Corporate Governance

Basic Philosophy

We believe that meeting our social responsibility is an important part of our mission. We strive to build corporate value as we build relationships of trust with society in the practice of our corporate philosophy and to pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust.
Driven by this philosophy, we use our business activities to build positive relationships with our stakeholders as we engage in responsive, efficient, sound, fair, and transparent business practices. To this end, we continue to strengthen our supervisory functions and provide information disclosure, introducing new measures as necessary.

Structure

Corporate Governance Improvement Timeline

Composition of the Board of Directors

To distinguish clearly between management oversight and business execution, three of the five members of the Board of Directors are external directors, while two of the four members of the Audit & Supervisory Board are external members. Further, we have filed notice with the Tokyo Stock Exchange for four of these five external officers to be designated as independent directors. In June 2019, we established the Human Resources and Compensation Committee, an advisory committee to the Board of Directors, and we will work toward further strengthening our corporate governance.

Title(s)	Name	Meetings Held	Meetings Attended
Representative Director, Chairman, President and Chief Executive Officer (Chair)	Tadahiko Konoike	17	17
Director and Senior Managing Executive Officer	Tadatsugu Konoike	17	17
External Directors	Yoshihito Ota	17	17
	Mika Masuyama	17	17
	Taisuke Fujita	17	15

Skills Matrix

Human Resources and Compensation Committee

The purpose of the Human Resources and Compensation Committee, which has external directors as more than half of its members and is chaired by an external director, is to strengthen the independence and objectivity of the Board of Directors’ functions regarding the appointment of directors, Audit & Supervisory Board members, and executive officers of the Company and the compensation of directors and executive officers.
The committee consists of two independent external directors, one external director, and one internal director, making a total of four members (as of March 31, 2025). Although only half of the members are independent outside directors, we believe that the independence and objectivity of the committee is still ensured because the chairperson is an independent outside director.

Meeting Attendance in FY3/2025

Title(s)	Name	Meetings Held	Meetings Attended
External Director (Chair)	Mika Masuyama	10	10
Representative Director, Chairman, President and Chief Executive Officer	Tadahiko Konoike	10	10
External Directors	Yoshihito Ota	10	10
External Directors	Taisuke Fujita	10	10

Officer Compensation System

At a meeting of the Board of Directors held on February 12, 2021, the Company resolved a policy for determining the content of individual director compensation, etc., and now, in conjunction with the start of the Medium-Term Business Plan 2027, the Board of Directors, at a meeting held on June 18, 2025, has resolved to partially revise said policy and the officer compensation system. The Board of Directors consults the Human Resources and Compensation Committee, which has external directors as more than half of its members and is chaired by an external director, for advice on the resolutions to be adopted, and receives reports.
The basic policy and method of determining the compensation, etc. of each individual director and executive officer of the Company (executive officers who do not concurrently serve as directors; the same applies below) are as follows.

Basic Policy

The director compensation system must contribute to realizing the Corporate Philosophy (Our Mission)
The director compensation system must aid in recruiting and retaining a talented management team intent on achieving our 2030 Vision
The director compensation system must encourage a constant spirit of ambition to go beyond expectations
The director compensation system must be designed to link compensation closely to corporate earnings
The director compensation system must incorporate compensation linked to share prices as an incentive to improve corporate value over the medium to long term
The director compensation system must be designed to guarantee fairness and transparency, ensuring that officers are accountable to employees, shareholders, and other stakeholders

Compensation Structure and Overview

Compensation for directors consists of monthly monetary compensation (basic compensation and performance-linked compensation) and nonmonetary compensation (restricted stock compensation). The amount of compensation is determined in accordance with each director’s position and responsibilities, taking into comprehensive consideration the Company’s business environment, performance, employee salary levels, and the levels of other companies. In the new revision, the Company has decided to abolish bonuses to directors.

Compensation Type			Overview
Monetary Compensation	Monthly Compensation	Basic Compensation	Paid monthly as fixed compensation in accordance with position and responsibilities.
Monetary Compensation	Monthly Compensation	Performance-Linked Compensation	In order to dynamically reflect the performance of each fiscal year in compensation, the amount is calculated based on the degree of achievement of the Company’s performance (Company-wide performance and divisional performance) in the previous fiscal year and the individual performance based on the evaluation of individual results and contribution to management in accordance with the medium-term plan shall be paid monthly. Evaluation indicators and their values, etc., that form the basis for calculating compensation shall be reviewed as necessary in response to changes in the surrounding environment and based on the report of the Human Resources and Compensation Committee.
Non-Monetary Compensation	Restricted Stock Compensation		Restricted stock, the transfer restrictions of which will be lifted upon retirement as a director, is paid as medium- to long-term incentive compensation based on position and responsibility to directors, excluding external directors, during a certain period each year.

Similarly, the compensation system for executive officers consists of monetary compensation (basic compensation and performance-linked compensation) and non-monetary compensation (restricted stock compensation). The amount of compensation is determined in accordance with each executive officer’s position and responsibilities, taking into comprehensive consideration the Company’s business environment, performance, and other factors.

Ratio of Compensation Payment by Type

The ratio of compensation paid to executive directors and executive officers by type of compensation is based on benchmark compensation levels at companies of similar business size and in related industries and business categories to that of the Company. The basic compensation, performance-linked compensation, and restricted stock compensation ratios are set at 5:3:2 as a guideline, and the structure will be such that the weights of performance-linked compensation and restricted stock compensation increase for higher-level positions. This will be reviewed by the Human Resources and Compensation Committee. The Board of Directors, respecting the content of the committee’s report, decides compensation details, etc. for each individual director within the range of the percentage of compensation by type indicated in said report. In light of their role to provide objective opinions and advice as well as supervision and guidance from an external standpoint, independent of the Company’s performance, external directors receive only basic compensation.

Matters Related to Performance-Linked Compensation and Non-Monetary Compensation

Performance-Linked Compensation

At the start of the Medium-Term Business Plan 2027 that began in FY3/3025, we have decided to change the evaluation indicators that form the basis for the calculation of performance-linked compensation. Specifically, we have decided to incorporate return on equity (ROE) in place of net sales, a legacy indicator stimulating pursuit of business scale, for the purpose of practicing management more conscious of the sustainable improvement of corporate profitability and corporate value, as well as capital efficiency, in consideration of its linkage with management targets.
The specific evaluation indicators and the method of determining compensation amounts are as follows.

Performance-Linked Compensation Evaluation Indicators

Evaluation Items	Evaluation Indicators		Approach to Indicator Selection
Evaluation Items	Before Revision (to FY2025/3)	After Revision (from FY2026/3)	Approach to Indicator Selection
Company-Wide Performance	Net Sales	－	－
	Operating Income	Operating Income	Evaluate achievement level of consolidated operating income for the entire Company, indicating the results delivered by Company-wide business activities
	－	ROE	Evaluate the degree of efficient profit earning relative to capital
	Market Capitalization Improvement Rate	Market Capitalization Improvement Rate	Evaluate the degree of improvement in corporate value as evaluated by shareholders and investors in relation to our business activities* * Relative evaluation of the Company’s market capitalization (stock price) vs. average TOPIX volatility during the fiscal year
Divisional Performance	Operating Income	Operating Income	Evaluate achievement level versus the target of consolidated operating income for the division in question, indicating the results delivered by the responsible division
Individual Performance	Performance by Individual (Assessment)	Performance by Individual (Assessment)	Qualitatively evaluate individual efforts toward the medium-term business plan and achievements versus individual goals, including the degree of contribution to management

As part of the evaluation process for individual performance, the President and Chief Executive Officer conducts interviews at the beginning and end of each fiscal year with the officer in question to set goals and evaluate the results (in cases where a director or executive officer in a lower position conducts the interview with the officer in question, a secondary evaluation is conducted for goal-setting confirmation and based on the primary evaluation by the subordinate interviewer). To ensure the validity and transparency of this evaluation, the results of the evaluation are reported to the Human Resources and Compensation Committee for its opinion. In addition, the Human Resources and Compensation Committee will directly evaluate the Representative Director, President and Chief Executive Officer.

Method for Determining Performance-Linked Compensation Amount
The base amount is determined according to the position and responsibility of each director and executive officer, and the amount to be paid is determined within the range of 0% to 200% of the base amount, depending on the status of each evaluation item for each fiscal year. The weights for each specific evaluation item are as follows.

Evaluation Items		Director, President, and Chief Executive Officer	Director, Vice President, and Chief Executive Officer	Director and Senior Managing Executive Officer	Senior Managing Executive Officer	Managing Executive Officer/ Executive Officer
Evaluation Items		Director, President, and Chief Executive Officer	Director, Vice President, and Chief Executive Officer	Director and Senior Managing Executive Officer	Senior Managing Executive Officer	Corporate Officers	Business Officers
Company-Wide Performance	Operating income, ROE, and market capitalization improvement rate	80%	70%	70%	70%	60%	30%
Divisional Performance	Operating income	－	－	－	－	－	30%
Individual Performance	Performance by individual (Assessment)	20%	30%	30%	30%	40%	40%

Non-Monetary Compensation

With respect to the restricted stock compensation to be paid each fiscal year as medium- to long-term incentive compensation, the total amount of monetary compensation to be paid for the grant of restricted stock by directors, excluding external directors, shall not exceed ¥100 million per year, and the total shares of the Company’s common stock to be issued or disposed of as restricted stock shall not exceed 100,000 shares per year. For directors and executive officers to whom it is difficult or inappropriate to grant restricted stock due to the fact that they are non-residents (residents outside Japan) or for other reasons, the Company may not grant restricted stock and may pay monetary or other compensation in lieu thereof.

Matters Relating to Delegation of Determination of Compensation

The amount of compensation for each individual director is to be resolved by the Board of Directors based on the report of the Human Resources and Compensation Committee. However, the Board of Directors may delegate the specifics of determining the amount of compensation to the President and Chief Executive Officer, and the President and Chief Executive Officer must respect the report of the Human Resources and Compensation Committee when making a decision.

Officer Category	Total Compensation (Millions of Yen)	Total Compensation Amount by Type (Millions of Yen)			Number of Eligible Officers
		Monetary Compensation		Non-Monetary Compensation
		Basic Compensation	Performance-Linked Compensation	Restricted Stock Compensation
Directors (Excluding External Directors)	152	64	72	16	2
Audit & Supervisory Board Members (Excluding External Members)	48	48	－	－	3
External Officers	59	59	－	－	6
Total	259	171	72	16	11

Evaluating the Effectiveness of the Board of Directors

Since FY3/2016, our Board of Directors has conducted an annual evaluation of the composition and operation of the Board, Board deliberation content, and support systems. We have worked to strengthen the functions of the Board to ensure a sustained increase in corporate value for the KONOIKE Group.

Evaluation Method

Evaluator	Self-Evaluation by Board of Directors and Audit & Supervisory Board Members and Evaluation by Third-Party Institution
Evaluation Method	Questionnaires and Interviews
Response Format	Anonymous
Evaluation Items	• State of the Board of Directors • Composition of the Board of Directors • Operation of the Board of Directors • Discussions at the Board of Directors • Monitoring Function of the Board of Directors • Performance of Internal Directors • Performance of External Directors • Support System for Directors and Audit & Supervisory Board Members • Officer Training • Dialogue With Shareholders (Investors) • Own Initiatives • Board of Directors’ Advisory Committees

Evaluation Process

Consideration of Evaluation Methods
Conducting Questionnaires and Interviews With Directors and Audit & Supervisory Board Members
Third-Party Aggregation of Data and Evaluation Feedback
Exploration Based on Evaluation Results

Evaluation Results

In order to incorporate a more objective perspective into our evaluation of the effectiveness of the Board of Directors, we conducted a third-party questionnaire survey (self-assessment) and individual interviews with all directors and corporate auditors. As a result, while many of the respondents commented that the Board of Directors is generally functioning effectively as a result of the improvement efforts made thus far, we will further improve the effectiveness of the Board of Directors by considering improvements focusing on the following issues: the composition of the Board of Directors, operation of the Board of Directors meetings including provision of materials and advance explanations, organization of agenda items for the Board of Directors meetings and enhancement of discussions regarding medium- to long-term management strategies, and methods of supervising the operation of the internal control system.

Activities in FY3/2025

Major Agenda Items

The board of directors met 17 times in FY3/2025. The following are items on the agendas at meetings.

Establishing, amending, and abolishing various rules
Organizational changes
Important business plans
Matters related to M&A
Matters related to the general meeting of shareholders (e.g., deciding what matters to discuss during general meeting of shareholders)
Matters related to stocks
Disclosures (public announcements of company information)
Purchasing, leasing, and other means of securing buildings, nonbuilding structures, and land (e.g., in relation to establishing new bases of operations)
Appointments of executive officers
Matters related to finance (e.g., matters related to long-term loans payable and short-term loans payable)
Matters related to affiliates
Other important matters related to management

Main Items on Agenda for Discussion

The Board of Directors met in May 2024 and discussed the results of a questionnaire regarding their own effectiveness as a board. At that meeting, items were set for discussion at future Board meetings on important management issues.

Discussions on Formulation of Medium-Term Business Plan 2027 and Revision of 2030 Vision

In the process of formulating the Medium-Term Business Plan 2027 (FY3/2026 to FY3/2028), detailed discussions were held on setting more ambitious and feasible goals while ensuring consistency with the 2030 Vision. In order to further improve profitability and clarify specific measures to reliably achieve ROE of 10%, we deepened discussions on optimizing the business portfolio and transforming the profit structure.
We also concentrated on strategic alignment and the importance of strengthening the infrastructure for ICT investments. Through these discussions, we established a policy for developing the medium-term business plan.

Discussion on Capital Policy

We analyzed in detail the recognition of current issues regarding capital policy, which is the foundation for increasing corporate value, and discussed the direction of our financial strategy in the next medium-term business plan. Specifically, we discussed the rationale for setting financial quantitative targets, cash allocation optimization policy, and quantitative targets for our shareholder return policy, all with awareness of the cost of capital.
The optimal balance between investment in growth and shareholder returns was examined from multiple perspectives, including the investment efficiency of growth investments and the appropriateness of the dividend payout ratio, based on the assumption that operating cash flow would be allocated. The results of these discussions are reflected in the capital policy of the next medium-term business plan.

Discussions on Sustainability

Based on ESG evaluations of the Group by the relevant evaluating institutions, there was a lively discussion on future strategies for the non-financial targets of Environment, People, and Technology.
Through the identification of materiality, we will promote measures that lead to sustainability, and by communicating with diverse stakeholders, we will strengthen our efforts to enhance our corporate value over the medium to long term.

Discussions on Engagement With Shareholders and Investors

The KONOIKE Group receives and discusses IR feedback on an ongoing basis as part of our PDCA cycle for IR activities. The results of these are regularly discussed at the Board of Directors. Investor feedback obtained through IR activities confirmed that there is a need for further clarification of the growth strategy to achieve the 2030 Vision and for more specific explanations on how shareholder returns, including dividend policy, should be provided.
By reflecting the valuable insights gained through dialogue with shareholders and investors in our management strategies, we will accelerate the transformation of our Group and strengthen our efforts to realize sustainable corporate value enhancement.

Training Future Leaders

Human resource development is a core component of sustainable growth for the KONOIKE Group. The president, directors (serving concurrently as managing executive officers), and executive general managers (executive officer level) meet once every month at the Executive General Manager Steering Committee to share information about operational execution. Executive general managers, through discourse and discussion with directors, seek to cultivate their perspectives as managers. We also hold forums as needed as a part of our efforts to further enhance our human resources foundation. Here, members exchange opinions about strategies, philosophies, and other areas related to the KONOIKE Group, leading to a desire to launch new businesses and expand existing domains. Individuals regarded as next-generation managers, including headquarters office managers and branch managers, build relationships of mutual trust in their daily work. We sponsor internal seminars to bring next-generation managers and above to share our Corporate Philosophy and behavioral guidelines. In this way, we pass on the experience and expertise necessary for management without interruption between generations.

Strategic Shareholdings

1. Basic Policy

Konoike Transport Co., Ltd. holds stock strategically to enhance our corporate value over the medium to long term. We do this by working to sustain and strengthen trade relationships with the customers who are vital to our business, as partnerships are key to Konoike Transport Co., Ltd. business activities across a range of areas.
Each year, the Board of Directors regularly verifies the appropriateness of holdings of individual strategic stocks. The Board considers whether the risks and benefits of holding these shares are commensurate with the accompanying cost of capital, and we sell and reduce holdings as appropriate.

2. Criteria for Exercising Voting Rights

Konoike Transport Co., Ltd. does not make uniform decisions on policies when exercising voting rights for strategically held stocks. Rather, we consider and decide each case separately from perspectives that include sustainable growth and improvement in medium- to long-term value of the Company in question. We never approve resolutions that would be harmful to shareholder value.

Reducing Strategic Shareholdings

Risk Management

Basic Policies for Risk Management

The KONOIKE Group established the Risk Management Regulations and Crisis Management Standards as the basic policies of the Group to reduce risks that may have a significant impact on corporate management. Through these policies, we also aim to establish a crisis management system that can respond quickly and appropriately in the event of an emergency.

Risk Management System

Based on the aforementioned Risk Management Regulations, the KONOIKE Group identified risks with the potential to harm corporate value and defines them as follows.

The risk of poor strategic decision-making that could interfere with KONOIKE Group efforts to grow, resolve sustainability issues, and enhance our corporate value in the future
The risk of insufficient legal compliance, inadequate initiatives on management issues, or other matters that could interfere with the sound development of existing business activities or operations, or which could damage current corporate value

Our approach to managing these risks is based on prevention and containment. We work to maintain our current corporate value and enhance corporate value in the future by preventing incidents or issues and fulfilling our social responsibility.
The Risk Management Subcommittee, chaired by the officer in charge of risk management, meets quarterly to check on risk countermeasures and monitor the status of initiatives that focus on priority risks selected based on a risk map. The subcommittee also conducts other activities aimed at risk reduction.

Crisis Management System

We define a crisis as any situation that threatens the survival or business continuity of the KONOIKE Group, whether such a situation is caused by internal or external factors, arises suddenly, or is a result of poor management. We define crisis management as an emergency response, recovery activities, or business continuity activities in response to a crisis.
We have built a system capable of responding appropriately and rapidly to events, one example of which is the aforementioned Crisis Management Standards. We prepare various manuals for ready use in case of natural disaster.
The Crisis Management Committee convenes in the event of risks such as large-scale natural disasters, including huge earthquakes and pandemics, that make it difficult to continue business operations. The committee is headed by the individual serving as Representative Director, Chairman, President, and Chief Executive Officer. If we determine the presence of a real emergency, we set up a command center to deal with the situation. In addition to the system establishment, we also conduct disaster-preparedness drills for setting up a task force, safety and confirmation drills, and other exercises. These drills enable us to sharpen our ability to respond to emergencies and minimize damage. The KONOIKE Group has also accumulated experience in emergency response to natural disasters such as earthquakes and typhoons through our history of providing emergency support for social infrastructure through logistics, medical care, and airport operations. We intend to leverage our knowledge to actively contribute to the support of disaster-stricken areas in the event of a disaster.

KONOIKE Group Risk Assessment

Risk assessment is our first step in the risk management process. In risk management, the KONOIKE Group focuses on analysis and evaluation to determine the current status of risks.
These efforts are an important process in risk management, aiming to collect basic data for decision-making, such as the exploration and prioritization of countermeasures. Risk assessments are conducted by the Risk Management Subcommittee under the supervision of the Sustainability Committee. For priority countermeasure risks identified in the risk assessment, we determine the departments with jurisdiction over leading specific countermeasure implementation and improvements.
The Risk Management Subcommittee is responsible for monitoring the status of initiatives in these departments.