Basic Concept of Corporate Governance

Putting the corporate motto into practice, the Company seeks to achieve its business objectives through manufacturing and to further improve corporate value, while also endeavoring to nurture a sound corporate culture and sincerely carry out its corporate activities, being constantly aware that it is a member of society.
TDK also pursues its corporate philosophy faithfully and earnestly, and is constructing the following efficient and orderly corporate governance system in order to maintain and guarantee the soundness, legality, and transparency of management.

Outline of TDK Corporate Governance Organization

1. To enable swift executive decision-making, the number of Directors is limited to seven, and three disinterested outside Directors are appointed to strengthen supervisory functions. The term of a Director is set at one year, giving the shareholders the opportunity for a vote of confidence in each business year.
2. The corporate officer system is adopted to separate the Board of Directors' policy decision-making and supervising functions from the operating function. The corporate officers are charged with carrying out business operations according to the decisions made by the Board of Directors, to enable rapid business operations in line with corporate policy.
3. In accordance with the auditor system principles as specified in the Corporation Act, the Board of Corporate Auditors (five Auditors in total) is established. Out of the five Auditors, three disinterested and independent outside Auditors are appointed to enhance the supervisory function for operations.
4. The Business Ethics & CSR Committee, the Disclosure Advisory Committee, the Compensation Advisory Committee, and the Nomination Advisory Committee are established as advisory bodies to the Board of Directors.
5. The Risk Management Committee and the Crisis Management Committee are established, reporting directly to the Executive Committee.
6. The outside directors and outside auditors are the equivalent of the independent directors stipulated by the Tokyo Stock Exchange (outside directors and outside auditors who pose no danger of a conflict of interest with shareholders).

TDK Corporate Governance Organization

(As of April 1, 2012)

Addressing Compliance with Securities Regulations

TDK has established the following system to ensure compliance with all applicable securities and exchange laws and other similar laws and regulations of any country, as well as the rules and regulations of each stock exchange where TDK's shares are listed.

1. TDK will collect, record, analyze, process, summarize, and report all the information required to be disclosed under the Securities Regulations and will establish a control system and other procedures to guarantee timely information disclosures within the deadlines stipulated by the Securities Regulations.
2. TDK has established a system to ensure that TDK has provided for procedures designed to acquire in a reasonable manner all information regarding ensuring that the trading TDK conducts is duly authorized, ensuring that its assets are protected from unauthorized or irrelevant use, and ensuring that all trading activities of TDK are appropriately recorded and reported for the purpose of enabling TDK to prepare the financial statements in accordance with applicable accounting standards.
3. TDK will ensure that the above-mentioned management system is in compliance with the requirements of the Securities Regulations with respect to the corporate governance system.

Compensation of Directors

At TDK, the Compensation Advisory Committee, an advisory body to the Board of Directors, screens the mechanisms and levels of compensation to directors, corporate officers, presidents of main affiliates, and equivalent officers and verifies the transparency of the compensation decision process and the appropriateness of individual compensation from the perspective of the company's business results, socially acceptable levels, and other factors. In accordance with legislation, the total amounts of compensation to directors and auditors (calculated separately for internal and outside directors and auditors) are released in the company's Annual Securities Report every business year.

» Securities Report 

Avoidance of Conflict of Interest

In order to avoid a conflict of interest, TDK responds in accordance with legislation. For example, if a director engages in a transaction that involves a conflict of interest, a resolution of the Board of Directors is necessary.

Nomination of Directors

At TDK, regarding the nomination of directors, auditors, and corporate officers, the Nomination Advisory Committee, an advisory body to the Board of Directors, recommends candidates after discussing the expected requirements. This contributes to ensuring appropriateness in the selection of directors, auditors, and corporate officers and transparency in the decision process.