Governance Corporate Governance

• Corporate Governance Report

• Basic Approach

• Corporate Governance System

• Succession Plan for the President and Representative Director

• Analysis and Assessment of the Effectiveness of the Board of Directors

• Executive Training

• Executives

• Remuneration of executives

• Internal Control System

• Policy on Shares held
  for Policy Purposes

• Basic Policy
  on Controlling Interest

We submit reports on corporate governance to the Tokyo Stock Exchange.

Our basic policy of corporate governance is to ensure the legality, transparency, and swiftness of management and to improve management efficiency in order to earn the trust of society and increase our corporate value over the medium and long term.
In light of our Purpose, “With our revolutionary environmental innovations, we activate the Earth’s future,” we are committed to securing the trust of society by positioning ESG and CSR management at our core to contribute to our stakeholders, including shareholders, employees, customers, partner companies, and local communities through our corporate activities. Additionally, as we regard the enhancement of corporate governance as one of our key management priorities, we work to achieve sustainable growth and medium- and long-term improvement of corporate value through the practice of effective corporate governance.

Our company has 7 outside directors (all 7 serving as independent officers) out of 12 directors. We believe that outside directors will further enhance the effectiveness of our governance framework by providing appropriate advisory functions and management supervision from a position independent of business execution and from an external, objective perspective, based on their extensive experience and expertise.

Corporate Governance Structure Diagram

Board of Directors - Met 12 times in FY2025

Audit & Supervisory Committee - Met 12 times in FY2025

Governance, Nomination and Compensation Committee - Met 11 times in FY2025

Management Council

The Management Council is a body established to enhance deliberations on important management matters and accelerate decision-making regarding management resource allocation, and is composed of directors excluding outside directors.

Internal Control Committee

The Internal Control Committee is established to promote the development and operation of internal control systems across the company and our corporate group. It is chaired by the President and composed of directors excluding outside directors.
This committee deliberates on the development of the Group’s internal control systems and revisions/abolition of the basic policy on internal control systems based on the status of such development, deliberates on matters to be submitted to the Board of Directors, and makes resolutions on the operational framework for the Group’s compliance promotion and risk management, revisions/abolition of the company’s compliance and risk management regulations, and the company’s annual activity policies for compliance and risk management, while also reporting to the Board of Directors.

Accounting Auditors

The accounting auditing for us is performed by two certified public accountants from KPMG AZSA LLC.
Employees responsible for auditing are rotated appropriately, engaging in the job for up to seven consecutive fiscal years. They are supported by 16 certified public accountants and 43 others.

Internal Audit Office

The Internal Audit Office is established as a department directly under the President and consists of 8 staff members. Based on the Internal Audit Regulations, it systematically conducts operational audits from an independent position regarding the appropriateness and efficiency of business operations.
For subsidiaries, information exchange and other activities are conducted as necessary. Audit results are reported to the President and Representative Director, and both the measures necessary and the implementation status of improvements are confirmed. The office also evaluates the operational status of internal controls over financial reporting (J-SOX) for the company and important consolidated subsidiaries. The office works to conduct effective internal audits by collaborating with directors who are Audit & Supervisory Committee members, as well as Accounting Auditors.

Members of the Board of Directors and Committees

Title	Name	Board of Directors	Management Council	Audit & Supervisory Committee	Governance, Nomination and Compensation Committee	Internal Control Committee
President and Representative Director	Kazuhito Kojima	〇	◎		〇
Representative Director and Executive Vice President	Hiroshi Kubota	〇	〇			◎
Director and Senior Managing Executive Officer	Tadashi Kamiya	〇	〇			〇
Director and Executive Officer	Ichiro Yamamoto	〇	〇			〇
Outside Director	Shuma Uchino	◎			〇
Outside Director	Atsushi Takagi	〇			◎
Outside Director	Yoko Seki	〇			〇
Outside Director	Hideka Morimoto	〇			〇
Director (Audit & Supervisory Committee member)	Hirotaka Yamada	〇		〇
Outside Director (Audit & Supervisory Committee member)	Kazuo Sakakibara	〇		◎
Outside Director (Audit & Supervisory Committee member)	Hiroyuki Hioka	〇		〇
Outside Director (Audit & Supervisory Committee member)	Hiroyuki Wakamatsu	〇		〇

〇 Member of the organization ◎ Head of the organization ^* The head is elected by mutual vote

Experience and expertise

Name	Corporate management and management strategies	Technology, innovation, and DX	Environment	Global matters	Sales strategies and marketing	Finance and accounting	Legal matters and risk management	Human resource development and diversity
Kazuhito Kojima	●	●	●		●			●
Hiroshi Kubota			●		●			●
Tadashi Kamiya		●	●		●
Ichiro Yamamoto		●	●					●
Shuma Uchino	●					●	●
Atsushi Takagi	●			●		●
Yoko Seki						●	●	●
Hideka Morimoto			●				●	●
Hirotaka Yamada	●					●	●	●
Kazuo Sakakibara							●	●
Hiroyuki Hioka	●		●	●			●	●
Hiroyuki Wakamatsu						●	●

In addition to the above, directors who are Audit & Supervisory Board members, the Accounting Auditors, and the Internal Audit Office work together to enhance corporate governance by conducting effective audits.

In order to ensure the transparency and objectivity of succession by the president and representative director to the successor, the Succession Plan for the President and Representative Director is reported to the Governance, Nomination and Compensation Committee on the successor’s education policy, training plan, and plan progress, and the Committee deliberates on the plan. The president and representative director proposes to the Governance, Nomination and Compensation Committee the most suitable candidate to replace him or her, and the Committee deliberates on the matter and reports the results of its deliberation to the Board of Directors.

FY2025 Board of Directors Effectiveness Evaluation Results（1.7MB）

We believe that the knowledge required of directors can be broadly split into knowing of matters unique to Takasago Thermal Engineering, such as our businesses, finance, and organization, and general knowledge that includes the roles required of directors and their legal and other responsibilities.
Executive directors work to gain a better understanding of general matters, such as our businesses, finance, and organization, through discussions at the Management Issue Review Committee every year. Executive directors and inside directors who are Audit & Supervisory Committee members strive to understand the roles and responsibilities required of executive directors or directors who are Audit & Supervisory Committee members by participating in training by external specialists and similar.
We provide an explanation of matters such as our businesses, finance, and organization to outside directors when they assume their posts and as required, to facilitate the acquisition of knowledge required of our outside directors. As such, we develop an environment for them to fulfill their roles.
In addition, we provide opportunities and services and pay the necessary expenses to acquire and properly update the knowledge required of each director. The Board of Directors regularly checks progress on the training of executive directors and inside directors who are Audit & Supervisory Committee members.

Click the button below to view a list of executives.

• Executives

Executive remuneration policy

We consider the compensation we pay to our directors (excluding directors who are Audit & Supervisory Committee members) and our executive officers (called executives below) to be an important strategy in terms of suitably incentivizing them to demonstrate the sort of management leadership necessary for us to achieve our goal of being an “Environment-Creator™.”

Basic policies

• Foster a sustainable “growth mindset” by evaluating the demonstration of leadership and suitable risk-taking to establish a compensation plan that enables the realization of suitable returns in line with achievements
• Maintain compensation details and levels effective for continuing to secure talented human resources
• Establish a compensation governance system that ensures independence, objectivity, and transparency, and make sure that executives are accountable to stakeholders

As to the remuneration of directors, we set the upper limit for the total amount of the remuneration, etc. of all directors except for Audit & Supervisory Committee members and all directors who are Audit & Supervisory Committee members based on a resolution at a shareholders’ meeting.

To enhance the independence, objectivity, and transparency of the remuneration of executives, we established the Governance, Nomination and Compensation Committee as a voluntary advisory body. After discussions by the Committee, the remuneration, etc. of directors except for Audit & Supervisory Committee members is determined based on a resolution of the Board of Directors. The majority of the Committee is composed of independent outside directors; the Governance, Nomination and Compensation Committee consists of five members, four of whom are independent outside directors.

The remuneration of directors except for Audit & Supervisory Committee members consists of basic remuneration, a bonus as a short-term (annual) incentive, and a stock-based compensation plan (executive remuneration BIP trust) as a medium- to long-term incentive. The composition is set in consideration of the relevant policy.

The remuneration structure for directors, except for Audit & Supervisory Committee members, is fundamentally designed to be highly performance-based. For the president and representative director, variable compensation (bonuses and stock-based compensation) accounts for approximately 60% of total compensation, and further, with stock-based compensation, through which profits are shared with all shareholders, accounts for 30% of that portion. For other directors, variable compensation is designed in accordance with his/her position and role so that it reaches approximately 50%.

Independent outside directors receive only basic remuneration, and there is no bonus or stock-based compensation plan (executive remuneration BIP trust).

The basic remuneration is determined as a fixed amount according to a director’s position and is paid each month.

Bonuses serve as an incentive to achieve single-year performance targets and as a way to encourage commitment to the achievement of milestones aimed at realizing our Medium- to Long-Term Vision. Bonuses are paid at a specific time every year and fluctuate within a range of 0% to 200% according to the consolidated ordinary income, consolidated gross profit margin, and individual evaluation of each executive.

Stock-based compensation (executive remuneration BIP trust) consists of performance-linked compensation (60%) and non-performance-linked (stock-price-linked) compensation (40%). Performance-linked compensation is intended to increase executive motivation to contribute to improving our corporate value in the medium to long term. Therefore, this compensation fluctuates within a range of 0% to 200% according to the achievement of performance targets, which is evaluated by using the important indicators called for by our Medium-Term Management Plan and other indicators stipulated by our Board of Directors. The company’s indicators are consolidated ordinary income, consolidated ROE, relative TSR (with respect to TOPIX), CO2 emissions, and employee engagement. Note that, if there are changes in the external environment surrounding the company, a review of our medium- to long-term strategies, or similar circumstances, the indicators and their evaluation weight are subject to change following deliberation by the Governance, Nomination and Compensation Committee and the passing of a resolution by our Board of Directors. Performance-linked compensation is paid a certain period of time after the end of the Medium-Term Management Plan, while non-performance-linked compensation is paid at the time of resignation.

The remuneration of executive officers also consists of basic remuneration, a bonus as a short-term (annual) incentive, and a stock-based compensation plan (executive remuneration BIP trust) as a medium- to long term incentive as in the case of directors except for Audit & Supervisory Committee members. The levels are decided based on a resolution of the Board of Directors after deliberations by the Governance, Nomination and Compensation Committee.

The directors (excluding independent outside directors) and executive officers make efforts to acquire our shares via voluntary contribution through the Official Shareholding Association.

Total remuneration, etc. by executive category, total amount of remuneration, etc. by type, and number of eligible executives

(FY2025: April 1, 2025 to March 31, 2026)

Category	Total remuneration (million yen)	Total amount of each type of remuneration （million yen）			Number of eligible officers
		Basic remuneration	Performance-linked compensation, etc.	Non-monetary compensation, etc. (stock compensation)
Director (except for Audit & Supervisory Committee member) (except for outside director)	389	153	155	80	4
Outside Director (except for Audit & Supervisory Committee member)	80	80	-	-	4
Director (Audit & Supervisory Committee member) (except for outside director)	30	30	-	-	2
Outside Director (Audit & Supervisory Committee member)	63	63	-	-	3
Total	564	327	155	80	13

1. Above information contains an information about a Director (Audit & Supervisory Committee Member) who retired upon 145th Ordinary General Meeting of Shareholders held on 18th June 2025.
   The stock compensation is the amount recorded as a provision of allowance for share-based remuneration during the fiscal year under the BIP trust.
2. The amount of monetary compensation (bonuses) for each individual for the relevant fiscal year is positioned as an incentive to achieve single-year performance targets and as a commitment to achieving milestones toward the realization of the medium- to long-term vision. It is designed to vary within a range of 0% to 200% depending on consolidated ordinary income, consolidated gross profit margin, and individual evaluations of each Director (excluding Directors who are Audit & Supervisory Committee members), and is paid at a fixed time each year.

The basic approach of our internal control system is to ensure the propriety of business operations by ensuring their effectiveness, efficiency, and reliability. We also ensure the propriety of the operations of the Company’s corporate group (including the Company, hereinafter referred to as the “Group”), taking into consideration factors such as the size and business characteristics of each constituent company, and the risks associated with them.
We have also established an Internal Control Committee to laterally promote the development of the Group’s internal control system.

• Basic Policy for
  Developing Systems to Ensure
  the Propriety of Operations

Internal Control over Financial Reporting

Our Internal Audit Office assesses the Company’s and major consolidated subsidiaries’ operation of internal control over financial reporting. The office works with the Audit & Supervisory Board and the Accounting Auditors to conduct effective internal audits.

• Basic Policy
  on Financial Reporting