Corporate Governance

Structure

Corporate Governance Structure of Shimizu Corporation

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Overview of the Corporate Governance Structure

We have adopted the structure of a company with an Audit & Supervisory Board. We have chosen this system based on the belief that we have established a system to supervise and oversee management from an objective and neutral perspective. This was achieved by limiting the number of directors and introducing an executive officer system to clearly separate the management strategy decision-making and oversight functions from the business execution function, by taking steps to encourage energetic debate at the Board of Directors, and by electing outside directors, other non-executive directors, and outside Audit & Supervisory Board members who maintain a high degree of independence. The concrete structure and implementation status are detailed below.

• One-third or more of the Board of Directors elected are outside directors to strengthen management supervision function, and to promote more energetic debate by the Board of Directors.
• Outside directors and other non-executive directors and outside Audit & Supervisory Board members use their extensive experience and sophisticated insight based on their individual career histories to oversee and supervise management and provide necessary advice as appropriate.
• We established a structure mainly consisting of the head office administrative departments to provide timely information and other materials to assist outside directors and other non-executive directors in performing their management supervisory duties (including tours of offices, job sites, etc.).
• The relevant divisions provide guidance on the Company in general, description of its businesses, and other relevant information to new outside directors and outside Audit & Supervisory Board members.
• Audit & Supervisory Board members audit all duties performed by directors from a fair and impartial perspective.
• The Audit & Supervisory Board Members Office was established as the dedicated organization to support Audit & Supervisory Board members. This office secures the necessary support staff to enable more effective audits by Audit & Supervisory Board members.
• Audit & Supervisory Board members improve the effectiveness of management supervision by attending important meetings and obtaining sufficient information from officers and employees without delay.
• When a Board of Directors meeting is held, the Board of Directors administrative office and other divisions provide explanations in advance to the outside directors, non-executive directors, and Audit & Supervisory Board members.
• Outside directors and other non-executive directors regularly exchange opinions with the chairman and president. They also exchange opinions with outside Audit & Supervisory Board members.
• Regular Outside Officers Meetings are held for outside directors and outside Audit & Supervisory Board members, and regular Outside Directors and Audit & Supervisory Board Members Meetings are held for outside directors and all Audit & Supervisory Board members to facilitate the exchange of opinions.

Main Governing Bodies Established by Shimizu (including discretionary committees and other meeting formats)

Board of Directors

In principle, the Board of Directors meets once a month and, as necessary, to decide matters stipulated by laws and regulations, the Articles of Incorporation, and the Board of Directors Regulations, as well as other important matters, and to supervise the execution of operations. The Articles of Incorporation specifies 12 as the maximum number of directors. These directors consist of executive directors who are highly knowledgeable in each area of our business and non-executive directors, some of whom are outside directors with extensive expertise and experience in their respective specialties. The Chairman and Representative Director serves as the chair of the Board of Directors.

［Names and Titles of Members］　(11 as of June 27, 2025)

(Main Agenda Items)
Election of directors; organizational reform; establishment, revision or repeal of company regulations; formulation and supervision of management policies and strategies; monitoring of progress and growth strategies of each business; risk management; sustainability matters such as climate change and human resources development; feedback on dialogue with investors; reduction of securities holdings; and revision of the standards for referral to the Board of Directors.

Audit & Supervisory Board

The Audit & Supervisory Board meets once a month as a rule, and additionally as necessary. It makes decisions on audit policy, audit plans, auditing methods, and other important audit matters, and deliberates on necessary matters concerning audits. The Articles of Incorporation sets the number of Audit & Supervisory Board members at a maximum of five, including three outside Audit & Supervisory Board members. The chair of the Audit & Supervisory Board is an Audit & Supervisory Board member chosen through discussion by the Audit & Supervisory Board.

［Names and Titles of Members］　(five as of June 27, 2025)

Nomination & Compensation Committee

We have established a Nomination & Compensation Committee to ensure fairness and transparency in the selection and dismissal of directors, Audit & Supervisory Board members and executive officers, as well as evaluation and compensation of directors and executive officers. The scope of responsibilities of the Committee is defined in the Rules of the Nomination and Compensation Committee and other related regulations. The members of this committee consist of five non-executive directors (four outside directors and one non-executive internal director) and one executive director. The committee is chaired by a non-executive director elected every year from among the members.

［Names and Titles of Members］　(six as of June 27, 2025)

(Main Agenda Items)
Creation of personnel appointments for and individual evaluations of directors and executive officers, total amount and individual bonuses for officers, individual monthly compensation for the next fiscal year, succession plans, and review of related regulations.

Risk Management Committee

Our Risk Management Committee ascertains and analyzes risks that would have a serious impact on our corporate group, which consists of Shimizu and its subsidiaries. It also determines key items of risk management, and follows up and reports to the Board of Directors. The President and Representative Director serves as the chair of the committee and one standing Audit & Supervisory Board member also attends committee meetings. The roles, authority, and other matters of the Risk Management Committee are defined in the Risk Management Regulations.

［Names and Titles of Members］　(15 as of June 27, 2025)

Committee on Corporate Ethics

Shimizu has established the Committee on Corporate Ethics to decide company-wide measures for thoroughly promoting corporate ethics and compliance, implement and follow up on those measures, centralize information on serious misconduct cases, and review and direct preventive measures and recurrence prevention measures. The President and Representative Director serves as the chair of the committee. One full-time Audit & Supervisory Board member and one outside expert (an attorney) also attend committee meetings.

［Names and Titles of Members］　(19 as of June 27, 2025)

Executive Officers Council

We have established an Executive Officers Council to communicate important matters and policies decided by the Board of Directors to executive officers and provide instructions to them. The President and Representative Director serves as the chair of this council and members consist of executive directors (other than the chair) and executive officers. Two full-time Audit & Supervisory Board members also attend council meetings.

Evaluating the Effectiveness of the Board of Directors

Our Board of Directors evaluates the overall effectiveness of the Board of Directors once a year.
A summary of the evaluation method and results for fiscal 2024 are provided below:

Evaluation Method

All directors and Audit & Supervisory Board members complete a survey (including anonymous entries and open answers). A self-analysis is performed through discussion by all directors and all Audit & Supervisory Board members at Board of Directors meetings, based on an analysis by a third party (attorney).

Summary of Evaluation Results

Conclusion: The Shimizu Board of Directors evaluated and determined the Board of Directors as a whole to be operating effectively.

Status of response to issues indicated in the last evaluation of effectiveness in FY2023 (covering April 2023 to March 2024)

The Board of Directors has made consistent efforts to resolve issues and make improvements as follows. The Board of Directors will continue to strive for further improvement.

1. Monitoring and supervision of the progress of the Mid-Term Business Plan by the Board of Directors

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   Strengthen monitoring of how the Mid-Term Business Plan and the annual Operation Plan are linked, how it is adopted across the Company and its progress

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   Holding explanatory meetings/group meetings for better understanding and achievement of the Mid-Term Business Plan. Opinions of the participants shared at the Board of Directors. Implement follow-up measures to ensure better understanding of the Mid-Term Business Plan and better incorporation into the annual Operation Plan.
2. The Board of Directors to check that management resources are appropriately distributed

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   Further discussions on business portfolio taking into account medium to long-term growth

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   Gather all Directors at offsite meetings, and hold discussions on precedents of business 　portfolio optimization. Have in-depth discussions on growth strategies for each line of business at the Board of Directors.
3. Sharing the deliberation status, etc. of the Nomination and Compensation Committee at the Board of Directors

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   The Board of Directors to check the deliberation process of the Nomination and Compensation Committee in addition to its result

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   The deliberation process and discussion details of the Nomination and Compensation Committee, outline of succession planning and other implementation matters to be shared at the Board of Directors.
4. Expanded disclosure of non-financial information

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   Expanded information disclosure related to risk management and sustainability

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   Review risk management process and items, continue discussions on disclosure details for better disclosure. Early information disclosure based on the TCFD and TNFD recommendations.

Major issues identified in the effectiveness evaluation.

1. Hold in-depth discussions on business portfolio optimization to enhance corporate value

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   Hold more in-depth discussions on growth strategies for each line of business considering the cost of capital at the Board of Directors, clearly define roles of each line of business in a company-wide scheme to enhance corporate value

2. Further improve internal control and risk management systems in order to realize teachings of our Credo, the Analects and the Abacus, in our operation

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   Establishing a reporting system where details of risky projects are more promptly reported. Creating a more systematic reporting system where the progress and completion of the responses can be shared.

3. Enhance the communication between our senior management and Outside Directors/Outside Auditors

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   Provide more opportunities for our senior management and Outside Directors/Outside Auditors to talk to each other in person outside the Board of Directors meeting.

Future initiatives

Based on the results of the evaluation of the effectiveness of the Board of Directors, we aim to enhance the effectiveness of the Board of Directors and further expand and reinforce corporate governance through the PDCA cycle to improve on issues.

Election of Outside Directors and Outside Audit & Supervisory Board Members

as of June 27, 2025

Criteria for Assessing Independence of Outside Directors and Outside Audit & Supervisory Board Members

Criteria for Assessing Independence of Outside Directors and Outside Audit & Supervisory Board Members(PDF：91KB)

Support Structure for Outside Directors and Outside Audit & Supervisory Board Members

We have established a system to provide information to facilitate supervision of management by outside directors and other non-executive directors in performing their duties. The administration departments in the head office play the main role in providing this information in a timely manner. The Corporate Auditor’s Office was established as a dedicated organization to support Audit & Supervisory Board members. A sufficient number of staff members have been secured to assist outside Audit & Supervisory Board members. When a Board of Directors meeting is held, materials are distributed in advance and the Board of Directors administrative office and other divisions provide explanations in advance to the outside directors and the outside Audit & Supervisory Board members.