On the Release of Bridgestone’s
Corporate Governance Code Report
The Bridgestone Corporation, under the mission of “Serving Society with Superior Quality,” has since2020 defined a vision of “continuing to provide social value and customer value, as a sustainable
solutions company towards 2050,” and as part of its efforts in working towards the achievement of thisvision, the company is in the process of further enhancing its corporate governance.
This process of enhancement and reform has been implemented on an ongoing basis since the company
was first established in order to respond over time to the changing conditions and issues deemed
important, and in order to ensure that the quality of management and the transparency of decision
making processes was constantly improved.
Based on this process, we have formulated a mid-long term business strategy that positions sustainability
as a central concern of management and aims to gain competitive advantage by creating value both forour customers and society as a whole. Also, by creating a globally consistent strategic view under the new
mid-long term business strategy and implementing our strategy in each region while adapting to local
characteristics and requirements, we can contribute to the realization of a sustainable society that will inturn provide opportunities to enable the continuing development of our customers, partners, and ourbusiness. It is our intention to fully employ our governance structure in order to further strengtheninternal controls, promote timely decision making, and continue to realize the ever more effective andefficient planning and execution of our business activities.
Since our first report in 2016, Bridgestone has been using the Corporate Governance Code as a tool forevaluating our governance policies and systems and continuously communicating our approach andprogress in their achievement to our stakeholders.
In recent years, despite the occurrence of natural disasters and health crises, we have and will continue towork towards further enhancing our corporate governance.
On behalf of everyone here at Bridgestone, I thank you for your ongoing support and understanding andlook forward to hearing your response to this report and your evaluation of our efforts to date as we
strive to create a company that we can all be proud of.
May 2021

Shuichi Ishibashi

Member of the Board
Global CEO and Representative Executive Officer

12021 Report on the Corporate Governance Code
1. Changes in Corporate Governance and Our Governance Structure (As of May 2021)
An overview of the development and current structure of Bridgestone’s corporate
governance are shown diagrammatically here in (1) our changes in the corporate
governance system and (2) corporate governance structure diagram.
‹Changes in Corporate Governance›Year

Management Oversight

Mission & Foundation Framework

2006
2010
2011

Reports the Changes
Reflected

Operational execution
Strategic Business Unit (SBU) organization structure(Followed by a progressive, continuous review of the operational structure)
Two officers (CEO, COO) system in Bridgestone Americas Introduction of Executive Committees

Independent members of the Boardof Directors

The Bridgestone Essence
Environmental Mission Statement

2012

Safety Mission Statement

Two officers (CEO, COO) system in Bridgestone Corp.

2013

Discretionary board advisory committee(Governance / Nomination / Compensation)

Global EXCO

2014

Compliance Committee

Introduction of Global Executive Committee
Restructure SBUs: BSCAP China + Asia Pacific
BSEMIA Europe + ME, Africa, Turkey, & Russia + India (2020—)

2016

Adoption of new corporate structure:“Company with Nominating Committee, etc.”

Quality Mission Statement

Establishment of Global Mining & Agricultural Solution Company

2016 Report

Global CSR Commitment “Our Way to Serve”
Refining Mid-term Management Plan formulating process

2017 Report

Restructuring of the Board’s authority(Authority delegation)

Establishment of Global Sustainable Procurement Policy, Global Human Rights Policy and Code of Conduct

May 2018 Report

Integrating Olympic and Paralympic related business related with the sports and cycle business

Dec 2018 Report

2020

Separating the roles of CEO and Chairmanof the Board

Establishment of Mid-Long Term Business Strategy

2020 Report2021

Abolished the full-time position of "Chairman"
Selecting the Chairperson of the Board fromamong independent directors

Establishment of Mid Term Business Plan
Renaming “CEO” and “COO” to “Global CEO” and “Global COO”

May 2021 Report

2017
2018

Global CSR Commitment“Our Way to Serve”

Continuous discussions to advance corporate governance system further‹Corporate Governance Structure›
General Meeting of Shareholders
Board of Directors (12)(includes 8 independent directors; chairperson: independent director)
Nominating Committee (3 independent directors)

Inquiry

Governance Committee

ReportCompliance Committee

Compensation Committee (3 independent directors)

Management OversightOperational execution
Representative Executive Officers (2)Executive Officers (4)(including one foreign member)

Executive Director, responsible for Internal Auditing
Internal Auditing OfficeInternal
Audit

Global CEO

Global EXCO
(Global Executive Committee)
Executive Officers and Corporate Officers (10)(including six foreign members)

Global COO
Other policy management meetings
Officer Nomination and Compensation Meeting

SBUs (Strategic Business Unit)
Domestic / overseas Group
companies & internal companies

Internal Control Systems

CEO

COO

SupportGBS(Global Business Support)

Accounting
audit

Independent Auditors

Audit Committee (5 independent directors +2 internal directors)

Advisory Committee to the Board of Directors

2

2. About This Year’s Report
This year’s report (released in May 2021) discusses the status of enhancement andimprovement eﬀorts implemented since the previous revisions announced by the Company
in May 2020. The key enhancements are listed as follows:
Principles of Japan’ s Corporate Governance CodeOur main improvements since previous report

Introduction of this report Changes in Corporate Governance
(1)

(2)

(3)

Selection of the Chairperson of the Board from among the independent directors

Determination of the Mid Term Business Plan

Board Effectiveness Evaluation for 2020

4.6

Business Execution and Oversite of the Management

4.11

Preconditions for Board and Audit Committee Effectiveness4.1

Corporate Goals and the Setting of Strategic Direction

4.1.2

Execution and Analysis of Business Plans

5.2

Establishing and Disclosing Business Strategies and Business Plans

4.11.3

Preconditions for Board and Audit Committee Effectiveness3. Current Status of Our Enhancement and Improvement Efforts Reported in Accordancewith Japan’s Corporate Governance Code

Section 1: Securing the Rights and Equal Treatment of Shareholders
General Principle 1
Companies should take appropriate measures to fully secure shareholder rights and develop an
environment in which shareholders can exercise their rights appropriately and effectively.
In addition, companies should secure effective equal treatment of shareholders.
Given their particular sensitivities, adequate consideration should be given to the issues andconcerns of minority shareholders and foreign shareholders for the effective exercise ofshareholder rights and effective equal treatment of shareholders.

The Company recognizes that it is essential for the sustainable development of thebusiness to collaborate with various stakeholders and that our shareholders constitute ourprimary stakeholder. Based on this understanding, the Company strives to develop an
environment wherein shareholders can adequately exercise their rights by providing themwith a wide variety of information and opportunities to exercise their rights.
Moreover, the Company endeavors to secure the rights of minority and foreign
shareholders and thereby seeks to secure the substantive equality of the rights of allshareholders.

3

Principle 1.1 Securing the Rights of Shareholders
Companies should take appropriate measures to fully secure shareholder rights, including
voting rights at the general shareholder meeting.

The Company endeavors to ensure the rights of shareholders by managing operations inorder to ensure timely disclosure of not only statutory disclosure documents but also ofother information in both Japanese and English, by conducting the Annual General
Shareholders’ Meeting in a manner such that the voting rights of all shareholders can be
exercised effectively, and by ensuring adequate time and opportunity for dialogue between
management and shareholders.

Supplementary Principle 1.1.1
When the board recognizes that a considerable number of votes have been cast against a
proposal by the company and the proposal was approved, it should analyze the reasons behind
opposing votes and why many shareholders opposed, and should consider the need forshareholder dialogue and other measures.

Based upon the understanding that the Annual General Shareholders’ Meeting is theCompany’s highest decision-making body, the Company takes the results of shareholders’execution of their voting rights as an important indication of their intent. The Board of
Directors therefore formally analyses the reasons and causes for proposals where the total
votes in opposition exceed 20%.

Supplementary Principle 1.1.2
When proposing to shareholders that certain powers of the shareholders’ meeting bedelegated to the board, companies should consider whether the board is adequately constituted
to fulfill its corporate governance roles and responsibilities. If a company determines that theboard is indeed adequately constituted, then it should recognize that such delegation may bedesirable from the perspectives of agile decision-making and expertise in business judgment.

In order to further promote the separation between the executive and supervisory
functions and further strengthen the supervisory role of the board, the Company has
adopted the “Company with Nominating Committee, etc.” model of corporate governance.
Moreover, in addition to establishing the committees legally required under this model, theCompany has established a Governance Committee comprised entirely of Independent
External Directors, all of whom meet the Company’s benchmark for independence(hereinafter referred to as “Independent Directors”). The Governance Committee serves as
an advisory body to the Board of Directors with the objective of ensuring that the Company
maintains the structures and processes needed to ensure appropriate levels of governance.
The Articles of Incorporation currently stipulate that the Board of Directors is responsiblefor decisions such as determining the level of interim dividend payouts. In the event of

4further such delegations of authority by the General Shareholders’ Meeting to the Board of
Directors, the Company will continue to enhance its structures and procedures ofgovernance in order to discharge these responsibilities while ensuring the necessary levelsof expertise in, and timeliness of, its decision making.

Supplementary Principle 1.1.3
Given the importance of shareholder rights, companies should ensure that the exercise ofshareholder rights is not impeded. In particular, adequate consideration should be given to thespecial rights that are recognized for minority shareholders with respect to companies and theirofficers, including the right to seek an injunction against illegal activities or the right to file ashareholder lawsuit, since the exercise of these rights tend to be prone to issues and concerns.

The Company has established a “Share Handling Regulations” which formally stipulates
procedures for the exercising of the rights of minority shareholders and any otherprocedures in relation to shares in order to ensure that shareholders are able to exercise
their rights in full.

Principle 1.2 Exercise of Shareholder Rights at General Shareholder Meetings
Companies should recognize that general shareholder meetings are an opportunity forconstructive dialogue with shareholders, and should therefore take appropriate measures toensure the exercise of shareholder rights at such meetings.

The Company designates Global CEO, the Representative Executive Officer, as thechairperson of the General Shareholders’ Meeting from the perspective of continuously
enriching the quality of dialogue with shareholders at the General Shareholders’ Meeting. In
addition, the Company has and will continue to make every effort to ensure thatshareholders are provided with the services and support necessary to ensure that they areable to exercise their rights at the General Shareholders’ Meeting including such measures
as scheduling the Meeting to avoid clashing with the “peak period” for holding General
Shareholders’ Meetings in Japan, early dispatch of proxy statements, provision of an online
voting platform, and provision of information in English.

Supplementary Principle 1.2.1
Companies should provide accurate information to shareholders as necessary in order tofacilitate appropriate decision-making at general shareholder meetings.

Taking the requests from shareholders into consideration, the Company provides clear
and relevant information to shareholders in a manner intended to facilitate their decision
making. This includes providing information regarding transitions in dividends and earnings
forecasts, attendance at board meetings and statutory committees for all candidates forboard membership, “Guidelines for Determining the Independence of Board Members,”“Nominating Policy for the candidates for appointment to the Board,” and topics related to
the Company's business strategy and its progress.

5

Supplementary Principle 1.2.2
While ensuring the accuracy of content, companies should strive to send convening notices forgeneral shareholder meetings early enough to give shareholders sufficient time to consider theagenda. During the period between the board approval of convening the general shareholder
meeting and sending the convening notice, information included in the convening notice should
be disclosed by electronic means such as through TDnet1 or on the company’s website.
1 TDnet: The Tokyo Stock Exchange operates a real-time internet service (Timely Disclosure network) which distributes the information

provided by listed companies on a timely basis in accordance with its listing rules.

The Company strives to ensure adequate time for deliberation of Shareholders’ meeting
agenda items by sending convening notices as early as possible and in advance of thedeadline prescribed by the Companies Act in Japan. In addition, in cases where board
approval is made on proxy items before sending the convening notice, notification of such ismade in advance at the time of the decision on the corporate website and through otherdigital methods.

Supplementary Principle 1.2.3
The determination of the date of the general shareholder meeting and any associated dates
should be made in consideration of facilitating sufficient constructive dialogue with shareholders
and ensuring the accuracy of information necessary for such dialogue.

The Company strives to promote the accessibility of the General Shareholders’ Meeting bymeasures including scheduling the Meeting to avoid clashing with the “peak period” forholding General Shareholders’ Meetings in Japan.

Supplementary Principle 1.2.4
Bearing in mind the number of institutional and foreign shareholders, companies should takesteps for the creation of an infrastructure allowing electronic voting, including the use of theElectronic Voting Platform, and the provision of English translations of the convening notices ofgeneral shareholder meeting.

In order to better accommodate the needs of the increasing numbers of overseas
investors holding shares, the Company has introduced an Electronic Voting Platform andprovides convening notices in English on its corporate website, along with a wide range ofother material and data for investors in English.

Supplementary Principle 1.2.5
In order to prepare for cases where institutional investors who hold shares in street nameexpress an interest in advance of the general shareholder meeting in attending the generalshareholder meeting or exercising voting rights, companies should work with the trust bank(shintaku ginko) and/or custodial institutions to consider such possibility.

6

The Articles of Incorporation of the Company restricts the exercise of voting rights at
Annual Shareholders’ Meetings to nominee shareholders or their proxies.
In consultation with the trust bank which manages the shareholders’ registry as the agentof the Company, and, taking into consideration both domestic and international implications,
legal obligations, social trends and operational issues, the Company will continue to monitor
the situation regarding the attendance of investors who are not registered on theshareholders’ registry.

Principle 1.3 Basic Strategy for Capital Policy
Because capital policy may have a significant effect on shareholder returns, companies should
explain their basic strategy with respect to their capital policy.

The Company, in full recognition of the importance of the interests of shareholders, aims
to strengthen the foundations of the business in order to promote future growth.
While maintaining levels of internal reserves sufficient to enable rebuilding earning power
mainly in our core businesses and investing for strategic growth to expand our growthbusiness of solutions, the Company endeavors to balance the need to maintain a strong
financial position with that of ensuring an appropriate level of return to its shareholders. In
overall consideration of quarterly business performance, current financial position,
mid-term profitability forecasts, investment plans and cash flow, the Company strives tomeet shareholder expectations for returns by striving to increase the amount of dividends ina stable and continuous manner through sustainable enhancement of corporate value, witha consolidated payout ratio of 40%.
Principle 1.4 Cross-Shareholdings
When companies hold shares of other listed companies as cross-shareholdings2, they should
disclose their policy with respect to doing so, including their policies regarding the reduction ofcross-shareholdings. In addition, the board should annually assess whether or not to hold eachindividual cross-shareholding, specifically examining whether the purpose is appropriate andwhether the benefits and risks from each holding cover the company’s cost of capital. The resultsof this assessment should be disclosed.
Companies should establish and disclose specific standards with respect to the voting rights as
to their cross-shareholdings, and vote in accordance with the standards.
2 Cross-shareholding: There are cases where listed companies hold the shares of other listed companies for reasons other than pureinvestment purposes, for example, to strengthen business relationships. Cross-shareholdings here include not only mutual shareholdings
but also unilateral ones.

The Company maintains a policy whereby it will not hold shares in other companies otherthan those which are of strategic importance; that is, necessary to maintain or enhancebusiness partnerships, or contribute to business profitability. The Company maintains a
policy whereby it will not hold shares outside the scope of this definition. As part of thispolicy, the rationality of, and need to maintain, any such strategic holdings including stock
brands, number of shares held, and the proportion of cross-shareholdings, and other related

7

issues must be assessed by the Board of Directors on an annual basis. The executive officers
comprehensively judge the rationality of holding shares in accordance with the policy,
considering the cost of capital for each individual stock brand.
In exercising its voting rights regarding cross-shareholdings, the Company will consider
the content of proposals in terms of the investment strategy as approved by the Board inaddition to their overall impact on enhancing profitability and sustainable business growth,
corporate governance and shareholder return and then take proper action.

Supplementary Principle 1.4.1
When cross-shareholders (i.e., shareholders who hold a company’s shares for the purpose ofcross-shareholding) indicate their intention to sell their shares, companies should not hinder the saleof the cross-held shares by, for instance, implying a possible reduction of business transactions.

When a publicly traded company that cross-holds Bridgestone shares (ascross-shareholdings) indicates an intention to divest itself of any such cross-held shares, theCompany in no way hinders such companies from taking such action.

Supplementary Principle 1.4.2
Companies should not engage in transactions with cross-shareholders which may harm theinterests of the companies or the common interests of their shareholders by, for instance,
continuing the transactions without carefully examining the underlying economic rationale.

The Company engages in no transactions that harm or impair the interests of companies
that cross-hold shares of the Company (cross-shareholders), nor does it engage in anytransactions that harm or impair the common interests of the shareholders.

Principle 1.5 Anti-Takeover Measures
Anti-takeover measures must not have any objective associated with entrenchment of the
management or the board. With respect to the adoption or implementation of anti-takeover measures,
the board should carefully examine their necessity and rationale in light of their fiduciary responsibility
to shareholders, ensure appropriate procedures, and provide sufficient explanation to shareholders.

The Company has no anti-takeover measures in place and currently has no plans to
introduce any such measures. Shareholders will be fully informed in advance of the natureand reason for any such measures should they be deemed necessary in the future.

Supplementary Principle 1.5.1
In case of a tender offer, companies should clearly explain the position of the board, including
any counteroffers, and should not take measures that would frustrate shareholder rights to sell
their shares in response to the tender offer.

8

In any instance where the shares of the Company are made the target of a tender offer
bid the Board of Directors will clearly convey its position on such bid to its shareholders andwill not act in such a manner as to interfere improperly with any shareholder in theexercising of their rights to accept any such offer.

Principle 1.6 Capital Policy that May Harm Shareholder Interests
With respect to a company’s capital policy that results in the change of control or in significant
dilution, including share offerings and management buyouts, the board should, in order not to
unfairly harm the existing shareholders’ interests, carefully examine the necessity and rationale
from the perspective of their fiduciary responsibility to shareholders, should ensure appropriate
procedures, and provide sufficient explanation to shareholders.

After due consideration by the Board of Directors and in accordance with appropriate
procedures, the Company will provide shareholders with explanations of the rationality andneed for any changes in capital policies that would result either in changes of control orsignificant dilution.

Principle 1.7 Related Party Transactions
When a company engages in transactions with its directors or major shareholders (i.e., related
party transactions), in order to ensure that such transactions do not harm the interests of thecompany or the common interests of its shareholders and prevent any concerns with respect tosuch harm, the board should establish appropriate procedures beforehand in proportion to theimportance and characteristics of the transaction. In addition to their use by the board inapproving and monitoring such transactions, these procedures should be disclosed.

In accordance with its Regulations of the Board of Directors, the Company requires thatany transactions between Directors and Executive Officers and the company or its
subsidiaries, and any transactions with other corporations which may constitute a conflict ofinterest with the Company, must be authorized in advance and subsequently monitored by
the Board of Directors.
The Regulations also stipulate that Directors obtain prior approval for any transactions
with entities that hold 5% or more of the Company’s total shares. The Regulations further
require that any such approved transactions between Directors and Executive Officers andthe company or its subsidiaries be reported to the Board of Directors on an annual basis andalso requires that any such approved transactions with entities holding 5% or more of theCompany’s total shares be reported to the Board of Directors on a quarterly basis.

9

Section 2: Appropriate Cooperation with Stakeholders
Other Than Shareholders
General Principle 2
Companies should fully recognize that their sustainable growth and the creation of mid- to long-term
corporate value are brought about as a result of the provision of resources and contributions made by arange of stakeholders, including employees, customers, business partners, creditors and local
communities. As such, companies should endeavor to appropriately cooperate with these stakeholders.
The board and the management should exercise their leadership in establishing a corporate culture
where the rights and positions of stakeholders are respected and sound business ethics are ensured.

In order to ensure sustainable growth and corporate value creation over the mid to longterm, in awareness of the necessity to maintain appropriate and favorable working
relationships with important stakeholders other than shareholders, such as its various
external partners and communities and other entities that constitute irreplaceable assets, theCompany actively participates in group-wide CSR activities including diversity and inclusion
aimed at the promotion of sustainability.
Moreover, under the leadership of the Board and Corporate Management, each individual
officer and employee of the Company is encouraged to act in accordance with the“Bridgestone Essence” [the statement of the Company Principles] in order to create a corporate
culture in which the rights and interests of stakeholders are respected and the highest levelsof business ethics are realized.

Principle 2.1 Business Principles as the Foundation of Corporate Value Creation
Over the Mid- to Long-Term
Guided by their position concerning social responsibility, companies should undertake theirbusinesses in order to create value for all stakeholders while increasing corporate value over themid- to long-term. To this end, companies should draft and maintain business principles that will
become the basis for such activities.

The Company has encapsulated its corporate philosophy as the Bridgestone Essence
which it takes as the foundation of all corporate activity. Taking the founder’s corporate
creed of “Serving Society with Superior Quality” as its unchanging mission, all officers andemployees of the Company are encouraged to embody the four corporate foundations
encapsulated within
the Essence: “Seijitsu-Kyocho” [Integrity and Teamwork], “Shinshu-Dokuso” [Creative
Pioneering], “Genbutsu-Genba” [Decision-Making Based on Verified On-Site Observations]and “Jukuryo-Danko” [Decisive Action after Thorough Planning] in their everyday activities.
Moreover, in order to enhance the creation of corporate value in the long-term, theCompany has introduced a global CSR initiative known as “Our Way to Serve” which is based
upon the Bridgestone Essence and incorporates the Mission Statements on Safety, Quality
and the Environment as a core of management throughout the Bridgestone group, andformulates and implements the Mid-Long Term Business Strategy in order to provide value
to our customers and society in a sustainable manner.

10

Principle 2.2 Code of Conduct
Companies should draft and implement a code of conduct for employees in order to express
their values with respect to appropriate cooperation with and serving the interests ofstakeholders and carrying out sound and ethical business activities. The board should be
responsible for drafting and revising the code of conduct, and should ensure its compliancebroadly across the organization, including the front line of domestic and global operations.

To fulfil its responsibilities to all its stakeholders, the Company has updated its Corporate
Philosophy. The Company has revised its Corporate Philosophy to include its Mission
Statements on Safety, Quality and the Environment and established a global corporate social
responsibility (CSR) structure entitled “Our Way to Serve.” The Corporate Philosophy and CSR
structure form the core of business throughout the group, and are augmented by global
policies including the Global Sustainable Procurement Policy, the Global Human Rights Policy,
and the Bridgestone Code of Conduct. The Company is currently actively promoting thedissemination and implementation of this Philosophy and CSR structure throughout its global
operations.
As a management policy “Our Way to Serve” identifies three areas of Mobility, People andthe Environment as well as six management fundamentals to be prioritized by the Company
as it seeks to assume its responsibilities and, in close collaboration with its stakeholders,realize ever greater contributions to a sustainable society.
Using examples of ethical and compliance issues that could confront employees in thecourse of their actual jobs, the “Bridgestone Code of Conduct”(https://www.bridgestone.com/responsibilities/code/) explains in clear and easy tounderstand language how problematic situations should be approached and provides
illustrations of specific actions that should be taken and those that would be inappropriate.
The Company continues to rigorously promote the implementation of both “Our Way to Serve”
and the “Bridgestone Code of Conduct” throughout its operations globally by incorporating
enhancements in CSR including Ethics and Compliance as goals in future mid-term businessplans.
More information regarding CSR including Ethics and Compliance is available on thecorporate website: https://www.bridgestone.com/responsibilities/index.html

Supplementary Principle 2.2.1
The board should review regularly (or where appropriate) whether or not the code of conduct isbeing widely implemented. The review should focus on the substantive assessment of whether
the company’s corporate culture truly embraces the intent and spirit of the code of conduct, andnot solely on the form of implementation and compliance.

The Board of Directors is regularly apprised of the Company’s plans regarding theactivities for sustainability including CSR and Ethics and Compliance and formally monitorsand evaluates their progress.

11

Principle 2.3 Sustainability Issues, Including Social and Environmental Matters
Companies should take appropriate measures to address sustainability issues, including socialand environmental matters.

In accordance with its mission of “Serving Society with Superior Quality” the Company
considers it important that it not only generates profits, but also contributes to society as awhole. As the global leader in the industry, the Company strives to achieve ongoing growth asa business while taking responsibility for the future and contributing to the development of asustainable society. Based upon this approach, the Company seeks not only to act incompliance with the rules and social norms that form the basis of a corporation’s foundation
but by applying its strengths and distinctiveness as a group, and through the application ofadvanced technologies and innovation, also contribute to the enhancement of mobility, life,
work and recreation.
More information regarding this approach to sustainability is available on the corporatewebsite: https://www.bridgestone.com/responsibilities/index.html

Supplementary Principle 2.3.1
With the recognition that dealing with sustainability issues is an important element of risk
management, the board should take appropriate actions to this end. Given the increasing demandand interest with respect to sustainability issues in recent years, the board should consider
addressing these matters positively and proactively.

The Company realizes that sustainability, including human rights, occupational health and safety, andsustainable procurement, are critical issues for its survival as a business. Having identified these issues
as management fundamentals within the “Our Way to Serve” policy, the Company has been actively
engaged in their promotion on a global basis.
In February 2018 the Company instituted a “Global Sustainability Procurement Policy”(https://www.bridgestone.com/responsibilities/procurement/index.html) guided by the procurement
management fundamental.
Existing CSR guidelines on procurement concern human rights, environment, and quality. These havebeen enhanced to include improving conservation and rights protection as well as traceability andresilience (the ability to adapt to change). This policy requires that sustainable procurement practices
be followed in the purchase of all materials and services, and applies to suppliers globally. Since theestablishment of this policy, the Company group has continued its efforts to communicate with
suppliers around the world in order to promote a better understanding of the procurement policy.
The Board of Directors is regularly apprised of the Company’s plans regarding sustainability activities
including CSR and Ethics and Compliance and formally monitors and evaluates their progress.
More information regarding other specific actions and initiatives is available on the Company
website: https://www.bridgestone.com/responsibilities/index.html
The Company intends to continue to engage in activities related to these core issues throughout its
organization as it endeavors to respond to the expectations and demands of its stakeholders.

12

Principle 2.4 Ensuring Diversity, Including Active Participation of Women
Companies should recognize that the existence of diverse perspectives and values reflecting avariety of experiences, skills and characteristics is a strength that supports their sustainable growth. As
such, companies should promote diversity of personnel, including the active participation of women.

In April 2018, the Company instituted the “Bridgestone Group Global Human Rights Policy”(https://www.bridgestone.com/responsibilities/human_rights/index.html), one of the purposesof which is to provide a workplace environment wherein people expressing different values andindividuality may work and grow. This policy puts a system in place in which the Company
respects differences in cultures and customs, enables employees at different life stages to feelsecure in their work, and nurtures and develops each individual’s abilities.
As a concrete example of these efforts, the Company has introduced policies aimed atpromoting career advancement and employment opportunities for women including childcare,nursing support and flexible working arrangements for employees whose partner has been
relocated.

Principle 2.5 Whistleblowing
Companies should establish an appropriate framework for whistleblowing such that employees
can report illegal or inappropriate behavior, disclosures, or any other serious concerns without
fear of suffering from disadvantageous treatment. Also, the framework should allow for an
objective assessment and appropriate response to the reported issues, and the board should be
responsible for both establishing this framework, and ensuring and monitoring its enforcement.

The Company has established Compliance Hotlines (known as the “BridgeLine”) for allgroup companies and has established Cartel Related Activity Reporting Hotlines and Bribery
and related Activity Reporting Hotlines for domestic group companies. The Company has
promoted the usage of these Hotlines through awareness campaigns, both online using thecorporate intranet and throughout facilities by informational posters. Hotline usage rates
and the issues thereby identified are reported to the Board of Directors and the Audit
Committee on a regular basis.

Supplementary Principle 2.5.1
As a part of establishing a framework for whistleblowing, companies should establish a point ofcontact that is independent of the management (for example, a panel consisting of outside directors3).
In addition, rules should be established to secure the confidentiality of the information provider andprohibit any disadvantageous treatment.
³ Outside director: A director who satisfies certain requirements such as not holding specific positions, including the position of executive
director, in the company or its subsidiaries (Article 2, Paragraph 15 of the Companies Act). Furthermore, matters such as not holding a
specific position in the parent company or other subsidiaries and not having specific kinship ties with controlling shareholders will be also
required for outside directors after the 2014 amendments to the Companies Act.

The Company has established Compliance Hotlines (the “BridgeLine”) for all groupcompanies, as well as Cartel Related Activity Reporting Hotlines and Bribery and related
Activity Reporting Hotlines for domestic group companies, as a framework to enable13

whistleblowing. The Hotlines for Compliance, Cartel Related Activity Reporting and Bribery
and related Activity Reporting operated independently of the Company by external lawyers.
The Company has also created formal rules and guidelines to ensure the fair treatment andprivacy protection of all employees using these hotlines or acting otherwise as
whistleblowers.

Principle 2.6 Roles of Corporate Pension Funds as Asset Owners
Because the management of corporate pension funds impacts stable asset formation for
employees and companies’ own financial standing, companies should take and disclose measures
to improve human resources and operational practices, such as the recruitment or assignment ofqualified persons, in order to increase the investment management expertise of corporate
pension funds (including stewardship activities such as monitoring the asset managers ofcorporate pension funds), thus making sure that corporate pension funds perform their roles asasset owners. Companies should ensure that conflicts of interest which could arise between
pension fund beneficiaries and companies are appropriately managed.

Bridgestone Corporate Pension Fund appoints fund management organizations based
upon an evaluation of their stewardship record. The exercise of voting rights is left entirely
to the discretion of the organization appointed to manage the Fund. The Company supports
the Fund by appointing qualified personnel from either within or outside the Company toserve as officers of the Fund, and has established a Pension Fund Oversight Council staffedby appropriately qualified personnel to monitor the management of the Fund.

14

Section 3: Ensuring Appropriate Information Disclosure andTransparency
General Principle 3
Companies should appropriately make information disclosure in compliance with the relevantlaws and regulations, but should also strive to actively provide information beyond that required bylaw. This includes both financial information, such as financial standing and operating results, andnon-financial information, such as business strategies and business issues, risk and governance.
The board should recognize that disclosed information will serve as the basis for constructive
dialogue with shareholders, and therefore ensure that such information, particularly non-financial
information, is accurate, clear and useful.

The Company, in addition to making appropriate disclosures of financial information
including financial standing and operating results and non-financial information including
business strategies, issues, risk and corporate governance in compliance with relevant laws
and regulations, in order to promote the transparency and impartiality of its decision
making processes and effective corporate governance also strives to disclose information
deemed appropriate even in the absence of legal obligations to do so.
The Company intends to continue to enhance the disclosure of information with thehighest possible levels of accuracy and usability on its corporate website.

Principle 3.1 Full Disclosure
In addition to making information disclosure in compliance with relevant laws and regulations,companies should disclose and proactively provide the information listed below (along with thedisclosures specified by the principles of the Code) in order to enhance transparency and fairness indecision-making and ensure effective corporate governance:i) Company objectives (e.g., business principles), business strategies and business plans;ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;iii) Board policies and procedures in determining the remuneration of the senior management anddirectors;iv) Board policies and procedures in the appointment/dismissal of the senior management and thenomination of directors; andv) Explanations with respect to the individual appointments/dismissal and nominations based on iv).

i) The Company provides online access to information regarding the Bridgestone Essence,Management Fundamentals, Mid-Long Term Business Strategy and Mid-Term Business
Plan on the corporate website as follows.
The Bridgestone Essence:https://www.bridgestone.com/corporate/philosophy/index.html
Management Fundamentals:
https://www.bridgestone.com/corporate/strategy/index.html
Mid-Long Term Business Strategy and Mid-Term Business Plan:
https://www.bridgestone.com/ir/library/strategy/

15ii) The company outlines its basic approach and policies for promoting corporate
governance based on each principle of the Corporate Governance Code in the firstparagraph on page 9 of the Annual Report for 2018 as shown on the corporate website as
follows:
https://www.bridgestone.com/corporate/library/annual_report/iii) The Compensation Committee’s policies and procedures in determining the remunerationof members of senior management and Directors are detailed in the following
attachment.
iv) 1. Nominating Policy for the candidates for appointment to the Board
When nominating candidates for Board membership, the Company considers thecharacter and judgment of each individual, their experience and expertise and theirlevel of dedication and commitment to performing the duties expected of a member ofthe Board.
(1) Members of the Board other than Outside Directors
The Company takes into account the following:• The candidate’s scope of knowledge and experience regarding the business andits operations.
• The level of the candidate’s ability to formulate business plans and targets based
upon an insightful understanding of the changing business environment.
(2) Outside Directors• The candidate’s absence of connections with the Company that would undermine
their independence from the Company (specifically, their ability to meet theconditions for independence as set out in the Company’s criteria on outside
directors’ independence).
The Nominating Committee will choose candidates in an appropriate manner inaccordance with fair and transparent guidelines and policies for the election anddismissal of the Members of the Board.
2. Nominating Policy for Executive Officers
When nominating Executive Officers, the Company considers if the candidate
possesses the depth and scope of experience and expertise relevant to the businessand the ability to implement business plans and meet performance targets based uponan insightful understanding of the changing business environment.
The Nominating Committee in accordance with the succession plan of theRepresentative Executive Officer submits proposals as appropriate for election anddismissal to the Board of Directors.
The Nominating Committee also deliberates the validity of proposals for the election
and dismissal of candidates for positions as Executive Officers other thanRepresentative Executive Officers.
v) The Company states the reason for nomination, summary of career to date and a list ofimportant posts concurrently served in other corporations or organizations for eachcandidate for nomination to Board membership in the convocation notice and reference
documents for the Annual General Shareholders’ Meeting, Business Report and Corporate
Annual Report.

16

The current appointment/dismissal status of Executive Officers is outlined in theannual Business Report and Corporate Annual Report.

Supplementary Principle 3.1.1
These disclosures, including disclosures in compliance with relevant laws and regulations,should add value for investors, and the board should ensure that information is not boiler-plate orlacking in detail.

The Company makes every effort to ensure that information is disclosed in a manner
which is both easily understandable and of benefit to stakeholders.

Supplementary Principle 3.1.2
Bearing in mind the number of foreign shareholders, companies should, to the extent
reasonable, take steps for providing English language disclosures.

In light of the trend toward increased corporate share ownership by overseas investors,
the Company prepares an English version of its Annual Report, which it makes publicly
available on the corporate website. In addition, the Company also provides English
translations of its consolidated financial statement, reference documents and notice ofAnnual General Shareholders’ Meeting on its corporate website. The Company also provides
online access to video recordings of its quarterly financial performance meetings foranalysts on the corporate website in Japanese with English subtitles.

Principle 3.2 External Auditors
External auditors and companies should recognize the responsibility that external auditors owe
toward shareholders and investors, and take appropriate steps to secure the proper execution of audits.

In recognition of the responsibility of External Accounting Auditors to perform appropriate
accounting audits on behalf of shareholders and investors, the Company acts in compliancewith the following Supplementary Principles as indicated below.

Supplementary Principle 3.2.1
The audit committee should, at minimum, ensure the following:i) Establish standards for the appropriate selection of external auditor candidates and proper
evaluation of external auditors; andii) Verify whether external auditors possess necessary independence and expertise to fulfill
their responsibilities.

i) The Audit Committee has established standards for the appointment and evaluation ofExternal Accounting Auditors.
ii) The Audit Committee, in accordance with these standards, (1) monitors the External
Accounting Auditor’s performance of its duties, (2) monitors the content andcompensation for non-auditing duties entrusted to the External Accounting Auditors by

17

the Audit Committee, and (3) receives reports regarding the quality management
systems of the External Accounting Auditors in order to verify their impartiality andprofessional qualifications.

Supplementary Principle 3.2.2
The board and the audit committee should, at minimum, ensure the following:i) Give adequate time to ensure high quality audits;ii) Ensure that external auditors have access, such as via interviews, to the senior management
including the CEO and the CFO;iii)Ensure adequate coordination between external auditors and each member of the audit
committee (including attendance at the audit committee), the internal audit department andoutside directors other than the members of the audit committee; andiv) Ensure that the company is constituted in the way that it can adequately respond to any
misconduct, inadequacies or concerns identified by the external auditors.

i) The Audit Committee requires that the External Accounting Auditor allocates sufficient
time to perform their audits and, by means of receiving reports by the External
Accounting Auditor on their audit plans, implementing the agreement procedures fordetermining the compensation of the External Accounting Auditor, and verifying reportson the results of the audit by the External Accounting Auditor, ensures that sufficient timeis devoted to performing audits and that audits are performed at the high quality levels
required.
ii) In the event that the External Accounting Auditor requests time to meet with the Global
CEO, Global COO and or Global CFO such arrangements and scheduling are made.
iii) 1. Audit Committee
Adequate coordination between the External Accounting Auditor and members of the
Audit Committee is achieved through audit reports by the External Accounting Auditor
at Audit Committee meetings, regular meetings between the External Accounting
Auditor and members of the Audit Committee outside of Audit Committee meetings,
and the attendance of Audit Committee members at site visits and audit reviews heldby the External Accounting Auditor.
2. Internal Audit Division /Independent Directors
Adequate coordination with the Internal Audit Division is achieved by their
participation
as observers in Audit Committee meetings where External Accounting Auditors share
information regarding the audit plan and findings, and with other Independent
Directors who do not serve on the Audit Committee via information provided by the
Audit Committee.
iv) In the event the External Accounting Auditor uncovers fraudulent activity and calls forappropriate countermeasures, or indicates problems or other issues, the Company will inaccordance with the nature of the situation indicated instigate investigation by the Audit
Committee, order reports from executive departments, provide directors with advice,warnings and or injunctions, report to the Board of Directors and undertake all measuresnecessary to identify the cause, rectify and prevent recurrence of the issue identified.

18

Section 4: Responsibilities of the Board
General Principle 4
Given its fiduciary responsibility and accountability to shareholders, in order to promote sustainablecorporate growth and the increase of corporate value over the mid-to long-term and enhance earnings
power and capital efficiency, the board should appropriately fulfill its roles and responsibilities, including:(1) Setting the broad direction of corporate strategy;(2) Establishing an environment where appropriate risk-taking by the senior management is
supported; and(3) Carrying out effective oversight of directors and the management (including shikkoyaku4
and so-called shikkoyakuin5) from an independent and objective standpoint.
Such roles and responsibilities should be equally and appropriately fulfilled regardless of theform of corporate organization – i.e., Company with Kansayaku Board (where a part of these roles
and responsibilities are performed by kansayaku and the kansayaku board), Company with Three
Committees (Nomination, Audit and Remuneration) or Company with Supervisory Committee.
4 Shikkoyaku: According to the Companies Act, Companies with Three Committees (Nomination, Audit and Remuneration) must appoint
one or more shikkoyaku from directors or non-directors by a resolution of the board and delegate business administration to shikkoyaku.
Also, authority to make certain kinds of business decisions may be delegated to shikkoyaku.
5 Shikkoyakuin: There are cases where a Company with Kansayaku Board or a Company with Supervisory Committee creates positions

with the title of “shikkoyakuin” for persons who are delegated by the board a certain range of discretion regarding businessadministration. Unlike shikkoyaku in Companies with Three Committees (Nomination, Audit and Remuneration), shikkoyakuin is not a
statutory position.

The Board fulfills its responsibility to promote sustainable corporate growth and enhance
corporate value over the mid to long term by the following means:(1) By focusing upon matters related to fundamental policies such as the “Bridgestone
Essence”(the Corporate Philosophy), and upon issues related to the sustained growthand long term value enhancement of the corporation, such as the formulation of mid tolong term business strategies, sustainable corporate growth and related issues, theBoard seeks to maintain a separation between supervisory and executive functions.
(2) In order to facilitate the timely and effective decision making required to implement thepolicies and strategies approved by the Board, the Board delegates a certain degree ofauthority to the executive.
(3) In addition to the establishment of the statutory and discretionary committees, theBoard is comprised on a majority of independent directors in order to ensure both theobjectivity and effectiveness of its supervisory function.

Principle 4.1 Roles and Responsibilities of the Board (1)The board should view the establishment of corporate goals (business principles, etc.) and thesetting of strategic direction as one major aspect of its roles and responsibilities. It should engage
in constructive discussion with respect to specific business strategies and business plans, andensure that major operational decisions are based on the company’s strategic direction.

19

To fulfill the corporate mission of “Serving Society with Superior Quality,” the Company
has established “The Bridgestone Essence (Corporate Philosophy),” which is one of the key
components of the Bridgestone Essence Framework, and underpinned by four foundations:“Seijitsu-Kyocho [Integrity and Teamwork];” “Shinshu-Dokuso[Creative Pioneering];”“Genbutsu-Genba [Decision-Making Based on Verified, On-Site Observations];” and“Jukuryo-Danko [Decisive Action after Thorough Planning].” Other components of theframework include the Safety Mission Statement, the Quality Mission Statement, and theEnvironmental Mission Statement. The Bridgestone Essence Framework and the global
corporate social responsibility (CSR) structure, known as “Our Way to Serve,” are thefundamental policies throughout the group and is supported by a number of newly
established global policies including the Global Sustainable Procurement Policy, the Global
Human Rights Policy, and the Bridgestone Code of Conduct. With its updated and reinforced
corporate governance structure, the Company has set a vision of “continuing to provide
social value and customer value, as a sustainable solutions company towards 2050.”
To achieve the goals outlined above, the Board focuses its deliberations upon criticalissues related to the sustained growth and long term value enhancement of thecorporation, such as the corporate philosophy framework and formulation of the mid-longterm business strategy and the monitoring of their achievement. In order to implement themost important strategic decisions of the Board with group-wide implications, including theformulation of the Mid-Term Business Plan, the Company has established a Global Executive
Committee (“Global EXCO”) comprised of key executives from across the global organization
which determines and oversees implementation of such policies and strategies.

Supplementary Principle 4.1.1
The board should clearly specify its own decisions as well as both the scope and content of thematters delegated to the management, and disclose a brief summary thereof.

The Company, in accordance with its Articles of Incorporation and applicable laws,
stipulates in the Regulations of the Board of Directors that the Board of Directors is thehighest decision- making body within the Company. The Board has made continuous
improvements in order to focus more on deliberations concerning business strategy.
Currently the Board determines:
1. the formulation of fundamental management policy;
2. the formulation of group business strategy (mid-long term business strategy,
significant business changes from the standpoint of group global operations,investment policy, issuance or guarantee of substantial amounts of borrowings anddebenture bond issues, debt guarantees, others);
3. issues involving personnel matters concerning directors and corporate officers;
4. issues involving internal control systems; and5. other matters as required by laws and regulations, or by the Articles of Incorporation.
By delegating authority for the determination of other issues to the operating divisions,the Company seeks to implement decision making in a timely manner.

20

Supplementary Principle 4.1.2
Recognizing that a mid-term business plan (chuuki keiei keikaku) is a commitment to shareholders,the board and the senior management should do their best to achieve the plan. Should the company
fail to deliver on its mid-term business plan, the reasons underlying the failure of achievement aswell as the company’s actions should be fully analyzed, an appropriate explanation should be given
to shareholders, and analytic findings should be reflected in a plan for the ensuing years.

The Company has formulated the mid-long term business strategy that establishes
fundamental principles for mid-to-long-term group global operations. In alignment with the
mid-long term business strategy in order to ensure a globally coordinated business strategy,
the Company has formulated the mid-term business plan, which identifies specific goals andactions to be taken. The Company subsequentially assesses and discusses implications ofchanges identified in the business environment, achievement of strategic objectives, andflexibly revises the plan accordingly.
The Company also provides opportunities to explain the contents above through meetings
with investors and other communication with stakeholders.

Supplementary Principle 4.1.3
Based on the company objectives (business principles, etc.) and specific business strategies,
the board should proactively engage in the establishment and implementation of a succession
plan for the CEO and other top executives and appropriately oversee the systematic developmentof succession candidates, deploying sufficient time and resources.

Bridgestone adopted the “Company with Nominating Committee, etc.” model ofcorporate governance in March 2016. The Board has subsequently delegated to theNominating Committee, which is composed solely of independent directors, the authority toformulate and present proposals regarding the appointment of Representative Executive
Officers. The Nominating Committee determines the selection process and qualifications
required of potential successors to the position of Representative Executive Officer,
assesses the Representative Executive Officer’s own succession planning, identifies andevaluates candidates through a process of ongoing discussions of the future strategic
directions of the Company with executive officers and SBU*1 management, and reports
periodically to the Board as required.
*1 SBU: Strategic Business Unit
An organizational unit classified by region of business for the purpose of management co-ordination within the
Bridgestone group. Currently, the group is divided into four regional units: Japan; the Americas; Europe, Russia, the Middle
East, India, and Africa; and China, Asia, and Oceania.

21

Principle 4.2 Roles and Responsibilities of the Board (2)The board should view the establishment of an environment that supports appropriate risk-taking by
the senior management as a major aspect of its roles and responsibilities. It should welcome proposals
from the management based on healthy entrepreneurship, fully examine such proposals from an
independent and objective standpoint with the aim of securing accountability, and support timely anddecisive decision-making by the senior management when approved plans are implemented.
Also, the remuneration of the management should include incentives such that it reflects mid- tolong-term business results and potential risks, as well as promotes healthy entrepreneurship.

The Company has established and continues to enhance systems and processes necessary
for the promotion and achievement of technological and business model innovation andrelated activities entailing appropriate risk taking. In accordance with this, key business
policies are developed after thorough deliberation by the Board of Directors – which iscomposed of a majority of independent directors thus reflecting the interests of bothshareholders and society at large – and then implemented by Representative Executive
Officers and Executive Officers.
The Company remunerates executives including Representative Executive Officers andExecutive Officers in part using a Performance Share Unit Plan which is a variable
remuneration linked to and for the purpose of achieving mid-term goals and incentivizing
the creation of long-term corporate value.

Supplementary Principle 4.2.1
The compensation committee should design management remuneration systems such that they
operate as a healthy incentive to generate sustainable growth, and determine actual remuneration
amounts appropriately through objective and transparent procedures. The proportion ofmanagement remuneration linked to mid- to long-term results and the balance of cash and stock
should be set appropriately.

Remuneration for management is comprised of a fixed monthly payment, an annual
performance-based bonus payment, and a Performance Share Unit Plan in which additional
compensation in the form of stock is tied to the degree of achievement of mid-term
performance goals and which is designed to provide management with an incentive toimprove the long-term value of the Company. The design of the compensation system andspecific remuneration amounts are deliberated and determined by the Compensation
Committee, which is composed solely of independent directors, based upon considerationof executive compensation survey and other data.

22

Principle 4.3 Roles and Responsibilities of the Board (3)The board should view the effective oversight of the management and directors from an
independent and objective standpoint as a major aspect of its roles and responsibilities. It should
appropriately evaluate company performance and reflect the evaluation in its assessment of the senior
management.
In addition, the board should engage in oversight activities in order to ensure timely and accurate
information disclosure, and should establish appropriate internal control and risk management systems.
Also, the board should appropriately deal with any conflict of interests that may arise between thecompany and its related parties, including the management and controlling shareholders.

The Board of Directors evaluates the Company’s performance and reflects this evaluationin its assessment and compensation of management. The Board of Directors also monitors
quarterly financial performance and other important performance indicators, and ensures
the accurate and timely disclosure of corporate performance information.
Regarding internal control systems including risk management systems, the Board of
Directors delegates to Representative Executive Officers the establishment of internal
control systems in accordance with the policies determined by the Board of Directors, andmonitors such execution by receiving regular reports on the levels of achievement. Throughsuch activities, the Board of Directors promotes further improvements of the systems.
Moreover, the Company requires that any potential conflict of interest trades bymanagement be approved in advance by the Board and that all directors submit an annual
report to the Board regarding whether or not they have participated in any such trades andthe nature of any trades in which they were involved. Although the Company does not havea controlling shareholder, it requires that any deals involving an entity holding 5% or moreof the Company’s stock on a voting rights basis be approved in advance by the Board of
Directors and that all directors submit a quarterly report to the Board regarding whether or
not they have participated in any such deals and the nature of any deals in which they wereinvolved.

Supplementary Principle 4.3.1
The board should ensure that the appointment and dismissal of the senior management are based onhighly transparent and fair procedures via an appropriate evaluation of the company’s business results.

Appointments and dismissals of senior management are determined by the Board of
Directors after consideration by the Nominating Committee, which is comprised entirely of
independent directors, upon the basis of the respective individual’s performance and suitability.

Supplementary Principle 4.3.2
Because the appointment/dismissal of the CEO is the most important strategic decision for acompany, the board should appoint a qualified CEO through objective, timely, and transparent
procedures, deploying sufficient time and resources.

23

The Company transitioned to the “Company with Nominating Committee etc.” Model inMarch 2016. The Board has determined that one function of the Nominating Committee,
which is composed solely of independent directors, is developing proposals regarding theappointment of Representative Executive Officers.
The Nominating Committee identifies and evaluates adequate successor candidates for
Representative Executive Officers through sharing management strategy and exchanging
opinions with executive officers and SBU*1 management, and submits a proposal to theBoard regarding the appointment of Representative Executive Officers.
The Board of Directors subsequently thoroughly deliberates such proposals and makes
final decisions at a Board meeting at which the majority of Board members are independent
directors. *1 SBU: Strategic Business Unit
An organizational unit classified by region of business for the purpose of management
co-ordination within the Bridgestone group. Currently, the group is divided into four
regional units: Japan; the Americas; Europe, Russia, the Middle East, India, and Africa; andChina, Asia, and Oceania.

Supplementary Principle 4.3.3
The board should establish objective, timely, and transparent procedures such that a CEO is
dismissed when it is determined, via an appropriate evaluation of the company’s business results,
that the CEO is not adequately fulfilling the CEO’s responsibilities.

Subsequent to adopting the “Company with Nominating Committee etc.” Model in March
2016, in addition to the proposal of motions for the dismissal of Representative Executive
Officers by a board member, motions for dismissal may also be proposed by the
Nomination, Audit or Compensation Committees as shown in the following diagram. Shouldsuch a motion be proposed it would be deliberated upon by the board, which is made up ofa majority of independent directors.
Member of Board

Article 366 of Companies Act andInternal Rules on the Board of Directors

Member of
Nominating Committee

Nominating Committee

Member of
Audit Committee
Member ofCompensation Committee

Calling ofCommittee(Internal Rulesof Each Committee)

Audit Committee
Compensation Committee

Board of Directors
Calling of
the Board(Article 417 ofCompanies Act)

8 of 12 directors are
independent direstors

Supplementary Principle 4.3.4
The establishment of effective internal control and proactive risk management systems forcompliance and financial reporting has the potential of supporting sound risk-taking. The board
should place priority on the appropriate establishment of such systems and the oversight ofwhether they effectively operate, and should not limit itself to the examination of compliancewith respect to specific business operations.

24

The Board of Directors reviewed the policies for internal control systems including risk
management systems and, on May 17, 2021, determined the updated policies.
The Board of Directors also delegates to Representative Executive Officers theestablishment of internal control systems in accordance with the policies determined by the
Board of Directors, and monitors such execution by receiving regular reports on the levels ofachievement.

Principle 4.4 Roles and Responsibilities of the Member ofthe Audit Committee and the Audit Committee
The audit committee should bear in mind their fiduciary responsibilities to shareholders andmake decisions from an independent and objective standpoint when executing their roles andresponsibilities including the audit of the performance of directors’ duties, appointment anddismissal of external auditors and the determination of auditor remuneration.
Although so-called “defensive functions,” such as business and accounting audits, are part of
the roles and responsibilities expected of the member of the audit committee and the audit
committee, in order to fully perform their duties, it would not be appropriate for the member of
the audit committee and the audit committee to interpret the scope of their function too
narrowly, and they should positively and proactively exercise their rights and express their views
at board meetings and to the management.

The Audit Policy set out annually by the Audit Committee states that it should perform its
duties from an independent and unbiased perspective and contribute to the sounddevelopment of the Company. In accordance with this policy the Audit Committee
supervises the performance of directors, sets the compensation for and appoints anddismisses External Accounting Auditors.
Additionally, the Audit Committee actively collects information and voices its opinion atmeetings of the Board of Directors in accordance not only with issues of legality but also in
regards to the adequacy of policies and deliberations.

Supplementary Principle 4.4.1
Given that more than half of the Audit Committee must be composed of outside director andthat the system needed to execute the duties must be decided in board of directors in accordancewith the Companies Act, the audit committee should, from the perspective of fully executing its
roles and responsibilities, increase its effectiveness through an organizational combination of the
independence of the former and the information gathering power of the latter. In addition, themember of audit committee or the audit committee should secure cooperation with outside
directors who are not the member of audit committee so that such directors can strengthen theircapacity to collect information without having their independence jeopardized.

The Company, as a “Company with Nominating Committee, etc.” in accordance with theCompanies Act of Japan, has established an Audit Committee comprised of a majority of
independent directors. In addition, in order to enhance the Audit Committee’s capacity tocollect information, two of the committee members are currently full-time appointees who
attend important corporate meetings in addition to Board Meetings, receive regular reports

25

from executives, attend meetings held in operating divisions and actively engage in thecollection of information within the company. In order to assist the Audit Committee theCompany has appointed a full-time executive director in charge of audits, and has
established a dedicated department in the internal auditing division under their direction to
support the Audit Committee. Information gathered by the full-time audit committee
members, along with that gathered by the executive director in charge of audits, is reported
to the Audit Committee in order to enhance the effectiveness of audits by promoting theobjectivity and impartiality of their deliberations.
Moreover, in addition to the regular reports on Audit Committee activities to the Board of
Directors, access to information by independent directors not serving on the Audit
Committee is provided through committees and other meetings comprised exclusively of
independent directors.

Principle 4.5 Fiduciary Responsibilities of Directors
With due attention to their fiduciary responsibilities to shareholders, the directors and the
management of companies should secure the appropriate cooperation with stakeholders and act
in the interest of the company and the common interests of its shareholders.

There are currently eight Independent Directors serving on the Board. Each Independent
Director actively participates in Board and committee meetings and promotes theconsideration of shareholder and stakeholder interests. All Directors and Executive Officers
act in the interest of the Company and its shareholders in accordance with the business
policies and strategic plans determined by the Board.

Principle 4.6 Business Execution and Oversight of the Management
In order to ensure effective, independent and objective oversight of the management by theboard, companies should consider utilizing directors who are neither involved in businessexecution nor have close ties with the management.

As of May 2021, of the twelve directors currently serving on the Board, ten are
non-executive directors, eight are Independent Directors and two full-time members of the
Audit Committee.
In order to further ensure the effectiveness of the board in its role of monitoring
management, the Company appointed an independent director as the chairperson of theBoard of Directors, at the board meeting convened immediately following the Annual
Shareholders’ Meeting held on March 26, 2021.

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Principle 4.7 Roles and Responsibilities of Independent Directors
Companies should make effective use of independent directors 6 , taking into consideration the
expectations listed below with respect to their roles and responsibilities:i) Provision of advice on business policies and business improvement based on theirknowledge and experience with the aim to promote sustainable corporate growth andincrease corporate value over the mid- to long-term;ii) Monitoring of the management through important decision-making at the board including
the appointment and dismissal of the senior management;iii)Monitoring of conflicts of interest between the company and the management or controllingshareholders; andiv) Appropriately representing the views of minority shareholders and other stakeholders in theboardroom from a standpoint independent of the management and controlling shareholders.
6 Independent director: The listing rules of securities exchanges provide that the outside directors, as defined in the Companies Act, areindependent directors where they satisfy independence criteria of securities exchanges and the company determines that they do nothave the possibility of conflicts of interest with its shareholders.

In addition to the establishment of a Governance Committee as an advisory committee tothe Board of Directors comprised entirely of Independent Directors, the Company strives topromote the role of Independent Directors by the following means:i) The Company strengthens its corporate governance by nominating independent directors
with a wealth of experience and expertise from a wide variety of different backgrounds
and disciplines to deliberate management policies and strategies at the Board level.
ii) Executive officers are nominated and dismissed by the Board in accordance with thedeterminations of the Nominating Committee which is comprised exclusively of
Independent Directors.
iii) In accordance with the Regulations of the Board of Directors the Company requires thatany outside transactions by executive officers and Directors including Independent
Directors that may constitute a potential conflict of interest with the Company beapproved in advance by the Board and that all directors submit a report to the Board onan annual basis regarding whether or not they have been involved in any suchtransactions. Although the Company does not have a controlling shareholder, it requiresthat any transactions involving an entity holding 5% or more of the Company’s stock on avoting rights basis be approved of in advance by the Board of Directors and that all
directors submit a report to the Board on an quarterly basis regarding whether or notthey have been involved in any such transactions.
iv) In order to ensure the objectivity of external directors the Company has established its
own Independence Standard. Currently eight Independent Directors serve on the Board ofwhich all eight meet the conditions set forth under this standard for independence
thereby ensuring that they objectively represent the interests of shareholders and otherstakeholders and have no conflicts of interest with general shareholders.

27

Principle 4.8 Effective Use of Independent Directors
Independent directors should fulfill their roles and responsibilities with the aim of contributing tosustainable growth of companies and increasing corporate value over the mid- to long-term. Companies
should therefore appoint at least two independent directors that sufficiently have such qualities.
Irrespective of the above, if a company believes it needs to appoint at least one-third of directors as
independent directors based on a broad consideration of factors such as the industry, company size,
business characteristics, organizational structure and circumstances surrounding the company, it should
appoint a sufficient number of independent directors.

Currently, eight members of the board qualify as Independent Directors.

Supplementary Principle 4.8.1
In order to actively contribute to discussions at the board, independent directors should
endeavor to exchange information and develop a shared awareness among themselves from an
independent and objective standpoint. Regular meetings consisting solely of independent
directors (executive sessions) would be one way of achieving this.

As a “Company with Nominating Committee, etc.”, Independent Directors comprise themajority of both the Company’s Board of Directors and, Audit Committee, while theNominating, Compensation and other discretionary committees are comprised entirely of
Independent Directors thus enabling a higher level of information exchange andopportunities to share awareness between independent directors.

Supplementary Principle 4.8.2
Independent directors should endeavor to establish a framework for communicating with the
management and for cooperating with the member of the audit committee or the audit
committee by, for example, appointing the lead independent director from among themselves.

Meetings are held on a regular basis between Independent Directors and members ofcorporate management in order to ensure a sufficient degree of information exchange.

Principle 4.9 Independence Standards and Qualification for
Independent Directors
Boards should establish and disclose independence standards aimed at securing effective
independence of independent directors, taking into consideration the independence criteria set by
securities exchanges. The nominating committee should endeavor to select independent director
candidates who are expected to contribute to frank, active and constructive discussions at board meetings.

The Company has established its own Standards of Independence entitled the “Guidelines fordetermining whether outside directors are sufficiently independent” which has been filed with
the Tokyo Stock Exchange and made publicly available on the corporate website:
https://www.bridgestone.com/corporate/library/corporate_governance/pdf/Guidelines_for_De
ter mining_Whether_Outside_Directors_are_Sufficiently_Independent.pdf

28

To further enhance corporate governance, the Nominating Committee selects candidates withextensive experience and who are expertly qualified in a wide variety of diverse backgrounds
and disciplines for Board membership.

Principle 4.10 Use of Optional Approach
In adopting the most appropriate organizational structure (as stipulated by the Companies Act)
that is suitable for a company’s specific characteristics, companies should employ optional
approaches, as necessary, to further enhance governance functions.

The company has adopted the governance model of the “Company with Nominating
Committee, etc.” and, in addition to the mandatory committees required within this model,
has established Governance and Compliance Committees to serve as advisory committees
to the Board in order to further enhance the input from Independent Directors.

Supplementary Principle 4.10.1
If the organizational structure of a company is either Company with Kansayaku Board orCompany with Supervisory Committee and independent directors do not compose a majority of theboard, in order to strengthen the independence, objectivity and accountability of board functions on
the matters of nomination and remuneration of the senior management and directors, the company
should seek appropriate involvement and advice from independent directors in the examination ofsuch important matters as nominations and remuneration by establishing independent advisorycommittees under the board, such as an optional nomination committee and an optional
remuneration committee, to which independent directors make significant contributions.

This principle does not apply to the Company since it has adopted the “Company with
Nominating Committee, etc.” model of corporate governance.

Principle 4.11 Preconditions for Board and Audit Committee EffectivenessThe board should be well balanced in knowledge, experience and skills in order to fulfill its roles
and responsibilities, and it should be constituted in a manner to achieve both diversity, including
gender and international experience, and appropriate size. In addition, persons with appropriate
experience and skills as well as necessary knowledge on finance, accounting, and the law should be
appointed as the member of the audit committee. In particular, at least one person who has sufficientexpertise on finance and accounting should be appointed as the member of the audit committee.
The board should endeavor to improve its function by analyzing and evaluating effectiveness of theboard as a whole.

The Board of Directors is currently comprised of twelve total members, including fourinternal directors (two of whom are Audit Committee members) and eight Independent
Directors (regarding the selection of the chairperson of the Board of Directors from among
Independent Directors, please see Principle 4.6.) In order to achieve a balance and tomaintain a board composition capable of realizing the Mission and strategy of the Company
while ensuring the effectiveness and diversity of the Board of Directors and Audit
Committee, board members are nominated in order to maintain a balanced portfolio across

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a comprehensive range of professional and academic fields including management, finance,accounting and law.
The background and expertise of independent directors are summarized in Section 4(Corporate Governance) Item 2 (Officers) in the Company’s Annual Securities Report (asrequired by the Financial Instruments and Exchange Law of Japan).
https://www.bridgestone.co.jp/ir/library/securities/pdf/101.pdf
The Board of Directors engages in the ongoing analysis and evaluation of theeffectiveness of the board’s deliberations – including those of the advisory committees – aspart of its efforts to further strengthen and promote effective corporate governance.

Supplementary Principle 4.11.1
The nominating committee should have a view on the appropriate balance between knowledge,
experience and skills of the board as a whole, and also on diversity and appropriate board size.
Consistent with its view, the board should establish policies and procedures for nominating
directors and disclose them along with its view.

The Nominating Committee, in selecting candidates for nomination to the board, seeks tomaintain diversity and, at the same time, overall balance in board composition with respect
to knowledge, experience and skills taking into consideration, for the Internal Director
candidates, business experience, and, for the Independent Director candidates, experienceand expertise from a wide variety of disciplines and fields. Additionally, it is the basic policyof the Company that the Board should be of sufficient size so as to enable adequate debate
and deliberation.
The policies and procedures for nominating directors are set out in principle 3-1 (iv).

Supplementary Principle 4.11.2
Outside directors and other directors should devote sufficient time and effort required toappropriately fulfill their respective roles and responsibilities. Therefore, where directors also serve
as directors, kansayaku or the management at other companies, such positions should be limited
to a reasonable number and disclosed each year.

As disclosed in the Annual Business Report and reference documents distributed at theAnnual General Shareholders’ Meeting, the attendance rate for all external directors during
2017 was high thus facilitating both active and objective deliberations at all board meetings.
As part of the process for considering candidates for nomination to the board theirconcurrent commitments to other companies and organizations, including board
memberships, are reviewed and taken into consideration. Other commitments for all
directors are reviewed annually and reported in the Annual Business Report.

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Supplementary Principle 4.11.3
Each year the board should analyze and evaluate its effectiveness as a whole, taking into
consideration the relevant matters, including the self-evaluations of each director. A summary of
the results should be disclosed.

In order to strengthen its corporate governance and promote the speed of businessexecution the Company has regularly reviewed its governance performance and continually
implements reforms to its governance systems and processes (as a part of this process theCompany introduced Independent Directors in 2010, between 2013 and 2014 established
Nominating, Compensation, Governance and Compliance committees as advisorycommittees to the board, adopted the “Company with Nominating Committee, etc.” modelof corporate governance in 2016, separated the existing roles of “CEO” and “Chairman of theBoard” in 2020, and abolished the full-time position of “Chairman” and elected an
Independent Director to the newly defined role of Chairperson of the Board of Directors in2021).
Building upon these enhancements the scope for the evaluation of Board effectivenesshas been taken to include not only the Board and the committees required under the“Company with Nominating Committee, etc.” Model (Nominating, Auditing andCompensation Committees) but also the advisory committees (Governance and Compliance
Committees). With the objective of strengthening corporate governance, the entire scope ofboard functions (the Board and all five committees – both legally required and advisory) is
subject to annual evaluation in a process which involves a review of all board deliberations
and their outcomes and self-evaluations of all directors. The following diagram illustrates
the structure and scope of this evaluation process.
Diagram of Board Evaluation Scope
General Meeting of Shareholders
Board of Directors (12)(includes 8 independent directors; chairperson: independent director)
Nominating Committee (3 independent directors)

Inquiry

Governance Committee

ReportCompliance Committee

Compensation Committee (3 independent directors)

Management OversightOperational execution
Representative Executive Officers (2)Executive Officers (4)(including one foreign member)

Executive Director, responsible for Internal Auditing
Internal Auditing OfficeInternal
Audit

Global CEO

Global EXCO
(Global Executive Committee)
Executive Officers and Corporate Officers (10)(including six foreign members)

Global COO
Other policy management meetings
Officer Nomination and Compensation Meeting

SBUs (Strategic Business Unit)
Domestic / overseas Group
companies & internal companies

Internal Control Systems

CEO

COO

SupportGBS(Global Business Support)

Accounting
audit

Independent Auditors

Audit Committee (5 independent directors +2 internal directors)

Advisory Committee to the Board of Directors

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The annual Board evaluation process requires the Board and each Committee to complete aformal self-evaluation process the results of which are then submitted to the Board where theoverall effectiveness of the Board’s operation and governance performance level is evaluated. The
preceding diagram illustrates the overall schedule and procedure of this evaluation process.
As a result of this Board evaluation in 2020, it has been determined that decision-making
ensures transparency and that the oversight functions of the Board are being carried out throughtimely reports to the Board for deliberation, productive discussions among members of the Board,
active deliberations at Board meetings taking the various perspectives of external independent
directors into account and the ongoing efforts of the legally- required and advisory committees tocreate an organization of global awareness.
With regard to the status of business execution, the Global CEO and Representative Executive
Officers shared information with the Board of Directors in a timely and appropriate manner basedon reports of deliberations held at the Global Executive Committee (Global EXCO) meetings, whichis the highest global level executive body within the group. As such, discussions between directors
and executive officers have been further enhanced in the process of formulating the Mid TermBusiness Plan based on the Mid-Long Term Business Strategy. In addition, the separation of theroles of the Chairman of the Board and Global CEO in March 2020 has further enhanced theobjectivity and transparency of the board and promoted active discussions among the directors. In
March 2021, the Company selected an independent director as the chairperson of the Board of
Directors. The Board of Directors will continue to work to strengthen governance and continuously
actively seek opportunities to further improve the overall function of the Board of Directors.

Principle 4.12 Active Board Deliberations
The board should endeavor to foster a climate where free, open and constructive discussions
and exchanges of views take place, including the raising of concerns by outside directors.

The Company provides preliminary briefing sessions for independent directors pertaining to
all items tabled on the Board agenda and, where necessary, holds special joint briefing
meetings on issues of importance in order to promote full understanding among independent
directors of all business and related issues salient to items for deliberation or reporting andthus promote rigorous debate and deliberation among all directors at Board meetings.

Supplementary Principle 4.12.1
The board should ensure the following in relation to the operation of board meetings and shouldattempt to make deliberations active:i) Materials for board meetings are distributed sufficiently in advance of the meeting date;ii) In addition to board materials and as necessary, sufficient information is provided todirectors by the company (where appropriate, the information should be organized and/or
analyzed to promote easy understanding);iii)The schedule of board meetings for the current year and anticipated agenda items are
determined in advance;iv) The number of agenda items and the frequency of board meetings are set appropriately; andv) Sufficient time for deliberations

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The Company endeavors to promote open and comprehensive deliberations by the Boardof Directors by the following means:i) As stipulated in internal regulations, material relating to Board agenda items must be
delivered to Directors at least two days in advance.
ii) The Governance Planning Section reporting directly to Vice President and Senior Officer
implements preliminary briefing sessions on Board agenda items for independent
directors and responds to all questions and requests for additional information arising
therefrom. In addition, when deemed necessary, special joint briefing meetings on issues
pertinent to Board agenda items or concerns are held in order to further enhance theinformation available to Board members.
iii) The annual schedule of the Board of Directors and the regular agenda items to bedeliberated at each meeting are determined by the end of the previous year after
coordination and consultation in advance with all Board members.
iv) The Company sets guidelines defining issues that must be submitted to the Board of
Directors and plans the agenda and frequency of Board meetings accordingly.
v) The Company allocates time for deliberation for each Board meeting, based upon thetime required to deliberate similar agenda in the past where appropriate. In cases where
deliberations cannot be concluded within the allocated time frame, they will continue
until such time as they can be concluded satisfactorily.

Principle 4.13 Information Gathering and Support Structure
In order to fulfill their roles and responsibilities, directors should proactively collect information, andas necessary, request the company to provide them with additional information.
Also, companies should establish a support structure for directors, including providing sufficient staff.
The board should verify whether information requested by directors is provided smoothly.

Board members obtain information through regular executive reports to the Board andCommittees and are able to request any additional information they may deem necessary
for the fulfillment of their roles and responsibilities. The Board and relative Committees
actively monitor the quality and speed of responses to these requests for additional
information.
In addition, in order to promptly and fully respond to requests for support and informationfrom Independent Directors the Company provides administrative and clerical support via
the Governance Planning Section reporting directly to Vice President and Senior Officer andinternal auditing office.

Supplementary Principle 4.13.1
Directors, including outside directors, should request the company to provide them withadditional information, where deemed necessary from the perspective of contributing totransparent, fair, timely and decisive decision-making. In addition, the member of the audit
committee, including the outside directors, should collect information appropriately, including theuse of their statutory investigation power.

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Directors may at any time request additional information from the Governance Planning
Section reporting directly to the Vice President and Senior Officer and all executive andoperating divisions are required to respond promptly to all such requests. In addition,members of the Audit Committee share among themselves information which they may
have gained independently or through the support of the internal auditing office.

Supplementary Principle 4.13.2
Directors should consider consulting with external specialists at company expense, where they
deem it necessary.

The company provides Directors with access at corporate expense to external experts
including consultants and lawyers at their request.

Supplementary Principle 4.13.3
Companies should ensure coordination between the internal audit department and directors. In
addition, companies should take measures to adequately provide necessary information to outside
directors. One example would be the appointment of an individual who is responsible forcommunicating and handling requests within the company such that the requests for information
about the company by outside directors are appropriately processed.

In order to promote coordination between the internal auditing office and directors theCompany appoints a full-time executive director in charge of auditing in order to support the
Audit Committee. In addition, in order to promptly and fully respond to requests for supportand information from Independent Directors the Company provides administrative andclerical support via the Governance Planning Section reporting directly to Vice President andSenior Officer.

Principle 4.14 Director Training
New and incumbent directors should deepen their understanding of their roles andresponsibilities as a critical governance body at a company, and should endeavor to acquire andupdate necessary knowledge and skills. Accordingly, companies should provide and arrange training
opportunities suitable to each director along with financial support for associated expenses. The
board should verify whether such opportunities and support are appropriately provided.

Directors are given briefings regarding their responsibilities, corporate policies andprocedures, and provided opportunities to enhance understanding of their roles andresponsibilities through training sessions, and factory and facility visits at the Company’s
expense. The Board of Directors formally reviews the effectiveness of these training
activities on an annual basis.

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Supplementary Principle 4.14.1
Directors, including outside directors, should be given the opportunity when assuming theirposition to acquire necessary knowledge on the company’s business, finances, organization andother matters, and fully understand the roles and responsibilities, including legal liabilities,
expected of them. Incumbent directors should also be given a continuing opportunity to renew andupdate such knowledge as necessary.

The Company provides newly appointed Members of the Board and Executive Officers
with briefings regarding the Company’s mid-long term business strategy, business
operations, responsibilities and rights of board members and other relevant policies andprocedures before appointment. In addition to training sessions for Members of the Board
and Executive Officers held once every two months, opportunities to visit the company
factories and facilities are also provided.

Supplementary Principle 4.14.2
Companies should disclose their training policy for directors.

In order to enable directors to fully exercise their supervisory function the Company
provides newly appointed directors with detailed briefings regarding the Company’s
mid-long term business strategy, operations, the responsibilities of directors as set forth
within the Corporate Regulations for Directors and other relevant regulations. Subsequent
to their appointment, all directors are invited to participate in regular training sessions
covering a variety of topics chosen to promote their understanding of issues with relevanceto the company’s activities. Independent Directors also participate in regular site visits tofactories and corporate facilities in order to promote their understanding of theenvironment and issues facing the Company. Additional training sessions may be held at therequest of directors on an ad hoc basis regarding topics deemed relevant.

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Section 5: Dialogue with Shareholders

General Principle 5
In order to contribute to sustainable growth and the increase of corporate value over the mid- tolong-term, companies should engage in constructive dialogue with shareholders even outside the generalshareholder meeting.
During such dialogue, senior management and directors, including outside directors, should listen to
the views of shareholders and pay due attention to their interests and concerns, clearly explain business
policies to shareholders in an understandable manner so as to gain their support, and work for developing
a balanced understanding of the positions of shareholders and other stakeholders and acting accordingly.

In order to achieve sustainable growth and enhance corporate value over the mid to longterm, the Company considers that it is important to consider the opinions and expectationsof shareholders when formulating business policies.
The Company has therefore established a specialist department to manage IR (Investor
Relations) which, by facilitating discussions with shareholders and investors by bothindividual and financial performance meetings for analysts, aims to promote better
understanding of the Company’s business strategy and establish a system whereby it can
respond appropriately to the opinions and expectations voiced by shareholders.

Principle 5.1 Policy for Constructive Dialogue with Shareholders
Companies should, positively and to the extent reasonable, respond to the requests from shareholders
to engage in dialogue (management meetings) so as to support sustainable growth and increase corporate
value over the mid- to long-term. The board should establish, approve and disclose policies concerning themeasures and organizational structures aimed at promoting constructive dialogue with shareholders.

The Company has established a department specifically to respond to requests forindividual meetings with shareholders. The Company not only holds financial performancemeetings for analysts and discussions with investors but also offers plant visits and a range
of opportunities to promote dialogue with shareholders. The corporate policy for promoting
dialogue with shareholders is as follows:
The Company proactively engages in dialogue with shareholders and investors in order toachieve sustainable business growth and enhance corporate value over the mid to long term.
In order to promote constructive engagement with shareholders and investors in addition
to engaging in the fair and impartial disclosure of information in accordance with Japan’s
Financial Instruments and Exchange Act and the regulations of stock exchanges where theCompany’s shares are listed, it is the basic policy of the Company that, even in the absence ofsuch legal requirements, information considered by the Company to be of relevance toshareholders and investors, and which can be released, should also be disclosed in a timely
and ongoing manner.

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In this manner the Company seeks to promote the understanding of its performance andoperations in order that its corporate value be accurately assessed.
The Company has established a dedicated IR Department reporting directly to the Global
CFO to manage relations with shareholders and investor dialogue. Coordinating on an
ongoing basis with the Corporate Planning, General Affairs, Finance, Legal, Public Relations,and Sales departments the IR Department serves to promote constructive dialogue withshareholders by disclosing not only financial data but also information of a non-financial
nature.
In addition to regular communication with domestic and overseas investors in order topromote their understanding of business strategies, financial conditions, and operations, theCompany also conducts quarterly press meetings regarding its financial results via real-timestreaming. During the meetings, in addition to the announcement of quarterly financial
results, the Global CEO explains the progress of the Mid-Long Term Business Strategy and the
Mid Term Business Plan. As a follow-up, IR meetings for analysts and domestic institutional
investors are held several times a year to further promote understanding of strategies andexchange of opinions. Furthermore, as a follow-up to the above, the Company holds IR
meetings for analysts and domestic institutional investors several times a year in order tofurther promote understanding of strategies and exchange of opinions. Communication withindividual shareholders is also being promoted by the release of materials related toquarterly financial performance meetings and video recordings of these meetings including
questions and answer periods, and press releases on the corporate website.
Information from shareholders obtained through these activities are compiled into reports
which are reviewed and discussed at internal meetings held at relevant departments,
transmitted to executive management and reported to the Board.
In addition to IR activities the Company also engages in Shareholder Relations (SR)
activities whereby representatives of the Company will visit shareholders in order to explain
the Company’s business policies, approach towards and structure of governance, andcorporate proposals for the Annual General Shareholders’ Meeting.
However, the Company does not engage in shareholder and or investor dialogue inperiods preceding earnings announcements in order to avoid the risks related to insider
information and has established rules and procedures for the internal management ofpotential insider information.

Supplementary Principle 5.1.1
Taking the requests and interests of shareholders into consideration, to the extent reasonable,
the senior management and directors, including outside directors, should have a basic position to
engage in dialogue (management meetings) with shareholders.

The IR department is responsible for facilitating dialogue with shareholders. In cases where
it is deemed necessary members of the Board of Directors including the Global CEO and/or
Global COO may participate in meetings with shareholders depending upon the nature of
requests, objectives and content of the topics to be discussed.

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Supplementary Principle 5.1.2
At minimum, policies for promoting constructive dialogue with shareholders should include thefollowing:i) Appointing a member of the management or a director who is responsible for overseeing
and ensuring that constructive dialogue takes place, including the matters stated in items ii)to v) below;ii) Measures to ensure positive cooperation between internal departments such as investor
relations, corporate planning, general affairs, corporate finance, accounting and legal affairs
with the aim of supporting dialogue;iii)Measures to promote opportunities for dialogue aside from individual meetings (e.g.,general investor meetings and other IR activities);iv) Measures to appropriately and effectively relay shareholder views and concerns learned
through dialogue to the senior management and the board; andv) Measures to control insider information when engaging in dialogue

The Company policy for the promotion of constructive dialogue with shareholders isoutlined above in Principle 5-1.

Supplementary Principle 5.1.3
Companies should endeavor to identify their shareholder ownership structure as necessary, and
it is desirable for shareholders to cooperate as much as possible in this process.

The Company conducts regular surveys twice yearly to determine shareholder
composition. The information thus obtained is used for IR activities both overseas anddomestically.

Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans
When establishing and disclosing business strategies and business plans, companies should
articulate their earnings plans and capital policies, and present targets for profitability and capitalefficiency after accurately identifying the company’s cost of capital. Also, companies should provide
explanations that are clear and logical to shareholders with respect to the allocation of management
resources, such as reviewing their business portfolio and investments in fixed assets, R&D, andhuman resources, and specific measures that will be taken in order to achieve their plans and targets.

The Company has formulated its mid-long term business strategy to indicate its basic
approach to medium to long-term group management. In order to achieve this goal, a Mid
Term Business Plan, has been formulated which clarifies our plans regarding financial
targets (sales revenue, adjusted operating income, adjusted operating margin, ROIC, andROE), business portfolio, major measures, and allocation of management resources over the
mid-to-long-term. The Company appropriately provides opportunities to explain theinformation regarding the above through meetings with investors and other communication
with stakeholders.