee on Personnel and Remuneration, etc. and appointment of highly independent Outside Directors enables improvement of governance.

[Board of Directors]

In June 2006, the Company reduced the number of Directors from 29 to 14 persons in connection with the introduction of Managing Officers System aiming at agile execution of operations and clarification of a responsibility framework and, after that, has continued to further streamline the structure of the Board of Directors in order to speed up decision-making processes thereat. Further, the Company has appointed two Outside Directors since June 2012 and has appointed three Outside Directors since June 2020, in order to strengthen the management oversight function and receive useful advice, suggestions, etc. on the Company’s business management based on their respective extensive experience and expertise and various perspectives.
In principle, the Board of Directors meets once a month and also as needed to strengthen supervision by making decisions on basic management policies, important business execution matters, matters authorized by the General Meeting of Shareholders to the Board of Directors, and other matters prescribed by law and the Articles of Incorporation based on sufficient discussion, including from the perspective of legal compliance and corporate ethics, as well as receiving reports on the execution of important business operations as appropriate.
In order to clarify managerial accountability for individual Directors and flexibly respond to the changing business environment, the term of each Director is set to one year.

Directors (9 persons)

(Age and years of service are as of September 2021)

[Company Auditor’s Audit]

As an independent organization which plays a part in corporate governance, the Company Auditors conduct audits conforming with the auditing standards of the Audit & Supervisory Board for proper managerial executions, as well as expressing their opinions to the management members as appropriate.
Company Auditors’ audit procedures conform to the auditing standards of the Audit & Supervisory Board, and according to the auditing policy and division of duties, which are formulated after the General Meeting of Shareholders, Company Auditors audit the proper execution of corporate management and communicate their opinions by attending meetings of the Board of Directors, Executive Committee and other important meetings, inspecting ringi (request for approval) documents and minutes of meetings, and receiving reports and interviews from directors and employees on the status of operations. In addition, Company Auditors review and discuss the audit plan and topics formulated by Audit HQ, which is an internal audit division, and the results of operational audits conducted by Audit HQ.

Audit & Supervisory Board Members (5 persons)

(Age and years of service are as of September 2021)

Full-time Company Auditors actively and proactively exercise their authority to express their opinions at meetings of the Board of Directors and other important meetings on management and execution of operation as described below as appropriate. In addition, as an observer, Company Auditors participate in the Corporate Governance Committee, the Inspection Reform Committee, the Quality Assurance Committee, and the Environment Committee, and express their opinions as necessary.
In addition, Company Auditors inspect the status of operations and properties at the Head Office and major places of business by carrying out the inspection of important decision documents, etc. and the audit, etc. on the performance of duties by the senior management. With respect to subsidiaries, Company Auditors inspect the status of operations and properties, etc. by receiving business reports and collecting management data, etc. and make proposals for improvement in business management through discussions with executives of subsidiaries by means of video conference, etc. Further, Company Auditors receives reports of audits conducted over the Head Office, major places of business and subsidiaries from Audit HQ, which is an internal audit division, conveyed their opinions, and confirm the status of activities under the internal control reporting system for financial reporting.
Outside Company Auditors attend meetings of the Board of Directors, the Audit & Supervisory Board as well as various meetings related to business management and execution of operations as appropriate and express their opinions as needed, and exchange opinions with the Representative Director. All of them are observers of the Advisory Committee on Personnel and Remuneration, etc. Regarding “Key Audit Matters (KAM),” the Audit & Supervisory Board has discussions, receives reports on the status of audits on such matters and seeks explanation as needed.

[Executive Committee and other various meetings on management and execution of operation]

In order to promptly deliberate and decide on important management issues and measures, the Executive Committee, which is attended by Executive Officers and General Managers, etc. as well as the Company Auditors as an observer, and other various meetings attended by Directors, Company Auditors and divisional responsible persons (Managing Officers and divisional general managers, etc.) are held weekly and as needed to report and share information on management and business execution.
Also, various meetings are held weekly and monthly to deliberate business plans etc. and to receive reporting on operation of the company, enabling the Company to appropriately plan, identify administrative issues and grasp the situation on execution of operation.
In such way, the Company is enhancing efficiency of decision making at the meetings of Board of Directors and supervision on execution of operation.

[Corporate Governance Committee]

Corporate Governance Committee has been established to examine matters to ensure compliance and risk management, as well as to promote the implementation of measures and policies for the Company Group's sustainable growth and the medium- to long-term enhancement of corporate value. The Committee also verifies the results of effectiveness evaluation of internal controls over financial reporting in accordance with Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act.
The Corporate Governance Committee is chaired by the Managing Officer in charge of corporate planning and consists of other Managing Officers and Executive General Managers who serve as vice chairpersons or members, and full-time Audit & Supervisory Board Members who serve as observers.

[Internal Auditing]

As an organization under the direct control of the President, staff members with expertise in various areas of the Company’s operations regularly audit the Company’s divisions and domestic and overseas affiliates in accordance with the audit plan.
Operational audits include on-site/online and paper audits to confirm the appropriateness and efficiency of overall operations, compliance with law and internal rules, and the development and operation of internal controls, such as the management and maintenance of assets. The operational audit results are reported to the President, the heads of related divisions, and full-time Company Auditor, as well as to the Board of Directors once every six months, at each audit along with suggestions for improvement on findings. Advice and guidance are provided until improvements are completed to solve issues at an early timing.
In addition, the effectiveness evaluation of internal controls over financial reporting in accordance with Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act is conducted by the Corporate Governance Committee, and the results are reported by the Corporate Governance Committee to the Board of Directors and the Board of Company Auditors.
For subsidiaries with an internal audit division, Internal Audit checks their activities, receives reports on their audit plans and results, and provides advice and guidance as necessary.
Furthermore, Audit results are shared with the accounting auditor as needed, and regular meetings are held to share information, enhance communication, and maintain close cooperation.

[Committee on Personnel and Remuneration, etc.]

Aimed to enhance clarity and objectivity upon electing candidates for Directors and Auditors, as well as deciding remuneration of Directors, as an optional committee the Company establishes the “Committee on Personnel and Remuneration, etc.”, where Outside Directors make up a majority of the membership.
The Committee discusses issues such as election standards and adequacy of candidates for Directors and Auditors, as well as adequacy of system and level of Director’s remuneration. The Board of Directors decides based on their results. Also, some matters are delegated to the committee.
Decision for election and remuneration of Senior Managing Officers are also based on results of the Committee’s discussion.
The Committee meetings are held as needed and the frequency of meetings varies from year to year. The Committee has the functions of both the Nominating Committee and the Remuneration Committee.

Committee on Personnel and Remuneration, etc. (5 committee members and 3 observers)

[Policy on Directors’ and Auditors’ remuneration]

Regarding the decision-making policy for individual remuneration of Directors (hereinafter referred to as the “Decisionmaking Policy”), a report on the validity of the proposed Decision-making Policy is received from the Committee on Personnel and Remuneration, etc. The Board of Directors deliberates and makes a resolution based on the report. The outline of the Decision-making Policy as of the filing of this report is as follows. Remuneration of Directors (excluding Outside Directors) consists of basic remuneration, bonuses linked to the Company’s performance of each fiscal year, and restricted stock remuneration linked to the medium- to long-term stock price to function as an incentive for continuous improvement of the Company’s corporate value. The ratio is roughly 40% basic remuneration, 30% bonuses, and 30% restricted stock remuneration. Outside Directors’ remuneration shall be solely basic remuneration, given their duties.
Basic remuneration for Directors is fixed monthly remuneration, which is determined and paid in consideration of duties and responsibilities, remuneration levels at other companies, and employee salary levels.
Bonuses are paid to Directors (excluding Outside Directors) in order to raise awareness of improvement of each fiscal year’s performance and to function as an incentive for continuous improvement of the corporate value. The specific amount of remuneration for each individual is calculated by multiplying the performance indicators predetermined by the Board of Directors by a stipulated percentage and the multiplication rate by position predetermined by the Board of Directors. The performance indicator shall be consolidated operating income based on the perspective of company profitability.
Restricted stock remuneration is paid to Directors (excluding Outside Directors) in order to function as an incentive for continuous improvement of the corporate value and to further promote shared value with shareholders. Eligible Directors shall receive common stock of the Company by paying all remuneration (monetary remuneration rights) paid as contribution in kind based on the resolution of the Board of Directors. The transfer restriction period shall be until the date of retirement from the position of Director. If a Director falls under certain grounds, such as the Director retires for any reason other than that deemed as reasonable by the Board of Directors, the Company shall acquire the shares allotted for no fee.
The remuneration of Audit & Supervisory Board Members shall be limited to monthly fixed remuneration and is determined and paid based on consultations with Audit & Supervisory Board Members.
Please refer to pages 15–18 of Corporate Governance Report regarding the amount of remuneration for Directors and Audit & Supervisory Board Members in FY2020.

[Independence of Outside Directors and Outside Company Auditors]

As to independence from the Company with regard to the election of Outside Director/Company Auditor, the Company judges their independence under the below “Standard for Independence of Outside Directors and Outside Company Auditors of the Company” based on “independence criteria” set by Tokyo Stock Exchange, Inc. Suzuki reports all the elected Outside Directors and Outside Auditors to the Tokyo Stock Exchange as independent officers.
About the Standard for Independence of Outside Directors and Outside Company Auditors, please refer to pages 14–15 of the Corporate Governance Report.