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Corporate Governance

Basic Policy for Corporate Governance The Gunze Group recognizes that legal and regulatory compliance is essential for meeting our basic management policy of sustainably boosting corporate value. Accordingly, we strive for swift decision- making and timely and appropriate disclosure of corporate information so that we can respond appropriately to the social and economic environment. We therefore consider improving shareholder value, by enhancing the transparency of our management, to be one of our most important management objectives. To achieve this, the Gunze Group seeks to build sound relationships with each stakeholder and strengthen and upgrade our internal control functions as a way to enhance our corporate governance.

Corporate Governance Structure The Gunze Group is a company with a Board of Corporate Auditors, where the Board of Corporate Auditors comprises four Corporate Auditors, two of whom are outside Corporate Auditors (as of June 25, 2026). The Corporate Auditors attend the Board of Directors and other important meetings, conduct onsite audits of business and management divisions, and inspect domestic and overseas subsidiaries, while performing other duties, in order to fulfill their management supervisory function. The current management structure comprises nine Directors (of whom two are women), including three outside Directors. Moreover, the Company has introduced a corporate officer system to facilitate accelerated business decisions
and to strengthen the business execution system, and has appointed 16 corporate officers, including five who also serve as Directors. To clarify management responsibilities and to establish a management framework that can respond more quickly to changes in the business environment, the term of office for Directors and corporate officers is set at one year.

History of Governance Enhancements

Initiatives to Enhance Corporate Governance The Gunze Group has worked to strengthen corporate governance through the initiatives shown in the table below, with the aim of responding to changes in the business environment, accelerating decision-making, strengthening management oversight, ensuring management transparency, and clarifying management responsibilities. The Gunze Group has established the Gunze Corporate Governance Guidelines as its basic policy on corporate governance.

History of Governance Enhancements

	Initiatives
FY2005	Introduced the corporate officer system and reduced the number of Directors
FY2006	Changed the term of office for Directors from two years to one year
FY2006	Appointed outside Directors and female Directors
FY2015	Established the Gunze Corporate Governance Guidelines
FY2018	Increased the number of female Directors to two
FY2019	Established the Nomination/Remuneration Committee (an advisory body to the Board of Directors, chaired by an outside Director)
FY2019	Outside Directors accounted for one-third of the Board of Directors
FY2021	Revised the Gunze Corporate Governance Guidelines
FY2021	Disclosed the skills matrix for Directors and Corporate Auditors

Overview of the conference and committee

Board of Directors

As entrusted by the Company’s shareholders, the Board of Directors assumes the responsibility for realizing efficient and effective corporate governance for the sake of all shareholders, achieving sustained growth for the Gunze Group as a result of realizing this level of corporate governance, and striving to maximize corporate value in the long term. To fulfill its responsibilities, the Board of Directors executes oversight functions over overall management practices in order to ensure fairness and transparency. The Board also nominates, evaluates, and determines remuneration for the President and other executives, assesses significant risks facing the Gunze Group and formulates appropriate responses, and makes decisions on important matters concerning business execution, thereby ensuring the best possible decision-making. As a general rule, the Board of Directors meets once per month (held 13 times in FY2025), during which it makes decisions on important matters related to business execution and matters stipulated by laws, regulations, and the Articles of Incorporation. It also supervises the status of the execution of duties by Directors.

Discussions at the Board of Directors

In addition to matters stipulated by laws, regulations, and the Articles of Incorporation, quarterly financial results, policies for the next fiscal year, operating budgets, and other individual matters are discussed as important business matters, and reports and information from each executive division are shared in a timely and appropriate manner. Outside officers actively ask questions, raise issues, and contribute to discussions from diverse perspectives.
In FY2025, particularly active discussions were held on key issues including the role of the Board of Directors, medium- to long-term management strategies, progress on the Medium term Management Plan VISION 2030 stage2, the cost of capital, structural reforms in the Apparel Business, and personnel system reforms. Proposals and reports were also made and deliberated on individual matters such as the closure and absorption-type merger of subsidiaries, organizational restructuring, and consolidation of business sites.

Selected topics discussed by the Board of Directors

Category	Main themes
Management strategy	• Medium-term Management Plan (formulation and progress) • Management policy and budget formulation policy • Overview of business conditions and future issues and measures • Shareholder strategy and market response • Apparel business structural reform (formulation and progress) • New personnel system • Status of Sustainability Committee activities
Financial results / Finance	• Approval of financial results and budgets • Acquisition of treasury shares • Financing and fund management • Debt guarantees • General Meeting of Shareholders
Organization and Personnel	• Personnel matters concerning Directors and Corporate Officers • Executive remuneration, bonuses, and stock compensation • Organizational restructuring
Governance	• Assessment of Board of Directors’ effectiveness • Status of Risk Management Committee activities • Conflict-of-interest transactions • Assessment of internal control effectiveness, Corporate Auditor audits, and business audits
Individual Matters	• Closure and absorption-type merger of subsidiaries • Consolidation of business sites, etc.

Assessment of Board of Directors’ effectiveness

At the Gunze Group, all Directors and Corporate Auditors conduct an annual assessment on the effectiveness of the Board of Directors as well as their own performance as Company officers and submit their results to the Board of Directors.
Since FY2019, the Board of Directors has been conducting self-evaluations and analyses with advice from an external organization. In March 2026, all Directors and Corporate Auditors who comprise the Board of Directors responded to a survey conducted by the Company. As they responded directly to an external organization, they were assured anonymity in their responses. Based on a report and advice from the external organization on the aggregate results, a report was made to the Board of Directors, and the results were evaluated and discussed. Generally positive evaluations were obtained from the survey in terms of composition, operations, agenda items, execution of individual roles, and mutual supervision, among others. Taking into consideration the changes in the evaluation results following the employment of the external organization and comparisons with the previous year’s evaluation and external data, we believe that the effectiveness of the Board of Directors as a whole is ensured with stability. Going forward, we will implement measures to address the identified issues and continue our efforts to further enhance the effectiveness of the Board of Directors.

FY2025 meeting results

	Times held	Number of agenda items	Number of reports	Attendance (Internal Officers)	Attendance (Outside Officers)
Board of Directors	13	35	46	100%	100%

Main agenda items and reports	Number
Management strategies	16
Financial results / financial affairs	19
Organization and personnel	13
Governance	10
Individual matters	11
Other	12

Analysis and evaluation process

Board of Corporate Auditors

In principle, the Board of Corporate Auditors meets regularly prior to meetings of the Board of Directors and also convenes as necessary for extraordinary meetings. It receives reports, deliberates, and makes resolutions on important matters pertaining to audits, in accordance with laws and regulations, the Company’s Articles of Incorporation, and the Board of Corporate Auditors Regulations.

FY2025 meeting results

	Times held	Number of agenda items	Number of reports Attendance (Internal Officers)	Attendance (Internal Officers)	Board of Corporate Auditors
Board of Corporate Auditors	15	22	25	100%	100%

Activities of Corporate Auditors

The main activities of the Audit & Supervisory Board members are as follows. The main activities carried out by the full-time and part-time Audit & Supervisory Board members are marked with a ● or ○.

Activities	Number of times, etc.	Job assignments
Activities	Number of times, etc.	Full-time	Outside part-time	Part-time
Attendance, expressing of opinions at Board of Directors’ meetings	13 times	●	●	●
Attendance and exchange of opinions at meetings of outside Directors (reporting sessions on initiatives from functional departments and business divisions)	8 times	●	●	●
Attendance and expression of opinions at Corporate Officers’ Meetings	15 times	●	○(Observer)	○(Observer)
Attendance and expression of opinions at other important meetings (budget meetings, business group head meetings, Sustainability Committee, Risk Management Committee, company-wide project meetings, etc.)	38 times	●		○
Viewing and verification of important documents (approval documents such as requests for approval, minutes of important meetings, and important contracts)	As needed	●		○
Individual meetings and exchanging of opinions with Directors	19 times	●	○	○
Individual interviews with corporate officers and senior employees, hearings on business execution status, and exchanges of opinions	88 times	●	○	○
Visits to and surveys of major offices and affiliated companies	24 entities	●	○	○
Attending inventory inspections at major business sites and affiliated companies	3 entities	●
Investigation, monitoring, and verification of the development and operational status of the internal control system through the above activities, and collection of voluntary inspection forms from departments and offices	Voluntary inspection 43 entities	●	○	○
Cooperation with subsidiary auditors (Group auditors’ liaison meetings, individual communications)	Liaison meetings 2 times	●	○	●
Cooperation with internal audit divisions (meetings to confirm audit plans and audit reports, reports to the Board of Corporate Auditors, etc.)	10 times	●	○	●
Cooperation with independent accounting auditors (meetings relating to audits and reviews, etc.)	11 times	●	○	○

●:Responsibility
○:Partial responsibility

Director and Corporate Auditor Appointments

Regarding the nomination of Director and Corporate Auditor candidates and the appointment of senior management, the Nomination/ Remuneration Committee deliberates on each matter based on the selection criteria stipulated by the Board of Directors, after which the Board of Directors makes a final decision. When appointing Directors, given that the Gunze Group operates its functional solutions, medical, apparel, and lifestyle creations businesses in a diversified and global manner, the Board of Directors as a whole must ensure appropriate and prompt decision-making and oversight of execution for these business activities. To achieve this, our fundamental policy is to form a well-balanced Board of Directors consisting of a balanced mix of Directors, considering diversity including gender and internationality. This includes Directors appointed from within the Company with knowledge, experience, and skills in each business field, as well as in finance and accounting, technology development and research, sales and marketing, legal affairs, and human resources; and multiple outside Directors who can provide active advice and proposals from a fair and objective standpoint, leveraging their management experience at other companies and their specialized knowledge and experiences from outside the Company. Appointments are decided by the Board of Directors, following deliberation by the Nomination/Remuneration Committee. When appointing Corporate Auditors, our basic policy is to form the Board of Corporate Auditors with individuals capable of expressing fair opinions from a professional perspective and independent standpoint, including at least one person possessing appropriate expertise in finance and accounting. Appointments are decided by the Board of Directors, following deliberation by the Nomination/ Remuneration Committee and with the consent of the Board of Corporate Auditors. With regard to Representative Directors, Directors, and Corporate Officers who are members of senior management, the Nomination/Remuneration Committee conducts an annual review of their performance and other matters. If the Committee finds that the criteria for dismissal established by the Board of Directors are met, it may recommend dismissal to the Board of Directors. If the Board of Directors, after verifying the review results, concludes that the criteria for dismissal are met, the relevant individuals shall not be nominated as Director candidates and shall be dismissed from their respective positions as Representative Director, Director, or Corporate Officer.

Directors and Corporate Auditors’ skill matrix

Attributes		Name, Posts, etc.	Years of service [Age]	Nomination/ Remuneration Committee member	Internal executive	Outside executive	Main specialty areas
Attributes		Name, Posts, etc.	Years of service [Age]	Nomination/ Remuneration Committee member	Management in each area of business	Management experience at other companies	Finance/ accounting	Production technology/ R&D	Sales/ marketing	Legal	Internationality
Directors	Male	Toshiyasu Saguchi Representative Director & Chairman	12 years [64]	○	○				○
	Male	Takahiro Oka Representative Director	2 years [63]	○	○				○		○
	Independent Male	Osamu Kujiraoka Outside Director	7 years [70]	○ (Chair)		○			○
	Independent Female	Rie Kida Outside Director	6 years [57]	○		○			○
	Independent Female	Kimiko Funato Outside Director	— [57]	○						○
	Male	Hirokazu Sawada Director	3 years [61]				○
	Male	Tomohisa Okuda Director	2 years [61]		○			○			○
	Male	Ryoji Kawanishi Director	5 years [63]		○		○				○
	Male	Shojiro Matsuda Director	1 year [57]		○			○			○
Corporate Auditors	Male	Tomio Suzuki Standing Corporate Auditor	5 years [62]				○				○
	Independent Male	Koji Funatomi Outside Corporate Auditor	3 years [65]				○
	Independent Male	Norihito Naka Outside Corporate Auditor	3 years [64]							○
	Female	Hiroko Yoshika Corporate Auditor	1 year [61]							○	○

・A circle indicates the main skills possessed by each person.(As of June 25, 2026)

Composition of the Board of Directors board_of_directors

Director and Corporate Auditor Training

Immediately after taking up their posts, newly appointed Directors of the Company, including independent outside Directors, are required to participate in training programs offered by the Director in charge of legal affairs and compliance or external attorneys at law. They are also to be informed about management strategies, financial positions, and other important matters by the President or Director(s) in charge of executing business operations or other executives named by the President. To fulfill their respective roles, the Directors and Corporate Auditors are required to proactively collect information regarding financial positions, legal and regulatory compliance, corporate governance, and other matters. They must also continuously strive to improve their knowledge and skills. We also provide in-house training programs, while expenses related to external training and seminars are borne by the Company based on requests for reimbursement.

Nomination/Remuneration Committee

The Company established the Nomination/Remuneration Committee as an advisory body to the Board of Directors. Comprising two Representative Directors and three outside Directors, and chaired by an outside Director, this Committee serves to ensure independence, transparency, and objectivity in decision- making procedures for the nomination of candidates for Director and Corporate Auditor, the appointment of senior management, and the determination of remuneration for Directors. In FY2025, the Committee deliberated on the appointment and dismissal of Representative Directors, Directors, and Corporate Officers, as well as remuneration for Directors, Corporate Auditors, and Corporate Officers. It also confirmed and exchanged opinions on the training and development of senior management candidates, including candidates for Chief Executive Officer (CEO). In FY2022, in conjunction with the launch of the Medium-term Management Plan VISION 2030, we revised the executive remuneration system to increase the percentage of performance-linked compensation, with the aim of further motivating executives to maximize Gunze’s corporate value. After conducting a multifaceted examination, including consideration of the consistency between the content of individual compensation based on the revised system and the decision-making policy, the Committee reported its findings to the Board of Directors.

FY2025 meeting results

		Times held	Number of agenda items	Number of reports	Attendance (Internal Officers)	Attendance (Outside Officers)
Nomination/Remuneration Committee		4	6	6	100%	100%

Matters referred to the Nomination/Remuneration Committee

・Appointment and dismissal of Directors and Corporate Auditors (matters to be resolved by the General Meeting of Shareholders), and appointment and dismissal of Corporate Officers
・Appointment and dismissal of Representative Directors and Directors with titles
・Succession planning (including training/development)
・Limits of Director compensation (matters to be resolved by the General Meeting of Shareholders)
・Director compensation, etc. (including individual amounts)
・Other important matters of business management relating to nomination and remuneration

FY2025 deliberations and decisions

・Appointment and dismissal of Directors
・Appointment and dismissal of Corporate Officers
・Director bonuses and stock compensation
・Appointment and dismissal of Representative Directors and Directors with titles
・Revisions to Director remuneration
・Training/development of senior management candidates

Succession Plan Under the recognition that the development of a successor for the President is an important matter for management, following deliberations by the Nomination/Remuneration Committee, the Board of Directors formulates a succession plan that specifies qualifications for the post of president and a candidate development policy, and provides final approval for the plan.
The Board of Directors shares this president succession plan among all members of the Board, periodically confirms the development status of senior management with the potential to succeed the President made by the Nomination/Remuneration Committee, and determines a candidate for succeeding the President in accordance with the succession plan when the current President steps down from this post.

Executive Remuneration System

Performance-linked bonuses Bonuses are paid to Directors as performance-linked bonuses at a fixed time each year.
The performance indicator selected as the basis for calculating the performance-linked bonuses is the Gunze Value Added (GVA) for each fiscal year. The reason for selecting this performance indicator is that it is linked to the Gunze Group’s business performance and shareholder interests, and we determined that it is the most appropriate indicator for raising awareness of improving business performance each fiscal year. The amount of the performance-linked bonus is calculated by multiplying each individual executive’s monthly remuneration by the executive bonus coefficient established for each position and the performance-linked coefficient corresponding to the increase/decrease in GVA relative to performance forecasts.
The actual GVA for the fiscal year under review was a deficit of 4.0 billion yen (a deficit of 0.9 billion yen in the previous fiscal year).

Performance-linked stock compensation To raise awareness of the need to enhance corporate value over the medium to long term, Directors (excluding outside Directors) are granted restricted stock at a fixed time each year as performance-linked stock compensation.
The performance indicators selected as the basis for calculating the amount of performance-linked stock compensation are a relative evaluation of Total Shareholder Return (TSR) and TOPIX for each fiscal year, as well as an evaluation based on the degree of achievement of the company-wide CO₂ emissions reduction target.
These indicators were selected because they are considered the most appropriate for further aligning interests with shareholders, raising awareness of contributions to enhancing the corporate value of the Gunze Group, and promoting business activities that reduce environmental impact.
The amount of performance-linked stock compensation is calculated by multiplying each individual executive’s monthly remuneration by coefficients established for each position for the fixed and variable components. The variable component is calculated by applying a performance-linked coefficient based on the relative evaluation of TSR and TOPIX and the degree of achievement of the company-wide CO₂ emissions reduction target.
The TSR growth rate for the previous fiscal year used to determine the FY2025 stock compensation was 152.86% (compared with the end of FY2021; TOPIX growth rate: 147.24%), while the company-wide CO₂ emissions reduction rate was 37.2% (compared with FY2013; target: 28.0%).

Officer remuneration

Remuneration type	Total amount of remuneration (millions of yen)	Total amount of remuneration by type (millions of yen)			Number of eligible officers
Remuneration type	Total amount of remuneration (millions of yen)	Fixed compensation	Performance-linked bonuses	Performance-linked stock compensation	Number of eligible officers
Directors (excluding outside Directors)	139	84	16	38	7
Corporate Auditors (excluding outside Corporate Auditors)	24	24	-	-	3
Outside Directors	22	22	-	-	3
Outside Corporate Auditors	14	14	-	-	2

(Note)
The number of eligible officers includes one Director and one Corporate Auditor who retired at the conclusion of the Ordinary General Meeting of Shareholders held in June 2025.

KPI of the executive remuneration system

Remuneration type	Item	Details	Results
Bonus	GVA	Change versus performance forecast	¥ (2.3) billion * Actual: ¥ (4.0) billion Forecast: ¥ (1.7) billion
Stock compensation	Relative evaluation of TSR and TOPIX	TSR growth rate / TOPIX growth rate	103.82% * TSR: 152.86% TOPIX: 147.24%
Stock compensation	Degree of achievement of the company-wide CO₂ emissions reduction target	Reduction exceeding the CO₂ emissions reduction target	Achieved * Reduction rate: 37.2% Target: 28.0%

Compensation ratio (%)

	Fixed compensation	Performance-linked bonuses	Performance-linked stock compensation	Total
Representative Director & President	50	30	20	100
Directors (excluding outside Directors)	62	24	14	100
Corporate Auditors (excluding outside Corporate Auditors)	100	-	-	100
Outside Directors	100	-	-	100
Outside Corporate Auditors	100	-	-	100

(Note)
For Directors, the ratio includes remuneration based on the execution of duties.

Business Execution System

Corporate Officers’ meeting The Corporate Officers’ Meeting was established to discuss and decide important matters concerning Group-wide management and business execution, coordinate activities across divisions, and deliberate and decide particularly important individual control matters. Its members include the Chairman, President, and Directors or Corporate Officers who oversee or are responsible for each functional department and business segment. In FY2025, the Committee met 15 times and discussed and decided upon 53 proposals (FY2024: 16 times, 54 proposals).

	Times held	Number of agenda items	Attendance
Corporate Officers’ Meeting	15	53	100%

Main agenda items	Items submitted for discussion/reported
Business strategy	16
Budgeting and financial reporting	14
Finance	11
Organization and human resources	7
Governance and risk management	1
Medium-term Management Plan	2
Individual projects	2

Business group head meetings

These meetings are held to ensure efficient management of the Gunze Group and achieve management targets by thoroughly communicating management policies and important matters, strengthening the framework for management participation and the operation of internal controls, and coordinating and controlling business group management. Reports are submitted each month in a prescribed format. At least once each quarter, face-to-face meetings are held among the President, Directors or Corporate Officers who oversee or are responsible for functional departments and business segments, heads of functional departments, and business group heads to strengthen communication. Functional departments explain important company-wide matters to share information, while each business division reports on recent profit and loss results, the outlook, the impact of social conditions on plan execution, and related measures. Through these activities, we monitor progress toward achieving management targets.

	Number of reports	Attendance (Internal Officers)
Business group head meetings	12	100%

Executive meetings

Executive meetings provide opportunities for outside Directors and Corporate Auditors to deepen their understanding of the businesses and directly exchange opinions on current issues. Reports cover the Medium-term Management Plan, the current status and key initiatives of each business and functional department, and the status of company-wide initiatives to address social issues. In FY2025, seven meetings were held, with Q&A sessions and discussions on twelve themes.

	Times held	Number of agenda items	Attendance
Executive meetings	7	12	98%

Cases	Number of themes
Management policy and Medium-term Management Plan	2
Reports on current status and key initiatives of each business unit	3
Reports on current status and key initiatives of each functional department	5
Status of efforts to address individual issues	2

Internal Systems Concerning Timely-Disclosure of Corporate Information

Important facts decided or occurring in each division are centrally collected by the Information Officer without delay. With regard to “decided matters” and “financial information,” the Information Officer discusses the need for disclosure with the relevant parties and then discloses them at the time a resolution is made by the body that actually decides on the execution of the Company’s operations, such as a General Meeting of Shareholders or by resolution of the Board of Directors. With regard to “incidents,” the Information Officer promptly discusses them with management, including the top management, as soon as he or she becomes aware of their occurrence and puts in place a system for their timely and appropriate disclosure.
In the case of important company information, the disclosure of which has been decided, the information officer will immediately issue instructions to the information disclosure officer, who will process disclosures in a timely and appropriate manner in accordance with the Timely Disclosure Rules and the Guidebook for the Timely Disclosure of Corporate Information.

Governance Dialogue Between the President and an Outside Director

Initiatives regarding cross-shareholdings

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