Murata Manufacturing : Update of Corporate Governance Report (Tokyo Stock Exchange)

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Corporate Governance Report

Last Update: June 28, 2024

Murata Manufacturing Co., Ltd.

Norio Nakajima

President and Representative Director

Contact: Toshiyuki Kambayashi General Manager of General Administration Department (Phone: [phone])

Securities Code: 6981 https://corporate.murata.com/en-global/

I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information

1. Basic Views

The Company's mission is to carry out operations based on the following "Murata Philosophy" which is the most important management principles of the Company, and to contribute to the advancement of society and culture through the provision of products and services.

We contribute to the advancement of society by enhancing technologies and skills

applying scientific approach

creating innovative products and solutions being trustworthy and,

together with all our stakeholders, thankful for the increase in prosperity. (Established in 1954, revised in 1979)

Based on this management principles, Murata considers corporate governance to be one of the highest priorities in management in order to achieve sustainable growth and increase corporate value over the mid- to long-term, and we work constantly to establish and operate optimal management systems while taking into consideration every stakeholder.

The Company's basic principles on corporate governance are set out in the "Corporate Governance Guidelines," which are posted on the Company's website.

https://corporate.murata.com/en-global/company/corporate_governance

[Reasons for Non-compliance with the Principles of the Japan's Corporate Governance Code] The Company implements all principles of the Corporate Governance Code (revised June 11, 2021).

[Disclosure Based on the Principles of the Japan's Corporate Governance Code] [Principle 1.4 Cross-Shareholdings]

(1) Policy regarding strategic shareholdings

In the electronics industry, with rapid changes in the market environment and technological innovation, to aim for sustainable improvement in corporate value, it is necessary to have cooperative relationships with various companies in all areas of development, procurement, production, and sales. The Company holds stock in such counterparties with the aim of maintaining and strengthening transactional relationships with counterparties that will contribute to the improvement of the Company's corporate value over the mid- to long-term.

(2) Objectives and rationale for strategic shareholdings

For all strategic shareholding stocks, the Board of Directors comprehensively examines the appropriateness of holding stocks every year from qualitative aspects such as the purpose of holding and transaction status, as well as quantitative aspects such as profitability relative to the cost of capital. For stocks for which the appropriateness of holding cannot be confirmed, the Board of Directors will engage in dialogue with the relevant party and reduce the number of stocks strategically held. If a relevant party indicates its intention to sell, etc. the shares, the Company will not hinder the party from doing so, nor will it take action such as to imply a possible reduction in business transactions.

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(3) Standards on exercise of voting rights

Regarding the exercise of voting rights for strategic shareholdings, the Company determines to vote for or against a proposal upon individually investigating whether the contents of each proposal do not fall under violation of laws and regulations, anti-social activities, or events that may be detrimental to shareholder value, or whether the proposal may lead to improvement of corporate value for the Company and the companies whose stocks are held by the Company from a medium- to long-term viewpoint through maintaining and strengthening business and cooperative relationships.

[Principle 1.7 Related Party Transactions]

Concerning transactions involving conflicts of interests with Members of the Board of Directors, approval is required from the Board of Directors under the Companies Act, and after implementation, reports are made to the Board of Directors. The presence of transactions between the Company and Members of the Board of Directors and relatives of these persons is confirmed with Members of the Board of Directors. Additionally, transactions with related parties are disclosed in line with laws and regulations.

[Supplementary Principle 2-4-1: Ensuring Diversity in the Promotion to Core Human Resources]

With diversity, equity, and inclusion, the Company will continue to create an environment in which diverse human resources can excel, with the aim of creating innovations that will lead to the development of society, through promotion of global job rotation, acquisition and active participation of human resources with diverse experiences, provision of diverse career paths, and promotion of women in the workplace and other actions.

The Company's policies for human resource development and internal environment development to ensure diversity, as well as the status of their implementation, and the company's policies and voluntary and measurable goals for ensuring diversity in the promotion to core human resources are available on the Company's website.

https://corporate.murata.com/en-global/csr/people/employees

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owner]

The Murata Corporate Pension Fund handles the management of assets accumulated for the Company's corporate pension. Decisions related to the asset management are made by the Board of Representatives, following deliberation by the Asset Management Committee. Members of the Asset Management Committee and the Board of Representatives include general managers of the Company's Human Resources, Accounting & Controller, and Finance departments, as well as other personnel with appropriate qualifications. Members also include leaders of the labor union, as representatives of the beneficiaries.

Furthermore, to ensure the appropriate monitoring of asset managers, the Company assigns and cultivates personnel having the necessary experience and credentials and takes advice from outside experts.

[Principle 3.1 Full Disclosure]

(i)-a: Management philosophy

The Company has established the basic philosophy of its management as its "Murata's Philosophy," which all executives and employees share and aim to enact. Murata's Philosophy is available on the Company's website. https://corporate.murata.com/en-global/company/philosophy

(i)-b: Management strategy, management plan

The Company formulates its Mid-term Direction in three-year increments, and the Mid-term Policy for the three years from FY 2022 to FY 2024 is available on the Company's website. In the Mid-term Direction 2024, the Company has identified economic value indicators, which place emphasis on the ratio of operating income to net sales and return on invested capital (ROIC), and social value indicators, which include greenhouse gas emissions and the percentage of power from renewal energy sources, and has set four mid- term management issues, including the promotion of management reform, to be addressed in order to achieve those indicator targets. At the same time, the Company has also formulated Vision2030, its Long-term Direction for 2030, and is working to disseminate information.

Vision2030:

https://corporate.murata.com/en-global/company/business-strategy/vision2030

Mid-term Direction 2024:

https://corporate.murata.com/en-global/company/business-strategy/mid-term-policy

(ii): Basic views and policies on corporate governance As stated in "1. Basic Views" above.

(iii): Policies and procedures in determining remuneration of Members of the Board of Directors

Please see "Director Remuneration" "Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof" in "1. Organizational Composition and Operation" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.

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(iv): Policies and procedures in the appointment and dismissal of senior management, and the nomination of candidates for Members of the Board of Directors

Please see "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.

(v): Explanations with respect to the individual appointments and dismissals of candidates for Members of the Board of Directors

Reasons for the appointment of candidates for Members of the Board of Directors and the dismissal of Members of the Board of Directors are disclosed in the Convocation Notice for the Ordinary General Meeting of Shareholders and other disclosures.

The composition of the Board of Directors and main skills, experiences, and knowledge held by each Member of the Board of Directors, as well as their definitions and reasons for selection, will also be published in the Convocation Notice for the Ordinary General Meeting of Shareholders and other disclosures.

Convocation Notice for the Ordinary General Meeting of Shareholders: https://corporate.murata.com/en-global/ir/info/meetings

[Supplementary Principle 3-1-3: Initiatives on Sustainability]

(1) Initiatives on Sustainability

In keeping with the spirit of Murata's Philosophy, the Company Group's management philosophy, it is committed not only to compliance with laws and regulations, but also to highly transparent governance, respect for human rights, health and safety, social contribution, environmental preservation, etc.

In addition, recent changes in society, as represented by SDGs and the Paris Agreement, require that companies pursue not only economic value, but also integrated value in harmony with people and nature. Seeing this as an opportunity for further strengthening of the management foundation and growth, the Company Group has set key issues as initiatives in the mid-term management plan and is promoting daily activities.

For details, please refer to the Company's website. https://corporate.murata.com/en-global/csr

(2) Investments in Human Capital

The Company Group, we regard CS and ES as important values, and we seek to realize innovation through continuous emphasis and improvement in the areas. To us, CS means "continuing to create and provide value that is recognized by the customer." And ES means that "every employee achieves satisfaction and continuing growth through the performance of their work duties." We strive to be a company in which these goals can be realized in employees' jobs daily. In addition, we have set employee engagement as a medium- to long-term KPI, and we will continue to foster diverse environments and implement a range of initiatives toward the cultivation of this type of corporate culture.

For details, please refer to the Company's website. https://corporate.murata.com/en-global/csr/people/employees

(3) Investments to Intellectual Capital

In our Company Group, after establishing the Basic Policy of Intellectual Property Activities, employees collaborate beyond the organization framework so as to engage in the intellectual property activities that would benefit the business.

For details of measures regarding Intellectual Property, please refer to the Murata value report and the Company's website. https://corporate.murata.com/en-global/csr/governance/ip

(4) Responses to climate change

The Company Group has set "Strengthening climate change measures" as a materiality and is working to meet the various demands of society, and will contribute to the reduction of greenhouse gases in manufacturing through business operations in line with Science Based Targets (SBT), the recommendations of the Task Force on Climate-related Financial Information Disclosure (TCFD), and the RE100.

For details of responses to climate change and TCFD measures, please refer to the Company's website. Reinforcement of climate change countermeasures: https://corporate.murata.com/en-global/csr/environment_murata/climate_change

TCFD measures: https://corporate.murata.com/en-global/csr/environment_murata/tcfd

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[Supplementary Principle 4-1-1: Duties of the Board of Directors and Definition of Range of Entrustment to Management] The Board of Directors carries out functions including decision-makingregarding management policy and execution of important operations as well as supervising the execution of duties by Members of the Board of Directors, and proposals and reports for the Board of Directors are defined within the Regulations of the Board of Directors.

To enable swift and resolute decision-making by the Executive Directors, certain individual decisions on important business execution, such as acquisition and disposal of important assets, or organization or personnel matters, are delegated to the Executive Directors.

[Principle 4-9: Independence Standards and Qualification for Independent Directors]

Please see "Independent Directors" "Matters relating to Independent Director" in "1. Organizational Composition and Operation" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.

[Supplementary Principle 4-11-1: Overall Balance of Expertise, Experience, and Capabilities of the Board of Directors and View Regarding Diversity and Scale]

Please see "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.

[Supplementary Principle 4-11-2: Status of Members of the Board of Directors Concurrently Serving as Officers of Other Listed Companies]

The Company nominates candidate Members of the Board of Directors who are able to dedicate the time and energy required to appropriately carry out the duties and obligations of a Member of the Board of Directors, and they do so in practice.

Significant concurrent positions of Members of the Board of Directors of the Company are stated in the "Convocation Notice for the Ordinary General Meeting of Shareholders."

Convocation Notice for the Ordinary General Meeting of Shareholders: https://corporate.murata.com/en-global/ir/info/meetings

[Supplementary Principle 4-11-3: Analysis and Evaluation of Effectiveness of the Board of Directors]

The Company endeavors to improve the effectiveness of the Board of Directors by conducting an annual analysis and evaluation of the effectiveness of the Board of Directors. For details of process of the analysis and evaluation, results of the analysis and evaluation, recognition of challenges, and future initiatives, etc. please refer to the Company's website.

*https://corporate.murata.com/en-global/company/corporate_governance/evaluation

[Supplementary Principle 4-14-2: Policy on Training for Members of the Board of Directors]

The Company's Members of the Board of Directors ensure that they acquire, verify and update the knowledge deemed necessary for carrying out their roles and responsibilities.

To acquire and verify knowledge deemed necessary for carrying out their roles and responsibilities, newly appointed Members of the Board of Directors are provided with items such as external training, and information about the Company's business operations, mechanisms, at the time of their appointment.

The Company provides opportunities for training in corporate governance, risk management, compliance and internal controls, etc. to Members of the Board of Directors.

The Company provides opportunities other than the Board of Directors meeting for the acquisition of knowledge relating to status of the Company's business and management issues, etc. to Outside Members of the Board of Directors.

[Principle 5-1: Policy for Constructive Dialogue with Shareholders]

Please see "2. IR Activities" of "III. Implementation of Measures for Shareholders and Other Stakeholders" below.

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[Action to Implement Management that is Conscious of Cost of Capital and Stock Price]

In The Companies, capital cost consciousness has been ingrained from early on. The Companies have established an internal interest rate system, records interest expenses using interest rates set at the same level as capital costs in the management accounting, and operates businesses with a consciousness of capturing profitability that exceeds capital costs. To make continued improvements to the capital efficiency, we have been setting ROIC (pre-tax basis)* targets at 20% or higher since the Medium-term Direction 2021. In addition, The Companies have set forth 3-layer portfolio management in the Medium-term Direction 2024, and aims for both capital efficiency and profitability through the proper allocation of management resources. The Companies' Weighted Average Cost of Capital (WACC) in FY 2023 was 8.4% (estimate by the Company).

• ROIC (pre-tax basis) = Operating income／Average invested capital at the beginning and end of the period(=Property, plant and equipment・right-of-use assets・goodwill・intangible assets＋inventories＋trade receivable－trade payables)

The Companies set ROIC (pre-tax basis) of 20% or higher as one of the management targets of the Medium-term Direction 2024. However, the result of 10.0% in FY 2023 fell below the target. This largely reflected the declines in the ratio of operating income to net sales and the capital turnover ratio due to a significant slowdown in demand for components in consumer markets, such as smartphones and personal computers, from the level expected when the targets in the Mid-termDirection 2024 were set, as well as recording of an impairment loss for manufacturing machineries, etc. for cylindrical type lithium-ionsecondary batteries.

Specific measures for the further improvement of capital cost and ROIC (pre-tax basis) are as follows. The Companies aim to increase corporate value by proceeding with these measures, and enhance market valuation.

ROIC	- Promotion of initiatives for the expansion of market share for each product lineup
	- Implementation of measures to enhance productivity, such as promotion of rationalization
	at manufacturing sites
	- Thorough evaluation of economic efficiency of investments for new capital investments
Capital cost	- Proactive IR activities (disclosure of information and dialogue)
	- Establishment of stable management structure by strengthening corporate governance
	- Promotion of initiatives related to sustainability

[Status of Dialogue with Shareholders and Investors]

Our basic policies for investor relations activities are threefold: "Timely, appropriate and fair disclosure of information," "Building long-term relationships of trust through constructive dialogue with shareholders and investors," and "Working together with shareholders and investors to increase corporate value."

For details of structure for dialogue, IR activities, dialogue results and dialogue themes and feedback within the company, please refer to the Company's website.

https://corporate.murata.com/ja-jp/company/corporate_governance/evaluation

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2. Capital Structure

	(1) Foreign Shareholding Ratio		More than 30%
(2) Status of Major Shareholders・
	Shareholder name		Number of shares held	Ownership ratio (%)
	The Master Trust Bank of Japan, Ltd. (Trust Account)		313,038,800	16.57
	Custody Bank of Japan, Ltd. (Trust Account)		133,082,180	7.04
	Nippon Life Insurance Company		49,687,713	2.63
	The Bank of Kyoto, Ltd.		47,340,207	2.51
	Meiji Yasuda Life Insurance Company		47,168,100	2.50
	SSBTC CLIENT OMNIBUS ACCOUNT		45,554,914	2.41
	STATE STREET BANK WEST CLIENT - TREATY 505234		33,830,018	1.79
	THE BANK OF NEW YORK MELLON 140042		25,986,938	1.38
	Mizuho Bank, Ltd.		24,892,122	1.32
	GOVERNMENT OF NORWAY		23,983,018	1.27
	(3) Controlling Shareholder (except for Parent Company)			―
	(4) Parent Company			None

1. Supplementary Explanation:

1. Although the Company holds 138,209 thousand shares of treasury stock, this stock does not have voting rights, and is excluded from the above Status of Major Shareholders.

3. Of the above number of shares held, the number of shares in trust operations are not stated as the Company cannot identify the details.

3.Corporate Attributes

(1)

Listed Stock Market and Market Section

Tokyo Stock Exchange, Prime Market

(2)

Fiscal Year-End

March

(3) Type of Business

Electric Appliances

(4)

Number of Employees (consolidated)

as

of

the

End

of

the

More than 1000

Previous Fiscal Year

(5)

Sales (consolidated) as of the End of the Previous Fiscal Year:

More than ¥1 trillion

(6)

Number of Consolidated Subsidiaries

as

of

the

End

of

the

From 50 to less than 100

Previous Fiscal Year

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
   －
2. Other Special Circumstances which may have Material Impact on Corporate Governance
   －

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II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

1. Organization Form

(2) Directors

Maximum Number of Directors Stipulated in Articles of Incorporation

Term of Office Stipulated in Articles of Incorporation

Chairperson of the Board of Directors

Number of Directors

Appointment of Outside Directors

Number of Outside Directors

Number of Independent Directors Designated fromamong Outside Directors

i) Outside Directors' Relationship with the Company (1)

Company with an Audit and Supervisory Committee

15

1 year

Independent Outside Director

12

Appointed

6

6

Name

Attribute

Relationship with the Company

a

b

c

d

e

f

g

h

i

j

k

Yuko Yasuda

From another company

Takashi Nishijima

From another company

△

Hiroyuki Ina

From another company

△

Takatoshi Yamamoto

From another company

△

Naoko Munakata

Other

Seiichi Enomoto

Certified public accountant

• 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 past

a. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary b. Executive or non-executive Director of the parent of the Company

c. Executive of a fellow subsidiary of the Company

d. Party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof

f. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director

g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation)

h. Executive of a client or supplier of the Company (which does not correspond to any of d., e., or f.) (the director himself/herself only) i. Executive of a corporation to which outside officers are mutually appointed (the director himself/herself only)

j. Executive of a corporation that receives a donation from the Company (the director himself/herself only) k. Other

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ii) Outside Directors' Relationship with the Company (2)

Audit and

Name

Supervisory

Independent

Supplementary Explanation of the

Reasons for Appointment

Committee

Director

Relationship

Member

Yuko Yasuda has engaged in introducing, assessing,

and training of CEOs, and evaluating the effectiveness

of boards of directors for many years as a Japan

Director at company that searches for corporate

executive candidates. She has extensive experience

with and insight into fields concerning assessment and

Yuko

development of executive personnel and corporate

No applicable items

governance. As Outside Director and Audit and

Yasuda

〇

Supervisory Committee Member since 2018 and as

Outside Director of the Company since 2020, she has

contributed to strengthening the functions of the Board

of Directors from an independent perspective.

She is appointed as an Outside Director because the

Company expects that she will continue to strengthen

the decision-making and oversight functions of the

Board of Directors by leveraging her experience and

insight in managing the affairs of the Company.

Yokogawa Electric Corporation, of which

Takashi Nishijima

has

extensive

experience

and

Takashi Nishijima served as Chairman until

insight as a corporate executive and a board chairman

June 2023, and its consolidated subsidiaries

in a company group expanding business

related to

have business relations with the Company

industrial automation globally. As Outside Director of

Group including

sales

and

purchases of

the Company since 2022, he has contributed to

Takashi

products. However, sales involving the

〇

strengthening the functions of the Board of Directors

Nishijima

relations account for only less than 1% of

from an independent perspective. He is appointed as

the consolidated sales of Yokogawa group

an Outside Director because the Company expects that

in each fiscal year and less than 1% of the

he will continue to strengthen the decision-making and

consolidated sales of the Company Group

oversight

functions

of the Board

of Directors by

in each fiscal year, indicating that there is

leveraging his experience and insight in managing the

no

materiality

that

would

affect

his

affairs of the Company.

independence as Outside Director.

Denso Corporation, of which Hiroyuki Ina

served as

Senior

Executive

Officer

until

Having engaged in the management of the electronic

December

2021,

and

its

consolidated

system

and device

business

for many

years

at a

subsidiaries have

business relations

with

company expanding its business related to automotive

the

Companies

including

sales

and

technologies, systems and products globally, Hiroyuki

Hiroyuki

purchases of products. However, sales

〇

Ina possesses extensive experience and knowledge. He

Ina

involving the relations account for only less

is appointed as

an

Outside

Director because

the

than

1%

of the

consolidated sales of

Company

believes

that

he

can

draw

on

such

Yokogawa group in each fiscal year and less

experience and knowledge to strengthen the decision-

than 2% of the consolidated sales of the

making function and supervisory function of the Board

Companies in each fiscal year, indicating

of Directors.

that there is no materiality that would affect

his independence as Outside Director.

Takatoshi Yamamoto has extensive experience of

corporate analysis of companies in Japan and overseas

as a securities analyst, particularly in regard to the

CASIO COMPUTER CO., LTD, of which

electronics industry, and has specialized insight in

Takatoshi Yamamoto served as Executive

finance and accounting, in addition to a wealth of

Managing Director until June 2011, has

experience related to global corporate management.

business relations with the Company Group

Leveraging his experience and insight in managing the

Takatoshi

regarding sales and purchases of products.

affairs of the Company as an Outside Director since

〇

〇

However,

sales

involving

the relations

2019

and

as

Outside

Director

and Audit

and

Yamamoto

accounted

for

only less than

1% of the

Supervisory Committee Member since 2020, he has

Company's consolidated sales in fiscal

contributed to strengthening the functions of the Board

2023, indicating that there is no materiality

of Directors from an independent perspective.

that would affect his independence as

He is appointed as an Outside Director who is an Audit

Outside Director.

and Supervisory Committee Member because the

Company expects that he will continue to strengthen

the

decision-making

functions

and

audit,

supervisory and oversight functions of the Board of

Directors.

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				Naoko Munakata has extensive experience and insight
				into the national administrative fields of economics,
				international trade and intellectual property, among
				others. As an Outside Director and Audit and
				Supervisory Committee Member of the Company
				since 2020, she has contributed to strengthening the
				functions of the Board of Directors by leveraging her
Naoko				experience and insight in managing the affairs of the
〇	〇	No applicable items	Company from	an independent	perspective.
Munakata	Furthermore, while	never having been involved in
			corporate management in any way other than serving
				as an outside officer, she possesses sufficient
				experience in organizational management in central
				bureaucracy. She is appointed as an Outside Director
				who is an Audit and Supervisory Committee Member
				because the Company expects that she will continue to
				strengthen decision-making functions and audit and
				supervisory functions of the Board of Directors.
				Seiichi Enomoto has engaged in affairs concerning
				financial auditing, internal control advising, risk
				management, and strengthening governance for many
				years as a certified public accountant and possesses
Seiichi	〇	〇	No applicable items	extensive experience and insight in	the fields of
Enomoto	corporate accounting, auditing, and internal controls.
			He is appointed as an Outside Director who is an
				Audit and Supervisory Committee Member because
				the Company expects that he will strengthen the
				decision-making function and audit and supervisory
				function of the Board of Directors.

1. Audit and Supervisory Committee

1. Committee's Composition and Chairperson's Attributes

Total

Full-time

Committee

Inside Directors

Members

Members

Audit and

Supervisory

4

1

1

Committee

	Outside Directors				Chairperson
	3				Inside director

Appointment of Directors and/or Employees to		Appointed
Support Duties of the Audit and Supervisory Committee

ii) Matters Related to the Independence of Such Directors and/or Employees from Executive Directors

To ensure the effectiveness of the audits of the Audit and Supervisory Committee, the Company has established the Office of Audit and Supervisory Committee to assist the Audit and Supervisory Committee in its duties and has stationed an appropriate number of employees. The employees shall not receive supervision or orders from the Executive Directors, and for human resources matters regarding these employees, the Executive Directors shall consult with the Audit and Supervisory Committee and obtain the consent. Moreover, the Executive Directors have established a system for reporting to the Audit and Supervisory Committee and persons who make reports shall not receive any detrimental treatment for having done so.

1. Cooperation among Audit and Supervisory Committee, Independent Auditor and Internal Audit Department

Please see "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.

1. Voluntary Committees・

	Voluntary Establishment of Committee(s) Equivalent to			Established
	Nomination Committee or Remuneration Committee

i) Voluntary Establishment of Committee(s), Committee's Name, Composition, and Chairperson's Attributes

		Total	Full-time	Inside	Outside	Outside
	Committee's Name	Committee	Other	Chairperson
	Members	Directors	Directors	Experts
		Members
Committee Equivalent to	Nomination Advisory	4	0	1	3	0	0	Outside director
Nomination Committee	Committee
Committee Equivalent to	Remuneration	4	0	1	3	0	0	Outside director
Remuneration Committee	Advisory Committee

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ii) Supplementary Explanation

With the intent of improving the independence, objectivity, and accountability of the functions of the Board of Directors regarding the nomination and remuneration of Members of the Board of Directors, the Company has established a Nomination Advisory Committee and Remuneration Advisory Committee as advisory organs of the Board of Directors. For details regarding the composition, duties and other key issues of the Nomination Advisory Committee and Remuneration Advisory Committee, please see "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.

1. Independent Directors・

i) Number of Independent Directors	6

ii) Matters relating to Independent Directors

In addition to requirements for outside directors stipulated by the Companies Act and independence standards stipulated by the Tokyo Stock Exchange, six Independent Outside Directors have been appointed based on the Company's Independence Criteria (Criteria for Independence of Outside Directors), and they have been submitted to the Tokyo Stock Exchange as Independent Directors.

The Criteria for Independence of Outside Directors of the Company are as follows.

The person does not fall under any of the following categories.

(1) In the past 10 years, the person was an executive of the Company or a company that was a subsidiary within the past three years.

(2) The person is currently a major shareholder or was an executive of the major shareholder in the past three years.

(*) Major shareholder refers to one who holds 10% or more of the total number of the voting rights of the Company.

(3) In the past three years, the person was an executive of a company, etc. that was a material client or supplier within the past three years with the Company Group.

(*) Material client or supplier refers to one with which the Company has transactions of 2% or more of consolidated revenue of the Company or of the client or supplier.

(*) The Company group refers to the Company and its current subsidiaries. The same shall apply hereinafter.

(4) In the past three years, the person was an executive of an organization (e.g., public interest incorporated foundation, public interest incorporated association, and nonprofit organization) that has received within the past three years a donation or grant of over 10.00 million yen per annum from the Company Group.

(5) In the past three years, the person was an executive of a company or a subsidiary of that company that within the past three years employed a Member of the Board of Directors, Statutory Auditor (regardless of full-time or part-time) or Executive Officer of the Company group.

(6) The person was a material consultant, etc. of the Company group within the past three years.

(*) Material consultant refers to an expert, such as consultant, lawyer and certified public accountant, who earns over 10.00 million yen per annum other than director remuneration from the Company group in the case of an individual or earns money or property that exceed 2% of the total revenue of the organization other than director remuneration from the Company group in the case that the person belongs to an organization.

(7) The person was an executive of the Independent Auditor of the Company in the past three years.

(8) The person is a relative of the following persons.

1. The person falls under (1) above and is a director or an employee in the position corresponding to General Manager or higher.
2. The person falls under (3) above and is a director or an employee in the position corresponding to General Manager or higher.
3. The person falls under (6) above.

1. 1. 1. "Relative" refers to the spouse or a relative within the second degree of kinship, etc.
   2. The person has stayed in office as Outside Director of the Company for over 10 years in total.
   3. The person carries the risk of creating a constant substantial conflict of interest between the Company's general shareholders as a whole for reasons other than those considered in (1) to (8) above.
2. Incentives

	i) Implementation of Measures to Provide Incentives to			Performance-linked remuneration
	Directors

ii) Supplementary Explanation

Please see "iv) Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof" of "(7) Director Remuneration" below.