Corporate Governance

Basic Principles of NSG Group Corporate Governance Guidelines

Nippon Sheet Glass Group (the "NSG Group" and the "Group") believes that achieving and maintaining an advanced level of corporate governance is a key management agenda. We have created and adopted "NSG Group Corporate Governance Guidelines", supporting and endorsing the spirits and principles of Corporate Governance Code provided by the Tokyo Stock Exchange.

These Guidelines are intended to define and embed the basic principles and framework of our corporate governance in the organization. To further secure such purposes, the Group has also adopted a self-disciplinary approach for the Guidelines which, among others, requires us to give a reasonable account to our shareholders if the Group should proceed with any actions deviating from these Guidelines.

Please refer to the "NSG Group Corporate Governance Guidelines".

The Group considers achievement of an advanced level of corporate governance a key management objective and will implement the following.

1. Organizational Structure
   1. The Group's ultimate parent company, Nippon Sheet Glass Company, Limited will adopt a Company with Three-Committee structure and the Company hence will establish and maintain the Board of Directors (the "Board"), the Nomination Committee, the Audit Committee, the Compensation Committee (individually referred to as the "Committee"), and Executive Officers.
   2. The Board will authorize the Executive Officers to make decisions on the execution of business for the Company within the scope as permitted by law, thereby facilitating separation between business execution and oversight, enhancing the transparency of the management processes, and strengthening the Board supervisory function over the executive management.
   3. The Company will establish and maintain an internal control system operating on a Group-wide basis including in relation to financial reporting (J-SOX).
2. Stakeholders Communication
   1. The Group aims to be judged as best in class by our many stakeholder groups in a variety of settings across the whole group (including shareholders, customers, employees, suppliers, and local communities) from their own perspectives and also will develop, maintain, and enhance good relationship with any of such groups.
   2. In relation to the matter of disclosure of corporate information, whether or not it is to be made according to legal requirements, the Group always aims to act in a timely and appropriate manner both in terms of the substance and form, with a view to maintaining and invariably enhancing the transparency of management of the Group.
3. Code of Conduct
   • The Group will create the "NSG Group Code of Ethics" which all entities and employees etc., of the Group must comply with and will be regularly reviewed in light of the status of implementation/embedding within the Group and the contents.

Corporate Governance Structure

NSG Group adopts a "Company with Three Committees" governance structure, and has in place, as statutory corporate organizations, Board of Directors, and Nomination, Audit, and Compensation Committees, and Executive Officers. Currently, the Chairperson of the Board as well as the Chairpersons of all three Committees are all appointed from among the Independent External Directors.

For example, according to the NSG Group Corporate Governance Guidelines, the majority of the members of the Board of Directors are Independent External Directors. Also, the roles of the Chairperson of the Board and CEO are clearly distinguished. In the event that the Chairperson of the Board is not an Independent External Director, an Independent External Director who is entrusted to perform specified tasks such as making of contribution to communication, coordination and cooperation between the Independent External Directors and the Executive Divisions, and rendering of support to the Chairperson of the Board in relation to any issues of corporate governance shall be appointed from among Independent External Directors. Independent External Directors meet on an as-needed basis, even without the presence of executives, for discussion concerning matters such as corporate governance and businesses. In addition, the Board appoints the Company Secretary, the Company Secretary is responsible for promoting initiatives for efficient functioning of the Board and each Board Committee.

As regards the executive function, the Group also has Management Committee, Sustainability Committee, and Strategic Risk Committee. Currently, fourteen (14) Executive Officers are responsible for the business execution. One (1) of them is Representative Executive Officer performing the duties of CEO.

Corporate Governance Mechanism (as of 27 June 2024)

Supervisory Function

Diverse and highly independent in its structure, the Board of Directors is responsible for making decisions on the Group's material matters and supervising the execution of business.

The members of the Board of Directors, Nomination Committee, Audit Committee, and Compensation Committee are as follows (as of 27 June, 2024):

◎ denotes the Chairperson of the Board or the Committees, and ○ denotes a member.

Please refer to Brief career history, material positions concurrently held with third parties, and activities of External Directors.

Executive Function

Fourteen (14) Executive Officers (as of 27 June 2024), a professional group with diverse backgrounds, are responsible for the business execution of NSG Group.

Director Skills Matrix

In order to develop and enhance the enterprise value of the Group in a sustainable manner on a medium to long term basis, the Board is required to effectively supervise the execution of duties by Executive Officers, etc., while preparing for a corporate environment which will enable the executive management to take proper degree of risks associated with business. Based on the company situation and the issues to be solved in the execution of the new medium-term plan "2030 Vision: Shift the Phase" starting from the fiscal year ending March 2025, the areas of experiences and specialized knowledge, which the Nomination Committee considers to be particularly important for Directors, are defined as follows. The composition of Directors will be well-balanced as a whole in consideration of diversity.

Please refer to "Director Skills Matrix".

Criteria of Independency for External Director at NSG

An External Director is a Director who has never been a Director, an Executive Officer nor an employee of NSG Group nor its subsidiaries. To enhance the transparency of its business management, the Company has appointed five out of six Directors as External Directors. All these External Directors are designated as Independent Directors as defined by the Tokyo Stock Exchange (hereinafter referred to as "TSE"), and notified to the TSE accordingly.

In addition to the criteria of independency defined by the TSE, the Company has established its own criteria of independency for External Directors, taking into consideration their relationships with the Group, including such with its officers and major shareholders. All five External Directors satisfy these criteria of independency.

Please refer to "Group's Criteria of Independency for External Ddirectors".

Board Effectiveness Evaluation

NSG Group started an annual evaluation process for the Board effectiveness in FY2016, in order to further and constantly improve the performance and effectiveness of the Board of Directors, as well as the Nomination, Audit and Compensation Committees.

The entire process is led and supervised by Independent External Directors under the leadership of the Chairperson of the Board to ensure adequacy and independence.

Please see below for the Initiatives for the Priority Implementation Items as well as the implementation process and results of the Effectiveness Evaluation of the Board of Directors and each Committee for FY2024.

Please refer to "Board Effectiveness Evaluation (FY2024)".

Compensation for Directors and Executive Officers

The Company adopts a Company with Three-Committee structure and the Compensation Committee, which is composed of a majority of Independent External Directors, decides on the following matters. The policy on compensation and perquisites to be offered to the Directors and Executive Officers of the Company Individual compensation and perquisites to be offered to the Directors and Executive Officers of the Company according to such policy.

Compensation Policy for Executive Officers

The objectives of the compensation policy are to ensure that packages of employment terms and conditions are market-competitive and designed in such a way as to attract, retain and motivate Executive Officers of the highest caliber in an international business environment. The policy aims to ensure that each individual's basic salary and incentives are aligned with the performance of the Group and the interests of shareholders, while also reflecting the commitment and achievements of the individuals concerned. While some elements of the packages of the Executive Officers may vary depending on the market conditions in the countries in which they are directly employed, annual bonuses and long-term incentive plans follow a global policy and are structured, designed, and coordinated at the Group level.

Compensation Policy for Independent External Directors

The roles of Independent External Directors are to supervise the management of the Group business from their independent and objective standpoint as well as to engage in the material decision-makings as members of the Board of Directors. To ensure that Independent External Directors can perform their roles appropriately and effectively, and to retain individuals with the required capability and experience, their compensation level is set at an appropriate level based on surveys of other companies conducted by external specialists. Independent External Directors receive compensation for the performance of their duties. They are not eligible for performance-linked bonuses or awards under long-term incentive plans.

For details, please see the following.

Our actions to date aiming for an advanced level of corporate governance