Itochu : Governance

187

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Governance

Governance

188

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

Policy and Basic Concept

The ITOCHU Group declares the spirit of "Sampo-yoshi " (Japanese for "good for all three sides": good for the seller, good for the buyer, and good for society) to be our corporate mission, based on the philosophy of our founder, Chubei Itoh I. We seek not only to achieve profit but also to help address social issues, in line with the trust and expectations placed on us by our customers, shareholders, employees, and various other stakeholders. Through the business spirit of "Sampo-yoshi," ITOCHU aims to have an ongoing and positive social impact and to contribute to a sustainable society for all. Furthermore, we adopt "I am One with Infinite Missions" as our guideline of conduct. These words mean that each individual employee should consider his or her business conduct on his or her own initiative in order to complete our infinite missions aim for better business operations which are good for the seller, good for the buyer, and good for society as well as for a better future. It is our fundamental management policy to build a fair and good relationship with various stakeholders based on our corporate mission and our guideline of conduct and thus improve our corporate value from a long-term perspective. In accordance with this policy, with the intention to ensure proper and efficient execution by management, we will enhance the transparency of decision-making and establish a corporate governance system in which monitoring and supervision functions are appropriately incorporated.

A strong leadership and a transparent decision-making system are pillars of good corporate governance. ITOCHU adopts an organizational structure with the presence of Audit & Supervisory Board (kansayaku secchi kaisha). In recent years, ITOCHU has gradually shifted to a governance model where executive officers decide and carry out the day to day business under the direction and supervision of the Board of Directors, along with implementing measures to strengthen monitoring.

In order to separate execution by and monitoring over management, we reduced the number of executive Directors and the increased percentage of Outside Directors on our Board of Directors to one-third or more from April 2017. We will also maintain this percentage of Outside Directors also in FYE 2021 and onwards. Additionally, ITOCHU has established, as voluntary advisory committees to the Board, a Governance, Nomination and

Remuneration Committee, which is chaired by an Outside Director and comprised of a majority of Outside Directors and a Women's Advancement Committee as another voluntary advisory committee which is chaired by an Outside Director, with at least half of its members comprised of Outside Directors and Audit & Supervisory Board Members (collectively "Outside Officers"), and has continued to monitor management through the eyes of Outside Officers. ITOCHU continues to maintain oversight of management by Outside Officers.

In appointing Outside Officers, ITOCHU places great importance on their independence, and in this connection, ITOCHU has adopted its own independence criteria, augmenting the independence criteria established by the Tokyo Stock Exchange.

This highly independent Board of Directors monitors execution by management as well as deliberates the execution of business that is of high quantitative or qualitative importance. The Company believes this arrangement facilitates not only appropriate monitoring over execution by management but also the consideration of important business execution from an external perspective.

It is also vital that ITOCHU disclose its financial and non-financial information to stakeholders as part of good governance. For this purpose, ITOCHU adopts a "Basic IR Policy" to further promote multi-party stakeholder dialogue, and makes best efforts to disclose such information both timely and adequately. Through communication with its stakeholders, ITOCHU aims to enhance its corporate value on a long-term basis.

We believe that our current corporate governance structure accords with good and effective corporate governance called for by the Tokyo Stock Exchange, in its Corporate Governance Code. ITOCHU will continue to evaluate and improve its corporate governance structure so that it always best suits ITOCHU in any given moment and time in its corporate history.

Targets and Action Plan

Risks

Opportunities

Occurrence of business continuity risk or unexpected loss resulting from the malfunction of corporate governance or internal control. Improvement of transparency in decision-making,appropriate response to changes and establishment of a stable basis of growth enabled by the establishment of a firm governance system.

Materiality	SDGs	Impact	Issues to address	Business area	Commitment		Specific approach		Performance indicators		Degree of Progress
Targets	Classification
					We will implement highly effective		● Appoint several outside Directors, who have a		Continue to		● We have maintained the diversity of the Board of Directors (through appointing always one third or
			Maintaining		supervision over the management		high level of independence that fulfills our			higher percentage of outside Directors- 4 outside Directors out of 10 Directors, 2 female Directors out of
				from an independent and objective		independence criteria and are expected to		implement measures		10 Directors, 2 female Audit & Supervisory Board Members, and an outside Director and an outside
Maintain			and reinforcing		standpoint and ensure the		contribute to the company management with a		to strengthen the		Audit & Supervisory Board Member who had wide range of sufficient experiences in corporate
	Governance	a governance	Corporate	appropriate and efficient execution		high level of knowledge in their respective fields.		supervising function		management).
Rigorous		system for	of business operations by improving		● Maintain a highly transparent and objective		of the Board of		● We have restructured the Governance and Remuneration Committee and the Nomination Committee
Governance			achieving	governance	the transparency of our decision-		Directors' and officers' remuneration system,		Directors, through an		into the Governance, Nomination and Remuneration Committee, the chair of which being the outside
Structures			sustainable		making, aiming to our sustainable		which can increase their motivation to		annual evaluation of		Director and a majority of the members of which being the outside Directors (4 out of 7 members).
			growth		growth as well as the medium- and		contribute to our medium- and long-term		the Board of		● We have maintained the chair of the Women's Advancement Committee being the female outside Director,
					long-term improvement of our		improvement of our company's performance		Directors.		and a half of the Women's Advancement Committee being the outside Directors and the outside Audit &
					corporate value.		and the improvement of our corporate value.				Supervisory Board Members, and the female members (3 out of 6 members respectively).

189

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

Compliance with Corporate Governance Code

As of June 21, 2024, ITOCHU complies with all principles set forth in Corporate Governance Code. For details, please refer to Corporate Governance Report (https://www.itochu.co.jp/en/files/CG_e.pdf)PDF

Reason for Adopting the Current System

The Company, as a company with Audit & Supervisory Board Members, endeavors to strengthen the monitoring/supervising function and ensure the transparency of decision making by having the Audit & Supervisory Board Members (including outside Audit & Supervisory Board Members) fully monitor corporate management. In addition to its corporate governance system primarily based on the monitoring of corporate management by Audit & Supervisory Board Members, the Company appointed Outside Directors to comprise a percentage of one-third or more of the total number of Directors since FYE 2018, and will also maintain this percentage of Outside Directors in FYE 2024 and onwards. And, the Company has already appointed independent Outside Directors and established, as voluntary advisory committees to the Board, the Governance, Nomination and Remuneration Committee, which is chaired by Outside Directors and which comprise a majority of Outside Directors, and Women's Advancement Committee which is chaired by an Outside Director, with at least half of its members comprised of Outside Officers, for the purpose of further increasing the effectiveness of the supervision of management by the Board of Directors and strengthening and improving the transparency of decision making. In the process of appointing the Outside Officers, the Company focuses securing independency of the Outside Officers, and in addition to the independence criteria established by the Tokyo Stock Exchange ITOCHU has adopted its own independence criteria. The Company believes that its current corporate governance system-which is based on independent Outside Directors comprising one-third or more of the Board of Directors, the said voluntary advisory committees to the Board and the Audit & Supervisory Board, majority of whom are outside Audit & Supervisory Board Members-accords with ITOCHU's "Basic Policy" stated in the Corporate Governance Report.

Structures and Systems

Corporate Governance

1. As the decision-making body, the Board of Directors, consisting of Directors and Outside Directors, is to decide important matters in accordance with laws and regulations, the Articles of Incorporation, the "Board of Directors Regulations," and other internal regulations, and as the supervisory body, the Board of Directors is to supervise the performance of the directors.
2. Each director is to carry out such director's functions and duties as designated by the Board of Directors in accordance with laws and regulations, the Articles of Incorporation, resolutions by the Board of Directors, and internal regulations.
3. ITOCHU is to adopt the Executive Officer System to strengthen the decision-making function and supervisory function of the Board of Directors, and to streamline executive decision-making. Based on the approval of the Board of Directors, executive officers implement their designated duties based on delegation from the Board of Directors and representative directors.
4. The corporate auditors are to oversee the performance of the directors based on the "Board of Corporate Auditors Regulations" and "Auditors' Auditing Standards."

Overview of ITOCHU's Corporate Governance and Internal Control System (As of June 21, 2024)

General Meeting of Shareholders

Election and dismissal

Monitoring and auditing

Election and dismissal

Audit & Supervisory Board

Board of Directors

Audit & Supervisory

Directors

Board Members

Election

Governance, Nomination and

Monitoring and

and

Appointment

Audit & Supervisory

dismissal

Consultation

and

Remuneration Committee

auditing

Board Members Office

supervision

Women's

Independent Auditor

Advancement Committee

Financial audit

Chairman & CEO

President

& COO

HMC

Internal Control Committee

CSO

Disclosure Committee

CAO

ALM Committee

CFO

Compliance Committee

CXO

Sustainability Committee

Internal Audit Division

Investment Consultative Committee

Group

New Headquarters Project Committee

CEO Office

Textile

Machinery

Metals &

Minerals

Energy&

Chemicals

Food

General Products

ICT &

Financial

The �th

Company

Company

Company

Company

Company

& Realty Company

Business Company

Company

*

1 CEO=Chief Executive Officer COO＝Chief Operating Officer CSO＝Chief Strategy Officer

CAO=Chief Administrative Officer CFO＝Chief Financial Officer CXO＝Chief Transformation Officer

HMC=Headquarters Management Committee ALM＝Asset Liability Management

2 CAO is the chief officer for compliance. Also, each Division Company has a Division Company president.

*3 Internal control systems and mechanisms have been implemented at every level of ITOCHU. Only the main internal control organization and committees

*

are described herein.

190

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

Board of Directors

Overview

• The Company is a company with the Board of Directors and Audit & Supervisory Board Member (the Audit & Supervisory Board).
• As from April 1, 2018, the Chairman of the Company is the Chief Executive Officer, and the President of the Company is the Chief Operating Officer.
• The Board of Directors, comprising 11 Directors including 4 Outside Directors, is chaired by the Chief Executive Officer. The Board of Directors meets, in principle, at least once a month, and it makes decisions on important matters in accordance with laws and regulations, the Articles of Incorporation, the "Board of Directors Regulations," and supervises the performance of the Directors.
  Two of the Outside Directors are female, and the average term our internal Directors have been on overseas assignments will be 5.4 years (as of June 21, 2024).
• In FYE 2024 the Board of Directors held a total of 17 meetings, which were attended by all Directors and all Audit & Supervisory Board Members. In addition, there was a proposal for a single board resolution by paper circulation, and all directors expressed their consent, while all auditors did not raise any objections. Therefore, the board resolution was deemed to have been adopted.
• In FYE 2024, a total of 75 agenda items were submitted to the Board of Directors (excluding the aforementioned matters resolved by paper circulation). The main agenda items were as follows:
• • Financial Results, Dividends, Financing, Treasury Share Acquisitions
  • FYE 2024 Management Plan, Overview of Results of the Evaluation as to the Effectiveness of the Board of Directors
  • Policy for the holdings of listed shares other than affiliates for FYE 2024
  • Recommendation of Women's Advancement Committee
  • Report with respect to the sustainability development
  • Important Investment Projects
  • • Acquire 100% shares of ITOCHU Techno-Solutions Corporation

    Acquire 100% shares of Daiken Corporation●

Etc.

Corporate Governance System (As of June 21, 2024)

Type of system

Company with the Board of Directors and the Audit & Supervisory Board

Number of Directors (Of which, number of

11 (4)

2 of the Outside Directors are female, and the average term our internal Directors have been on

outside Directors)

* overseas assignments is 5.4 years.

Number of Audit & Supervisory Board

5 (3)

Members (Of which, number of outside

Audit & Supervisory Board Members)

Term of office for Directors

1 year (the same for Outside Directors)

Adoption of an Executive Officer System

Yes

Organization to support CEO

Headquarters Management Committee (HMC) deliberates on companywide

decision-making

management policy and important issues

Advisory committees to the Board of

Governance, Nomination and Remuneration Committee, Women's

Directors

Advancement Committee

(1) Monthly remuneration (Fixed)

Determined according to factors that include degree of contribution to

ITOCHU, including addressing climate change, ESG and SDGs, based on a

standard amount for each position

(2) Performance-linked bonuses (Variable(Single Year))

Director Remuneration System

Total amount is determined based on consolidated net profit, and individual

amount is determined in relation to the position points for the Director, etc.

Details of Corporate Officer Remuneration

(3) Share price-linked bonuses (Variable(Medium- to Long-term))

System (P192)

Calculated by adding the evaluation of the relative growth rate of ITOCHU's

share price compared to Tokyo Stock Price Index (TOPIX) to the amount of

increase of ITOCHU's share price for two consecutive fiscal years

(4) Performance-linked stock remuneration (Variable(Medium- to Long-term))

number of shares delivered as remuneration is determined based on

consolidated net profit and in relation to the position points for the Director

Independent external auditor

* Outside Directors paid monthly remuneration only

Deloitte Touche Tohmatsu LLC

Meetings of Management Bodies in FYE 2022-2024

Financial Year

Board

Governance, Nomination

Governance and

Women's

Audit &

and Remuneration

Remuneration

Advancement

Supervisory

Meetings

Committee

Committee

Committee

Board Meeting

Number of Meetings

17

3

2

2

14

FYE2024

Attendance

Outside Directors

100%

100%

100%

100%

ー

Outside Audit & Supervisory

Rate

100%

100% (Observer)

100%

100%

100%

Board Members

Financial Year

Board Meetings

Nomination

Governance and

Women's

Audit &

Remuneration

Advancement

Supervisory

Number of Meetings

15

Committee

Committee

Committee

Board Meeting

3

2

2

14

FYE 2023

Attendance

Outside Directors

98%

100%

100%

100%

ー

Outside Audit & Supervisory

Rate

100%

100%

100%

100%

100%

Board Members

Number of Meetings

15

1

3

3

14

FYE 2022

Attendance

Outside Directors

100%

100%

100%

100%

ー

Rate

Outside Audit & Supervisory

98%

100%

100%

67%

98%

Board Members

* "Number of Meetings" does not include meetings by paper circulations.

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Corporate Governance

Risk Management

Compliance

Corporate Governance

Members of the Board

◎Chair ○Member

Current position and responsibility in

Number of

Number of

Governance,

Women's

Name

Attendance at

Nomination and

ITOCHU Corporation

Meetings of the

years in

Remuneration

Advancement

Member of the Board, Chairman &

Board of Directors

office

Committee

Committee

Masahiro Okafuji

17/17 (100%)

20 years

〇

―

Reelection

Chief Executive Officer

Member of the Board,

Keita Ishii

Reelection

President & Chief Operating

17/17 (100%)

3 years

〇

―

Officer

Fumihiko Kobayashi

Member of the Board, Executive Vice

17/17 (100%)

9 years

〇

〇

Reelection

President Chief Administrative Officer

Tsuyoshi Hachimura

Member of the Board, Executive Vice

17/17 (100%)

9 years

―

―

Reelection

President Chief Financial Officer

Member of the Board, Executive

Hiroyuki Tsubai

Reelection

Vice President President, Machinery

17/17 (100%)

2 years

―

―

Company

Kenji Seto

Executive Officer Chief Strategy

―

―

―

―

New election

Officer

Member of the Board, Executive

Hiroyuki Naka

Reelection

Officer Chief Transformation Officer;

17/17 (100%)

2 years

―

―

General Manager, Group CEO Office

Masatoshi Kawana

Member of the Board

17/17 (100%)

6 years

〇

―

Reelection

Makiko Nakamori

Reelection

Member of the Board

17/17 (100%)

5 years

〇

◎

Outside

Independent

Kunio Ishizuka

Reelection

Member of the Board

17/17 (100%)

3 years

◎

―

Outside

Independent

Akiko Ito

Reelection

Member of the Board

13/13 (100%)

1 year

〇

―

Outside

(since election)

Independent

Ratio of Female Directors and

Ratio of Outside Directors and

Internal Directors*1

Outside Directors

Audit & Female Supervisory Board

Outside Audit & Supervisory Board

Members on Board of Directors*2

Members on Board of Directors*2

7

4

25%

44%

CEO COO

CAO

CFO

Males

Females

Division Company

CSO

CXO

(4 members)

(7 members)

President

*1 Division Company President: President, Machinery Company

*2 The composition of the above Board of Directors includes Directors and Audit & Supervisory Board Members.

Governance						191
Sustainable Finance	Evaluation by Society	Independent Assurance Report

Policy and Process for Appointing Candidates for Directors

In order to effectively supervise management and decide important business matters as the Board of Directors of a general trading company with broad range of business, ITOCHU's Board of Directors consists of, in principle, the Chairman & CEO, President & COO, officers responsible for overseeing each administrative functions, one appropriate Division Company president as an (internal) director, and several Outside Directors so that the percentage of Outside Directors in the Board of Directors is one-third or more to improve the supervisory function of the Board of Directors. When nominating Outside Director candidates, ITOCHU prioritizes candidates with higher independence, based on the criteria for "independent directors" prescribed by the Tokyo Stock Exchange, Inc. and ITOCHU's "Independence Criteria for Outside Directors and Outside Audit & Supervisory Board Members," who with his or her experience and knowledge in the relevant category, are expected to contribute to the management of ITOCHU. The proposal for candidates for directors is created by the Chairman & CEO by taking into consideration diversity such as knowledge, experience, gender and internationality (race, ethnicity, nationality, etc.), and submitted to the Governance, Nomination and Remuneration Committee for further deliberation before the Board of Directors finally nominates the candidates for election at the General Meeting of Shareholders.

• Reason for Appointment as Outside Directors

Name	Reason for appointment
	Mr. Kawana is appointed as an Outside Director in the anticipation that, based on his experience as a
Masatoshi Kawana	doctor at Tokyo Women's Medical University Hospital for many years and in important posts such as the
Deputy Director of the same hospital as well as his high level of medical knowledge, he will monitor and
appointed in June 2018	supervise the corporate management of ITOCHU from an independent perspective. According to the
[Attendance at Meetings	criteria for the independence of directors / auditors prescribed by the Tokyo Stock Exchange, as well as
of the Board of Directors]	our own independence criteria, Mr. Kawana qualifies as an independent Director. Accordingly, ITOCHU
FYE 2024 : 17/17 (100%)	believes that he is unlikely to have conflicts of interest with general investors, and he has been
	designated as an independent Director.
Makiko Nakamori	Ms. Nakamori is appointed as an Outside Director in the anticipation that, based on her high level
expertise regarding finance and accounting as a certified public accountant as well as her extensive
appointed in June 2019	experience as a corporate executive, she will monitor and supervise the corporate management of
[Attendance at Meetings	ITOCHU from an independent perspective. According to the criteria for the independence of directors /
of the Board of Directors]	auditors prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Ms. Nakamori
FYE 2024 : 17/17 (100%)	qualifies as an independent Director. Accordingly, ITOCHU believes that she is unlikely to have conflicts of
	interest with general investors, and she has been designated as an independent Director.
	Mr. Ishizuka is appointed as an Outside Director in the anticipation that, by utilizing his extensive
Kunio Ishizuka	knowledge of corporate management and the retail industry that was earned through his experience as
President and Chairman of Isetan Mitsukoshi Holdings Ltd. and as a Vice Chair of Nippon Keidanren
appointed in June 2021	(Japan Business Federation), he will monitor and supervise the corporate management of ITOCHU from
[Attendance at Meetings	an independent perspective. According to the criteria for the independence of directors / auditors
of the Board of Directors]	prescribed by the Tokyo Stock Exchange, as well as our own independence criteria, Mr. Ishizuka
FYE 2024 : 17/17 (100%)	qualifies as an independent Director. Accordingly, ITOCHU believes that he is unlikely to have conflicts
	of interest with general investors, and he has been designated as an independent Director.
	Ms. Ito is appointed as an Outside Director in the anticipation that, based on her extensive and
	profound insights as a government official in charge of consumer-oriented issues, which were earned
Akiko Ito*	from her experience such as the Deputy Director-General of the Ministry of Land, Infrastructure,
Transport and Tourism, the first female director in the Ministry of Land, Infrastructure, Transport and
appointed in June 2023	Tourism (the Director-General of the Housing Bureau), and as Councillor, Cabinet Secretariat, Director
[Attendance at Meetings	General, Secretariat of the Headquarters for Overcoming Population Decline and Vitalizing Local
of the Board of Directors]	Economy in Japan, followed by her service as Commissioner of Consumer Affairs Agency, she will
FYE 2024 : 13/13 (100%)	monitor and supervise the corporate management of ITOCHU from an independent perspective.
(After appointment)	According to the criteria for the independence of directors / auditors prescribed by the Tokyo Stock
Exchange, as well as our own independence criteria, Ms. Ito qualifies as an independent Director.
	Accordingly, ITOCHU believes that she is unlikely to have conflicts of interest with general investors, and
	she has been designated as an independent Director.
	* Registered name: Akiko Noda

192

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

Outline of Limitation of Liability Contracts

Pursuant to Article 427, Paragraph 1, of the Companies Act, ITOCHU has entered into limitation of liability contracts with respect to liability as set forth in Article 423, Paragraph 1, of the Companies Act with Outside Directors and outside Audit & Supervisory Board Members. Under these contracts, their liabilities are limited to the lowest amount of liability pursuant to Article 425, Paragraph 1, of the Companies Act if and so long as they have acted in good faith and without gross negligence in performing their duties.

Outline of Directors and Officers Liability Insurance Policy

ITOCHU has entered into a directors and officers liability insurance policy as provided for in Article 430-3, Paragraph 1 of the Companies Act with an insurance company. The policy covers the losses, such as damages payable and litigation costs in damage suits, incurred by all of ITOCHU's directors and Audit & Supervisory Board Members, etc. who are the insureds. However, the scope of compensation does not cover the damages and litigation costs of a director or officer involved in an intentional illegal act or criminal act such as bribery, to ensure that the appropriateness of the performance of director or officer duties is not lost. The full amount of the insurance premiums is borne by ITOCHU.

Outline of the Indemnity Contract with Directors and Audit & Supervisory Board members ITOCHU has entered into the indemnity contracts with all of Directors and Audit & Supervisory Board Members in accordance with Paragraph 1 of Section 430-2of the Companies Act, pursuant to which ITOCHU indemnifies the costs under the sub-paragraph1, paragraph 1 of Section 430-2of the Companies Act and the losses under the sub-paragraph2, paragraph 1 of Section 430-2of the Companies Act, incurred by them within the limit under the law. ITOCHU will not indemnify such costs or losses incurred by them in relation to their acts performed with the knowledge of illegality or to provide undue profit for third parties or to cause damages to ITOCHU.

Consideration of the Succession Plan

ITOCHU conducts discussions on succession planning through a process involving the proposal by Chairman & CEO followed by the deliberation at the Governance, Nomination and Remuneration Committee as an advisory committee to the Board of Directors. In considering the succession plan, it is essential to have a deep understanding not only of the overall business of ITOCHU but also of the candidates' professional backgrounds, experiences, and personal qualities, in order to achieve long-term enhancement of corporate value. With this in mind, the process assumes the involvement of the executive team. And the Governance, Nomination and Remuneration Committee consists of a majority of Outside Directors, with one serving as the committee chairman, which allows for the inclusion of perspectives from Outside Officers who possess a viewpoint encompassing both public perception and the interests of common shareholders. It should be noted that the successor will be determined by the Board of Directors based on the candidate proposed by the Chairman & CEO, following deliberation and recommendations from the Governance, Nomination, and Remuneration Committee, which are then presented to and resolved upon by the Board of Directors.

Corporate Officer Remuneration System

ITOCHU's remuneration plan for Directors is designed to be an incentive to grow business performance and raise ITOCHU's stock price. Variable remuneration is approximately 82% of overall remuneration (FYE 2024), which is extremely high, even when compared to other companies. The system clarifies management's responsibility, with Director remuneration increasing as performance improves, and significantly decreasing if performance deteriorates. Furthermore, this remuneration plan, including the calculation method, has been previously disclosed publicly, making it highly transparent.

More specifically, the remuneration plan consists of (1) monthly remuneration, (2) performance-linked bonuses, (3) share price-linked bonuses, and (4) performance-linked stock remuneration, with performance-linked bonuses reflecting short-term performance and share price-linked bonuses and performance-linked stock remuneration reflecting the increase of corporate value in the medium to long term.

We have consolidated net profit as the linked indicator for the performance-linked bonus and performance-linked stock remuneration, which is a non-monetary remuneration. Consolidated net profit is of high interest on the stock market because it is an easy-to-understand indicator of capital for growth- oriented investment and returns to shareholders, and we believe that its importance as an indicator going forward is unshakeable. In addition, employee bonuses are also linked to consolidated net profit.

To align with our shareholders and create greater awareness of increasing corporate value, we have introduced share price-linked bonuses with ITOCHU's share price as the linked indicator. This bonus is an index linked to the increase in the average daily value of ITOCHU's stock price for each consecutive two fiscal years. To ensure fairness, the calculation scheme includes the relative evaluation between the growth rate of the average value of the ITOCHU's stock price and the growth rate of the average value of the Tokyo Stock Price Index (TOPIX) for each successive two fiscal years.

193

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

				Resolution of
	Type of remuneration	Content	Remuneration limit	General
	Meeting of
		Determined according to factors		Shareholders
		¥1.0 billion per year as total monthly
	(1)Monthly	that include degree of contribution
	to ITOCHU Corporation, including	remuneration (including ¥0.1 billion per
	remuneration	addressing climate change, ESG	year as a portion to the Outside
	(Fixed)	and SDGs, based on a standard	Directors)
		amount for each position
	(2) Performance-	Total amount is determined based
	on consolidated net profit, and
	linked bonuses	individual amount is determined in		June 24,
	(Variable(Single	relation to the position points for
	Year))	the Director, etc.		2022
		*Formula is described below	¥3.0 billion per year as total bonuses
		Calculated by adding the	paid to all directors (excluding Outside
Directors	(3) Share	evaluation of the relative growth	Directors)
rate of ITOCHU's share price
	price-linked	compared to Tokyo Stock Price
	bonuses	Index (TOPIX) to the amount of
	(Variable(Medium-	increase of ITOCHU's share price for
	to Long-term))	two consecutive fiscal years
		*Formula is described below
			The following is the limit for a two-year
	(4) Performance-	Number of shares delivered as	period for Directors, Executive Officers
	and Senior Operating Officers
	linked stock	remuneration is determined based	● Upper limit for contribution to trust	June 21,
	remuneration	on net profit (consolidated), and in	from ITOCHU: ¥5 billion
	(Variable(Medium-	relation to the position points for	● Total points awarded to persons	2024
	to Long-term))	the Director	eligible for the plan: 0.6 million points
		*Formula is described below	(conversion at 1 point = 1 share)
Audit &			*Not paid to Outside Directors
Only monthly			June 24,
Supervisory		¥250 million per year
Board	remuneration		2022
Members

• Remuneration composition ratio for Directors (excluding Outside Directors) (FYE2024)

Performance-linked	Fixed
stock remuneration	approx. ��%

Monthly

remuneration

Share price-linked bonuses

Performance-linked

Variablebonuses approx. ��%

Formulas for Performance-linked Bonuses and Stock Remuneration

In accordance with confirmed results for FYE 2025, director bonuses for FYE 2025 will be paid following the conclusion of the 101st Ordinary General Meeting of Shareholders in amounts calculated according to the methods described below (in regard to stock remuneration, points will be awarded).

Total Amount Paid to all Directors

Total amount paid to all directors = (A + B + C) x Sum of Position points for all the eligible directors/55 (but not exceeding ¥1.0billion)

A = (Of consolidated net profit for FYE 2025, for the portion up to ¥200.0 billion) × 0.35%

B = (Of consolidated net profit for FYE 2025, for the portion more than ¥200.0 billion but up to ¥300.0 billion) x 0.525%

C = (Of consolidated net profit for FYE 2025, for the portion exceeding ¥300.0 billion) × 0.35%

Amount Paid to an Individual Director

Amount paid to an individual director = Total amount paid to all directors × Assigned position points / Sum of position points for all the eligible directors

Chairman and Chief	President and Chief	Executive Vice		Senior Managing	Managing Executive	Executive Officer
Executive Officer	Operating Officer	President		Executive Officer	Officer
10	7.5		5	4	3	2.2

Of the amount paid to an individual director, 80% of the amount paid is linked the plan achievement rate of the consolidated net profit of the assigned division/department and the rate determined by comparing the net profit of the assigned division/department in the fiscal year and that in the fiscal year prior to the fiscal year when he/she assumed the position*.

*Formula for 80% of the Amount Paid to an Individual Director :

(Total base amount paid to all Directors as above x Position Point/Sum of Position points for all the eligible Directors) x 80% x (the Rate A (defined below) determined based on plan achievement rate of the consolidated net profit target for the assigned division/department x 70% + (the Rate B (defined below) determined based on the rate determined by comparing the net profit of the assigned division/department in the fiscal year and that in the fiscal year prior to the fiscal year when he/she assumed the position) x 30%)

- The Rate A: 100% + (the plan achievement rate of the consolidated net profit target for the assigned division/department -100%) x 2 (if negative, it will be 0%. Maximum will be 200%.)

- The Rate B: 100% + (the consolidated net profit in FYE 2025 of the assigned division/department divided by the consolidated net profit in the fiscal year prior to the fiscal year when he/she assumed the position - 100%) x 2 (if negative, it will be 0%. Maximum will be 200%.)

- The assigned division of the Director whose bonuses are determined utilizing the Rate A and Rate B is the Machinery Company, while with its planned target for the FYE 2025 consolidated net profit set at ¥130.0 billion (announced on May 8, 2024).

However, for Directors who have already assumed a position in the assigned division/department as of the date of the system revision on June 13, 2023, the consolidated net profit in the fiscal year prior to the fiscal year when he/she assumed the position for the year before assuming the position shall be replaced with the consolidated net profit of the assigned division/department for FYE 2024.

- The Rate A and Rate B shall be 100% for the eligible Director for whom no plan achievement rate is measurable.

194

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

Formulas for Share price-linked Bonuses

To align with our shareholders and create greater awareness of increasing corporate value, we have introduced share-price linked bonuses with ITOCHU's share price as the linked indicator. This bonus is an index linked to the increase in the average daily value of ITOCHU's stock price for two consecutive fiscal years. To ensure fairness, the calculation scheme includes the relative evaluation between the growth rate of the average value of the ITOCHU's stock price and the growth rate of the average value of the Tokyo Stock Price Index (TOPIX) for each successive two fiscal years.

Amount Paid to an Individual Director

FYE 2025 *1

= ((Average of daily closing price of ITOCHU stock from FYE 2024 to FYE 2025) - (Average of daily closing price of ITOCHU stock from FYE 2022 to FYE 2023)) × 1,300,000 × (agregated position points*2 of FYE 2024 and FYE 2025) / (108.8 points × 2)× Relative stock price growth rate*3 - Share Price-linked Bonuses of FYE 2024

*	1	Share price-linked bonus amounts are determined and paid after the Director retires (after the Executive Officer retires, in the case of taking on the position
	of Executive Officer after retirement of the Director.) If the amount calculated based on the calculation formula is negative, the amount paid to an individual
	2	Director for the relevant year will be zero.
	The position points assigned to each Director are the same as those applied for calculating (2) performance-linked bonuses.
*3	Relative stock price growth rate = (Average of daily closing price of ITOCHU stock from FYE 2024 to FYE 2025 /Average of daily closing price of ITOCHU stock
*		from FYE 2022 to FYE 2023) / (Average of daily TOPIX from FYE 2024 to FYE 2025 / Average of TOPIX from FYE 2022 to FYE 2023)

Share Price-linked bonuses together with performance-linked bonuses are paid to the eligible directors within the director bonuses limit of ¥3.0 billion.

Formulas for Performance-linked Stock Remuneration Plan

Points = Base points assigned to each position*1 x Calculation rate of points based on performance*2 x {(Number of months of service from July, the beginning month of the applicable period of payment, to June of the following year (rounding up fractions of less than one month)) / 12} (rounding down fractions) *1 Base points assigned to each position as the Director are as per below:

	President and Chief	Executive Vice	Senior Managing	Managing Executive
Chairman and Chief	Executive Officer
Executive Officer	Operating Officer	President	Executive Officer	Officer
31,900	23,900	16,000	12,800	9,600	7,000

*2 Calculation rate of points based on performance is as set forth below:

(The amount of consolidated net profit attributable to ITOCHU for FYE 2025 - ¥300.0 billion) / ¥10.0 billion x 2%

We implement the clawback and malus provisions for the Performance-linked Stock Remuneration Plan. In the event that a Director is found to have committed major infractions of their duties or internal rules, or in the event that a Director resigns or is dismissed due to serious unlawful acts, etc. that warrant disciplinary action, including the occurrence of similar cases, the delivery, etc. of ITOCHU shares, etc. under the Plan shall not be conducted. If the delivery, etc. has already been conducted, ITOCHU shall be able to demand compensation from said Director of an amount, etc. obtained by multiplying the number of shares delivered under the Plan (including the number of shares converted) by the closing stock price of ITOCHU shares on the Tokyo Stock Exchange on the date on which ITOCHU provided notification of the return to said Director.

Actual Corporate Officer Remuneration for FYE 2023 and FYE2024

	Number of	FYE 2023			Number of	FYE 2024
	Amount paid		Details	Amount paid		Details
	people	(Millions of Yen)	(1)	people	(Millions of Yen)	(1)
Directors	10	3,045	¥662 million	11	3,661	¥714 million
(2)	¥1,825 million	(2)	¥1,966 million
(Outside Directors)	(4)	(81)	(3)	¥168 million	(5)	(81)	(3)	¥512 million
Audit & Supervisory			(4)	¥390 million			(4)	¥469 million
Board Members	6	172	Only (1)	7	160	Only (1)
(Outside Audit &
Supervisory Board	(3)	(60)			(5)	(61)
Members)
Total	16	3,216			18	3,821
(Outside Officers)	(7)	(141)			(10)	(142)

• (1) Monthly Remuneration, (2) Performance-linked bonuses, (3) Share price-linked bonuses, (4) Stock Remuneration
• Monthly remuneration is decided based on the standard amount by position and the level of contribution to ITOCHU Corporation, including its response to climate change, ESG, and the SDGs.

195

Top Commitment

Sustainability at the ITOCHU Group

Environment

Society

Governance

Sustainable Finance

Evaluation by Society

Independent Assurance Report

Corporate Governance

Risk Management

Compliance

Corporate Governance

Name, position, and amount of compensation paid to Directors receiving compensation of ¥100 million or more during FYE 2024, are as follows.

			Total Annual Monthly	Performancelinked	Share pricelinked	Stock
Name	Category	Total
Remuneration	bonuses	bonuses	Remuneration
Masahiro Okafuji*	Director	¥179 million	¥542 million	¥148 million	¥135 million	¥1,003 million
Keita Ishii*		Director	¥111 million	¥407 million	¥111 million	¥101 million	¥729 million
Fumihiko Kobayashi		Director	¥99 million	¥271 million	¥74 million	¥68 million	¥511 million
Tsuyoshi Hachimura		Director	¥98 million	¥271 million	¥74 million	¥68 million	¥511 million

Evaluation as to the Effectiveness of the Board of Directors

ITOCHU has conducted an evaluation as to the effectiveness of the Board of Directors and Audit & Supervisory Board Members once a year since FYE 2016 utilizing external consultants, and the Board of Directors has analyzed and evaluated the findings after deliberation by the Governance, Nomination and Remuneration Committee (until June 23, 2023, Governance and Remuneration Committee; excluding FYE 2017).

Procedure for the Board Evaluation for FYE 2024 is as follows:

Procedure for the Board Evaluation

	Hiroyuki Tsubai	Director	¥82 million	¥356 million	¥74 million	¥68 million	¥580 million
	Hiroyuki Naka*	Director	¥64 million	¥119 million	¥32 million	¥30 million	¥246 million
	* Monthly remuneration includes	housing allowance.				(Rounded to nearest million yen)

The remuneration for Executive Officers who do not concurrently hold director positions is provided based on a system designed according to the position based on the remuneration plan for the Directors. Name and amount of compensation paid to Executive Officers (excluding those who concurrently hold director positions) whose total compensation exceeded ¥100 million in FYE 2024, are as follows:

Name	Total Annual Monthly	Performancelinked	Share pricelinked	Stock	Total
Remuneration	bonuses	bonuses	Remuneration
Mitsuru Chino*	¥44 million	¥56 million	―	¥13 million	¥112 million

Respondents

Implementation and Evaluation method

Question details

All of ten (10) Members of the Board and five (5) Audit & Supervisory Board Members in FYE 2024

1. Conducted a questionnaire to and individual interview with each of respondents by the external consultant (Answered on anonymous basis)
2. Implemented an information compilation and analysis by the external consultant based on the answers from the respondents
3. In reference to the information compilation and analysis, conducted an examination at the
   Governance, Nomination and Remuneration Committee
4. Implemented an analysis and evaluation at the Board of Directors

1. Structure of the Board of Directors
2. Structure of the advisory committees to the Board of Directors
3. Roles and duties of the Board of Directors
4. Operation status of the Board of Directors
5. Information provision and training for Members of the Board and Audit & Supervisory Board
   Members
6. Other important topics

Tomoyuki Takada	¥51 million	¥49 million	―	¥13 million	¥113 million
Tatsushi Shingu	¥51 million	¥158 million	¥44 million	¥30 million	¥284 million
Masaya Tanaka	¥40 million	¥128 million	¥32 million	¥29 million	¥230 million
Kenji Seto	¥36 million	¥100 million	¥32 million	¥29 million	¥197 million
Masatoshi Maki	¥40 million	¥86 million	¥32 million	¥29 million	¥187 million
Hideto Takeuchi	¥36 million	¥96 million	¥32 million	¥29 million	¥193 million
Shuichi Miyamoto	¥37 million	¥112 million	¥32 million	¥29 million	¥210 million
* Registered name: Mitsuru Ike				(Rounded to nearest million yen)

Overview of the results of the evaluation

As a result of deliberations at the Governance, Nomination and Remuneration Committee and the Board of Directors based on the analysis on questionnaires and interviews in the evaluation as to the effectiveness, it was confirmed that the effectiveness of the Board of Directors of ITOCHU is continuously secured.

With respect to the quantitative aspect, the scores that were improved in FYE2023 has been further improved and the Board of Directors was confirmed to be performing at a high level in six themes for the evaluation. In particular, the total number / ratio of Directors, the attributes of the Chairman of the Board, and the appropriateness of the proceedings of the Board of Directors have been further building on the high evaluation from the previous year. Our efforts to enhance the effectiveness of the Board's deliberations have also been recognized in the evaluation. With respect to the qualitative aspect, we received many positive opinions as well as the implications for further improvement. As priority issues to be addressed in the medium- to long-term, primarily "Group governance" and "forward-looking discussions for the future" were highlighted.

Top Commitment	Sustainability at the ITOCHU Group	Environment	Society	Governance
Corporate Governance		Risk Management Compliance
Corporate Governance

In the previous evaluation, it was recognized that the ongoing efforts should continue to address the identified issues of "continuing discussions on strengthening management foundations" and "ensuring further diversification of human resources," which were identified as the issues of FYE2022, and as new issues, we recognized the need for further efforts in "holding ongoing discussions on succession planning for senior management throughout the Group" and "continuing strengthening monitoring and supervision systems in light of changes in the external environment" in the Board of Directors. As to these issues, the improvement and progress were confirmed as follows:

FYE	Issues Identified	Progress in FYE 2024
		● We are making investment decisions for the future growth of the entire consolidated group,
	Continue discussions on	such as considering tender offers for listed subsidiaries or affiliates, and evaluating investment
	projects across multiple Division Companies.
	strengthening management	● We have established a new position of CXO and are actively working on building a structure to
	foundations	promote the transformation of the Group's business scope and business model, including the
		promotion of digitalization.
		● Taking into account the discussions and recommendations of the Women's Advancement
2022		Committee, we have set forth specific measures and goals to promote the advancement of
	women, such as appointing female Executive Officers and establishing numerical targets for
		the proportion of women among all officers. We have announced these initiatives and goals,
	Ensure further	and are actively implementing concrete actions.
	● We are implementing concrete initiatives that contribute to further diversity in talent, such as
	diversification of human	the introduction of Virtual Office to facilitate the growth and career development of junior
	resources	employees, promote cross-organizational business, and adopt other work-style reform
		measures.
		● The improvement in the overall women ratio of Member of the Board and Audit & Supervisory
		Board Members has further enhanced the diversity of officers and facilitated deeper
		discussions within the Board of Directors.
		● We have established a governance structure in the Governance, Nomination, and
	Hold ongoing discussions	Remuneration Committee (with the chairman and the majority of members being Outside
	Directors) that enables cross-functional and organic discussions on succession planning,
	on succession planning for	selection and compensation of Executive Officers, and other related matters.
	senior management	● We have established a new position of Senior Operating Officer to ensure a pool of candidates
	throughout the Group	for key manager positions within ITOCHU, along with executives of our Group companies, by
		strengthening the layer of experienced Executive Officers.
		● We are deepening the understanding and enhancing the effectiveness of oversight within
2023		ITOCHU and Group companies by Outside Directors and Outside Audit & Supervisory Board
	Members through activities such as on-site visits to business bases including overseas
		locations, meetings with Division Company Presidents, Officers responsible for overseeing
	Continue strengthening	each administrative functions, and management teams of subsidiaries, discussions with
	young employees, explanation of audit plans at Board meetings by Audit & Supervisory Board
	monitoring and supervision	Members, and collaboration between Audit & Supervisory Board Members and Outside
	systems in light of changes	Directors.
	in the external environment	● We have restructured the advisory committees into the Governance, Nomination, and
		Remuneration Committee, with the chairman and the majority of members being Outside
		Directors, to strengthen the supervisory function by the Board of Directors.
		● The Board of Directors considers the reduction of GHG emissions and contribution to SDGs
		through discussions and oversight, which are reflected in investment and business decisions.

					196
Sustainable Finance	Evaluation by Society	Independent Assurance Report

As mentioned above, we have been formulating and implementing specific measures to address past issues. Looking ahead, it is expected that these measures will be executed steadily, established and embedded, and become continuous initiatives. In light of this, we recognize the need for further efforts by the Board of Directors to address new areas of consideration, specifically (1) supervising the implementation status of diversity strengthening measures, and (2) supervising governance strengthening measures for sustainable growth of the group. We will continue to utilize opportunities such as discussions in advisory committees and off-site meetings to effectively exercise our supervisory function as the Board of Directors regarding these issues.

We will make active efforts to maintain the effectiveness of the Board of

Directors and further improve its functions in light of the result of this Board

Evaluation.

Training Policy

The Company conducts training related to regulations with respect to Directors and Audit & Supervisory Member, corporate governance and other matters as part of its training for newly appointed internal and Outside Officers. The Company also provides Directors and Audit & Supervisory Board Members with opportunities for training at third-party institutions, with the Company bearing the costs of such training. Also, to ensure that management supervision by Directors and audit by Audit & Supervisory Board Members are adequately performed, before each meeting we provide to Outside Officers prior explanations on matters presented to each meeting of the Board of Directors through respective offices of the Board of Directors and the Audit & Supervisory Board. In addition, ITOCHU strives to ensure that Outside Officers appropriately understand its business environment and challenges through various occasions such as introductory session concerning ITOCHU's business upon election, visits to business premises in or outside Japan, meetings among Outside Officers, reporting activities by internal auditing units to Outside Directors, periodical discussions with the managements and explanatory sessions on matters requested by Outside Officers.