Based on the recognition that Yokowo exists today with the support of all stakeholders, including shareholders, customers, suppliers, and local communities, we establish good relationships with stakeholders and aim to maximize our corporate value.
Yokowo believes that strengthening its corporate governance is one of its important management challenges. It has accordingly adopted a corporate management system to ensure management efficiency, transparency, and lawful conduct, and to achieve its management objectives.

Yokowo has adopted a statutory auditor system. Our corporate governance organizational system consists of a Board of Directors that performs management strategic and supervisory functions, an Executive Officer system that fulfills an executive function, and Statutory Auditors meetings that fulfill management audit functions. Details of our corporate governance organizational system are as follows:

1. The Board of Director's decision-making function in management strategies and supervisory function are clearly defined. Also, the Board of Directors consists of only a limited number of directors, to ensure prompt decision making.
2. By adopting both the Executive Officer system and the Department Structure, strategic decision making and operational supervisory functions is clearly separate from the executive function, representing a system for prompt and appropriate execution of operations.
3. To strengthen the managerial audit capabilities of statutory auditors' meetings, we have appointed two outside statutory auditors with excellent professional expertise and abundant practical experience.

• List of Directors
• List of Statutory Auditors

• List of Executive Officers

The Board of Directors

Yokowo's Board of Directors consists of three members. This smaller number enables the Company to clarify strategic management decisions and play a supervisory function, while making prompt decisions. Candidate directors are selected at Board of Directors meetings in accordance with the Company standards, and all candidates are subject to a thorough examination to determine their suitability. We believe that our management supervisory and audit functions are appropriate performed by the Board of Directors, Statutory Auditors'meetings, and outside Statutory Auditors. As a consequence, no outside directors are appointed.

Statutory Auditors and Auditors'Meetings

The statutory auditors' meetings consist of three members, one full-time statutory auditor and two part-time outside statutory auditors. In addition to regular meetings of auditors, extraordinary meetings are held as required.
The statutory auditors remain in close contact with internal control departments in charge of internal audits and accounting auditors, as follows.

Collaboration with Accounting Auditors

KPMG AZSA LLC has been appointed as our accounting auditor. The statutory auditors and the accounting auditor cooperate in holding discussions on the receipt of the accounting auditor's report on audits and reviews on a quarterly basis (at the end of each quarter and at the end of the fiscal year) at meetings of the statutory auditors and to conduct audits of each department and subsidiary, including both domestic and overseas companies, with the accounting auditor accompanied by the full-time statutory auditor.

Collaboration with the section in charge of internal audit

Functioning between the section in charge of internal audits and the statutory auditors, the section in charge of internal audits provides appropriate support for the audits conducted by the statutory auditors, and the statutory auditors hold regular meetings with the section in charge of internal audits to share the necessary information on the improvement of internal control and the status of operation, etc..

Status of Activities of Outside Statutory Auditors

From a professional viewpoint as attorneys and based on extensive knowledge and experience in personnel affairs, general affairs, and other areas, the two outside statutory auditors give advice and suggestions at meetings of the Board of Directors.

Compensation for Board Members and Statutory Auditors

Compensation for the Board members and statutory auditors is determined in accordance with internal compensation standards and also by taking into consideration both business results as well as the personal results of individual Board members and statutory auditors based on their position, and is then finally viewed from the aspect of reasonability. However, the total amount for compensation is subject to the approval of a general shareholders'meeting.

The amount of compensation for the Board members and statutory auditors for this fiscal year, FY2010, is as follows:

Note: The above amounts include compensation for one Statutory Auditors who retired from the Company at the closing of the 72th ordinary general meeting of shareholders. The number therefore differs from the number of Board members and statutory auditors described in the "Corporate Governance System" mentioned earlier.

Incentives

Payments of bonuses to the Board members are, as a general rule, the amount linked to the results for each business year and require approval at a general meeting of shareholders. Stock options were granted four times to Board members from 1998 to 2002; however, this incentive has since been discontinued. Further, in June 2006, as part of the reforms made to compensation for Board members and Statutory Auditors, the retirement compensation for the Board members and statutory auditors was abolished as it was not linked to management results.

Outline of Present Internal Control System

In accordance with the resolution of the Board of Directors titled "Basic Principles for Establishment of an Internal Control System," Yokowo Group continues to establish the system and improve operational framework.

Basic Principles in the Internal Control System

The basic principles in establishing an internal control system are as follows:

"Basic Principles Concerning the Establishment for Internal Control System" (109KB)

Internal Control relating to Financial Statements

Yokowo has adopted the "internal control relating to financial statements" set out in the Financial Instruments and Exchange Law since the fiscal year ended March 31, 2010. As a result of improving and executing internal control, we have determined that our internal control relating to financial statements was effective for the fiscal year ended March 31, 2010.

Yokowo also received an audit report from the Accounting Auditors that the report on its internal control was appropriate.

Risk Management

Yokowo has prepared Risk Management Rules for more stable and effective business activities and has established the Risk Management Committee, which is chaired by the President and Executive Officer. The committee forms and develops a Risk Management System (RMS) that seeks to identify and analyze diverse risks of loss and to conduct the necessary preparations, execution, assessment, improvement, and review.

Information Management

Yokowo has appointed persons responsible for individual organs in order to ensure the appropriateness of storing and managing information. This allows the Company to conduct organizational and systematic storage and management of information and to monitor information storage and management periodically.

The chart below shows our corporate governance and internal control systems as of June 29, 2011.