Corporate Officers

Outside Corporate Officers

Kanamoto has five outside directors: a Senior Managing Executive Officer of ORIX Motor Corporation, an Executive Officer of ORIX Corporation, the President of Social Medical Corporation Hokuyukai, a Director of Lavender Law Office, and employee representative at law of Hashimoto Okawa Law Office. ORIX Corporation Ltd. is a major shareholder of Kanamoto and has business transactions with the Company, including installment contracts. Kanamoto also has business transactions with ORIX Motor Corporation, including operating leases. In addition, Hashimoto Okawa Law Office acts as legal counsel for Kanamoto. However, Kanamoto provides no improper benefits to any of these entities. The three outside corporate auditors include an individual with extensive experience and knowledge in municipal administration and management, a full-time corporate auditor of Kanamoto's main financial bank, and a certified public accountant with specialized business experience. All of our outside directors and outside corporate auditors are providing appropriate guidance on Kanamoto business execution from their own unique perspectives. None of these outside officers have personal relationships with Kanamoto corporate officers.
Kanamoto has defined standards and policies concerning outside director independence for the appointment of outside directors. We also refer to guidelines, such as the criteria for independence of directors and corporate auditors defined by the regulations, etc. of the Tokyo and Sapporo Stock Exchanges for publicly-listed companies. All five of our outside directors and three of our outside corporate auditors serve as independent officers.

Mutual Cooperation among Supervision and Auditing by Outside Directors and Outside Corporate Officers, Internal Audits, Audits by the Board of Corporate Auditors and Accounting Audits, and the Relationship with Internal Control Departments

Outside corporate auditors strive to collect information, coordinate in supervisory functions and enhance the effectiveness of audits through means that include reports on audit plans and results from internal audit departments and accounting auditors via the Board of Corporate Auditors.
At Board of Directors Meetings, outside directors and outside corporate auditors verify the quality of internal control in various ways that include reports from the Internal Control and Auditing Office, Compliance Committee and the Business Process Reengineering Office.

Officer Remuneration

Policy Matters Concerning Officer Remuneration and Calculation Methods

Several Kanamoto directors serve concurrently as corporate officers. Kanamoto believes in an approach that clearly separates remuneration for these duties. Director remuneration is fixed remuneration for management decision-making and auditing functions, while corporate officer remuneration reflects a performance-based evaluation, which links the fixed portion of the remuneration with business performance to function as incentives.
The President and Chief Executive Officer with the consent of the Board of Directors has discretion to determine an amount of compensation for each director within the upper limit of remuneration approved at the General Meeting of Shareholders according to an evaluation of each director.
Kanamoto determines fixed remuneration for outside directors according to their role and independence. Kanamoto determines remuneration for corporate auditors through deliberation with the Board of Corporate Auditors within the upper limit of remuneration approved at the General Meeting of Shareholders.
The Board of Directors has determined the remuneration for each individual is in line with the relevant decision-making policies.
A resolution at the 26th General Meeting of Shareholders convened on January 24, 1991 set the upper limit of remuneration for directors at an annual amount of ¥240 million (not including the employee salaries). The number of directors at the conclusion of the General Meeting of shareholders this year is nine directors. The 56th General Meeting of Shareholders convened on January 28, 2021 set the upper limit of remuneration provided for under the transfer-restricted stock-based compensation system for directors (excluding outside directors) to no more than ¥100 million annually.
A resolution at the 42nd General Meeting of Shareholders convened on January 26, 2007 set the upper limit of remuneration for corporate auditors at an annual amount of ¥50 million. The number of corporate auditors at the conclusion of the General Meeting of shareholders this year is two corporate auditors.
The President and Chief Executive Officer Tetsuo Kanamoto with the consent of the Board of Directors has discretion to determine an amount of remuneration for individual directors. Kanamoto has given the Representative Director and President this discretion because it has determined him to be the best person to evaluate the divisions of which each director is in charge.
Kanamoto provides incentives to directors (excluding outside directors; hereinafter eligible directors) for sustainable enhancements of corporate value and a transfer-restricted stock-based compensation system in order to better share value with the shareholders. The eligible directors will receive payment of all monetary compensation claims to be paid as property contributed in-kind to issue or dispose of common Company stock based on the approval of the Board of Directors. The monetary compensation claim shall not exceed ¥100 million annually, which equates to the issue or disposal of no more than a total of 50,000 shares in common Company stock. Moreover, the Board of Directors shall determine the specific payment period and allocation of payment to each eligible director.

Total Remuneration and Other Compensation by Officer Classification, Total Amount by Type of Remuneration and Other Compensation, and Eligible Number of Officers

Material Salaries Paid to Corporate Officers Serving Concurrently as Employees

Adoption of a Transfer-restricted Stock-based Compensation System

Kanamoto adopted a transfer-restricted stock-based compensation system by resolution at the 56th General Meeting of Shareholders held January 28, 2021.

Overview of Limited Liability Agreements

Kanamoto enters into agreements with outside directors and outside corporate auditors pursuant to the provisions of Article 427, Paragraph (1) of the Companies Act to limit their liability for damages provided for in Article 423, Paragraph (1) of the Companies Act. The limit of liability for damages based on these agreements is the amount stipulated by laws and regulations for outside directors and outside corporate auditors. This limitation of liability only applies if said outside director or outside corporate auditor performed the duties responsible for a liability issue in good faith without gross negligence.

Overview of Limited Liability Agreements for Corporate Officers and Other Senior Management

Kanamoto and its subsidiary companies have entered into limited liability agreements between insurance companies and corporate officers as well as other senior management pursuant to the provisions of Article 430, Paragraph (3), Section (1) of the Companies Act. The insured persons are the directors, corporate auditors, and corporate officers of Kanamoto and its subsidiaries. The insurance contracts indemnify the insured from damages or other liability claims arising from the insured person’s execution of duties. However, these limited liability agreements do not cover damages or liability claims arising from intentional violations of laws or regulations in order to prevent the insured from improprieties in the execution of their duties. Furthermore, Kanamoto pays the entire insurance premium.

Number of Directors

The Kanamoto Articles of Incorporation stipulate that the number of directors shall not exceed twenty (20).

Requirements for Approval of Director Appointments

The Kanamoto Articles of Incorporation stipulate that resolutions on director appointments must be approved by a majority of shareholders who are present and own shareholdings amounting to one-third (1/3) or more of the voting rights of shareholders eligible to exercise their voting rights. Moreover, the Articles of Incorporation prohibit cumulative voting on proposals for director appointments.

Requirements for Special Resolutions at the General Meeting of Shareholders

The Kanamoto Articles of Incorporation stipulate that special resolution requirements for the General Meeting of Shareholders provided for in Article 309, paragraph (2) of the Companies Act shall be adopted by at least two-thirds (2/3) of the shareholders in attendance who hold at least one-third (1/3) of the voting rights of shareholders eligible to exercise their voting rights. The purpose of these requirements is to ease the quorum for special resolutions and ensure smooth General Meetings of Shareholders.

Decision-Making Body for Surplus Dividends and Other Matters

The Kanamoto Articles of Incorporation stipulate that Kanamoto shall determine surplus dividends and other matters as set forth in the provisions of Article 459, paragraph (1) of the Companies Act at the discretion of the Board of Directors, without resolution at the General Meeting of Shareholders, except as otherwise provided for by laws or regulations. The purpose of these requirements is to place surplus dividends and other matters under the authority of the Board of Directors and provide a flexible return of profits to shareholders.

Acquisition of Treasury Shares

The Kanamoto Articles of Incorporation stipulate that Kanamoto may, by resolution of the Board of Directors, acquire its own shares through market transactions or other means pursuant to Article 165, Paragraph (2) of the Companies Act. The acquisition of treasury shares enables Kanamoto to flexibly accomplish financial policies as well as other management measures in response to changes in the economic climate.

Director and Corporate Auditor Exemption from Liability

The Kanamoto Articles of Incorporation stipulate that Kanamoto may, by resolution of the Board of Directors and pursuant to the provisions of Article 426, Paragraph (1) of the Companies Act, exempt directors (including former directors) and corporate auditors (including former Board of Corporate Auditor members) from liability within the limits of laws and regulations as provided for in Article 423, Paragraph 1 of the Companies Act. The purpose of this exemption from liability is to create an environment in which directors and corporate auditors can fully utilize their abilities and fulfill their expected duties.

Basic Policy on Control of Joint-Stock Companies

Kanamoto has not defined basic policies related to persons who determine its financial and business policies.