Corporate Governance Report
Last Updated: July 30, 2024

OSG Corporation

President
Nobuaki Osawa
Contact: Yosuke Sakashita, Accounting Manager
Stock Exchange Code: 6136
https://www.osg.co.jp/en/index.html
The corporate governance of OSG Corporation (the “Company”) is described below.

Ⅰ. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information
1. Basic Views
Under our corporate philosophy of achieving a global presence, we regard compliance with laws,
regulations, and social norms as a fundamental part of our management policies, together with fairness andtransparency in our business activities. We also believe that these qualities contribute to sustainable corporate
development and the improvement of corporate value. Measures to enhance corporate governance, including
the establishment of efficient and transparent management organizations, and the creation of systems toensure timely and fair disclosure of accurate information, are among our most important management
priorities.
One of the ways in which we enhance our corporate governance is by raising compliance awareness among
directors, executive officers and employees of OSG and its Group companies through the dissemination of
the OSG Philosophy and the OSG Corporate Code of Ethics, which provide specific guidelines designed toraise ethical standards within the Company.
[Reasons for Not Implementing Each Principle of the Corporate Governance Code]
The Company fully implements each principle of the Corporate Governance Code.
[Disclosure Based on the Principles of the Corporate Governance Code] Updated[Principle 1.4 Cross-Shareholdings]
The Company can acquire and hold shares of other listed companies as cross-shareholdings if we judge
doing so to be beneficial for improving the Group’s medium- to long-term corporate value from theperspective of building medium- to long-term relationships with business partners and facilitating andstrengthening business alliances, etc. Each year, the Board of Directors examine the benefits and suitabilityof these cross-shareholding by considering the medium- to long-term economic rationale for holding eachindividual stock and the contribution it makes to maintaining and strengthening a comprehensive relationshipwith each business partner. We intend to sell off holdings that have become less significantly important instages after taking into account the financial situation of the companies involved.
In addition, we will exercise the voting rights pertaining to the listed stocks appropriately after carefully
examining shareholder meeting agenda proposals and confirming that those proposals will help enhance thecorporate value of the relevant company and promote the common interest of its shareholders.
[Principle 1.7 Related Party Transactions]
The Company requires any conflict of interest or competitive transactions by directors, etc. (including relatedparties other than directors) to be preapproved by the Board of Directors, and the subsequent result of thesetransactions to be preapproved and reported by the Board of Directors.
[Supplementary Principle 2.4.1]-1-

Regarding the need to ensure greater diversity of human resources in the Company, we have strived to createa pleasant work environment based on the theme of promoting “diversity & inclusion” so that our diverse
human resources are able to capitalize on their individual personalities and character as well as demonstrate
their abilities to the fullest regardless of their nationality, gender, ethnicity, disability, or other characteristics.
Among these efforts, we recognize that promoting the active participation of women in the workplace is an
important issue. Our aim is to enable each and every woman to demonstrate her abilities to the fullest in her
career by continuing to work passionately and assuredly. We have set a goal of “7% for the percentage ofmanagers who are women (2025)” based on the Law for the Promotion of Women’s Activities.
In addition, we are also working on the utilization of global human resources, such as by hiring persons
categorized as a Specified Skilled Worker (i) and accepting trainees from overseas.
The reason we have not indicated voluntary and measurable goals for the promotion of non-Japanese andmid-career hires to managerial positions is that we promote persons based on their abilities, experience andaptitude, and have not created a framework based on gender, nationality, or hiring method.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
Given the fact that the Company’s retirement pension plan is a defined contribution corporate pension, there
is no management of corporate pension reserves and no impact on the financial situation of the Company.
[Principle 3.1 Full Disclosure](i) Management philosophy and management strategies
We disclose our Medium-term Management Plan, integrated reports and other documents on our Company
website.
(Medium-term Management Plan: https://www.osg.co.jp/en/about_us/ir/policy/plan.html）(Integrated reports: https://www.osg.co.jp/en/about_us/ir/financial/ir-library/annual.html）(ii) Basic policies on corporate governanceOur basic views on corporate governance are described in section I.1. Basic Views. Our basic corporate
governance policy is as follows:(1) The Company respects the rights of shareholders and strives to ensure substantive shareholder equality.
(2) The Company strives to cooperate appropriately with all stakeholders.
(3) The Company seeks to ensure appropriate information disclosure and proactively provide non-financial
information as well.
(4) The Board of Directors will determine the direction of the Company’s corporate strategy, etc. andappropriately fulfill its roles and responsibilities.
(5) The Company will engage in constructive dialogue with shareholders in order to help achieve sustainablegrowth and enhance corporate value over the medium- to long-term.
(iii) Compensation structure, etc. of directors
Compensation for directors (excluding directors who are members of the Audit & Supervisory Committee)
consists of fixed basic compensation, variable compensation linked to business performance, and allocationsof restricted stock. Compensation for directors who are members of the Audit & Supervisory Committee
consists solely of fixed compensation.
The total amount of fixed compensation is determined within the upper limit defined by a resolution of
the 103rd Ordinary Shareholders’ Meeting held on February 20, 2016. Compensation is set at ¥396 million
per year for directors (excluding directors who are members of the Audit & Supervisory Committee), and¥84 million per year for directors who are also members of the Audit & Supervisory Committee. To
determine the amount of compensation, the Board of Directors delegates the Representative Director to
prepare proposed compensation amounts according to standards set by the Company. The proposed amounts
are then referred to the Nomination and Compensation Committee, and based on the Committee’s response,
the amounts are then finalized by a resolution of the Board of Directors. The amount of compensation for
directors who are also members of the Audit & Supervisory Committee is determined by a resolution of the
Audit & Supervisory Committee.
Variable compensation is linked to the Company’s business performance. The Representative Director isdelegated by the Board of Directors to calculate the proposed amounts for profit-linked bonuses and personalassessment bonuses for eligible directors who are serving as executive officers and managing officers using
the methods determined by the Company. These proposed amounts are then submitted to the Nomination
and Compensation Committee. Based on the report from the Nomination and Compensation Committee, the-2-

Board of Directors determines the final amounts to be paid, subject to approval of the total amount througha resolution of an ordinary shareholders’ meeting.
Compensation based on allocations of restricted stock (for directors (excluding directors who are membersof the Audit & Supervisory Committee)) are determined within the upper limit defined by a resolution of the106th Ordinary Shareholders’ Meeting held on February 16, 2019. The maximum total value of shares
allocated to eligible directors is set at ¥200 million a year, and the maximum total number of the Company’s
ordinary shares that can be issued or disposed of is 100,000 per year. To determine the amount ofcompensation, the Board of Directors delegates the Representative Director to prepare proposedcompensation amounts according to standards set by the Company. The proposed amounts are then referredto the Nomination and Compensation Committee and, based on the Committee’s response, the amounts arethen finalized by a resolution of the Board of Directors.
Finally, the Company discontinued the payment of retirement bonuses for corporate officers at theconclusion of the 92nd Ordinary Shareholders’ Meeting held on February 19, 2005.
(iv) Appointment and nomination of director candidates
Persons who are deemed suitable to be directors of OSG, on the basis of their extensive experience, advanced
knowledge, and high-level specialist capabilities, are selected and nominated as candidates for membershipof the Board of Directors. The Board of Directors then makes decisions on appointments after seeking advice
and receiving a response from the Nomination and Compensation Committee.
(v) Reasons for appointment of director candidates
The Company describes its reasons for appointing individual directors in the Notice of the Ordinary
Shareholders’ Meeting and discloses each director candidate’s past experience in the same notice.
(vi) Appointment/dismissal of directors
The Board of Directors makes decisions on the appointment or dismissal of directors after receiving advice
from the Nomination and Compensation Committee.
[Supplementary Principle 3.1.3]
The Company disclosed our sustainability initiatives in our Medium-term Management Plan.
Regarding the Company’s climate change initiatives, we have disclosed in the Medium-term Management
Plan our business strategy for building a corporate culture capable of meeting any changes in an era of highuncertainty as we make a full-scale transition to the age of carbon neutrality, and we are promoting ESG
management as the cornerstone of this strategy.
In particular, we recognize that “Climate Change Initiatives,” which is one of the Company’s eight material
issues, is an important issue that the entire Group should address. We are actively working on initiatives toachieve carbon neutrality and develop eco-friendly products. We are also collecting and analyzing thenecessary data on the impact of climate change-related risks and earning opportunities on our businessactivities and income, and are disclosing our findings based on the TCFD framework. As metrics and targets,
we have set the following targets for the reduction of CO2 emissions. FY2030 target: 30% reduction from
FY2019 level, FY2050 target: achievement of carbon neutrality, and we are promoting energy savings inmanufacturing processes and the introduction of renewable energies.
Regarding human capital, based on the slogan, “Beyond the Limit,” we aim to create an environment andculture that allows us to take on challenges without fear of change by constantly taking on the challenge oftransforming ourselves without being confined by conventional wisdom.
As we aim for the effective use of human resource capabilities and the wellbeing of our employees, we aim
to create an environment that allows employees to feel comfortable with taking on the challenges of work,
and we are promoting initiatives for diversity, enhanced work-life balance, and health & safety management.
Regarding intellectual capital, we conduct joint development with universities and national and publicresearch institutes, and engage in long-term basic research, as a result of which we actively registeredintellectual property such as patents and designs. In addition, we have launched the “A brand,” which is thebasic strategy of our Medium-term Management Plan, product development in micro precision processing,and “eco-friendly product development.” We have established evaluation criteria for Eco-Products, set
indices to be achieved when developing new products, and been promoting the registration of trademarks tostrengthen our brand power.
Specific details regarding our ESG management and sustainability initiatives are disclosed in the Company’s
Medium-term Management Plan, sustainability website, integrated reports and other documents.
(Medium-term Management Plan: https://www.osg.co.jp/en/about_us/ir/policy/plan.html)(Sustainability website: https://www.osg.co.jp/en/sustainability/index.html)(Integrated reports: https://www.osg.co.jp/en/about_us/ir/financial/ir-library/annual.html)-3-

[Supplementary Principle 4.1.1]
The Company’s Board of Directors determines matters stipulated by laws and regulations and importantmatters relating to the management of the whole Group and also supervises the execution of duties bydirectors and executive officers. The standards for doing so are stipulated in the Company’s Rules Governing
the Board of Directors and Rules Governing the Executive Officer Committee. Examples of importantmanagement-related items include matters related to the nomination and compensation of corporate officers
and matters related to important business execution. Other matters are delegated to the Chief Executive
Officer (CEO) and other executive officers to be guided by the standards stipulated in our Rules on
Administrative Authority.
[Principle 4.9 Independence Standards and Qualification for Independent Directors]
The Company selects candidates for independent outside directors based on the independence standards
determined by the Tokyo Stock Exchange.
[Supplementary Principle 4.10.1]
Regarding agenda proposals pertaining to nomination and compensation, the proposals are drafted by the
Representative Director, who then consults and receives advice from the Nomination and Compensation
Committee (four out of five members are independent outside directors), and are then decided following
deliberations by the Board of Directors, which includes four independent outside directors (four out of sevenmembers are independent outside directors).
[Supplementary Principle 4.11.1]
Our basic approach is to ensure that the Company’s Board of Directors is composed within the upper limits
stipulated in our Articles of Incorporation, which is, 5 directors who are not members of the Audit &Supervisory Committee and six directors who are members of the Audit & Supervisory Committee. We also
aim to ensure that the Board is of an appropriate size to ensure effective debate and is staffed by members
who guarantees diversity and boasts a balanced range of knowledge, experience, and abilities, etc. associatedwith each business.
In addition, the expertise (skill matrix) of directors who are not members of the Audit & Supervisory
Committee and directors who are members of the Audit & Supervisory Committee is disclosed in the Noticeof the Ordinary Shareholders’ Meeting, integrated reports, and our Company website. Persons who haveexperience in design, sales, overseas business, academic, or banking fields, as well as a certified public
accountant, an attorney, and those who have experience in corporate management at other companies havebeen appointed as directors (including one woman). The directors have wide-ranging knowledge andexperience and ensure diversity, thereby enhancing the effectiveness of the Board of Directors as a whole.
(Integrated reports: https://www.osg.co.jp/en/about_us/ir/financial/ir-library/annual.html)[Supplementary Principle 4.11.2]
Outside directors and other directors allocate the time and effort necessary to their duties as directors toensure they appropriately fulfill their roles and responsibilities, and keep concurrent positions within areasonable range. The status of the concurrent appointments is described in the Notice of the Ordinary
Shareholders’ Meeting, integrated reports, and securities reports.
[Supplementary Principle 4.11.3]
The Company started analyzing and evaluating the effectiveness of the Board of Directors from fiscal year
2022 in order to improve the functioning of the Board.
To ensure current year’s evaluation of Board effectiveness was conducted objectively and transparently,
we enlisted the support of external organizations to conduct a questionnaire of all directors in September
2023 regarding the composition, operation, and other elements of the Board. We then analyzed, discussed,and evaluated Board effectiveness at an extraordinary meeting of the Board of Directors held in October
2023 based on the third-party report of the aggregated survey results.
The survey results, as in the previous year, revealed generally positive evaluations, which enabled us toacknowledge that the effectiveness of the Board of Directors as a whole has been ensured.
However, respondents shared their opinions on the need to enhance support systems, share information
about dialogues with shareholders and other investors, discuss potential risks in the whole Group, andcooperate with the Internal Audit Department, and pinpointed areas where the Board’s functions could befurther improved and debate in the Board enlivened.

-4-

Going forward, the Board of Directors will fully consider and promptly address any issues that arise basedon evaluations of its effectiveness, and will continue to promote initiatives designed to further enhance thefunctioning of the Board.
[Supplementary Principle 4.14.2]
The Company provides information to directors, including Audit & Supervisory Committee Members, as anopportunity to acquire the necessary knowledge and to fully understand roles and responsibilities.
The Company also provides relevant information to outside directors on the occasion of their appointment
and regularly thereafter to help deepen understanding of the Group’s management philosophy, management
policy, business activities, and organization. In addition, we provide directors, including outside directors,
with opportunities to acquire any knowledge of business, finance, organization, etc. required to fulfill theirroles and responsibilities and offer financial support to fund such training.
[Principle 5.1 Policy for Constructive Dialogue with Shareholders](i)(ii) Under the leadership of the President, the Management Planning Department coordinates the activities
of units involved in IR activities and maintains collaboration among these units on a day-to-day basis.
(iii) The Management Planning Department actively responds to requests for IR information, including
telephone inquiries from investors and small meetings. OSG holds half-yearly financial presentations
by top management.
(iv) If necessary, any opinions and concerns of shareholders gathered through dialogue are fed back to theBoard of Directors and senior management by the unit that carried out the IR activities concerned.
(v) When engaging in dialogue with investors, OSG takes care over the management of insider information
by ensuring that such dialogue, whether at financial presentations or small meetings, centers on strategies
for the achievement of sustainable growth and the improvement of OSG’s corporate value from a
medium- to long-term perspective.
[Action to Implement Management That Is Conscious of Cost of Capital and Stock Price]
While the Group has made efforts to strengthen its financial structure as well as invest in growth segments,
it recognizes the importance of shareholder returns from the standpoint of enhancement of corporate value.
In terms of shareholder returns, the Group has articulated its intention in the medium-term management plan
“Beyond the Limit 2024,” covering the three-year period from the fiscal year ended November 2022 to thefiscal year ending November 2024, to increase the dividend payout ratio from the current commitment of
30% to 35% starting from the annual dividends for the fiscal year ended November 2022, and to aim for apayout ratio of 40% thereafter while monitoring trends in business performance. In addition, to further
increase corporate value, the Group believes that it is desirable to improve capital efficiency while
maintaining the financial structure and cash reserves that support future growth investments. Therefore, theCompany, by a resolution of the Board of Directors dated December 5, 2023, decided to repurchase its own
shares to a certain extent using debt funds. At the same time, to finance this repurchase, it will issue bonds
with stock acquisition rights.
The Company also considers ROE to be an important indicator and plans to set an ROE target (scheduled
to be announced in January 2025) that exceeds the cost of shareholders’ equity in the next medium-term
management plan “Beyond the Limit 2027 Stage 2,” covering the three-year period from the fiscal year
ending November 2025 to the fiscal year ending November 2027. The Company will continue to practicemanagement conscious of the cost of capital.
2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders] Updated
Name/Company Name
The Master Trust Bank of Japan, Co., Ltd. (Trust

Number of Shares Owned

Percentage (%)

10,664,700

11.72

Custody Bank of Japan, Ltd. (Trust Account)

6,059,800

6.67

SSBTC CLIENT OMNIBUS ACCOUNT

4,445,219

4.89

Account)-5-

OSG Agent Stock Ownership Association

3,569,567

3.93

OSG Stock Ownership Association

2,558,669

2.82

Osawa Scientific Studies Grants Foundation

2,350,000

2.59

Sumitomo Mitsui Banking Corporation

2,100,000

2.31

SMBC Nikko Securities Inc.

1,864,300

2.05

OSG Employee Stock Ownership Association

1,823,420

2.01

1,650,000

1.82

THE NOMURA TRUST AND BANKING CO.,LTD. AS THE TRUSTEE OF REPURCHASE
AGREEMENT MOTHER FUND
Controlling Shareholder (except for Parent
Company)
Parent Company—
None

Supplementary Explanation Updated
The status of major shareholders is as of May 31, 2024. The Company holds 8,340,151 treasury shares.

3. Corporate Attributes

Fiscal Year-End

Tokyo Stock Exchange Prime Market and Nagoya Stock
Exchange Premier Market
NovemberType of Business

Machinery

Listed Stock Market and Market Section

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
From ¥100 billion to less than ¥1 trillion
From 50 to less than 100

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—

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

Company with Audit & Supervisory Committee
-6-

-7-

[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation

11
1 yearNumber of Directors

Company Chairperson (unless company chairperson is
also serving as president)
7

Appointment of Outside Directors

Appointed

Number of Outside Directors

4

Number of Independent Directors

4

Chairperson of the Board

Outside Directors’ Relationship with the Company (1)NameAttribute

Akito Takahashi

LawyerRelationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

Kunihiko Hara

From another company
Kayoko Yamashita Certified public
accountant
Yoshitsugu Hayashi Academic*
Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides compensation as a director/kansayaku
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, orf) (the director himself/herself only)
i. Executive of a company, between which and the Company outside directors/kansayaku are mutually
appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director
himself/herself only)
k. Others-8-Outside Directors’ Relationship with the Company (2)Designationas
Independent
Director

Supplementary
Explanation of theRelationship

Akito Takahashi

MembershipofSupervisory
Committee○○—

Kunihiko Hara

○

○

—

Kayoko Yamashita

○

○

—

Name

-9-

Reasons for Appointment
Mr. Takahashi has extensive
experience and advanced
knowledge and specialist skills
gained through his career as an
attorney. As a legal expert, he
was judged to be a person who
would participate in board
meetings from an independent
perspective and contribute to
management auditing andsupervision.
Since Mr. Takahashi is not
associated with any OSG
affiliated company or major
supplier or customer, he wasdeemed to present no risk of aconflict of interest withgeneral shareholders.
In addition to an academic
career spanning many years,
Mr. Hara has extensive
experience in and knowledgeof corporate management. He
was judged to be a person who
would participate in board
meetings from an independent
perspective and contribute to
management auditing andsupervision.
Since Mr. Hara is not
associated with any OSG
affiliated company or major
supplier or customer, he wasdeemed to present no risk of aconflict of interest withgeneral shareholders.
Ms. Yamashita has extensive
experience and advanced
knowledge and specialist skills
gained through her career as acertified public accountant. As
an expert in accounting andtax affairs, she was judged to
be a person who would
participate in board meetingsfrom an independent
perspective and contribute to
management auditing andsupervision.
Since Ms. Yamashita is not
associated with any OSG
affiliated company or major
supplier or customer, she wasYoshitsugu Hayashi○○

deemed to present no risk of aconflict of interest withgeneral shareholders.
Professor Hayashi has wideranging knowledge andexperience gained through hislong academic career. He wasjudged to be a person who
would participate in board
meetings from an independent
perspective and contribute to
management auditing andsupervision.
Since Professor Hayashi is not
associated with any OSG
affiliated company or major
supplier or customer, he wasdeemed to present no risk of aconflict of interest withgeneral shareholders.

—[Supervisory Committee]
Committee’s Composition and Attributes of Chairperson

Supervisory
Committee

All Committee
Members

Full-timeMembers

Internal
Directors

OutsideDirectors

5

1

1

4

Appointment of Directors and/or Staff to
Support the Supervisory Committee

Chairperson
Internal
Director

Appointed

Matters Related to the Independence of Such Directors and/or Staff from Executive Directors
The Company has established the Audit & Supervisory Committee Section to assist the Audit & Supervisory
Committee in its duties.

Cooperation among Supervisory Committee, Accounting Auditors and Internal Audit Departments
The Management Audit Section (Internal Control Division), the Audit & Supervisory Committee, and the
Accounting Auditors periodically exchange information and opinions to strengthen mutual cooperation.
[Voluntary Establishment of Nomination/Compensation Committee]
Voluntary Establishment of Committee(s)Corresponding to Nomination Committee or
EstablishedCompensation Committee- 10 -

Committee’s Name, Composition, and Attributes of Chairperson
Committee Corresponding toNomination Committee
Nomination and Compensation

Committee Corresponding toCompensation Committee
Nomination and Compensation

Committee

Committee

All Committee Members

55

Full-time Members

1

1

Internal Directors

11Outside Directors

44Outside Experts

0

0

Other

0

0

Chairperson

Outside Director

Outside Director

Committee’s Name

Supplementary Explanation
OSG has established a Nomination and Compensation Committee as an advisory body for the Board of
Directors. Its purpose is to strengthen the independence, objectivity, and accountability of Board functions
through the appropriate involvement of independent outside directors and the provision of advice in relation
to the appointment and compensation of directors and executive officers, etc.
[Independent Directors]
Number of Independent Directors

4

Matters relating to Independent Directors—[Incentives]
Incentive Policies for Directors

Performance-linked Compensation, Other

Supplementary Explanation
Variable Performance-linked Compensation
Starting in the fiscal year ended November 2019, the Company provides variable compensation in the formof profit-linked bonuses in line with the definition of profit-linked salaries provided in Article 34, Paragraph
1 Item 3 of the Corporation Tax Act, as well as personal assessment bonuses to eligible directors who areserving as executive officers and managing officers.
Compensation Based on Allocations of Restricted Stock
The Company introduced a restricted stock compensation system in the fiscal year ended November 31,
2019 for directors (excluding directors who are members of the Audit & Supervisory Committee) for the
purpose of providing an incentive to achieve continual improvement in the Company’s corporate value andincrease the value shared with shareholders.
Recipients of Stock Options
Supplementary Explanation- 11 -

—[Director Compensation]
Disclosure of Individual Directors’Partial disclosure of individual director remuneration

Compensation
Supplementary Explanation

Amount of compensation, etc. paid to directors in the 111th fiscal year (ended November 2023): ¥345 million
The Company discloses the individual remuneration for directors whose consolidated compensation totals¥100 million or higher in our Securities Report.
Policy on Determining Compensation Amounts

Establishedand Calculation Methods

Disclosure of Policy on Determining Compensation Amounts and Calculation Methods
Compensation for directors (excluding directors who are members of the Audit & Supervisory Committee)
Compensation for directors (excluding directors who are members of the Audit & Supervisory Committee)
consists of fixed basic compensation, variable compensation linked to business performance, and allocationsof restricted stock.
Compensation for directors who are members of the Audit & Supervisory Committee
Since directors who are members of the Audit & Supervisory Committee are independent from the otherdirectors and are not involved in the execution of business operations, their compensation consists solely of
fixed compensation.
Fixed Compensation
The total amount of fixed compensation is determined within the upper limit defined by resolution of the
103rd Ordinary Shareholders’ Meeting held on February 20, 2016. Compensation is set at ¥396 million peryear for directors (excluding directors who are members of the Audit & Supervisory Committee) (10members at the time of the resolution), and ¥84 million per year for directors who are also members of the
Audit & Supervisory Committee (six members at the time of the resolution).
Variable Compensation
Calculation method of monetary consideration provided as performance-linked compensation
Starting in the fiscal year ended November 2019, the Company provides variable compensation in the formof profit-linked bonuses in line with the definition of profit-linked salaries provided in Article 34, Paragraph
1 Item 3 of the Corporation Tax Act, as well as personal assessment bonuses.
Profit-linked Bonuses• Eligibility: Eligible directors who are serving as executive officers and managing officers as stipulated by
Article 34, Paragraph 1 Item 3 of the Corporation Tax Act• Calculation method: Profit-linked bonus = consolidated operating income before provision for the cost of
performance-linked bonuses*1 x Rank-based bonus ratio*2*1 The “indicator of the profits in the business year that ends on or after the start date of the execution ofduties period” stipulated in Article 34, Paragraph 1, Item 3(a) of the Corporate Tax Act is consolidated
operating income.
*2
Rank
ChairmanRank-based Bonus Ratio
0.3645％- 12 -

PresidentManaging Officers

0.4050％0.1620％•The “fixed amount” stipulated in Article 34, Paragraph 1, Item 3(a) of the Corporate Tax Act pertaining to
the maximum amount for profit-linked bonuses is ¥700 million.
•The reason we adopt consolidated operating income as the indicator for performance-linked compensationis that it is the indicator we use for management as best reflecting the results of the Company’s businessactivities, and it enables us to create a mechanism that incentivizes eligible directors and officers to improveconsolidated performance over each business period.
•The target and actual result for the indicator related to performance-linked compensation in the most recent
business period:
Indicator
Consolidated operating income

Target¥24,000 million

Actual Result¥19,800 million

Personal Assessment Bonuses• Eligibility: Managing officers•Calculation method: Personal assessment bonuses are paid according to qualitative assessments of each
person’s contribution to business performance.
•The maximum amount for personal assessment bonuses is ¥50 million.
Compensation Based on Allocations of Restricted Stock• Eligibility: Directors (excluding members of the Audit & Supervisory Committee)• The amount of compensation is determined within the upper limit defined by resolution of the 106th
Ordinary Shareholders’ Meeting held on February 16, 2019. The maximum total value of shares allocatedto eligible directors is set at ¥200 million a year, and the maximum number of ordinary shares that can beissued or disposed of is 100,000 per year (two members at the time of resolution). The purpose of thissystem is to provide an incentive to achieve continual improvement in the company’s performance andcorporate value and increase the value shared with shareholders.
<Process for Determining Compensation>
Fixed Compensation, Compensation Based on Allocations of Restricted Stock
In order to determine the amount of compensation for directors (excluding members of the Audit &Supervisory Committee), the Board of Directors delegates the Representative Director to prepare proposedcompensation amounts according to standards set by the Company. The proposed amounts are then referredto the Nomination and Compensation Committee. Based on the response from the Nomination andCompensation Committee, the amounts are then finalized by a resolution of the Board of Directors. The
amount of compensation for directors who are also members of the Audit & Supervisory Committee isdetermined through consultations among those directors.
Variable Compensation
Variable compensation is linked to the Company’s business performance. The Representative Director isdelegated by the Board of Directors to calculate the proposed amounts for profit-linked bonuses and personalassessment bonuses using the methods outlined above. These proposed amounts are then submitted to theNomination and Compensation Committee. Based on the report from the Nomination and Compensation
Committee, the Board of Directors determines the final amounts to be paid, subject to approval of the total
amount through a resolution of an ordinary shareholders’ meeting.
The Company discontinued the payment of retirement bonuses for corporate officers at the conclusion of the
92nd Ordinary Shareholders’ Meeting held on February 19, 2005.

[Supporting System for Outside Directors]
The Company has appointed employees to assist with the duties of the Audit & Supervisory Committee,
which includes outside directors to report information about internal meetings, etc. to the Audit &Supervisory Committee when necessary. We have also developed a system that enables outside directors todeepen their understanding of the Company’s business circumstances by dispatching the materials formeeting to directors in advance, sending minutes of meetings, and providing monthly management
information, etc.
- 13 -

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Compensation
Decisions (Overview of Current Corporate Governance System)
As a company with an audit and supervisory committee, OSG’s corporate governance structure consists of
the Board of Directors, the Audit & Supervisory Committee, and the accounting auditors. The role of theBoard of Directors is clearly defined under this structure. Operational executive functions are performed byexecutive officers, while the Board of Directors is responsible for supervising that business execution. To
strengthen decision-making functions, the seven-member Board of Directors includes two members who arealso involved in business operations as executive officers. The remaining five directors, of whom four areoutside directors, are also members of the Audit & Supervisory Committee. The outside directors also makeup the majority of the Board of Directors. By creating this structure, we have enhanced the transparency andindependence of the Board of Directors and the effectiveness of its management supervisory role, whilebringing in outside perspectives.
• OSG has introduced an executive officer system to ensure effective responses to changes in the businessenvironment, as well as to clarify the roles and responsibilities of the executive organization. The executive
officers are solely responsible for the performance of business operations in a timely manner and inaccordance with policies decided by the Board of Directors, while continually improving flexibility andefficiency.
• OSG holds monthly meetings of our Management Committee, which comprises directors (excluding
directors who are members of the Audit & Supervisory Committee), executive officers, heads of individual
departments, the head of the Audit & Supervisory Committee, and employees assigned to assist with Audit& Supervisory Committee duties. The meetings help communicate management policies and businessplans determined by the Board of Directors, encourage executive officers and department heads to share
information on the status of business execution, and spark lively discussions.
(Board of Directors)
In addition to its regular meetings, which are in principle held once each month, the Board of Directors holds
special meetings as required. The purpose of these meetings is to deliberate on important matters and makemanagement decisions, and to supervise the performance of the Company’s business operations. The Board
comprises seven members in total (including four outside directors). Chaired by Norio Ishikawa, Chairman
and Chief Executive Officer (CEO), the Board also includes Nobuaki Osawa, President & Chief Operating
Officer (COO) and five other directors who are members of the Audit & Supervisory Committee: Takehiro
Tomiyoshi, Akito Takahashi (outside director), Kunihiko Hara (outside director), Kayoko Yamashita(outside director), and Yoshitsugu Hayashi (outside director). Executive officers attend Board meetings if
required to deliver performance reports, etc.
(Audit & Supervisory Committee)
The Audit & Supervisory Committee is chaired by Takehiro Tomiyoshi, the head of the Audit &Supervisory Committee. The Committee consists of five members in total, including four outside directors:
Akito Takahashi (outside director), Kunihiko Hara (outside director), Kayoko Yamashita (outside director),and Yoshitsugu Hayashi (outside director).
(Nomination and Compensation Committee)
The Nomination and Compensation Committee was established as an advisory body to the Board of
Directors. The Committee consists of five members in total, including four outside directors. Akito Takahashi(outside director) is Chairperson of the Committee, and Kunihiko Hara (outside director) is Deputy
Chairperson. Other members are Kayoko Yamashita (outside director), Yoshitsugu Hayashi (outside
director), and Takehiro Tomiyoshi. The Committee consults with the Board of Directors, deliberates, andthen reports back to the Board on issues such as the appointment, structure, compensation, and bonuses for
directors (excluding directors who are members of the Audit & Supervisory Committee) and executive
officers.
• OSG has concluded an audit agreement with Deloitte Touche Tohmatsu LLC to serve as the Company’s
accounting auditor. The accounting auditor audits the Company and its subsidiaries based on an auditing
plan, and exchanges opinions regarding the results of those audits, etc. The accounting auditor also reports
regularly to the Audit & Supervisory Committee.
• OSG concludes advisory agreements with lawyers to receive timely advice and guidance on legal mattersas part of our overall commitment to comply with all laws and regulations.

- 14 -

• The Company has entered into an agreement to limit liability for damages pursuant to Article 423,
Paragraph 1 of the Companies Act with directors based on Article 427, Paragraph 1 of the said Act and theprovisions of the Articles of Incorporation of the Company. Under the agreement, in the event that theycause damages to the Company from negligence in the performance of duties, and if they act in good faithwithout gross negligence, their liability for the damages to the Company shall be limited to the minimum
liability amount stipulated in Article 425, paragraph 1 of the said Act.

3. Reasons for Adoption of Current Corporate Governance System
By adopting our present corporate governance structure, we have enhanced the ability of the Board of
Directors to oversee and supervise management decision-making and the supervision of business execution,
thereby improving management efficiency and ensuring that management decisions can be madeappropriately and strategically.
The activities of the Audit & Supervisory Committee, of which four of the five members are outside
directors, include the auditing of the Company’s financial position and operations, and the performance of
duties by the representative director and executive officers. OSG’s four outside directors are independent
officers as stipulated in the listing rules. With the five members of the Audit & Supervisory Committee,
including these highly independent outside directors, as members of the Board of Directors, we believe that
we have created a corporate governance structure by providing an environment for effective management
supervisory functions and by ensuring that the company is managed transparently and appropriately.

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 System Platform andOther Initiatives to Improve
the Voting Environment for
Institutional Investors
Providing Convocation Noticein English
Other

Supplementary Explanations
The Notice of the Ordinary Shareholders’ Meeting for the 111th fiscal year
(ended November 30, 2023) held on February 16, 2024 was dispatched on
January 31, 2024 (two days ahead of the legally stipulated dispatch date).
The business year for the Company ends in November and we do notbelieve there are any specific peak days for AGMs in the month ofFebruary.
We use the internet-based voting rights exercise website prepared by theshareholder registry administrator. Please note, we do not use internet
services that enable shareholders to exercise their voting rights using amobile phone as a mobile terminal.
We have been participating in the Electronic Voting System Platform for
institutional investors operated by ICJ, Inc. since the 109th Ordinary
Shareholders Meeting (fiscal year ended November 30, 2021).
We compile a shorter Notice and meeting reference documents in English.
We hold informal gatherings for shareholders and the management
following the conclusion of the Ordinary Shareholders’ Meeting.

2. IR Activities
Supplementary Explanations
Regular Investor Briefings for
Individual Investors
Regular Investor Briefings forAnalysts and Institutional
Investors
Regular Investor Briefings forOverseas Investors

We explain the Company’s business model
approximately once a year.
We hold briefings twice a year, along with otherindividual briefings.
Held roughly twice a year.

- 15 -

Explanations byRelevant
Representatives
Yes
Yes
Yes

Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge ofIR

Information (consolidated financial results,financial results report, timely disclosure materials,
securities reports, quarterly reports, notice of theordinary shareholders’ meeting and notice ofresolution, shareholder communications, integrated
reports)
https://www.osg.co.jp/en/about_us/ir/
Department in Charge: Management Planning
Department
Officer in Charge: President

3. Measures to Ensure Due Respect for Stakeholders
Implementation ofEnvironmental Activities, CSR
Activities etc.

Supplementary Explanations
In November 2000, the Company acquired ISO14001 certification forenvironmental management systems (at nine business sites), and we arepromoting environmental conservation activities.
All our business sites have maintained their status as certified zeroemission establishments by fulfilling strict certification standards requiring a
recycling rate (recycling volume/total waste emissions) of 99% or above.
In addition to serving as a member of the certification committee for the
National Certification System, which aims to enhance the broader society’s
evaluation of technical skills and improve the skills and status of working
people, we also promote the transfer of skills by dispatching teachers to
local community educational institutions.

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
Based on OSG’s Basic Policy for Establishing an Internal Control System resolved by the Board of
Directors, we have compiled various internal rules for the Company and its subsidiaries, such as our
Corporate Code of Ethics and Risk Management Rules. We also ensure that directors, executive officers,
and employees comply with laws, regulations, and the Company’s Articles of Incorporation, and strive tobuild an internal control system for the Company and its subsidiaries that is worthy of our stakeholders trust.
The items resolved by the Board of Directors under the Basic Policy for Establishing an Internal Control
System are as follows:(1) Systems to ensure that the execution of duties by directors and employees is in compliance with laws,
regulations, and the Articles of Incorporation
1) The Company has established rules pertaining to our compliance system, starting with the Corporate
Code of Ethics, and has also determined Company action guidelines that require directors, executive
officers, and employees of the Company and our subsidiary and affiliated companies (the “Group”) to
act in compliance with laws, regulations, the Articles of Incorporation, and social norms.
2) The Company has appointed a director in charge of compliance and set up a Risk and ComplianceManagement Committee to establish, maintain, and improve Group compliance systems.
3) The Company has established an Internal Audit Department to audit the implementation status ofinternal controls at the Company and Group as well as compliance status, and to improve andthoroughly enforce the internal control system.
4) The status of activities of the Risk and Compliance Management Committee and the Internal Audit
Department shall be periodically reported to the Board of Directors and the Audit & Supervisory
Committee.
5) The Company has established a whistleblowing system for reporting potentially suspect actions from alegal or regulatory perspective, and operates the system in accordance with internal reporting standards
for the Company and the Group.
(2) Systems regarding management and storage of information related to the execution of duties by directors
1) Information pertaining to the execution of duties by directors is recorded on paper or in electronic
form (“documents, etc.”) and the Company appropriately stores and manages (including disposal) these- 16 -

documents, etc. in accordance with internal regulations. The Company verifies the operational status of
this system as required and reviews each regulation.
2) Directors and Audit & Supervisory Committee Members must be able to view these documents at all
times.
(3) Rules and other systems regarding management of risk of losses
1) When classifying the risks related to the execution of Company’s businesses, we recognized three broadrisk types: (a) external environment, (b) business processes, and (c) internal environments, and weestablished a risk management system by identifying these risks and assigning departments toeffectively manage them.
2) OSG established Risk Management Rules for the Company and the Group as a basis upon which tobuild a solid risk management system. We decided which departments will be responsible for managing
individual risks and are striving to build a risk management system in accordance with the establishedrules.
3) The Board of Directors promptly determines which department will be responsible for any newly
emerged risks.
4) The Internal Audit Department checks the risk management status of each department that is responsible
for managing specific risks and periodically reports its findings to the director in charge of the Risk andCompliance Management Committee and the Board of Directors. The Board then deliberates anddetermines any necessary improvement measures.
(4) Systems to ensure efficient execution of duties by directors
1) The Board of Directors sets common companywide targets for directors, executive officers, andemployees. The Company’s executive officers then determine specific targets for each department andthe most efficient ways of achieving those targets.
2) The Board of Directors periodically evaluates the progress of business execution, formulates
improvement measures, and establishes frameworks to help improve the efficiency of companywide
business execution.
3) With regard to business execution based on Board decisions, we formulate administrative authority anddecision-making rules in our Rules on Administrative Authority and Rules on Division of Duties.
4) The Board of Directors formulates an annual management plan and implements monthly and quarterly
corporate performance management.
(5) Systems to ensure appropriate operations by the corporate group comprised of the Company and its
subsidiaries
1) The OSG Board of Directors and the presidents of Group companies have the authority andresponsibility to establish compliance and risk management systems at each Group company.
2) We establish management rules for Group companies to ensure the appropriateness of the Group’sbusiness.
3) The Company’s Internal Audit Department audits the status of business execution at the Company andGroup companies, reports the results to the Board of Directors of the Company and Group company
presidents, and offers support and advice where necessary regarding the formulation andimplementation of internal control improvement measures.
(6) Systems regarding directors and employees that support the Audit & Supervisory Committee in theexecution of duties and matters regarding independence of directors and employees that support the
Audit & Supervisory Committee in the execution of duties from other directors (excluding directors who
are members of the Audit & Supervisory Committee)
1) If the Audit & Supervisory Committee has asked for an employee to be assigned to assist withauditing duties, an employee shall be appointed to assist with that work.
2) The consent of the Audit & Supervisory Committee is required in matters relating to the appointment
and dismissal of employees assigned to assist with auditing duties.
3) Those employees shall be independent from directors and executive officers.
4) Those employees shall follow the directions and orders given by Audit & Supervisory Committee
Members.
(7) Systems for directors and employees to report to the Audit & Supervisory Committee, and other systems
regarding reports to the Audit & Supervisory Committee
1) We establish systems for directors, executive officers, and employees to report to the Audit &Supervisory Committee on important matters affecting the business or performance of the Company- 17 -

and the Group, and the status of implementation of internal audits, in addition to statutory matters on acase-by-case basis.
2) We establish a system for appropriately reporting any legal or regulatory infringements and othercompliance issues to the Audit & Supervisory Committee through our whistleblowing provisions for
the Company and the Group and the appropriate maintenance of our whistleblowing system. We alsoestablish frameworks to ensure any stakeholders who have used the whistleblower system are nottreated disadvantageously.
(8) Other systems to ensure effectiveness of audits by the Audit & Supervisory Committee
1) The Company holds regular meetings where Audit & Supervisory Committee Members can exchange
opinions with the President or the accounting auditor.
2) The Company guarantees Audit & Supervisory Committee Members the opportunity to receive advice
on auditing operations from outside experts, such as lawyers and certified public accountants, whenrequired for conducting audits.
3) The Company ensures effective procedures for the prepayment or reimbursement to Audit &Supervisory Committee Members of costs incurred during the execution of duties as well as any otherexpenses or debt arising from the execution of said duties.

2. Basic Views on Eliminating Anti-Social Forces
In its Business Ethics Norms of OSG Corporate Code of Ethics, the Company states that we will stand firmly
against any and all anti-social forces and groups that would harm the security and stability of general public.
The Company, as Corporate Action Standards, stipulates that “the OSG group will have absolutely no ties
with any individuals and groups that will affect society and the company’s well-being. Also, all employees
and managers will not fear these groups, and will face them resolutely.”
Going forward, in addition to seeking to deepen awareness of the OSG Corporate Code of Ethics among
all Group employees, we have assigned the General Affairs and Legal Affairs Division as the internal
department in charge of compiling a manual on how to respond to anti-social forces and working together
with lawyers, police, and other groups, and developing frameworks to prepare ourselves for the emergenceof any unreasonable demands.

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

Not adopted

Supplementary Explanation—

2. Other Matters Concerning Corporate Governance System＜Overview of Timely Disclosure System＞(1) Notification of Information
The heads of department and presidents of Group companies that are responsible for reporting
information shall report any information they have grasped to the President and the officer in charge of
information handling.
(2) Concentration, Examination, and Disclosure of Information
The officer in charge of handling information aggregates notifications and reports from the President,
the Board of Directors, the heads of each division, and the presidents of Group companies, deliberates
together with the Accounting Division, the Human Resources, General Affairs and Legal Affairs
Division and other pertinent departments on information requiring timely disclosure, and considers andproposes disclosure contents and methods.
- 18 -

(3) Reporting the Contents of Timely Disclosure to the President
The officer in charge of information handling reports the contents of the proposed disclosure to the
President.
(4) Implementing Timely Disclosure
1) Facts related to decisions and Financial Results
The officer in charge of handling information shall report the disclosure contents to the President andimplement timely disclosure without delay.
2) Facts related to incidents
The officer in charge of handling information shall report important facts related to incidents that are
judged to require urgent disclosure to the President and also promptly disclose those factors in a timely
manner.

- 19 -

Corporate Governance StructureInternal System for Timely Disclosure
Heads of individual departments, Group company presidents
Financial results information
for Group companies

Board of Directors

President

Decisions

Officer in Charge of Information Handling (Accounting Manager)
Instruct implementationof timely disclosure

Financial results information(Management sections)

Accounting Division(responsible for implementing timely
disclosure）
Management-related information
Financial results information

Timely disclosure- 20 -

Legal Affairs Division