CORPORATE GOVERNANCE

Hitachi. Ltd.

Last Update: July 10, 2024

Hitachi, Ltd.
President & CEO Keiji Kojima
Contact: Legal Division (Phone No.: +81-3-3258-1111)
Securities Code: 6501
https://www.hitachi.com/

The corporate governance of Hitachi, Ltd. (the “Company”) is described below.

Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information
1. Basic View
The Company considers the growth of profits for shareholders and investors from a long-term perspective as an important managerial objective. As theCompany and the Hitachi Group have a wide range of stakeholders, from shareholders and investors to customers and clients, the Company realizes that building
good relationships with them forms an important part of its corporate value.
The Company is a Company with Nominating Committee, etc. under the Companies Act, aiming to establish a framework for quick business operation andto realize highly transparent management by separating responsibilities for management oversight and those for the execution of business operations. The
Company attempts to maintain an appropriate composition of the Board of Directors aiming to ensure the effectiveness of its management oversight functionin addition to reflect diverse global perspectives in management. As of the filing date of this report, the Board of Directors was made up of 12 Directors
elected at the general meeting of shareholders held in June, and nine of whom are Independent Directors (the directors who fulfill the qualification
requirements to be outside directors as provided by the Companies Act and also meet the independence criteria defined by the Company and those as provided
by Japanese stock exchanges where the Company is listed, unless otherwise stated). In May 2012, the Company established the Corporate Governance
Guidelines, which outlines the basic framework of corporate governance, including the roles that the Board of Directors should fulfill, and posted them on the
Company’s website.
https://www.hitachi.com/IR-e/corporate/governance/guidelines.html
In addition, the Company has positioned the Hitachi Group Code of Ethics and Business Conduct as behavior disciplines to be shared among the Group to
generate common values for the Group and promote understanding of the social responsibilities to be fulfilled by the Group.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company is implementing all principles of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code] Update<Principle 1.4 Cross-Shareholdings>(1) Policy regarding cross-shareholdings
Under the basic policy, the Company will not acquire and hold other companies’ shares except for cases where acquiring or holding such shares isnecessary in terms of transactions or business relationships. The Company will seek to sell reducing shares that it already owns unless the significanceand economic rationale of holding the shares are confirmed. The Board of Directors verifies whether it is appropriate to hold shares for all stock theCompany owns every year. In making this verification, each individual stock is re-examined as to the purpose of holding the shares and whether the
benefits from holding the shares are in line with the target level of capital efficiency. As the result of the verification, the Company seeks to sell sharesfor which significance of holding shares and economic rationale of holding the shares are not confirmed. In the fiscal year ended March 31, 2024 (fiscal
2023), the Company reduced the number of shares held in seven listed stocks (total amount sold: 222,876 million yen).
(2) Criteria for exercising voting rights of cross-shareholdings
The Company exercises voting rights from the perspective of increasing the corporate value of the Company and investee companies over the medium- tolong-term. In exercising voting rights, the following agenda items, etc., that may have a significant impact on the corporate value of investee companies, shallbe paid careful attention to collect the necessary information in order to determine approval or disapproval after scrutiny.
・Proposals for the appointment of Directors and Audit & Supervisory Board Members (in the event of a serious scandal or prolonged sluggish performance)
・Proposals related to reorganization
・Proposals related to the introduction of hostile takeover defense measures<Principle 1.7 Related Party Transactions>
Approval of the Board of Directors shall be required for transactions involving conflict of interest and competitive transactions by Directors and Executive
Officers. Said policies and procedures are stipulated in Article 15 of the Company’s Corporate Governance Guidelines as follows.
Article 15. (Conflicts of Interest)
All directors and executive officers shall not pursue interests of themselves or third parties that would constitute a real or perceived conflict of interest with
the Company.
Even without intentions to pursue interests described above, all directors and executive officers shall obtain approval by the Board resolution to conduct any
transactions that would constitute a conflict of interest or competition with the Company stipulated by the Companies Act of Japan.
Directors and executive officers who have their personal or professional interests in the above-mentioned transactions may not participate in the vote in the
Board resolution.
<Supplementary Principle 2.4.1>
The Company believes that diversity, equity, and inclusion (DEI) are sources of innovation and growth. By respecting and valuing individual differences inbackground, age, gender, sexuality, family status, disability, neurodiversity, nationality, race, ethnicity, religion, and values, the Company aims to be a company
in which every person makes a positive contribution. With a diverse workforce, broad experience, and an inclusive culture, the Company will meet its customer’s
needs and drives its sustainable growth.
Specifically, in addition to promoting all dimensions of diversity, the Company sets three common global DEI topics: Gender, Culture, and Generation, anddrives initiatives aligned to local needs and business strategies. The Company sets greater management diversity as a global DEI target, and by fiscal 2030, its
target is for 30% of its executives to be women and 30% to be non-Japanese persons as Key Performance Indicators (KPIs). As of June 2024, 11.8% of executives
were woman and 25.0% of executives were non-Japanese persons. In addition, the Company is working to ensure a diverse range of human resources andtransforming to job-based human resources management to maximize organizational and individual performance and improve engagement, by assigning theright people to the right jobs according to their personal abilities and motivations, regardless of their attributes such as nationality, gender, or age.
Information on the Company’s DEI strategies for the active participation of all human resources, including women, foreign nationals and people withexperience at other companies, and specific initiatives are disclosed in the Annual Securities Report, on the Company’s website and in the Sustainability Report,etc.
Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/Company website
https://www.hitachi.com/sustainability/index.html
Sustainability Reporthttps://www.hitachi.com/sustainability/download/index.html<Principle 2.6 Roles of Corporate Pension Funds as Asset Owners>
Hitachi Pension Fund (HPF) manages and administers the Company’s corporate pension reserves. In order to realize the safe and efficient operation ofreserves, HPF has issued management basic policies and operation guidelines decided by its Board of Representatives to trustees, receives reports on the statusof the management from those trustees on a regular basis, and appropriately supervises them while incorporating the specialized knowledge of external
specialized organizations as necessary. HPF also conducts regular monitoring of stewardship activities of the trustees. In order to appropriately manage
conflicts of interest that may arise between the beneficiaries of the corporate pension and the Company, HPF entrusts to the trustees the selection of investees
and the decision to exercise voting rights relative to investees.
The Company dispatches and assigns personnel with appropriate experience and abilities from the finance division and human capital division so that HPF
can enhance its management expertise and perform functions such as monitoring of the trustees.
In addition, in order to properly operate the retirement benefit system of the Group, the Company has established a committee chaired by the Executive
Officer in charge of pensions and members from executives of the finance division and human capital division to periodically check important matters on theoperation of the system and the status of pension finances. In addition, the Company established subsidiaries within the Group that provide investment advice,agency services, and investment management, and are working to efficiently manage pension assets for the entire Group by utilizing the human resources of
those subsidiaries who have specialized knowledge and abilities.
<Principle 3.1 Full Disclosure>(1) Management Philosophy, Management Strategy and Management Plan
In addition to the corporate philosophy and founding spirit that the Group has inherited since its founding, the Hitachi Group Vision, which shows the ideal
form of the Group in the future, is systematized as the Hitachi Group Identity and disclosed on the Company’s website.
https://www.hitachi.com/corporate/about/identity/
The Company has formulated and disclosed a three-year Mid-term Management Plan from fiscal 2022.
https://www.hitachi.com/IR-e/library/strategy/index.html#Presentation2024(2) Basic views and guidelines on corporate governanceSee “1. Basic Views” above and the Company’s website.
https://www.hitachi.com/IR-e/corporate/governance/(3) Policies and procedures for determining remuneration for senior management and Directors
In accordance with the provisions of the Companies Act, the Compensation Committee, which is made up of a majority of Independent Directors, determines
the policy for determining the details of remuneration for Directors and Executive Officers, and the details of individual remuneration (such as the amount of
remuneration, etc.) based on it. For the policy on determining the amount of remuneration, etc., see “Disclosure details of the policy for determining theamount of remuneration related to Directors and Executive officers and the calculation method” described below.
(4) Policies and procedures for the appointment and dismissal of Executive Officers and the nomination of candidates for Directors, as well as explanation of
the appointment and dismissal of Executive Officers and the nomination of candidates for Directors■ Policies and procedures for the appointment and dismissal of Executive Officers
At the Company, in accordance with the provisions of the Companies Act, the Board of Directors decides the appointment and dismissal of Executive
Officers, including the Chief Executive Officer, in order to establish an optimal business execution system for the Company’s management. The Nominating
Committee deliberates in advance on the appointment and dismissal of the Chief Executive Officer, and the Board of Directors makes a decision taking into
consideration the Nominating Committee’s proposal.
Personnel appointments of other Executive Officers shall also be reported to the Nominating Committee prior to the decision of the Board of Directors. Since
the term of office of Executive Officers of the Company is one year (until the last day of the fiscal year ending within one year after selection), the structureof Executive Officers follows a process every year of being reported to and deliberated by the Nominating Committee and decided by the Board of Directors.
The succession planning for the Chief Executive Officer and the policy for appointment and dismissal, etc. is disclosed on the Company’s website.
https://www.hitachi.com/IR-e/corporate/governance/system/■ Policies and procedures for the nomination of candidates for Directors
At the Company, in accordance with the provisions of the Companies Act, the Nominating Committee determines candidates for Directors. Matters need tobe considered in determining candidates for Directors such as the size of the Board of Directors, the composition and aptitude of Directors, and the
independence of Independent Directors are disclosed on the Company’s website.
https://www.hitachi.com/IR-e/corporate/governance/initiatives/
Regarding the appointment of individual executives and the nomination of candidates for Directors, the reasons for appointment/nomination and individual
backgrounds are disclosed in the Notice of Annual General Meeting of Shareholders and the Annual Securities Report. When a new Chief Executive Officer
or President is appointed, the Company makes efforts to enhance external explanation.
Notice of Annual General Meeting of Shareholders
https://www.hitachi.com/smeet-e/
Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/<Supplementary Principle 3.1.3>(1)
Sustainability initiatives
The Group practices sustainable management and places sustainability at the center of its business strategy and setting itself the goal of contributing to therealization of a sustainable world as a global leader of the Social Innovation Business.

In April 2022, the Company formulated the Mid-term Management Plan 2024 in order to conduct management from a long-term perspective, maximize theuse of diverse management resources, promote the Social Innovation Business, and address increasingly complex global issues. In the Mid-term Management
Plan 2024, the Company declared its new goal of “supporting people’s quality of life with data and technology that fosters a sustainable society.” The Company
further evolve its Social Innovation Business driven by three growth drivers: Digital, Green, and Innovation, and contribute to solve social issues, in order torespect for planetary boundaries to protect the environment and realize wellbeing for all individuals (being in a good physical, mental, and social condition).
The Company will also grow Lumada globally as a customer co-creation framework and accelerate business expansion.
In addition, the Company addresses the priority items: Environment, Resilience, Safety & Security, Healthcare, Harmonious Coexistence of People andNature, DEI, Integrity in Management, and Enhancing Quality of Life, in order to provide value to customers and society through the enhancement of humancapital in the Mid-term Management Plan 2024.
Specific details of its sustainability initiatives are disclosed in the Annual Securities Report, on the Company’s website and in the Sustainability Report, etc.
Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/Company website
https://www.hitachi.com/sustainability/
Sustainability Reporthttps://www.hitachi.com/sustainability/download/index.html(2)
Investment in human capital
The Company believes that human capital – in other words, people – are the source of our value. Therefore, the Company leverages the combined power ofour global network of employee and aims to contribute to the realization of a sustainable society by providing value to customers and society. The Company
formulated the 2024 Human Resources Strategy based on the Mid-term Management Plan 2024, which defines its vision of becoming an employer of choicein the global marketplace, by developing an organization in which human resources oriented toward social contribution gather and thrive. To realize that vison,
the Company defined a Foundation based upon three strategic pillars: People, Mindset, and Organization.
As a concrete initiative, in order to select and develop global management leaders, the Company is implementing intensive training for both On-the-job
training and Off-the-job training, including tough assignments and the provision of opportunities to discuss matters with managers and outside directors, for
the GT +, a talent pool of candidates for management leadership, and the Future 50, which is a selection of young and promising employees among them.
Aiming to achieve expansion of the Lumada business, a growth driver for the Company, the Company is securing and cultivating the Digital talents who will
drive digital transformation (DX) by acquiring global human resources such as personnel at GlobalLogic Inc. and expanding the company’s own DX training
system and development programs based on practical experience. The Company monitors employee engagement annually through Hitachi Insights, a global
employee survey, and work to plan and promote human capital measures in order to improve employee engagement. In addition to these, the Company has
been working to improve individual capabilities and specialties through Title-Specific Management Training for managers and career development support
for employees, to introduce job descriptions and “Learning Experience Platform (LXP): a platform that AI interface recommends internal and external learning
content according to the career aspirations” for a transformation to job-based human resources management, and to introduce support systems to promote“work-life management”, which encourages employees to proactively take change of improving the quality of both their work and private lives.
Details of investment in human capital are disclosed in the Annual Securities Report, on the Company’s website and in the Sustainability Report, etc.
Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/
Sustainability Reporthttps://www.hitachi.com/sustainability/download/index.html(3)

Investment in intellectual property
The Group sets the intellectual property as key element of its business strategy. Through intellectual property activities, it promotes the creation of solutions
that enhance value for customers, the global deployment of the created intellectual property, and the contribution to solving social issues related to the SDGs
and Society 5.0. As a concrete example of intellectual property activities, the total number of published patent applications in the fiscal year ended March 31,
2024 was roughly 3,100 in Japan and roughly 7,300 outside Japan. Details of intellectual property activities are disclosed in the Integrated Report and resourcesof R&D and IP Strategies Briefing on the Company’s website.
Integrated Reporthttps://www.hitachi.com/IR-e/library/integrated/
R&D and IP Strategies Briefing
https://www.hitachi.com/IR-e/library/presentation/webcast/221205.html
The Group’s R&D expenditure in fiscal 2023 was 290.1 billion yen, which was 3.0% of revenue.

(4)

Impact of Climate Change Risks and Earnings Opportunities on the Company’s Business Activities and Earnings etc.
Responses to climate-related risks and opportunities, in June 2018, the Company announced its endorsement of the recommendations by the Financial
Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) and disclosed the key climate-related financial information in line with
the TCFD’s recommendations in the Sustainability Report.
Sustainability Reporthttps://www.hitachi.com/sustainability/download/index.html<Supplementary Principle 4.1.1>
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming to establish a framework for quick business operationand to realize highly transparent management by separating responsibilities for management oversight and those for execution of business operations.
The Board of Directors approves the basic management policy for the Group and supervises the execution of the duties of executive officers anddirectors, and, in principle, delegates all decision on business execution to executive officers, expect for matters stipulated by laws, regulations and the
Articles of Incorporation. The basic management policy includes mid-term management plan and annual budget compilation. The Board of Directors
also focuses on strategic issues related to the basic management policy.
<Principle 4.9 Independence Standards and Qualification for Independent Directors><Supplementary Principle 4.11.1>
The Company discloses the policies and procedures for the appointment of Directors of the Company, the experience, knowledge, and abilities that Directors
should have, and the composition of the Board of Directors based on these, on the Company’s website.
https://www.hitachi.com/IR-e/corporate/governance/initiatives/<Supplementary Principle 4.11.2>
The status of important concurrent positions of Directors is disclosed in the Notice of Annual General Meeting of Shareholders.

https://www.hitachi.com/smeet-e/
Article 6 of the Company’s Corporate Governance Guidelines stipulates that the Directors are encouraged not to serve as more than four listed companies’
directors, corporate auditors, or executive officers in addition to the Company’s director because they are expected to invest the time necessary to understandthe Company’s business, participate in and prepare for the Board of Directors meetings.
Article 6. (Service in Other Companies)
Directors are encouraged not to serve as more than 4 listed companies’ directors, corporate auditors, or executive officers in addition to the Company’s
director because they are expected to invest the time necessary to understand the Company’s business, participate in and prepare for the Board’s meetings.
Directors shall advise the director as set forth in the Article 8 when receiving an invitation to serve as an officer from other companies.
<Supplementary Principle 4.11.3>
The Company evaluates the effectiveness of its Board of Directors each year in a continuous effort to maintain and improve its functions. The details of
evaluation process, evaluation results and future initiatives are disclosed at the Company’s website.
https://www.hitachi.com/IR-e/corporate/governance/initiatives/<Supplementary Principle 4.14.2>
The policy for training Directors is stipulated in Article 11 of the Company’s Corporate Governance Guidelines as follows to be implemented as appropriate
in addition to orientation upon assuming office.
Article 11. (Education of Directors)
The Company shall provide directors with an orientation upon assuming office as well as other opportunities, when necessary, in order for them to acquire
knowledge, such as of the Hitachi Group’s business, necessary for discharging their duties as directors.
<Principle 5.1 Policy for Constructive Dialogue with Shareholders>
In order to contribute to the improvement of corporate value over the medium- to long-term, the Company is working to implement measures and develop asystem to promote constructive dialogue with shareholders and investors. In addition, the Company strives to disclose information fairly and with hightransparency so that shareholders and investors can fully understand the Company’s management policies and financial situation and appropriately evaluate
corporate value.
With regard to general dialogue with shareholders and investors, the investor relations and public relations division, the legal division, the strategy planning
division, and the finance division, etc. have established a system to appropriately disseminate information and conduct dialogue in cooperation and provide
feedback on the opinions of shareholders and investors to the Directors and Executive Officers. Directors and Executive Officers use these opinions to promotemanagement reforms aiming for sustainable growth of the Company.
In addition, executives, such as top management and the CFO, etc., actively engage in information dissemination and dialogue, such as meeting withinstitutional investors, holding quarterly financial results briefings, and holding briefings on management policies. In addition, the Company has been holding“Hitachi Investor Day (Hitachi IR Day)” since fiscal 2010 as an opportunity for persons in charge of major businesses to directly explain respective businessstrategies to shareholders and investors. Details of briefing materials and videos at these briefings are posted on the Company’s website.
https://www.hitachi.com/IR-e/library/irday/index.html
In dialogue with shareholders and investors, the Company strives to ensure fair information disclosure and pays full attention to preventing insider informationfrom being communicated.
[Action to Implement Management that is Conscious of Cost of Capital and Stock Price]
Under the Mid-term Management Plan 2024, the Company sets fiscal 2024 performance targets, which are 5-7% Annual growth rate for revenue (FY
2021-FY 2024 CAGR), 12% Adjusted EBITA margin, 600 yen EPS*, 1.2 trillion yen Core free cash flows (cumulative for 3 years), and 10% return on
invested capital (ROIC), and the Company is working to generate cash and enhance shareholder returns.
* Calculated using the number of shares before the share split(effective on July 1, 2024)(1)

Further strengthening cash generation capability and deepening ROIC management
The Company aims to grow EPS and core free cash flows per share (CFPS) by maximizing cash flows from operating activities through expansion of theLumada business, which is a revenue growth driver, sales growth and improvement of profitability by reviewing business processes, reduction of loss costs
through risk management and strengthening of working capital monitoring including early collection of accounts receivable, and by strengthening cash
generation capability through careful monitoring of each capital investment item.
In addition, the Company introduced ROIC as a KPI for business management from fiscal 2019 to accelerate management that emphasizes capital efficiency,with the aim of sustainably generating returns that exceed the weighted average cost of capita (WACC), which is the cost of raising invested capital. To achieve
the 10% ROIC targeted, the Company will further deepen ROIC management by utilizing the ROIC tree and developing internal KPIs for each business andformulating and reviewing of business strategies.

(2)

Increasing shareholder returns
The Company views the return of profits to shareholders through enhancing corporate value from mid-to long-term perspective and paying dividends andrepurchase of its shares as an important managerial issue. The policy of the Company regarding dividends is to aim for the stable payment of dividends while
also securing the funds necessary for investment dividends are determined by comprehensively taking into account factors such as financial performancetrends, the financial situation, and the dividend payout ratio. The Company flexibly repurchases its shares depending on factors such as capital needs and thebusiness environment. In accordance with its mid- to long-term management strategy, the Company utilize undistributed profits in areas such as M&A, researchand development, and capital expenditure, in order to secure competitiveness and grow the business as a global enterprise.
Based on the above policy, the Company increased dividends in fiscal 2023 and resolved, at the Board of Directors meeting held on April 26, 2024, toacquire treasury stock up to 200 billion yen in fiscal 2024.
Details of the measures taken to realize management in the Company that is conscious of capital costs and stock prices are disclosed in the Company’s Midterm Management Plan, Annual Securities Report, and Integrated Report, etc.
Mid-term Management Plan
https://www.hitachi.com/IR-e/library/strategy/index.html#Presentation2024
Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/
Integrated Reporthttps://www.hitachi.com/IR-e/library/integrated/[Implementation of Dialogue with Shareholders]
For information on implementation of dialogue with shareholders and investors, see <Principle 5.1 Policy for Constructive Dialogue with Shareholders> above,

“Ⅲ. Implementation of Measures for Shareholders and Other Stakeholders – 2. IR Activities” below, the Company’s Integrated Report and website, etc.
Integrated Reporthttps://www.hitachi.com/IR-e/library/integrated/
Company’s website
https://www.hitachi.com/IR-e/library/index.html

2. Capital Structure
Percentage of Foreign Shareholders[Status of Major Shareholders] Update
Name / Company Name
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
State Street Bank and Trust Company 505223(Standing proxy: Mizuho Bank, Ltd.)
GOVERNMENT OF NORWAY(Standing proxy: Citibank, N.A.)
NATS CUMCO(Standing proxy: Mizuho Bank, Ltd.)
Nippon Life Insurance Company
SSBTC CLIENT OMNIBUS ACCOUNT(Standing proxy: The Hongkong and Shanghai Banking Corporation Limited)
State Street Bank West Client -Treaty 505234(Standing Proxy: Mizuho Bank, Ltd.)
Hitachi Employees’ Shareholding Association
JP Morgan Chase Bank 385632(Standing proxy: Mizuho Bank, Ltd.)

Controlling Shareholder (expect for Parent
Company)―――

Parent Company

None

Number of Shares
Owned

Percentage(%)

155,658,700
57,317,377

16.80
6.19

22,663,806

2.45

21,161,670

2.28

20,721,566

2.24

20,000,099

2.16

19,936,868

2.15

18,317,987

1.98

17,568,674

1.90

15,303,016

1.65

Supplementary Explanation Update
Status of Major Shareholders is as of March 31, 2024.
Some reports on substantial shareholdings regarding the Company under the Financial Instruments and Exchange Act are available for public inspection.
However, the information in the reports is not described in the above table since the Company does not confirm the actual status of shareholdings as of March
31, 2024. The major contents of the reports are as follows.
・Holders: BlackRock Japan Co. Ltd and nine other entities
・Date on which the duty to file report: September 15, 2023
・Number of shares: 68,635,088 shares・Ownership percentage to the total number of issued shares: 7.32%
・Holders: Sumitomo Mitsui Trust Asset Management Co., Ltd. and one other entity
・Date on which the duty to file report: March 15, 2022
・Number of shares: 58,850,673 shares・Ownership percentage to the total number of issued shares: 6.08%
The Company implemented a stock split as of July 1, 2024. “Number of Shares Owned” in “Status of Major Shareholders” and “Number of shares” in thereports mentioned above are the numbers of shares before the stock split.

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange, Prime Market / Nagoya Stock Exchange, Premier Market

Fiscal Year-End

MarchType of BusinessElectric Appliances

Number of Employees (consolidated) as of
the End of the Previous Fiscal Year

More than 1,000

Sales (consolidated) as of the End of thePrevious Fiscal Year

More than 1 trillion yen

Number of Consolidated Subsidiaries as of
the End of the Previous Fiscal Year

More than 300

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

5. Other Special Circumstances which may have Material Impact on Corporate Governance Update
The Company currently has Hitachi Construction Machinery Co., Ltd.(“HCM”) as a listed affiliate. The Company maintains a capital relationship with
HCM, based on the belief that collaboration with an optimal capital structure will lead to mutual growth. The Company will continuously review its capital
structure to ensure that it is the most appropriate structure depending on the situation at the time.
Although the Company has entered into an agreement with HCM, regarding the licensing of the trademarks, etc. owned by the Company, it does not
stipulate the Company's involvement in the decision-making of HCM. While the Company dispatches one director to HCM, this does not constitute amajority of the Board of Directors of HCM, and five outside directors of HCM have been registered as independent directors with the Tokyo Stock
Exchange. Therefore, the Company has judged that special measures to ensure independence of HCM are unnecessary, because there is little concern about
the risk of conflict of interest between the Company and the minority shareholders of HCM.
Additionally, The Company currently does not have any listed subsidiaries.

Ⅱ Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution
of Business, and Oversight in Management
1. Organizational Composition and Operation[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation

20

Term of Office Stipulated in Articles ofIncorporation

1 yearChairperson of the Board

Independent Director

N

12

rs

[Independent Directors]
Number of Outside Directors

9

Number of Independent Directors

9

Independent Directors’ Relationship with the Company (1)UpdateName
Katsumi Ihara

Attributeab

Relationship with the Company*
c d
e
f g
h
i

j

k

From another company

Ravi Venkatesan

From another company

Ikuro Sugawara

From another company

Isabelle Deschamps

From another company

Joe Harlan

From another company

Louise Pentland

From another company

Takatoshi Yamamoto

From another company

Hiroaki Yoshihara

Other

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

Katsumi
Ihara

Nomination○

Compensation

○

Audit

○

Ravi
Venkatesan

Ikuro
Sugawara

Isabelle
Deschamps

asIndependent
Director

○

○

○

○

○

UpdateSupplementary Explanation of
the Relationship

Reasons of Appointment

Mr. Ihara has rich experience and insight in the area ofglobal corporate management gained through the
involvement in management at major companies
conducting diversified businesses globally. He is
appointed to expect to leverage such experience and insight
There are no personal or business to reinforce the supervisory and decision-making
relationships, etc. that fall under the functional aspects of the Company’s Board of Directors by
matters described as criteria for judging offering opinions and proposals regarding the general
independence in “Independent Directors management of the Company and supervising the– Matters relating to Independent execution of duties by Executive Officers and others from
Directors,” and there are no other special an independent perspective.
interests.
As shown on the left, there are no special interests with
the Company, and the Company believes thatindependence has been ensured, and since he does not
fall under any of Article 211, Paragraph 4, Item 6 a to jof the Enforcement Rules for Securities Listing
Regulations, he is designated as an independent officer.
Mr. Venkatesan has rich experience and insight in the areaof global corporate management, digital business andemerging markets. He is appointed to expect to leveragesuch experience and insight to reinforce the supervisory and
There are no personal or business decision-making functional aspects of the Company’s
relationships, etc. that fall under the Board of Directors by offering opinions and proposals
regarding the general management of the Company from amatters described as criteria for judging
global viewpoint and supervising the execution of duties by
independence in “Independent Directors
Executive Officers and others from an independent– Matters relating to Independent
perspective.
Directors,” and there are no otherAs shown on the left, there are no special interests with thespecial interests.
Company, and the Company believes that independence has
been ensured, and since he does not fall under any of Article
211, Paragraph 4, Item 6 a to j of the Enforcement Rules for
Securities Listing Regulations, he is designated as anindependent officer.
Mr. Sugawara has rich experience and insight in the area of
public administration, etc. gained through leading positions
at government agencies. He is appointed to expect toleverage such experience and insight to reinforce the
There are no personal or business supervisory and decision-making functional aspects of therelationships, etc. that fall under the Company’s Board of Directors by offering opinions andproposals regarding the general management of thematters described as criteria for judging
Company and supervising the execution of duties by
independence in “Independent Directors
Executive Officers and others from an independent– Matters relating to Independent
perspective.
Directors,” and there are no otherAs shown on the left, there are no special interests with thespecial interests.
Company, and the Company believes that independence has
been ensured, and since he does not fall under any of Article
211, Paragraph 4, Item 6 a to j of the Enforcement Rules for
Securities Listing Regulations, he is designated as anindependent officer.
Ms. Deschamps has rich experience and insight in the areaof corporate legal matters and corporate governance,
having served as the chief legal officer of major global
companies, etc. She is expected to leverage such experienceand insight to reinforce the supervisory and decisionThere are no personal or business making functional aspects of the Company’s Board ofrelationships, etc. that fall under the Directors by offering opinions and proposals regarding thematters described as criteria for judging general management of the Company from a global
independence in “Independent Directors viewpoint and supervising the execution of duties by– Matters relating to Independent Executive Officers and others from an independent
Directors,” and there are no other perspective.
special interests.
As shown on the left, there are no special interests with theCompany, and the Company believes that independence
has been ensured, and since she does not fall under any of
Article 211, Paragraph 4, Item 6 a to j of the Enforcement
Rules for Securities Listing Regulations, she is designatedas an independent officer.

Membership of Committees Designation
Name

Nomination

Joe Harlan

Compensation

Audit

○

LouisePentland

Takatoshi
Yamamoto

Hiroaki
Yoshihara

○

○

○

as
Independent
Director

Supplementary Explanation of
the Relationship○

There are no personal or business
relationships, etc. that fall under thematters described as criteria for judging
independence in “Independent Directors– Matters relating to Independent
Directors,” and there are no otherspecial interests.

○

There are no personal or business
relationships, etc. that fall under thematters described as criteria for judging
independence in “Independent Directors– Matters relating to Independent
Directors,” and there are no otherspecial interests.

○

There are no personal or business
relationships, etc. that fall under thematters described as criteria for judging
independence in “Independent Directors– Matters relating to Independent
Directors,” and there are no otherspecial interests.

○

There are no personal or business
relationships, etc. that fall under thematters described as criteria for judging
independence in “Independent Directors– Matters relating to Independent
Directors,” and there are no otherspecial interests.

Reasons of Appointment
Mr. Harlan has rich experience and insight in the area ofglobal corporate management gained through the
involvement in management at major companies
conducting diversified businesses globally. He is
appointed to expect to leverage such experience andinsight to reinforce the supervisory and decision-making
functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the generalmanagement of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers
and others from an independent perspective.
As shown on the left, there are no special interests with theCompany, and the Company believes that independence
has been ensured, and since he does not fall under any of
Article 211, Paragraph 4, Item 6 a to j of the Enforcement
Rules for Securities Listing Regulations, he is designatedas an independent officer.
Ms. Pentland has deep insight into corporate legal mattersand corporate governance gained through her richexperience as the chief legal officer of major global
companies. She is appointed to expect to leverage such
experience and insight to reinforce the supervisory anddecision-making functional aspects of the Company’s
Board of Directors by offering opinions and proposals
regarding the general management of the Company from a
global viewpoint and supervising the execution of duties by
Executive Officers and others from an independent
perspective as well as reflecting her global viewpoint.
As shown on the left, there are no special interests with theCompany, and the Company believes that independence
has been ensured, and since she does not fall under any of
Article 211, Paragraph 4, Item 6 a to j of the Enforcement
Rules for Securities Listing Regulations, she is designatedas an independent officer.
Mr. Yamamoto has broad range of insight in business andmanagement gained through his experience in the area ofcorporate analysis and global corporate management. He is
appointed to expect to leverage such experience and insightto reinforce the supervisory and decision-making
functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the generalmanagement of the Company and supervising theexecution of duties by Executive Officers and others froman independent perspective.
As shown on the left, there are no special interests with theCompany, and the Company believes that independence
has been ensured, and since he does not fall under any of
Article 211, Paragraph 4, Item 6 a to j of the Enforcement
Rules for Securities Listing Regulations, he is designatedas an independent officer.
Mr. Yoshihara has rich experience and insight in the areaof global corporate management and accounting. He is
appointed to expect to leverage such experience andinsight to reinforce the supervisory and decision-making
functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the generalmanagement of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers
and others from an independent perspective.
As shown on the left, there are no special interests with theCompany, and the Company believes that independence
has been ensured, and since he does not fall under any of
Article 211, Paragraph 4, Item 6 a to j of the Enforcement
Rules for Securities Listing Regulations, he is designatedas an independent officer.

Membership of Committees Designation
Name

Nomination

Compensationas
Independent
Director

Audit

Helmuth
Ludwig○○Supplementary Explanation of
the Relationship

Reasons of Appointment

There are no personal or business
relationships, etc. that fall under thematters described as criteria for
judging independence in “Independent
Directors– Matters relating to Independent
Directors,” and there are no otherspecial interests.

Mr. Ludwig has rich experience and insight in the areaof global corporate management and digital business.
He is appointed to expect to leverage such experienceand insight to reinforce the supervisory and decisionmaking functional aspects of the Company’s Board of
Directors by offering opinions and proposals regarding
the general management of the Company from a global
viewpoint and supervising the execution of duties by
Executive Officers and others from an independent
perspective.
As shown on the left, there are no special interests with
the Company, and the Company believes thatindependence has been ensured, and since he does not
fall under any of Article 211, Paragraph 4, Item 6 a to jof the Enforcement Rules for Securities Listing
Regulations, he is designated as an independent officer.

[Committees]
Committee’s Composition and Attributes of Chairperson Update
All Committee
Members

Full-timeMembers

InsideDirectors

Independent
Directors

Chairperson

Nomination
Committee

3

0

1

2

Independent Director

Compensation
Committee

4

0

1

3

Independent Director

Audit
Committee

5

1

1

4

Independent Director[Executive Officers (Shikkoyaku)]
Number of Executive Officers

UpdateStatus of Additional Duties

UpdateName

Additional Duties as Director

Representative
Authority

Nomination
Committee
MemberCompensation
Committee
MemberAdditional
Duties as
EmployeeToshiaki Higashihara

Yes

Yes

○

×

No

Keiji Kojima

Yes

Yes

×

○

No

Jun Abe

Yes

No

×

×

No

Brice Koch

Yes

No

×

×

No

Alistair Dormer

Yes

No

×

×

No

Toshiaki Tokunaga

Yes

No

×

×

No

Tatsuro Ueda

No

No

×

×

No

Tomomi Kato

Yes

No

×

×

No

Shashank Samant

No

No

×

×

No

Lorena Dellagiovanna

No

No

×

×

No

Katsuya Nagano

No

No

×

×

No

Hidenobu Nakahata

No

No

×

×

No

Masahiko Hasegawa

Yes

No

×

×

No

Andreas Schierenbeck

No

No

×

×

No

Giuseppe Marino

No

No

×

×

No

Atsuhiro Aketa

No

No

×

×

No

Noriharu Amiya

No

No

×

×

No

Takashi Iizumi

No

No

×

×

No

Yasunori Inada

No

No

×

×

No

Yoshiaki Kagata

No

No

×

×

No

Tadashi Kume

No

No

×

×

No

Takashi Saito

No

No

×

×

Jun Taniguchi

No

No

×

×

No
No

Kojin Nakakita

No

No

×

×

No

Hideshi Nakatsu

No

No

×

×

No

Itaru Nishizawa

No

No

×

×

No

Seiichiro Nukui

No

No

×

×

No

Andrew Barr

No

No

×

×

No

Nitesh Banga

No

No

×

×

No

Hirohide Hirai

No

No

×

×

No

Yoshinori Hosoya

No

No

×

×

No

Chie Mashima

No

No

×

×

No

Yuto Matsumura

No

No

×

×

No

Kazunobu Morita

No

No

×

×

No

Takashi Yoda

No

No

×

×

No

[Auditing Structure]
Appointment of Directors and/or Staff to
Support the Audit Committee

Appointed

Matters Related to the Independence of Such Directors and/or Staff from Executive Officers
When necessary, the Board of Directors may appoint one or more director(s), who does not serve concurrently as an executive officer, as a director responsible
for assisting with the duties of the Audit Committee. In addition, the Board of Directors’ Office (the “Office”) shall be established specifically to assist with theduties of each Committee and the Board of Directors and be composed of employees who are not subject to the direction of Executive Officers. In order to ensure
the independence of the Office personnel from Executive Officers, the Audit Committee shall be informed in advance of planned transfers of the Office personnel.

Cooperation among Audit Committee, Accounting Auditors and Internal Audit Departments Update
The Audit Committee conducts audits for whether corporate administration by Directors and Executive Officers are properly carried out under appropriate
internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives reports or conducts hearing for execution of duties from Directors
and Executive Officers. In addition, the members of the Audit Committee, who are in charge of internal inspection, examine business units of the Company andreceive reports from subsidiaries in order to check whether business transaction and property management are properly carried out, and then report the results to
the Audit Committee. Furthermore, such members of the Audit Committee attend the important meetings including the budget meeting, the Senior Executive
Committee and the Disclosure Committee, inspect audit reports from internal audit division, and provide internal audit division with instructions about divisions
to be subject to auditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of the audit from the accounting auditor, and based on the reports,
verifies results of financial audits and internal control audits. In addition, the Audit Committee receives reports and explanations of quality control systems of theaccounting auditor.
The accounting auditor of the Company is Ernst & Young ShinNihon LLC. In fiscal 2023, the accounting audit of the Company was performed by three certified
public accountants of Ernst & Young ShinNihon LLC: Koji Fujima, Teruyasu Omote and Shinya Yoshida. At the direction of them, the accounting audit works
were assisted by 42 certified public accountants and 95 staffs belonging to Ernst & Young ShinNihon LLC.
In fiscal 2023, the amount of the fees paid by the Company and its consolidated subsidiaries to Ernst & Young ShinNihon LLC was 1,019 million yen based on
audit certification services, and 50 million yen based on non-audit services. The amount of the fees (excluding the amount mentioned above) paid by the Company
and its consolidated subsidiaries to Ernst & Young ShinNihon LLC Group (including Ernst & Young and its group firms which belong to the same network as
Ernst & Young ShinNihon LLC) was 4,505 million yen based on audit certification services, and 565 million yen based on non-audit services. The Audit
Committee approves the amount of the fees in advance of the Company’s decision.
The Audit Committee evaluated the appropriateness and relevance of auditing conducted by the accounting auditor from the perspectives of the effectiveness of
initiatives to facilitate communication with the Audit Committee and the top management in particular, the details and implementation of audit systems andauditing manuals and remuneration for auditing in accordance with evaluation criteria the Audit Committee formulated in advance. For evaluating the accounting
auditor, the Audit Committee gathered information on matters such as the independence of the accounting auditor, audit systems, the implementation of audits
and audit quality thereof from the Accounting Control Department and the Internal Auditing Office. The Audit Committee also received reports from theaccounting auditor regarding compliance with laws and regulations, including the accounting auditor’s independence, methods for evaluating risks with respect
to the acceptance and continuation of audit services, audit and inspection systems and quality control systems, and detailed audit plans based on the accounting
auditor’s evaluations for risks pertaining to the Company, as well as results of audits and details of and progress on plans for improving business operations andauditing efficiency at the time of the completion of quarterly reviews and annual audits. Based on such reports, the Audit Committee concluded that the accounting
auditor conducted highly transparent audits and its activities were appropriate and relevant.
The Internal Auditing Office is in charge of internal audit within the Group and audits business units, corporate divisions of headquarters and subsidiaries andaffiliates.
The Internal Auditing Office monitors and assesses whether overall business operations, including marketing, personnel management, labor management,compliance, procurement transactions, development, production and quality control, environment, disaster prevention, export regulations, information system,
financing activities, and property management of the Group are properly carried out pursuant to audit standards established by the Company, and points out items
required to be improved based on the results of auditing and follows up their improvements. The Internal Auditing Office reports in advance its internal audit plan
to the Audit Committee, and reports the results of audits to the President and the Audit Committee. Although the internal audit plan and the results of internal
audits are not directly reported to the Board of Directors, the member of the Audit Committee regularly reports to the Board of Directors the fact that the Internal
Audit Office reports these contents to the Audit Committee and the details of discussions at the Audit Committee. Furthermore, relating to internal control overfinancial reporting, the internal control division in the Internal Audit Office establishes and maintains the internal control systems pursuant to the Company’s
guidelines, assesses their effectiveness, and reports the results to the President and the Audit Committee.

[Independent Directors]
Number of Independent Directors

Matters relating to Independent Directors
For appointment an Independent Director, the Nominating Committee of the Company considers, in addition to the following criteria for the independency,
whether the Independent Director has the highest personal and professional ethics, integrity and insight, and distinguished records of leadership or experience atpolicy making levels in business, law, administration, accounting or education, etc.
For the independency of an Independent Director, the Company considers the Independent Director to be independent unless・his or her immediate family member* is, or has been within the last three years, a director or an executive officer, of the Company or any of its subsidiaries;* An “immediate family member” includes a person’s spouse, parents, children, siblings, grand-parents, grand-children, mothers and fathers-in-law, sons anddaughters-in-law, spouses of siblings, grand-parents-in-law, grand-children-in-law, and brothers and sisters-in-law.
・he or she is currently an executive director, an executive officer or an employee of a company that has made payments to, or received payments from, theCompany for property or services in an amount which, in any of the last three fiscal years, exceeds 2% of any of the companies’ consolidated gross revenues;
・he or she has received during any of the last three fiscal years more than 10 million yen in direct compensation for his or her service as a specialist in law,accounting or tax, or as a consultant from the Company, other than director compensations; or・he or she serves as an executive officer or director of a not-for-profit organization, and the Company’s discretionary charitable contributions to the organizationin any of the last three fiscal years are more than 10 million yen and 2% of that organization’s annual gross revenues.
Each of Independent Directors has no personal or business relationship with the Company. In addition, there is no particular conflict of interest between eachof Independent Directors and the Company.
The Company considers that all Independent Directors are independent, and therefore has notified them as independent directors to each of theCompany’s listing stock exchanges in Japan.

[Incentives]
Incentive Policies for Directors and/or
Executive Officers

Performance-linked Remuneration / Stock Options / Other

Supplementary Explanation
Remuneration of Directors and Executive Officers is described in “Remuneration for Directors and Executive Officers Disclosure of Policy on Determining
Remuneration Amounts and Calculation Methods.”

Recipients of Stock Options

Executive Officers / Other

Supplementary Explanation
Until fiscal 2018, the stock options as stock-based compensation (stock acquisition rights) with stock price conditions at an exercise price of 1 yen per share
were granted to Executive Officers of the Company and Corporate Officers of the Company (the number of shares subject to stock acquisition rights is 100 shares
per unit). In fiscal 2016, there were 17,205 stock acquisition rights issued to Executive Officers and 7,014 to Corporate Officers. In fiscal 2017, there were 17,430
stock acquisition rights issued to Executive Officers and 5,476 to Corporate Officers. In fiscal 2018, there were 13,351 stock acquisition rights issued to Executive
Officers and 4,048 to Corporate Officers. The concept of level of a grant by the individual, etc., is described in “Remuneration for Directors and Executive
Officers Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods.” From fiscal 2019, the Company has granted restricted sharesin lieu of conventional stock options as stock-based compensation.

[Compensation for Directors and Executive Officers]
Disclosure of Individual Directors’Compensation

No Individual Disclosure

Disclosure of Individual Executive Officers’ Selected Executive Officers
Compensation

Supplementary Explanation
The Company discloses individual compensation for some Executive Officers in its Annual Securities Report in accordance with the provisions of the Cabinet
Office Order on Disclosure of Corporate Affairs.

Policy on Determining Compensation
Amounts and Calculation Method Update

Established

Disclosure of Policy on Determining Compensation Amounts and Calculation Methods[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the policy on the determination of the amount of compensation, etc. of each Director and Executive
Officer pursuant to applicable provisions of the Companies Act.
[Basic Policy]- Compensation shall be commensurate with the roles and responsibilities of each Directors and Executive Officers.
- Compensation for Directors shall be such that it enables them to exercise the functions of supervision of management effectively.
- Compensation for Executive Officers shall be reflected by considering the following factors;(Alignment with the Mid-term Management Plan 2024)
In the Short-term incentive compensation and Long-term incentive compensation, set performance metrics toward the Mid-term Management Plan as Indicators(“KPIs”) to encourage executives to achieve them.
(Establishment of a compensation program and corporate performance program that foster a growth mindset)
Pursue an optimal balance between short and medium- to long-term performance with respect to “growth,” “improving profitability” and “cash generation,” aiming
for improved short-term performance and medium to long-term growth in corporate value..
Establish a compensation program that significantly rewards performance by setting stretch goals and commensurate compensation levels.
(Setting indicators to promote sustainable management)
Develop specific indicators and goals related to “Environment,” “Business with Integrity” and “Quality of life” under its sustainability strategy, and encourage
their implementation.
(Expansion of stock compensation that rewards growth in corporate value over the medium- to long- term)
Expand stock compensation to better align with medium to long-term corporate value.
- Competitive compensation levels with a global perspective
Ensure competitive compensation levels to attract and retain key executives in global market, regardless of their residence or origin, who can lead the managementof a global organization.
- Compensation benchmarking with objectivity and transparency
Reference to the benchmarks in the US and European markets in addition to the benchmarks in the Japanese market for analysis and level-setting from multiple
perspectives.
- Transparency and objectivity through enhanced compensation disclosure and shareholder engagement
Endeavor to gain investors' understanding and support through sufficient disclosure of the compensation program with a global perspective and ongoing shareholder
engagement, and continuously improve the program based on the insights gained through the engagement.
[Compensation Structure](i) Matters relating to Directors
Compensation for Directors consists of basic remuneration and stock compensation as fixed pay. The basic amount of basic remuneration and stockcompensation is set based on the ratio of 3:1 as the standard. A Director concurrently serving as an Executive Officer is not paid compensation as a Director.
The method of determination of each type of compensation is as follows.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount to reflect full-time or part-time status, committee membership and position, andattendance of meetings, etc.
Stock compensation- A restricted stock compensation unit will be granted as an incentive to offer management supervision and advice with an awareness of medium- and longterm improvements in corporate value. The units will become vested at the end of three fiscal years after granting, and common stocks or cash for the vested
units will be delivered.
(ii) Matters relating to Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay, and short-term incentive compensation and medium- and long-term
incentive compensation as variable pay. For President & CEO, the basic amount of basic remuneration, short-term incentive compensation, and medium- andlong-term incentive compensation is set based on the ratio of 1:1.2:2.0 as the standard, taking into account the composition of executive compensation for
major global companies, in order to improve corporate value through the growth of global businesses. The higher the position an Executive Officer hold, thehigher the proportion of variable pay is set to total annual compensation.
The method of determination of each type of compensation is as follows.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount set in accordance with the relevant position to reflect the results of an assessment.
Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of a basic amount set according to the relevant position byadjusting that amount to reflect financial results and individual performance. Evaluation items and proportion of evaluation item are as follows.
<President (CEO)>Financial Performance
Individual goals
Sustainability measurement

70%
10%
20%

<Executive Officers in charges of business>
Financial Performance (Corporate)
Financial Performance (Division)
Individual goals
Sustainability measurement

30%
30%
20%
20%

<Executive Officers in charge of corporate affairs>
Financial Performance
40%
Individual goals
40%
Sustainability measurement
20%- The amount of the financial performance linked component varies according to the evaluation of corporate performance and division performance.
Corporate performance is evaluated using consolidated revenues, profit index and cash flow in order to measure the level of achievement of consolidated
financial forecasts disclosed to stakeholders, including shareholders and investors.
Division performance is evaluated using consolidated revenues, profit index and cash flow in order to measure the level of achievement of targets under the
Mid-term Management Plan and the annual budgets for divisions.
- The amount of the individual goals linked component varies according to the evaluation of the level of achievement of individual targets for each Executive Officer
determined based on his/her responsibility.
- The amount of the sustainability measurement linked component varies according to the degree of achievement of the numerical goals for materiality which areestablished under the sustainability strategy.
Medium- and Long-term incentive compensation- The target amount (Medium- and Long-term incentive compensation target ( “LTI target”)) is decided based on the positions of Executive Officers, and the sharesof Restricted Stock (“RS”) compensation with an incumbency condition and Performance-linked Restricted Stock (“Performance-linked RS”) compensation are
granted in order to propel management from a long-term perspective and to provide incentives to bring about a sustainable increase in enterprise value by further
promoting senior management’s shared values with shareholders through the holding of shares during their term of office. The conditions, the grant ratio to LTI
target and grant date of RS and Performance-Linked RS compensation are as follows;<Restricted Stock Compensation>
Condition
The grant ration to LTI target
Grant date of Restricted Stock

Incumbency condition
30%
Every Fiscal Year

<Performance-linked Restricted Stock >1) Stock Compensation with Stock Price Condition
The grant ration to LTI target
70%
Grant date of Restricted Stock
After the end of the three fiscal years beginning with the base fiscal year
2)

Stock Compensation with Conditions for Achievement of Mid-term Management Plan Targets (ROIC)
The grant ration to LTI target
10%
Grant date of Restricted Stock
After the end of the final fiscal year of the Med-term Management Plan period

3)

Stock Compensation with Conditions for Achievement of Mid-term Management Plan Targets (Sustainability targets)
The grant ration to LTI target
10%
Grant date of Restricted Stock
After the end of the final fiscal year of the Med-term Management Plan period- In RS compensation, the shares of RS equivalent to 30% of the LTI target are granted and the restriction on the shares is lifted depending on the tenure of each
executive over the three fiscal years from the beginning of the fiscal year when the RS is granted.
- In Performance-linked RS compensation, the shares of Performance-linked RS compensation will be granted depending on the degree of achievement of theevaluation KPI during a certain evaluation period, and the restriction on transfer will be lifted upon retirement. Performance-linked RS compensation consists ofcompensation with a stock price condition and compensation with conditions for achievement of Mid-term Management Plan targets.
In stock compensation with a stock price condition, Performance Share Units (“PSUs”) equivalent to 70% of the LTI target are granted. The shares ofrestricted stock equivalent to 0 ~ 200% of the PSUs are granted in accordance with the results of comparing the Total Shareholder Return growth rate of theCompany stock with the TOPIX growth rate (“TSR/TOPIX Growth Rate Ratio”) and with the %ile rank of the Total Shareholder Return growth rate of theCompany among the global comparable companies determined by the Compensation Committee (“Global Competitive Comparison”). The evaluation period
is the three fiscal years beginning at the fiscal year to which the PSUs are granted. For Executive Officers who retire before the end of the evaluation period,
ex-post evaluation is conducted by subtracting the number of shares obtained by multiplying the ratio of their tenure to the evaluation period.
In stock compensation with conditions for achievement of Mid-term Management Plan targets, PSUs equivalent to 20% of the LTI target are granted. The
shares of restricted stock equivalent to the PSUs are granted when the target of ROIC and sustainability indicators during the period of Mid-term Management
Plan covering the fiscal year when the PSUs are granted are achieved.
- If it is deemed inappropriate to grant shares of restricted stock due to laws and regulations in the country of residence, etc., a cash award based on the value of theCompany’s share price shall be substituted for restricted stock.
- From fiscal 2019, shares of restricted stock have been granted in place of the stock options as stock-based compensation the Company has granted until then. Fromfiscal 2023, the medium- and long-term compensation described above is granted.
If it is found that an executive officer has been engaged in misconduct during his/her term of office, compensation for Executive Officers that has been
already paid shall be returned to the Company.
With regard to persons who are hired externally such as foreign persons, a compensation package could be individually determined based on the level ofcompensation in a job market which is considered for compensation benchmarking while referring the above policy. The Company grants restricted stock
units to non-Japanese Executive Officers as medium- and long-term incentive compensation. One third of vested restricted stock units is delivered in theform of shares of common stock of the Company and cash each fiscal year over three years from the beginning of the fiscal year containing the day on which
restricted stock units are granted.

[Supporting System for Independent Directors]
The employees as described in “Auditing Structure – Appointment of Directors and/or Staff to Support the Audit Committee” shall assist Independent Directors intheir duties.
The policy for remuneration for Independent Directors is described in “Remuneration for Directors and Executive Officers Policy on Determining Remuneration
Amounts and Calculation Methods.”[Retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)]
Information on retired presidents/CEOs holding advisory positions

Name
―――

Job title/
position―――

Responsibilities―――

Employment terms(Full/part time, with/withoutcompensation, etc.)

Date whenformer role aspresident/
CEO ended

―――

―――

Term
―――

Number of retired presidents/CEOs holding advisory positions

OthersAlthough the Articles of Incorporation stipulate that Advisers can be appointed by resolution of the Board of Directors, there is currently no one with that
position.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions(Overview of Current Corporate Governance System) Update
The Board of Directors
The Board of Directors approves basic management policy for the Group and supervises the execution of the duties of executive officers and directors
in order to sustainably enhance corporate value and the shareholders’ common interests. The basic management policy includes medium-term
management plan and annual budget compilation. The Board of Directors focuses on strategic issues related to the basic management policy as well asother items to be resolved that are provided in laws, regulations, the Articles of Incorporation and Board of Directors Regulations. As of the filing dateof this report, the Board of Directors was made up of 12 Directors, and nine of whom are Independent Directors and two concurrently serve as Executive
Officers.
Within the Board of Directors, there are three statutory committees of the Nominating Committee, the Audit Committee and the Compensation
Committee with Independent Directors accounting for the majority of members of each committee. The Board of Directors meetings were held ninedays during fiscal 2023, and the attendance rate of Directors at those meetings was 100%. Attendance record of Directors at the Board of Directors
meetings during his/her term of office is as follows.
Katsumi Ihara: 9/9 days (100%)Ravi Venkatesan: 9/9 days (100%)
Cynthia Carroll: 9/9 days (100%)
Ikuro Sugawara: 9/9 days (100%)Joe Harlan: 9/9 days (100%)Louise Pentland: 9/9 days (100%)
Takatoshi Yamamoto: 9/9 days (100%)
Hiroaki Yoshihara: 9/9 days (100%)
Helmuth Ludwig: 9/9 days (100%)
Keiji Kojima: 9/9 days (100%)
Mitsuaki Nishiyama: 7/7 days (100%)
Toshiaki Higashihara: 9/9 days (100%)
Hideaki Seki: 2/2 days (100%)
In fiscal 2023, the Board of Directors received a report on the progress of the Mid-term Management Plan 2024, including overall priority items and theprogress in each sector, and confirmed that it is consistent with the plan. The Board of Directors extensively discussed and deliberated how to respond to risks,
including cyber security and generative AI as well as management plans and business strategies. In addition to strategic discussions of basic management policies
and discussions of risks, the Board of Directors received reports on and discussed topics important to the executives which were discussed at the Senior Executive
Committee, an advisory council to the President, facilitating a shared understanding with the executives. In order to promote more lively discussion, the Boardof Directors spends more time exchanging views on agenda items than explaining them.
As part of the above, the Company holds meetings of the Board of Directors, basically once a year, in countries closely related to the Hitachi Group’s business.
In September 2023, the Company held the Board of Directors meeting in Stockholm, Sweden. At the meeting, Directors discussed issues relevant to businessstrategy in Europe and environmental strategy. The Directors also attended lectures by local experts and visited local subsidiaries. In addition, the Company helda Board of Directors meeting at the Kyōsō-no-Mori R&D center, the R&D Group’s Kokubunji Site, which is one of the Company’s research and development
sites. Directors discussed research and development strategy and innovation strategy at the meeting and attended lectures regarding research and development
initiatives presented by employees.
Furthermore, the Company is working to improve the effectiveness of the Board of Directors by enhancing its opportunities to share information with
Independent Directors through individual meetings, site visits, and other activities. Online participation in the Hitachi Social Innovation Forum, and attendanceat the internal business conference and the research presentation meeting held at research institutes, including online, and visits to Hitachi Origin Park provided
opportunities for the Independent Directors to increase their understanding of the business and engage in dialogue with senior management and front line
employees.
The Nominating Committee
The Nominating Committee has the authority to determine proposals submitted to the general meeting of shareholders for the election and dismissal of
directors. The Nominating Committee consists of three Directors, two of whom are Independent Directors. It determines Director candidates and holds

preliminary hearings concerning the appointment and dismissal of executive officers, including the CEO stipulated in “Policies and procedures for theappointment and dismissal of Executive Officers and the nomination of candidates for Directors, as well as explanation of the appointment and dismissalof Executive Officers and the nomination of candidates for Directors” in “I.1. Disclosure Based on the Principles of the Corporate Governance Code.”
During fiscal 2023, the Nominating Committee held meetings on 10 days. Attendance record of members at the Nominating Committee meetings duringhis/her term of office is as follows.
Katsumi Ihara: 10/10 days (100%)
Cynthia Carroll: 10/10 days (100%)
Hiroaki Yoshihara: 10/10 days (100%)
Toshiaki Higashihara: 10/10 days (100%)
In fiscal 2023, the Nominating Committee decided on the details of the proposal for the election of Directors to be submitted to the general meeting ofshareholders, discussed candidates to succeed the CEO, and received and confirmed a preliminary report on Executive Officer structure for fiscal 2024. In
addition, in order to develop management-level leadership candidates, the members of the Nominating Committee made discussion and one-on-one interviews
with leadership candidates.
The Audit Committee
The Audit Committee has the authority to audit the execution of duties of Directors and Executive Officers and to determine on proposals submitted to
the general meeting of shareholders for the election and dismissal of accounting auditors. The Audit Committee currently consists of five Directors,
including four Independent Directors and one standing Audit Committee member. Hiroaki Yoshihara, the Chair of the Audit Committee, has considerable
knowledge of finance and accounting based on his long experience at KPMG Group with businesses related to accounting, etc. Mitsuaki Nishiyama, thestanding Audit Committee member, has considerable knowledge of finance and accounting based on his long experience as a chief of finance and accounting
department and an Executive Officer in charge of finance and accounting department.
During fiscal 2023, the Audit Committee held meetings on 15 days. Attendance record of members at the Audit Committee meetings during his/herterm of office is as follows
Katsumi Ihara: 15/15 days (100%)
Ikuro Sugawara: 15/15 days (100%)
Hiroaki Yoshihara: 15/15 days (100%)
Helmuth Ludwig: 15/15 days (100%)
Mitsuaki Nishiyama: 9/9 days (100%)
Hideaki Seki: 6/6 days (100%)
In fiscal 2023, the Audit Committee engaged in a variety of activities to study priority matters such as strengthening a “tripartite audit”, facilitating
information sharing as well as the auditing of the establishment and operation of internal control systems from the perspective of risk management andthe validity of the execution of duties. In addition, a standing committee member worked to obtain information as needed in a timely and accurate manner,
mainly by collaborating with the Internal Auditing Office, among other departments, and attending important internal meetings such as the Senior
Executive Committee, and facilitated information sharing with other committee members.
The Compensation Committee
The Compensation Committee has the authority to determine remuneration policies for Directors and Executive Officers and remuneration for
individuals based on those policies. The Compensation Committee consists of four Directors, three of whom are Independent Directors.
During fiscal 2023, the Compensation Committee held meetings on seven days. Attendance record of members at the Compensation Committee meetings
during his/her term of office is as follows.
Katsumi Ihara: 7/7 days (100%)Joe Harlan: 7/7 days (100%)
Takatoshi Yamamoto: 7/7 days (100%)
Keiji Kojima: 7/7 days (100%)
In fiscal 2023, based on policies for determining compensation for Directors and Executive Officers, the Compensation Committee determined the amountsof remuneration for Directors and Executive Officers individually including confirmation and review of the process and details of performance and individual
target evaluations regarding the assessment of fixed pay amounts and the short-term incentive compensation paid to Executive Officers.
In addition, the Compensation Committee discussed whether the compensation system for the Company’s Executive Officers which was amended in theprevious fiscal year, functioned soundly as an incentive to increase corporate value over the mid- to long-term, based on an analysis by a third-party organization
outside of the Company. In particular, the Compensation Committee confirmed the appropriateness of the compensation levels based on a compensation
benchmark analysis considering each market in Japan, Europe and the U.S. and examined whether the new compensation system functioned effectively fromvarious angles, including the verification of the appropriateness of target setting and evaluation.
Regarding the compensation paid to the Company’s Directors, based on a remuneration benchmark analysis, the Compensation Committee discussed thecompensation paid to the Directors of the Company who are from various regions. As a result, the Compensation Committee decided to introduce a newcompensation system in fiscal 2024 to further promote awareness of increasing corporate value in the context of management supervision and advice. Specifically,
the Compensation Committee revised compensation levels to be sufficiently competitive in the global market, and introduced stock compensation in order tofurther promote awareness of increasing corporate value in the medium-to-long term and enhance the sharing of value with shareholders.
In its deliberations, the Compensation Committee considers changes in the business environment and the opinions of shareholder and investors and obtains
necessary information and advice from third-party organizations with global insight and experience.
The Company maintains a limited liability agreement stipulated in Article 427, Paragraph 1 of the Companies Act with each director (excluding
Executive Director, etc.) The general intent of the agreement is to limit the liability of Directors to the aggregate amount stipulated in each item under
Article 425, Paragraph 1 of the Companies Act.
Executive Officers decide on matters delegated to them by the Board of Directors and execute the Company’s business affairs within the scope ofassignments determined by the Board of Directors. As of the filing date of this report, the Company has 35 Executive Officers.
The Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides on important managerial matters, which may affect theCompany or the Group business, through discussing from diverse viewpoints. It consists of ten members as of the filing date of this report; President(Keiji Kojima), four Executive Vice President and Executive Officers (Jun Abe, Brice Koch, Alistair Dormer, Toshiaki Tokunaga), four Senior Vice
President and Executive Officers (Tomomi Kato, Lorena Dellagiovanna, Hidenobu Nakahata and Masahiko Hasegawa) and one Vice President andExecutive Officer (Yuto Matsumura), and other attendees designated by the President.
In April 2022, the Company established the Growth Strategy Meeting, the Risk Management Meeting and Human Resource Strategy Meeting within the Senior
Executive Committee. The Growth Strategy Meeting discusses and decides on matters related to the Group’s management strategy and accelerates the formulationof strategies necessary for its growth. The Risk Management Meeting discusses and decides on important matters related to group-wide risks, and aims to realize

a solid management foundation in coordination with growth strategies through a centralized and cross-sectional understanding of risks. The Human Resource
Strategy Meeting discusses and decides on matters necessary to foster the Group’s organization and culture as well as to secure and develop human resources,
thereby supporting its further growth through the enhancement of human capital.

3. Reasons for Adoption of Current Corporate Governance System
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming to establish a framework for quick business operationand to realize highly transparent management by separating responsibilities for management oversight and those for execution of business operations. In
addition, based on the experience and insight possessed by independent directors, the Company improves the functions of the Board of Directors bysupervising the execution of duties by Executive Officers from an independent standpoint.

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

On June 3, 2024, the Notice of Annual General Meeting of Shareholders was sent out for the
Annual General Meeting of Shareholders held on June 21, 2024. It was posted on the
Company’s website before the mailing date (on May 27, 2024).

Scheduling AGMs Avoiding the Peak Day

The Company held its Annual General Meeting of Shareholders on June 21, 2024.

Allowing Electronic Exercise of
Voting Rights

On the dedicated website established by Tokyo Securities Transfer Agent Co., Ltd., theCompany’s shareholder registry administrator, it is possible to exercise voting rights byelectromagnetic means after the Notice of Annual General Meeting of Shareholders is sent
until the day before the Annual General Meeting of Shareholders.

Participation in Electronic Voting
Platform and Other Efforts to Enhance
the Voting Environment for Institutional
Investors

It uses an electronic voting platform for institutional investors operated by ICJ, Inc.

Providing Convocation Notice in English

English translations of the Notice of Annual General Meeting of Shareholders, business
reports, etc. have been prepared and are posted on the Company’s website.
https://www.hitachi.com/smeet-e/

Other

In addition to the Notice of Annual General Meeting of Shareholders, business reports, etc.,
supplementary explanations of agenda proposals of the General Meeting of Shareholders areposted on the Company’s website.

2. IR Activities

Supplementary Explanations

Explanation
byRepresentative

Preparation and Publication ofDisclosure Policy

In addition to disclosing information fairly and with high transparency, theCompany has posted a disclosure policy on its website that is based on the basic
policy of responsibly responding to shareholders, investors, and other diverse
stakeholders through various communication activities.
(https://www.hitachi.com/IR-e/corporate/disclosure/)

Regular Investor Briefings for Analysts
and Institutional Investors

Briefings are held on the Company’s financial results and business strategies,
etc.

Yes

Regular Investor Briefings forOverseas Investors

In order to explain the Group’s business performance and management strategy
to institutional investors in North America, Europe and Asia, the Company’s
Executive Officers, etc. provide explanation through individual meetings.

Yes

Posting of IR Materials on Website

https://www.hitachi.com/IR-e/

Establishment of Department
and/or Manager in Charge of IR

Department: Investor Relations Division

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations

Stipulation of Internal Rules for
Respecting the Position of Stakeholders

Implementation of Environmental
Activities, CSR Activities etc.

Company Regulations stipulate that companies are recognized as members of society, devote
themselves to fair and transparent corporate behavior, and strive to realize a truly prosperous
society as sensible citizens through harmony with the environment and active social contribution
activities, and to secure the trust of society broadly, including shareholders, customers, business
partners, and local residents in Japan and overseas.
The Group as a whole has established a specialized department to promote CSR activities
globally while sharing policy direction through regular meetings and other means at theCompany and group companies in Japan and overseas.
The Group’s CSR and environmental conservation activities, including social contribution
activities and the promotion of diversity, are posted on the Company’s website. In addition,
the Hitachi Sustainability Report, an annual report summarizing activities information, is also
posted on the Company’s website.
(https://www.hitachi.com/sustainability/download/index.html)

Development of Policies on Information
Provision to Stakeholders

In addition to disclosing information fairly and with high transparency, the Company has
posted a disclosure policy on its website that is based on the basic policy of responsibly
responding to shareholders, investors, and other diverse stakeholders through various
communication activities.
(https://www.hitachi.com/IR-e/corporate/disclosure/index.html)

Other

As of the filing date of this report, 2 of 12 directors are women.

Ⅳ Matters Related to the Internal Control System
1. Basic Views on Internal Control System and Progress of System Development
Outlines of the internal control system and the risk management system of the Company are as follows. In addition, these systems were resolved by
the Board of Directors as the basic policy for internal control system under the Companies Act.
(1) The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(a) When necessary, the Board of Directors may appoint one or more directors, who are not concurrently serving as executive officers, to be director(s)responsible for assisting with the duties of the Audit Committee. In addition, the Board of Directors Office (the “Office”) shall be established specificallyto assist the Board of Directors and each committee with their duties.
(b) To ensure the Office personnel are independent from the Executive Officers and the effect of instructions by the Audit Committee, the Office is staffedwith personnel who work only for the Office and are not subject to the orders or instructions of Executive Officers, and the Audit Committee shall be
informed in advance of planned transfers of Office personnel.
(c) Executive Officers and employees shall report significant matters affecting the Company and its subsidiaries, the results of internal audits and theimplementation status of reporting under the internal reporting system without delay to the members of the Audit Committee. It shall be provided for in
the company regulation that reporters using the common internal reporting system of the Group shall not be treated disadvantageously due to theirsubmission of a report, and the system’s administrative organization shall ensure this provision is thoroughly implemented.
(d) The Office shall be responsible for paying for the expenses incurred in connection with the Audit Committee members’ execution of their duties and otheradministrative duties, and shall promptly process payments for these expenses or debts except in cases where the expense or debt claimed is clearly foundto be unnecessary for the execution of the Audit Committee members' duties.
(e) Standing Committee member(s) shall be appointed to the Audit Committee, and the activity plans of the Audit Committee shall be prepared in coordination
with the audit plans of the Internal Auditing Office.
(2) The following measures shall be effective to ensure the adequacy of business operations within the Company and the Group.
(a) Fundamental policies that emphasize the social responsibilities of business enterprises shall be shared with the subsidiaries of the Company.
(b) Each subsidiary of the Company shall develop systems to ensure the appropriateness of its operations appropriate for its size and other characteristics, thebasic framework of which will be similar to the ones employed by the Company. To ensure each subsidiary's development of such systems, directors andauditors shall be sent by the Company to the subsidiaries, and regular audits of the subsidiaries shall be conducted.
(c) A system for reporting matters to Directors shall be established to ensure that the Executive Officers of the Company execute their duties in compliancewith laws, regulations and the Articles of Incorporation.
(d) Information pertaining to the Company’s Executive Officers’ execution of their duties shall be prepared and maintained in accordance with internal rules.
(e) A structure shall be established in which each relevant department shall establish regulations and guidelines, conduct training, prepare and distribute
manuals and carry out other such measures regarding various risks. Efforts shall be made to identify possible new risks through measures such as progress
reports on business operations and, should it become necessary, an Executive Officer will be appointed promptly to be responsible for responding to a
new risk.
(f) The efficiency of the Company’s Executive Officers, and the subsidiaries’ Directors and Executive Officers’ performance of their duties shall be ensured
through the following business management systems.
・The Senior Executive Committee shall be established to deliberate on and facilitate the formulation of decisions based on due consideration of diverse
factors regarding important issues that affect the Company and/or the Group.
・Based on the management policy, medium-term business plans and annual budgets, on which performance management is based, shall be prepared tooperate business in a planned and efficient manner.
・Internal audits of the Company and its subsidiaries shall be conducted to identify and monitor the status of their business operations and to facilitate
improvements.
・The Audit Committee shall receive the accounting auditors' audit plans in advance, and the prior approval of the Audit Committee shall be required
regarding the fees to be paid to the accounting auditors.
・Documented business processes for matters to be reflected in financial reports shall be executed by the Company and its subsidiaries, and internal andexternal auditors shall examine these processes to ensure the reliability of financial reports.
・A structure for the adequate and efficient conduct of the common business operations of the Group companies shall be established .
(g) Continuous maintenance of a legal and regulatory compliance structure shall be ensured through the following business management systems.
・Internal audits shall be conducted and various committees shall be established for legal and regulatory compliance activities. Furthermore, a HitachiGroup common internal reporting system shall be established and education regarding legal and regulatory compliance shall be provided.
・Various policies and rules on compliance with laws shall be established, aiming to ensure that the employees are aware of the internal control systems
overall and that the systems are effective.
(h) A system shall be established in which the subsidiaries submit reports on important issues and the progress of measures regarding operations to theCompany through the Company’s Senior Executive Committee, medium-term business plans and the budget system.
(i) The policy on transactions within the Group is to trade fairly based on market prices.

2. Basic Views on Eliminating Anti-Social Forces and Progress of Related Efforts Update
As part of the basic policy on internal control systems based on the Companies Act, the Company establishes various policies and rules based on compliancewith laws and regulations related to the Group’s business activities, including the prevention of anti-social transactions. “Hitachi Group Anti-Money
Laundering and Prevention of Anti-Social Transactions Policy”, which is established based on those policies, stipulates that the Company rejects all
unreasonable demands and illegal transactions, and never engages in anti-social transactions. This policy applies to Directors and employees of the Group.
Directors and employees of the Group will take necessary measures to ensure that all persons who work with or on behalf of the Group comply with thispolicy.
The main concrete measures to eliminate anti-social forces are as follows.
・The Company has established a dedicated department to provide business guidance and audits on information gathering, training, management systems
and procedures.
・The Company is working to prevent transactions with anti-social forces through the screening of business partners and the establishment of anti-social
force exclusion clauses in contracts.
・In cooperation with external specialized organizations (National Center for Removal of Criminal Organizations or the police, etc.), the Company isworking to eliminate access by anti-social forces.
・In addition to establishing steps and procedures for responding to unreasonable demands, the Company is promoting the installation of a person
responsible for preventing unreasonable demands at each business site, and have established a system for contacting and consulting with authorities andexternal specialized organizations.
・If necessary, the Company will establish an advisory committee, including experts from outside the company, to hear opinions.

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

Not Adopted

Supplementary Explanation
The Group invests a great deal of business resources in fundamental research and in the development of market-leading products and businesses that willbear fruit in the future, and realizing the benefits from these management policies requires that they be continued for a set period of time. For this purpose, theCompany keeps its shareholders and investors well informed of not just the business results for each period but also of the Company’s business policies forcreating value in the future.
While the Company recognizes the importance of its revitalization of business activities and performance that can be brought about through a change inmanagement control, it also recognizes the necessity of determining the impact on company value and the interests of all shareholders of the buying activities
and buyout proposals of parties attempting to acquire a large share of stock of the Company or a Group company by duly examining the business description,
future business plans, past investment activities, and other necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor is there a specific threat, neither does the Company intend
to implement specified so-called anti-takeover measures in advance of the appearance of such a party, but the Company does understand that it is one of thenatural duties bestowed upon it by the shareholders and investors to continuously monitor the state of trading of the Company’s stock and then to immediately
take what the Company deems to be the best action in the event of the appearance of a party attempting to purchase a large share of the Company’s stock. In
particular, together with outside experts, the Company will evaluate the buyout proposal of the party and hold negotiations with the buyer, and if the Company
deems that said buyout will not maintain the Company’s value and is not in the best interest of the shareholders, then the Company will quickly determine thenecessity, content, etc., of specific countermeasures and prepare to implement them. The same response will also be taken in the event a party attempts toacquire a large percentage of the shares of a Group company.

2. Other Matters Concerning to Corporate Governance System
The status of the Company’s internal system for timely disclosure of company information is as follows.
The Company is a company with a Nominating Committee, etc. under the Companies Act, and the Board of Directors determines basic management policies,etc., supervises the execution of business by Executive Officers, while greatly delegating authority to make business decisions to Executive Officers.
The Company’s authority on timely disclosure of company information is delegated to Executive Officers, and the Board of Directors and the Audit
Committee supervise the execution of business by Executive Officers appropriately.
Disclosure Policy stipulates that the Company appropriately discloses information fairly and with high transparency in accordance with laws and regulations
and the rules established by financial instruments exchanges on which the Company is listed. With regard to important information concerning the Company
and Group companies, etc., based on laws and regulations, financial instruments exchange rules, internal rules on the management and disclosure of
information, etc., the Company will comprehensively grasp and manage important information to be disclosed, and promptly disclose it while ensuring theaccuracy of the disclosure details.
Based on this policy, in order to disclose important information in a timely and appropriate manner, the Company has established the following system in
the internal rules, etc. for the management and disclosure of information.
Important facts and information related to each business division and head office division of the Company shall be reported to the Global Corporate Brand& Communications Division and the Investor Relations Division by the person in charge of the management of the relevant division based on the above
internal rules. In addition, important information at Group companies is similarly transmitted through each department of the Company that manages saidGroup company.
With regard to important information obtained through such reports, the person in charge of managing the information shall strictly manage it, and the Legal
Division will consider the necessity of timely disclosure based on the Financial Instruments and Exchange Act and rules on timely disclosure of financial
instruments exchanges. If timely disclosure is deemed necessary, after confirming the appropriateness and accuracy of the disclosure details, disclosurematerials shall be prepared, and after the approval of the Executive Officer in charge of legal affairs and the relevant Executive Officer, the Company shallreport it to the President before timely disclosure at the Legal Division.
Financial results information for each fiscal year are prepared by the Finance Group in charge of financial results, and the status of the settlement of accounts
is disclosed at the Legal Division after deliberations by the Management Committee and approval by the Board of Directors. Financial results information foreach quarter is prepared by the Finance Group and disclosed after deliberations by the Senior Executive Committee and reporting to the Board of Directors on
the status of financial results.
In addition, the Company has established the Disclosure Committee consisting of the Executive Officer in charge of legal affairs and the Executive Officer
in charge of finance, and in addition to confirming laws and regulations concerning disclosure of important information and financial instruments exchange
rules, determining disclosure policies, etc., and confirming the appropriateness of the contents of the Annual Securities Report, etc. A Director who is astanding Audit Committee member attends as an observer.