三菱マテリアル（5711） – [Delayed]Corporate Governance Report

Corporate Governance Report Last Update: April 1, 2022 Mitsubishi Materials Corporation Naoki Ono, Chief Executive Officer Contact: Chiaki Kubota, General Manager, Corporate Communications Dept. TEL: 03-5252-5206 Securities Code: 5711 https://www.mmc.co.jp/ The corporate governance of Mitsubishi Materials Corporation (the “Company”) is described below. I. Basic Approach to Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information1. Basic ApproachWe have, based on the corporate philosophy of the Group, vision, values, code of conduct, mission and the Basic Policy on Corporate Governance (*) established by the Board of Directors, developed trust with all stakeholders related to the Company and its subsidiaries (hereinafter, the “Group”), such as shareholders and investors as well as employees, customers, client or supplier companies, creditors and local communities, and also develop our corporate governance. Among the governance systems under the Companies Act, we have chosen to be a Company with a Nomination Committee, and by separating supervision and execution, will strengthen the Board of Directors’ management supervisory functions, improve the transparency and fairness of management and accelerate business execution and decision making. We acknowledge the enhancement of corporate governance to be one of the most important management issues, and continuously make efforts to improve our corporate governance. (*) We have prepared the “Basic Policy on Corporate Governance,” which is disclosed on the Company’s website, as a compilation of the basic approach to and framework of corporate governance. https://www.mmc.co.jp/corporate/en/csr/view/governance.html [Reasons for Non-compliance with the Principles of the Corporate Governance Code] We have implemented all provisions of each principle of the corporate governance code. * This Report is written based on the Corporate Governance Code revised in June 2021 (includingeach principle of the Code for the Prime Market applicable from April 2022 and onward).[Disclosure Based on the Principles of the Corporate Governance Code] Updated [Principle 1-4: Strategic share holdings] – 1 -The Company’s basic policy on shares acquired for purposes other than pure investment (hereinafter, “Shares in the Form of Strategic Share Holdings”) shall be as follows: -The Company shall not acquire or hold Shares in the Form of Strategic Share Holdings unlessdoing so is necessary for the purpose of its business strategy.- With regard to the Shares in the Form of Strategic Share Holdings, the appropriateness ofsuch holdings shall be specifically reviewed and examined at a meeting of the Board ofDirectors on an annual basis. As a result of such reviews and examinations, the Company willreduce any Shares in the Form of Strategic Share Holdings if it is not deemed to be necessaryto hold such shares.-In exercising the voting rights attached to any Shares in the Form of Strategic Share Holdings,the Company will examine relevant proposals and decide whether to vote for or against it fromthe perspective of improving the corporate value of the Company and issuing company overthe medium- to long-term viewpoint. In FY2022, out of all of the Strategic Share Holdings (Listed shares held by the Company at the beginning of fiscal year: Shares issued by 43 issuing companies), we sold all or part of the shares issued by 22 issuing companies. The sales price was approximately 56.6 billion yen (at market value) in total, which accounted for about 48% of the amount stated on the balance sheet at the The status of reduction of Strategic Share Holdings before FY2022 is disclosed in the Integrated end of March 2021. Report. https://www.mmc.co.jp/corporate/en/ir/library/annual.html [Principle 1-7: Transactions between related parties] With respect to competitive transactions between the Company and Directors/Executive Officers and conflict-of-interest transactions between the Company and Directors/Executive Officers, the Company will conduct advance deliberations and make reports on the actual results of approved transactions (if any) at the Board of Directors Meetings, in accordance with the provisions of laws and internal rules such as the Board of Directors Rules. Further, any transaction between the Company and any major shareholder over a certain amount shall be deliberated at the Board of Directors Meeting in advance, in accordance with the provisions of the Board of Directors Rules. (Article 31 of the Basic Policy on Corporate Governance) [Supplementary Principle 2-4-1: Ensuring Diversity within the Company] 1. Approach to ensuring diversityBased on the belief that employees are the source of new values and the Group’s sustainablegrowth, we aim to maximize organizational performance by creating workplace environments inwhich team members with diversity in every respect, including race, religion, gender, sexualorientation and gender identity, age, disability, nationality, national origin, social origin, andprofessional background, can coexist, mutually recognize one another, and actively demonstratetheir individual abilities at their very best.- 2 -(Article 10 of the Basic Policy on Corporate Governance) We will actively drive Diversity and Inclusion in order to embrace and respect diverse personalities, as well as to create new values, that are the sources of sustainable growth for the Group. (Article 3 of Sustainability Policy) We aim to build workplaces where team members with diverse attributes, values, and experiences can coexist and mutually respect one another, and where individuals can work confidently with a sense of growth and fulfillment as they elevate each other and demonstrate their capabilities to the full. (Article 8 of the Human Rights Policy) 2. Voluntary and measurable goals and status for ensuring diversity The respective current status and goals related to female, foreign nationals, and mid-career employees in the Company are as follows. ① Female employees At the end of FY2021, the percentage of women managers to the total is approximately 2%. The recent ratio of female graduate new hires employed in career-track positions and above has generally achieved the existing target of 25% or higher. Going forward, we will be elevating this level to increase the number of women managers approximately 2.5 times by the end of FY 2026 compared with the end of FY2021. We will do this through enhancing mid-career recruitment, providing support for building a career and networking, cultivating capabilities by helping people to acquire diverse experience, and making other efforts. Meanwhile, in respect of the promotion of women’s participation and career advancement, including those in non-managerial positions, the following guidelines have been established and various measures are being conducted. Guidelines for Supporting Women’s Development and Advancement 1) Actively promoting Diversity and Inclusion to embrace and respect diverse personalities, as well as to create new values, that are the sources of sustainable growth for the Group. Such promotion is one of our management strategies, and active participation of female talents is indispensable. 2) Aiming to be a place where all female talents with diverse personalities can demonstrate her individual abilities at their very best at all workplaces, occupation fields and positions, while experiencing growth and self-realization. 3) Fostering culture where every female talent can independently and autonomously build and realize their careers by improving the work environment, expanding the work area and support that respect viewpoints of work. – 3 – ② Foreign nationals At the end of FY2021, the percentage of foreign managers to the total is approximately 1%. We will actively continue hiring new graduates and mid-career people to increase the number of foreign managers approximately 2.5 times by the end of FY 2026 compared with the end of FY2021 through career support and improving the work environment. ③ Mid-career employees At the end of FY2021, the percentage of mid-career employees to total managers is approximately 12%. We recently have been focusing on mid-career employment, and the ratio of mid-career employees in career-track positions and above in the past 3 years is approximately 40%. We will continue maintaining this level to increase the number of mid-career managers approximately 1.5 times by the end of FY 2026 compared with the end of FY2021. We will do this by strengthening the support system for members after they join the Company such as training and internal networking, providing career support and making other efforts. 3. Policy on human resource development and internal environment development for ensuring diversity of core human resources, and the implementation status In order for each employee with diverse attributes, values, and experience to actively demonstrate their individual abilities, we plan and manage development programs and support measures corresponding to the attributes of female, foreign nationals, and mid-career employees. Initiatives open to all employees are also taken. They include holding seminars and streaming videos to foster a culture that embraces diversity, promoting a new working style with remote work, developing a personnel system where a good work-life balance can be achieved in various life events such as childcare, nursing care, and illness, and promoting its use. [Principle 2-6: Fulfillment of function as corporate pension funds owner] The Company has been developing the asset mix of pension funds based on the risk and return at different times, in order to ensure the payment of pensions in the future. Pension Committee, comprised of the Executive Officer who oversees finance & accounting matters and the Executive Officer who oversees divisions in charge of corporate pension operations or the Strategic Management Committee members as well as the personnel with knowledge and experience of fund management and corporate pension operations, conduct periodic monitoring as to the investment status of the pension funds, and consider the review of the asset mix, and then the Strategic Management Committee determines the same after deliberation. In order to perform appropriate fund management, we conduct comprehensive evaluation and monitoring as to the institution entrusted with the investment by means of the combination of a quantitative evaluation and qualitative evaluation. [Principle 3-1: Fulfillment of information disclosure] (1) Management philosophy, management strategy and management plan (a) Management philosophy – 4 – 1) Corporate philosophy, etc. Based on its corporate philosophy of “For People, Society and the Earth”, the Group’s vision is “We will become the leading business group committed to creating a sustainable society though materials innovation with use of our unique and distinctive technologies, for People, Society and In order to realize such Corporate Philosophy and Vision, the Group believes that “Values” should be respected and the “Code of Conduct” should be complied with as a rule, both of which are For details, please refer to our website. https://www.mmc.co.jp/corporate/en/company/policy.html the Earth”. established. 2) Mission The Group has established the Group mission as medium- and long term goals from FY 2031 to FY2051 to fulfill the corporate philosophy and achieve the Group’s vision. ①We aim to contribute to build a prosperous society by providing nonferrous metal materials, predominantly copper, and high value-added functional materials and products. ②We aim to contribute to build a recycling-oriented society by providing recyclable products and advanced technology-based waste recycling. ③We aim to contribute to build a decarbonized society by developing and promoting the use of renewable energies such as geothermal energy, and ensuring to consider the reduction of environment impact in manufacturing. (b) Management strategy and management plan 1)Value creation process The Group will utilize its strengths that include “an advanced recycling technology and business platform,” “value chain from raw materials to products with a stable supply,” “unique material development and manufacturing technology,” and “a team that can unite to resolve issues,” etc., to solve social issues and promote key group initiatives to strengthen its management foundation and core businesses, and thereby further both social and economic values. 2) The Medium-term Management Strategy (FY2023 Strategy) In March 2020, we established a new Medium-Term Management Strategy (“FY2023 Strategy”) covering the period from FY2021 to FY2023, and we established the Group-wide Policy as follows: Group-wide Policy – Optimization of business portfolio – Comprehensive efforts to increase business competitiveness – Creation of new products and businesses FY2023 Strategy was partially reviewed as of May 14, 2021. For details, please refer to our website. – 5 – https://www.mmc.co.jp/corporate/en/company/strategy.html (2) Basic approach to and policy on corporate governance Please refer to “I.1. Basic Approach” in this Report. (3) Remuneration for Directors and Executive Officers Please refer to “Remuneration System for Directors and Executive Officers” attached at the end of this Report. (4) Nomination of Candidates for Director and the Election and Dismissal of Executive Officers (a) Policy for Nomination of Candidates for Director Our basic approach to the structure of the Board of Directors, which fulfills the roles of determining the direction of management and exercising supervision over the progress of business execution, is to ensure that it comprises a diverse range of human resources with different expert knowledge, experience, and other qualities. In particular, the Nomination Committee will consider candidates for Outside Director to ensure that they comprise individuals who possess experience and knowledge in corporate management (business similar to or different from the Group’s business, etc.) and organizational management, and individuals who possess broad and advanced expert knowledge and extensive experience in relation to finance and accounting, legal affairs, production engineering, research and development, sales and marketing, or international relations, etc. In light of the basic policy on the structure mentioned above, the Nomination Committee will nominate and select individuals who satisfy the following requirements as candidates for Director, regardless of individual attributes concerning gender, nationality and race, etc.: – An individual of exceptional insight and character; – An individual with a strong sense of ethics and a law-abiding spirit; and – An individual who can properly fulfill his or her duties concerning the exercise of supervision over the management of the Company and the determination of the direction of management. Further, with respect to candidates for Independent Outside Director, the Nomination Committee will nominate and select individuals who satisfy the following requirement in addition to the above – An individual who has no material interest in the Group and who can remain independent. The specific selection of personnel shall be decided after deliberation by the Nomination requirements: Committee. (Exhibit 1 of the Basic Policy on Corporate Governance) (b) Policy for Election and Dismissal of Executive Officers In electing Executive Officers responsible for the execution of business tasks, the Nomination Committee will elect individuals who satisfy the following requirements, regardless of individual attributes concerning gender, nationality and race, etc.: – An individual of exceptional insight and character; – An individual with a strong sense of ethics and a law-abiding spirit; and – 6 – – An individual well-versed in management and the business activities of the Group. In relation to the election process, the Chief Executive Officer will first draft a proposal for the election of Executive Officers after consulting with relevant officers as necessary. The Chief Executive Officer will then submit a proposal for the election of Executive Officers to the Board of Directors based on the deliberations and responses to inquiries at a Nomination Committee meeting, and Executive Officers will be elected by resolution of the Board of Directors based on a comprehensive review of the candidates’ personal history, achievements, specialist knowledge, and other capabilities. In addition, if any event occurs that makes an Executive Officer highly ineligible in light of these standards, the Executive Officer shall be dismissed by resolution of the Board of Directors following a review by the Nomination Committee. (Exhibit 3 of the Basic Policy on Corporate Governance) (5) Explanations of individual nomination, election and dismissal In case of the nomination of candidates for Directors and the election or dismissal of Executive Officers, the reason for each nomination, election or dismissal is disclosed on the Company’s website. https://www.mmc.co.jp/corporate/ja/company/governance.html Further, the reason for the nomination of each of the candidates for Directors is described in the Notice of the General Meeting of Shareholders as well. [Supplementary Principle 3-1-3: Initiatives for sustainability] 1. Initiatives for sustainability The Company recognizes addressing sustainability issues is essential in order to improve the corporate value of the Group from a medium- to long-term viewpoint. We aim to simultaneously ensure our contribution to the creation of a sustainable society and the improvement of corporate value from a medium- to long-term viewpoint by actively working to resolve social issues through means such as promoting the recycling of waste and resources and energy conservation in our global business activities. The Group will address sustainability issues in an appropriate manner, based on Sustainability Policy established on December 1, 2021. (Article 3 of the Basic Policy on Corporate Governance) Sustainability Policy The Basic Policy on Sustainability, which provides a summary on views and policies addressing sustainability issues, was established on December 1, 2021. For details, please refer to the Company website. https://www.mmc.co.jp/corporate/en/sustainability/ The Group’s medium- to long-term talent strategy states we will “Enhance the management of the – 7 – Group by securing and fostering adaptive talents and building a healthy organizational culture and promote sustainable growth by implementing measures for improving social values.” Based on such strategy, the Group has clarified competencies and skills commonly required of leaders, and has drawn up “Leadership Values in the Mitsubishi Materials Group,” (“Leadership Values” hereinafter), a guideline for leadership development. The Leadership Values are reflected in the performance assessment of managers in the Company. This is aimed at encouraging higher-ranked employees to lead awareness reform and embody the Leadership Values. The Company’s trainings by job grade have been designed in accordance with our Leadership Values, which provide the Group employees opportunities for leadership development appropriate to the various stages of their careers. In addition, we established “Next-Generation Leadership Talent Development Programs” which seek to develop qualified candidates for our Group’s senior management position. Under it, would-be executive talented personnel are selected for further training and development. In addition, we have reviewed the classification of personnel management as “Human Resource Transformation (HRX)” and introduced a “job-based personnel system” for non-union employees. The Group appropriately protects and enhances its own rights while respecting third-party intellectual property rights. Analytical tools that utilize big data on patent information in business and development strategies have been introduced. Based on the information analyzed, business strategies and strategic intellectual property formation activities are conducted, and in the latter we proceed to apply for and acquire rights in line with research and development strategies supporting business strategies. In addition, business units and IP Strategy Dept. began to have strategic dialogue to ascertain and analyze intellectual property rights, while reviewing business models and strategy development. Directors for supervision. As governance activities related to intellectual property, we regularly deliberate on intellectual property at the Monozukuri and R&D Strategy Meeting, and regularly report at the Board of The current status of investments and initiatives for the Company’s intellectual property rights at present are disclosed on the Company website. https://www.mmc.co.jp/corporate/en/business/ip/ 2. Responding to Climate Change Based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we established and analyzed scenarios to grasp the impact of climate-related risks and opportunities on our business and financial affairs, and to review measures to reduce risks and capture opportunities. The results have been disclosed. For details, please refer to the Company website. https://mmc.disclosure.site/ja/themes/93 – 8 – Furthermore, details of the Company’s sustainability initiatives are disclosed in ESG meetings, ESG Reports, Integrated Reports and others. [Supplementary Principle 4-1-1: Matters to be resolved at the meetings of the Board of Directors, Etc.] The Board of Directors shall determine matters which may have a serious impact on our management, such as the management policy and managerial reform – pursuant to the provisions of laws and regulations, the Articles of Incorporation and the Board of Directors Rules – in order to improve the medium- to long-term corporate value of Mitsubishi Materials Group, and the standards for such determination are clearly set forth in the Board of Directors Rules. The determination and execution of matters for the Company’s operations, etc. not determined by the Board of Directors are entrusted to the Executive Officers. They are determined by the Strategic Management Committee and other important meetings or General Managers of related departments, etc., in accordance with the Company’s internal regulations concerning decision-making authority. Further, the execution of the Company’s important operations, etc. determined by the Strategic Management Committee, etc. shall be reported to and supervised by the Board of Directors. Outside Directors] [Principle 4-9: Standards for determining independence and qualifications of Independent The Company has set its own standards for the independence of Outside Directors and registers with the Tokyo Stock Exchange, Inc. as Independent Outside Directors those Outside Directors who fulfill the standards for independence of Outside Directors. For the standards for the independence of Independent Outside Directors, please refer to “Matters relating to Independent Directors” of “II.1. Independent Directors” of this Report. (Article 23 and Exhibit 2 of the Basic Policy on Corporate Governance) [Supplementary Principle 4-11-1: Perspective on the balance, diversity and scale of knowledge, experience and ability of the Board of Directors as a whole] The Board of Directors shall consist of an appropriate number of Directors (but not more than 15 Directors, as provided for in the Articles of Incorporation) to enable the Board of Directors to fulfill its functions most effectively and efficiently. In addition, a majority of the Directors on the Board of Directors shall be Independent Outside Directors. The Board of Directors shall consist of diverse Directors with a high degree of expertise and insight into management, finance and accounting, sales and marketing, production engineering, research and development, legal affairs, internationality and other aspects to ensure a well-balanced combination of knowledge, experience and ability necessary to fulfill their functions and duties effectively as a whole. Meanwhile from the notice of the General Meeting of Shareholders held in June 2021, a Skill Matrix listing the expertise and experience of Directors has been presented and disclosed on the Company website. – 9 – https://www.mmc.co.jp/corporate/en/news/ir/ (Article 16 of the Basic Policy on Corporate Governance) [Supplementary Principle 4-11-2: Status of concurrent post of Directors at other listed In order to secure the time necessary to properly fulfill their functions and duties, Directors shall not concurrently serve as directors, corporate auditors, executive officers or representatives of more than three (3) listed companies or legal entities, etc. other than the Company. The important positions of other organizations concurrently assumed by each Director are disclosed in the Business Report and the Notice of the General Meeting of Shareholders every (Article 21 of the Basic Policy on Corporate Governance) [Supplementary Principle 4-11-3: Analysis and evaluation of the effectiveness of the Board of The Company analyzes and evaluates the effectiveness of the Board of Directors based on the evaluation by each Director on an annual basis. In FY2022, the effectiveness of the Board of Directors was evaluated using a third-party organization. The evaluation method and a summary companies] year. Directors] of the results are outlined below. 1. Method of analysis/evaluation (1) Evaluation process ・September 2021 ・October 2021 The third-party organization conducted a preliminary ・November 2021 A questionnaire prepared in consultation with the third-・December 2021 Based on the results of the questionnaire, the third-・February and March 2022 Given the report from the third-party organization on The materials and minutes of the Company’s Board of Directors meetings were disclosed to the third-party organization. interview with the Chairman of the Board of Directors and the Chief Executive Officer regarding the current status of the Board of Directors. party organization was distributed to all 10 Directors and anonymous responses were retrieved. party organization conducted individual interviews with all 10 Directors on important matters concerning the Board of Directors. the results of the questionnaire and interviews compiled and analyzed, the Directors discussed the effectiveness of the Board of Directors based on that report. – 10 – ・March 2022 Following the discussions in February and March, the Board of Directors passed a resolution on the effectiveness of the Board of Directors for FY2022. (2) Questionnaire items The questionnaire uses a five-grade evaluation for the questions below (1. Strongly agree, 2. Agree, 3. Neither agree nor disagree, 4. Disagree, 5. Totally disagree) and provides a free comment space where needed. ・Roles and functions of the Board of Directors ・Scale and composition of the Board of Directors ・Status of operations of the Board of Directors ・Composition, roles and status of operations of each of the Nomination Committee, Audit Committee and Remuneration Committee ・Support system for Outside Directors ・Relationship with investors and shareholders ・Overall effectiveness of the Company’s governance system and the Board of Directors (3) Interview items Based on the responses to the questionnaire, the third-party organization conducted interviews on the following important matters concerning the effectiveness of Board of Directors. Promotion of CX (efforts for management innovation) and organizational reform (i) Views on business and management Optimization of business portfolio Status of corporate culture and human resources Status of group governance and internal control (ii) Views on the Board of Directors Supervisory function by the Board of Directors Status of discussions at the Board of Directors Comments by Outside Directors Quality of discussions at the Board of Directors and future responses Discussions on sustainability issues Setting of agenda Materials and presentations Views on the leading Independent Outside Directors Succession plan for the Chief Executive Officer Views on the Chairman and its succession plan Composition of Outside Directors and their succession plan Sharing of information on discussions at the Nomination Committee with the Board of Directors Status of activities of the Audit Committee 2. Issues based on the FY2021 evaluation and evaluation of responses to those issues As a result of the questionnaire and interviews conducted by the third-party organization regarding the initiatives concerning the following matters taken by the Company in FY2022 based on the – 11 – results of the evaluation of the effectiveness of the Board of Directors for FY2021, it was confirmed that “certain measures were taken and improvements have been made” and “sufficient discussions were conducted by the Board of Directors” in general. (1) Matters pertaining to enhancement of management supervisory functions (the manner of supervision, including supervision of the measures taken based on the Medium-term Management Strategy, the appropriate content and number of proposals to the Board of Directors, the content and volume of materials for the Board of Directors, and time for prior consideration) ・Distribution of materials for the Board of Directors should be made at an early timing with particularly important sections in materials highlighted. ・Emphasis should be made on explaining new matters, and causes and countermeasures, etc. of matters that are progressing unfavorably in reports made by Executive Officers at the Board of Directors meetings. ・In regard to matters deliberated by the Board of Directors, reporting of business results, budget, financial results, etc. should be made in the first half so that Directors may judge the appropriateness of each measure based on the general situation of business performance, etc. ・Business briefings should be held regularly for Outside Directors in order to deepen their understanding of our business and major projects, overseas sites/business expansion, and overview and background, etc. of measures taken under the Medium-term Management Strategy. (2) Matters pertaining to understanding of capital cost and setting of indicators ・In line with the partial review of the Medium-term Management Strategy, financial plans, including ROIC, were reviewed after consultation by the regular Board of Directors meetings held in March and April 2021. ・Appropriate calculation and operation methods, etc. of management indicators, including ROIC, should be further discussed by the Board of Directors to develop a monitoring structure based on appropriate management indicators applicable for the next Medium-term Management Strategy. (3) Matters pertaining to supervision of the policy for reduction of the Strategic Share Holdings ・Strategic Share Holdings should be examined based on business alliances, business relationships, and investment effects to systematically reduce shares if it is deemed unnecessary to hold them. (For the status of actual reduction efforts, please refer to [Principle 1-4: Strategic shareholdings] in [Disclosure Based on the Principles of the Corporate Governance Code].) (4) Matters pertaining to supervision of Group governance, etc. ・Initiatives should be taken on the Group-wide measures to activate communication and enhance internal control. ・Previously implemented reports on safety, quality, compliance, etc. by the Sustainable Management Office to the Board of Directors should be continued as provision of necessary information for monitoring. 3. Results of analysis of the questionnaire and interviews by the third-party organization – 12 – The key results of analysis of the questionnaire and interviews compiled by the third-party organizations are as follows. (1) Effectiveness, etc. of the Board of Directors ・The supervisory function of the Board of Directors is appropriately exercised, and its effectiveness is considered to be high. ・In the self-evaluation of Directors, it was confirmed that each individual contributed to activating discussions at the Board of Directors meetings and to exercising the supervisory function. (2) Supervisory function of the Board of Directors ・The management team is currently working on business and organizational reforms, but there are still many issues recognized. The role, composition, and discussions of the Board of Directors are expected to change in response to such business and management stages. As for their role, it is considered that “the support and supervision of execution will be important in the success of reforms and the creation of growth areas” and “discussions are needed to enhance the supervision function to monitor the efforts to address issues.” ・The Board of Directors has a common understanding that supervision of management and execution is an important role. The way in which a supervisory function is exercised is considered to differ depending on the experience and perspective of each Director. Specific measures included “support execution and lead to change,” “examine from both quantitative and qualitative aspects, focusing on major policies related to the whole,” and “strictly monitor progress and achievements in response to commitments.” There is an opinion stating that it is better for the Board of Directors to take a more leading role in matters related to the way the Company ought to be, such as sustainability issues. (3) Sustainability ・ On sustainability issues, many directors believe it is better for the Board of Directors to demonstrate stronger leadership and set a direction from the Board’s point of view. In order to conduct effective discussions, it is considered necessary to “clarify the definition of sustainability,” “organize how Outside Directors can contribute,” “establish a sustainability committee to hold discussions outside the Board of Directors,” and “enhance the secretariat structure” among others. 4. Summary of FY2022 evaluation results As a result of deliberations by the Board of Directors in consideration of the results of the third-party analysis, it was confirmed that the effectiveness of the Board of Directors of the Company was secured in FY2022. Matters recognized as issues in the questionnaire and interviews and a summary of deliberations of the Board of Directors regarding those issues are as follows. (1) Matters pertaining to the operation of the Nomination Committee, Audit Committee and Remuneration Committee ・There was an opinion that “the Nomination Committee has not sufficiently shared information with the Board of Directors regarding the status of consideration of the succession plan for the internal Directors.” Regarding this, there was an opinion indicating that “this evaluation result may be due to a lack of sharing of discussions had by the Nomination Committee with the entire Board – 13 – of Directors or to inadequate sharing of relevant information from Directors who also serve as Executive Officers. This can also be said of discussions at the Remuneration Committee, etc., and from a broad perspective, it may be a question of whether each committee shares the content of deeper discussions.” ・On the other hand, there was a comment stating that “in some cases, the content of discussions at each committee includes information that is not necessarily appropriate to be shared with the Board of Directors as a whole because of the presence of relevant persons within the Board.” Regarding this, an opinion was given that “opportunities for discussion among Outside Directors only should be increased, taking into account cases where it is not appropriate to share information with internal relevant parties.” ・In light of the above, the Board of Directors will deepen its consideration of the ways in which the content of the discussions within the Nomination Committee, Audit Committee and Remuneration Committee should be shared in terms of “where,” “to which Directors,” and “to what extent.” (2) Matters pertaining to supervision of growth strategies by the Board of Directors ・Regarding the optimization of the business portfolio, there was an opinion stating, “Since a certain degree of business reforms, including restructuring and withdrawal, is expected to be completed, discussions on growth strategies, such as strengthening existing businesses and fostering new businesses, should be deepened from a multifaceted perspective.” ・In addition, while there was an opinion stating, “It is necessary to enhance explanations and information provision from Executive Officers in order for the Board of Directors to accurately monitor the current situation,” there was also an opinion stating, “This is covered by the business briefing, etc. for Directors currently held.” ・In light of the above, the Board of Directors will deepen its consideration of what efforts should be made in terms of “the perspective from which discussions should be made” and “what situations (methods)” in order to further enhance the effectiveness of the Board of Directors’ supervision with respect to the future growth strategies. (3) Matters pertaining to the establishment of a sustainability committee ・Through this evaluation process, it was found that on sustainability, many Directors believe “it is better for the Board of Directors to demonstrate stronger leadership and set a direction from the Board’s point of view.” ・In light of the above, the Board of Directors will deepen its consideration of the establishment of a sustainability committee. Looking ahead, the Board of Directors will keep making continuous efforts toward further effectiveness improvements, taking into account the above matters. (Article 17 of the Basic Policy on Corporate Governance) [Supplementary Principle 4-14-2: Policy on training for Directors] We will provide Directors with the opportunity for training by outside experts, etc. as necessary so – 14 – that they can acquire the knowledge to carry out their functions and duties (including legal responsibilities) at the time of and after their assumption of office. We will provide Outside Directors with the opportunity to obtain a deeper understanding of Mitsubishi Materials Group’s business, finance, organization, etc. Any costs and expenses for the foregoing shall be borne by the Company. (Article 26 of the Basic Policy on Corporate Governance) [Principle 5-1: Policy on constructive communication with shareholders] (1) Policy on communication; framework for promotion The Company shall engage in constructive communication with shareholders and investors as follows: communication. – The Chief Executive Officer and the Chief Financial Officer shall supervise communication with shareholders and investors in general and endeavor to realize constructive – The members of management, as well as the Corporate Communications Dept. and other internal relevant departments, shall cooperate to deal with matters concerning communication with shareholders and investors, based on appointment by the Chief Executive Officer and the Chief Financial Officer. – With the aim of enhancing communication with shareholders and investors, the Company shall hold a variety of briefings on its management strategy, business content, products, regional strategies, and performance, etc., in addition to the General Meeting of Shareholders and individual discussions. Also the Company shall collect and analyze opinions, etc. of shareholders and investors obtained through communication, and provide feedback to the Board of Directors and the members of management. (Article 12 of the Basic Policy on Corporate Governance) (2) Achievements In order to achieve the continuous improvement of corporate value over the medium- to long-term through constructive communication with shareholders and investors, the Company readily responds to requests from domestic and foreign institutional investors for individual meetings, and also promotes various approaches through discussions, etc. by the members of the management, including the Chief Executive Officer. The concrete contents of our approaches through dialogue by the members of the management, including the Chief Executive Officer, are as follows: A. Investor conference for analysts and institutional investors (Chief Executive Officer, Chief B. Overseas individual IR (Chief Executive Officer, Chief Financial Officer, etc.) C. Attending investment conferences for foreign institutional investors (Chief Financial Officer, Financial Officer) etc.) D. IR Day and Business explanatory meetings (Executive Officers) E. ESG meetings for analysts and institutional investors (Chief Executive Officer, Chief – 15 – Financial Officer) F. Small meetings with domestic institutional investors (Chief Executive Officer, Chief Financial Officer, Outside Directors, etc.) G. Factory tour (Person responsible of each business location, etc.) H. Explanatory meetings for individual investors (Chief Financial Officer, General Manager of Corporate Communications Dept., etc.) (3) Handling of Corporate Information, etc. – The Company shall disclose its corporate information in a timely and appropriate manner in accordance with the Companies Act, the Financial Instruments and Exchange Act and other applicable laws and regulations as well as the rules established by the relevant financial instruments exchange, etc. In addition, the Company shall give due consideration to other voluntary disclosures so that such disclosures will be conducted appropriately. – The Company shall establish regulations for the management of insider information, and appropriately manage insider information. In addition, the Company shall prevent insider trading by calling the attention of the Group’s employees to insider trading on a periodic basis and also, for example, providing in-house education as necessary. (Article 9 of the Basic Policy on Corporate Governance) 2. Capital Structure Percentage of Foreign Shareholders 30% or more [Status of Major Shareholders] Name / Company Name Percentage (%) Number of Shares Owned 18,178,900 The Master Trust Bank of Japan, Ltd. (Trust account) Custody Bank of Japan, Ltd. (Trust account) NORTHERN TRUST CO. (AVFC) RE SILCHESTER INTERNATIONAL INVESTORS INTERNATIONAL VALUE EQUITY TRUST NORTHERN TRUST CO. (AVFC) RE U.S TAX EXEMPTED PENSION FUNDS Meiji Yasuda Life Insurance Company NORTHERN TRUST CO.（AVFC） SUB A/C NON TREATY MUFG Bank, Ltd. STATE STREET BANK AND TRUST COMPANY 505103 NORTHERN TRUST CO.(AVFC) RE IEDU UCITS CLIENTS NON LENDING 15 PCT TREATY ACCOUNT Custody Bank of Japan, Ltd. (Trust account 7) 8,916,600 7,767,600 4,106,800 3,101,893 2,478,188 2,003,030 1,887,213 1,810,800 1,753,100 – 16 – 13.89 6.81 5.93 3.14 2.37 1.89 1.53 1.44 1.38 1.34 Controlling Shareholder (except for Parent Company) Parent Company ――― None Supplementary Explanation Updated The status of major shareholders is based on the information as of September 30, 2021. The above-mentioned “Percentage” was calculated after deducting treasury shares (566,561 While the Large Shareholding Report (including Change Report) was made available for public inspection as shown below, as the number of shares substantially held by each of such holders as of November 30, 2021, has not been confirmed by the Company, the above “Status of Major Shareholders” is based on the number of shares held by each shareholder as recorded in the shareholders’ register: shares). (1) Submitted by BlackRock Japan Co., Ltd. and five other persons Effective Date of Reporting Obligation: November 30, 2020 Date Submitted: December 4, 2020 Number of Shares Owned: 4,488,731 shares Ratio of Shares Held to Total Number of Issued and Outstanding Shares: 3.41% (2) Submitted by Nomura Securities Co., Ltd. and two other persons Effective Date of Reporting Obligation: December 31, 2020 Date Submitted: January 8, 2021 Number of Shares Owned 6,631,161 shares Ratio of Shares Held to Total Number of Issued and Outstanding Shares: 5.04% (3) Submitted by Silchester International Investors LLP Effective Date of Reporting Obligation: October 28, 2021 Date Submitted: November 1, 2021 Number of Shares Owned: 17,927,700 shares Ratio of Shares Held to Total Number of Issued and Outstanding Shares: 13.63% (4) Submitted by Sumitomo Mitsui Trust Asset Management Co., Ltd. and one other person Effective Date of Reporting Obligation: November 30, 2021 Date Submitted: December 6, 2021 Number of Shares Owned 7,966,400 shares Ratio of Shares Held to Total Number of Issued and Outstanding Shares: 6.06% (5) Submitted by MUFG Bank, Ltd. and two other persons Effective Date of Reporting Obligation: January 10, 2022 Date Submitted: January 17, 2022 Number of Shares Owned: 6,397,508 shares Ratio of Shares Held to Total Number of Issued and Outstanding Shares: 4.87% – 17 – Listed Stock Market and Market Section First Section, Tokyo Stock Exchange 3. Corporate Attributes Fiscal Year-End Type of Business Number of Employees (consolidated) as of the End of the Previous Fiscal Year Net sales (consolidated) as of the End of the Previous Fiscal Year Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year March Nonferrous Metals More than 1000 More than \1 trillion From 100 to less than 300 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder ――― ――― 5. Other Special Circumstances which may have Material Impact on Corporate Governance 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 a Nomination Committee [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of 15 persons 1 year Incorporation Chairperson of the Board of Directors Number of Directors Chairman (except for the case where the person concurrently serves as Chief Executive Officer) 10 persons [Outside Directors] Number of Outside Directors Number of Independent Directors 6 persons 6 persons Outside Directors’ Relationship with the Company (1) Name Attribute Mariko Tokuno Hiroshi Watanabe From another company From another company Relationship with the Company* a b c d e g h f i j k – 18 – Hikaru Sugi Hiroshi Sato Tatsuo Wakabayashi From another company From another company From another company From another company * Categories for “Relationship with the Company” * Koji Igarashi △ △○ △“○” when the Director presently falls or has recently fallen under the category; ““●” 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 ” when the Director fell under the category in the past * a. Executive of the Company or its subsidiaries b. Non-executive Director or executive of the 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 h. Executive of a client or supplier company of the Company (which does not correspond to any of i. Executive of a company, between which and the Company Outside Directors are mutually j. Executive of a company or organization that receives a donation from the Company (the Director shareholder is a legal entity) d, e, or f) (the Director himself/herself only) appointed (the Director himself/herself only) himself/herself only) k. Others Outside Directors’ Relationship with the Company (2) Updated Membership of Committees Nomination/ Remuneration Designation as Independent Director ○ Name Mariko Tokuno Supplementary Explanation of the Relationship Reasons of Appointment strategy and general aspects Outside Director, of management from a global Happinet Corporation perspective gained through Outside Director, her extensive experience as a Yamato Holdings Co., Ltd. manager of the Japanese Outside Director operations of leading Shiseido Co., Ltd. international firms. Based on her insight, she has given Ms. Tokuno was designated as useful advice from various Independent Director of the viewpoints in the Board of Company. Directors meetings so as to enhance mid to long-term corporate value of the Group and has supervised the execution of duties by – 19 – Executive Officers, etc., from an independent position. Additionally, as Chairperson of the Nomination Committee and a member of the Remuneration Committee, she has been involved in selecting candidates for Directors and Executive Officers, and deciding on the remuneration of Directors and Executive Officers, etc., of the Company from an objective and neutral position. As explained above, she has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that she will help strengthen the appropriate supervisory and decision-making functions of the Board of Directors, and therefore is appropriate for the position of Outside Director. The Company designated her as Independent Director because she does not violate any of the independency standards established by Tokyo Stock Exchange, Inc. and the independency standards separately established by the Company, and we considered that she had sufficient independence and therefore was unlikely to have conflicts of interest with general shareholders. and overseas finance and Hiroshi Watanabe Audit ○ – 20 – President, economics, and general Institute for International aspects of management Monetary Affairs gained through his experience Outside Director, ORIX in key positions at the MOF Corporation and in management positions in government-affiliated Mr. Watanabe was designated as financial institutions. Based on Independent Director of the his insight, he has given useful Company. advice from various viewpoints in the Board of Directors meetings so as to enhance mid to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc., from an independent position. Additionally, as a member of the Audit Committee, he has been engaged mainly in auditing the execution of duties by Executive Officers, etc., from an objective and neutral position. As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will help strengthen the appropriate supervisory and decision-making functions of the Board of Directors, and therefore is appropriate for the position of Outside Director. The Company designated him as Independent Director because he does not violate any of the independency standards established by Tokyo Stock Exchange, Inc. – 21 – Hikaru Sugi Nomination/ Remuneration ○ and the independency standards separately established by the Company, and we considered that he had sufficient independence and therefore was unlikely to have conflicts of interest with general shareholders. He came from Denso Corporation He has extensive technical (he resigned from the office of knowledge in development, Executive Vice President of such design and manufacturing company in June 2014) and the processes, and he also has Company has a business insight into corporate strategy relationship with Denso from a global perspective and Corporation related to such general aspects of activities as the sale of copper management gained through cathodes. However, the value of his experience as a the transactions amounts to less management of a than 1% of the consolidated net manufacturer that develops its sales of the Company and such business all over the world. company. Based on his insight, he has given useful advice from Mr. Sugi was designated as various viewpoints in the Independent Director of the Board of Directors meetings Company. so as to enhance mid to long-term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc., from an independent position. Additionally, as a member of the Nomination Committee and the Remuneration Committee, he has been involved in selecting candidates for Directors and Executive Officer and deciding on the remuneration of Directors and Executive Officer, etc., of the Company from an objective and neutral – 22 – position. As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will help strengthen the appropriate supervisory and decision-making functions of the Board of Directors, and therefore is appropriate for the position of Outside Director. The Company designated him as Independent Director because he does not violate any of the independency standards established by Tokyo Stock Exchange, Inc. and the independency standards separately established by the Company, and we considered that he had sufficient independence and therefore was unlikely to have conflicts of interest with general shareholders. Hiroshi Sato Audit ○ He came from Mitsubishi Steel He has insight into finance, MFG. Co., Ltd. (he resigned from accounting and general the office of Managing Director of aspects of management such company in June 2017) and gained through his experience the Company has a business as a corporate auditor of a relationship with Mitsubishi Steel financial institution and as a MFG. Co., Ltd. related to such management at a activities as the purchase of raw manufacturer. Based on his materials. However, the value of insight, he has given useful the transactions amounts to less advice from various viewpoints than 1% of the consolidated net in the Board of Directors sales of the Company and such meetings so as to enhance mid to long-term corporate value of the Group and has Mr. Sato was designated as supervised the execution of company. – 23 – Independent Director of the duties by Executive Officers, Company. etc., from an independent position. Additionally, as Chairperson of the Audit Committee, he has been engaged mainly in auditing the execution of duties by Executive Officers, etc., from an objective and neutral position. As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will help strengthen the appropriate supervisory and decision-making functions of the Board of Directors, and therefore is appropriate for the position of Outside Director. The Company designated him as Independent Director because he does not violate any of the independency standards established by Tokyo Stock Exchange, Inc. and the independency standards separately established by the Company, and we considered that he had sufficient independence and therefore was unlikely to have conflicts of interest with general shareholders. Tatsuo Wakabayashi Nomination/ Remuneration ○ accounting and general Senior Adviser, aspects of management Mitsubishi UFJ Trust and Banking gained through his extensive Corporation experience as a management Outside Director, having served as President – 24 – Mitsubishi Logistics Corporation and Chairman at financial institutions. Based on his He resigned from the office of insight, he has given useful managing executive of Mitsubishi advice from various viewpoints UFJ Trust and Banking in the Board of Directors Corporation (MUTB) (Chairman) meetings so as to enhance on April 1, 2020 and assumed the mid to long-term corporate office of Senior Advisor of such value of the Group and has company. The Company has a supervised the execution of business relationship with MUTB duties by Executive Officers, related to such activities as etc., from an independent entrustment of the Company’s position. Additionally, as pension funds. However, the Chairperson of the value of the transactions amounts Remuneration Committee and to less than 2% of the a member of the Nomination consolidated net sales of the Committee, he has been Company and such company. involved in deciding on the Moreover, the Company has no remuneration of Directors and business relationship with MUTB Executive Officers, etc., and relating to the borrowing of funds. selecting candidates for Directors and Executive Mr. Wakabayashi was designated Officers of the Company from as Independent Director of the an objective and neutral Company. position. As explained above, he has extensive knowledge and rich experience that contributes to the sustainable growth of the Group. The Company expects that he will help strengthen the appropriate supervisory and decision-making functions of the Board of Directors, and therefore is appropriate for the position of Outside Director. The Company designated him as Independent Director because he does not violate any of the independency standards established by Tokyo Stock Exchange, Inc. – 25 – Koji Igarashi Audit ○ He resigned from the office of He has extensive technical and the independency standards separately established by the Company, and we considered that he had sufficient independence and therefore was unlikely to have conflicts of interest with general shareholders. advisor of Ajinomoto Co., Ltd. knowledge in technological on June 30, 2020. (In June development and 2017, he resigned from the manufacturing as well as office of Member of the Board, insight into general aspects of Corporate Senior Vice management, such as President of such company.) business globalization, The Company has a business business reform and creation, relationship with such company and promotion of digitalization such as consigned treatment of through his experience as a industrial waste. However, the management of a food value of the transactions manufacturer that develops its amounts to less than 1% of business all over the world. consolidated net sales of the Based on his insight, he has Company and such company. given useful advice from various viewpoints in the Mr. Igarashi was designated as Board of Directors meetings Independent Director of the so as to enhance mid to long-Company. term corporate value of the Group and has supervised the execution of duties by Executive Officers, etc., from an independent position. Additionally, as a member of the Audit Committee, he has been engaged mainly in auditing the execution of duties by Executive Officers, etc., from an objective and neutral position. As explained above, he has extensive knowledge and rich experience that contributes to – 26 – the sustainable growth of the Group. The Company expects that he will help strengthen the appropriate supervisory and decision-making functions of the Board of Directors, and therefore is appropriate for the position of Outside Director. The Company designated him as Independent Director because he does not violate any of the independency standards established by Tokyo Stock Exchange, Inc. and the independency standards separately established by the Company, and we considered that he had sufficient independence and therefore was unlikely to have conflicts of interest with general shareholders. [Committees] Nomination Committee Remuneration Committee Audit Committee Committee’s Composition and Attributes of Chairperson All Committee Members Full-time Members Inside Directors Outside Directors Chairperson 5 5 5 0 0 2 2 2 2 3 3 3 Outside Director Outside Director Outside Director [Executive Officers] Updated Number of Executive Officers 10 persons Status of Additional Duties Name Representative Authority Naoki Ono Yasunobu Suzuki Makoto Shibata Yes Yes No Additional Duties as Director Nomination Committee Member Yes Remuneration Committee Member Yes No No No No Additional Duties as Employee No No No Yes No No – 27 – Nobuhiro Takayanagi Jun Nagano Tetsuya Tanaka Toshinori Ishii Katsuyoshi Isaji Yoshiaki Arai Makiko Nogawa 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 [Auditing Structure] Updated Appointment of Directors and/or Employees to Support the Audit Committee Appointed Matters Related to the Independence of Such Directors and/or Employees from Executive Officers – The Company establishes the Audit Committee Office as an organization dedicated to assisting with the operations of the Audit Committee. The Company assigns employees in the Audit Committee Office to assist with the operations of the Audit Committee and carry out the operations according to the instructions of the Committee. – As to personnel changes in employees who belong to the Audit Committee Office, the Executive Officer in charge of the Audit Department of the Strategic Headquarters shall obtain prior consent from the Audit Committee (if the Audit Committee nominates a specific Audit Committee Member, such Audit Committee Member) in order to secure independence from Executive Officer