In order for Isuzu to continuously increase revenues and enhance corporate value through its corporate activities, the Company believes that it is essential to establish a corporate governance system that provides a framework for regulating such activities.
Furthermore, we believe that the fundamental purpose of corporate governance is to respect the perspectives of, and build constructive relationships with, all of our stakeholders, and to that end we endeavor to ensure fairness and transparency in our corporate affairs through timely and appropriate disclosure of important information. In particular, we believe that a key element of corporate governance is to develop an internal structure and environment that protects the rights and interests of all stakeholders and ensures equality among stakeholders.

Isuzu is a company with an Audit and Supervisory Committee. We have a Board of Directors and an Audit and Supervisory Committee to act as statutory meeting structures to resolve, supervise and audit the execution of our main business activities. In addition to these statutory meeting structures, the Management Meeting deliberates on important policies and plans, conducts business management and executes other overall business activities. We also have advisory bodies and meeting structures to facilitate supervision and decision-making on business execution.
The outline of our corporate governance structure is as follows (as of June 28, 2023).

Board of Directors

The Board of Directors lives up to the mandates and confidence of shareholders and, for the purpose of consistently enhancing our corporate value, makes important decisions and conducts supervision on issues that concern our business management. In principle, the Board of Directors holds monthly meetings and may also hold extraordinary meetings on an as-needed basis to deliberate and make decisions on necessary agenda items.
Currently, the Board of Directors consists of 13 directors. The Board is chaired by Masanori Katayama, Chairman CEO, and Representative Director. Five of the 13 directors are independent outside directors.

Audit and Supervisory Committee

The Audit and Supervisory Committee follows the audit plan that it established, and audits and supervises the Board of Directors’ decision making and directors’ execution of business. Currently, the Audit and Supervisory Committee is composed of five directors who serve as Audit Committee Members. To strengthen the auditing and supervisory functions of the Audit Committee Members and to enable them to collect information daily, share information at important internal meetings, and fully cooperate with the accounting auditors and the internal audit division, three members (Makoto Anayama, Kenji Miyazaki, and Masao Watanabe) have been selected as Standing Audit and Supervisory Committee Member. The Committee is chaired by Makoto Anayama, a director and a Standing Audit and Supervisory Committee Member. Of the five Audit and Supervisory Committee members who are directors, three are independent outside directors.
All five members are selected members of the Audit and Supervisory Committee.

Nomination and Remuneration Committee

In addition to these statutory organizations, Isuzu has a Nomination and Remuneration Committee, an arbitrary organization on corporate governance that is designed to strengthen the independence, transparency and objectivity of the function of the Board of Directors involved in the nomination of candidate officers, selection of executives, decisions on officers’ remuneration and other processes. Isuzu's Nomination and Remuneration Committee consists of five members, including two internal directors (Masanori Katayama and Shinsuke Minami) and three outside directors (Mitsuyoshi Shibata, Kozue Nakayama, and Makoto Anayama). The chairman is Masanori Katayama, who holds the positions of Chairman, CEO, and Representative Director. The Committee deliberates and gives opinions on the questions it receives.

Executive Officer System and Management Meeting

By separating supervision and business execution, Isuzu is building a rapid decision-making and execution system through improvements in the deliberations in the Board of Directors, the supervisory organization, and the proper transfer of power from the Board of Directors. We also have executive officers and executives to take responsibility for a rapid decision-making and execution structure and for business execution in the areas of their assignment. The Management Meeting, consisting of Masanori Katayama, the Representative Director, Chairman of the Board, and CEO; Shinsuke Minami, the Representative Director, President, and COO; various Executive Vice Presidents (EVPs), group CxOs, and executive officers, is chaired by Shinsuke Minami and deliberates on issues concerning our business management and execution within the scope of power transferred from the Board of Directors.

Group CxO System

To further strengthen governance, we appointed the following CxOs. These officers have supervisory authority Company-wide over specific areas across different divisions and Group companies.

• Group CFO (Chief Financial Officer)
• Group CRMO (Chief Risk Management Officer)

Governance Themes

As corporate governance has been strengthened in Japan in recent years, Isuzu has endeavored to reform its governance. In June 2021, we shifted to a company with Audit and Supervisory Committee. We will remain committed to strengthening our governance and enhancing our corporate value.

Isuzu conducts an annual evaluation and analysis of the effectiveness of the Board of Directors to improve its operations. The following is a summary of the evaluation and analysis for FY2023 (ended March 31, 2023).

1. Process of analysis and evaluation for FY2023
   Isuzu conducted an evaluation focusing on the separation of “execution” and “supervision” status resulting from the organizational changes implemented two years ago, as well as the performance of the monitoring function of the Board of Directors.
   Questionnaires targeting all directors and interviews conducted by a third-party organization were carried out and the results were analyzed. Additionally, countermeasures for the issues identified through the analysis were devised, and a report was presented to the Board of Directors in May 2023 for evaluation and confirmation of future initiatives.
2. Summary of evaluation results (strengths)
   Isuzu's Board of Directors evaluated and confirmed the following three points as strengths.
   1) We are steadily, proactively, and urgently working on establishing and enhancing the governance structure. The "delegation of authority to the Management Meeting" and the "strengthening of the Board of Directors' supervisory function" are being progressed effectively. 2) To enhance understanding of the agenda, there is a well-established practice of conducting pre-briefing sessions and distributing materials in advance for outside directors. 3) The Board is composed of a balanced team of members with diverse backgrounds, qualifications, and skills.
3. Summary of evaluation results (challenges)
   Isuzu's Board of Directors identified the following four points as challenges to enhance the Board’s monitoring function.
   1) Enhancement of appropriate agenda setting and discussions 2) Enhancement of reporting on internal control status, including the risk management structure. 3) Sharing the opinions of each stakeholder with the Board of Directors 4) Enhanced discussion of cost-of-capital strategies and business portfolios.
4. Major issues in FY2022 and progress of initiatives for FY2023.
   

   Major issues in FY2022	Progress of initiatives for FY2023
   (1) Enhance discussions with an awareness of the diverse opinions of shareholders and stakeholders	The voices and opinions of various stakeholders such as employees, business partners, shareholders, and investors were shared with the Board of Directors as needed. In particular, the sharing of the contents of financial reports and the provision of result updates have been strengthened. We will systematically capture and share the opinions of various stakeholders, taking into account IR/SR activities and ESG-related discussions, and engage in discussions accordingly.
   (2) Enhanced discussion of cost-of-capital strategies and business portfolios	Efforts have been made to enhance the content of the performance explanations provided by the Group CFO. In particular, the content of the "CFO Message" in the Integrated Report has been discussed to move toward the desired direction. We will further enhance discussions on cost-of-capital strategies and business portfolio.
   (3) Enhancement of reports to the Board of Directors (reports on risk management, compliance, and nomination and remuneration.)	Throughout the year, discussions on Risk Management and Compliance were conducted, leading to an improvement in the monitoring function of the Board’s execution status. Taking into account the rapidly changing environment, we will strive to enhance reporting and clarify the main points of discussions.

Basic Principles

The following are Isuzu’s basic principles on remuneration for directors and executive officers.

Remuneration for Directors (excluding Audit and Supervisory Committee Member)

Remuneration for directors (excluding the directors that are Audit and Supervisory Committee Member and outside directors) includes basic compensation, bonuses linked with the degree of achievement of the single-year consolidated performance target and the amount of remuneration that is based on the performance-linked stock compensation plan linked with the degree of achievement of the management indexes aimed within the period of a Medium-Term management plan. Methods for evaluating each officer’s performance and deciding the officers’ bonuses and the performance-linked stock compensation plan go through a procedure of consultation and provides opinions to the optional Nomination and Remuneration Committee, of which independent outside directors occupy the majority. In this procedure, the president fulfills his accountability and thereby secures the objectivity and impartiality of remuneration for officers.

Remuneration for Outside Directors

Remuneration for outside directors consists of basic compensation only, in view of their roles and independence. Each director receives the fixed amount only and the remuneration involves no fluctuation that may result from performance evaluation and so on.

Compensation for Directors Who Are Also Audit and Supervisory Committee Member

The amount of remuneration for directors who are Audit and Supervisory Committee Member consists of basic compensation only, in view of their roles and independence. It is decided through discussion by the directors who are members of Audit and Supervisory Committee Member with consideration of factors such as the number of directors, economic environment, market trends and the levels of remuneration in other companies, within the range of the upper limit approved at the General Shareholders Meeting.

Total Remuneration Amounts and Other Payments to Directors

Isuzu believes that holding its business partners’ shares on the assumption of long-term transactions is an effective means of building a stable relationship and should lead to the enhancement of its corporate value over the medium and long terms. To confirm the reasonability of holding business partners’ shares, the Board of Directors annually performs an examination from two different aspects: it conducts a quantitative evaluation of each issue in terms of criteria such as whether the benefit of holding the shares at least equals the capital cost, and a qualitative evaluation of the significance of the shareholding, among other aspects. Consequently, any shares that we no longer see a reason to hold will be swiftly reduced. In executing our voting rights as a shareholder, we respect, as a shareholder with individual trade relations, the aims and intentions of the proposals and resolutions submitted from share issuer. If we see a risk of damaging a share issuer’s value during the process of a dialogue with the share issuer or examination of a resolution; however, we will request the withdrawal or review of the resolution and will take action for each resolution, which may involve abstaining from the right to execute our voting rights.