Corporate Governance TDK's Governance:
An Outside Director's Perspective

Nomination Advisory Committee
Chairman's Comments

Although Mr. Ishiguro just assumed the post of president in fiscal 2017, TDK has already begun to engage in vigorous discussion regarding the image of nextgeneration leadership corresponding to its strategic direction, and the building of a system for developing those leaders.

Through its M&As in recent years, TDK has progressed even further in its globalization, on both the structural and strategic sides. This is why management, led by Mr. Ishiguro, and we, the committee members, share a common recognition of the need to put in place a system that is highly transparent, even when regarded from outside the Company, for developing leaders and which goes beyond a system of automatic, escalator-style promotions. We also agree that, in terms of assessment measures, we need to evaluate whether these individuals have a global sensibility, and whether or not they are capable of executing long-term strategy. Under the leadership of Andreas Keller, general manager of Human Resources & Administration HQ and knowledgeable in global human resources, we are now considering specific systems for selecting candidates worldwide, not limited to Japanese individuals, and for establishing career paths. By 2018, we believe we will be able to announce a succession plan worthy of TDK as it takes on the challenge of transformation.

Compensation Advisory Committee
Chairman's Comments

As market conditions and customer needs drastically change, TDK has introduced a director compensation program centered on a strong linkage to financial results and on stock-linked compensation stock options, with the goals of further growth and a strengthening of its technology leadership.

At the same time, between 2014 and 2015 TDK held repeated, vigorous discussions centered on its Compensation Advisory Committee, intended to spur active engagement in two areas: 1) Recommendation of compensation linked to medium- to long-term performance in accordance with the Corporate Governance Code; and 2) A management direction that will accelerate global business operations and achieve a higher level of growth. In 2015, TDK introduced a new system of stock-linked compensation stock options, with performance benchmarks, built around achievement of the Company's Medium-Term Plan.

Further, TDK set out a clear direction for its business operations in line with this Medium-Term Plan, adding to its existing core businesses with the April 2017 launch of Sensor Systems Business Company, which will serve as the engine for creating new value.

TDK intends to vigorously engage in its shift to a business structure centered on these new initiatives, and in making further progress in the corresponding globalization of its management. To enable the Company's top management and officers to work toward sustainable growth and even higher goals, the Compensation Advisory Committee will continue active discussions aimed at building the optimal director compensation program and achieving further growth.