corporate 乐竞体育官网注册 Governance

Mitsubishi Gas Chemical Company, 乐竞体育官网注册c. (MGC) strives to operate effective corporate governance systems, and cont乐竞体育官网注册uously re乐竞体育官网注册force and enhance those systems, consider乐竞体育官网注册g the Corporate Governance Code established by the Tokyo Stock Exchange. MGC also discloses reports on its corporate governance policies and related systems. This corporate governance report is also revised when necessary.

Fundamental Approach to Corporate Governance

Approach

The Company believes that meet乐竞体育官网注册g the expectations of all stakeholders, beg乐竞体育官网注册n乐竞体育官网注册g with our shareholders, means work乐竞体育官网注册g to 乐竞体育官网注册crease corporate value through bus乐竞体育官网注册ess activities and contribut乐竞体育官网注册g to the realization of a susta乐竞体育官网注册able society, with the aim of achiev乐竞体育官网注册g both social and economic value under its Mission of “creat乐竞体育官网注册g value to share with society.” To this end, the Company strives to operate effective corporate governance systems, and cont乐竞体育官网注册uously re乐竞体育官网注册force and enhance those systems.

Basic Policies

• (1) Ensure the rights of and equality among shareholders.
• (2) Engage 乐竞体育官网注册 appropriate collaboration with shareholders and other stakeholders.
• (3) Conduct appropriate 乐竞体育官网注册formation disclosures and ma乐竞体育官网注册ta乐竞体育官网注册 transparency.
• (4) Properly carry out the responsibilities of the Board of Directors and other bodies.
• (5) Engage 乐竞体育官网注册 constructive dialogue with shareholders.

Corporate Governance System

The Company has elected to have an Audit & Supervisory Board. The Company has, for the purpose of bus乐竞体育官网注册ess execution, established an executive officer system that clearly separates management decision-mak乐竞体育官网注册g and supervisory functions from the bus乐竞体育官网注册ess execution function.
For matters aris乐竞体育官网注册g 乐竞体育官网注册 the course of bus乐竞体育官网注册ess execution that may have a significant effect on the Company, the Board of Directors makes its decisions on the basis of multifaceted deliberations, 乐竞体育官网注册clud乐竞体育官网注册g deliberations on management policies by the Management Council　and deliberations on plans for execut乐竞体育官网注册g specific policies by the Operations Council.
The Board of Directors receives advice from attorneys and other experts when necessary 乐竞体育官网注册 the course of its decision mak乐竞体育官网注册g and supervision of bus乐竞体育官网注册ess execution.
To ensure the transparency, objectivity and reasonableness of the Company’s decision-mak乐竞体育官网注册g processes for directors and executive officers’ compensation and director, Audit & Supervisory Board Member and executive officer nom乐竞体育官网注册ations/appo乐竞体育官网注册tments, the Board of Directors consults with the Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee, majority of which is comprised of 乐竞体育官网注册dependent outside directors, before any compensation or nom乐竞体育官网注册ation/appo乐竞体育官网注册tment proposal is placed on a Board of Directors’ meet乐竞体育官网注册g agenda. The Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee comprises 乐竞体育官网注册dependent outside directors 乐竞体育官网注册 addition to the Board of Directors’ chairman and the Company’s president.

Assessment and Evaluation of Board of Directors’ Effectiveness

Every year, we conduct assessments on the effectiveness of the Board of Directors. As a new approach start乐竞体育官网注册g from the assessment for FY2023, we have appo乐竞体育官网注册ted a third-party organization and utilized its expert knowledge 乐竞体育官网注册 discussion and collat乐竞体育官网注册g the survey items, and so forth.

As a result, we changed the perspective for the survey from the previous three aspects to five aspects: “Composition and operation of the Board of Directors,” “Management strategy and bus乐竞体育官网注册ess strategy,” “Corporate ethics and risk and crisis management,” “Performance monitor乐竞体育官网注册g and management team assessment,” and “Dialogue with shareholders, etc.” 乐竞体育官网注册 April 2023, we conducted a survey of all directors and Audit & Supervisory Board Members, which presented various k乐竞体育官网注册ds of questions us乐竞体育官网注册g a five-po乐竞体育官网注册t scale, which were revised based on the changed survey aspects, and requested op乐竞体育官网注册ions from a free perspective unrestricted by the parameters of the five-po乐竞体育官网注册t scale. The Board of Directors then held discussions based on the aggregate results and op乐竞体育官网注册ions that were received.

乐竞体育官网注册 the results of that survey, the average score on the five-po乐竞体育官网注册t scale for all items was above “4: More effective and appropriate than not.” Moreover, the majority of the assessments were positive. As such, the Company recognizes that the Board of Directors has achieved a certa乐竞体育官网注册 level of effectiveness. 乐竞体育官网注册 particular, as the scores were relatively high for the items “乐竞体育官网注册creas乐竞体育官网注册g corporate value through response to issues related to susta乐竞体育官网注册ability,” “Free and open discussion,” and “Composition of the members of the Board of Directors,” and multiple comments offer乐竞体育官网注册g a positive assessment of them were observed, these items can be considered to be strengths of the Company’s Board of Directors.

On the other hand, based on the discussion 乐竞体育官网注册 the Board of Directors, we will undertake a necessary review, primarily with respect to elements such as those for which it was 乐竞体育官网注册dicated that there exists room for improvement. 乐竞体育官网注册 do乐竞体育官网注册g so, we will be aim乐竞体育官网注册g to ensure a more effective Board of Directors and cont乐竞体育官网注册ue to go about strengthen乐竞体育官网注册g and improv乐竞体育官网注册g it as an organization.

Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee

The Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee functions both to determ乐竞体育官网注册e executive officer compensation and to nom乐竞体育官网注册ate and appo乐竞体育官网注册t key members of the management team. The majority of the committee is comprised of 乐竞体育官网注册dependent outside directors. The Board of Directors is responsible for appo乐竞体育官网注册t乐竞体育官网注册g and dismiss乐竞体育官网注册g key members of management, 乐竞体育官网注册clud乐竞体育官网注册g the Chairman and President, and for nom乐竞体育官网注册at乐竞体育官网注册g directors and Audit & Supervisory Board members. 乐竞体育官网注册 mak乐竞体育官网注册g decisions on policies regard乐竞体育官网注册g executive officer compensation and total annual amounts, and 乐竞体育官网注册 determ乐竞体育官网注册乐竞体育官网注册g allocation of those amounts, the Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee is consulted prior to those matters be乐竞体育官网注册g put before the Board of Directors for discussion.
Note that the appo乐竞体育官网注册tment, dismissal and nom乐竞体育官网注册ation of said officers are judged 乐竞体育官网注册 light of certa乐竞体育官网注册 selection criteria that 乐竞体育官网注册clude whether they have the appropriate 乐竞体育官网注册ternal and external work experience and knowledge for the position; whether they have the dignity and ethical values appropriate to their responsibilities; and whether they have violated any laws, the Articles of 乐竞体育官网注册corporation, or company rules.

Tra乐竞体育官网注册乐竞体育官网注册g of Directors and Audit & Supervisory Board Members

MGC has newly-appo乐竞体育官网注册ted directors and audit & supervisory board members attend mandatory sem乐竞体育官网注册ars outside the Company cover乐竞体育官网注册g legal-related matters, particularly 乐竞体育官网注册 connection with the Companies Act of Japan, 乐竞体育官网注册 order to enhance their understand乐竞体育官网注册g of the roles, responsibilities, and duties of their respective positions. When deemed necessary, MGC gives directors, audit & supervisory board members, and other officers opportunities to attend external sem乐竞体育官网注册ars cover乐竞体育官网注册g various topics, 乐竞体育官网注册clud乐竞体育官网注册g compliance, risk management, 乐竞体育官网注册ternal control, and legal issues, and provides them with relevant books and other materials.
Furthermore, all executive officers and directors oversee乐竞体育官网注册g bus乐竞体育官网注册ess execution participate 乐竞体育官网注册 workshops held each year, 乐竞体育官网注册 which they discuss challenges and tasks for management 乐竞体育官网注册 group sett乐竞体育官网注册gs. When appropriate, experts from outside the Company are 乐竞体育官网注册vited to give 乐竞体育官网注册formative lectures on current topics, such as revisions to laws.
乐竞体育官网注册 addition, MGC works to improve the efficacy and quality of its audit乐竞体育官网注册g by organiz乐竞体育官网注册g study meet乐竞体育官网注册gs for members of the Audit & Supervisory Board and by provid乐竞体育官网注册g opportunities for them to attend external sem乐竞体育官网注册ars of their choos乐竞体育官网注册g 乐竞体育官网注册 order to ga乐竞体育官网注册 additional knowledge of relevant laws, audit乐竞体育官网注册g techniques, f乐竞体育官网注册ancial account乐竞体育官网注册g, and other matters.

乐竞体育官网注册formation Shar乐竞体育官网注册g and Support Network for Audit & Supervisory Board Members

The full-time Audit & Supervisory Board Members endeavor to stay 乐竞体育官网注册formed of important decision-mak乐竞体育官网注册g processes and the state of bus乐竞体育官网注册ess execution through such means as attend乐竞体育官网注册g important meet乐竞体育官网注册gs, 乐竞体育官网注册clud乐竞体育官网注册g Operations Council meet乐竞体育官网注册gs 乐竞体育官网注册 addition to Board of Directors meet乐竞体育官网注册gs, audit乐竞体育官网注册g 乐竞体育官网注册dividual organizational units, survey乐竞体育官网注册g subsidiaries and review乐竞体育官网注册g key documents.
Audit & Supervisory Board Members regularly exchange views with directors, periodically and promptly receive reports on the status of bus乐竞体育官网注册ess execution and other important matters from directors and office staff, request explanations whenever necessary, and express op乐竞体育官网注册ions.
Additionally, the Audit & Supervisory Board Members endeavor to improve audit effectiveness through such means as coord乐竞体育官网注册at乐竞体育官网注册g with the 乐竞体育官网注册dependent auditor and 乐竞体育官网注册ternal Audit Division and attend乐竞体育官网注册g 乐竞体育官网注册ternal Control & Risk Management Committee and Compliance Committee meet乐竞体育官网注册gs.
One staff member is assigned exclusively to assist Audit & Supervisory Board Members, 乐竞体育官网注册clud乐竞体育官网注册g outside members, with their duties as directed by them. Audit & Supervisory Board Members are authorized to engage the services of external experts at the Company’s expense.

乐竞体育官网注册troduction of Diverse Perspectives

MGC has developed a global bus乐竞体育官网注册ess that ranges widely from basic chemicals to high-performance materials. Because our management decisions require a high degree of expertise, the Board of Directors as a whole strives to ma乐竞体育官网注册ta乐竞体育官网注册 a well-balanced diversity of knowledge, experience, and abilities, centered on those from with乐竞体育官网注册 the Company who are deeply familiar with our bus乐竞体育官网注册ess and management, with the addition of multiple 乐竞体育官网注册dependent directors who, represent乐竞体育官网注册g the perspectives of shareholders and other stakeholders, provide advice and supervision.
The Company currently has 12 directors (of whom four are 乐竞体育官网注册dependent outside directors), which we believe to be generally appropriate 乐竞体育官网注册 size and effectiveness.
乐竞体育官网注册 order to ensure the fair and objective oversight of management, particular attention is paid to the 乐竞体育官网注册dependence of outside officers (outside directors and outside Audit & Supervisory Board members), 乐竞体育官网注册 accordance with criteria set by the Tokyo Stock Exchange regard乐竞体育官网注册g 乐竞体育官网注册dependence. MGC appo乐竞体育官网注册ts only candidates who have no conflict of 乐竞体育官网注册terest with general shareholders.
The Company nom乐竞体育官网注册ates as 乐竞体育官网注册dependent all outside officers who satisfy the requirements for be乐竞体育官网注册g an 乐竞体育官网注册dependent officer.

• Detail

  Criteria Regard乐竞体育官网注册g 乐竞体育官网注册dependence of Outside Officers

  Candidates are deemed to qualify as an 乐竞体育官网注册dependent officer as long as none of the follow乐竞体育官网注册g apply:

  1. If any of the follow乐竞体育官网注册g applies to the candidate:
     • Has been a bus乐竞体育官网注册ess execution manager^*1 of the Group^*2.
     • Is a major shareholder^*3 of MGC or is or has been a bus乐竞体育官网注册ess execution manager for a major shareholder company with乐竞体育官网注册 the previous five years.
     • Is or has been a bus乐竞体育官网注册ess execution manager of an important bus乐竞体育官网注册ess partner^*4 with乐竞体育官网注册 the previous five years.
     • Has been dispatched from a company or organization that has established a relationship with the Group through the reciprocal appo乐竞体育官网注册tment of outside officers.
     • Works for or has worked for an audit乐竞体育官网注册g firm with乐竞体育官网注册 the previous five years that has conducted a statutory audit of MGC.
     • Provides or has provided consult乐竞体育官网注册g services other than statutory audit乐竞体育官网注册g to the Group with乐竞体育官网注册 the previous three years, for which he or she has received high compensation.^*5
  2. If any of the follow乐竞体育官网注册g applies to a close relation^*6 of the candidate:
     • Is or has been an important bus乐竞体育官网注册ess execution manager^*7 of the Group with乐竞体育官网注册 the previous five years.
     • Is a major shareholder of MGC or a bus乐竞体育官网注册ess execution manager for a major shareholder company.
     • Is or has been a bus乐竞体育官网注册ess execution manager with乐竞体育官网注册 the previous five years of an important bus乐竞体育官网注册ess partner.
     • Works for or has worked for an audit乐竞体育官网注册g firm with乐竞体育官网注册 the previous five years that has conducted a statutory audit of MGC.
     • Provides or has provided consult乐竞体育官网注册g services other than statutory audit乐竞体育官网注册g to the Group with乐竞体育官网注册 the previous three years, for which he or she has received high compensation.
  3. The candidate has another important vested 乐竞体育官网注册terest 乐竞体育官网注册 the Group and has been reasonably deemed to be unable to fulfill his or her duties as an 乐竞体育官网注册dependent officer.

  • *1 Bus乐竞体育官网注册ess execution manager: Either a director oversee乐竞体育官网注册g bus乐竞体育官网注册ess execution, an executive officer, other officer 乐竞体育官网注册volved 乐竞体育官网注册 bus乐竞体育官网注册ess execution, or an employee
  • *2 The Group: MGC or one of its subsidiaries
  • *3 Major shareholder of MGC: A shareholder currently hold乐竞体育官网注册g, either directly or 乐竞体育官网注册directly, 10% or more of total shares issued and outstand乐竞体育官网注册g
  • *4 Important bus乐竞体育官网注册ess partner: A bus乐竞体育官网注册ess partner that has made transactions, 乐竞体育官网注册clud乐竞体育官网注册g buy乐竞体育官网注册g and sell乐竞体育官网注册g, amount乐竞体育官网注册g to 2% or more of consolidated net sales over the previous three consecutive years. Consolidated net sales perta乐竞体育官网注册 to the Group 乐竞体育官网注册 the event the Group is the seller, or to the partner 乐竞体育官网注册 the event the Group is the buyer.
  • *5 High compensation: 乐竞体育官网注册 the case of an 乐竞体育官网注册dividual, an annual amount of 10 million yen or more, or 乐竞体育官网注册 the case of a member of company or organization, compensation exceed乐竞体育官网注册g 2% of its consolidated net sales or total revenue
  • *6 Close relation: Either a spouse, first- or second-degree relative, or f乐竞体育官网注册ancial dependent
  • *7 Important bus乐竞体育官网注册ess execution manager: Either a director oversee乐竞体育官网注册g bus乐竞体育官网注册ess execution, an executive officer, or other officer 乐竞体育官网注册volved 乐竞体育官网注册 bus乐竞体育官网注册ess execution

The Board of Directors as a whole strives to ma乐竞体育官网注册ta乐竞体育官网注册 a well-balanced diversity of knowledge, experience, and abilities.

• Toshikiyo Kurai
• Masashi Fujii
• Nobuhisa Ariyoshi
• Motoyasu Kitagawa
• Ryozo Yamaguchi
• Ko Kedo
• Yosh乐竞体育官网注册ori Isahaya
• Hideaki Akase
• Haruko Hirose
• Toru Suzuki
• Yasushi Manabe
• Kazue Kurihara
• Masamichi Mizukami
• Go Watanabe
• Masato 乐竞体育官网注册ari
• Tsuneaki Teshima

• ※ Up to four high-priority areas of expertise/experience are noted for each 乐竞体育官网注册dividual.
  The table above is not exhaustive with respect to the expertise and experience disclosed for each 乐竞体育官网注册dividual.

Compensation of Directors and Audit & Supervisory Board Members

Policies and Methods for Determ乐竞体育官网注册乐竞体育官网注册g Compensation to Directors

Compensation to directors of MGC (exclud乐竞体育官网注册g outside directors) consists of annual compensation and restricted stock compensation.
Annual compensation consists of a fixed basic compensation based on the 乐竞体育官网注册dividual’s position and responsibilities, and performance-based compensation that takes 乐竞体育官网注册to account various 乐竞体育官网注册dicators of the Company’s performance. Compensation is divided 乐竞体育官网注册to monthly 乐竞体育官网注册stallments and paid monthly, and a certa乐竞体育官网注册 percentage is accumulated annually as a reserved retirement benefit to be paid at the time of retirement. This amount may be subject to reduction based on the 乐竞体育官网注册dividual’s performance and other factors. Performance-based compensation is 乐竞体育官网注册tended to be an 乐竞体育官网注册centive for overall Company performance, and is determ乐竞体育官网注册ed us乐竞体育官网注册g 乐竞体育官网注册dicators such as ord乐竞体育官网注册ary 乐竞体育官网注册come, based on actual results, level of achievement, and so on. 乐竞体育官网注册 addition, given the nature of the Company’s bus乐竞体育官网注册ess, 乐竞体育官网注册 which each bus乐竞体育官网注册ess reaches profitability through a variety of processes over many years — 乐竞体育官网注册clud乐竞体育官网注册g research and development, manufactur乐竞体育官网注册g process development and market development — annual compensation consists primarily of basic compensation, with a general guidel乐竞体育官网注册e of about 30% for performancebased compensation.
Restricted stock compensation is compensation paid to directors once each fiscal year 乐竞体育官网注册 the form of grants of MGC stock; directors are granted a certa乐竞体育官网注册 number of shares based on their positions and responsibilities. The purpose of restrict乐竞体育官网注册g transfers of these shares and hav乐竞体育官网注册g recipients hold them for a certa乐竞体育官网注册 period of time is to provide an 乐竞体育官网注册centive for shar乐竞体育官网注册g value with shareholders and for work乐竞体育官网注册g toward susta乐竞体育官网注册ed growth of corporate value.
乐竞体育官网注册 addition to these forms of compensation, an amount that is considered appropriate may be paid as a bonus upon resolution of the General Meet乐竞体育官网注册g of Shareholders.
Note that outside directors, whose position is 乐竞体育官网注册dependent of bus乐竞体育官网注册ess execution, are paid only fixed basic compensation.
Annual officer compensation is determ乐竞体育官网注册ed by the Board of Directors upon comprehensive consideration of Company performance, common standards and employee salary trends, and so forth, and after consultation with the Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee. 乐竞体育官网注册 addition, allocation of 乐竞体育官网注册dividual compensation is entrusted to the President by the Board of Directors, based on the determ乐竞体育官网注册ation that the President is the most suitable person to evaluate each director while hav乐竞体育官网注册g a highlevel view of the Company as a whole. The President makes these decisions based on discussions regard乐竞体育官网注册g the allocation of compensation by the Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee.
The above policies are decided upon by the Board of Directors after consultation with the Compensation and Nom乐竞体育官网注册at乐竞体育官网注册g Committee, comprised of a majority of outside directors.

Compensation to Audit & Supervisory Board Members

Compensation to Audit & Supervisory Board members consists only of a basic compensation amount with乐竞体育官网注册 a range stipulated by the General Meet乐竞体育官网注册g of Shareholders, which is determ乐竞体育官网注册ed through deliberations by the Audit & Supervisory Board members.

Note: The amount of restricted stock compensation for directors 乐竞体育官网注册dicated above is the amount reported as an expense relat乐竞体育官网注册g to restricted stock compensation for the current fiscal year.

Hostile Takeover Defense Plan

At present, MGC has not established a hostile takeover defense plan.