Governance Framework

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Board of Directors

The Board of Directors consists of twelve directors including five outside directors with two female directors. The Board decides on matters stipulated by laws and regulations, basic management policy and other important management matters. At the same time, the Board supervises the execution of duties by the directors and executive officers. Outside directors in particular perform an important supervisory role from an independent standpoint, helping to ensure even more robust and effective corporate governance. The Board selects the Chief Executive Officer and other Executive Officers placing emphasis on whether the Company can continue to realize its management vision and policy in the years ahead. In principle, the Board of Directors meets once a month.

Composition of the Board Directors (12 members)

Composition of the Board Directors (11 members)

Nomination Committee, Audit Committee and Compensation Committee

Our three Committees' decisions are made from independent standpoint through the leadership of the Outside Directors.

The Nomination Committee is made up of three directors, two of whom are outside directors. This Committee decides the details of proposals submitted to the General Meeting of Shareholders concerning the appointment and dismissal of directors. The Nomination Committee meets at least once a year, or as necessary.

The Audit Committee is made up of three directors, two of whom are outside directors. In addition to auditing the execution of duties by the directors and executive officers, the Audit Committee decides the details of audit policy, audit plans, proposals for the appointment or dismissal of the independent auditors to the General Meeting of Shareholders, and other matters. As a rule, this Committee convenes at least once a month, or as necessary.

The Compensation Committee is made up of five directors, three of whom are outside directors. This Committee decides details of individual compensation for directors and executive officers. The Compensation Committee meets at least once a year, or as necessary.

  Number of members Internal directors Outside directors
Nomination Committee 3 1 2
Audit Committee 3 1 2
Compensation Committee 5 2 3

Executive Officers Meeting

The Executive Officers Meeting is made up of the executive officers and serves as a decision-making body for business execution based on the basic policy decided by the Board of Directors. It decides on important matters relating to business execution of the Company. As a rule, the Executive Officers Meeting meets once a month, but may hold extraordinary meetings as necessary.

Internal Audit

The Internal Audit Division consists of four persons. An internal audit division has been established in the principal Group companies, which periodically conducts audits internally, including audits of their respective subsidiaries. As the Company's Internal Audit Division periodically audits subsidiaries that lack an internal audit division, audits are conducted in a thoroughgoing manner on a Group-wide scale, while their status is confirmed at the Meeting of Persons Responsible for Internal Auditing in Group Companies convened on a regular basis; in addition, efforts are made to share information on Group companies as well as the uniform auditing policies of the Group.

Accounting Audits

In regards to accounting audits, the Company has concluded, with Deloitte Touche Tohmatsu LLC, an audit agreement on audits under the Companies Act and audits under the Financial Instruments and Exchange Act. The Company's Audit Committee and Deloitte Touche Tohmatsu LLC have opportunities to share information periodically, and are endeavoring to improve the quality of each other's audits by such means as exchanging information on their respective auditing policies and various problems that have arisen during the period. Also, an audit debriefing session is held at the end of the fiscal year, where opinions are exchanged with respect to account settlement issues in concrete terms.

The names of the certified public accountants who led auditing duties for the year under review ending March 31, 2015, the number of consecutive years they have audited the Company, and details of personnel who assisted with audits are as follows.
Names of certified public accountants who led auditing duties and number of consecutive audit years Designated limited liability partner: Yasuyuki Onaka (4 consecutive years), Koji Inagaki (1 year) and Junichi Yamanobe (6 consecutive years)

Assistants on audits

11 certified public accountants, 7 persons who have passed the certified public accountant examination, etc.

Number of meetings held during the fiscal year ended March 31, 2015

Board of Directors 15 Made decisions on matters specified by law, basic management policies, and important management matters as well as monitored the conduct of duties by the directors and executive officers (Meets once a month in principle)
Nomination Committee 5 Made decisions on the content of proposals to be submitted to the General Meeting of Shareholders regarding the election and dismissal of directors (Meets one or more times a year, as necessary)
Compensation Committee 7 Discussed and made decisions regarding the content of compensation of individual directors and executive officers (Meets one or more times a year, as necessary)
Audit Committee 14 In addition to auditing the conduct of duties by the directors and executive officers, discussed and made decisions on auditing policy, auditing plans, and the content of proposals to be submitted to the General Meeting of Shareholders regarding the selection and dismissal of the independent accounting firm (Meets once a month or more, as necessary, in principle)
Executive Officers Meetings 18 As the decision-making body responsible for the execution of business activities in accordance with the basic Policies approved by the board of directors, decided on important matters related to the execution of business in the Company and the Group as a whole (Meets once a month in principle; holds extraordinary meetings as necessary)
Investment Strategy Council 0 Discussed Group strategy (investments, funding, M&A, overseas strategy, etc.) and set directions with the objective of increasing the LIXIL Group's corporate value
Investment and Loan Council 13 Deliberated proposals made by the holding company and the operating companies that (1) are investments that are closely involved with Group strategy, (2) investments that are related to more than one Group operating company, and (3) investments that exceed the approval authority of the president of the relevant operating company
New Business
Deliberation (Acquisition)
Council
2 Deliberated proposals made by the holding company and the operating companies that are (1) investments that involve the establishment of a new company or are investments in an existing company and (2) investments for the acquisition, etc., of a business partner company of an operating company
Risk Management
Committee
3 In addition to forming a risk management committee in the holding company, also monitored the formation of such committees for risk management in Group companies and confirmed the status of risk management
Compliance Committee 5 Provided guidance for structuring and operational management of compliance systems in Group companies and monitoring of the status of requiring compliance with laws and regulations
Internal Audit Committee 4 Undertook inspections and checks of legal compliance and appropriateness of corporate activity and of management conformity not only with legal requirements but also with standards as determined by the company

Status of auditing activities

Internal Audit Division The holding company and principal Group companies have formed internal auditing departments that periodically conduct audits internally, including audits of subsidiaries. The Meeting of Persons Responsible for Internal Auditing in Group Companies has been formed to share information on Group companies as well as the uniform auditing policies of the Group. This meeting is held, in principle, once a year in Japan and once every two years overseas.
Accounting Auditors Deloitte Touche Tohmatsu LLC

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