Corporate Governance and Compliance

Yokohama Rubber Group is striving for further improvement and enhancement of our Corporate Governance Supporting System to realize management with health, safety, transparency, and fairness based on our "Corporate Philosophy". Without this, our management body would not be functioning to continue to improve our various corporate values. We aim to establish our management so that it will continue to gain "steadfast credibility" from all our stakeholders.

Corporate Governance Support System

Our support system of corporate governance is on top of various organizations stipulated under the Companies Acts (General Shareholder's Meeting, Representative Director, Board of Directors, Board of Auditors, and Accounting Auditors). We have also deployed a Corporate Officer System in order to ensure prompt management decision making and execution of work operations by making clear the supervision of our management and execution of work operations. Also, in order to fortify strategizing functions in our top management, we conduct discussions to understand the current status of various business schemes and business strategies by holding Management Meeting among our Directors as core members. The Chair of the Board Meeting is our Chairman and cannot serve as a Corporate Officer at the same time. Also, we do not appoint any External Directors.

Under our systems, Corporate Officers can get know the status of our business operations by attending various important meetings or committees such as the Management Meeting. We have three pillars in our auditing system; the audits done by our Corporate Officers who supervise work execution by our Directors, accounting audits done by our independent accounting auditors as external audits, finally, the audits done by our Internal Audit Department for work operation by our each corporate division and group companies, plus accounting audits. They function by maintaining each other's independency; by establishing the three pillars of the audit system, our Corporate Auditors can fortify the function of Corporate Auditors by obtaining information from our Accounting Auditors and Internal Audit Department in a timely manner.

Also, in order to secure transparency and fairness in appointment and various benefits of our Directors, we will determine them at the Board of Directors' Meeting by establishing a Personnel/Remuneration Committee for Corporate Officers and Directors followed by our review. We have deployed the Merit System so that the part of their remuneration is in proportion with our actual business performance. Also, the measurement for critical matters such as conflict of interest will be determined in accordance with the Regulations of our Board of Directors.

Corporate Governance Supporting System (as of June 29, 2011)

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Improvement of our Corporate Governance System

We have made resolutions under the "Basic Guidelines for Corporate Governance in Accordance with Companies Act" during our Board of Directors' Meeting in May 2006. Not only do we follow up with their activity status every year, but also we keep making further enhancements such as our review by aiming for clearer description of the "Guidelines of the Elimination of Anti-Social Behaviour" in April 2009. Also, to comply with the J-SOX Law effective from the fiscal year of 2008 (evaluation of support system for financial account in accordance with Financial Instruments and Exchange Act), it has been confirmed that our corporate governance system is effective both in internal and external evaluation in the fiscal year of 2011. We will continue to make improvements on this aspect as well in order to maintain our sustainable and effective functions.

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Risk Management Support System

We have established a Risk Management Committee to manage risks in a cross-sectional manner and handle properly anything that may impact our company management greatly. Our Risk Management Committee has two functions; to "act promptly in case of any emergency situation occurred" and to "confirm what to do towards potential risks and establish a meticulous risk management supporting system". We have divided potential risks towards the entire Yokohama Rubber Group into Safety, Earthquake/Fire, Compliance, Environment, and so on; followed by our development upon setting up of guidelines and measurements from each Committee and Body for Meeting. Also, each of our business units is addressing not only the preceding descriptions, but also various risks related to quality and business management.

In the wake of the Great Eastern Japan Earthquake that struck the Tohoku region on March 11, 2011, we established a "Central Disaster Handling Division" under our President as the Head, to handle the emergency situation right after the earthquake broke out. The Central Disaster Handling Division gave instructions to our employees on duty remaining in our company premises and office buildings, understanding of damage situation both in human and facilities, any measures to avoid the effect on our customers, and relief goods for our operation sites in the affected area and its surrounding areas. Our Risk Management fulfilled its duties in a sense but it became clear that there are so many areas for further inspection and enforcement needing to be made. We will thereby evaluate the impact of the earthquake in a more holistic way to fortify our risk management support system. In order to achieve this, we should not ignore any of our activities on normal days; we will continue to work more on our PDCA activities which is to sample any possible risks, discuss what to do with them, let the relevant personnel know about them, followed by our verification.
(For our activities in the wake of the earthquake, please refer to our Up Close Articles.)

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Our Approaches for Corporate Compliance

Our Basic Notion of Corporate Compliance

Our basic notion of Corporate Compliance is "not just to pursue operational profit, but also to enhance our presence as a corporate citizen by respecting social ethics, high credibility, and fair business, while proactively engaging in the environmental protection".

Our Supporting System for Corporate Compliance

We are holding meetings under the "Corporate Compliance Committee" to review and confirm any incidents related to corporate compliance and activities as to its enlightenment four times every year. Our President has been appointed as the Committee Chair and its Secretariat is from our Corporate Compliance Department.
Every division in Yokohama Rubber is placed with personnel who belong to the Corporate Compliance Department as well, to continue to share the progress of the activities in internal enlightenment and related information in the workplace. In our domestic Group Companies as well, we have appointed our managers to facilitate each of them to develop the same level of activities. We are aiming to do the same for our overseas offices, too; we have completed the appointment of our managers to facilitate all our overseas offices in the fiscal year of 2010.
Incidentally, in the fiscal year of 2010, there was no major breach of the Anti-Monopoly Act confirmed; also, no legal sanction has been made against our company.

Whistle-Blowing System (Corporate Compliance Hotline / General Counselling Room)

The Corporate Compliance Hotline refers to the system to entertain even anonymous whistle-blowing as our Corporate Compliance Department and our external legal office as contact points, being in place in accordance with Whistle-Blower Protection Act. You can find its telephone number, fax number, and e-mail address on "Corporate Compliance Card" to be distributed to all our domestic Yokohama Rubber Group's employees. There were 13 reports in the fiscal year of 2010.
The General Counselling Room is the contact point where all our internal email users can utilize as to any doubt or anxieties at work related to Corporate Compliance. Each case is handled by personnel from the Legal Department. In the fiscal year of 2010, we received 24 cases of questions and concerns for items to confirm or seeking advice.

Whistle-Blowing System (Corporate Compliance Hotline)

Activities on Seminars and Various Enlightenment

We are trying to be effective in order to have our employees equipped with general knowledge as basic knowledge of Corporate Compliance by combining it with special contents they need to take note of at work. In the fiscal year of 2010, we focused on the education towards our expatriates overseas in order to enhance our Corporate Compliance Support System overseas; also we had conducted the seminar as to Sub-Contracting Acts and Anti-Monopoly Acts towards personnel in charge of procurement.

Seminars Conducted (fiscal year of 2010)

Privacy Policy for Employees

We strictly manage employees' personal information by obtaining prior consent by quoting the purpose of its usage. We understand the importance of employees' personal information and ensure its proper treatment; we also let our employees know through our internal intranet that we continue to take measures to protect their personal information.

Measurement against any Violations

• No sanctions against Anti-Monopoly Acts have been imposed on our company.
• No sanctions against fraudulent accounting practice, any discrimination or misconducts at workplace have been imposed on our company.
• No sanctions owing to any violation against environmental regulations have been imposed on our company.
• No complaints have been lodged over the loss of our customers' data.
• There is no case of a breach confirmed against the law with regards to the supply of products, services, and their usages.

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