NIPPON STEEL CORPORATION
Corporate Governance Report(Translation)
Corporate Governance Report
Last Update: July 7, 2022
Nippon Steel Corporation
Representative Director and President
Eiji HashimotoContact: General Administration Dept.
Securities code: 5401
https://www.nipponsteel.com/en
The corporate governance of Nippon Steel Corporation (the “Company” or “NIPPON STEEL”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views===========================================================================The Corporate Governance Report dated July 7, 2022 contains the following updates among others:
I-1. Basic Views
 [Supplementary Principle 2.4.1] (Ensuring Diversity in the Promotion to Core Human Resources):
Updates were made to “(2) Voluntary and Measurable Targets for Ensuring Diversity and Their Status.”
For other descriptions of actual results, figures and other information have been updated.
==========================================================================(1)

The Company has established a corporate governance system suited to the businesses of the
NIPPON STEEL Group in order to achieve the sound and sustainable growth of the NIPPONSTEEL Group and increase its corporate value over the medium- to long-term, in response to thedelegation of responsibilities by and trust of all stakeholders, including its shareholders andbusiness partners.

(2)

The basic structure of NIPPON STEEL’s corporate governance is as follows.
a.

Reasons for Adopting a Company with an Audit & Supervisory Committee
The Company has adopted a company structure with an Audit & Supervisory Committee
for the purpose of, among others, expediting management decision-making, enhancing
discussions by the Board of Directors relating to matters such as the formulation ofmanagement policies and strategies by limiting the number of items for deliberation by
the Board of Directors, and strengthening the supervisory function of the Board of
Directors over management.

b.

Corporate Governance System.
Currently, the Board of Directors of NIPPON STEEL is comprised of fourteen (14)members, of whom nine (9) are Directors (excluding Directors who are Audit &Supervisory Committee Members) and five (5) are Directors who are Audit &Supervisory Committee Members. By all Directors appropriately fulfilling theirrespective roles and responsibilities, prompt decision-making is achieved corresponding-1-

NIPPON STEEL CORPORATION
Corporate Governance Reportto changes in the management environment, and multifaceted deliberations and objective
and transparent decision-making by the Board of Directors are secured. In addition,
Directors who are Audit & Supervisory Committee Members have voting rights on the
Board of Directors regarding decisions on proposals for the election and dismissal of
Directors as well as the election and dismissal of Representative Directors, and otherdecisions in general regarding business execution (excluding decisions that have beendelegated to Directors). The Audit & Supervisory Committee has the authority to give its
opinions at the General Meeting of Shareholders regarding the election, compensation,etc. of Directors, excluding Directors who are Audit & Supervisory Committee Members.
This structure strengthens the supervisory function of the Board of Directors overmanagement.
In accordance with a provision in the Articles of Incorporation, the Board of Directors of
NIPPON STEEL delegates part of the decisions regarding execution of important
operations (excluding matters listed in each item of Article 399-13, Paragraph 5 of theCompanies Act) to the Representative Director and Chairman and Representative
Director and President, thereby expediting management decision-making, and limiting
the number of items for deliberation by the Board of Directors and enhancing discussions
by the Board of Directors relating to matters such as the formulation of management
policies and strategies. In order for all Outside Directors to obtain the necessary
information and sufficiently fulfill their roles, the Chairman, the President and othersenior management regularly hold meetings with all Outside Directors to share themanagement challenges and exchange opinions.
Independent Outside Directors account for more than one-third (5 out of 14) of all
members of the Company’s Board of Directors.

(Board of Directors’ structure)
Name
Position[Directors (excluding Directors who are Audit & Supervisory Committee Members)]
Kosei Shindo

Eiji Hashimoto

Akio Migita

Naoki Sato

Takahiro Mori

Takashi Hirose

Tadashi Imai

Representative
Director andChairman
Representative
Director and President(Chairperson)
Representative
Director andExecutive Vice
President
Representative
Director andExecutive Vice
President
Representative
Director andExecutive Vice
President
Representative
Director andExecutive Vice
President
Managing Director-2-

NIPPON STEEL CORPORATION
Corporate Governance Report

Tetsuro Tomita

Director

Outside Director

Kuniko Urano

Director

Outside Director[Directors who are Audit & Supervisory Committee Members]
Shozo Furumoto
Senior Audit &Supervisory
Committee Member(full-time)
Masayoshi Murase
Audit & Supervisory
Committee Member(full-time)
Seiichiro Azuma
Outside Director
Audit & Supervisory
Committee Member
Hiroshi Yoshikawa
Outside Director
Audit & Supervisory
Committee Member
Masato Kitera
Outside Director
Audit & Supervisory
Committee Member

Independent
Director
Independent
Director

Independent
Director
Independent
Director
Independent
Director(Note) The details of each member, including titles and brief personal histories, aredescribed in “4. Corporate Governance, etc., (2) Status of Officers, (a) List of
Officers” in “IV. Status of the Reporting Company” of the 97th Term Annual
Securities Report.
(The 97th Term Annual Securities Report,
URL: https://www.nipponsteel.com/en/ir/library/annualsecuritiesreport.html, pp. 75-80)c.

Establishment and Operation of the Internal Control System
To comply with applicable laws and regulations, and ensure the integrity of financial
reports and the effectiveness and efficiency of business and affairs, NIPPON STEEL
establishes and appropriately operates an internal control system, and strives tocontinually improve it. To create a sound and open organization, NIPPON STEEL
establishes the internal control environment by emphasizing dialogue in and outside theworkplace, regularly conducting attitude surveys with all employees, and establishing awhistleblower system to receive consultation and reports from officers and employees of
NIPPON STEEL and the Group companies, as well as their families and others.

d.

Appropriate Information Disclosure
To enhance management transparency and advance a correct understanding bystakeholders on the management situation of the Group, NIPPON STEEL not only seeks
to disclose information in accordance with applicable laws and regulations and the rulesof financial instruments exchanges on which NIPPON STEEL is listed, but also seeks todisclose financial and non-financial information at an appropriate timing, in an easily
understandable manner, and accurately.

e.

Regular Examination and Review of Corporate Governance
NIPPON STEEL regularly examines and reviews, at the Board of Directors, the corporate
governance structure, its operating situation, and other relevant facts and circumstances,including the analysis and evaluation of the effectiveness of the Board of Directors as awhole so that NIPPON STEEL will be able to make improvements autonomously,
considering the opinions of Outside Directors. For the specific initiatives and situations-3-

NIPPON STEEL CORPORATION
Corporate Governance Report

regarding the NIPPON STEEL’s corporate governance, please see each item of thisreport.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]NIPPON STEEL conducts all matters related to every principle of the Code.

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NIPPON STEEL CORPORATION
Corporate Governance Report[Disclosure Based on the Principles of the Corporate Governance Code][Principle 1.4] (Strategic Shareholdings)(1)

Policy on Strategic Shareholdings
NIPPON STEEL, from the standpoint of sustainable growth and improvement of its
corporate value in the mid- to long-term, believes that it is extremely important tomaintain and develop the relationships of trust and alliance with its extensive range ofbusiness partners and alliance partners both in Japan and overseas, which have beencultivated through its business activities over the years. Accordingly, NIPPON STEEL
shall continue to hold strategic shareholdings which are judged to contribute tomaintaining and strengthening its business foundation such as the business relationships
and alliance relationships between NIPPON STEEL and the investees, enhancing the
profitability of both parties, and thereby improving the corporate value of NIPPONSTEEL and the Group. Regarding companies for which we confirm to be able to achieve
the objectives described above without holding their shares after sufficient dialogues,
we will proceed with the sale of shares in such companies.

(2)

Examination of the Appropriateness of the Strategic Shareholdings
NIPPON STEEL confirms the appropriateness of its strategic shareholdings by
specifically examining all shareholdings to determine, among others, whether the
purpose of each shareholding is appropriate and whether the benefit and risk associatedwith each shareholding are commensurate with the cost of capital. Of theseshareholdings, each shareholding with the market value exceeding a certain threshold is
examined each year at the Board of Directors. The total market value of theshareholdings examined at the Board of Directors accounts for approximately 90% of
the total market value of the strategic shareholdings held by NIPPON STEEL on aconsolidated basis (as of March 31, 2022).
The number of stocks held as strategic shareholdings by NIPPON STEEL on a nonconsolidated basis was 284, as of March 31, 2022 (total value on the balance sheet was
255.9 billion yen), while 495 were held as of October 1, 2012, when Nippon Steel &Sumitomo Metal Corporation was founded.

(3)

Basic Policy on Exercise of Voting Rights Concerning Strategic Shareholdings
Regarding the voting rights concerning each strategic shareholding, NIPPON STEEL
exercises its voting rights upon comprehensively evaluating whether the agenda of theGeneral Meeting of Shareholders of the investee company contributes to theimprovement of the respective corporate values of NIPPON STEEL and the investee
company. Specifically, NIPPON STEEL formulates criteria for the exercise of voting
rights which set forth guidelines for judgment according to the type of agenda items suchas the appropriation of surplus, the election of Directors and Audit & Supervisory Board
Members, etc., and exercises its voting rights based on these criteria together with theresults of the examination of the appropriateness of the shareholdings in (2) above.

[Principle 1.7] (Related Party Transactions)Regarding transactions (including indirect transactions) between NIPPON STEEL and Directors,
NIPPON STEEL verifies the contents of each transaction. If the transactions fall underconflict-of-interest transactions, in accordance with applicable laws and regulations and NIPPONSTEEL’s internal rules, the “Rules for Board of Directors,” NIPPON STEEL seeks approval at,
and reports to, the Board of Directors, and confirms that all those transactions will not harm
NIPPON STEEL.

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Corporate Governance Report

Also, regarding the transactions between NIPPON STEEL, on the one hand, and other relatedparties, on the other hand, NIPPON STEEL verifies the contents of each transaction; subject toapplicable laws and regulations, it discloses the transactions appropriately, depending on theirimportance and nature.
[Supplementary Principle 2.4.1] (Ensuring Diversity in the Promotion to Core Human Resources):(1)

Approach to Ensuring Diversity
NIPPON STEEL aims to create and deliver valuable and attractive products and ideas byrespecting diverse values and utilizing individuality through smooth communication andcollaboration. With respect for all human rights being a prerequisite for corporate
activities, NIPPON STEEL has worked to eliminate as unjust the discriminatory treatmentof workers based on nationality, race, religion, creed, gender, age, sexual orientation, anddisability.
Amid recent changes to the environment surrounding NIPPON STEEL, in order tocontinue to grow with the aim of becoming “the best steelmaker with world-leading
capabilities” that contributes to Japan’s industrial competitiveness from the present andinto the future, NIPPON STEEL is reinforcing diversity & inclusion (“D&I”) initiatives,
based on the recognition that it is important for the Company’s employees to be able toaccept each other’s diverse values, be productive, perform at their best, be empowered,and feel proud and fulfilled.
Specifically, the Board of Directors has authorized the Company to work on D&I
measures, and a dedicated organization to promote D&I measures has been establishedand is accelerating initiatives.

(2)

Voluntary and Measurable Targets for Ensuring Diversity and Their Status
Concerning the promotion of female employee’s participation and career advancement,
based on the various programs and work environments that have been established,
NIPPON STEEL has established the following targets to support female employees tocontinue to demonstrate their abilities through career development, and to further promote
them to managerial positions.
[Target] Aim to at least double and possibly triple the number of female employees inadministrative positions in 2025 from 36 in 2020, and to increase by at least four times
and possibly seven times by 2030.
NIPPON STEEL conducts hiring, placement, and training of employees regardless of
their nationality or whether they are new graduate hires or mid-career hires. Therefore,
the Company does not set targets for promoting foreign nationals and mid-career hires tomanagerial positions based on those categories.
Going forward, NIPPON STEEL will continue to work on creating an organization where
diverse employees can perform at their individual best and human resources development
to enable the Company to appropriately deal with priority issues such as overseas businessexpansion, taking on the challenge of carbon neutrality, and DX strategy.

(3)

Policies for Human Resources Development and Internal Environment Development toEnsure Diversity, and Their Status
Information on policies for human resources development and internal environment
development to ensure diversity, and their status, are disclosed in NIPPON STEEL’s
Sustainability Report.

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NIPPON STEEL CORPORATION
Corporate Governance Report(Sustainability Report 2021 URL:
https://www.nipponsteel.com/en/csr/report/index.html, pp. 47-56)[Principle 2.6] (Roles of Corporate Pension Funds as Asset Owners)
In order to ensure the payment of pension benefits to beneficiaries into the future, NIPPON STEEL
carries out the management of pension assets to achieve long-term and stable asset formation. The
Accounting & Finance Division manages the pension assets under a contract-type defined-benefit
corporate pension plan. Persons in charge within the Accounting & Finance Division, who arerotated every several years, manage the pension assets in accordance with NIPPON STEEL’s basic
policy on pension fund management and strive to exercise the roles expected of asset owners, whileat the same time reinforcing their expertise through the utilization of outside consultants and othermeans.
Furthermore, the persons in charge of pension fund management confirm with each fund manager
its investment performance, management policy, management system, management process, etc. atoccasions such as quarterly investment reporting sessions, and comprehensively evaluate all of theinvestment products and the fund managers. In addition, NIPPON STEEL periodically convenes
the Fund Management Committee comprising personnel including officers in charge of the
Accounting & Finance, Corporate Planning, Human Resources and Legal Division, to confirm thesoundness of pension financing and the appropriateness of the internal management system bychecking the investment performance and through the deliberation and approval of the management
policy.
NIPPON STEEL avoids any conflicts of interest which may arise between the beneficiaries and
NIPPON STEEL by entrusting the management of its pension fund to several Japanese andoverseas fund managers and by delegating the authority to exercise the relevant voting rights toeach fund manager.
[Principle 3.1] (Full Disclosure)(1)

Corporate Philosophy, Management Strategies, and Management Plans♦

Corporate Philosophy
As a fundamental philosophy, the Group will pursue world-leading
technologies and manufacturing capabilities, and contribute to society byproviding excellent products and services. In order to achieve this, the Group
has the following management principles:(i)
We continue to emphasize the importance of integrity and reliability
in our actions.
(ii)
We provide products and services that benefit society, and grow inpartnership with our customers.
(iii)
We pursue world-leading technologies and manufacturing
capabilities.
(iv)
We continually anticipate and address future changes, innovate fromwithin, and pursue unending progress.
(v)
We develop and bring out the best in our people to make our Grouprich with energy and enthusiasm.

♦

Employee Action Guidelines
In order to realize the above Corporate Philosophy, NIPPON STEEL has
established the following “NIPPON STEEL Group Employee Action
Guidelines” that express the daily attitude and frame of mind of its employees.
What we strive for:
Creativity, Innovation and Growth-7-

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Corporate Governance Report

We constantly seek self-improvement, pursue ambitious goals withenthusiasm, and continuously challenge ourselves to do better.
What we value most:Self-empowerment, Workplace and Essentiality
We observe rules, keep our promises and pierce to the heart of matters byactively investigating the facts.
What we encourage:
Dialogue, Collaboration and Sharing of Knowledge
We build mutual trust through dialogue and collaboration, and seek to passon our spirit and skills to the next generation.
We will be guided by these principles, and act fairly and equitably throughout
the world.
♦

Management Strategies and Management Plans
In March 2021, the NIPPON STEEL developed the “NIPPON STEEL Group’s
Medium- to Long-term Management Plan” with the aim of continually growing
to become “the best steelmaker with world-leading capabilities” that
contributes to Japan’s industrial competitiveness from the present and into the
future. In the domestic steel business, NIPPON STEEL will build a strong
framework that enables efficient production of the highest grade products. In
the overseas steel business, the Group will expand its integrated production
framework in the center of demand and ensure that local demand is captured in
growing markets. The plan is to achieve 100 million tons of global crude steel
capacity per annum for the Group by combining the efforts of its mother millsin Japan and local mills located overseas. The Company will also continue torespond to climate change, aiming to achieve carbon neutrality by 2050.
Furthermore, it will push hard for DX while aiming to become a digitallyadvanced company in the steel industry.
In fiscal year 2022, the ongoing Russia-Ukraine situation has been amplifying
the magnitude of the world economy’s three main risks—China’s slowdown ineconomic growth, supply constraints mainly for semiconductors, and a surge inenergy and resource prices on the back of “greenflation.” Under thesecircumstances, the external environment has been fluctuating beyond thenormal economic rationale, as evidenced by the emergence of new risks suchas a deterioration in Japan’s trade balance prompted by the sharp depreciationof the yen, and the outlook is extremely uncertain. In this business environment,
NIPPON STEEL is working to maximize profits by continuing and promoting
the ongoing drastic measures to enhance its profit structure that were previously
implemented, and by flexibly responding to changes in the supply and demand
aspects of the global steel market (the shortening of management cycle time),
thereby striving to achieve high-level profit generation.
Please refer to NIPPON STEEL’s website for details of the Medium- to Longterm Management Plan.
(Business Plan & Strategy
URL: https://www.nipponsteel.com/en/ir/library/strategy.html)(2)

Basic Views and Guidelines on Corporate Governance
Please refer to I-1 “Basic Views” of this report.

(3)

Board Policies and Procedures in Determining the Compensation of Directors-8-

NIPPON STEEL CORPORATION
Corporate Governance Reporta.

Content of policies
The policies regarding the decisions on the amount of compensation, etc. for
Directors of NIPPON STEEL are as detailed in items (a) and (b) below.
NIPPON STEEL abolished its retirement benefits for Directors in 2006.
Furthermore, the policies relating to their bonuses were removed from the “Policies
regarding the Decisions on the Amount of Compensation” for Directors, etc. in
2013.
(a) Directors (excluding Directors who are Audit & Supervisory Committee
Members)a) Basic policy
NIPPON STEEL sets the base amount of compensation for eachposition as it deems appropriate in consideration of the skills andresponsibilities it requires of each Director. This base amount varies
within a certain range based on NIPPON STEEL’s consolidated
performance. The Company then determines the amount of monthly
compensation for each Director within the limit approved by theGeneral Meeting of Shareholders.
b) Policy on performance-linked compensation
In accordance with the basic policy in the above a), compensation of
Directors (excluding Directors who are Audit & Supervisory
Committee Members and Outside Directors) consists solely ofmonthly compensation, and the amount of compensation is wholly
based upon the performance of NIPPON STEEL, in order to give
incentives for the sustainable growth of NIPPON STEEL’s group andimprovement of its corporate value. As indicators for performancelinked compensation, NIPPON STEEL uses consolidated annual
profit/loss (however, corrections were made for the sake of fair
remuneration commensurate with earnings for the term by excluding
the portion of gains/losses from reorganization for production facility
structural measures; hereinafter the same in this section), whichclearly indicates its business performance and earning power, andconsolidated EBITDA, while taking into account other factors
including the revenue targets in the Medium- to Long-termManagement Plan.
Compensation for Outside Directors (excluding Directors who are
Audit & Supervisory Committee Members) consists solely ofmonthly compensation, and fixed compensation in principle, but theamount of compensation may be increased or decreased only in theevent of significant changes in the consolidated annual profit/loss of
NIPPON STEEL.
c) Method of determining compensation for each individual
The specific amount of monthly compensation for each Director(excluding Directors who are Audit & Supervisory Committee
Members) is determined by the Board of Directors after the
deliberation of the “Nomination and Compensation Advisory
Committee.”-9-

NIPPON STEEL CORPORATION
Corporate Governance Report(b) Directors who are Audit & Supervisory Committee Members
NIPPON STEEL determines the monthly compensation for each Director who
is Audit & Supervisory Committee Member, within the limit approved by theGeneral Meeting of Shareholders, by considering the duties of the Director’s
position and whether the Director is full-time or part-time.
b. Methods of determining the policies
The policies described in a. above for Directors (excluding Directors who are Audit& Supervisory Committee Members) are determined by resolution of the Board of
Directors, after the deliberation of the “Nomination and Compensation Advisory
Committee,” while for Directors who are Audit & Supervisory Committee
Members, the policies described in a. above are determined through discussion by
Directors who are Audit & Supervisory Committee Members.
The Nomination and Compensation Advisory Committee conducts discussions on
a wide-range of topics including the system of Directors’ compensation and theappropriateness of the compensation levels by position, taking into account thesurvey results of directors’ compensation levels of other companies obtained fromthe third-party research organizations.
(4)

Policies on and Procedures in the Nomination of Director Candidates and the
Appointment and Dismissal of Senior Managementa.

Policies on the Nomination of Director Candidates and the Appointment ofSenior Management
For the nomination of Director candidates, and the appointment of senior
management, NIPPON STEEL’s policy is to consider not only eachindividual’s experience, insight, and expertise, but also the size of each of theBoard of Directors and the Audit & Supervisory Committee as a whole, andthe balance of candidates comprising these respective boards (including thenumber of Outside Directors) so that NIPPON STEEL will establish an
optimum board composition in which each individual is able to appropriately
fulfill its role and responsibilities and properly respond to the management
challenges of the Group’s business.
NIPPON STEEL believes the appointment of the President and other senior
management to be one of the most important roles/functions of the Board of
Directors. To ensure that optimum human resources who are capable ofrealizing the sustainable growth of the entire Group and the mid- to long-term
improvement of its corporate value are appointed to the office of President andother senior management in a timely manner, NIPPON STEEL provides
various opportunities for Directors and Executive Officers who are to become
successor candidates to improve their credentials by strategically assigning androtating them to various positions, and by other means as well.

b.

Procedures in the Nomination of Director Candidates and the Appointment ofSenior Management
The nomination of Director candidates and the appointment of senior
management are resolved at the Board of Directors after discussion at the“Nomination and Compensation Advisory Committee,” comprised of the
Chairman, the President, and three or more members designated by the
President, who is the Chairperson, from among the Outside Directors.

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NIPPON STEEL CORPORATION
Corporate Governance Report

The Nomination and Compensation Advisory Committee conducts discussions
and deliberations from various perspectives, in accordance with the policies
stated in a. above, taking into account, among others, the sizes of the entire
Board of Directors and the Audit & Supervisory Committee and the balanceamong the candidates who will comprise the members.
The nomination of candidates for Directors who are Audit & Supervisory
Committee Members will be submitted to the Board of Directors fordeliberation, after the approval at the Audit & Supervisory Committee.
c.

Procedures in the Dismissal of the President and Other Senior Management
In the event that any disqualification for Directors as stipulated by laws andregulations occurs to the President or other senior management, NIPPONSTEEL shall dismiss him or her from the President or other managerial
positions by the resolution of the Board of Directors. In addition, in the eventthat the President or other senior management has engaged in any acts
suspected of committing fraud or breach of trust, or in the occurrence of anincident to the President or other senior management that has caused
significant hindrance to the continuation of duties, etc., NIPPON STEEL may
dismiss him or her from the President or other managerial positions by the
resolution of the Board of Directors, while also taking into account discussions
and deliberations at the “Nomination and Compensation Advisory Committee”
as necessary.

(5)

Explanations for the Appointment, Dismissal and Nomination of Each Individual in the
Appointment and Dismissal of Senior Management and the Nominations of Director
Candidates by the Board of Directors Based on the above (4)NIPPON STEEL explains the nomination, appointment and dismissal of each individualin nominating Director candidates, as well as the appointment and dismissal of senior
management, by indicating NIPPON STEEL’s management system, including theallocation of each individual’s responsibilities, the designation of managerial positions,and other related matters, and each individual’s brief personal history in referencematerials attached to the “Notice of the General Meeting of Shareholders,” the “Securities
Report” and press releases related to managerial personnel matters.
In addition, the reasons for appointment and independence of Outside Directors are
explained in reference materials attached to the “Notice of the General Meeting of
Shareholders” and also indicated in [Directors] of “Organizational Composition andOperation” of II-1 of this report for your reference.

[Supplementary Principle 3.1.3] (Initiatives on Sustainability and Investments in Human Capital andIntellectual Properties)(1)

Initiatives on Sustainability
The Group’s corporate philosophy states “Nippon Steel Corporation Group will pursue
world-leading technologies and manufacturing capabilities, and contribute to society byproviding excellent products and services.” This embodies the E (Environment) S(Social) and G (Governance) approach of the Group, and we recognize initiatives toaddress ESG issues are fundamental management activities, as they form the base that
supports the very existence and growth of a company. Materiality of ESG issues is
identified through discussion and approval by the Board of Directors, and progress of
implementation is followed up based on KPIs. By doing so, the Company steadily
promotes initiatives and works to contribute to the achievement of SDGs and enhance- 11 -

NIPPON STEEL CORPORATION
Corporate Governance Report

corporate value. Materiality of ESG issues and KPIs are disclosed in the Integrated
Report. Additionally, details on NIPPON STEEL’s E (Environment) and S (Social)
initiatives are disclosed in the Sustainability Report.
(Integrated Report 2021 URL:
https://www.nipponsteel.com/en/ir/library/annual_report.html, pp. 41-44)(Sustainability Report 2021 URL:
https://www.nipponsteel.com/en/csr/report/index.html, pp. 13-60)
NIPPON STEEL discloses information in accordance with Task Force on Climaterelated Financial Disclosures (TCFD) recommendations. In addition, the Company has
established “Nippon Steel Carbon Neutral Vision 2050,” a new vision to tackle climatechange that aims for carbon neutrality by 2050, and is working on efforts such as thedevelopment of ultra-innovative technologies for achieving carbon neutrality as a toppriority management issue. Details are disclosed in the Sustainability Report.
(Sustainability Report 2021 URL:
https://www.nipponsteel.com/en/csr/report/index.html, pp. 15-32)(2)

Investments in Human Capital and Intellectual Properties
From the perspective of creating a company where diverse employees are productive,
perform at their best, be empowered, and feel proud and fulfilled, NIPPON STEEL isreinforcing our D&I efforts while focusing on five areas, namely, promoting female
employee’s participation and career advancement, realizing work life balance so as toenable employees with various backgrounds and circumstances to perform at their best,developing health management in order for employees to perform at their best until theretirement age of 65, prevention of harassment, and promoting empowerment of theelderly and the disabled. In addition, NIPPON STEEL’s Management Principles statethat “we develop and bring out the best in our people to make our Group rich with energy
and enthusiasm,” positioning human resource (HR) development as a top-level concept.
A goal of HR development is to create people who can understand and implement our
Corporate Philosophy and our Employee Action Guidelines. All our employees keep thisin mind. Based on the belief that the development of excellent personnel is a prerequisite
for the production of excellent products, NIPPON STEEL is promoting measures todevelop human resources who serve the enhancement of workplace strength andtechnological advancement, with 540,000 hours/year of training/learning hours (19hours/year per employee) (fiscal year 2021 results).
NIPPON STEEL works on “strategic R&D, aimed at sustainable growth” and“protection and use of intellectual property.” Use of advanced IT in business has also
been identified as an important element to enhance competitiveness. NIPPON STEEL
has one of the largest numbers of researchers of any steel company in the world, boastinga world-leading standard of technical development capabilities. These human resources
are allocated according to priority, and each project is carried out according to a roadmap which sets forth milestones, goals, and returns. In addition, NIPPON STEEL has
developed intellectual property strategy, under which it secures the most advanced newly
created technologies and other proprietary technologies, including hydrogen reduction
steelmaking and other carbon neutrality-related technologies as intellectual properties(IPs) and utilizes them according to its medium- to long-term business strategy tocontribute to revenue. The Intellectual Property Division collaborates with the businessdivisions and the R&D divisions to support the Company’s global strategies. NIPPONSTEEL has been focusing on enriching and accumulating IPs as “effective means ofleverage to compete with others anywhere in the world” both in terms of quality andquantity of products and has also been enhancing the strategic utilization of our IPs. The
Company’s R&D expenses are 66.4 billion yen (fiscal year 2021 results), with- 12 -

NIPPON STEEL CORPORATION
Corporate Governance Reportapproximately 14,000 patents in Japan and approximately 16,000 patents overseas (bothfigures valid as of March 31, 2022 on a non-consolidated basis).
Details of this human capital and intellectual capital are disclosed in the Integrated
Report as important capital that is input into the Company’s value creation process. In
addition, diversity & inclusion, human resources development, and R&D and intellectual
property management are positioned as the Company’s materiality of ESG issues.
(Integrated Report 2021 URL:
https://www.nipponsteel.com/en/ir/library/annual_report.html, pp. 39-44, 51-60)[Supplementary Principle 4.1.1] (Brief Summary of the Scope of Matters Delegated to theManagement)
In accordance with a provision in the Articles of Incorporation, the Board of Directors of NIPPONSTEEL delegates part of the decisions regarding execution of important operations (excluding
matters listed in each item of Article 399-13, Paragraph 5 of the Companies Act) to theRepresentative Director and Chairman and Representative Director and President, thereby
expediting management decision-making, and limiting the number of items for deliberation by the
Board of Directors and further enhancing discussions by the Board of Directors relating to matterssuch as the formulation of management policies and strategies. The execution of important mattersconcerning the management of NIPPON STEEL and NIPPON STEEL Group is determined at theBoard of Directors (held about once per month) after deliberations in the Corporate Policy
Committee (held once a week, in principle) comprised of the Chairman, President, Executive Vice
Presidents, and other members, pursuant to NIPPON STEEL’s rules.
NIPPON STEEL has introduced an Executive Officer system for setting clear responsibilities andimproving management efficiency by more prompt decision-making.
[Principle 4.9] (Independence Standards of Independent Directors)
NIPPON STEEL decides the independence of Outside Directors in accordance with theindependence standards set by financial instruments exchanges in Japan (e.g. Tokyo Stock
Exchange), considering each individual’s personal relationship, capital relationship, transaction
relationship, and other interests with NIPPON STEEL. For the interests between the Outside
Directors, on the one hand, and the NIPPON STEEL, on the other hand, on which the NIPPONSTEEL bases its decisions, please refer to [Directors] of “Organizational Composition andOperation” of II-1 of this report.
[Supplementary Principle 4.10.1] (Strengthening the Independence of the Nomination andCompensation Committee)
The “Nomination and Compensation Advisory Committee” is comprised of the Chairman, thePresident, and three or more members designated by the President, who is the Chairperson, fromamong the Outside Directors. It has been established to conduct discussions and deliberations on awide range of topics relating to the nomination and compensation of the Directors in general,
including the compositions of the entire Board of Directors and the Audit & Supervisory
Committee, the system and levels of the Directors’ compensation, and other topics.
The Nomination and Compensation Advisory Committee comprises five members, theRepresentative Director and Chairman, Kosei Shindo, the Representative Director and President,
Eiji Hashimoto, and Outside Directors Tetsuro Tomita, Kuniko Urano and Masato Kitera. The
President serves as the chairman of the Committee. The Nomination and Compensation Advisory
Committee, as a general rule, is held twice a year.
The Company decides the independence of Outside Directors in accordance with the independence
standards set by financial instruments exchanges in Japan (e.g. Tokyo Stock Exchange), considering- 13 -

NIPPON STEEL CORPORATION
Corporate Governance Report

each individual’s personal relationship, capital relationship, business relationship, and otherinterests with the Company. In addition, since each Outside Director has been judged to possess
independence, the Company has reported all of them as Independent Directors to each financial
instruments exchange in Japan (e.g. Tokyo Stock Exchange).
[Supplementary Principle 4.11.1] (View on the Balance between Knowledge, Experience, and Skills of
the Board of Directors as a Whole, and on Diversity and Appropriate Board Size)
To enable a prompt decision-making and to establish an effective corporate governance structure
corresponding to changes in the management environment, the Board of Directors will be an
appropriate size for the Group’s business lineup and management challenges, and be comprised ofmembers, considering the balance among experience, insights, and expertise of the Board of
Directors as a whole and its diversity.
Specifically, the Board of Directors as a whole must have the necessary skills and experience inconsideration of the Group’s Corporate Philosophy and Medium- to Long-Term Management Plan,and each Director primarily has the skills and experiences outlined in Reference Documents of the“Notice of the General Meeting of Shareholders.” For the balance of the Board of Directors as awhole and its diversity, please also see “b. Corporate Governance System” of I-1, (2) of this report.
In addition, the Articles of Incorporation provide that the number of Directors is twenty (20) or lessand the number of Directors who are Audit & Supervisory Committee Members is seven (7) or less.
Currently, NIPPON STEEL’s Board of Directors consists of a total of fourteen (14) Directors,
including nine (9) Directors (excluding Directors who are Audit & Supervisory Committee
Members) (consisting of seven (7) Executive Directors who were employees of NIPPON STEEL
with intimate knowledge of NIPPON STEEL’s businesses, and two (2) Outside Directors who havedeep insight) and five (5) Directors who are Audit & Supervisory Committee Members (consistingof two (2) Directors who were employees of NIPPON STEEL with intimate knowledge of NIPPONSTEEL’s businesses, and three (3) Outside Directors who have deep insight). Outside Directors
account for more than one-third (5 out of 14) of all members of the Company’s Board of Directors.
(Notice of the 98th General Meeting of Shareholders,
URL: https://www.nipponsteel.com/en/ir/individual/meeting.html, the skill matrix of Directors
shown on p. 26)[Supplementary Principle 4.11.2] (Directors Serving Concurrently as Directors, Audit and Supervisory
Board Members, or Management at Other Listed Companies)
When deciding Director candidates, NIPPON STEEL confirms that each candidate is able toappropriately fulfill its role and responsibilities, including confirming whether the candidate
concurrently serves as a director, an audit and supervisory board member, or the management atother listed companies. Whether Directors serve concurrently as directors, audit and supervisoryboard members or management at other listed companies are disclosed every year in referencematerials attached to “Notice of Convocation for the General Meeting of Shareholders” and in“Business Report,” among others. They are all posted on NIPPON STEEL’s website. Please see thesite for details.
(Notice of the 98th General Meeting of Shareholders,
URL: https://www.nipponsteel.com/en/ir/individual/meeting.html, pp. 50-52)[Supplementary Principle 4.11.3] (Analysis and Evaluation of the Effectiveness of the Board of
Directors as a Whole)
At NIPPON STEEL, the office of the Board of Directors (General Administration Division)
conducts quantitative analysis through comparison of the number of the agenda items submitted
for deliberation or reported to the Board of Directors and the number of hours of deliberation, as
well as the attendance rate and the number of opinions expressed by each of Directors at the- 14 -

NIPPON STEEL CORPORATION
Corporate Governance Reportmeetings of the Board of Directors with these of prior years; and the Board of Directors, taking into
account self-assessments and opinions of each member of the Board of Directors on the operationof the Board of Directors obtained through individual interviews with them, annually analyzes andevaluates the effectiveness of the entire Board of Directors and utilizes such analysis and evaluation
to improve the future operation and administration of the Board of Directors. NIPPON STEEL
decided to take the opportunity of the transition to a Company with an Audit & Supervisory
Committee in fiscal year 2020 to establish the Rules of the Board of Directors, enhance discussions
by the Board of Directors on matters such as the formulation of management policies and strategies,
strengthen the supervisory function of the Board of Directors over management, and devise andimprove operation of meetings so as to contribute to these efforts.
The Board of Directors, at its meeting held in June 2022, analyzed and evaluated the effectivenessof the Board of Directors for fiscal year 2021, confirming that the Board of Directors functions
effectively because all of the matters submitted for deliberation or reported to the Board of Directors
pursuant to the Companies Act or NIPPON STEEL’s rules were resolved or confirmed, after
discussion among Inside and Outside Directors, from the point of view of improvement of NIPPONSTEEL’s corporate value in the mid- to long-term or other various perspectives, with relevant
information being provided in advance. In addition, from the standpoint of further enhancing theeffectiveness of the Board of Directors, NIPPON STEEL will (1) continue allocating more time fordeliberations on fundamental agenda items, such as basic business policies, headway therein, andimportant specifics related thereto, by limiting the number of items for deliberation and revising
meeting operations; (2) continue providing information through opinion exchanges at forums
outside Board of Directors meetings, and by Outside Directors’ visits to its business sites; and (3)further improve the format and contents of materials for Board of Directors meetings, as well as themeans of providing them, based on the opinions voiced by each Director in the effectivenessevaluation for fiscal year 2021.
[Supplementary Principle 4.14.2] (Training Policy for Directors)
NIPPON STEEL, via relevant officers, explains its corporate philosophy and the Group businesslineups, among others, to each Outside Director individually once they assume their positions. In
addition, after the assumption, NIPPON STEEL proactively provides opportunities for them to visit
steelworks, research laboratories, and to have dialogue with the Chairman, the President, and theVice Presidents. NIPPON STEEL also explains anew to Executive Directors and Directors who are
Audit & Supervisory Committee Members, both of whom were employees of NIPPON STEEL,
their responsibilities under important applicable laws and regulations such as the Companies Act,and NIPPON STEEL’s rules, upon the assumption of their positions.
Moreover, NIPPON STEEL provides opportunities for Directors to attend exchanges of opinionswith outside experts and executives of other companies, as well as lectures and seminars.
[Principle 5.1] (Policy for Dialogue with Shareholders)With a view to achieving sustainable growth and improvement of NIPPON STEEL’s corporate
value in the mid- to long-term, NIPPON STEEL takes various measures to enhance constructive
dialogue with the shareholders. The dialogue with the shareholders and investors is generally
supervised by the Director responsible for General Administration and the Director responsible for
Accounting and Finance, and the General Administration Division and the Accounting & Finance
Division work in conjunction with other divisions of NIPPON STEEL to enhance the measures.
Specifically, for shareholders, in addition to striving to actively provide information to theshareholders and sincerely responding to their questions and comments in the General Meeting of
Shareholders, NIPPON STEEL holds management business briefings and plant tours, regularly invarious locations, and issues interim reports. On the other hand, for institutional investors, NIPPONSTEEL not only explains its management strategies, business lineups, business performance, ESG
initiatives, and other related matters, by means of briefings on financial results in each quarter,
briefings on the Medium- to Long-Term Management Plan, the Carbon Neutral Vision and DX- 15 -

NIPPON STEEL CORPORATION
Corporate Governance Reportstrategy, steelworks/research laboratory tours, and other opportunities, but also holds small
meetings for investors and various conferences, and visits to overseas institutional investors. Senior
management and an officer in charge of IR attend these dialogues, as necessary. The opinions andother comments received from the shareholders and investors through the above-listed initiatives
are reported and fed back to the Board of Directors and others responsible for the dialogue with theshareholders and investors on a regular basis.
Insider information (undisclosed material facts) is appropriately managed in accordance withNIPPON STEEL’s internal rules, “Rules on Insider Information Management and Insider Trading
Regulations.”“NIPPON STEEL Corporate Disclosure and Dialogue Policy” is posted on the NIPPON STEEL’s
website. Please see that site for reference (URL:
https://www.nipponsteel.com/en/ir/management/disclosure.html).

2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders]Name / Company Name

Number of Shares
Owned

The Master Trust Bank of Japan, Ltd. (Trust
Account)
Custody Bank of Japan, Ltd. (Trust Account)
Nippon Life Insurance Company
STATE STREET BANK WEST CLIENT TREATY 505234
Meiji Yasuda Life Insurance Company
Mizuho Bank, Ltd.
Nippon Steel Group Employees Shareholding
Association
JP MORGAN CHASE BANK 385781
JPMorgan Securities Japan Co., Ltd.
Sumitomo Mitsui Banking Corporation
Controlling Shareholder (except for Parent
Company)
Parent Company

Percentage (%)

137,277,300

14.89

49,772,400
21,465,898

5.40
2.33

16,061,517

1.74

14,064,318
12,199,898

1.53
1.32

11,245,985

1.22

10,472,976
10,433,936
10,252,967

1.14
1.13
1.11

------None

Supplementary Explanation
1. In addition to the above, there are 28,370,810 treasury shares owned by NIPPON STEEL (shareholding
ratio: 3.08%).
2. In a Statement of Changes to a Statement of Large-Volume Holdings made available for public inspection
as of November 1, 2021, it is stated that MUFG Bank, Ltd. and its joint holders, Mitsubishi UFJ Trustand Banking Corporation, Mitsubishi UFJ Kokusai Asset Management Co., Ltd., and Mitsubishi UFJ
Morgan Stanley Securities Co., Ltd., held the following shares of NIPPON STEEL as of October 25,
2021. However, they are not included in the above major shareholders because NIPPON STEEL is unable
to confirm the actual number of shares held by the said companies as of March 31, 2022. The details in
the Statement of Changes are as follows:- 16 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Name / Company name

Number of share
Ownership ratio
certificates, etc. held(%)
(Hundreds of shares)
MUFG Bank, Ltd.
95,5871.01
Mitsubishi UFJ Trust and Banking Corporation
214,359
2.26
Mitsubishi UFJ Kokusai Asset Management Co., Ltd. 80,019
0.84
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
46,5990.49
Total
436,565
4.59
3. In a Statement of Changes to a Statement of Large-Volume Holdings made available for public inspection
as of November 8, 2021, it is stated that Nomura Securities Co., Ltd. and its joint holders, NOMURAINTERNATIONAL PLC and Nomura Asset Management Co., Ltd., held the following shares of
NIPPON STEEL as of October 29, 2021. However, they are not included in the above major shareholders
because NIPPON STEEL is unable to confirm the actual number of shares held by the said companies asof March 31, 2022. The details in the Statement of Changes are as follows:
Name / Company name
Number of share
Ownership ratio
certificates, etc. held(%)
(Hundreds of shares)
Nomura Securities Co., Ltd.
182,740
1.89
NOMURA INTERNATIONAL PLC
23,0430.24
Nomura Asset Management Co., Ltd.
331,6533.49
Total
537,437
5.44
4. In a Statement of Changes to a Statement of Large-Volume Holdings made available for public inspection
as of February 22, 2022, it is stated that Mizuho Bank, Ltd. and its joint holders Mizuho Securities Co.,
Ltd., Asset Management One Co., Ltd., and Mizuho International plc, held the following shares of
NIPPON STEEL as of February 15, 2022. However, they are not included in the above major
shareholders because NIPPON STEEL is unable to confirm the actual number of shares held by the said
companies as of March 31, 2022. The details in the Statement of Changes are as follows:
Name / Company name
Number of share
Ownership ratio
certificates, etc. held(%)
(Hundreds of shares)
Mizuho Bank, Ltd.
144,348
1.49
Mizuho Securities Co., Ltd.
112,557
1.16
Asset Management One Co., Ltd.
369,791
3.82
Mizuho International plc
0
0.00
Total
626,697
6.47

3. Corporate Attributes
Tokyo Stock Exchange Prime Market, Nagoya Stock
Listed Stock Market and Market Section

Exchange Premier Market, Sapporo Stock Exchange Main
Board, Fukuoka Stock Exchange Main Board

Fiscal Year-End

MarchType of Business

Iron & Steel

Number of Employees (consolidated) as of the
End of the Previous Fiscal YearSales (consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of the
End of the Previous Fiscal Year

More than 1,000

More than ¥1 trillion

More than 300- 17 -

NIPPON STEEL CORPORATION
Corporate Governance Report

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder-------

5. Other Special Circumstances which may have Material Impact on Corporate Governance(Significance of having listed subsidiaries)
NIPPON STEEL is aiming at the Group’s sound and sustainable growth, improvement of its corporate value
in the medium- to long-term, and winning the trust of society under the “Corporate Philosophy of the NIPPONSTEEL Group.” In addition, NIPPON STEEL establishes and appropriately manages an internal control
system suitable for the business of the Group to comply with applicable laws and regulations, and ensure
integrity of financial reporting, as well as effectiveness and efficiency of business, and continues to improve
such system.
Under this basic policy, NIPPON STEEL and its Group companies share business strategies and manage theGroup as a whole, while taking into account the business characteristics of each Group company. With respect
to control of the Group companies, NIPPON STEEL sets forth basic rules in the Rules for Control of Group
companies, and ensures their appropriate application, while each Group company builds and maintains its
internal control system based on autonomous internal controls, and seeks to improve measures relating tointernal controls based on support, guidance, and advice from NIPPON STEEL.
Furthermore, in order to ensure independent decision-making at listed subsidiaries, each listed subsidiary has
a system in place where one-third or more of Directors are Independent Outside Directors, and the Company
believes that the autonomous management has been achieved for each listed subsidiary in this manner.
Each listed subsidiary confirms that the terms and conditions of transactions between the parent company andthe subsidiary are reasonably determined on the basis of general contract terms and conditions with othercustomers, market prices or other reasonable criteria and that the interests of the subsidiary are not harmed.
In addition, each subsidiary listed on Tokyo Stock Exchange Prime Market has developed a system underwhich a special committee is established if significant transactions and business are conducted between theparent company and the subsidiary.
In light of the above, NIPPON STEEL currently has five listed subsidiaries, and views that the significanceof these listed subsidiaries are as follows.
● NS Solutions Corporation
The main business of NS Solutions Corporation is the provision of engineering and consulting pertaining tocomputer systems, outsourcing and other services using IT.
Following the spinoff of NIPPON STEEL’s information systems division in April 2001 (through a businessintegration with NIPPON STEEL’s wholly-owned subsidiary), NS Solutions Corporation went public in
October 2002, with the aim of establishing its presence in the industry, securing human resources, and raisingfunds for growth.
Computer systems in the steelmaking business support all aspects of business activities, including orderacceptance, production, shipment, and quality control, and are an important foundation for utilizing a variety
of data. The accumulation of know-how and securing the continuity of human resource supply by making NS
Solutions Corporation a subsidiary are essential for NIPPON STEEL to achieve differentiation in the steel
industry and maintain its competitiveness. In addition, the implementation of advanced IT in the steelmaking
business and the promotion of DX by NS Solutions Corporation are generating significant synergies withNIPPON STEEL.

- 18 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Furthermore, NS Solutions Corporation applies achievements and technologies developed through thesteelmaking business to NIPPON STEEL Group companies, while making use of them to offer various
services to external customers. The Company therefore believes operating NS Solutions Corporation as a
subsidiary contributes to maximizing the value of the subsidiary and the NIPPON STEEL Group.
● Sanyo Special Steel Co., Ltd.
The main business of Sanyo Special Steel Co., Ltd. is the manufacture and marketing of special steel products.
In March 2019, with the aim of strengthening the competitiveness of the special steel business throughcollaboration between NIPPON STEEL, Ovako, a major European manufacturer of special steel, and SanyoSpecial Steel Co., Ltd., NIPPON STEEL made Sanyo Special Steel Co., Ltd. a subsidiary by capital increase
through a third-party allotment, and Ovako became a wholly-owned subsidiary of Sanyo Special Steel Co.,Ltd.
The special steel products of Sanyo Special Steel Co., Ltd. and NIPPON STEEL are used as materials forimportant parts in various industries, including automotive and industrial machinery, and demand for theseproducts is expected to continue to grow steadily in the future as the need for high-quality special steel
products increases further. By making Sanyo Special Steel Co., Ltd. a subsidiary, the three companies
including NIPPON STEEL and Ovako work together to strengthen the business base and technologicalcapabilities, and develop a framework for global business development, thereby strengthening the mediumto long-term competitiveness of the special steel business.
As such, Sanyo Special Steel Co., Ltd. plays an important role in NIPPON STEEL’s special steel business.
The Company therefore believes operating Sanyo Special Steel Co., Ltd. as a subsidiary contributes tomaximizing the value of the subsidiary and the NIPPON STEEL Group.
● Osaka Steel Co., Ltd.
The main business of Osaka Steel Co., Ltd. is the manufacture and marketing of shapes, bars, and billets.
Osaka Steel Co., Ltd. became a subsidiary in 1990 to promote collaboration with NIPPON STEEL.
The steel products of Osaka Steel Co., Ltd. are mainly destined for the construction, civil engineering,shipbuilding, and industrial machinery. Osaka Steel Co., Ltd. provides products that meet the needs of its
customers in cooperation with NIPPON STEEL and its Group companies. Furthermore, Osaka Steel Co., Ltd.
collaborates with NIPPON STEEL in various areas, such as production and technology in every process fromsteelmaking to rolling.
As such, the Company believes operating Osaka Steel Co., Ltd. as a subsidiary contributes to maximizing thevalue of the subsidiary and the NIPPON STEEL Group.
● Krosaki Harima Corporation
The main business of Krosaki Harima Corporation is the manufacture and marketing of refractories andconstruction of furnaces.
As NIPPON STEEL began to apply International Financial Reporting Standards from March 2019, Krosaki
Harima Corporation became a subsidiary with the aim of achieving a closer collaboration.
The manufacture and marketing of refractories and construction of furnaces that Krosaki Harima Corporationis engaged in are indispensable to NIPPON STEEL’s steel business. NIPPON STEEL believes that operating
Krosaki Harima Corporation as a subsidiary contributes to maximizing the value of Krosaki Harima
Corporation and the NIPPON STEEL Group through measures such as the improvement of quality andproduct development capabilities and deepening the joint study of various collaborative issues.

- 19 -

NIPPON STEEL CORPORATION
Corporate Governance Report● Geostr Corporation
The main business of Geostr Corporation is the manufacture and marketing of concrete and metal products
for civil engineering and building construction work.
In October 2011, Geostr Corporation, which was a company accounted for using the equity method, absorbed
Tokyo Econ Kentetu Co., Ltd. (NIPPON STEEL’s consolidated subsidiary at that time) through an absorptiontype merger, with the aim of unifying segment (tunnel lining materials) manufacturing divisions in the Group,
integrating management resources, strengthening cooperation through enhancing efficiency of manufacturing
divisions, and increasing the Group’s corporate value. As a result of the merger, Geostr Corporation became
a consolidated subsidiary of NIPPON STEEL,
By having Geostr Corporation as a subsidiary, it will be possible to share the steel production and utilization
technologies developed by NIPPON STEEL and Geostr Corporation’s concrete production and utilization
technologies, thereby achieving high product competitiveness in segment products for civil engineering
materials. In addition, the collaboration between the two companies enables them to respond to a wide rangeof customer needs and to conduct swift sales activities, such as proposing optimal products that meet use
condition of customers, with a full range of segment specifications.
As such, operating Geostr Corporation as a subsidiary helps create synergies with civil engineering materials
products of the NIPPON STEEL Group and increase the value of NIPPON STEEL’s construction products
business. The Company therefore believes it contributes to maximizing the value of the subsidiary and the
NIPPON STEEL Group.

II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Supervision in
Management
1. Organizational Composition and Operation
Organization Form

Company with an Audit & Supervisory Committee[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation20

1 yearChairperson of the Board

President

Number of Directors

14

Appointment of Outside Directors

Appointed

Number of Outside Directors

5

Number of Independent Directors

5- 20 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Outside Directors’ Relationship with NIPPON STEEL (1)Relationship with NIPPON STEEL*

Name

Attribute

Tetsuro Tomita

From another company

Kuniko Urano

From another company

Seiichiro Azuma

CPA

Hiroshi Yoshikawa

Scholar

a

b

c

d

e

f

g

h

i

j

k

△
△

Masato Kitera
Other* Categories for “Relationship with NIPPON STEEL”* “○” when the director presently falls or recently fell under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or recently fell under the category;“▲” when a close relative of the director fell under the category in the past△a. Executive of NIPPON STEEL or its subsidiaries
b. Non-executive director or executive of a parent company of NIPPON STEEL
c. Executive of a fellow subsidiary of NIPPON STEEL
d. A person whose major client or supplier is NIPPON STEEL or an executive of such person
e. Major client or supplier of NIPPON STEEL or an executive of such client or supplierf. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from NIPPON STEEL besides compensation as a director/audit & supervisory board member

g. Major shareholder of NIPPON STEEL (or an executive of the said major shareholder if the shareholder is a legal
entity)h. Executive of a client or supplier of NIPPON STEEL (which does not fall under any of d, e, or f) (the director
himself/herself only)

i. Executive of a company with which NIPPON STEEL mutually appoints outside directors/audit & supervisoryboard members (the director himself/herself only)

j. Executive of a company or organization that receives donations from NIPPON STEEL (the director
himself/herself only)

k. Others

Outside Directors’ Relationship with the Company (2)Name

Tetsuro Tomita

Membershipof Audit &Supervisory
Committee

Designationas
Independent
Director
Yes

Supplementary
Explanation of
the Relationship
Until March 2018, Mr.
Tomita engaged in theexecution of business of
East Japan Railway
Company, which has abusiness relationship withNIPPON STEEL fortransactions of steel andother products/services.
However, he currently
does not engage in theexecution of its business.
The amount of transactions- 21 -

Reasons of Appointment[Reasons for Appointment as an
Outside Director]
NIPPON STEEL believes that Mr.
Tomita is well-qualified for the
position by his deep insight andample experience in corporate
management.
[Reasons for Designation as an
Independent Director]
Until March 2018, Mr. Tomita
engaged in the execution ofbusiness of East Japan Railway

NIPPON STEEL CORPORATION
Corporate Governance Report

Yes

Kuniko Urano

with the said company
accounts for less than 1%of the consolidated
revenue of NIPPONSTEEL, so that the said
company is not a specified
associated service providerof NIPPON STEEL.

Company, which has a business
relationship with NIPPONSTEEL for transactions of steel
and other products/services.
However, he currently does notengage in the execution of its
business. The amount oftransactions with the said
company accounts for less than
1% of the consolidated revenue of
NIPPON STEEL, so that the said
company is not a specified
associated service provider of
NIPPON STEEL. He does notconflict with the independence
standards as set by each financial
instruments exchange on which
NIPPON STEEL is listed (e.g.
Tokyo Stock Exchange), and does
not have any special interests withNIPPON STEEL.
Because NIPPON STEEL
believes that there is no
possibility of a conflict of interest
between him and the generalshareholders as stated above,
NIPPON STEEL has designatedhim as an Independent Director.

Until March 2021, Ms.
Urano engaged in
execution of business ofKomatsu Ltd., which has abusiness relationship withNIPPON STEEL fortransactions of steel andother products/services.
However, she currently
does not engage in theexecution of its business.
The amount of transactions
with the said company
accounts for less than 1%of the consolidated
revenue of NIPPONSTEEL, so that the said
company is not a specified
associated service providerof NIPPON STEEL.

[Reasons for Appointment as an
Outside Director]
NIPPON STEEL believes that
Ms. Urano is well-qualified forthe position by her deep insightand ample experience in corporate
management.

- 22 -[Reasons for Designation as an
Independent Director]
Until March 2021, Ms. Urano
engaged in execution of businessof Komatsu Ltd., which has abusiness relationship withNIPPON STEEL for transactionsof steel and otherproducts/services. However, shecurrently does not engage in theexecution of its business. The
amount of transactions with thesaid company accounts for lessthan 1% of the consolidated
revenue of NIPPON STEEL, so
that the said company is not a
specified associated service
provider of NIPPON STEEL. She
does not conflict with theindependence standards as set by

NIPPON STEEL CORPORATION
Corporate Governance Report

each financial instruments
exchange on which NIPPONSTEEL is listed (e.g. Tokyo Stock
Exchange), and does not have any
special interests with NIPPONSTEEL.
Because NIPPON STEEL
believes that there is no
possibility of a conflict of interest
between her and the generalshareholders as stated above,
NIPPON STEEL has designatedher as an Independent Director.
Yes

Yes

Not applicable[Reasons for Designation as an
Independent Director]
He does not conflict with either
the independence standards orattribute information as set byeach financial instruments
exchange on which NIPPONSTEEL is listed (e.g. the Tokyo
Stock Exchange), and does nothave any special interests in
NIPPON STEEL.
Because NIPPON STEEL
believes that there is no
possibility of a conflict of interest
between him and the generalshareholders as stated above,
NIPPON STEEL has designatedhim as an Independent Director.

Seiichiro
Azuma

Yes

Hiroshi
Yoshikawa[Reasons for Appointment as an
Outside Director]
NIPPON STEEL believes that Mr.
Azuma is well-qualified for the
position by his deep insight andample experience as a certified
public accountant possessing deepfamiliarity with corporate
accounting.

Yes

Although Mr. Yoshikawa
engaged in the executionof business of The
University of Tokyo until
March 2016, to which
NIPPON STEEL makes
donations, he currently
does not engage in theexecution of business of
the university.
Furthermore, theuniversity is not a
specified associatedservice provider of- 23 -[Reasons for Appointment as an
Outside Director]
NIPPON STEEL believes that Mr.
Yoshikawa is well-qualified forthe position by his deep insightthat he accumulated as auniversity professor and his ample
experience as President of Rissho
University and Dean of the
Graduate School of Economics,
Faculty of Economics, The
University of Tokyo.

NIPPON STEEL CORPORATION
Corporate Governance Report

NIPPON STEEL.
NIPPON STEEL donates
27 million yen annually fora corporate sponsoredresearch program in the
School of Engineering at
The University of Tokyo.

Yes

Yes

Not applicable

Masato Kitera[Reasons for Designation as an
Independent Director]
Although Mr. Yoshikawa engaged
in the execution of business of
The University of Tokyo until
March 2016, to which NIPPONSTEEL makes donations, hecurrently does not engage in theexecution of business of theuniversity. Furthermore, theuniversity is not a specified
associated service provider of
NIPPON STEEL. NIPPONSTEEL donates 27 million yen
annually for corporate sponsoredresearch program in the School ofEngineering at The University ofTokyo. He does not conflict with
the independence standards as set
by each financial instruments
exchange on which NIPPONSTEEL is listed (e.g. Tokyo Stock
Exchange), and does not have any
special interests with NIPPONSTEEL.
Because NIPPON STEEL
believes that there is no
possibility of a conflict of interest
between him and the generalshareholders as stated above,
NIPPON STEEL has designatedhim as an Independent Director.
[Reasons for Appointment as an
Outside Director]
NIPPON STEEL believes that Mr.
Kitera is well-qualified for the
position by his deep insight
regarding international affairs,
economy, culture, etc. that heaccumulated at the Ministry ofForeign Affairs as well as ample
experience as Ambassador
Extraordinary and Plenipotentiary
and other important positions.
[Reasons for Designation as an
Independent Director]
He does not conflict with either
the independence standards orattribute information as set byeach financial instruments
exchange on which NIPPONSTEEL is listed (e.g. the Tokyo
Stock Exchange), and does nothave any special interests in
NIPPON STEEL.

- 24 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Because NIPPON STEEL
believes that there is no
possibility of a conflict of interest
between him and the generalshareholders as stated above,
NIPPON STEEL has designatedhim as an Independent Director.

[Audit & Supervisory Committee]
Committee’s composition and attributes of Chairperson
Audit & Supervisory Committee
All Committee Members

5

Full-time Members

2

Inside Directors

2Outside Directors

3

Chairperson

Inside Director

Appointment of Directors and/or Employees
to Assist the Audit & Supervisory Committee

Appointed

Matters related to the independence from Executive Directors of Directors and/or employees to assist the
Audit & Supervisory Committee
NIPPON STEEL has established the Audit & Supervisory Committee Members’ Office and has assigned fulltime employees (dedicated staff members), in order to assist the Audit & Supervisory Committee in thesmooth execution of its duties. No Directors have been assigned to assist the Audit & Supervisory Committee
in its duties.
Dedicated staff members are full-time employees and perform their duties under the direction of the Audit &Supervisory Committee. In addition, the Head of the Human Resources Division discusses with the Audit &Supervisory Committee in advance the transfer and evaluation, etc. of the dedicated staff members to ensure
their independence from the executive divisions and the effectiveness of the Audit & Supervisory
Committee’s instructions to the dedicated staff members.
Cooperation among the Audit & Supervisory Committee, Accounting Auditors, and Internal Audit
Departments● Cooperation between the Audit & Supervisory Committee and the Accounting Auditor
At the beginning of a fiscal year, the Audit & Supervisory Committee and the Accounting Auditor exchange
opinions on matters of concern from the previous fiscal year, items of focus in the audit and other matters,
based on the audit plan drafted by the Accounting Auditor, which outlines scope of the audit, the audit
structure, and priority audit items for the period, among others, so that an effective accounting audit will be
executed.
Moreover, at each quarter, the Audit & Supervisory Committee Members appointed by the Audit &Supervisory Committee receive a report on the progress and the results of the quarterly review from the
Accounting Auditor and exchange opinions regarding matters stated in the quarterly report including nonfinancial information.

- 25 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Furthermore, at the end of a fiscal year, the Audit & Supervisory Committee receives the Auditor’s Reportand a report on the audit results including the priority audit items for the period from the Accounting Auditor,
and uses such reports for the basis of the Audit Report, which is subsequently prepared by the Audit &Supervisory Committee.
In addition, the Audit & Supervisory Committee Members appointed by the Audit & Supervisory Committee
and the Accounting Auditor cooperate and mutually contribute to forming their respective audit opinions byexchanging opinions on audit activities regularly.
● Cooperation between the Audit & Supervisory Committee and Internal Audit Departments
The Audit & Supervisory Committee Members appointed by the Audit & Supervisory Committee attend
quarterly meetings of the Risk Management Committee, and the Audit & Supervisory Committee receives
regular reports from the Internal Control & Audit Division, and both parties exchange opinions to ensure close
collaboration. In addition, the Audit & Supervisory Committee regularly interviews functional divisions
managing important risks, such as safety, environment, disaster prevention, quality assurance and othermatters, on the status of their respective activities, to enhance the effectiveness of audit activities. Moreover,the Internal Control & Audit Division and functional divisions formulate an annual plan based on the opinionsof the Audit & Supervisory Committee. In addition, the Audit & Supervisory Committee shares information
on litigation with the Legal Division.
● Cooperation between the Accounting Auditor and Internal Audit Departments
The Internal Control & Audit Division reports quarterly to the Accounting Auditor with respect to the contents
and related matters of the discussions at the Risk Management Committee, and discusses appropriately with
the Accounting Auditor the development and operation of the internal control system relating to financial
reports, to pursue its continuous improvement.
[Voluntary Committee]
Voluntary Establishment of Committee(s)Corresponding to Nomination Committee or
Compensation Committee

Established

Committee’s Name, Composition, and Attributes of Chairperson

All Committee Members

Committee
Corresponding
to Committee
Corresponding
toNomination Committee
Compensation Committee
Nomination and Compensation Nomination and Compensation
Advisory Committee
Advisory Committee
55Full-time Members

00Inside Directors

22

Outside Directors

33Outside Experts

0

0

Other

0

0

Chairperson

An Executive Director

An Executive Director

Committee’s Name

Supplementary Explanation

The “Nomination and Compensation Advisory Committee”, comprised of the Chairman, the President, andthree or more members designated by the President, who is the Chairperson, from among the Outside
Directors, has been established to conduct discussions and deliberations on a wide range of topics relating to- 26 -

NIPPON STEEL CORPORATION
Corporate Governance Report

the nomination and compensation of the Directors in general, including the compositions of the entire Boardof Directors and the Audit & Supervisory Committee, the system and levels of the Directors’ compensation,and other topics.
The Nomination and Compensation Advisory Committee comprises five members, the Representative
Director and Chairman, Kosei Shindo, the Representative Director and President, Eiji Hashimoto, and Outside
Directors Tetsuro Tomita, Kuniko Urano and Masato Kitera. The President serves as the chairman of theCommittee. The Nomination and Compensation Advisory Committee, as a general rule, is held twice a year(in fiscal year 2022, held in May and scheduled in December).

[Independent Directors]
Number of Independent Directors

5

Matters relating to Independent Directors
NIPPON STEEL decides the independence of Outside Directors in accordance with the independence
standards set by the financial instruments exchanges in Japan (e.g. Tokyo Stock Exchange), considering eachindividual’s personal relationship, capital relationship, business relationship, and other interests with NIPPONSTEEL.
As stated above, since NIPPON STEEL believes that each of the Outside Directors is independent, NIPPONSTEEL has reported all of them as Independent Directors to each financial instruments exchange in Japan(e.g. Tokyo Stock Exchange).
[Incentives]
Incentive Policies for Directors

Introduction of Performance-linked Compensation

Supplementary Explanation
In accordance with “a. Content of Policies” indicated in (3) under I-1. [Principle 3.1] (Full Disclosure) of thisreport, compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members
and Outside Directors) consists only of monthly compensation, and is all based upon performance of NIPPONSTEEL, in order to give incentives for the Group’s sustainable growth and improvement of its corporate value.
As indicators for performance-linked compensation, NIPPON STEEL uses consolidated annual profit/loss(however, corrections were made for the sake of fair remuneration commensurate with earnings for the termby excluding the portion of gains/losses from reorganization for production facility structural measures;
hereinafter the same in this section), which clearly indicates its business performance and earning power, andconsolidated EBITDA, while taking into account other factors including the revenue targets in the Mediumto Long-term Management Plan.
Although compensation for Outside Directors is fixed compensation in principle, the amount of compensation
may be increased or decreased only in the event of significant changes in the consolidated annual profit/loss
of NIPPON STEEL.
Although compensation for Directors who are Audit & Supervisory Committee Members (excluding Outside
Directors) is fixed compensation in principle, the amount of compensation will be increased or decreased onlyin the event of significant changes in the consolidated annual profit/loss and consolidated EBITDA ofNIPPON STEEL.
The method for determining the amount of such performance-linked compensation is indicated in (3) b.
“Methods of determining the policies” under I-1. [Principle 3.1] (Full Disclosure) of this report.

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NIPPON STEEL CORPORATION
Corporate Governance Report

Recipients of Stock Options
Supplementary Explanation------[Director Compensation]
Disclosure of Individual Directors’Compensation

Selected Directors

Supplementary Explanation
The total amounts for all the Directors (excluding Directors who are Audit & Supervisory Committee
Members), all the Outside Directors (excluding Directors who are Audit & Supervisory Committee Members),
all the Directors who are Audit and Supervisory Committee Members, and all the Outside Directors who are
Audit & Supervisory Committee Members are disclosed in the Annual Securities Report and the Business
Report. In addition, when the total amount of consolidated compensation and other consideration for anindividual Director is one hundred million (100,000,000) yen or more, such total amount is disclosed in the
Annual Securities Report.
In fiscal year 2021, total compensation amounts of 657,330,000 yen were paid to thirteen (13) Directors(excluding Directors who are Audit & Supervisory Committee Members) (including compensation of
43,200,000 yen to three (3) Outside Directors) and 211,870,000 yen paid to seven (7) Directors who are Audit& Supervisory Committee Members (including compensation of 57,600,000 yen to four (4) Outside Directors
who are Audit & Supervisory Committee Members).
* The amounts stated above include the compensation paid to two (2) Directors (excluding Directors who are
Audit & Supervisory Committee Members) who resigned at the conclusion of the 97th General Meeting of
Shareholders held on June 23, 2021.

Policy on Determining Compensation Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Compensation Amounts and Calculation Methods
This is indicated in (3) “Board Policies and Procedures in Determining the Compensation of Directors” of
I-1. [Principle 3.1] (Full Disclosure) of this report for reference.
[Supporting System for Outside Directors]
NIPPON STEEL supports the performance of responsibilities by Outside Directors by assigning a sufficientnumber of staff members in the General Administration Division and the Audit & Supervisory Committee
Members’ Office, and timely and appropriately providing company information such as offering priorexplanations about the matters to be submitted for deliberation or reported to the meetings of the Board of
Directors and other important meetings. The Audit & Supervisory Committee Members’ Office has dedicatedstaff members that support Directors who are Audit & Supervisory Committee Members, in order to ensure
their independence from the Directors (excluding Directors who are Audit & Supervisory Committee
Members). Under the direction of all Directors who are Audit & Supervisory Committee Members, including
Outside Directors, such staff members support supervisory activities and otherwise engage in work relating
to supervision.

- 28 -

NIPPON STEEL CORPORATION
Corporate Governance Report- 29 -

NIPPON STEEL CORPORATION
Corporate Governance Report[Status of persons who retired from Representative Director and President or other position]
Name

Position / title

Description of duties

TakashiImai

Senior Advisor,
Honorary Chairman

Akio
MimuraSenior Advisor,
Honorary Chairman

HiroshiTomonoSenior Advisor

Shoji
MuneokaSenior Advisor

Expresses opinions upon therequest of management. Also
serves as executives of someoutside organizations.
[Major public office]Chief Director, The Industry
Club of Japan
Chairman, Japan Atomic
Industrial Forum, Inc.
Honorary Chairman,
KEIDANREN (Japan Business
Federation)
Expresses opinions upon therequest of management. Also
serves as executives of someoutside organizations.
[Major public office]
Chairman, The Japan Chamberof Commerce and Industry
Chairman, The Tokyo
Chamber of Commerce andIndustry
Advisor, KEIDANREN (Japan
Business Federation)
Expresses opinions upon therequest of management. Also
serves as executives of someoutside organizations.
[Major public office]
Chairman, Kansai Association
Switzerland-Japan
President, Tekko Gakuen
Educational Association
Advisor, KEIDANREN (Japan
Business Federation)
Expresses opinions upon therequest of management. Also
serves as executives of someoutside organizations.
[Major public office]
Chairman, Japan-China
Economic Association
Chairman, Japan Tax
Association
Advisor, KEIDANREN (Japan
Business Federation)- 30 -

Workingarrangements/terms(full-time/part-time
with/withoutcompensation)
Part-time withoutcompensation

Date ofresignation
fromoffice ofPresident
March 31,
1998

Term
of
officePart-time withoutcompensation

March 31,
2008

None

Part-time withcompensation

March 31,
2014

None

Full-time withcompensation

March 31,2014

5 yearsor lessNone

NIPPON STEEL CORPORATION
Corporate Governance Report

Total number of Senior
Advisors/Advisors who served as
Representative Director and President
or other equivalent positions4- 31 -

NIPPON STEEL CORPORATION
Corporate Governance Report

2. Matters on Functions of Business Execution, Supervision, Nomination, and Compensation Decisions(Overview of Current Corporate Governance System)
A summary of and views on the current corporate governance system are indicated in the I-1 “Basic
Views” of this report.
Please also see I-1 “Basic Views” of this report, in addition, the following supplementary
explanations about business execution, auditing and supervision, nomination, and compensation decisions,among others, and the chart at the end.
(1)

Business Execution and activities of the Board of Directors

In accordance with a provision in the Articles of Incorporation, the Board of Directors of NIPPONSTEEL delegates part of the decisions regarding execution of important operations (excluding matters listed
in each item of Article 399-13, Paragraph 5 of the Companies Act) to the Representative Director andChairman and Representative Director and President, thereby expediting management decision-making, andlimiting the number of items for deliberation by the Board of Directors and further enhancing discussions
relating to matters such as the formulation of management policies and strategies. The execution of importantmatters concerning the management of NIPPON STEEL and NIPPON STEEL Group is determined at theBoard of Directors (held about once per month) after deliberations in the Corporate Policy Committee (heldonce a week, in principle) comprised of the Chairman, President, Executive Vice Presidents, and othermembers, pursuant to NIPPON STEEL’s rules.
As corporate committees engaging in deliberations before the Corporate Policy Committee and theBoard of Directors, there are 22 company-wide committees, depending on their respective purposes and areas(as of April 1, 2022).
The status of attendance at the meetings of the Board of Directors held in the fiscal year ended
March 31, 2022 (13 meetings in total) for those who attended the meetings of the Board of Directors held
after the conclusion of the 98th General Meeting of Shareholders is as follows.

Directors (excluding Directors who are Audit& Supervisory Committee Members)
Inside Director

Outside Director
Directors who are Audit & Supervisory
Committee Members
Inside Director
Outside Director

Name

Attendance rate

Kosei Shindo
Eiji Hashimoto
Akio Migita
Naoki Sato
Takahiro Mori
Takashi Hirose
Tadashi Imai
Tetsuro Tomita
Kuniko Urano

100%
100%
100%
100%
100%
―
100%
100%
―

Shozo Furumoto
Masayoshi Murase
Seiichiro Azuma
Hiroshi Yoshikawa
Masato Kitera

100%
―
100%
100%
100%

*1
*1
*2

*2

*2

*3

*1 Status of attendance at the 10 meetings of the Board of Directors held since his/her appointment.
*2 Appointed on June 23, 2022.
*3 Attendance as a Director (excluding Directors who are Audit & Supervisory Committee
Members).

- 32 -

NIPPON STEEL CORPORATION
Corporate Governance Report(2)Supervision(i)Supervision by the Board of Directors
The Board of Directors is comprised of fourteen (14) members, of whom nine (9) are
Directors (excluding Directors who are Audit & Supervisory Committee Members) andfive (5) are Directors who are Audit & Supervisory Committee Members. Outside
Directors account for more than one-third (5 out of 14) of all members of the Company’s
Board of Directors.
Of the above, the Directors (excluding Directors who are Audit & Supervisory Committee
Members) are comprised of seven (7) Executive Directors who were employees of
NIPPON STEEL with intimate knowledge of NIPPON STEEL’s businesses, and two (2)Outside Directors who have vast experience in, and deep insights into, corporate
management. The Directors who are Audit & Supervisory Committee Members arecomprised of two (2) Directors who were employees of NIPPON STEEL with intimate
knowledge of NIPPON STEEL’s businesses, and three (3) Outside Directors, each ofwhom has vast experience in, and deep insights into, such areas as corporate accounting,economies, international affairs, economies and cultures, respectively.
At NIPPON STEEL, by all Directors appropriately fulfilling their roles andresponsibilities prompt decision-makings are achieved corresponding to changes in the
management environment, and multifaceted deliberations and objective and transparent
decision-making by the Board of Directors are secured. In addition, Directors who are
Audit & Supervisory Committee Members have voting rights on the Board of Directors
regarding decisions on proposals for the election and dismissal of Directors as well as onelection and dismissal of Representative Directors, and other decisions in generalregarding business execution (excluding decisions that have been delegated to Directors).
The Audit & Supervisory Committee has the authority to give its opinions at the General
Meeting of Shareholders regarding the election, compensation, etc. of Directors,
excluding Directors who are Audit & Supervisory Committee Members. This structure
strengthens the supervisory function of the Board of Directors over management.
To secure capable Outside Directors and allow Non-executive Directors, including
Directors who are Audit & Supervisory Committee Members who were employees of
NIPPON STEEL to adequately carry out their expected roles in the performance of theirduties, NIPPON STEEL has concluded an agreement with each of the Non-executive
Directors that limits his liability under Article 423, paragraph 1 of the Companies Act tothe greater of twenty (20) million yen or the Minimum Liability Amount, as defined in
Article 425, paragraph 1 of the Companies Act, so long as he acts in good faith andwithout gross negligence in performing his responsibilities.

(ii)

Supervision by the Audit & Supervisory Committee
NIPPON STEEL’s Audit & Supervisory Committee is comprised of two (2) full-time
Directors who are Audit & Supervisory Committee Members who were employees of
NIPPON STEEL with intimate knowledge of NIPPON STEEL’s businesses, and three(3) Outside Directors who are Audit & Supervisory Committee Members, each of whomhas vast experience in, and deep insights into, such areas as corporate accounting,economies, international affairs, economies and cultures, respectively. The Audit &Supervisory Committee acts with the obligation of contributing to the establishment of ahigh-quality corporate governance system that enables sound and sustainable growth of
NIPPON STEEL and its Group companies, by supervising the performance of
responsibilities by Directors and acting as part of the Company’s oversight function, as
an independent organ fulfilling its roles and responsibilities that are recently expected, in
response to the delegation of responsibilities by the shareholders, and social trust.

- 33 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Specifically, the Audit & Supervisory Committee Members cooperate closely with thedepartment in charge of internal audits, and proceed with daily supervisory activities in aplanned way, with a main focus on the development and operation of the internal control
system, the development of business infrastructure, and the progress of various measures
for management plans, in accordance with, among others, the standards for the Audit &Supervisory Committee’s audits, the policies and plans of audit and supervision, andassignment of duties as set forth by the Audit & Supervisory Committee. In addition, theAudit & Supervisory Committee Members attend important meetings, such as themeetings of the Board of Directors, and conduct onsite audits of steelworks and otherfacilities. Further, the Audit & Supervisory Committee Members ask Executive Directors
and employees, among others, to explain the performance of their responsibilities, andother related matters, and actively express opinions.
For the Group companies, the Audit & Supervisory Committee Members of NIPPONSTEEL exchange opinions and information with the Directors of such Group companies
and the Directors, etc. of the responsible divisions of NIPPON STEEL, and as necessary,receive business reports from them and ask them for explanations. Further, the Audit &Supervisory Committee Members of NIPPON STEEL seek to improve the quality of thesupervisory activities as the whole Group, by establishing close cooperation with theGroup companies’ audit & supervisory board members, through liaison conferences andother opportunities.
NIPPON STEEL has established the Audit & Supervisory Committee Members’ Officeand has assigned six (6) full-time dedicated staff members, in order to assist the Audit &Supervisory Committee in the smooth execution of its duties.
The Outside Directors who are Audit & Supervisory Committee Members contribute to
NIPPON STEEL’s sound and fair management, by, among other tasks, expressing theirrespective opinions independently at the Board of Directors, the Audit & Supervisory
Committee, and other opportunities, and performing supervisory activities, including
audits on the business and affairs and the status of assets at major steelworks, etc. andhearing of reports from the Accounting Auditor, as Audit & Supervisory Committee
Members elected by the Audit & Supervisory Committee, based on their vast experiencein, and deep insights into, the abovementioned areas. In addition, Outside Directors who
are Audit & Supervisory Committee Members strive to share information and exchange
opinions about NIPPON STEEL’s management issues with the Representative Director
and Chairman, Representative Director and President and Outside Directors (excluding
Directors who are Audit & Supervisory Committee Members) through liaison meetingsand other means.
(iii)

Internal Control and Audit
NIPPON STEEL has determined its basic policy on the internal control system at theBoard of Directors, as indicated in “IV. Matters Related to the Internal Control System”
of this report, and is operating it under such policy.

(iv)

Accounting Audits
NIPPON STEEL has appointed KPMG AZSA LLC as its accounting auditor. The namesof the certified public accountants who execute the accounting audit activities at NIPPONSTEEL under the Companies Act and the Financial Instruments and Exchange Act, andthe composition of the assistants for such audit activities, are as follows.
KPMG AZSA LLC
Continuous Audit Period
16 years- 34 -

NIPPON STEEL CORPORATION
Corporate Governance Report-

Names of the Certified Public Accountants Who Execute the Activities(Designated Limited Liability Partner)
Mr. Koichi Kobori, certified public accountant; Mr. Hirotaka Tanaka, certified
public accountant; and Mr. Takahiro Toyama, certified public accountant.
The number of years that Mr. Koichi Kobori, Mr. Hirotaka Tanaka, and Mr.
Takahiro Toyama have continuously conducted NIPPON STEEL’s audits isseven or less.

-Composition of the Assistants Involved in Accounting Audit Activities
The composition of the assistants involved in accounting audit activities isdecided under KPMG AZSA’s appointment standards. Specifically, certified
public accountants are the principal members, and assistants, such as system
specialists, are also included.

In addition, KPMG AZSA and its executive partners in charge of NIPPON STEEL’s
audits have no special interests with NIPPON STEEL.

(Policies and Reasons for Selection of the Accounting Auditor)
NIPPON STEEL selects the Accounting Auditor considered well-qualified based on thepolicy on selecting the Accounting Auditor, which is formulated by the Audit &Supervisory Committee. Specifically, such policy requires selection of an Accounting
Auditor from among multiple candidates based on the scale and the global nature of ourbusiness, while taking into consideration the Accounting Auditor’s independence,
specialty, audit quality, track record, audit plan, audit structure, and level of audit fees.
On the basis of such policy, NIPPON STEEL has judged that KPMG AZSA LLC is wellqualified for its Accounting Auditor.
As for the policy regarding decision on dismissal or non-reelection of the Accounting
Auditor, NIPPON STEEL shall dismiss the Accounting Auditor by unanimous consentsof the Audit & Supervisory Committee Members upon occurrence of events justifying
such dismissal, pursuant to laws and regulations. In addition, the Audit & Supervisory
Committee shall resolve and submit proposal to dismiss or not to reelect the Accounting
Auditor to the General Meeting of Shareholders if any event materially interferes with
continuation of the audit services occurs.
On the basis of such policy, the Audit & Supervisory Committee of NIPPON STEEL
carried out an evaluation of KPMG AZSA LLC, to conclude that a proposal for dismissal
or non-reelection of the Accounting Auditor need not be submitted to the General Meetingof Shareholders.

(Evaluation of the Accounting Auditor by the Audit & Supervisory Committee)
The Audit & Supervisory Committee of NIPPON STEEL evaluates the Accounting
Auditor in consideration of the factors including its independence, specialty, audit quality,
audit activities, level of audit fees, and adequacy of audit report, and the Audit &Supervisory Board Members and the Audit & Supervisory Board of NIPPON STEEL
have judged that KPMG AZSA LLC is suitable and adequate as the Accounting Auditor.

- 35 -

NIPPON STEEL CORPORATION
Corporate Governance Report(3)

Decision on Directors’ Compensation and the Nomination of Director Candidates

This is indicated in (3) “Board Policies and Procedures in Determining the Compensation of
Directors” and (4) “Policies on and Procedures in the Nomination of Director Candidates and the Appointment
and Dismissal of Senior Management” of [Principle 3.1] (Full Disclosure) of I-1 of this report for reference.

3. Reasons for Adoption of Current Corporate Governance System
This is indicated in (2) of I-1 “Basic Views” of this report, for reference.

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NIPPON STEEL CORPORATION
Corporate Governance Report

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
Early Notification of General
Shareholder Meeting

Scheduling AGMs Avoiding
the Peak Day
Allowing Electronic Exerciseof Voting Rights
Participation in Electronic
Voting Platform
Providing Convocation Noticein English

Other

Supplementary Explanations
A notice of the General Meeting of Shareholders is sent roughly three weeks
prior to the General Meeting of Shareholders (roughly one week prior to thestatutory deadline) (June 3 in 2022). From the viewpoint of early disclosureof information, the notice of the General Meeting of Shareholders, with its
English translation, is posted on the websites of NIPPON STEEL and Tokyo
Stock Exchange at least four weeks or so prior to the General Meeting of
Shareholders (in 2022, the Japanese original text was posted on May 23 andthe English translation on May 30).
The ordinary General Meeting of Shareholders is held by avoiding the peakday.
Implemented. In 2018, NIPPON STEEL began allowing shareholders to
exercise their voting rights via a smartphone or tablet by scanning a QR code.
NIPPON STEEL is registered at the electronic voting platform operated by
ICJ, Inc.
English version of the notice of the General Meeting of Shareholders (fulltext including Reference Documents for the General Meeting of
Shareholders) is posted on the websites of NIPPON STEEL and Tokyo Stock
Exchange at least three weeks prior to the General Meeting of Shareholders(in 2022, English version was posted on May 30).
[Disclosure of supplementary explanation materials of the items on theagenda of the General Meeting of Shareholders]
Based on the questions from shareholders about the items on the agenda of
the General Meeting of Shareholders, supplementary information is disclosed
and posted on the websites of NIPPON STEEL and Tokyo Stock Exchange,
as necessary (in 2022, no supplementary information was posted).
[Explanations and summary of Q&A at the General Meeting of Shareholders]
As the General Meeting of Shareholders NSSNC makes every effort to clearly
explain the business report and the major management issues to shareholders
using slides and other audiovisual materials throughout the presentation, andpolitely answer questions from shareholders.
In addition, NIPPON STEEL posts a summary of the proceedings, Q&A,
materials explaining business challenges and measures to take on its website
after the conclusion of General Meetings of Shareholders (since 2020).
[Analysis of the results of the exercise of voting rights]
Items on the agenda that received a considerable number of opposing votes
are analyzed each year at subsequent meetings of the Board of Directors basedon the proportions of votes “for” and “against” by shareholder composition
and by shareholder category, and the information disclosed by theinstitutional investors on the results of the exercise of voting rights. NIPPONSTEEL utilizes these results in its SR and IR activities.

2. IR Activities
Supplementary Explanations

Explanation bya representative

Preparation and Publication ofDisclosure Policy

NIPPON STEEL aims to realize its sustainable growth
and the medium- to long-term enhancement of corporate
value by gaining shareholders’ and investors’- 37 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Regular Investor Briefings for
Individual Investors

Regular Investor Briefings forAnalysts and Institutional
Investors

Regular Investor Briefings forOverseas Investors

Posting of IR Materials on
Websiteunderstanding and trust as to its management policies
and business activities through timely, appropriate andfair disclosure of information and constructive dialogue.
To this end, “NIPPON STEEL Corporate Disclosure andDialogue Policy” has been established and is available on
NIPPON STEEL’s website.
(Japanese)
https://www.nipponsteel.com/ir/management/disclosu
re.html(English)https://www.nipponsteel.com/en/ir/management/discl
osure.html
Management performance briefings are held for Yes
individual shareholders who hold ten units of shares ormore. In the briefing, NIPPON STEEL Directors orofficers explain business performance, the medium- tolong-term management plan, NIPPON STEEL’s
contribution to regional communities, and initiatives
towards the environmental preservation and other topics,
while questions from shareholders are also answered. In
fiscal year 2021, NIPPON STEEL held a total of fivebriefings in Fukuoka and Osaka.
At the time of announcing the performance four times a Yes
year, an officer in charge of IR holds briefings in Japan
to explain the performance overview and other topics.
Subsequently, the materials used in the briefing and asummary of Q&A are posted both in Japanese andEnglish on NIPPON STEEL’s website. When importantmatters arise regarding the management strategies,
briefings are organized as necessary.
Furthermore, as part of constructive dialogue to enhance
corporate value, NIPPON STEEL regularly holds small
meetings between the analysts, institutional investors andthe President. NIPPON STEEL also invites the analysts
and institutional investors to plant tours as necessary to
deepen their understanding of NIPPON STEEL’s
business.
NIPPON STEEL’s senior management, an officer in Yes
charge of IR, and the IR department conduct dialogue
with overseas investors through face-to-face meetingsand securities conferences held in Japan and overseas.
Financial results materials (IR Briefings, Summaries of
Q&A, Financial Results, Annual Securities Reports,
Quarterly Reports and others) and publications forshareholders and investors (Integrated Reports,
Sustainability Reports, Fact Books, Business Reports,
Interim Reports and others) are posted in “IR Library” on
NIPPON STEEL’s website. English translations areprovided for all documents excluding Quarterly Reports.
(Japanese)
https://www.nipponsteel.com/ir/library/index.html(English)https://www.nipponsteel.com/en/ir/library/index.html
Documents relating to the General Meeting of
Shareholders (Notices of the General Meeting of- 38 -

NIPPON STEEL CORPORATION
Corporate Governance Report

Shareholders, Notices of Resolutions of the General
Meeting of Shareholders and others) are posted on the
General Meeting of Shareholders page.
(Japanese)
https://www.nipponsteel.com/ir/individual/meeting.ht
ml(English)https://www.nipponsteel.com/en/ir/individual/meeting.htmlEstablishment of Department
and/or Manager in Charge ofIR
OthersThe Investor Relations Department in the Accounting &Finance Division is established.
In addition to the above initiatives, in fiscal year 2021, todeepen shareholders’ understanding of the Group’sbusiness performance and others, NIPPON STEEL sentout the Interim Report in December to shareholders.
Furthermore, six of NIPPON STEEL’s steelworks gave
tours in fiscal year 2019 for shareholders who held ten
units of shares or more (chosen by lottery) to view theactual manufacturing sites. (In order to prevent the
spread of COVID-19, tours were not given in fiscal year
2020 and fiscal year 2021.)

3. Measures to Ensure Due Respect for Stakeholders
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders

ImplementationofEnvironmental Activities, CSR
Activities etc.

Supplementary Explanations
The “Corporate Philosophy of the NIPPON STEEL Group” provides that theGroup continues to emphasize the importance of integrity and reliability, andthe “Code of Conduct of the NIPPON STEEL Group” requires that the Groupact with a strong sense of ethical values and in compliance with applicablelaws and regulations, and respect the positions of various stakeholders.
[Sustainability Report]
NIPPON STEEL became the first in the Japanese steel industry to issue anenvironmental report (renamed as “Sustainability Report” in 2019) in 1998,
and for 24 years since then, it has presented in these reports its progress inenvironmental management and various initiatives in environmental
preservation activities and CSR activities.
In the fiscal year 2021 edition, NIPPON STEEL’s stance on the pursuit ofsocial sustainability is clearly communicated, and its environmental, socialand governance (ESG) initiatives, which are the foundation of its sustainablegrowth, are introduced in detail. In particular, it explains various climatechange initiatives, such as NIPPON STEEL’s strategy based on TCFD
scenario analysis and efforts for innovation to realize a decarbonized society,and introduces in detail NIPPON STEEL’s challenges to achieve the scenario
of “Nippon Steel Carbon Neutral Vision 2050.”
Sustainability Report 2021, URL:
https://www.nipponsteel.com/en/csr/report/index.html[Environmental Activities]
Having identified environmental activities as critical for our corporate
management, under the principle of Ecological Management, NIPPONSTEEL is commented in the Basic Environmental Policy established in
October 2012, to contribute to the creation of a society oriented toward- 39 -

NIPPON STEEL CORPORATION
Corporate Governance Reportenvironmental preservation with lower environmental impact. We have been
actively engaged in various environmental measures, which encompass someat the local community level and others of global scale. These efforts include
the maintenance and improvement of good living environments, thepromotion of reduction and recycling of waste, addressing climate change
issues, and the maintenance and improvement of biological diversity.
(URL: https://www.nipponsteel.com/en/csr/env/policy/index.html)
NIPPON STEEL is committed to solving the issues involved in creating asustainable society through innovative technology development and bypromoting “three ecos,” namely, Eco Process (The way we manufacture iseco-friendly: We manufacture steel products with world’s highest-level
energy efficiency and low CO2 emission), Eco Products (What we produce
is eco-friendly: We contribute energy saving and lowing CO2 emission by
reducing the weight of products, improving energy efficiency, and utilizing
by-products), and Eco Solution (Sharing our eco-solutions: We contribute toenvironmental preservation on a global level by providing environment andenergy-efficient technology to countries around the world.
[CSR Activities]
As CSR activities to support art and culture, NIPPON STEEL opened the
Kioi Hall in 1990 with halls dedicated to both classical music and traditional
Japanese music, and has been focused on music sponsorship through theoperation of the Hall and support for the activities of the NIPPON STEEL
Arts Foundation, including the awarding of the NIPPON STEEL MusicAwards each year to promising young musicians and to those who have madecontributions to the development of the culture of music in Japan.
NIPPON STEEL also supports community-based sports teams for volleyball,rugby, judo, baseball and other sports, and develops junior sports teams, gives
sports classes for children, and makes its sport facilities available for themnationwide.
NIPPON STEEL is also involved in the creation of forests and community
clean-ups in the areas of its steelworks. Our “Creation of Hometown Forests”
projects started with planting small tree saplings on the premises of Oita
Works (now Kyushu Works Oita Area) in 1971, with the aim of facilitating
harmonious coexistence between nature and humans. This project has
subsequently expanded to our domestic production bases, and our forests
have grown into large forests with a total area of around 840 hectares.
As educational activities, NIPPON STEEL supports environmental educationand conducts lectures mainly at its steelworks and nearby elementary andjunior high schools, in order to foster interest and better understanding of thesteel industry among young people and to have them know the joy of
manufacturing and the depth of science technology.
Over the years, NIPPON STEEL has accepted the business training programsfor Japanese school teachers at private companies sponsored by the Japan
Institute for Social and Economic Affairs and the Japan Iron and SteelFederation, offering tours of its steelworks for the teachers to gain better
understanding of the industry, as well as an experience-based safety education
program.
Going forward, NIPPON STEEL will continue to promote these activities
and, together with local communities, contribute to regional development.

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Development of Policies on
Information
Provisionto
Stakeholders

Others(1) The “Nippon Steel Corporation Group Code of Conduct” provides thatNIPPON STEEL discloses its corporate information in a fair and proactive
manner.
(2) The “Basic Policy on Internal Control System” of NIPPON STEEL
provides that NIPPON STEEL seeks timely and accurate disclosure ofimportant corporate information such as management plans and financial
information, in compliance with applicable laws and regulations, and otherrequirements.
(3) The “Rules on Insider Information Management and Insider Trading
Regulations” provide that after corporate decision that falls under “insider
information” is made by or reported to the Board of Directors, NIPPONSTEEL will release it promptly to multiple news media organizations, anddisclose it in accordance with the rules of each financial instruments exchange
on which NIPPON STEEL is listed (e.g. Tokyo Stock Exchange).
(4) The “NIPPON STEEL Corporate Disclosure and Dialogue Policy”
provides that NIPPON STEEL will disclose information in compliance withapplicable laws and regulations and the rules of each financial instruments
exchange, and that with respect to financial and non-financial information
other than that stated above, NIPPON STEEL will also disclose theinformation that is considered to be likely to affect investment decision in atimely, appropriate, and fair manner.
In addition to the above, NIPPON STEEL is engaged in the following
initiatives.
[Diversity & Inclusion (D&I) Initiatives]
From the perspective of creating a company where diverse employees areproductive, perform at their best, be empowered, and feel proud and fulfilled,
NIPPON STEEL is reinforcing our D&I efforts while focusing on five areas,
namely, promoting female employee’s participation and career advancement,
realizing work life balance so as to enable employees with various
backgrounds and circumstances to perform at their best, developing healthmanagement in order for employees to perform at their best until theretirement age of 65, prevention of harassment, and promoting empowermentof the elderly and the disabled.
(Sustainability Report 2021, URL:
https://www.nipponsteel.com/en/csr/report/index.html, pp.49-54)- 41 -

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Corporate Governance Report

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development(1)
Basic policy on internal control system (system to ensure appropriateness of business, etc.)
The resolutions made by NIPPON STEEL as a system to ensure appropriateness of its businessare as follows.
NIPPON STEEL is aiming at continuous improvement of its corporate value and winning the trustof society under the “Corporate Philosophy of the NIPPON STEEL Group.” In addition, NIPPON STEEL
will establish and appropriately manage an internal control system (a system for ensuring appropriateness ofbusiness, etc.) as follows to comply with applicable laws and regulations, and ensure integrity of financial
reporting, and effectiveness and efficiency of business, and will continue to improve such system in view offurther enhancement of corporate governance.
(i)

Matters Necessary for the Execution of Duties of the Audit & Supervisory Committeei)

Matters related to Directors and Employees to Assist the Audit & Supervisory Committee
of NIPPON STEEL in its Duties
NIPPON STEEL will establish the Audit & Supervisory Committee Members’ Office
and assign full-time employees (the “dedicated staff members”), in order to assist the
Audit & Supervisory Committee in the smooth execution of its duties. No Directors will
be assigned to assist the Audit & Supervisory Committee in its duties.

ii)

Matters related to the Independence of the Dedicated Staff Members from Other
Directors (Excluding Directors Who are Audit & Supervisory Committee Members) andMatters related to Ensuring the Effectiveness of Instructions of the Audit & Supervisory
Committee to the Dedicated Staff Members
The dedicated staff members are full-time employees and perform their duties under the
direction of the Audit & Supervisory Committee. In addition, the Head of the Human
Resources Division discusses with the Audit & Supervisory Committee in advance thetransfer and evaluation, etc. of the dedicated staff members to ensure their independence
from the executive divisions and the effectiveness of the Audit & Supervisory
Committee’s instructions to the dedicated staff members.

iii) System for Directors, Employees, Etc. of NIPPON STEEL and Its Subsidiaries to Reportto the Audit & Supervisory Committee
The Directors (excluding Directors who are Audit & Supervisory Committee Members),
Executive Officers, General Managers, and other employees of NIPPON STEEL willreport to the Audit & Supervisory Committee in a timely and appropriate manner inaccordance with laws and regulations or NIPPON STEEL’s rules, either directly or
through the related divisions such as the Internal Control & Audit Division, on the statusof the execution of duties, the maintenance and operation of the internal control system(hereinafter including the status of whistleblower systems.), major accidents andincidents, and other matters related to risk management. They will also report importantmanagement matters to the Board of Directors, the Corporate Policy Committees and the
Risk Management Committees, and other corporate committees, and thereby share suchinformation with the Audit & Supervisory Committee.
In addition, the directors, audit & supervisory board members, employees, etc. of eachGroup company of NIPPON STEEL will report to the Audit & Supervisory Committee
in a timely and appropriate manner in accordance with laws and regulations or NIPPONSTEEL’s rules and other regulations, either directly or through the related divisions suchas the Internal Control & Audit Division, on the status of the execution of duties, the- 42 -

NIPPON STEEL CORPORATION
Corporate Governance Reportmaintenance and operation of internal control systems, major accidents and incidents,and other matters related to risk management at each Group company.
iv) System to Ensure that the Person Who Made the Report Referred to in the Preceding
Paragraph will not be Treated Unfavorably for the Reason of Making Such Report
NIPPON STEEL will stipulate Rules for the Whistleblower System, which state thatNIPPON STEEL shall not unfavorably treat a person who has reported as stated in thepreceding paragraph, for reasons of such report, make such rules known, and implement
them appropriately.
v)

Matters related to the Policy for the Handling of Expenses Incurred in the Performanceof Duties by Audit & Supervisory Committee Members
NIPPON STEEL will record in its budget such expenses as it deems necessary for the
execution of duties of Audit & Supervisory Committee Members. If an Audit &Supervisory Committee Member requests reimbursements of such expenses, NIPPONSTEEL will handle them appropriately in accordance with the provisions of theCompanies Act.

vi) Other Systems to Ensure that Audits by the Audit & Supervisory Committee are
Conducted Effectively
The General Manager of the Internal Control & Audit Division and the heads of eachfunctional division of NIPPON STEEL cooperate closely with the Audit & Supervisory
Committee through means such as exchanging opinions on the operation of the internal
control system and other matters on a regular basis or whenever necessary. In addition,
NIPPON STEEL will strive to create an environment that enables the Audit &Supervisory Committee to conduct audits in an organized and efficient manner.
(ii)

System to Ensure that Execution of Duties by the Directors of NIPPON STEEL Complies
with Applicable Laws and Regulations and the Articles of Incorporation and Other
Systems to Ensure Appropriateness of Operation in the Corporate Group Consisting of
NIPPON STEEL and its Subsidiaries
i)

System to Ensure that Performance of Responsibilities by the Directors of NIPPONSTEEL Complies with Applicable Laws and Regulations and the Articles ofIncorporation
The Board of Directors will make decisions or receive reports on important matters ofmanagement in accordance with the Rules of the Board of Directors and other relevantinternal rules.
In accordance with the resolution at the Board of Directors, each of the Executive
Directors will, in his/her assigned area, perform his/her responsibilities and supervise theperformance of responsibilities of employees, and report such supervisory status to theBoard of Directors.

ii)

System for the Preservation and Management of Information in relation to the
Performance of Responsibilities by the Directors of NIPPON STEELNIPPON STEEL will appropriately preserve various information in relation to theperformance of responsibilities, including minutes of the meetings of the Board of
Directors, by, among others, specifying managers in charge of information preservationand management, and classifying each information by security level, in accordance with
the internal rules for information management.

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NIPPON STEEL will seek to make timely and accurate disclosure of important corporate
information, such as its management plan and financial information, in addition to suchdisclosure as required by applicable laws and regulations.
iii) Rules and Other Systems with respect to Loss-related Risk Management of NIPPONSTEELThe General Manager of each division will identify and evaluate risks associated withbusiness in his/her division, and carry out his/her duties in accordance with theauthority and responsibilities set out in internal rules for organization and operation.
With respect to risks related to areas such as safety and health, environment and disasterprevention, information management, intellectual properties, quality control, and integrityof financial reporting, the division in charge of each specific area (each functional
division) will establish rules and other systems from a company-wide perspective, inform
other divisions of such rules and systems, identify and evaluate the status of risk
management at other divisions through monitoring and other methods, and provide
guidance and advice to such divisions.
Upon the occurrence of an accident, disaster, compliance issue, or other event whichcauses a material effect on the management, the Executive Directors will immediately
convene “Emergency Control Headquarters” and other meetings, and take necessary
actions in order to minimize the damage, impact, and other effects.
iv) System to Ensure Efficiency in the Performance of Responsibilities by Directors of
NIPPON STEELThe Board of Directors will make decisions on the execution of management plans andbusiness strategies, as well as important business executions such as capital expenditure,and investments and provision of loans, after such matters are deliberated bycompanywide Committees for relevant areas such as ordinary budget, plant andequipment investment budget, investment and financing, and technology development,
and the Corporate Policy Committee.
The business execution under the resolution at the Board of Directors and other corporate
organizations is performed promptly by the Executive Directors, Executive Officers, andGeneral Managers.
v)

System to Ensure that Performance of Responsibilities by Employees of NIPPONSTEEL Complies with Applicable Laws and Regulations and the Articles ofIncorporation
NIPPON STEEL will build and maintain an internal control system based on
autonomous internal controls.
Each General Manager will develop an autonomous internal control system in his/her
Division, and strive to ensure thorough compliance with applicable laws and regulations
and internal rules, and prevent any violation of applicable laws and regulations in businessand affairs. NIPPON STEEL will also develop and enhance an employee-education
system that includes regular seminars, and the creation and distribution of manuals for the
purpose of ensuring compliance with applicable laws and regulations and internal rules.
When each General Manager becomes aware of any potentially illegal acts or facts, he or
she will immediately report such matters to the General Manager for the Internal Control& the Audit Division.
The General Manager of the Internal Control & Audit Division will confirm the status ofdeveloping and operating company-wide internal control systems, and identify and- 44 -

NIPPON STEEL CORPORATION
Corporate Governance Report

evaluate each Division’s situation of compliance with applicable laws and regulations andinternal rules, and take necessary measures such as preventing violations of applicablelaws and regulations and internal rules. Moreover, the General Manager will report onsuch matters to the Risk Management Committee, and further report on important items
among such matters to the Corporate Policy Committee and the Board of Directors. The
General Manager will also establish and operate a whistleblower system that provides
consultations and takes reports regarding risks in the operation of business.
Employees are obligated to comply with applicable laws and regulations and internal rules
and to appropriately perform their responsibilities. Employees who violate applicablelaws and regulations and internal rules will be subject to disciplinary action under theRules of Employment.
vi) System to Ensure Appropriateness of Operation in the Corporate Group Consisting of
NIPPON STEEL and its Subsidiaries
Under the “Corporate Philosophy of the NIPPON STEEL Group,” NIPPON STEEL andeach Group company will share business strategy and conduct their business in a unified
manner, taking into account each company’s business characteristics, and will familiarize
their respective employees with their respective business operation policies and otherrelated matters. With respect to control of the Group companies, NIPPON STEEL will
set forth basic rules in the Rules for Control of group companies, and ensure theirappropriate application.
Each Group company will build and maintain its internal control system based on
autonomous internal controls, and seek to improve measures relating to internal control
through, among other measures, information sharing with NIPPON STEEL. Each
responsible division of NIPPON STEEL will confirm the status of internal controls at
each Group company, and provide assistance in its improvements, where necessary.
The General Manager of the Internal Control & Audit Division will coordinate with eachfunctional division, and identify and evaluate the situation of internal control of the Group
companies as a whole, and provide guidance and advice to each responsible division andeach Group company.
The specific systems under the views above are as follows.
i.

System for Reporting to NIPPON STEEL in relation to the Performance ofResponsibilities by the Group Companies’ Directors
The responsible divisions of NIPPON STEEL will request that each Group
company report on important management matters in relation to NIPPONSTEEL’s consolidated management or each Group company’s management,
including business plans, significant business policies, and financial results, andgive advice and other guidance.

ii.

Rules and Other Systems with respect to Group Companies’ Loss-related Risk
Management
The responsible divisions of NIPPON STEEL will request that each Group
company report on the situation of risk management in each Group company,and give advice and other guidance.

iii.

System to Ensure Efficiency in the Performance of Responsibilities by the Group
Companies’ Directors- 45 -

NIPPON STEEL CORPORATION
Corporate Governance Report

The responsible divisions of NIPPON STEEL will evaluate the businessperformance of each Group company, and give support for the management.
iv.

System to Ensure that the Performance of Responsibilities by Group Companies’
Directors and Employees Complies with Applicable Laws and Regulations andthe Articles of Incorporation
The responsible divisions of NIPPON STEEL will request that Group
companies report on their respective situation on compliance with applicablelaws and regulations, and the development and operation of internal control
systems, and give necessary support, advice, and other guidance. Additionally,such divisions will request that each Group company report on any actions andfacts in such Group company that may violate applicable laws and regulations,and promptly report to the General Manager of the Internal Control & Audit
Division.

(2)

Outline of status of operation(i)

Operational organization
NIPPON STEEL has established an operational organization for its internal control
systems. This organization consists of the Internal Control & Audit Division (20 fulltime and 22 concurrently with their other posts), which is responsible for the internal
control plan and internal audits, and functional divisions responsible for managing risk
in each field (about 900 staffs). NIPPON STEEL has also designated persons in chargeof risk management (about 110 for NIPPON STEEL) and persons responsible for risk
management (about 550 in group companies) who are engaged in planning andpromoting autonomous internal-control activities in each division and Group company.
This organization operates the internal control system as follows.

(ii)

Specific status of operationi)Internal control plan
In March of each year, NIPPON STEEL develops an annual plan on internal
control for NIPPON STEEL Group as a whole based on changes in therelated laws and the business circumstances. This plan includes a basic
policy, separate plans for each function, including safety, environment, plantsafety, and quality, an internal audit plan, and an education plan. Eachdivision and Group company creates its own plan for the fiscal year based onsuch annual plan developed by NIPPON STEEL.

ii)

Autonomous internal control activities
In accordance with the annual plan, each division and Group company
autonomously performs internal control activities based on the characteristics
of each business and its inherent risks. Specifically, such activities include
establishment, education and voluntary inspections of operational rules,
manuals and other documentation; third-party monitoring; and improvements
to operations based on the results thereof.
Such divisions and Group companies immediately report any accidents,
disasters, facts that may violate applicable laws and regulations, etc. to theInternal Control & Audit Division, and coordinate with the relevant divisions
to take corrective measures, such as measures to prevent recurrence. The
Internal Control & Audit Division compiles case studies of such incidents- 46 -

NIPPON STEEL CORPORATION
Corporate Governance Reportand shares them within the NIPPON STEEL Group. Each division and Group
company then performs inspections for similar risks.
iii)Internal audits, etc.
Internal audits confirm the status of internal controls via internal-control
checklists and other documents. Additionally, the Internal Control & Audit
Division and each functional division monitor each division and groupcompany.
As measures to complement NIPPON STEEL’s internal controls, NIPPONSTEEL also operates a hotline for internal reporting and consultations within
the Company and at external professional organizations, which are open to
officers and employees of NIPPON STEEL and the Group companies, aswell as their families and others. In fiscal year 2021, there were 437 cases ofinternal reporting and consultations. In addition, NIPPON STEEL and its
major group companies conduct employee awareness surveys regarding
internal controls.

iv)

Assessment and improvement
The Internal Control & Audit Division reports the status of operation of theinternal control system at the quarterly meeting of the Risk Management
Committee. It is also reported at meetings of the Corporate Policy Committee
and Board of Directors. Such status is also shared with each division andGroup company at the meeting of the persons in charge of risk management
and the meeting of the persons responsive for risk management.
The Internal Control & Audit Division also assesses the effectiveness of its
internal control system as of the end of each fiscal year, and compiles areport of its assessment based on the status of internal-control activities,
internal audits, etc. This assessment is then reported to the Risk Management
Committee, Corporate Policy Committee, and Board of Directors.
Based on the results of these assessments, NIPPON STEEL establishes
measures to improve the effectiveness of its internal control system, andincorporates them into the next fiscal year’s internal control plan.

v)

Education and awareness raising
The Company educates employees and officers of NIPPON STEEL and thoseof its group companies through sessions on internal controls prepared by
NIPPON STEEL. The sessions include position-specific training, and are
given to everyone from new hires to executive management. The Company
also works actively to raise awareness of its approach to internal controls,
establishment of better workplace culture, and other topics through a dialog
between the Internal Control & Audit Division, and each division of
NIPPON STEEL, and its group companies.

vi)

Coordination with the Audit & Supervisory Committee and Accounting Auditor
The Internal Control & Audit Division reports the status of internal controls
to the Audit & Supervisory Committee each quarter. It also reports anddiscusses the status of internal controls with the Risk Management
Committee with the attendance of Audit & Supervisory Committee
Members. The Internal Control & Audit Division also cooperates closelywith the Audit & Supervisory Committee through means such as exchanging
opinions on the operation of the internal control system and other matters on- 47 -

NIPPON STEEL CORPORATION
Corporate Governance Reporta regular basis. It reports and discusses such matters as the results ofassessments of internal controls relating to the status of operation of the Risk
Management Committee and reporting of financial statements to the
Accounting Auditor periodically.

2. Basic Views on Eliminating Anti-Social Forces
NIPPON STEEL provides, in “Corporate Philosophy of the NIPPON STEEL Group,” that theGroup continues to emphasize the importance of integrity and reliability, and provides in the “Code of
Conduct of the NIPPON STEEL Group” that the Group will not have any relationships of any kind with antisocial forces or organizations that threaten order and safety in the civil society, and will take firm action
against all unreasonable demands. NIPPON STEEL has established “Rules that Prohibit any Relationships
with Anti-social Forces and Prevent Damage Caused by Them,” and internal systems thereunder.
Specifically, NIPPON STEEL defines the role of each relevant division and communication systems
between them by establishing a division, a General Manager, and a personnel in charge of public relations,maintains regular contacts with police departments and other relevant authorities, and seeks to promote
educational activities through information sharing within the Group and internal seminars.

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V. Other
1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

Not adopted

Supplementary Explanation
The Basic Policy on the Composition of Persons to Control the Decision-Making over the Financial andBusiness Policies of the Company
Under the corporate philosophy that the NIPPON STEEL Group will pursue world-leading technologies andmanufacturing capabilities, and contribute to society by providing excellent products and services, the
NIPPON STEEL Group aims to improve its corporate value, and further the common interests of its
shareholders, by enhancing its competitiveness and profitability through the planning and execution ofmanagement strategies.
NIPPON STEEL believes that in the event a third party proposes the acquisition of substantial shareholdings
in NIPPON STEEL (a “Takeover Proposal”), the ultimate decision as to whether or not to accept the Takeover
Proposal should be made by the then shareholders of NIPPON STEEL. On the other hand, NIPPON STEEL
believes that such Takeover Proposals could include those with the potential to cause clear damage to thecorporate value of NIPPON STEEL or the common interests of the shareholders of NIPPON STEEL or thosewith the potential to practically coerce shareholders into selling their shares of NIPPON STEEL.
Consequently, NIPPON STEEL will pay close attention to the status of trading of shares of NIPPON STEEL
and changes of its shareholders in order to prepare for such disadvantages to the shareholders of NIPPONSTEEL in the event a Takeover Proposal is made by a third party, and, for the occasions where a Takeover
Proposal is actually made, will make efforts to enable its shareholders to make an appropriate informed
judgment based on sufficient information and with a reasonable time period to consider such proposal. If a
Takeover Proposal is reasonably judged to damage the corporate value of NIPPON STEEL, which could resultin harm to the common interests of shareholders of NIPPON STEEL, NIPPON STEEL will aim to protect its
corporate value and the common interests of its shareholders by taking prompt and appropriate measures tothe extent permitted under the then applicable laws and regulations.

2. Other Matters Concerning to Corporate Governance System(1)
The Corporate Governance System, including an Overview of the Internal Control System
Please see the chart at the end.
(2)

Overview of the Timely Disclosure System
NIPPON STEEL’s internal system for ensuring the timely disclosure of its corporate information
as described below.
(i)

Information Disclosure Concerning Corporate Decisions
Corporate Decisions by NIPPON STEEL and its subsidiaries that are subject to timely
disclosure are submitted for deliberation by or reported to the Board of Directors, orreported to the General Manager of the General Administration Division in accordancewith the internal rules, and then disclosed in accordance with the rules of each financial
instruments exchange on which NIPPON STEEL is listed (e.g. Tokyo Stock Exchange).

(ii)

Information Disclosure Concerning the Occurrence of Facts
Occurrence of Facts regarding NIPPON STEEL and its subsidiaries that are subject totimely disclosure are reported to the Board of Directors or the General Manager of theGeneral Administration Division in accordance with the internal rules, and then disclosed- 49 -

NIPPON STEEL CORPORATION
Corporate Governance Reportin accordance with the rules of each financial instruments exchange on which NIPPONSTEEL is listed (e.g. Tokyo Stock Exchange).
(iii)

Information Disclosure Concerning Financial Results
Information concerning financial results is submitted for deliberation by and reported to
the Board of Directors, and then disclosed in accordance with the rules of each financial
instruments exchange on which NIPPON STEEL is listed (e.g. Tokyo Stock Exchange).

(iv)

OthersAll of the information mentioned above is disclosed by the Senior Manager of theGeneral Administration Department of the General Administration Division (theresponsible person for handling information), in a timely manner. Furthermore, whensuch information is disclosed, it is posted on NIPPON STEEL’s website.

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NIPPON STEEL CORPORATION
Corporate Governance Report<Reference: Relationship Diagram regarding NIPPON STEEL’s Organization and Internal Control>

The following is a diagram illustrating the relationship regarding NIPPON STEEL’s organization and internal control.

General Meeting of Shareholders

Board of Directors
Nomination andCompensation
Advisory Committee

Audit & Supervisory Committee

Corporate Policy Committee
Representative Director and Chairman
Representative Director and President

Companywide Committees

Executive Directors
Executive Officers
General Managers
in Charge
Responsible
Divisions

Accounting
Auditor(AuditCompany)

Risk Management Committee

Internal Control and
Audit Division
Whistleblower System

Employees

Employees

Group Companies (Autonomous Internal Control)(Note)
1:

2:

In accordance with a provision in the Articles of Incorporation, the Board of Directors of NIPPON STEEL delegates part ofthe decisions regarding execution of important operations (excluding matters listed in each item of Article 399-13, Paragraph
5 of the Companies Act) to the Representative Director and Chairman and Representative Director and President, thereby
expediting management decision-making, enhancing discussions by the Board of Directors relating to matters such as theformulation of management policies and strategies, and strengthening the supervisory function of the Board of Directors overmanagement.
The execution of important matters concerning the management of NIPPON STEEL and NIPPON STEEL Group isdetermined at the meetings of the Board of Directors (held about once per month) after deliberations in the Corporate Policy
Committee (held once a week, in principle) comprised of the Chairman, President, Executive Vice Presidents, and othermembers, pursuant to NIPPON STEEL’s rules.
As corporate organizations engaging in deliberations before the Corporate Policy Committee and the Board of Directors,
there are 22 company-wide committees in total, including the Ordinary Budget Committee, the Plant and Equipment- 51 -

NIPPON STEEL CORPORATION
Corporate Governance Report3:

4:Investment Budget Committee, the Investment and Financing Committee, the Fund Management Committee, the Technology
Development Committee, the Environment Management Committee, the Risk Management Committee, and Green
Transformation Development Committee, depending on each purpose (as of April 1, 2022).
NIPPON STEEL has established an operational organization for its internal control systems. This organization consists of
the Internal Control & Audit Division (20 full-time and 22 concurrently with their other posts), which is responsible for theinternal control plan and internal audits, and functional divisions responsible for managing risk in each field (about 900
staffs). NIPPON STEEL has also designated persons in charge of risk management (about 110 for NIPPON STEEL) andpersons responsible for risk management (about 550 in group companies) who are engaged in planning and promoting
autonomous internal-control activities in each division and Group company.
As far as the Group companies are concerned, each company establishes and develops an internal control system based on its
autonomous internal control, and the responsible divisions of NIPPON STEEL provide assistance in their improvement,
where necessary. Furthermore, the General Manager for the Internal Control & Audit Division of NIPPON STEEL
identifies and evaluates the situation of internal control of NIPPON STEEL Group as a whole, and gives guidance and advice
to each responsible division and each Group company.

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