Mitsubishi Materials : Governance (pp. 74~88)

[Governance]

Those on the supervision side and those on the execution side fulfill their responsibilities with a sense of duty to support the value creation of the Mitsubishi Materials Group.

3	15	18	17	16
13	11	6	1	Akira Takeuchi	7	Hikaru Sugi	13	Shinichi Nakamura	17	Tetsuya Tanaka
		9	7
			3	Nobuhiro Takayanagi	9	Tatsuo Wakabayashi	15	Shogo Yamaguchi	18	Kazuto Hirano
			1
						Hiroshi Watanabe		Yasunobu Suzuki		Jun Nagano
				6	11	16

Value Creation and	Top Message	About the Mitsubishi	Business Strategies	Corporate Strategies	Strengthening the	Governance	Financial Data/
Performance	Materials Group	Foundation	Corporate Data

14 12

	8		4
	10	2	Naoki Ono	8	Hiroshi Sato	14	Tetsuro Sakai
5
	2		4	Yoshikazu Yasui	10	Koji Igarashi
					Mariko Tokuno		Makoto Shibata
			5	12

Photo taken with consideration on preventing the spread of COVID-19 (June 24, 2021).

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MITSUBISHI MATERIALS CORPORATION INTEGRATED REPORT 2021 75

Value Creation and		About the Mitsubishi			Strengthening the		Financial Data/
Top Message	Business Strategies	Corporate Strategies	Governance
Performance	Materials Group	Foundation	Corporate Data

[Governance]

Directors and Executive Officers (As of June 24, 2021)

Directors

1 Akira Takeuchi

Director, Chairman of the Board

Audit Committee

		Remuneration Committee
Apr. 1977	Joined the Company
Jun. 2009	Managing Director
Apr. 2014	Executive Vice President
Apr. 2015	President
Jun. 2018	Director, Chairman of the Board (to present)

[Reasons for nominating] Mr. Akira Takeuchi, following appointment as Managing Director of the Company in 2009, had served as Director in charge of corporate communications, general affairs, the environment, human resources, safety and health and the affiliated corporations' business. After serving as President, he has been Chairman since June 2018.

At present, as Chairman of the Board of Directors, he plays the leading role in enhancing the effectiveness of the Board of Directors noticeably by proceeding with meetings in such a way as to facilitate open and quality discussions in the Board of Directors meetings.

As explained above, he has extensive knowledge and rich experience related to the business and operations of the Group. The Company believes that he will strengthen the appropriate supervisory and decision-making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Director.

2 Naoki Ono

Director; Chief Executive Officer
(Representative Executive Officer)		Nomination Committee
CEO; General Operation of the Company;
Remuneration Committee
responsible for: Internal Audit
Apr. 1979	Joined Mitsubishi Mining & Cement Co., Ltd.
Jun. 2014	Managing Director;
Apr. 2016	President, Cement Company
Executive Vice President;
Jun. 2016	President, Cement Company
Director; Executive Vice President;
Apr. 2017	President, Cement Company
Director; Executive Vice President;
Jun. 2018	General Manager, Corporate Strategy Div.
President
Jun. 2019	Director; Chief Executive Officer
Apr. 2021	Director; Chief Executive Officer; CEO (to present)

[Reasons for nominating] Mr. Naoki Ono, following appointment as Managing Director of the Company in 2014, served as President, Cement Company, and General Manager of the Corporate Strategy Division. After serving as President, he has been as Director, Chief Executive Officer, since June 2019.

At present, as Director, Chief Executive Officer and CEO, he supervises the management of the Group and is leading a variety of measures for management reform. Additionally, he reports on the overall situation of management of

the Group regularly at the Board of Directors meetings, thereby fulfilling his accountability to the Board of Directors as Executive Officer.

As explained above, he has extensive knowledge and rich experience related to the business and operations of the Group. The Company believes that he will strengthen the appropriate supervisory and decision-making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Director.

3 Nobuhiro Takayanagi

Director; Managing Executive Officer

CFO; responsible for: Corporate Strategy, Corporate Communications, Finance & Accounting, Affiliated Corporations & Aluminum; General Manager, Corporate Strategy Dept.

Apr. 1986 Joined the Company

Apr. 2016 Operating Officer; Vice President, Metals Company

Dec. 2017 Operating Officer; President of Mitsubishi Cable Industries, Ltd. Apr. 2019 Operating Officer; President of Mitsubishi Cable Industries, Ltd.,

Vice President, Advanced Products Company of the Company Apr. 2020 Managing Executive Officer;

Vice President, Advanced Products Company Apr. 2021 Managing Executive Officer; CFO;

General Manager, Corporate Strategy Dept. Jun. 2021 Director; CFO;

General Manager, Corporate Strategy Dept. (to present)

[Reasons for nominating] Mr. Nobuhiro Takayanagi took office as Managing Executive Officer of the Company in April 2020. After serving as Vice President, Advanced Products Company, he has undertaken his duties as CFO and has been in charge of Corporate Strategy, Corporate Communications, Finance & Accounting and Affiliated Corporations & Aluminum as well as General Manager, Corporate Strategy Dept. since April 2021.

He has a global perspective and insight into general aspects of management through his experience as Vice President, Metals Company; Vice President, Advanced Products Company; and the president of major Group companies in Japan. After taking office as Managing Executive Officer, in particular, not only has he supported the management of the entire Advanced Products Company as Vice President of the company, but also has been engaged mainly in strengthening the growth potential of the Electronic Materials & Component Div.

As explained above, he has extensive knowledge and rich experience related to the business and operations of the Group. The Company believes that he will strengthen the appropriate supervisory and decision-making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Director.

7 Hikaru Sugi

Outside Director		Nomination Committee
	Remuneration Committee

Apr. 1974 Joined Nippondenso Co., Ltd. (currently DENSO CORPORATION) Jun. 2002 Executive Director, Member of the Board; General Manager,

Air-Conditioning Product Div.

Jun. 2004 Executive Director; General Manager, Air-Conditioning Product Div. Jun. 2005 Executive Director; General Manager,

Thermal Systems Business Div.

Jun. 2008 Senior Executive Director, Member of the Board;

General Manager, Engineering Research & Development Center Jun. 2011 Senior Executive Director, DENSO CORPORATION;

President and CEO, DENSO INTERNATIONAL AMERICA, INC. Jun. 2013 Executive Vice President, DENSO CORPORATION;

President and CEO, DENSO INTERNATIONAL AMERICA, INC. Jun. 2014 Advisor, Senior Technical Executive, DENSO CORPORATION Jun. 2016 Advisor (resigned June 2017)

Jun. 2018 Director of the Company (to present)

[Reasons for nominating] Mr. Hikaru Sugi has extensive technical knowledge in development, design and manufacturing processes. He also has insight into corporate strategy from a global perspective and general aspects of management through his experience as a manager of a manufacturer that develops its business all over the world. Based on his insight, he has given useful advice from various viewpoints in the Board of Directors meetings so as to enhance mid- to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc. from an independent position. Additionally, as a member of the Nomination Committee and the Remuneration Committee, he has been involved in selecting candidates for Directors and Executive Officer and deciding on the remuneration of Directors and Executive Officer, etc. of the Company from an objective and neutral position.

As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will continue helping to strengthen the appropriate supervisory and decision- making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Outside Director.

8 Hiroshi Sato

Outside Director

Chairperson of the Audit Committee

Apr. 1980 Joined The Mitsubishi Bank, Ltd. (currently MUFG Bank, Ltd.) Jun. 2007 Executive Officer; Manager, Credit Div.

Apr. 2008 Executive Officer; Senior Superintendent Jun. 2008 Standing Audit & Supervisory Board Member Jun. 2011 Managing Director, Mitsubishi Steel Mfg. Co., Ltd.

(resigned June 2017)

Jun. 2017 Standing Audit & Supervisory Board Member of the Company Jun. 2019 Director of the Company (to present)

[Reasons for nominating] Mr. Hiroshi Sato has insight into finance, accounting and other aspects of corporate management from his experience as a corporate auditor of a financial institution and as a management at a manufacturer. Based on his insight, he has given useful advice from various viewpoints in the Board of Directors meetings so as to enhance mid- to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc. from an independent position. Additionally, as Chairperson of the Audit Committee, he has been engaged mainly in auditing the execution of duties by Executive Officers, etc. from an objective and neutral position.

As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will continue helping to strengthen the appropriate supervisory and decision- making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Outside Director.

9 Tatsuo Wakabayashi

Outside Director		Nomination Committee
	Chairperson of the Remuneration Committee

Apr. 1977 Joined Mitsubishi Trust Bank (currently Mitsubishi UFJ Trust and Banking Corporation)

Jun. 2008 Managing Director, Mitsubishi UFJ Trust and Banking Corporation (MUTB)

Jun. 2009 Senior Managing Director, MUTB

Jun. 2010 Senior Managing Director and Chief Executive, Trust Assets Division, MUTB; Managing Officer and Group Head, Integrated Trust Assets Business Group, Mitsubishi UFJ Financial Group, Inc. (MUFG)

Jun. 2011 Senior Managing Director, MUTB; Director, MUFG Apr. 2012 President, MUTB; Director, MUFG

Apr. 2013 President, MUTB; Deputy Chairman, MUFG

Dec. 2013 President, CEO and Chairman, MUTB; Deputy Chairman, MUFG Jun. 2015 President, CEO and Chairman, MUTB;

Director and Deputy Chairman, MUFG Apr. 2016 Chairman, MUTB; Director, MUFG Jun. 2016 Chairman, MUTB

Jun. 2018 Part time engagement, Audit & Supervisory Board Member of the Company

Jun. 2019 Director of the Company (to present) Apr. 2020 Senior Advisor, MUTB (to present)

[Reasons for nominating] Mr. Tatsuo Wakabayashi has insight into finance, accounting and other aspects of corporate management from his extensive experience as a manager after having served as President and Chairman at financial institutions. Based on his insight, he has given useful advice from various viewpoints in the Board of Directors meetings so as to enhance mid- to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc. from an independent position. Additionally, as Chairperson of the Remuneration Committee and a member of the Nomination Committee, he has been involved in deciding on the remuneration of Directors and Executive Officer, etc. and selecting candidates for Directors and Executive Officer of the Company from an objective and neutral position.

As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will continue helping to strengthen the appropriate supervisory and decision- making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Outside Director.

4 Yoshikazu Yasui

Director	Nomination Committee
		Audit Committee

Apr. 1984 Joined the Company Apr. 2015 Operating Officer;

General Manager, Human Resources Dept. Apr. 2017 Operating Officer;

General Manager, Human Resources Dept., General Administration Div.

Apr. 2018 Managing Executive Officer;

General Manager, Human Resources & General Affairs Div. Jun. 2019 Managing Executive Officer;

General Manager, Human Resources & General Affairs Div. Apr. 2020 Senior Executive Councillor

Jun. 2020 Director (to present)

[Reasons for nominating] Mr. Yoshikazu Yasui took office as Managing Executive Officer and General Manager, Human Resources & General Affairs Div. of the Company in April 2018. After serving as Managing Executive Officer and Senior Executive Councillor, he has undertaken the duties of Director and a member of the Nomination Committee and the Audit Committee since June 2020.

At present, as a member of the Nomination Committee and the Audit Committee, he is involved in selecting candidates for Directors and Executive Officer of the Company and auditing the execution of duties by Executive Officers, etc. He has done this by leveraging his insight into general aspects of management gained through his experience in working in the Human Resources Dept. for many years and performing business administration of Group companies in Japan and overseas.

As explained above, he has extensive knowledge and rich experience related to the business and operations of the Group. The Company believes that he will strengthen the appropriate supervisory and decision-making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Director.

5 Mariko Tokuno

Outside Director	Chairperson of the Nomination Committee
		Remuneration Committee

Jan. 1994 Joined Louis Vuitton Japan K.K. Apr. 2002 Senior Director, Sales Administration Mar. 2004 Vice President, Tiffany & Co., Japan Inc.

Aug. 2010 President and Representative Director, Christian Dior K.K.

Sep. 2013 President, Representative Director and CEO, Ferragamo Japan K.K. (resigned September 2016)

Jun. 2016 Director of the Company (to present)

[Reasons for nominating] Ms. Mariko Tokuno has insight into corporate strategy and general aspects of management from a global perspective gained through her extensive experience as a manager of the Japanese operations of leading international firms. Based on her insight, she has given useful advice from various viewpoints in the Board of Directors meetings so as to enhance mid- to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc. from an independent position. Additionally, as Chairperson of the Nomination Committee and a member of the Remuneration Committee, she has been involved in selecting candidates for Directors and Executive Officer and deciding on the remuneration of Directors and Executive Officer, etc. of the Company from an objective and neutral position.

As explained above, she has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that she will continue helping to strengthen the appropriate supervisory and decision-making functions of the Board of Directors. For these reasons, the Company believes her appointment to the position of Outside Director.

6 Hiroshi Watanabe

Outside Director

Audit Committee

Apr. 1972 Joined the Ministry of Finance Japan (MOF) Jul. 1998 Deputy Director-General, MOF

Personal Secretary to the Minister, MOF Jul. 2001 Deputy Director-General, MOF

Jul. 2002 Senior Deputy Director-General, International Bureau, MOF Jan. 2003 Director-General, International Bureau, MOF

Jul. 2004 Vice Minister of Finance for International Affairs, MOF Jul. 2007 Special Advisor to the Minister of Finance

Oct. 2007 Special Advisor, Japan Center for International Finance

Apr. 2008 Professor, Hitotsubashi University-Graduate School of Commerce and Management / Faculty of Commerce and Management

Oct. 2008 Deputy Governor, Japan Finance Corporation Apr. 2012 CEO, Executive Managing Director,

Japan Bank for International Cooperation

Dec. 2013 Governor, Japan Bank for International Cooperation (resigned June 2016)

Oct. 2016 President, Institute for International Monetary Affairs (to present) Jun. 2017 Director of the Company (to present)

[Reasons for nominating] Mr. Hiroshi Watanabe has knowledge of domestic and overseas finance and economics and general aspects of management gained through his experience in key positions at the MOF and in management positions in government-affiliated financial institutions. Based on his insight, he has given useful advice from various viewpoints in the Board of Directors meetings so as to enhance mid- to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc. from an independent position. Additionally, as a member of the Audit Committee, he has been engaged mainly in auditing the execution of duties by Executive Officers, etc. from an objective and neutral position.

As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will continue helping to strengthen the appropriate supervisory and decision- making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Outside Director.

10 Koji Igarashi

Outside Director

Audit Committee

Apr. 1980 Joined Ajinomoto Co., Inc.

Apr. 2002 Senior Vice President, Ajinomoto U.S.A., Inc.

Jun. 2007 Executive Officer; Vice President, Amino Acids Company, Ajinomoto Co., Inc.

Jun. 2009 Executive Officer; General Manager, Corporate Planning Div. Jun. 2011 Member of the Board, Corporate Vice President

Jun. 2013 Member of the Board, Corporate Senior Vice President Jun. 2017 Senior Advisor (resigned June 2020)

Jun. 2020 Director of the Company (to present)

[Reasons for nominating] Mr. Koji Igarashi has extensive technical knowledge in technological development and manufacturing as well as insight into overall management, such as global business development, business reform and creation, and promotion of digitalization through his experience as a manager of a food manufacturer that develops its business all over the world. Based on his insight, he has given useful advice from various viewpoints in the Board of Directors meetings so as to enhance mid- to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc. from an independent position. Additionally, as a member of the Audit Committee, he has been engaged mainly in auditing the execution of duties by Executive Officers, etc. from an objective and neutral position.

As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will continue helping to strengthen the appropriate supervisory and decision- making functions of the Board of Directors. For these reasons, the Company believes his appointment to the position of Outside Director.

Executive Officers

11 Yasunobu Suzuki

Executive Vice President and Executive Officer

(Representative Executive Officer)

President, Advanced Products Company

12 Makoto Shibata

Managing Executive Officer

Responsible for: DX Promotion, System Strategy,

Corporate Research & Development, New Business Development

13 Shinichi Nakamura

Managing Executive Officer

Responsible for: Procurement & Logistics, Safety, Environment & Quality, Corporate Production Engineering, Production Technology Management, Mineral Resources

14 Tetsuro Sakai

Managing Executive Officer

President, Metals Company

	Shogo Yamaguchi		Tetsuya Tanaka
15	17
Managing Executive Officer	Managing Executive Officer
President, Environment & Energy Business Company	President, Metalworking Solutions Company
	Jun Nagano		Kazuto Hirano
16	18
Managing Executive Officer	Managing Executive Officer
Responsible for: General Affairs, Legal, Human Resources,	President, Cement Company
CSR & Compliance, Business Process Innovation

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[Governance]

Message from the Chairman of the Board of Directors

Striving to further improve corporate governance and strengthen the functions of the Board of Directors

Akira Takeuchi

Chairman

Value Creation and		About the Mitsubishi			Strengthening the		Financial Data/
Top Message	Business Strategies	Corporate Strategies	Governance
Performance	Materials Group	Foundation	Corporate Data

[Governance]

Message from the Chairpersons of the Nomination Committee, Audit Committee and Remuneration Committee

Supporting, from a Nominating Committee standpoint, prompt and appropriate executive decisions in response to accelerating changes in the socioeconomic environment

Chairperson of the Nomination Committee

Mariko Tokuno, Outside Director

Internal and External Situation and Initiatives on Corporate Governance

The role that society expects corporations to play is changing as economic and social conditions change and people's values change. The pace of change has particularly accelerated in recent years, and the content of corporate governance that stakeholders demand of the Group has become more broad- ranging and severe. The Corporate Governance Code was revised in 2021 as a measure to achieve new growth under the changing environment surrounding companies triggered by the COVID-19 pandemic. Efforts are already underway on many items, but we will continue to exercise the functions of the Board of Directors, secure diversity of core human resources, and actively address issues such as those related to sustainability.

The Group has migrated to a company with a Nomination Committee with a goal of enhancing the management supervision function of the Board of Directors, improving the transparency and fairness of management, and speeding up the decision-making in the execution of business, and two years have passed since the migration. Vigorous discussions were held at the Nomination Committee, Audit Committee, and Remuneration Committee immediately after the migration, culminating in the Company formulating and publishing a Basic Policy on Corporate Governance in April of 2020.

And regarding the effectiveness of the Board of Directors, we periodically conduct evaluation questionnaires for all Directors, and based on the results, the Board of Directors conducts discussions and discloses the evaluation results in a Corporate Governance Report. In the discussions, opinions are exchanged on measures to improve effectiveness, and a draft of the improvement plan is reported to the Board of Directors for implementation. Into the future, we will make an effort to improve the effectiveness of the Board of Directors by steadily going through the cycle of "evaluation, formulation of improvement measures, and implementation of improvements."

Further Strengthening Group Governance

With an Aim of Efficient Management of the

Board of Directors

One major role of the Board of Directors is to perform appropriate decision-making on important items and supervise progress

of the Group management plan. In fiscal 2022, continuing from last year, the Board of Directors periodically receives reports on progress and achievement of Medium-term Management Strategy and single-year goals, as well as issues and their handling, and discusses those topics in the Board of Directors meetings. In regard to the important items, etc. in the Medium- term Management Strategy, we have discussions on a monthly theme, and exchange frank opinions with the Executive Officers in charge. Our intention is that this will enable the Board of Directors to appropriately make decisions on important items as well as to perform monitor functions more effectively. The Board of Directors will robustly support the execution side in achieving the goals in the Medium-term Management Strategy.

Another important role of the Board of Directors is its supervisory function for ensuring the corporate and legal compliance of the Group. We found that conflict-of-interest transactions were conducted at subsidiaries outside Japan in fiscal 2021, so we strengthened measures for internal control at the Group as a whole. The Board of Directors intends to further expand its monitoring function for the Group as a whole and more appropriately fulfill monitoring functions while gaining the cooperation of the execution side in areas such as early communication of information.

Changes in the environment surrounding companies are accelerating due to the global spread of COVID-19. In order to achieve sustainable growth after COVID-19 and improve corporate value over the medium to long term, further advancement of corporate governance and strengthening of the functions of

the Board of Directors will be imperative. As head of the Board of Directors, I will continue to do my best to promote free and constructive discussions from the perspective of supervising the status of achieving business goals and monitoring corporate and legal compliance, and to achieve high-quality deliberation as well as effective and efficient management of the Board of Directors.

Nomination Committee Activities Status and Major Accomplishments

The Nomination Committee met for ten times in fiscal 2021. The responsibilities of the committee are to nominate candidates for the Board of Directors, to advise on the selection of Executive Officers, and to plan for the succession of the President and develop the next generation of management.

Under a policy that Directors should be members who always adapt to changes in the business environment, we updated the list of candidates for Outside Directors and verified the fulfillment rate in the Director skills matrix in fiscal 2021. We also clarified the search process for Outside Directors and worked to create a mechanism that ensures fairness. And as new initiatives, we strove to gain a deeper understanding of qualities as leaders of candidates for successor to the President through 360-degree feedback surveys and the like for those candidates and provided opportunities for presentations by Executive Officers from the perspective of developing and evaluating the next generation of top management.

In this way, I feel activities of the Committee are becoming more specific and detail-oriented. I believe that the mission of the Nomination Committee is to accurately recognize the situation the Company faces, to nominate candidates for the Board of Directors who are most suitable for the advancement of the Company, and to work to assess the President or other Executive Officers entrusted with business execution. And I am determined that we continue to work diligently as a committee without fear of change.

Effectiveness of the Board of Directors and Evaluation of That

In December 2020, we conducted evaluation questionnaires on the effectiveness of the Board of Directors, and I believe that the results are valid. In a word, I think it would be good to have awareness to further evolve the efforts that have been accumulated so far in each item without relenting under any circumstances. The Board of Directors has changed greatly compared with when I was appointed in 2016, and I feel that it has become much more active. And I feel that, in an aim to have even more active, it would be good to form venues for Directors to discuss with each other in addition to the Board of Directors. While I do not see major issues currently in the Company's corporate governance, I intend to continue to monitor the situation closely to ensure that the governance system is maintained even at future changes in the system with corporate transformation (CX) and reforms in the corporate culture.

Deepening Understanding of the Company and Always Remembering to be Fair and Objective

I believe it is important as an Outside Director and as Chairperson of the Nomination Committee to be prepared for emergencies by constantly striving to deepen understanding of the company's situation, and to remember to be fair and objective. Moreover, executives must respond to the ever- accelerating changes in the socioeconomic environment, make quick and decisive decisions, and control the direction of the Company's operations. That is the true goal of transforming to a company with a Nomination Committee, and I intend to support quick and decisive executive decisions from the standpoint of the position I hold at the Company.

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[Governance] Message from the Chairperson of the Nomination Committee, Audit Committee and Remuneration Committee

Value Creation and		About the Mitsubishi			Strengthening the		Financial Data/
Top Message	Business Strategies	Corporate Strategies	Governance
Performance	Materials Group	Foundation	Corporate Data

Audit Committee Fiscal 2021 Activities Status and Major Accomplishments

The Audit Committee started fiscal 2021 with the three new members. Our main activities are as follows.

First is to audit status of measures for compliance with antitrust laws. We monitored sufficiency and progress of measures for preventing reoccurrence in line with an incident that came to light in fiscal 2020 at subsidiaries in Japan and presented the opinions of the Audit Committee to the Board of Directors and others. Second is the issue of how long Accounting Auditors remain assigned. Discussions on this have continued for years, and I feel that we are close to reaching a reasonable consensus. Third is dealing with conflict-of-interest transactions discovered at subsidiaries outside Japan. As investigation of the facts proceeds, measures to strengthen internal control in Group companies are being taken in order to prevent reoccurrence, and this has been made an important audit item for fiscal 2022.

Board of Directors Firmly Fulfilling its Function of Auditing Executive Officers

The Company's Board of Directors is firmly fulfilling its function of auditing Executive Officers. I think this is largely due to the formation of an awareness that Executive Officers make much of the discussions of the Board of Directors under the strong leadership of top management. And that means that the Board of Directors must work to enhance its own effectiveness in order to achieve a growth strategy with a sense of speed. Listening to shareholders directly is also effective. For example, meetings between institutional investors and Outside Directors enable valuable opinions to be heard, and I would like to see those continue.

Supervisory functions of the Board of Directors steadily evolve, and we aim for further strengthening of effectiveness

Chairperson of the Audit Committee

Hiroshi Sato, Outside Director

Further Strengthening Group Governance

Since finding a quality issue, the Company has promoted Group governance enhancement as one of the most important top management issues and worked to enrich that by means such as transforming to a company with a Nomination Committee. Listening to Group company employees, I get a feel that the intentions of top management have come to be communicated well. Into the future, we need to work on the following two points as well.

First is to further strengthen internal control at locations where it is difficult for governance to reach. This is mainly companies that entered the Group by M&A, especially, subsidiaries outside Japan. Second is organization of Group companies taking into account our governance capabilities. Like with growth strategies, I believe that working with a sense of speed is essential.

I, myself, will try to enhance "defense" as Audit Committee Chairperson. I will work to run the Audit Committee with the aim of us becoming a company that sets the norm for a society with a deeply ingrained awareness of compliance. Meanwhile, as an Outside Director, I will push for bold and aggressive growth strategies, always taking capital efficiency into consideration with the aim of having a vigorous "offense" stance. By balancing "offense" and "defense," I believe we will do everything in our power to make the Company one that is highly valued by its stakeholders and contributes to society.

Remuneration Committee Activities and Future Issues

The Remuneration Committee met six times in fiscal 2021 with the five members attending all times.

The fiscal 2021 Remuneration Committee decided fiscal

2021 Director and Executive Officer remuneration, decided to introduce a system of stock-based remuneration using a trust, and deliberated subjects such as suitability of the executive remuneration system.

As an issue for the future, we will continue to discuss design of a remuneration system from the perspective of investors, thereby enabling us to build a system that contributes to maximizing corporate value.

Executive Officer remuneration is composed of the fixed remuneration of basic remuneration and the performance-linked remuneration of annual bonuses and stock-based compensation. That stock-based compensation achieves a shared sense of profit with shareholders in a simple manner, and the goal of that system is to function as an incentive to improve the Group's medium- to long-term corporate value. If the market demands

1. remuneration system with a more medium- to long-term perspective in the future, we will consider necessary measures such as increasing the ratio of stock-based compensation.

It is important for all employees to be aware that the basis for corporate governance lies is in their daily work

Chairperson of the Remuneration Committee

Tatsuo Wakabayashi, Outside Director

Steadily Increasing Effectiveness of the Board of Directors

I feel that the effectiveness of the Company's Board of Directors is steadily increasing. Areas requiring improvement are clearly identified based on a questionnaire survey implemented annually, and actions for improvement are steadily being taken. On the other hand, I feel that in order to make the Board of Directors even more active, it is necessary to spend more time explaining and discussing matters that are important to the management of the Company. Many of the reported items on the agenda include matters that can be omitted from the Board of Directors meeting by providing advance explanation, so further improvement of the efficiency of the operation method would be desirable in order to secure sufficient time for deliberations on important issues.

I believe that corporate governance is essential for companies because it maximizes the interests of shareholders and other stakeholders and that the basis for this is the identification, control, and management of risks associated with the company in question. Therefore, the basis of corporate governance lies

in the "worksite," and "worksite abilities" hold the key to that. It is important for all employees to be aware that corporate governance is not something that the officers and executives come up with, but rather has its basis in their own daily work.

I, myself, would like to contribute to the sustainable growth of the Company in my day-to-day activities by exchanging frank opinions through the Board of Directors and committees.

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[Governance]

Corporate Governance

Value Creation and		About the Mitsubishi			Strengthening the		Financial Data/
Top Message	Business Strategies	Corporate Strategies	Governance
Performance	Materials Group	Foundation	Corporate Data

Basic Approach

The basic approach to corporate governance of Mitsubishi Materials Corporation (the "Company") is described below.

• We have, based on the corporate philosophy of the Group, vision, values, code of conduct, mission and the Basic Policy on Corporate Governance* established by the Board of Directors, developed trust with all stakeholders related to the Company and its subsidiaries (hereinafter, the "Group"), such as shareholders and investors as well as employees, customers, client or supplier companies, creditors and local communities, and also develop our corporate governance.
• Among the governance systems under the Companies Act, we have chosen to be a Company with a Nomination Committee, and by separating supervision and execution, will strengthen the Board of Directors' management supervisory functions, improve the transparency and fairness of management and accelerate business execution and decision making.
• We acknowledge the enhancement of corporate governance to be one of the most important management issues, and continuously make efforts to improve our corporate governance.

As the Group is an integrated business entity supplying basic materials and elements indispensable to the world, and is involved in recycling business and renewable energy business, we adopted an in-house company system so as to facilitate and appropriately execute business operations.

• We have prepared the "Basic Policy on Corporate Governance," which is disclosed on the Company's website, as a compilation of the basic approach to and framework of corporate governance.

Overview of Corporate Governance

(Board of Directors)

The functions and duties of the Board of Directors shall be as follows:

• Upon delegation by shareholders, the Board of Directors shall indicate the direction of its management and make an effort to enhance the Group's medium- to long-term corporate value by, for example, engaging in freewheeling and constructive discussion on management policies and management reforms;
• The Board of Directors shall determine matters that may have a serious impact on management, such as management policies and management reforms, in accordance with the provisions of laws, the Articles of Incorporation and the Board of Directors Rules;
• The Board of Directors shall accelerate decision-making in business execution by delegating the authority over business execution to an appropriate extent to Executive Officers in accordance with the provisions of the Board of Directors Rules, etc. so that Executive Officers may assume the responsibility and authority to make decisions and execute business in response to changes in the business environment; and
• The state of Group governance and the progress of the execution of duties, including the progress of the management strategy, shall be reported by Executive Officers to and supervised by the Board of

Directors on a periodic basis.

The Board of Directors is comprised of 10 Directors (including 6 Outside Directors), and the Chairman of the Board of Directors is performed by the Chairman of the Company.

(Nomination Committee)

The Nomination Committee determines the policy for the nomination of candidates for Director, the content of proposals, etc. concerning the election and dismissal of Directors to be submitted to General Meetings of Shareholders. In addition to this, the Nomination

Committee reviews and responds to inquiries from the Board of Directors concerning the election and dismissal, etc. of Executive Officers.

The Nomination Committee is comprised of 5 Directors (including 3 Outside Directors), and the Chairman of the Nomination Committee is performed by an Outside Director.

(Audit Committee)

The Audit Committee audits the legality and validity of duties performed by Directors and Executive Officers, via audits either using internal control systems or directly by the Audit Committee member selected by the Audit committee.

The Audit Committee is comprised of 5 Directors (including 3 Outside Directors), and the Chairman of the Audit Committee is performed by an Outside Director.

The Audit Committee also elects 2 full time Member of the Audit Committee in order to improve the effectiveness of audits conducted by the Audit Committee.

(Remuneration Committee)

The Remuneration Committee establishes policies for determining individual remuneration for Directors and Executive Officers, and determines the individual remuneration to be received by Directors and Executive Officers based on such policies.

The Remuneration Committee is comprised of 5 Directors (including 3 Outside Directors), and the Chairman of the Remuneration Committee is performed by an Outside Director.

(Executive Officer)

Executive Officers execute business in accordance with the prescribed segregation of duties, based on the delegation of authority from the Board of Directors. The Company has 10 Executive Officers, of which the Chief Executive Officer Naoki Ono, and the Executive Vice President and

• An individual of exceptional insight and character;
• An individual with a strong sense of ethics and a law-abiding spirit; and
• An individual who can properly fulfill his or her duties concerning the exercise of supervision over the management of the Company and the determination of the direction of management.

Further, with respect to candidates for Independent Outside Director, the Nomination Committee will nominate and select individuals who satisfy the following requirement in addition to the above requirements:

• An individual who has no material interest in the Group and who can remain independent.

The specific selection of personnel shall be decided after deliberation by the Nomination Committee.

Provided that the Company considers that an Outside Director is not independent if he or she falls under any of the conditions listed below in addition to meeting the standards for independence established by Tokyo Stock Exchange, Inc.

1. An individual who falls under or has fallen under any of items (1) or (2)

below, either presently or in the past:

(1) An executive or non-executive Director of the Company; or

(2) An executive or non-executive Director of the Company's

subsidiary.

2. An individual who falls under any of items (1) through (5) below:

(1) An executive of a client or supplier company of the Company,

whose value of transactions amounted to 2% or more of the

consolidated net sales of the Company or the client or supplier

company as of the end of the previous fiscal year;

(2) A person who received, as a professional or consultant, etc.,

consideration of not less than 10 million yen from the Company

in the previous fiscal year, excluding his/her consideration as a

Director;

(3) An executive of an organization that received a donation of not less

than 10 million yen from the Company in the previous fiscal year;

(4) A shareholder who directly or indirectly holds at least 10% of the

Overview of the Corporate Governance System (Chart as of April 1, 2021)

General Meeting of Shareholders

Election

Election

Board of Directors

10 (including six Outside Directors)

Accounting Auditor

Nomination Committee

Remuneration Committee

Audit Committee

Coordination

Five (including three Outside Directors)

Five (including three Outside Directors)

Five (including three Outside Directors)

Election

Transfer of authority

Report

Audit

Report

Instructions and coordination from

Coordination

the Audit Committee to the Internal Audit Dept.

Operational Execution

Executive Ofcer (Executive Ofcers' Meeting)

Instruction

Chief Executive Ofcer

Instruction

Report

Instruction

Report

Sustainable Management Ofce

Governance Deliberative Council

Internal

Audit

Audit Dept.

Consultation at Expert Committee

Deliberation

Opinion (Director in charge)

Business Divisions

Support

Related Departments

Directly controlled business sites/subsidiaries

Executive Officer Yasunobu Suzuki, are elected as Representative Executive Officers upon the decision of the Board of Directors.

(Executive Officers' Meeting)

Following the delegation of authority from the Board of Directors, Executive Officers' Meetings review and determine important matters concerning the management of the entire Group. Executive Officer's Meeting is attended by all 10 Executive Officers, and the Chairman of the Executive Officer's Meeting is performed by the Chief Executive Officer.

Nomination of Candidates for Director and the Election and Dismissal of Executive Officers

1. Policy for Nomination of Candidates for Director

Our basic approach to the structure of the Board of Directors, which fulfills the roles of determining the direction of management and exercising supervision over the progress of business execution,

is to ensure that it comprises a diverse range of human resources with different expert knowledge, experience, and other qualities. In particular, the Nomination Committee will consider candidates for Outside Director to ensure that they comprise individuals who possess experience and knowledge in corporate management (business similar to or different from the Group's business, etc.) and organizational management, and individuals who possess broad and advanced expert knowledge and extensive experience in relation to finance and accounting, legal affairs, production engineering, research and development, sales and marketing, or international relations, etc.

In light of the basic policy on the structure mentioned above, the Nomination Committee will nominate and select individuals who satisfy the following requirements as candidates for Director, regardless of individual attributes concerning gender, nationality and race, etc.:

	total number of voting rights of the Company or an executive of
	such shareholder; or
(5) The Company's Accounting Auditor or its employee, etc.
3.	An individual who has fallen under any of items (1) to (5) of 2 above
	at any time in the past three (3) years:
4.	A close relative of any of the persons listed in item (1) or (2) of 1
	above, items (1) to (5) of 2 above, or 3 above (excluding unimportant
	persons); or
5.	A person who has served as the Company's Outside Director for a
	period of more than eight (8) years.

2. Policy for Election and Dismissal of Executive Officers

In electing Executive Officers responsible for the execution of business tasks, the Nomination Committee will elect individuals who satisfy the following requirements, regardless of individual attributes concerning gender, nationality and race, etc.:

• An individual of exceptional insight and character;
• An individual with a strong sense of ethics and a law-abiding spirit; and
• An individual well-versed in management and the business activities of the Group.
  In relation to the election process, the Chief Executive Officer

will first draft a proposal for the election of Executive Officers after consulting with relevant officers as necessary. The Chief Executive Officer will then submit a proposal for the election of Executive Officers to the Board of Directors based on the deliberations and responses to inquiries at a Nomination Committee meeting, and Executive Officers will be elected by resolution of the Board of Directors based on a comprehensive review of the candidates' personal history, achievements, specialist knowledge, and other capabilities.

In addition, if any event occurs that makes an Executive Officer highly ineligible in light of these standards, the Executive Officer shall be dismissed by resolution of the Board of Directors following a review by the Nomination Committee.

82 MITSUBISHI MATERIALS CORPORATION INTEGRATED REPORT 2021

MITSUBISHI MATERIALS CORPORATION INTEGRATED REPORT 2021 83