Fuji Electric : Corporate Governance Report

CORPORATE GOVERNANCE	FUJI ELECTRIC CO., LTD.

Date of Latest Update: June 25, 2024

Fuji Electric Co., Ltd.

Chairman of the Board and Chief Executive Officer: Michihiro Kitazawa Contact: Taizo Kishi, General Manager, Corporate Planning Office, Corporate Management Planning Headquarters Tel: [phone] Securities Code: 6504 https://www.fujielectric.com/

The status of corporate governance at Fuji Electric Co., Ltd., is as follows.

I. Basic Policy on Corporate Governance, Capital Structure, Company Profile, and Other Basic Information

1. Basic Policy on Corporate Governance [Basic Policy]

Fuji Electric* defines its corporate mission as follows.

We, Fuji Electric, pledge as responsible corporate citizens in a global society to strengthen our trust with communities, customers and partners.

Our mission is to:

• Contribute to prosperity
• Encourage creativity
• Seek harmony with the environment

Aiming to fulfill this mission, Fuji Electric has developed a corporate governance framework that consists of a Board of Directors, which performs the functions of management supervision and important decision making, Audit & Supervisory Board Members and the Audit & Supervisory Board, which are in charge of the management audit function, and a Nomination and Remuneration Committee as an optional advisory organ for the Board of Directors, which ensure the fairness, transparency, and objectivity of the procedures related to the nomination and remuneration of Directors and Audit & Supervisory Board Members.

To reinforce management supervision and audit functions, Fuji Electric actively calls on outside officers to fulfill the role of providing management supervision and management audits from an objective perspective. At the same time, outside officers offer useful advice and suggestions from various perspectives about all areas of Fuji Electric's management, helping to ensure the appropriateness of management judgments.

In addition, to ensure that outside officers are able to properly perform their functions and fulfill their roles, Fuji Electric endeavors to appoint officers that are sufficiently independent by carefully evaluating any potential personal, capital, or transactional relationships between Fuji Electric and outside officer candidates or the company in which they are employed.

Furthermore, to strengthen our management and business execution functions, Fuji Electric has a Chief Executive Officer and Chairman (the "Chairman and CEO"), who oversees the formulation of our medium- to long-term business strategies and management plans, Chief Operating Officer and President (the "President and COO"), who oversees business execution based on business strategies and management plans, and executive officers.

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• In this corporate governance report, "Fuji Electric" refers to the conglomerate comprising the Company, its subsidiaries, and its affiliates.

[Basic Policies]

1. Protecting shareholder rights and ensuring their equal treatment
2. Conducting appropriate collaboration with non-shareholder stakeholders
3. Guaranteeing proper information disclosure and ensuring transparency
4. Executing the duties of the Board of Directors
5. Engaging in dialogue with shareholders

[Reasons for not adopting the principles of Japan's Corporate Governance Code]

The Company adopts the principles of Japan's Corporate Governance Code.

[Disclosure based on the principles of Japan's Corporate Governance Code] Updated

Principle 1.4: Cross-Shareholdings

The Company holds listed shares on a policy basis to maintain and strengthen relationships with investee companies. As a basic policy, we will reduce our cross-shareholdings; even if certain rationality is recognized, we will reduce them while paying attention to the impact on management and business. Under the basic policy, we reduced our holdings of listed stocks from 102 at the end of March 2019 to 6 by the end of March 2024.

The Board of Directors will periodically evaluate the rationality of shareholding from the following perspectives and disclose the evaluation details.

• Necessity of maintaining and strengthening relationships with the investee companies
• Comparison of capital cost and return

Voting rights attached to cross-shareholdings are exercised based on a comprehensive evaluation of whether each proposal will contribute to the establishment of appropriate corporate governance frameworks and improvements in medium- to long-term corporate value at the issuing company as well as of the impacts on Fuji Electric. The content of proposals will be discussed with the issuing company as necessary.

Principle 1.7: Related Party Transactions

In accordance with the Rules of the Board of Directors, the Company requires approval to be received from the Board of Directors with regard to major transactions with Directors, with the companies that Directors control, and with major shareholders of the Company (shareholders possessing 10% or more of the Company's voting rights).

Supplementary Principle 2.4.1: Ensuring Diversity in the Company, Including Promotion of Active Participation of Women

・The Corporate Code of Conduct states, "Fuji Electric and its employees respect human rights in their

relationships within all corporate activities. In addition, we will promote the activities of diverse human resources, and strive to create a workplace that takes health and safety into consideration, with each employee having a rewarding job." As one of the Management Policies, we are also committed to "maximizing our strengths as a team, respecting employees' diverse ambition."

・Our human resource development policies and work environment policies and goals to ensure

workplace diversity are described on our website: https://www.fujielectric.com/company/csr/with_employee/diversity2.html

Principle 2.6: Roles of Corporate Pension Funds as Asset Owners

Fuji Electric takes the following steps to ensure that the corporate pension fund is able to exercise its role as an asset owner.

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・Fund managers that possess the financial, accounting, and other insight necessary for managing reserve funds are appointed and training is provided to foster specialized capabilities.

・Policies for managing reserve funds is Fund management policies are set by an asset management committee in which external consultants participate as observers.

・The status of operation of the corporate pension fund is monitored on a regular basis.

・Independence in the operation of the corporate pension fund, including the selection of its managers, is ensured.

Principle 3.1: Full disclosure

1. Corporate Philosophy, Management Policies, and Medium-Term Management Plan
2. 1. Corporate Philosophy and Management Policies

Fuji Electric's corporate philosophy and management policies can be viewed on the following website:

https://www.fujielectric.com/company/philosophy.html

2) Medium-Term Management Plan

Information on Fuji Electric's FY2026 Medium-Term Management Plan can be found on the following website:

https://www.fujielectric.com/ir/management/plan.html

(2) Basic policies related to Corporate Governance

Fuji Electric's basic policy on corporate governance can be found in section I-1. (Basic Policy on Corporate Governance) of this report.

1. Policies and procedures for use by the Board of Directors in deciding remuneration of senior management members and Directors

The Board of Directors will decide remuneration of Directors based on the disclosed Policy for Deciding Remuneration of Directors and Audit & Supervisory Board Members, remuneration standards and reports from the Nomination and Remuneration Committee, an organization to advise the Board of Directors.

1. Policies and procedures for appointment and dismissal of senior management members and nomination of Director and Audit & Supervisory Board Member candidates by the Board of Directors

With consideration of the overall balance of insight, experience, and other qualities and the diversity of the Board of Directors, the following policies have been adopted for the nomination of Director and Audit & Supervisory Board Member candidates.

Standing Director candidates should be selected based on whether or not they possess the insight, experience, and other qualities necessary for implementing the Company's management policies.

Outside Director candidates are to be selected based on a comprehensive evaluation of the candidate's insight and experience, including management experience in other companies and expertise and international experience in the energy and environmental fields related to the Company's business, to determine their ability to conduct multifaceted management decisions, as well as of their understanding with regard to Fuji Electric's management and their independence from the Company. This approach is adopted to facilitate the reinforcement of Fuji Electric's management supervisory functions and ensure the validity and appropriateness of important management decisions.

For Standing Audit & Supervisory Board Members, candidates are selected based on consideration of how versed they are on all aspects of Fuji Electric's business operations and of the specialized insight and experience they possess.

Outside Audit & Supervisory Board Member candidates are to be selected based on a comprehensive

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evaluation of the candidate's insight and experience, to determine their ability to make multifaceted management decisions, as well as of their understanding with regard to Fuji Electric's management and their independence from the Company, and selected individuals should possess specialized knowledge. This approach is adopted to facilitate the reinforcement of Fuji Electric's management audit functions and ensure that Outside Audit & Supervisory Board Members can provide advice and instructions that are viable to management decisions.

The Board of Directors nominates Director and Audit & Supervisory Board Member candidates in accordance with the Rules of the Board of Directors. Audit & Supervisory Board Member candidates are nominated after receiving consent from the Audit & Supervisory Board.

In selecting the Chairman and CEO and the President and COO, Fuji Electric nominates individuals with the insight, experience, and other qualities necessary for enacting management policies as well as a capacity for multifaceted management decisions.

The Board of Directors will examine the possibility of dismissing a Director, the Chairman and CEO, the President and COO, or an Audit & Supervisory Board Member in any of the following cases.

1. The individual has committed a violation of laws, regulations, or the articles of incorporation.
2. The individual has engaged in activities that may significantly diminish Fuji Electric's corporate value.
3. The individual is applicable under the provisions for dismissal from a Director position described in the Companies Act of Japan.
4. The individual is judged incapable of fulfilling the role anticipated at the time of their appointment. The Board of Directors will make decisions on the nomination of Director and Audit & Supervisory Board Member candidates and the appointment and dismissal of the Chairman and CEO and the President and COO based on reports from the Nomination and Remuneration Committee, an advisory organization.

1. Explanations of reasons for nominations of individual Director and Audit & Supervisory Board Member candidates by the Board of Directors
   The reasons for nominations of individual Director and Audit & Supervisory Board Member candidates by the Board of Directors are the same as those contained in the Reference Materials for the Ordinary General Meeting of Shareholders attached to convocation notices for the Ordinary General Meeting of Shareholders. The Reference Materials for the Ordinary General Meeting of Shareholders can be accessed through the following website. https://www.fujielectric.com/ir/stock_bond/shareholders_meeting.html

Supplementary Principle 3.1.3: Sustainability Initiatives

・Having identified the promotion of energy and environment businesses as our important business

challenge (materiality) related to sustainability, and the promotion of Environmental Vision 2050, the realization of wellbeing, and the further enforcement of governance as our materiality for strengthening our business foundation, we promote our global activities with the aim of making contributions to a sustainable society such as the promotion of SDGs and decarbonization through our businesses and improving our corporate value.

The details of our sustainability initiatives are disclosed on our website and Integrated Reports. ESG: https://www.fujielectric.com/company/csr/index.html

Integrated reports (Fuji Electric Reports):https://www.fujielectric.com/ir/box/doc/pdf/rep2023/all.pdf

・For human capital, the Corporate Code of Conduct states, "Fuji Electric and its employees respect

human rights in their relationships within all corporate activities. In addition, we will promote the activities of diverse human resources, and strive to create a workplace that takes health and safety into consideration, with each employee having a rewarding job." As one of the Management Policies, we are also committed to "maximizing our strengths as a team, respecting employees' diverse ambition." While placing respect for human rights and our employees' safety and health at the foundation of everything we do, we are actively working to make it easier for our employees to demonstrate their abilities and develop human resources toward mid- to long-term business development.

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Toshihito Tamba

Yukari Tominaga, Yukihiro Tachifuji, and Tomonari Yashiro Michihiro Kitazawa and Shiro Kondo

・Intellectual property is our important management resources as the Corporate Code of Conduct

states, "we strictly manage our intellectual property, personal information, customer and confidential information, and fully respect the property and information of others." We are promoting our global intellectual property strategies, including strengthening our intellectual property efforts deeply incorporated in business planning and R&D and promoting international standardization.

・In the field of climate change, we announced our support for the Recommendations of Task Force on

Climate-related Financial Disclosures (TCFD) in June 2020. We are promoting initiatives and information disclosure in accordance with the TCFD Recommendations, including analyzing climate change risks and opportunities for the entire supply chain using several scenarios.

Supplementary Principle 4.1.1: Scope of delegation of authority to management from the Board of Directors

The Rules of the Board of Directors stipulate that matters legally required to be decided by the Board of Directors as well as matters that effectively fall into the same category should be decided by the Board of Directors due to their importance and the nature of these decisions. Accordingly, authority for these decisions is assigned to the Board of Directors.

Authority for decisions pertaining to operational execution are delegated to management. These decisions are to be made based on the directives of the business strategies and management plans decided through discussion by the Board of Directors.

Executive officers are appointed to assume responsibility related to operational execution, and decisions on operational execution for which authority is delegated from the Board of Directors are made by the Executive Committee, which is membered by Executive Directors and executive officers. The results of decisions made by the Executive Committee are reported to the Board of Directors to form a framework for quickly detecting and addressing specific issues and challenges faced in frontline operations. This framework ensures the effectiveness of the operational execution oversight functions of the Board of Directors.

Principle 4.9: Independence Standards and Qualification for Independent Directors The applicable information can be found in section II-1. (Independent Officers) below.

Supplementary Principle 4.10.1: Use of Optional Advisory Bodies

The Company has a Nomination and Remuneration Committee, the majority of whose members are Independent Outside Directors and which are chaired by an Independent Outside Director.

The Nomination and Remuneration Committee discusses and reports the following matters to the Board of Directors:

1. Policy on the composition of the Board of Directors
2. Policies and criteria regarding the appointment or dismissal of Directors, the President, and Audit & Supervisory Board Members
3. Appointment or dismissal of Directors, the President, and Audit & Supervisory Board Members
4. Matters regarding the formulation and implementation of a succession plan for the President
5. Policies and criteria regarding the remuneration for Directors and Audit & Supervisory Board Members
6. Details of the remuneration for Directors and Audit & Supervisory Board Members

Shown below are the members of the Nomination and Remuneration Committee as of the date of latest update and their meetings held in FY2023.

(Committee members)

Chairman:Independent Outside Director

Committee members: Independent Outside Director

Representative Directors

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(Meetings held)

May 17, 2023: Meeting on executive compensation

July 27, 2023: Meeting on annual activity plans and confirmation of challenges in the fiscal year 2023

January 31, 2024: Meeting to discuss the introduction of stock-based compensation system

February 29, 2024: Meeting on the appointment of Directors and Audit & Supervisory Board Members and on the skills matrix

Supplementary Principle 4.11.1: Composition of the Board of Directors

The Company has determined insight, experience, and other qualities necessary for the Board of Directors in light of the business strategies, listed such qualities expected of each Director, and disclosed the list at the URL below: https://www.fujielectric.com/company/csr/management/corporate_governance.html

The policies and procedures related to the appointment of Directors can be found in section (4) under "Principle 3.1 Full Disclosure."

Supplementary Principle 4.11.2: Concurrent positions held by Directors and Audit & Supervisory Board Members

Information on major concurrent positions held by Directors and Audit & Supervisory Board Members can be found in the annual business reports provided in the notice of convocation of the Ordinary General Meeting of Shareholders.

The notice of convocation of the Ordinary General Meeting of Shareholders can be accessed through the following website. https://www.fujielectric.com/ir/stock_bond/shareholders_meeting.html

Supplementary Principle 4.11.3: Evaluations of effectiveness of the Board of Directors

1. In accordance with a defined schedule, the Board of Directors meets 13 times a year and conducts effective discussions and makes appropriate decisions based on important agenda items.
2. Relevant materials are provided to Directors prior to meetings, and meeting agendas are formulated to contain an appropriate number of items and allow for sufficient time, resulting in active discussions.
3. The Board of Directors periodically receives reports on management conditions and uses these reports to supervise business execution.
4. The ideal means of operating the Board of Directors has been self-assessed and analyzed as follows with advice sought from an external agency.

Method

In February 2024, a questionnaire survey was conducted for all Directors and Audit & Supervisory Board Members constituting the Board of Directors.

The method of response was to respond directly to an external agency, which was intended to ensure anonymity. The Company's Board of Directors discussed and evaluated its effectiveness at its regular meeting in April 2024 based on the survey results compiled and reported by the external agency.

Summary of Results

Overall, the responses to the questionnaire survey have shown generally positive evaluation of the operation and discussion of the Board of Directors and the effectiveness of the overall Board of Directors has been recognized as ensured.

In the previous evaluation, we shared the necessity of further discussing our medium- to long-term important issues. Since then, we have made necessary improvements, including providing opportunities to report and discuss our development and investment projects of priority businesses and human resources strategy. While we believe our efforts have made substantial achievements, some Directors and Audit & Supervisory Board Members emphasized the need for further efforts to enhance the functions of the Board of Directors and foster more dynamic discussions at its meetings.

In the future, the Company's Board of Directors will give careful consideration to the aforementioned

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issues identified by this effectiveness evaluation and deal with the respective issues one by one with a clear schedule defined individually to continuously engage in activities for enhancing the functions of the Board of Directors.

Supplementary Principle 4.14.2: Policies for training Directors and Audit & Supervisory Board Members

Standing officers undergo compliance training concerning such matters as legal affairs and taxation prior to assuming their positions and are also provided with opportunities to acquire necessary knowledge on an ongoing basis after appointment. Outside officers receive explanations regarding the Company and their expected roles prior to assuming their positions. After appointment, they also receive explanations regarding our business and R&D strategies and participate in business site inspections.

Principle 5.1: Policy for constructive dialogue with shareholders

1. Dialogues with shareholders are managed by the Director responsible for finance or the General
   Manager of the President's Office. With the attendance of the executive officer responsible for business segments and others, we have active dialogues with shareholders through various opportunities, such as financial results presentations.
2. Internal organizations for supporting dialogue have been established and proactive coordination is pursued while performing tasks such as the preparation and examination of disclosure materials and the sharing of necessary information in order to realize constructive dialogue.
3. Financial results presentations and factory tours for investors are held as venues for dialogue in addition to individual meetings.
4. Input gathered from shareholders through dialogue activities is reported to the Board of Directors every year and also relayed through reports as necessary to the management and relevant divisions so that this information can be shared and utilized.
5. The Fuji Electric Rules for Prevention of Insider Trading have been established to install rigorous protections against leaks of insider information. In addition, a quiet period is held beginning from the settlement date of each quarter until the announcement of the Company's financial results during which the Company refrains from responding to inquiries regarding financial information.

[Action to Implement Management That is Conscious of Cost of Capital and Stock Price] Please refer to the following resources for more information.

Integrated reports (Fuji Electric Reports) https://www.fujielectric.com/ir/box/doc/pdf/rep2023/all.pdfFY2026 Medium-Term Management Plan https://www.fujielectric.com/ir/policy/detail/plan.html

2. Capital Structure

Ratio of shares held by foreign institutions and	More than 30%
individuals
[Major Shareholders]	Updated
	Name		Number of shares	Investment ratio (%)
The Master Trust Bank of Japan, Ltd. (Trust Account)	25,108,600	17.58
Custody Bank of Japan, Ltd. (Trust Account)		17,024,847	11.92
Asahi Mutual Life Insurance Company		3,955,183	2.77
National Mutual Insurance Federation of Agricultural	3,059,000	2.14
Cooperatives
MSIP CLIENT SECURITIES		2,691,940	1.88
FANUC CORPORATION		2,684,200	1.88
STATE STREET BANK WEST CLIENT - TREATY		2,409,894	1.69

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505234
SSBTC CLIENT OMNIBUS ACCOUNT		2,226,777	1.56
FURUKAWA CO., LTD.		2,205,146	1.54
NORTHERN TRUST CO．（AVFC） RE FIDELITY		2,138,050	1.50
FUNDS
Has controlling shareholders (excluding parent	―
company)
Has parent company	No

Supplementary Information Updated

The information on our major shareholders is as of March 31, 2024.

The investment ratios represent the proportion of their shares to the total number of outstanding shares minus our treasury stock (6,466,915 shares).

3. Company Details

Stock exchange, section	Tokyo Stock Exchange, Prime;
	Nagoya Stock Exchange, Premier; Fukuoka Stock
	Exchange
Fiscal year-end	March 31
Industry	Electric Appliances
Number of employees at end of previous fiscal	More than 1,000
year (consolidated)
Net sales in previous fiscal year (consolidated)	More than ¥1 trillion
Number of consolidated subsidiaries at end of	More than 50, less than 100
previous fiscal year

1. Guidelines for Measures to Protect Minority Shareholders in the Event of Transactions with Controlling Shareholders
   ―
2. Other Conditions That May Materially Affect Corporate Governance

Basic policies on group management

Fuji Electric's corporate philosophy is to "Contribute to prosperity," "Encourage creativity" and "Seek harmony with the environment," and the Company intends to contribute to the creation of responsible and sustainable societies through its energy and environment businesses as stated in its management policies.

Significance of owning a listed subsidiary

Of the Company's consolidated subsidiaries, Fuji Furukawa Engineering & Construction Co. Ltd. falls under a listed subsidiary. Fuji Furukawa Engineering & Construction plays an important role as a general equipment company in Fuji Electric's plant business and is working on the expansion of sales channels outside Fuji Electric with its high expertise, which makes us believe that the company's ensured independence as a listed company in Fuji Electric will contribute to the maximization of the corporate value of the entire Fuji Electric.

Measures to ensure the effectiveness of the listed subsidiary governance framework

In order to ensure the effectiveness of the listed subsidiary governance, Fuji Electric supports the building of a listed subsidiary governance framework and takes measures including avoidance of taking concurrent positions with the listed subsidiary. The Company imposes no operational restrictions on the listed subsidiary and strives to ensure the independence and autonomy of the listed subsidiary to

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encourage its own business judgment.

The listed subsidiary appoints a certain number of independent outside directors to make decisions based on their own business judgments in the Board of Directors for ensuring the effectiveness of the governance framework.

1. Business Management Organization for Management Decision Making, Operational Execution, and Auditing and Other Corporate Governance Systems

1. Organizational Structures and Operation

Organizational structure

Company with Company Auditors

[Board of Directors]

Number of directors pursuant to articles of

15

incorporation

Term of Directors pursuant to articles of

1 year

incorporation

Chairman of Board of Directors

Chairman (unless the Chairman concurrently

serves as President)

Number of Directors

10

Has Outside Directors

Yes

Number of Outside Directors

4

Number of Outside Directors that are also

4

independent directors

Relationship between Outside Directors and the Company (1)

Updated

Name

Association

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Toshihito Tamba

Comes from

△

other company

Yukari Tominaga

Comes from

△

other company

Yukihiro Tachifuji

Comes from

other company

Tomonari Yashiro

Academic

○

• Multiple choice items regarding relationship with the Company
• ○ indicates that the individual is now or was recently applicable under the item.

• indicates that the individual was applicable under the item in the past.

• ● indicates that a close relative of the individual is now or was recently applicable under the item.

• indicates that a close relative of the individual was applicable under the item in the past.

1. A person involved in operation of the Company or its subsidiaries
2. A person involved in operation or a non-executive director of the parent company of the Company

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c. A person involved in operation of a subsidiary of the parent company of the Company

d. An entity or a person involved in operation of an entity of which the Company is a major supplier e. An entity or a person involved in operation of an entity that is a major supplier of the Company f. A consultant, an accounting specialist, or a legal specialist receiving large amounts of monetary

payments or other financial assets from the Company that are separate from executive remuneration g. A major shareholder of the Company (or a person involved in operation of an entity that is a major

shareholder of the Company)

h. A person involved in operation of an entity with which the Company has a significant business relationship that does not qualify under d., e., or f. above (only applies to individual in question)

i. A person involved in operation of an entity at which a person involved in operation of the Company serves as an outside officer (only applies to individual in question)

j. A person involved in operation of an entity that receives large amounts of donations from the Company (only applies to individual in question)

k. Other

Relationship between Outside Directors and the Company (2)

Updated

Name	Independent	Supplementary information	Reason for appointment
	officer	regarding status of independence
Toshihito	〇	Mr. Tamba is an Executive	Mr. Tamba possesses a wealth of
Tamba		Adviser to Tokyo Century	experience and considerable insight as a
		Corporation. The Company	manager of listed companies. By
		conducts transactions with the	providing advice and instructions from
		aforementioned company. In the	an objective, multifaceted perspective,
		fiscal year ended March 31, 2024,	he is fulfilling his role in reinforcing
		transactions with Tokyo Century	management supervision functions and
		Corporation amounted to	ensuring the validity and
		approximately ¥1 billion.	appropriateness of management
			decisions related to business execution.
			In relation to Mr. Tamba, there are no
			concerns regarding his independence,
			such as being a person involved in
			operation of a major business partner of
			the Company, which are applicable
			under the standards of relevant
			financial instruments exchanges and
			the Company; therefore, the Company
			has determined that he is unlikely to
			have conflicts of interest with our
			general shareholders and has
			designated him as an independent
			officer.
			Fuji Electric has a business relationship
			with Tokyo Century Corporation.
			However, the amount of transactions
			between the Company and the company
			accounted for less than 1% of total net

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