Corporate Governance

Japan
| Basic Views on Corporate Governance | Corporate Governance System | Functions and Roles of Outside Directors and Outside Audit & Supervisory Board Members | Evaluation of the effectiveness of the Board of Directors | Cross-Shareholdings | Fundamental Attitudes of Timely Disclosure | Internal Control Audits of the Kyocera Group |

 Basic Views on Corporate Governance
The Board of Directors of the company defines the corporate governance of the Kyocera Group to mean "structures to ensure that Directors conducting the business manage the corporations in a fair and correct manner”. The purpose of corporate governance is to maintain soundness and transparency of management and to achieve fair and efficient corporate management, through which the management rationale of the Kyocera Group can be realized. The Board of Directors shall permeate the "Kyocera Philosophy", which is the basis of the management policy of the Kyocera Group, into all Directors and employees working in the Kyocera Group, and establish a sound corporate culture, and it shall establish proper corporate governance through exercise of the Kyocera Philosophy.
Basic Views on Corporate Governance


 Corporate Governance System
Corporate Governance System

Corporate Governance System

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Board of Directors
The Board of Directors of the Company is an organization to decide the important matters and to supervise the execution of businesses of Kyocera Group as a whole. It consists of Directors including three Outside Directors, The Directors are nominated by the General Shareholders Meeting based on the proposal of candidates who have enough understanding of Kyocera Group and with outstanding“ personality”,“ capability” and“ insight” to engage in the management of Kyocera. Besides, Kyocera adopts the Executive Officer system to facilitate the efficiency of the management of Kyocera. The execution of the businesses of Kyocera is undertaken by the Executive Officers under the instruction of the Representative Director and President of Kyocera. Representative Director and President is nominated by the Board of Directors, which undertakes the management decision and supervision of the execution of businesses. Representative Director directs the Executive Officers to report the status of the execution of the businesses to the Board of Directors, and the Board of Directors makes sure that the businesses is efficiently executed. As such, Kyocera clarifies the responsibility and authority to achieve efficient management of Kyocera, and to realize the efficient functionality of appropriate corporate governance and internal control of Kyocera. The Directors of Kyocera include some presidents of the important subsidiaries in Japan and overseas of Kyocera, to make sure that corporate governance works for whole Kyocera Group.

Audit & Supervisory Board
Kyocera has Audit & Supervisory Board Members and Audit & Supervisory Board based on the corporate governance policy and the provision of its Articles of Incorporation which was approved by the General Shareholders Meeting. Audit & Supervisory Board Members include one full-time Audit & Supervisory Board Member originally an employee of Kyocera, one Audit & Supervisory Board Member who is very much familiar with Kyocera and who is with plenty of knowledge and experience as an attorney-at-law, as well as two Outside Audit & Supervisory Board Members, who have plenty of knowledge and experience as an attorney-at-law or CPA. The Audit & Supervisory Board Members are conducting audit of Kyocera as a whole based on the accurate information about Kyocera gathered from inside and utilizing variety of view-points as outsider of Kyocera.
In case employees, suppliers, customers and other individuals or organizations associated with the Kyocera Group find conduct that violates or is likely to violate the laws on accounting or matters related to auditing, such as illegal sale or transaction, or feel suspicious of any such conduct, they are encouraged to directly notify the Audit & Supervisory Board by e-mail or letter by means of the System for Internal Complaint Reporting to the Audit and Supervisory Board put in place for this purpose.

Nominating and Remuneration Committee
With respect to the nomination and remuneration of Directors, proposed nomination and remuneration are subject to prior review by the Nomination and Remuneration Committee, the majority of which consists of Outside Directors, the Board of Directors examine them, so that the decision relating thereto shall be made in a fair manner and appropriately.

Kyocera Group Management Committee
Kyocera has established “Kyocera Group Management Committee” consisting of the Directors (excluding Outside Directors) who live in Japan and Kyocera holds meetings every month regularly. Such Committee examines not only the agenda of the meetings of the Board of Directors but also other important matters relating to the execution of the businesses of Kyocera Group as a whole to secure the sound management of Kyocera Group.

Kyocera Disclosure Committee
Kyocera has established an organ known as the“ Kyocera Disclosure Committee” for disclosure of corporate information. This Committee investigates all disclosure documents for the purpose of assuring the appropriateness of disclosures of corporate information, reporting the results of its investigations to the Representative Director and President which educates Group companies concerning rules relating to disclosure and promotes appropriate disclosure of information for the entire Group.

Kyocera Group Internal Audit Committee
Kyocera has established“ Kyocera Group Internal Audit Committee” in order to improve of internal control level in Kyocera Group and strengthen cooperation with internal audit department in each company. The committee aims to heighten the effectiveness of internal control by receiving report of audit results from the Corporate Global Audit Division and internal audit division in consolidated subsidiaries and issuing instructions for any ecessary corrective action by Representative Director and President and Directors in each subsidiary of Kyocera Group.

Kyocera Group Philosophy Committee
Kyocera has established“ Kyocera Group Philosophy Committee” to educate and permeate“ Kyocera Philosophy,” which is our corporate philosophy setting forth importance of conducting business of management in a fair and honest way, basing its fundamental judgments on a precept that “what is the right thing to do as a human being.” The committee has set education policy of“ Kyocera Philosophy” of each entity in Kyocera Group, and discusses and decides the measures to promote an understanding of “Kyocera Philosophy” and practice it.


  Functions and Roles of Outside Directors and Outside Audit & Supervisory Board Members
Kyocera Corporation assigns three Outside Directors, who have plenty of knowledge and experience as certified public accountant and tax accountant, scholar, or attorney-at-law, and two Outside Audit & Supervisory Board Members, who have plenty of knowledge and experience as an attorney-at-law or certified public accountant. Kyocera Corporation enhances the supervision to Director and the Board of Directors by providing enough explanation from Directors to Outside Directors and Audit & Supervisory Board Members through the meetings of the Board of Directors. Directors also discuss with the Outside Directors and Audit & Supervisory Board Members relating to management, so that the Directors can make judgment taking outside viewpoint into consideration. Kyocera Corporation establishes sound corporate culture pursuant to the “Kyocera Philosophy,” which is the corporate philosophy based on the general criteria in making judgment, namely “what is the right thing to do as human being.” Kyocera establishes its corporate governance system through practicing the Kyocera Philosophy. Such system is supplemented by the function to check the managementby the Outside Directors and Audit & Supervisory Board Members. The role of each Outside Director and Outside Audit & Supervisory Board Member which Kyocera Corporation expects is as below; Kyocera Corporation expects that Hiroto Mizobata will be continuously capable of providing advice on and undertaking supervision of general corporate activities as an Outside Director, based on his abundant experience and exceptional insight as a certified public accountant and licensed tax accountant. Kyocera Corporation expects that Atsushi Aoyama will be continuously capable of providing advice on and undertaking supervision of general corporate activities as an Outside Director, based on his abundant experience and exceptional insight relating to the area of Technology Management that study companies who make much of technology development and innovation. Kyocera Corporation expects that Akiko Koyano will be continuously capable of providing advice on and undertaking supervision of corporate activities as an Outside Director, based on her extensive experience and insight as an attorney at law specializing in corporate law and wide-ranging insight into social issues, such as gender equality, etc. Kyocera Corporation expects that Hitoshi Sakata will be capable of conducting a general audit of the Kyocera's global corporate activities as an Outside Audit & Supervisory Board Member based on his abundant experience and exceptional insight as an attorney at law and his familiarity with the field of company legal affairs including Companies Act and overseas intellectual property. Kyocera Corporation expects that Masaaki Akiyama will be capable of conducting a general audit of Kyocera's corporate activities as an Outside Audit & Supervisory Board Member based on his abundant knowledge relating to finance and accounting as a certified public accountant and his abundant experience and exceptional insight.

Activities of Outside Directors and Audit & Supervisory Board Members (The Year Ended March 31, 2019 FY3/2019))
Position Name Major activities
Outside Director Tadashi Onodera Mr. Tadashi Onodera, Outside Director, attended 11 of the 12 meetings of the Board of Directors which were held during fiscal 2019 and expressed his views based on his abundant knowledge and experience as a corporate executive.
Outside Director Hiroto Mizobata Mr. Hiroto Mizobata, Outside Director, attended all of the 12 meetings of the Board of Directors which were held during fiscal 2019 and expressed his views based on his abundant knowledge and experience as a Certified Public Accountant.
Outside Director Atsushi Aoyama Mr. Atsushi Aoyama, Outside Director, attended 10 of the 12 meetings of the Board of Directors which were held during fiscal 2019 and expressed his views based on his abundant knowledge and experience as a professor of Graduate School.
Outside Audit & Supervisory Board Member Hitoshi Sakata Mr. Hitoshi Sakata, Outside Audit & Supervisory Board Member, attended 11 of the 12 meetings of the Board of Directors and all of the 8 meetings of the Audit & Supervisory Board which were held during fiscal 2019 and expressed his views based on his abundant knowledge and experience as an attorney-at-law.
Outside Audit & Supervisory Board Member Masaaki Akiyama Mr. Masaaki Akiyama, Outside Audit & Supervisory Board Member, attended all of the 12 meetings of the Board of Directors and all of the 8 meetings of the Audit & Supervisory Board which were held during fiscal 2019 and expressed his views based on his abundant knowledge and experience as a Certified Public Accountant.

Remuneration of Directors
The total amount of remuneration, etc. for Directors and Audit & Supervisory Board Members of the Company was determined by the resolution adopted at the 55th Ordinary General Meeting of Shareholders held on June 25, 2009 and the 65th Ordinary General Meeting of Shareholders held on June 25, 2019 as follows:

Remuneration to the Directors
  [1]Basic Remuneration: No more than 400 million yen per year (not including salaries for services as employees or Executive Officers for those Directors who serve as such).
[2]Bonuses to Directors: No more than 0.2% of profit attributable to owners of the parent for the relevant fiscal year, provided that such amount shall not exceed 300 million yen per year.
[3]Compensation for granting restricted stocks: No more than 0.1% of profit attributable to owners of the parent for the relevant fiscal year, provided that such amount shall not exceed 100 million yen per year.
(The total amount of common stock issued or disposed of shall be 25,000 shares or less annually.)

The amount of payment of each remuneration is determined by the Board of Directors within the range of the resolution above, after consulting in advance the Nomination and Remuneration Committee, a majority of which consists of Outside Directors, from the perspective of ensuring objectivity and achieving transparency in decision-making processes. Specifically, upon being consulted by the Board of Directors, the Nomination and Remuneration Committee examines the standard remuneration amount for each position, and based on the results of the examination, the Chairman and Representative Director, and the President and Representative Director, who are entrusted by the Board of Directors, determine individual amounts of payment.
* Compensation for granting restricted stocks has been introduced starting from remuneration relevant to fiscal year ending March 2020.

Remuneration to Audit & Supervisory Board Members
  Basic Remuneration: No more than 100 million yen per year.
Individual amounts of payment are determined within the range of the above resolution upon consultation among Audit & Supervisory Board Members.

Amount of Remuneration by Classification, Components and Number of Directors (The Year Ended March 31, 2019 (FY3/2019))
(Yen in Millions)
Classification Amount Components Number of Directors
Basic remuneration Bonus to Directors
Directors
(excluding outside Directors)
346 163 183 13
Outside Directors 36 36 - 3
Auditors
(excluding outside Auditors)
34 34 - 2
Outside Auditors 20 20 - 2
Total 436 253 183 20

(Notes) Aside from the "Basic remuneration" and "Bonus to Directors" in the above table, the aggregate amount of remuneration to Directors (excluding Outside Directors) was 265 million yen in salaries for services as employees or Executive Officers for those Directors who serve as such and was 248 million yen in bonus for services as employees. Compensation for granting restricted stocks has been introduced starting from fiscal year ending March 2020.



  Evaluation of the effectiveness of the Board of Directors
Regarding analysis and evaluation of the effectiveness of the Board of Directors as a whole, the Board of Directors shall conduct analysis and evaluation, and a summary of the results shall be disclosed once per year. The Company conducted such evaluation by issuing questionnaires to all Directors and Audit & Supervisory Board Members, in order to obtain an appropriate understanding of the current condition of the Board of Directors and of avenues for more effective operation. Discussions were conducted within the Board of Directors about the results of the evaluation and the opinions raised therein. As a result, improvements in securing time for discussions and in materials for meetings, taking into consideration the improvement in corporate value in the medium to long-term, were confirmed. The Board of Directors was evaluated as generally ensuring effectiveness. However, some opinions were received regarding the timing of distribution of materials for meetings and the way in which discussions were conducted. Based on these opinions, we are endeavoring to further improve effectiveness and to make ongoing improvements.


  Cross-Shareholdings
Policy regarding cross-holding of shares
We engage in cross-holding of shares with the objective of improving our business value in the medium to long-term, focusing on corporate growth through enhancement, maintenance and development of business relationships, realization of profits through shareholdings, and the issuing companies’ social significance. In our annual review of cross-holdings of shares, if we determine that there is no significance in holding the relevant shares, in principle we will dispose of such shares. Pursuant to the above-mentioned policy, we currently hold shares of KDDI CORPORATION (“KDDI”). We continue to hold these shares for economic reasons and because we anticipate that KDDI will be an important business partner of ours in future business opportunities.

Review of cross-holdings of shares
Kyocera Group Management Committee and our Board of Directors conduct an annual review of all cross-holdings of shares to assess whether continued holding of the relevant shares is appropriate, taking into account business needs, such as maintenance and/or enhancement of business relationships and efficiency in use of assets, including capital costs, with respect to individual shares. For any shares as to which a justifiable reason for holding them cannot be identified, we decrease our holdings of such shares through discussions with the issuing companies. We sold some of our crossholdings of shares in the fiscal year ended in March 2019 as a result of such review.

Exercise of voting rights
In exercising the voting rights of shares that we hold through crossholdings, we undertake a comprehensive assessment based on criteria that include whether the proposed measure conforms to our basic policy regarding cross-holdings of shares, and whether our exercise of such voting rights will produce improvement in medium to long-term business value and in shareholder returns, or may cause damage to the management efficiency or financial soundness of the issuers, while continuing to respect their overall management policy and strategy


  Fundamental Attitudes of Timely Disclosure
Kyocera, based on the ethical views appearing in “The Kyocera Philosophy,” believes that it is important to enjoy a high degree of trust from its shareholders, investors and other stakeholders. For this purpose, Kyocera recognizes that sincere efforts to provide timely and appropriate disclosure of corporate information are indispensable and has accordingly established the following basic policies toward the disclosure of information.

1. "With respect to the disclosure of information, it shall be our policy to disclose both favorable information and unfavorable information timely in an equal and accurate manner."
2. "With respect to the disclosure of information, it shall be our policy to disclose information without delay and in a fair manner, with no bias towards the domestic or foreign, and without preference towards specific persons."

Corporate System for the Timely Disclosure

Corporate System for the Timely Disclosure

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 Internal Control Audits of the Kyocera Group
Kyocera was listed on the New York Stock Exchange until June 26, 2018, and because of this, we had been among the companies to which Section 404 of the Sarbanes-Oxley Act applies. Section 404 requires business operators to construct and maintain internal control systems relating to fiscal reporting. It assesses the effectiveness of internal control systems through internal audits based on internal control evaluation criteria. As Kyocera voluntarily delisted its stocks from the New York Stock Exchange, we will assess the effectiveness of internal control systems based on the Companies Act and the Financial Instruments and Exchange Act (J-SOX rules).
   
 
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