東京電力ホールディングス（9501） – Corporate Governance Report

TRANSLATION Please note that the following purports to be an accurate and complete translation of the original Japanese version prepared for the convenience of the Shareholders outside Japan. However, in the case of any discrepancy between the translation and the Japanese original, the latter shall prevail. Corporate Governance Report Last Updated: April 15, 2022 Tokyo Electric Power Company Holdings, Incorporated Tomoaki Kobayakawa, President Contact: Shareholder & Investor Relations Group, Corporate Affairs & Legal Office +81-3-6373-1111 Securities Code: 9501 https://www.tepco.co.jp/en/hd/ The corporate governance of Tokyo Electric Power Company Holdings, Incorporated (hereinafter, the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information 1. Basic Views The Company is working to develop organizational structures and policies for thorough legal and ethical compliance, appropriate and prompt decision-making, efficient business execution, and enhanced auditing and supervisory functions. To further improve the objectivity and transparency of its management, the Company has adopted a “Company with Nominating Committee, etc.” management structure, thereby stepping up the effort to secure solid corporate governance. Moreover, having adopted a holding company system in April 2016, the Company is striving to further enhance its corporate value through the optimal allocation of management resources and a robust corporate governance system encompassing its entire group (hereinafter, the “Group”). Amidst these circumstances, the series of events regarding the Company’s power stations have greatly reduced the trust of the local community and society at large. The Company takes these events seriously. Returning to the starting point of reflecting and learning from the lessons of the Fukushima Daiichi Nuclear Power Station accident, the Company will identify causes and work with the site as one to improve safety and work quality. Furthermore, in light of diversifying social needs, the Company will conduct management with consideration of value creation for various stakeholders based on the following corporate philosophy revised in July 2021. ＜TEPCO Group Corporate Philosophy＞ 【Mission】 Develop the future of energy Deliver a comfortable life We commit to fulfilling our responsibilities to Fukushima. We pursue expanding possibilities in the world of energy and deliver value beyond the expectations of individual customers. We strive to earn the trust of our customers and partners. We create value focusing on global carbon neutrality and regional disaster preparedness for a safe and sustainable society. 【Vision】 【Values】 Top priority on safety／Fulfill our responsibilities／Customer-focused／Dare to innovate – 1 – [Reasons for Non-compliance with the Principles of Japan’s Corporate Governance Code] The Company implements each principle of Japan’s Corporate Governance Code revised in June 2021 (excluding principles for the Prime Market to be applied from April 2022 onward.) The content of the Supplementary Principle 3.1.3 for the Prime Market is disclosed in advance. [Disclosure Based on the Principles of Japan’s Corporate Governance Code] Updated [Principle 1.4 Cross-Shareholdings] The Company and its core operating companies* retain the minimal shareholdings necessary to improve corporate value, based on a comprehensive assessment of considerations that include whether such holdings are necessary for maintaining medium- to long-term partnerships in accordance with strategies for growth, as well as whether such holdings enable smooth execution of business of the Company and sustainable growth. Regarding such matters as the rationale for retaining cross-shareholdings, all shares are examined individually by the Board of Directors on an annual basis, and shares of companies deemed unlikely to help improve corporate value from a medium- to long-term perspective are accordingly sold, taking into consideration share prices, market trends and other such factors. Moreover, with respect to voting rights exercised regarding cross-shareholdings, the Company takes a comprehensive approach in determining approval or disapproval of proposals upon having verified pertinent details through dialogue with respective companies and other such means, from the perspective of improving corporate value and maximizing shareholder returns. A suitable authorized person then sanctions the action. * Core operating companies: TEPCO Fuel & Power, Incorporated, TEPCO Power Grid, Incorporated, TEPCO Energy Partner, Incorporated and TEPCO Renewable Power, Incorporated [Principle 1.7 Related Party Transactions] The Company has established the following operational framework to ensure that transactions engaged in with Directors, Executive Officers, major shareholders or others (i.e., related party transactions) do not harm the interests of the Company or the common interests of its shareholders. When engaging in transactions involving conflict of interest with Directors and Executive Officers, approval of the Board of Directors must be obtained in accordance with the rules of the Board of Directors, and material facts regarding respective transactions must be reported to the Board of Directors without delay subsequent to such transactions. Approval of the Board of Directors must also be obtained for other related party transactions in accordance with the rules of the Board of Directors, depending on the extent of materiality. Such transactions to be submitted as agendas of Board of Directors meetings must be checked by the legal affairs-related departments and attorneys at law as necessary. Matters regarding transactions with Nuclear Damage Compensation and Decommissioning Facilitation Corporation, a major shareholder, are stated in section I, subsection 4, “Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder,” of this report. [Principle 2.4 Ensuring Internal Diversity Including the Promotion of Women’s Empowerment] (Supplementary Principle 2.4.1) ＜Policies for Ensuring Diversity and Voluntary Measurable Goals for Ensuring Diversity and Their Status＞ With the aim of ensuring diversity in human resources who will play a central role in future corporate management, TEPCO Group provides equal training opportunities and work experience regardless of gender, nationality, etc., while promoting the appointment to managerial positions based on fair evaluation and treatment that emphasize ability and performance. In recent years, the Company has also strengthened recruitment activities that form the basis of diversity in core human resources. Based on the premise of hiring talented human resources with diverse perspectives and values regardless of gender, nationality, etc., the Company hires foreigners who meet the requirements for the status of residence under the Immigration Control Act, while also focusing on mid-career recruitment of personnel with extensive skills, knowledge, and abilities. The most recent plans call for 20% of new hires through mid-career recruitment. For voluntary and measurable goals for ensuring diversity, the Company has set the following targets for women. With regard to foreigners and mid-career hires, targets have not been set as the Company is in the process of – 2 – strengthening recruitment and training, but targets will be considered based on the progress of recruitment and training. Ratio of female managers Current status: 5.8% as of end of FY2021 (Ratio of female employees 13.1%) Target: 10% as of end of FY2025 ＜Policies for Human Resource Development and Internal Environment Development, and The Status Thereof＞ In addition to providing equal training opportunities and work experience regardless of gender, nationality, etc. as mentioned earlier, the Company works to ensure the diversity in core human resources by providing various training programs that contribute to the development of next-generation managers who will lead the workplace and organization, including “Leader Skill Up Training” for female employees, and opportunities to study at graduate schools in Japan and overseas. [Principle 2.6 Roles of Corporate Pension Funds as Asset Owner] Because the Company holds defined benefit corporate pension plans, the Company is working in regard to operation of a reserve fund for its pension scheme per the “Guidelines on roles and responsibilities for parties involved in asset management-related activities regarding defined benefit corporate pensions”, in order to ensure that it performs in its role as asset owner. The details are listed below: Establishment of an Asset Management Committee (composed of Executive Officers and persons beneath them with responsibility for such matters) to implement the formulation and revision of the fundamental management policies, operational guidelines, and asset mix policy. For reviewing the fundamental management policies, the Company has established a structure that can address matters in a continuous and appropriate manner, implementing measures such as the utilization of a consulting company in order to secure expertise and reliability, and avoid conflicts of interest. [Principle 3.1 Full Disclosure] (i) The Group engages in business operations on the basis of special business plans approved by the Japanese government, and drawn up with Nuclear Damage Compensation and Decommissioning Facilitation Corporation for the purpose of establishing a managerial platform that is sufficient with respect to fulfilling the Company’s longstanding responsibilities to Fukushima while concurrently taking on its obligations in that regard. The Group moves ahead in paying compensation, revitalizing Fukushima, and decommissioning nuclear reactors on the basis of such plans, while at the same time taking steps geared to enhancing corporate value largely by engaging in nationwide sales of electric power and actively drawing on alliances in all aspects of its operations. Based on the Fourth Comprehensive Special Business Plan approved by the government in August 2021, the Group will continue to work on drastic management reforms with group-wide efforts to secure funds for compensation and decommissioning and improve corporate value. Details regarding the Fourth Comprehensive Special Business Plan, and Integrated Report, which comprises plans such as strategies and business models for “Fukushima” and “Energy Services”, are available via the Company’s website. TEPCO Group Corporate Philosophy is described in section I, subsection 1, “Basic Views,” of this report. “the Fourth Comprehensive Special Business Plan” URL: https://www.tepco.co.jp/about/corporateinfo/business_plan/overall_special_plan.html (in Japanese only) “Integrated Report” URL: https://www.tepco.co.jp/en/hd/about/ir/library/integratedreport/index-e.html (ii) The Company’s basic views on corporate governance are stated in section I, subsection 1, “Basic Views,” of this report. (iii) As a “Company with Nominating Committee, etc.,” the Company’s Compensation Committee maintains authority for determining content of matters such as remuneration for Directors and Executive Officers. – 3 – Policy with respect to the Compensation Committee determining content of matters such as remuneration for Directors and Executive Officers is stated in section II, subsection 1, “[Remuneration for Directors and Executive Officers], Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods,” of this report. (iv) While fulfilling the Company’s responsibility for the Fukushima Daiichi Nuclear Power Station accident the Company will, based on a mission to achieve a stable supply of electric power while ensuring safety and under competitive conditions, work on realizing the maximization of corporate value, by selecting people who possess the personalities, insights and capabilities suitable for leading business operations and management reform to achieve both “responsibility and competitiveness” as Director candidates and Executive Officers. In addition, the Board of Directors consists of a diverse group of Directors with varying backgrounds in terms of expertise and experience, etc., and the actual number of Directors elected is to be an appropriate number within the maximum number of 13 stipulated in the Articles of Incorporation Among this number, regarding Outside Directors, by comparing candidates against the “Standards for Independence of Outside Directors,” the Company selects candidates based on whether they fulfill the criteria for independence. Pursuant to the Companies Act, the Nominating Committee, the majority of which are Outside Directors, determines the content of proposals with regard to the election and dismissal of Directors that are submitted to the General Meeting of Shareholders. In the selection and dismissal of Executive Officers, the Nominating Committee holds a deliberation before a decision is made at a meeting of the Board of Directors. (v) Respective Director candidates and respective Executive Officers are appointed in accordance with the policy stated in item (iv), above. The reasons for appointing Director candidates are stated in Reference Materials for General Meeting of Shareholders. Moreover, reasons for the appointing Outside Director candidates are also stated in section II, subsection 1, “[Outside Directors], Outside Directors’ Relationships with the Company (2),” of this report. (Supplementary Principle 3.1.3) ＜Sustainability Initiatives and Investment in Human Capital/ Intellectual Properties＞ The Company has disclosed its sustainability initiatives in the Fourth Comprehensive Special Business Plan or the Integrated Report, etc. With regard to investment in human capital and intellectual properties, the Company has disclosed specific information that is consistent with its management strategy/ management issues as easy to understand as possible in the Integrated Report, etc. by referring to the International Integrated Reporting Framework. ＜Impact of Climate Change Risks and Earning Opportunities on the Company’s Business Activities, Profits, etc.＞ The Company recognizes that medium- to long-term response to climate change is an important management issue for the Group, which carries out energy supply, and implements disclosure based on the TCFD recommendations (announcement of risks, opportunities, indicators, and targets based on scenario analysis). The Company will further enhance disclosure contents in light of the opinions of shareholders and investors. [Principle 4.1 Roles and Responsibilities of the Board of Directors (1)] (Supplementary Principle 4.1.1) As a “Company with Nominating Committee, etc.,” the Company’s Board of Directors determines important business execution stipulated in laws and regulations, the Articles of Incorporation, and rules of the Board of Directors, with respect to matters such as basic policies of corporate management, the personnel issues related to Executive Officers and other management personnel, and the disposal of material assets. Also, the Company’s Executive Officers determine other matters and engage in business practices on the basis of decisions made by the Board of Directors, and also report developments thereof to the Board of Directors. – 4 – [Principle 4.9 Independence Standards and Qualification for Independent Directors] The “Standards for Independence of Outside Directors” specified by the Company are stated in section II, subsection 1, “[Independent Directors], Matters relating to Independent Directors” of this report. [Principle 4.11 Preconditions for Board of and Board of Auditors Effectiveness] (Supplementary Principle 4.11.1) The Company’s views on the balance, diversity and size of the Board of Directors are stated in item (iv) of [Principle 3.1 Full Disclosure]. The skill matrix of directors (including director candidates) is disclosed in the reference documents for General Meeting of Shareholders and the Integrated Report, and the policy/ procedures for the appointment of directors are also disclosed in the reference documents of the General Meeting of Shareholders. Four of the Company’s independent directors have management experience at other companies. (Supplementary Principle 4.11.2) The Business Report provided annually by the Company as an attached document to the Notice of Convocation of the General Meeting of Shareholders discloses important concurrently-held positions of Directors and Executive Officers, and figures for attendance of the Outside Directors at Board of Directors and committee meetings. (Supplementary Principle 4.11.3) The Company strives to improve the effectiveness of the Board of Directors through active deliberation, etc. by utilizing remarks, etc. based on the rich experience and wide-ranging insights, etc. of diverse Outside Directors, including corporate managers, certified public accountants, attorneys at law, and academic experts. The evaluation of the effectiveness for fiscal 2020 was conducted for the Board of Directors, the Nominating Committee, and the Compensation Committee (hereinafter Board of Directors, etc.). An overview of the evaluations is as follows. A questionnaire was conducted for all directors (13 persons) on the effectiveness of the Board of Directors, and for all members of the Nominating Committee and the Compensation Committee (6 persons, 3 persons) on the effectiveness of the Nominating Committee and Compensation Committee respectively. The results were analyzed and evaluated and then reviewed by the Board of Directors.

The effectiveness of the Board of Directors, etc. of the Company was evaluated as having been ensured, based on the following factors: the Board of Directors had an appropriate number of diverse members; discussions were conducted freely; the Board of Directors, etc. continued to receive a high evaluation in the questionnaire with no major issues related to the Board of Directors, etc. identified in the questionnaire. It is confirmed that it is necessary to strengthen the Board’s supervising function for the nuclear power business, to discuss strategies, etc. for earning in light of changes in the market environment, and to continue to provide risk information and secure opportunities for inspections, etc. in addition to other activities. Given this evaluation, we will continue to further improve the effectiveness of the Board of Directors, etc. by implementing additional improvements. [Principle 4.14 Director and Auditor Training] (Supplementary Principle 4.14.2) To ensure that the Company’s Directors and Executive Officers are able to sufficiently fulfill their duties, the Company has outside experts conduct various forms of training as appropriate, including training in areas such as legal affairs and finance, as well as media training, and also has its Directors and Executive Officers take part in workshops outside the Company as necessary. Moreover, Outside Directors are provided with opportunities to gain a deeper understanding of the Company’s business operations through briefings held regarding details – 5 – of the Company’s business operations as well as organizational and management issues, and through inspections of the Company’s power stations, offices and other locations, as appropriate. [Principle 5.1 Policy for Constructive Dialogue with Shareholders] 1. Basic Views With the aim of enhancing management transparency and ensuring that opinions of those outside the Company are reflected in management, the Company promotes accurate and prompt disclosure of management information, and otherwise endeavors to grow sustainably and enhance corporate value over the medium- to long-term through constructive dialogue with its shareholders and investors. 2. IR/SR activities Three Executive Officers have been appointed as officers in charge of IR to oversee IR activities. The Company has also appointed a full-time General Manager in charge of IR. Two Executive Officers have been appointed as officers in charge of SR to oversee SR activities. Corporate division which includes the Corporate Management & Planning Unit (Corporate Planning Office, ESG Office, Corporate Management Office, Corporate Affairs & Legal Office, Accounting & Treasury Office, etc.) and the Public Relations & Corporate Communications Unit (Corporate Communications Office, etc.), as well as the Fukushima Revitalization Headquarters, the Niigata Headquarters, other respective companies, and the core operating companies are cooperating organically to enhance Company dialogue with its shareholders and investors. 3. Approach to Dialogue The Company endeavors to disclose easy-to-understand information in order to promote constructive dialogue with its shareholders and investors. To that end, the Company holds briefings, etc. and makes use of its website, as detailed below. Briefings for institutional investors on business management plans, specifics of financial results, and other matters of great interest to such investors Individual visits subsequent to earnings releases and prior to General Meetings of Shareholders Meetings for facilitating exchange of opinions involving the Company’s management team and institutional investors The Company’s website has pages especially for the Company’s shareholders and investors containing its Quarterly Financial Results (in Japanese only), Annual and Quarterly Securities Reports (in Japanese only), Integrated Report and Business Reports. For analysts, shareholders and others, the website also contains Factbooks, presentation materials and explanations, Q&A summaries, and other such materials. The results of IR/SR activities and concerns of shareholders and investors are being provided as feedback to Company management and periodically shared with related divisions to enhance future IR/SR activities. Specifically, with respect to IR activities, the President and officers in charge of IR are directly meeting with institutional investors to exchange opinions to gain a better understanding of the investors’ issues of interest, and the concerns and opinions of institutional investors are being shared through the Management & Planning Meeting, etc. With respect to SR activities, the ESG Committee and other meeting bodies discuss the Company’s response to the concerns and requests of its shareholders and investors. The responses are included in the Integrated Report to widely disseminate Company information among Company shareholders and investors. 4. Insider Information and Investor Relations Quiet Periods The Company places stringent controls on insider information (undisclosed material facts) with respect to its dialogue with its shareholders and investors. The Company also stipulates a quiet period spanning the one month immediately prior to its earnings release, during which time management refrains from commenting and replying to questions regarding specifics of the Company’s financial results. – 6 – 2. Capital Structure [Status of Major Shareholders] Updated Percentage of Foreign Shareholders From 10% to less than 20% Name / Company Name Number of Shares Owned (Shares) Percentage (%) 1,940,000,000 54.74 Nuclear Damage Compensation and Decommissioning Facilitation Corporation The Master Trust Bank of Japan, Ltd. (Trust Account) Custody Bank of Japan, Ltd.(Trust Account) TEPCO Employees Shareholding Association Tokyo Metropolitan Government Sumitomo Mitsui Banking Corporation STATE STREET BANK WEST CLIENT – TREATY 505234 Nippon Life Insurance Company JP MORGAN CHASE BANK 385781 JP JPMSE LUX RE BARCLAYS CAPITAL SEC LTD EQ CO 222,478,200 62,624,880 53,259,789 42,676,791 35,927,588 26,497,866 26,400,519 19,918,028 19,651,563 6.28 1.77 1.50 1.20 1.01 0.75 0.74 0.56 0.55 Controlling Shareholder (except for Parent Company) Nuclear Damage Compensation and Decommissioning Facilitation Corporation None Parent Company Supplementary Explanation The Company’s controlling shareholder, Nuclear Damage Compensation and Decommissioning Facilitation Corporation, maintains holdings amounting to 1,600,000,000 Class A Preferred Shares (50.10% of the voting rights of all shareholders) and 340,000,000 Class B Preferred Shares (without voting rights) in the Company. 3. Corporate Attributes Listed Stock Market and Market Section Updated Fiscal Year-End Type of Business Number of Employees (consolidated) as of the End of the Previous Fiscal Year Tokyo Stock Exchange Prime Market March Electric Power & Gas 1,000 or more Sales (consolidated) for the Previous Fiscal Year ¥1 trillion or more Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year From 10 to less than 50 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder The Company’s controlling shareholder, Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF), is a corporation which was established in September 2011 under Japanese government – 7 – approval. It does not endeavor to generate profit, but instead was established with the aim of enabling prompt and appropriate compensation for nuclear damages by arranging financial support and other needs of nuclear operators to compensate for such damages, and thereby particularly ensuring smooth operations with respect to stable supplies of electricity and operations of nuclear reactor, etc. As such, the Company deems that NDF’s position as the controlling shareholder is not disadvantageous to the interests of minority shareholders of the Company. 5. Special Circumstances Which May Have Material Impact on Corporate Governance The Company accepts officers from Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF). Management teams of the Company and its core operating companies assume responsibility in terms of promoting management reforms based on the special business plans, while the NDF provides backup support and monitors progress in that regard. More specifically, the Company implements the special business plans, and otherwise makes business judgments and decisions on business operations under the direction of the management teams. Meanwhile, NDF is furnished with reports as needed from the officers and employees it sends to the Company, and requests that the Company and its core operating companies take action when necessary from the perspective of ensuring sound performance with respect to the special business plans. – 8 – Chairman (unless the Chairman also serves as the President) II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management 1. Organizational Composition and Operation Organization Form Company with Nominating Committee, etc. [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation 13 Term of Office Stipulated in Articles of Incorporation 1 year Chairmanship of Board of Directors meetings Number of Directors 12 [Outside Directors] Number of Outside Directors Number of Independent Directors Designated from among Outside Directors Outside Directors’ Relationships with the Company (1) 6 5 a Name Attribute Yoshimitsu Kobayashi Hideko Kunii Hideo Takaura Shigeo Ohyagi Shoichiro Onishi Asa Shinkawa * Categories for “Relationships with the Company” * “○” when the director presently falls or has recently fallen under the category; From another company Academic CPA From another company From another company Attorney at Law “△” when the director fell under the category in the past Relationships with the Company* i f c h g d e b j k * “●” 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 (“Executive” refers to an executive as defined in [Standards for Independence of Outside Directors] on page 11; hereinafter, the same) of the Company or any of its subsidiaries b. Non-executive director or executive of a parent company of the Company c. Executive of a fellow subsidiary company of the Company d. A party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides remuneration as a director g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or corporation) f) (the director himself/herself only) i. Executive of an entity to which outside officers are mutually appointed (the director himself/herself only) j. Executive of an entity that receives a donation from the Company (the director himself/herself only) k. Others – 9 – Outside Directors’ Relationships with the Company (2) Name Membership of Committees Yoshimitsu Kobayashi Nominating / Compensation/Audit Designation as Independent Director Supplementary Explanation of the Relationship Yes – Reasons for Appointment The Company judges Mr. Yoshimitsu Kobayashi suitable for Outside Director due to his extensive experience and insight relating to corporate management and international business, reflected in his background, having served as the President and Chairman of Mitsubishi Chemical Holdings Corporation, and also his deep knowledge of management issues facing the Company, serving as a Management Committee Member of Nuclear Damage Compensation and Decommissioning Facilitation Corporation, and that he can be expected to draw on his experience to perform the role of supervising business execution. He is independent in accordance with the standards for independence prescribed by Tokyo Stock Exchange, Inc. and “Standards for Independence of Outside Directors” specified by the Company. As such, there is considered to be no risk of a conflict of interests arising with ordinary shareholders. The Company has therefore designated him as an independent director. Mr. Kobayashi served as member of the Management Committee of the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF), a major shareholder of the Company, until May 31, 2021. However this does not affect our determination that he is independent for the following reasons. ･While the Management Committee determines important items for the NDF, its members are not involved in the execution of the business. The members are selected from a pool of qualified candidates with expert knowledge and experience and appointed to the position following approval by the Prime Minster and the Minister of the Education, Culture, Sports, Science and Technology. ･The Nuclear Damage Compensation and Decommissioning Facilitation Corporation is a not-for-profit entity established in September 2011 following an approval of the government. It aims to ensure that nuclear operators swiftly and appropriately compensate for nuclear damages, smoothly manage the nuclear reactor operation business, and stably supply electricity by providing the necessary funding for nuclear operators to compensate for damages. – 10 – Name Membership of Committees Designation as Independent Director Supplementary Explanation of the Relationship Hideko Kunii Compensation/Audit Yes – Hideo Takaura Compensation/Audit Yes – Reasons for Appointment The Company judges Ms. Hideko Kunii suitable for Outside Director due to her extensive experience and insight relating to corporate management, reflected in her background, having served as the Chairperson of Ricoh IT Solutions Co., Ltd., etc., and also her deep insight relating to promoting diversity including the active participation of women, and that she can be expected to draw on her experience to perform the role of supervising business execution. She is independent in accordance with the standards for independence prescribed by Tokyo Stock Exchange, Inc. and “Standards for Independence of Outside Directors” specified by the Company. As such, there is considered to be no risk of a conflict of interests arising with ordinary shareholders. The Company has therefore designated her as an independent director. The Company judges Mr. Hideo Takaura suitable for Outside Director due to his extensive experience and deep insight, primarily in the fields of auditing and accounting, reflected in his background, having served as Chief Executive Officer of PricewaterhouseCoopers Aarata as a Japanese Certified Public Accountant, and also his diverse experience in corporate auditing by having served as Outside Corporate Auditor, and that he can be expected to draw on his experience to perform the role of supervising business execution. He is independent in accordance with the standards for independence prescribed by Tokyo Stock Exchange, Inc. and “Standards for Independence of Outside Directors” specified by the Company. As such, there is considered to be no risk of a conflict of interests arising with ordinary shareholders. The Company has therefore designated him as an independent director. – 11 – Name Membership of Committees Designation as Independent Director Supplementary Explanation of the Relationship Shigeo Ohyagi Nominating/ Compensation Yes – Shoichiro Onishi Nominating/ Audit Yes – Reasons for Appointment The Company judges Mr. Shigeo Ohyagi suitable for Outside Director due to his extensive experience and insight relating to corporate management, and also his abundant experience in international business, reflected in his background, having served as the President and Chairman of the Board of Teijin Limited, etc., and that he can be expected to draw on his experience to perform the role of supervising business execution. He is independent in accordance with the standards for independence prescribed by Tokyo Stock Exchange, Inc. and “Standards for Independence of Outside Directors” specified by the Company. As such, there is considered to be no risk of a conflict of interests arising with ordinary shareholders. The Company has therefore designated him as an independent director. The Company judges Mr. Shoichiro Onishi suitable for Outside Director due to his deep insight primarily in the field of law gained as an attorney at law, and also his extensive experience and insight relating to corporate business revitalization, reflected in his background, having served as the Representative Director of Frontier Management Inc. and FCD Partners Inc., etc., and that he can be expected to draw on his experience to perform the role of supervising business execution. He is independent in accordance with the standards for independence prescribed by Tokyo Stock Exchange, Inc. and “Standards for Independence of Outside Directors” specified by the Company. As such, there is considered to be no risk of a conflict of interests arising with ordinary shareholders. The Company has therefore designated him as an independent director. – 12 – Name Membership of Committees Designation as Independent Director Supplementary Explanation of the Relationship Asa Shinkawa Audit No ― Reasons for Appointment The Company judges Ms. Asa Shinkawa suitable for Outside Director due to her extensive experience and deep insight, primarily in the field of law, reflected in her background, having served as Partner of Nishimura & Asahi, and also her diverse experience in corporate management, having served as Outside Director, and that she can be expected to draw on her experience to perform the role of supervising business execution. She meets the independence standards as provided for by Tokyo Stock Exchange, Inc. and Standards for Independence of Outside Directors established by the Company. However, the Company has not submitted her as an independent director. [Committees] Committee’s Composition and Attributes of Committee Chairman Nominating Committee Compensation Committee Audit Committee All Committee Members 5 4 6 Full-time Members Inside Directors Outside Directors Committee Chairman 0 0 1 2 0 1 3 Outside Director 4 Outside Director 5 Outside Director – 13 – [Executive Officers] Number of Executive Officers Updated 17 Status of Additional Duties Updated Name Representative Authority Tomoaki Kobayakawa Yes Additional Duties as Director Nominating Committee Member Compensation Committee Member Additional Duties as Employee Seiichi Fubasami Seiji Moriya Hiroyuki Yamaguchi Mitsushi Saiki Riki Kojima Tomomichi Seki Ryutarou Yamamoto Momoko Nagasaki Daisuke Sakai Akira Ono Kazuyoshi Takahara Masaya Kitta Issei Sou Takeyuki Inagaki Toshihiko Fukuda Shigehiro Yoshino Yes Yes Yes No No No No No No No No No No No No No Yes Yes Yes No No No No No No No No No No No No No Yes Yes No No No No No No No No No No No No No No No Yes No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No [Auditing Structure] Appointment of Directors and/or Staff to Support the Audit Committee Appointed Matters Related to the Independence of Such Directors and/or Staff from Executive Officers The Company has appointed Audit Committee Aides to support the duties of the Audit Committee and established the Office of Audit Committee as a full-time body for assisting the duties of the Audit Committee. Audit Committee Aides and members of the Office of Audit Committee shall comply with instructions and orders from the Audit Committee, and matters concerning their personnel shall be discussed with the Audit Committee in advance. – 14 – Cooperation among Audit Committee, Accounting Auditor and Internal Audit Department The Audit Committee, the Internal Audit Department, and the Accounting Auditor conduct rigorous audits in their respective assigned fields, and also regularly exchange opinions regarding audit plans and audit results, thereby coordinating with one another. [Independent Directors] Number of Independent Directors 5 Matters relating to Independent Directors The Company has designated all outside directors other than Ms. Shinkawa who fulfill the qualifications of an independent director as independent directors. [Standards for Independence of Outside Directors] The Company judges that an Outside Director is independent if none of the following items applies to him/her. 1. Related-party of the Group A person from the Company or any of its subsidiaries 2. Major shareholder (a shareholder holding one-tenth or more of the Company’s voting rights; hereinafter, the same) Executive of a current major shareholder of the Company (“Executive” refers to an executive as defined in Article 2, Paragraph 3, Item 6 of the Ordinance for Enforcement of the Companies Act; hereinafter, the same) Executive of a company of which the Company is currently a major shareholder 3. Major client or supplier Executive of a corporation whose major client or supplier is the Company or any of its subsidiaries (*1) Executive of a corporation that is a major client or supplier of the Company or any of its subsidiaries (*2) 4. Specialized service provider (attorney at law, certified public accountant, consultant, etc.) A member, etc., of an auditing corporation that is currently the Accounting Auditor of the Company or any of its subsidiaries A person who does not fall under any of the above, but is an attorney at law, certified public accountant, tax accountant, or other consultant who has received from the Company or any of its subsidiaries monetary consideration or other property other than remuneration for directors and/or officers averaging ¥10 million or more per year over the past three years An officer of a company that has accepted a member of the Company or any of its subsidiaries as its 5. Mutually appointed officer officer 6. Close relative A spouse or relative within the second degree of kinship (hereinafter, “close relative”) of a Director, Executive Officer, Corporate Officer, or other important employee of the Company or any of its subsidiaries A close relative of a person who has been a Director, Executive Officer, Corporate Officer, or other important employee of the Company or any of its subsidiaries within the last three years A close relative of a person to whom 2. through 4. above applies. However, for Executive mentioned in 2. and 3. above, this item shall apply only to a director, executive officer, corporate officer or other similar officer; and for a member, etc. mentioned in 4. above, this item shall apply only to a member or a partner. A person who is likely to constantly have a substantial conflict of interest with ordinary shareholders of the Company as a whole due to circumstances other than those mentioned in 1. through 6. above. 7. Other – 15 – Even for persons to whom one or more of the above apply, the Company may consider persons thought to possess independence, after reviewing their character and knowledge, etc., as candidates for the Company’s independent outside director on condition that the reason for considering those persons suitable as an independent outside director is explained externally. *1 A client or supplier who received payments from the Company or any of its subsidiaries amounting to 2% or more of the client’s or supplier’s annual consolidated net sales in any one of the last three fiscal years *2 A client or supplier whose payments made to the Company or any of its subsidiaries have amounted to 2% or more of the Company’s annual consolidated net sales in any one of the last three fiscal years (or a lender from whom the Company or any of its subsidiaries’ loans have amounted to 2% or more of the Company’s consolidated total assets) [Immateriality Standards regarding Omission of “Attribute Information of Independent Directors”] With respect to transactions and donations in which the Company engaged with each independent director and the companies from which each independent director originates, if there seems to be no risk of impact on the judgment of shareholders in exercising their voting rights in terms of scale (proportion of such transactions and donations in each company’s net sales, etc.) and format (typical transaction as an ordinary consumer, etc.), the Company will omit giving an overview of such transactions and donations. [Incentives] Implementation of Measures to Provide Incentives to Directors and/or Executive Officers Other Supplementary Explanation The remuneration paid to Directors comprises only basic remuneration. The remuneration paid to Executive Officers comprises basic remuneration and productivity-linked remuneration. The details of the policy and other matters are described in “[Remuneration for Directors and Executive Officers] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods.” Recipients of Stock Options Supplementary Explanation ― [Remuneration for Directors and Executive Officers] Disclosure of Individual Directors’ Remuneration Disclosure of Individual Executive Officers’ Remuneration Supplementary Explanation No Individual Disclosure No Individual Disclosure The remuneration, etc. paid to the Company’s Directors and Executive Officers in fiscal 2020 were as follows. Number of Persons Amount of Remuneration, etc. Directors Executive Officers 9 persons 14 persons ¥94 million ¥395 million *1 The Company does not pay to Directors who concurrently serve as Executive Officer the remuneration paid to Directors. Therefore, “Number of Persons” for “Directors” stated above does not include the number of Directors who concurrently serve as Executive Officer. – 16 – *2 The above includes ¥71 million in remuneration, etc. for eight Outside Directors. *3 In determining the productivity-linked remuneration, based on the policy for the determination of the contents of remuneration, etc. for each Director and Executive Officer, which was set forth by the Compensation Committee, aiming to achieve the targets of the Revised Comprehensive Special Business Plan (the Third Plan), to ensure that Executive Officers are willing and responsible and the results of these efforts are appropriately reflected, results of the Company (consolidated ordinary income before deducting the amount of special contribution paid under the Nuclear Damage Compensation and Decommissioning Facilitation Corporation Act) and individual performance (cost reduction indicators and other KPIs for each division in charge) in the management plan are set out as indicators in the productivity-linked remuneration. The amount to be paid varies from 0 to 150%, assuming a 100% payment rate at the time of achievement of the target, and is determined by the Compensation Committee after calculation as follows. Results of the Company: Calculated by multiplying the base amount by the achievement level Individual performance: Calculated by multiplying the base amount by the achievement level or evaluation by the Compensation Committee Policy on Determining Remuneration Amounts and Calculation Methods Established Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods The Company has established determining policy regarding the remuneration for each of the Directors and Executive Officers via the Compensation Committee, which is composed of Outside Directors, based on the stipulations of the Company Law regarding companies with nominating committees. The content is as follows. The main duty of each Director and Executive Officer of the Company is to minimize the burden on the people by enhancing corporate value based on a strong commitment to achieving stable supply of electric power beyond the world’s highest level for ensuring safety and under competitive conditions, while fulfilling the Company’s responsibility for the Fukushima Daiichi Nuclear Power Station accident. In order to achieve this, the basic policies for the determination of remuneration are securing outstanding human resources capable of leading business operations and management reform to achieve both “responsibility and competitiveness,” clarifying responsibilities and outcomes and increasing incentives for improved performance and increase in the stock value. The remuneration system for Directors and that of Executive Officers are different based on the different duties of the Directors, who are in charge of supervising corporate management, and the Executive Officers, who are in charge of executing business operations. Officers who concurrently serve as Director and Executive Officer receive only the remuneration paid to Executive Officers. (1) Remuneration paid to Directors The remuneration paid to Directors comprises only basic remuneration. The amount of basic remuneration paid to each Director is determined taking into consideration whether he/she is full time or part time, the committee to which he/she belongs and his/her job description. (2) Remuneration paid to Executive Officers The remuneration paid to Executive Officers comprises basic remuneration and productivity-linked remuneration. The proportion of the productivity-linked remuneration is set according to the proportions at other companies and other factors. The amount of basic remuneration paid to each Executive Officer is determined based on his/her specific rank, whether he/she holds the right to represent the Company and his/her job description. The amount of productivity-linked remuneration paid to each Executive Officer is set based on his/her specific rank, whether he/she holds the right to represent the Company and his/her job description. It is also determined according to results of the Company and personal performance. – 17 – (3) Level of remuneration to be paid When determining the level of remuneration to be paid to Directors and Executive Officers, the Company takes into consideration its management environment, the remuneration levels of other companies and the current salaries of employees, etc., with the aim of setting remuneration at levels commensurate with their abilities and responsibilities to be required as Directors and Executive Officers. [Supporting System for Outside Directors] For agendas of Board of Directors meetings, the Company enables Outside Directors to sufficiently consider the relevant matters before making Board of Directors resolutions by sending them materials and providing them with explanations on each individual matter beforehand. Moreover, in addition to Board of Directors meetings, the Company holds Outside Directors meetings to facilitate exchange of opinions particularly among Outside Directors, and for important matters it sends them materials and provides support for investigation and information gathering, and so forth, in order to provide an environment where Outside Directors can perform their supervisory function effectively. [Status of Persons who have retired from Representative Director and President, etc.] Name of Consultants, Advisors, etc. who have retired from Representative Director and President, etc. Name Title / Position Description of Tasks Date of Retirement from President, etc. Term Form and Conditions of Services (Full-time, Part-time, Paid or Unpaid, etc.) – – – – – Total number of Consultants, Advisors, etc. who have retired from Representative Director and President, etc. Others – 2. Matters on Functions of Business Execution, Auditing, Oversight, Nominating and Compensation Decisions (Overview of Current Corporate Governance System) Updated 2-1. The Board of Directors (Directors) and Executive Officers, etc. The Board of Directors comprises twelve Directors (consisting of ten men and two women), including six Outside Directors. To supervise business execution undertaken by Directors and Executive Officers, the Board of Directors meets once a month in principle and holds additional special meetings as necessary to discuss and make decisions on important business execution and to receive reports from Executive Officers on the status of their execution of duties on both a regular and an as-needed basis. In addition, the Company has established the Nominating Committee, Audit Committee, and Compensation Committee in accordance with the stipulations concerning a “Company with Nominating Committee, etc.” as set forth in the Companies Act. Also, Executive Officers (consisting of sixteen men and one woman) execute business operations in accordance with policies formulated by the Board of Directors. To ensure appropriate and prompt decision-making as well as efficient company operations, the Board of Executive Officers, which meets once a week in principle, and other forums, discuss important management matters, including agendas to be submitted to meetings of the Board of Directors. The Company has also set up cross-organizational committees aimed at assisting the decision-making of the Board of Executive Officers. In addition, the Company has appointed Corporate Officers who bear responsibility for specific businesses and execute operations accordingly. – 0 – 18 – Pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act and Article 29, Paragraph 2 of the Articles of Incorporation, the Company has entered into agreements with Directors Yoshimitsu Kobayashi, Hideko Kunii, Hideo Takaura, Shigeo Ohyagi, Shoichiro Onishi, Asa Shinkawa and Yoshihito Morishita which limit their liabilities under Article 423, Paragraph 1 of the Companies Act to the extent permitted by laws and regulations. 2-2. Nominating Committee The Nominating Committee comprises five Directors, including three Outside Directors, and meets at least once a year to determine the content of proposals with regard to the election and dismissal of Directors that are submitted to the General Meeting of Shareholders. Although not included in the items to be discussed by the Nominating Committee as set forth in the Companies Act, the committee also discusses matters concerning personnel issues related to Executive Officers and other management personnel. 2-3. Audit Committee The Audit Committee, comprising six Directors, including five Outside Directors, meets once a month in principle and holds additional special meetings as necessary to conduct its activities including audits of the business execution of Directors and Executive Officers and preparation of audit reports. The Audit Committee, based on the audit plan, conducts audits on the compliance with the law and appropriateness of the business execution of Directors and Executive Officers, and verifies initiatives aimed at improving profitability and corporate value. 2-4. Compensation Committee The Compensation Committee consists of four Outside Directors and meets at least once a year to prescribe the policy on decisions on the content of the remuneration, etc. for individual Directors and Executive Officers as well as to determine the content of the remuneration, etc. for individual Directors and Executive Officers. *The frequency of, and attendance at, meetings of the Board of Directors and each Committee are described in “The 97th Ordinary General Meeting of Shareholders”. 2-5. Accounting Auditor (Audit Corporation) The Company has concluded an audit contract with Ernst & Young ShinNihon LLC, under which it receives rigorous accounting audits. The names of the certified public accountants that conducted the accounting audit operations of the Company for FY2021 are as follows. Name Affiliated audit corporation Atsushi Kasuga Ernst & Young ShinNihon LLC Mikio Shimizu Ernst & Young ShinNihon LLC Kazuyuki Maekawa Ernst & Young ShinNihon LLC – 19 – All of the certified public accountants have continually performed the audits for seven years or less. Supporting staff engaged in the accounting audit operations comprise 29 certificated public accountants, and 52 other persons. 2-6. Internal Audit In general, the Office of the Audit Committee (53 persons) audits general business activity performance and management, and audits for specific themes whenever necessary. The results of the main internal audit are reported to the CEO or at board meetings, and the efforts will be made to improve the subjects audited based on the audit results as necessary. 3. Reasons for Adoption of Current Corporate Governance System The Company is working to develop organizational structures and policies for thorough legal and ethical compliance, appropriate and prompt decision-making, efficient business execution, and enhanced auditing and supervisory functions. To further improve the objectivity and transparency of its management, the Company has adopted a “Company with Nominating Committee, etc.” management structure, thereby stepping up the effort to secure solid corporate governance. Moreover, having adopted a holding company system in April 2016, the Company is striving to further enhance its corporate value through the optimal allocation of management resources and a robust corporate governance system encompassing the entire Group. Outside Directors draw on extensive experience, insight, etc. in their respective fields of expertise to formulate important management strategies and supervise business execution via the Board of Directors and other channels. The Company considers that they possess the competency to further improve the objectivity and transparency of the Company’s management. All of the six Outside Directors are independent in accordance with the standards for independence prescribed by Tokyo Stock Exchange, Inc. and “Standards for Independence of Outside Directors” specified by the Company. As such, there is considered to be no risk of a conflict of interests arising with ordinary shareholders. The five Outside Directors other than Ms. Shinkawa have been designated as independent outside directors and has been submitted as such to the Tokyo Stock Exchange, Inc. as stipulated in article 436-2 of the Securities Listing Regulations. – 20 – III. Implementation of Measures for Shareholders and Other Stakeholders 1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights Early Notification of General Meeting of Shareholders Supplementary Explanations The Company makes efforts to ensure a sufficient period for shareholders to consider the resolutions by publishing the Notice of Convocation on its website or through other media before sending it out (approximately one month before the General Meeting of Shareholders), and by sending it out earlier than the statutory period (approximately three weeks before the General Meeting of Shareholders). Allowing Electromagnetic Exercise of Voting Rights The Company adopted the exercise of voting rights via the Internet at the General Meeting of Shareholders held in June 2006. The exercise of voting rights by using the voting platform for institutional investors operated by ICJ, Inc. has been available since the General Meeting of Shareholders held in June 2007. Participation in Electronic Voting Platform and Other Efforts to Improve the Environment Surrounding the Exercise of Voting Rights by Institutional Investors Providing Notice of Convocation in English (Fully or Partially) 2. IR Activities Preparation and Publication of Disclosure Policy Regular Investor Briefings for Analysts and Institutional Investors Regular Investor Briefings for Overseas Investors The Company prepares English translations of its Notice of Convocation and Business Report, etc., and publishes them on its website or through other media for use as references by foreign shareholders and other stakeholders when exercising their voting rights. Supplementary Explanations Explanation Given by Representative The Company formulates a disclosure policy, and announces it on the Company’s website. This can be found on the following URL: https://www.tepco.co.jp/about/ir/index-j.html (in Japanese only) The Company holds briefings for securities analysts and institutional investors, in principle, twice a year for the financial results (for the second quarter (interim) results and fourth quarter (annual) results). Additional briefings are also held as needed for the first and third quarter results. In principle, the President or an officer in charge of IR presents the information. Moreover, in addition to regular briefings, the Company holds briefings as necessary regarding matters of great interest to shareholders and investors. The Company prepares English translations of its presentation materials for analyst and institutional investor briefings, and discloses them on its website. Moreover, the Company holds briefings for its major overseas investors at least once a year. Yes Yes – 21 – Posting of IR Materials on Website Establishment of Department and/or Manager in Charge of IR Other 3. Measures to Ensure Due Respect for Stakeholders Internal Rules, etc. Stipulated for Respecting the Position of Stakeholders Implementation of Environmental Preservation Activities, CSR Activities etc. Supplementary Explanations Explanation Given by Representative The IR materials published by the Company include the management policy; financial information such as the Quarterly Financial Results (in Japanese only); various reports such as the Annual and Quarterly Securities Reports (in Japanese only), Integrated Report, Business Reports; and other materials such as the Factbooks, presentation materials, timely disclosures made to securities exchanges, and FAQs. These can be found on the following URL: https://www.tepco.co.jp/en/hd/about/ir/index-e.html Accounting & Treasury Office The Company aims to enhance management transparency and to ensure that opinions of those outside the Company are reflected in management. To this end, the Company holds financial results briefings for shareholders and investors and discloses management information accurately and promptly through media such as its website. The Company also engages proactively in IR activities, such as holding direct exchanges of opinions between investors in Japan and overseas and the Company’s management. Supplementary Explanations These are set forth in the TEPCO Group Charter of Corporate Conduct (formulated in April 2005). TEPCO Group positions environmental preservation as an important corporate issue, and the Company holds the following environmental policy. We, the TEPCO Group, fulfill our responsibilities to Fukushima, comply with environmental laws and regulations thoroughly, and contribute to creating of a sustainable society through our diverse array of businesses unique to an energy and utility company. ・Carbon neutrality We contribute to achieving carbon neutrality on both the user and supplier sides, through especially the establishment of an ‘electrified society’ valuable for disaster preparedness, further development of renewables businesses, use of nuclear power with safety as a first priority, and technological development and innovation, etc. ・Reduction of environmental impacts We contribute to creating a sound resource-circulation society through efficient utilization of resources and water, while we reduce environmental impacts by ensuring measures against environmental pollutions and risk management. – 22 – Supplementary Explanations Other ・Biodiversity Conservation We contribute to creating a society that values biodiversity, by striving to