The Board of Directors

How the Board of Directors Should Function

Kao’s Board of Directors will conduct a substantial delegation of authority to the executive organizations, and further strengthen its monitoring function to encourage appropriate risk-taking by management and prompt and bold decision-making. In particular, the Board of Directors will effectively supervise the appropriate allocation of management resources, including human capital, and the adequate implementation of strategies by management. It also recognizes that it is the responsibility of the Board of Directors to develop internal controls and risk and crisis management systems, and will build and operate these systems appropriately.

Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size of the Board of Directors/Skill Matrix

At Board of Directors meetings (attended by Directors and Audit & Supervisory Board Members), Directors provide broad direction regarding business strategies and Directors and Audit & Supervisory Board Members deliberate on their appropriateness and the risks related to their realization and other matters in an objective and multidimensional fashion.
The Kao Group Mid-term Plan “K27” includes the vision of “Protecting future lives.” To accomplish this, the Company’s management is executing business in line with the Company’s strategies of (1) becoming an essential company in a sustainable world, (2) transforming to build robust business through investment, and (3) maximizing the power and potential of employees.
The Board of Directors considers it important for Inside and Outside Directors and Audit & Supervisory Board Members to complement each other with each of their knowledge, experience, and abilities, and to be able to demonstrate high effectiveness as a whole, in order to supervise that management is implementing business execution in a framework for transparent, fair, prompt and decisive decision-making accordance with the above strategies.

As of March 22, 2024

Attributes Experience / Knowledge / Expertise Main reasons for marking “✓”
Term of office Gender Nationa
-lity		 Manage
-ment		 Global Consu
-mer
goods
industry		 Chemi
-cal
industry		 Human
capital
strategy		 Resea
-rch		 Environ
-ment/
society		 IT/DX Legal/
risk
manage
-ment		 Finance/
account
-ing
Directors
Yoshihiro Hasebe
8 years Male Japan ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ - Experience in the Company’s Research and Development (including experience in
global operations, and knowledge of fundamental and
applied technologies and matter cycle research) (Doctor of Engineering)
- Experience at the Company’s overseas business promotion projects
- Experience as the Company’s Senior Vice President of Strategic Innovation
Technology, Global
- Experience as the Company’s officer responsible for Human Capital Development
Masakazu Negoro
1 year Male Japan ✓ ✓ ✓ ✓ - Experience in the Company’s Chemical Business and management experience at
overseas subsidiaries (Chemical Business)
- Experience at the Company’s Procurement, Global (including promotion of
sustainability activities in procurement)
- Experience as the Company’s officer responsible for Finance Department
Toru Nishiguchi
1 year Male Japan ✓ ✓ - Experience in the Company’s Consumer Products Business
- Experience in management and global marketing at the Company’s overseas subsidiaries
- MBA
David J. Muenz
2 years Male United States ✓ ✓ ✓ ✓ - Experience in research and business at the Company’s overseas subsidiary
- Experience in the Company’s ESG, Global
Osamu Shinobe
6 years Male Japan ✓ ✓ ✓ - Experience as the top executive of a major international airline (including
experience as Chairman of CSR and Environmental Management Committee)
Eriko Sakurai
2 years Female Japan ✓ ✓ ✓ ✓ ✓ - Experience as the head of a global division and the regional head of a major U.S.
chemical company
- Experience in overall human resources strategy including compensation,
development, and assignment in global businesses
- Knowledge of sustainability in the chemical field
Takaaki Nishii
1 year Male Japan ✓ ✓ ✓ ✓ - Experience as the top executive of a major food company
- Experience in the management of overseas subsidiaries
- Experience in the human resources department
Makoto Takashima
- Male Japan ✓ ✓ ✓ - Experience as the top executive of a major financial institution
- Experience in international and corporate planning departments
Audit & Supervisory Board Members
Yasushi Wada
1 year Male Japan ✓ ✓ ✓ - Experience in the Company’s Product Quality Management
- Experience at the Company’s global production sites
- Experience in the Company’s process engineering development and plant
management
Sadanao Kawashima
3 years Male Japan ✓ - Experience in the Company’s Finance Department
- Experience in the Company’s Department of Internal Audit
Hideki Amano
7 years Male Japan ✓ ✓ ✓ ✓ - Certified Public Accountant
- Served overseas and the head of the global audit network for the Asia-Pacific
region
- Experience in human capital strategy, risk management, etc., as the COO of audit and
consulting operations
Nobuhiro Oka
6 years Male Japan ✓ - Attorney-at Law
- Ph.D. in Law (Chuo University)
- Professor at Keio University Law School
Saeko Arai
- Female Japan ✓ ✓ ✓ - Certified Public Accountant
- Experience as a representative of a U.S. corporation
- Experience as a partner of an IT venture company

(Scroll horizontal bar to view all items.)

  • * The areas of experience, knowledge, and expertise of each Director and Audit & Supervisory Board Member that are particularly expected of them are marked with a “✓.”
Experience/
knowledge/expertise		 Reasons for selection as experience/knowledge/expertise
Management In order to effectively supervise the business execution by management, it is useful for Directors to have their own experience as top management. We
believe that their experience as top management is necessary for the Company’s management to realize appropriate risk-taking and aggressive governance
that encourages prompt and bold decision-making.
Global As part of its global strategies, the Company aims to provide one-of-a-kind value that is less likely to be involved in fierce competition with competitors and
price competition. We will also accelerate global growth by shifting to a local production for local consumption model based on local value, cost performance,
and manufacturing. In order to properly offer advice and supervise the execution of these activities, we believe that it is necessary to have experience and
insight in management positions outside Japan and at non-Japanese companies.
Consumer goods
industry
Chemical industry		 In order to effectively supervise business execution by management, it is necessary to discuss matters from a higher perspective with taking a bird’s-eye
view of the Company’s entire business domain. To this end, it is important to have a deep understanding of the business environment and market characteristics in
the consumer goods and chemical industries, which are the Company’s business domains, as well as to gain insight into future prospects. Regarding the
execution of business, including marketing, we are actively delegating authority to executive officers with specialized expertise in order to speed up decision-
making and execution.
Human capital strategy The Company has formulated a human capital strategy based on its corporate strategy, and has defined roles and human resource requirements that will be
necessary for future growth, rather than as an extension of existing strategies. The Company is working to secure human resources by systematically
developing and appointing them from outside organizations. We believe that it is necessary to supervise the adequacy and progress of this human capital
strategy from expert knowledge and experience.
Research The Company’s research is the driving force behind generating constantly innovative and high-value products. The Company is committed to Essential
Research and uses its accumulated technological assets to create innovation. We believe that it is necessary to supervise whether we are able to maintain
and develop a research system that continues to generate innovation, and whether we are able to expand our business and increase our corporate value
while effectively using the created technological assets.
Environment/society In April 2019, the Company announced its ESG Strategy, the Kirei Lifestyle Plan, and began ESG management. In order to realize a Kirei World in which all life
lives in harmony, which is our purpose, we will implement the Kirei Lifestyle Plan based on corporate strategies that are integrated with the ESG Strategy, in
consideration of social changes and demands. We believe that it is necessary for the Board of Directors to supervise these matters appropriately in light of
public trends.
IT/ digital
transformation (DX)		 In order to realize K27, we believe that innovative initiatives that actively utilize IT and digital transformation, such as new business creation, digital marketing
and digital communications, which are not an extension of existing initiatives, are essential. With regard to experience, knowledge, and expertise related to
IT/DX, we will utilize executive officers and external human resources to compliment supervision by the Board of Directors.
Legal/risk
management		 Various risks are expected to arise in daily corporate activities, as well as in the creation of new businesses and business innovation. The Company believes
that it is an important challenge in management to recognize these risks, manage them appropriately, and respond strategically, proactively, and ex post
facto to legal matters.
Finance/accounting It is a natural responsibility to ensure the reliability of financial reporting that influences investment decisions. In order to achieve sustainable growth in
corporate value, it is essential to conduct management in consideration of the improvement of profitability and capital efficiency, based on appropriate capital
allocation from a company-wide perspective. For this reason, we believe that the Board of Directors needs experience, knowledge, and expertise in finance
and accounting.

In addition to knowledge, experience and ability, the Company recognizes that diverse perspectives that come from diversity of the Board of Directors in terms of gender, nationality, race and age contribute to the promotion of business, global expansion and proper supervision and auditing, and promotes the appointment of such diverse personnel as Directors and Audit & Supervisory Board Members. The Company’s target for the ratio of women on the Board of Directors is 30% by 2025.
The Company sets the appropriate size of the Board of Directors in consideration of the balance between having diverse personnel required to conduct the proper deliberations and supervision of execution and a small Board of Directors to accelerate decision-making for dealing with business expansion and other matters, on the premise of the delegation of responsibility to appropriately placed Executive Officers. The Company aims to have Outside Directors comprise at least half of the Board of Directors to ensure its diversity and influence and emphasizes their independence. In addition, the Company aims to have a majority of Outside Audit & Supervisory Board Members who meet the Standards for Independence.

Attending Members for Meetings of the Board of Directors, the Audit & Supervisory Board and Other Committees

◎ Indicates Chairman of the Board or specified committee. ○ Indicates attending member.

Name Age
（as of March 22, 2024）		 Board of
Directors		 Audit &
Supervisory
Board		 Committee
for the
Examination
of the Nominees
for Directors
and Audit &
Supervisory
Board
Members		 Compensation
Advisory
Committee for
Directors and
Executive Officers		 Compensation
Advisory
Committee
for Audit &
Supervisory
Board Members		 Attendance
Board of
Directors		 Audit &
Supervisory
Board
Directors
Yoshihiro Hasebe
63 〇 〇 〇 15/15 ー
Masakazu Negoro
64 〇 11/11*2 ー
Toru Nishiguchi
62 〇 11/11*2 ー
David J. Muenz
63 〇 15/15 ー
Osamu Shinobe
Outside/
Independent
71 ◎ 〇 ◎ 〇 15/15 ー
Eriko Sakurai
Outside/
Independent
63 〇 ◎ 〇 15/15 ー
Takaaki Nishii
Outside/
Independent
64 〇 〇 〇 11/11*2 ー
Makoto Takashima
Outside/
Independent
65 〇 〇 〇 ー*1 ー
Board Members
Audit & Supervisory
Yasushi Wada
64 〇 ◎ 11/11*2 11/11
Sadanao Kawashima
64 〇 〇 15/15 11/11
Hideki Amano
Outside/
Independent
70 〇 〇 ◎ 15/15 11/11
Nobuhiro Oka
Outside/
Independent
60 〇 〇 〇 〇 15/15 11/11
Saeko Arai
Outside/
Independent
60 〇 〇 〇 ー*1 ー*1
  • * 1 Assumed at the Shareholders Meeting in March 2024.
  • * 2 The Board of Directors met 11 times since Mr. Negoro, Mr. Nishiguchi, Mr. Nishii and Mr. Wada assumed the position.

Major topics discussed by the Board of Directors

In FY2023, the Board of Directors, in accordance with the Board of Directors’ approach confirmed in FY2022, focused its deliberations on the following points.

<How the Board of Directors should function>

Kao’s Board of Directors will conduct a substantial delegation of authority to the executive organizations, and further strengthen its monitoring function to encourage appropriate risk-taking by management and prompt and bold decision-making. In particular, the Board will effectively supervise the appropriate allocation of management resources, including human capital, and the adequate implementation of strategies by management. It also recognizes that it is the responsibility of the Board to develop internal controls and risk and crisis management systems, and will build and operate these systems appropriately.

Monitoring of the progress of the Mid-term plan and issues

The Board of Directors monitored business indicators and the progress of the Kao Group’s Mid-term plan “K25” at monthly meetings, and held an interim review of K25 to discuss structural reforms and growth strategies. As a result of the interim review of K25, the Kao Group Mid-Term Management Plan “K27” was re-formulated, and discussions and implementation of structural reforms are in progress.

Human capital strategy

The Board of Directors confirmed the recognition of issues in the human capital strategy and the direction of response to the issues found therein and discussed the human capital strategy to realize the Company’s growth strategy. It was pointed out that it is necessary to further deepen the discussion on the requirements, training, and acquisition of human resources to take charge of the growth strategy. The Board will continue to ensure that time is set aside for discussion and that the growth strategy is implemented. The Board also continue to deliberate on the progress and results following the introduction of the new human capital revitalization system OKR (Objectives and Key Results), which encourages employees to take on new challenges. The Board will ensure that diverse challenges in various Group locations will increase and expand, and that further collaboration will be promoted through dialogue.

Sustainability (Climate Change Risks/Human Rights, etc.)

The Board of Directors received reports on the Kao Group’s initiatives, including global ESG trends and the incorporation of “decarbonization” and “biodiversity” strategies into business plans, and confirmed their promotion status. The Board will continue to review issues related to sustainability.

Establishment and Operation of Internal Control System

The Board of Directors was confirmed that the internal control system has been established and is operating without any major problems.

In addition to the above, monthly reports on execution are made by directors who concurrently serve as executive officers, and reports on matters deliberated by the Management Board are made by the executive officer in charge.

Evaluation of the Effectiveness of the Board of Directors

On an annual basis, an evaluation is conducted at a meeting of the Board of Directors in order to make improvements aimed at enhancing the effectiveness of the Board of Directors. Based on the idea that the roles and responsibilities of the Board of Directors must be shared by the entire Board of Directors, the Company believes that it is effective for all members who participate in meetings of the Board of Directors, including Audit & Supervisory Board Members, to conduct an evaluation using a method that entails expressing their own opinions and engaging in free and open discussion. However, the Company also recognizes the usefulness of an objective evaluation by a third party, with an eye to introducing activities that further enhance the effectiveness of the Board of Directors.
For the FY2023 evaluation, prior to the self-assessment at the meeting of the Board of Directors held in January 2024, a survey of the ten Directors and five Audit & Supervisory Board Members was conducted on the topics below. Feedback on the results was then provided before the meeting, during which the Board engaged in discussions and exchanged opinions with a focus on areas where there is room for improvement. The Committee for Examination of Nominees for Directors and Audit & Supervisory Board Members and the Compensation Advisory Committee for Directors and Executive Officers were evaluated at the same time. Furthermore, third parties provided advice on the formulation and analysis of questionnaire items so that objective perspectives can be reflected in the questionnaires and analysis.
The following is a summary.

Results of the FY2023 Evaluation of the Effectiveness of the Board of Directors

Overall, it was found that the Board of Directors has adequately exercised its supervisory functions, and that its effectiveness has been maintained. However, the evaluation also identified issues to be addressed in order to further improve the Board’s effectiveness, and opinions were shared regarding future initiatives.

Agenda Item Selection and Discussions

FY2022 Issues FY2023 Initiatives FY2023 Evaluation and Issues Future Initiatives
  • The issues to be addressed in order to achieve the Mid-term Plan K25 and the interim summary
    needed to be discussed in greater depth, including quantitatively.
  • K25 interim summary was performed, and structural reforms and growth strategies were discussed.
  • Focus topics for each business segment were reported.
  • Business status indicators and the progress status of K25 were monitored through monthly meetings of the Board of Directors.
  • Based on the results of the K25 interim summary, the Mid-term Plan K27 was reformulated, and progress was made in both discussing and implementing structural reforms.
  • Further discussion is needed regarding growth strategies and business segments that are experiencing issues.
  • Further improvements should be made to monitoring of management indicators under ROIC management.
  • Set the time for ongoing discussions at meetings of the Board of Directors, while also being aware of the integration of growth strategies and challenged businesses with ESG strategies.
  • Evolve the method of management indicators to be monitored and report regularly on the performance against such management indicators.
  • Stakeholder relations strategies needed to be discussed.
  • Reports were presented at meetings of the Board of Directors before and after IR activities.
  • Deliberations are being conducted with greater attention paid to key stakeholders, including investors.
  • Growth strategies need to be demonstrated more clearly.
  • Continue to engage in deliberations while paying attention to key stakeholders and how to demonstrate growth strategies.
  • Further discussions were needed regarding how human capital strategies relate to business strategies.
  • Discussed human capital strategies and human capital structural reforms.
  • Discussions and decisions on the Structural reforms in relation to human capital are positively evaluated.
  • It is necessary to deepen discussions regarding what is required of the human capital responsible for growth strategies, and how to develop and acquire said human capital.
  • Further discuss concrete human capital strategies linked to the growth strategies at meetings of the Board of Directors.

Structure, Status of Operation and Deliberations of the Board of Directors

FY2022 Issues FY2023 Initiatives FY2023 Evaluation and Issues Future Initiatives
  • There were times when the level of reporting was too granular, resulting in unfocused discussions.
  • Defined the indicators that are needed in order to achieve K25 (and K27).
  • A presentation format was used at meetings of the Board of Directors.
  • The Board of Directors is appropriately fulfilling its supervisory functions.
  • Presenters should make discussion points clear.
  • Use the presentation format at all meetings of the Board of Directors, and clearly indicate discussion points.
  • Ongoing deliberations were needed regarding the necessary elements for realizing the vision of the Board of Directors, as well as the Board’s composition.
  • Corporate governance was discussed, and official policy was formulated and disclosed.
  • The disclosure of the corporate governance policy is commendable. The composition of the Board of Directors was in line with the corporate governance policy.
  • The composition of the Board of Directors, including diversity of Directors (skills, women and global human capital), will be discussed on an ongoing basis.

Results of the FY2023 Evaluation of the Effectiveness of the Committee for Examination of Nominees for Directors and Audit & Supervisory Board Members

The Committee engaged in sufficient discussions regarding the composition of the Board of Directors, the structure of the Board of Directors, including Directors and Audit & Supervisory Board Members, and the succession plan for appointing future CEO. It reported its findings to the Board of Directors, and it was found that the overall effectiveness of the Committee has been maintained. Opinions were shared regarding future initiatives to further improve the Committee’s effectiveness.

FY2022 Issues FY2023 Initiatives FY2023 Evaluation and Issues Future Initiatives
  • Ongoing deliberations was needed regarding the vision of the Board of Directors, as well as the Board’s composition.
  • There was a need for ongoing verification and deeper discussions regarding the succession plan.
  • There were ongoing deliberations regarding the necessary elements for realizing the vision of the Board of Directors, as well as the Board’s composition.
  • There were ongoing deliberations regarding the succession plan.
  • Discussions were sufficient.
  • More concrete discussions are needed regarding human capital requirements and training plans.
  • Continue deliberating on the vision of the Board of Directors, as well as the Board’s diversity.
  • Continue discussions regarding the succession plan.

Results of the FY2023 Evaluation of the Effectiveness of the Compensation Advisory Committee for Directors and Executive Officers

The Committee devoted sufficient time to in-depth discussions of the overall compensation system for Directors and Executive Officers, compensation standards and other relevant topics, and it was found that its effectiveness has been maintained.

FY2022 Issues FY2023 Initiatives FY2023 Evaluation and Issues Future Initiatives
  • There was a need for ongoing deliberations regarding the compensation system for Directors and Executive Officers.
  • Discussed from the concept of a policy on the compensation system for Directors and Executive Officers overall.
  • Deliberations were conducted appropriately.
  • Continue to perform verifications and deliberations.

Corporate Governance

Corporate Governance

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