Inherited
ULVAC-Style

Corporate Governance

Message to OurReaders

About ULVACULVAC’s Vision

ULVAC’s Strategy

CorporateGovernance

Financial Data/
Corporate Information

Corporate Governance
Basic Corporate Governance Policy and Structure

Overview of Meeting Bodies

Under its Basic Corporate Philosophy that “the ULVAC Group aims to contribute to the development of industries
and science by comprehensively utilizing its vacuum and peripheral technologies through the mutual cooperation andcollaboration of the Group companies,” ULVAC endeavors to improve its corporate governance with a view toward
increasing its corporate value over the medium to long term. From the aforementioned standpoint, the Company
values competitive and efficient management by ensuring strict compliance with corporate ethics as well as laws
and regulations, while respecting the interests of all stakeholders related to its business activities, including not only
shareholders, but also business partners, local communities, and employees.

Composition Two internal directors, four
independent external directors
Chairperson President
Meeting
Once a month (ad hoc meetings
frequency
as necessary)

Board of Directors
It is a decision-making body for important management issues. The Board
holds regular meetings once a month, as well as ad hoc meetings asnecessary to ensure flexibility. Independent external directors constitutea majority of the Board. The Company is not only able to make swift andefficient judgments concerning important management issues, but is also
to achieve fair, impartial, and highly transparent deliberation as well as
operational supervision.
Main agenda id-term management plan, plan for a single fiscal year, financial
M
results (including dividends)• Sustainability, risk management, compliance•Overview of the Design of Institutional Structures
Company with a board of corporate auditors
 articularly important institutional structures include the Board of Directors, the Management Council,
Pthe Board of Corporate Auditors, and the Committee for Appointment and Remuneration, etc.
Introduced an executive officer system

Committee for Appointment and Remuneration, etc.
Composition One internal directors, four
independent external directors,
two independent external auditors
Chairperson External director
Meeting
Six times a year
frequency

It is a voluntary advisory body for the Board of Directors to discuss
important matters that require objective determination in particular, suchas the appointment and remunerations, etc. of directors and executiveofficers. By having such an advisory body for the Board of Directors, wehave achieved fair, impartial, and highly transparent deliberations withregard to especially important management decisions and increase theeffectiveness of the Board of Directors.
Main agenda
 ppointment/dismissal of directors and executive officers,Aremuneration (including evaluation of individuals)• President succession planning

Corporate Governance Structure•General Meeting of Shareholders
Appointment/DismissalBoard of Directors

Audit

Board of Corporate Auditors
Appointment/Dismissal

Appointment/Dismissal
Collaboration
Board ofCorporate Auditors

IndependentAuditor

Composition Two full-time auditors, twoindependent external auditors
Chairperson Full-time auditor
Meeting
Once a month
frequency

Recommendation
Accounting audit

Audit

Committee for Appointment
and Remuneration, etc.

It performs auditing and supervision of management decision-making andbusiness operations. We ensure full auditing and supervisory functions
through close cooperation between auditors and the Internal Auditing
Department and the independent auditor, whose independence isensured, as well as attendance and statement of opinions by auditors atimportant meetings, such as meetings of the Board of Directors and theManagement Council, and regular meetings with the President and Chief
Executive Officer. By virtue of this structure, each auditor obtains sufficient
information and fulfills rigorous, fair, impartial, and transparent auditing andsupervisory functions.

Management Council
Risk Management
Committee

Compliance Committee

President andChief Executive Officer

Collaboration

Management Council

Collaboration

Comprising of internal directors and executive officers, the Management
Council deliberates on important matters related to business execution
based on the management policies decided by the Board of Directors.
It holds regular meetings once a month, as well as ad hoc meetings asnecessary.

Risk Management Committee
Chairperson President
Meeting
Twice a year
frequency

Sustainability Promotion
Committee
Divisions of the Company

Group companies

Composition Two internal directors,
16 executive officers
Chairperson President
Meeting
Once a month (ad hoc meetings
frequency
as necessary)

Audit

Internal Auditing
Department

Chaired by the President and consisting of risk control offices designatedaccording to risk classifications, the Risk Management Committee sharesinformation and verifies the operation of the risk management system. Itholds regular meetings twice a year.

Compliance Committee
Chairperson President
Meeting
Twice a year (ad hoc meetings asfrequencynecessary)

Chaired by the President, the Compliance Committee considers measures
to prevent compliance violations and to respond to whistleblowing. It holds
regular meetings twice a year, as well as ad hoc meetings as necessary.

Sustainability Promotion Committee
Chairperson Executive Officer in charge ofsustainability
Meeting
Twice a year
frequency
55

ULVAC VALUE REPORT 2023

Chaired by the Executive Officer in charge of sustainability and consistingof internal directors, executive officers, and department heads, theSustainability Promotion Committee sets sustainability targets, manages
progress, considers policies, and discusses initiatives on key themes.
ULVAC VALUE REPORT 2023

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Inherited
ULVAC-Style

Corporate Governance

Message to Our
Readers

About ULVACULVAC’s Vision

ULVAC’s Strategy

CorporateGovernance

Financial Data/
Corporate Information

Corporate GovernancePrincipal Activities of External Directors and Auditors in FY 2022

Directors’ Remuneration
The Company’s policy on determining the individual
remuneration, etc. of directors is that the determinationof the remuneration of each director should take into
consideration the responsibility of that director not only
for the Company’s non-consolidated business results
for a single fiscal year, but also for the sustainableenhancement of the corporate value of the ULVACGroup. In addition, multiple remuneration elements
are evaluated in combination in order to appropriatelyreflect the contributions of each director according totheir respective responsibilities, whereby it is ensured
that the remuneration, etc. of each director is at an
objectively appropriate level.
As described above, the Committee for Appointment
and Remuneration, etc. comprehensively examines andreviews the proposals concerning the remuneration
standards and evaluations of individual internal directors
submitted by the Board of Directors in light of theCompany’s policy on determining the content ofremuneration, etc. of individual directors, and submits
recommendations to the Board of Directors, whichthen determines the amounts of remuneration, etc. of
individual directors while according due respect to thecommittee’s recommendations. Therefore, the Companybelieves that remuneration, etc. of individual directors isin line with the determination policy.

Basic remuneration
Fixed remuneration paid in a fixed amount every monthbased on the remuneration standards set for each
executive position

Name of external
director/auditor

Reasons for selection as an external
director/auditor

Hiroyuki Nishi

To receive valuable opinions based on
his extensive experience and broad
insight, primarily in risk management

Attended all 13 meetings of the Board of Directors held during the fiscal
year and provided opinions concerning deliberation of the agenda asnecessary, based on his extensive experience and sophisticated insight asa corporate manager of other companies both in Japan and overseas.

Norio UchidaTo receive valuable opinions based on
his extensive experience and broad
insight, primarily in international sales
activities

Attended all 13 meetings of the Board of Directors held during the fiscal
year and provided opinions concerning deliberation of the agenda asnecessary, based on his extensive experience and sophisticated insight asa corporate manager of other companies both in Japan and overseas.

Dr. Kozo Ishida

To receive valuable opinions based on
his extensive experience and broad
insight, primarily in research anddevelopment

Attended all 13 meetings of the Board of Directors held during the fiscal
year and provided opinions concerning deliberation of the agenda asnecessary, based on his extensive experience and technical expertise as acorporate manager of other companies both in Japan and overseas.

Yoshimi Nakajima

To receive valuable opinions based onher extensive experience and broad
insight, primarily in international sales
activities

Attended all 13 meetings of the Board of Directors held during the fiscal
year and provided opinions concerning deliberation of the agenda asnecessary, based on her extensive experience and sophisticated insight asa corporate manager of other companies both in Japan and overseas.

Senshu AsadaTo receive valuable opinions basedon his extensive experience andexpertise as an attorney

Attended all 13 meetings of the Board of Directors and all 19 meetings ofthe Board of Corporate Auditors held during the fiscal year and provided
opinions concerning deliberation of the agenda as necessary, mainly froma specialist perspective as an attorney.

IsaoUtsunomiya

To receive valuable opinions basedon his extensive experience andexpertise as a certified public tax
accountant

Attended all 13 meetings of the Board of Directors and all 19 meetings ofthe Board of Corporate Auditors held during the fiscal year and provided
opinions concerning deliberation of the agenda as necessary, mainly froma specialist perspective as a certified public tax accountant.

Annual performance-linked remuneration
Primarily in order to motivate each internal director to work
harder to improve the performance in each fiscal year, thisremuneration is determined based on criteria determinedwith reference to performance indicators such as theCompany’s non-consolidated operating profit margin,
taking into account an evaluation of each internal director’s
degree of contribution and achievement of duties.

Stock-based remuneration
Primarily in order to motivate each internal director tocontribute more to the performance and increase of
corporate value of the ULVAC Group over the medium tolong term, this remuneration is determined with reference
to the standards set for each executive position, basedon the degree of achievement of performance targets interms of consolidated operating profit for a single fiscal
year covered under the mid-term management plan as a
calculation indicator.

Attendance and principal activities

Evaluation of the Effectiveness of the Board of Directors

Initiatives to Ensure the Effectiveness of Audit

In an effort to enhance the functions of the Board of Directors and thus ultimately to increase our corporate value,
we ask individual directors and auditors to assess the Board’s effectiveness annually by themselves, in which eachdirector and auditor directly gives replies to an external organization to ensure anonymity.
The Board of Directors carries out an analysis and evaluation based on the aggregated results reported by theexternal organization.
While we determined that, as a result of the analysis and evaluation of the effectiveness of the Board of Directors
in FY 2022, the Board’s effectiveness has been maintained, we will continuously strive to improve the Board’s
effectiveness by taking into account the recommendations about the enhancement of deliberations on businessportfolio, etc.

The Board of Corporate Auditors held a total of 19 meetings during FY 2022, at which important audit-related
matters including agendas for meetings of the Board of Directors were reported and discussed. Based on thediscussions at meetings of the Board of Corporate Auditors and the expertise of individual auditors, auditors provide
recommendations to directors of the Company as appropriate and necessary, including at meetings of the Board ofDirectors. In addition, the Company secures opportunities for auditors to regularly exchange opinions with directors,
the Internal Auditing Department, and the independent auditor on wide-ranging matters such as compliance and thestatus of establishment of internal control. The Company ensures that auditors are provided with the informationnecessary to carry out audits, and that they attend meetings that it is necessary for them to attend from theperspective of ensuring the acquisition of such information.

Policy on Selection of External Directors and Auditors

Training Policy for Directors and Auditors

ULVAC gives consideration to the desirable balance and diversity of the knowledge, experience, and skills of themembers of the Board of Directors, as well as appropriateness of its size, with a view to enhancing its effectivenessthrough multifaceted deliberations. Candidates for directors are carefully selected by the Board of Directors inconsideration of the aforementioned aspects. The Company also gives consideration to optimizing the board size forspeedy decision-making.

The Company appropriately provides its directors and auditors with opportunities for training that is deemednecessary for them to fully and appropriately fulfill the roles and responsibilities that are expected of them.
Newly appointed external directors receive explanations regarding management strategy, financial standing,management issues, and other important matters, and are given opportunities to acquire knowledge and insight
through tours, etc. of business sites, as appropriate, for the purpose of obtaining a deeper understanding of theULVAC Group.
For newly appointed auditors, the Company provides training opportunities equivalent to those for newly appointed
directors upon the request of the auditors. After they take office as directors and auditors, the Board of Directors
provides them with opportunities to receive explanations regarding business strategies, management issues, andrelated matters of each business every year. The Company also provides them with financial support for trainings thatare deemed necessary for them to fulfill their duties and encourages them to enhance their expertise. These training
opportunities are continually reviewed and updated, as necessary.

Selection Criteria
for ExternalDirectors andAuditors

57

Composition of remunerationof internal directors

The Company’s selection criteria for external directors and external auditors are notlimited to those stipulated by laws and regulations but also emphasize the attributes thatcan be expected to enable external directors/auditors to provide useful opinions, such as
experience as corporate managers and expertise in law and accounting, etc. In addition,from the perspective of fairness, the Company comprehensively considers whether there
is any conflict of interest with the Company. Moreover, in order to ensure the fairness ofthe opinions of the independent outside directors, the Company applies the independence
criteria determined by the Company.

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