Ajinomoto : Corporate Governance Report 2023

Corporate Governance Report

CORPORATE GOVERNANCE

Ajinomoto Co., Inc.

Final Update: June 30, 2023

Ajinomoto Co., Inc.

Taro Fujie, Representative Executive Officer, President & Chief Executive Officer

Contact: Corporate Planning Dept. [phone]

Securities code: 2802

https://www.ajinomoto.com/

The corporate governance of Ajinomoto Co., Inc. (the "Company") is described below.

• Basic policy on corporate governance and capital structure, business attributes and other basic information

1. Basic Policy

Since its founding, the Ajinomoto Group has consistently worked to resolve social issues through its businesses, and improve economic value by creating shared value with societies and communities, which has led to growth. These initiatives have been named ASV (The Ajinomoto Group Creating Shared Value), and currently also, ASV is positioned at the core of our management philosophy (hereinafter, "ASV Management"). Going forward also, we will continue to engage in strengthening corporate governance by advancing ASV Management, in order to realize our purpose of "contributing to the well-being of all human beings, our society and our planet with 'AminoScience®'."

The Ajinomoto Principle on Corporate Governance is disclosed at the website below. This principle enables stakeholders to easily understand the Ajinomoto Group's continued efforts for strengthening its corporate governance in ASV Management, serves as a mainstay in cultivating dialogue and coordination, and is resolved by the Board of Directors.

https://www.ajinomoto.co.jp/company/en/ir/strategy/corp_gov/main/0/teaserItems1/03/linkList/03/link/principle_E.pdf

[Reasons for non-compliance with the principles of the Corporate Governance Code]

Ajinomoto Co., Inc. ("we," "our," "us," or the "Company") implements each principle of the Corporate Governance Code, and discloses them in the Ajinomoto Principle on Corporate Governance and other documents.

[Disclosures required by the principles of the Corporate Governance Code]

Ajinomoto Co., Inc. implements each principle of the Corporate Governance Code, and discloses them in the Ajinomoto Principle on Corporate Governance and other documents.

[Principle 1.4] (Cross-Shareholdings) is set out in "Chapter 3.4: Cross-Shareholdings" of the Ajinomoto Principle on Corporate Governance. In fiscal 2023, we will retain 28 different stocks from our clients, five different stocks from financial institutions, and one other type of stocks.

[Principle 1.7] (Related Party Transactions) is set out in "Chapter 3.6: Related Party Transactions" of the Ajinomoto Principle on Corporate Governance.

Basic Principle "4. Fair and Transparent Transactions" of the Ajinomoto Group Policies (hereinafter, "AGP") is disclosed on the following website: https://www.ajinomoto.com/sustainability/agp/

Group Shared Policy on Procurement is disclosed on the following website: https://www.ajinomoto.com/sustainability/agp/procurement.php

[Supplementary Principle 2.4.1] (Ensuring Diversity, Including Active Participation of Women)

1. Ajinomoto Group believes that becoming a company where each and every employee flourishes while demonstrating mutual respect, regardless of gender, age, nationality, the presence or absence of disabilities, and individual professional experiences, and promoting diversity, equity and inclusion (hereinafter, "DE&I"), whereby a range of individuals from inside and outside the company comes together to leverag e their various unique strengths and grow together as an "organization," are essential to the creation of innovation into the future, and an important component of management strategy. In securing human resources possessing diverse viewpoints, we are engaging in DE&I across the Ajinomoto Group as a whole, with an emphasis on diversity of "gender," "nationality" and "(external) experience" in particular.
   "6. Human Resources Training and Ensuring Safety" in AGP is disclosed on the following website: https://www.ajinomoto.com/sustainability/agp/
   "Group Shared Policy on Human Resources" is disclosed on the following website: https://www.ajinomoto.com/sustainability/agp/human-resources.php
   Our approach for diverse talents is disclosed on the following website: https://www.ajinomoto.com/sustainability/materiality/diverse_talent.php
2. The Ajinomoto Group has included the ratio of female directors and line managers (organization heads or general managers) as a priority KPI in promoting DE&I,.
3. We assign female managers equitably and fairly depending on their ability. The percentage of female managers (Group total) is 27% as of March 2023. Whereas, the percentage of female managers in Ajinomoto Co., Inc. (only) is 13% as of Mar 2023.
   We are actively promoting women for managerial posts raising the ratio of female directors and line managers (organization heads or general managers) to 30% by fiscal 2030, upon strengthening forming a preliminary candidate group of female potential leaders in all job titles (directors, organization heads, general managers, managers and pre-managerial positions). In the prospect as of the end of June 2023, the percentage of female directors is 27% and the percentage of female line managers is 11%.
4. Regarding assignment of employees those of non-Japanese nationality, we hire and promote diverse human resources equitably and fairly in accordance with AGP. The percentage of Officers of non-Japanese nationality (Group total) is 38% as of March 2023. The percentage of locally hired overseas executives in core affiliated companies is 45% as of March 2023. Whereas, the percentage of managers in Ajinomoto Co., Inc. (only) those of non-Japanese nationality is 0.7% as of March 2023.
   Going forward, along with expanding our business domains in line with our growth strategy, creating new business opportunities and strengthening functions, we will promote the appointment of employees of non-Japanese nationality to managerial posts, over and above our current initiatives.
5. We assign career hires equitably and fairly the same as new graduate. The ratio of career hires in managerial positions in Ajinomoto Co., Inc. is 14.6% as of March 2023.

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The percentage of managers in career hires is 40.0% (Ajinomoto Co., Inc. only) compared with new graduate in which percentage is 39.0% as of June 2023. We are actively promoting career hires for managerial posts equivalent or higher than new graduate.

1. As one of the events promoting the inclusion of diverse talents, the Ajinomoto Group sets organizational and individual goals of solving issues together with our customers and standardize the plan-do-check-action (PDCA) cycle of management using the operational excellence (OE) method. Beginning with dialogue with the CEO and General Managers of business or corporate divisions, employees involves setting personal goals linked with the organization's goals. During this process, we utilize OE methods to ensure employees feel a keen sense of contributing to issue solving and value creation, and quantify the results of value improvement, viewing not only consumers but also other divisions in the company's value chain as customers. In addition, by sharing goals within each organization through the personal goal presentation, we foster a culture where employees tackle challenges while embracing our vision. We also actively share and commend best practices. The employee engagement score on the annual engagement survey is used as an important KPI, from which we track trends in the ASV engagement of employees and then reflect any issues identified in the survey results in next year's plan.
2. We continue to consider our human capital strategy for the mid-to-long term enhancement of corporate value and will disclose it forthwith.

[Principle 2.6] (Fulfilling Our Function as the Asset Owner of Corporate Pensions)

In order to boost the Company's investment expertise to enable it to fulfill its function as an asset owner, on the personnel side, Ajinomoto Co., Inc. will appoint persons with specialist skills and knowledge when it comes to pension investment to serve as corporate fellows in charge of the investment, and will also appoint outside advisors to supplement their specialist skills and knowledge. Furthermore, on the managerial side, we will carry out initiatives such as having our Asset Investment Review Committee monitor the investment status as needed.

[Principle 3.1] (Full Disclosure and Transparency)

1. "Our Philosophy," which serves as the Company's philosophical framework, is disclosed on the following website: https://www.ajinomoto.com/aboutus/group
   Vision for 2030 and the Medium-Term ASV Initiatives are disclosed on the following website: https://www.ajinomoto.co.jp/company/en/ir/event/medium_term.html
2. Our basic views on corporate governance are the same as that found in "I.1 Basic Views" in this report.
3. The policy and procedures used by the Board of Directors for determining the compensation of directors are the same as those found in "II.1 [Compensation for Directors and Executive Officers (Shikkoyaku)] Policy on Determining Compensation Amounts and Calculation Methods" in this report.
4. Details on the election and dismissal of directors are set out in "Chapter 5.1: Selection and Dismissal" of the Ajinomoto Principle on Corporate Governance.
5. The reason for electing directors is the same as that found in Proposal No. 2 "Election of 11 Directors" of the General Meeting of Shareholders' reference documents from the Notice of Convocation of the 145th Ordinary General Meeting of Shareholders.
   The Notice of Convocation of the 144th Ordinary General Meeting of Shareholders is disclosed on the following website: https://www.ajinomoto.co.jp/company/en/ir/event/meeting/main/01/teaserItems1/00/linkList/0/link/Notice%20145ENG.pdf

The reason for electing Outside Director candidates is the same as that found in "II.1 [Outside Directors] Outside Directors' Relationship with the Company (2)" in this report.

[Supplementary Principle 3.1.3] (Disclosure of Initiatives on Sustainability and investment in human capital and intellectual property, etc.)

The Company's initiatives on sustainability are disclosed on the following website: https://www.ajinomoto.co.jp/company/jp/ir/library/securities.html

In addition, we disclose our sustainability initiatives, contents, and results in the following URLs, ASV Report (Integrated Report), and Sustainability Data Book.

ESG & Sustainability:	https://www.ajinomoto.com/sustainability/
ASV Report (Integrated Reports):	https://www.ajinomoto.co.jp/company/en/ir/library/annual.html
Sustainability Data Book:	https://www.ajinomoto.co.jp/company/en/ir/library/databook.html

We believe that "human capital assets" are the driving force that increases the value of all intangible assets. We will further increase the sum total of our "human capital assets" by mobilizing the "passion" of each and every employee for our "purpose" and the empathy of the diverse stakeholders who share our "purpose".

Our human resources management system, specific initiatives, and achievements are disclosed at the following URLs, in the ASV Report (Integrated Report), and in the Sustainability Data Book.

ESG & Sustainability:	https://www.ajinomoto.com/sustainability/
ASV Report (Integrated Reports):	https://www.ajinomoto.co.jp/company/en/ir/library/annual.html
Sustainability Data Book:	https://www.ajinomoto.co.jp/company/en/ir/library/databook.html

We believe that intellectual property, including technology assets, is the source of value creation. With our research process, which thoroughly pursues "unlocking the power of amino acids," in everything from research and development to production and business operations intellectual property is an intangible asset that is indispensable for the continued creation of social and economic value. We will continue to enhance the value of the Group's intellectual property through co-creating value with our customers, with whom we have built trust in the products and services we provide over a period of many years.

The Group operates a wide range of businesses globally, centering on its Food Products and AminoScience businesses. In particular, we allocate management resources to six core businesses: Sauce & Seasonings, Quick Nourishment, Solutions & Ingredients (S&I), Frozen Foods, Bio-Pharma Services & Ingredients, and Functional Materials, and four growth areas: Green, Healthcare, Food and Wellness, and ICT, as we continue to contribute to the well-being of all human beings, our society and our planet with "AminoScience®." We have established a basic policy on intellectual property and are promoting the following seven initiatives to establish a competitive advantage, generate profits, and achieve global growth.

1. Strategic and efficient acquisition of intellectual property for core business technologies
2. Proactively incorporate and collaborate with external technologies through open innovation, etc.

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1. Utilization and enforcement of proprietary technologies, including licensing and litigation of in-house technologies
2. Protection of products and enhancement of brand value by utilizing trademark system, etc.
3. Minimize the risk of infringement by respecting the intellectual property rights of others and thoroughly conducting investigations and clearances
4. Provide research and analysis information to Group business units and R&D departments
5. Development of intellectual property human resources and utilization of internal and external networks

The "Group Policy on Intellectual Property" is disclosed at the following URL. https://www.ajinomoto.com/sustainability/agp/intellectual-property.php

In the Food Products business, we are advancing our "Deliciousness Technologies®" to develop products with enhanced added value and functions in each region of the world, and in the AminoScience business, which includes healthcare and electronic materials, we are developing products and services with high barriers to entry by advancing our "advanced bioscience and fine chemical technologies" in anticipation of market innovation.

Furthermore, we will refine our technological assets to reform our business model and create next-generation businesses through the fusion of Food Products and AminoScience.

We will actively invest in strengthening our technological assets and intellectual property to create further value through innovation and to create new business models by setting up areas that will contribute to the global environment and social change in 2050.

We take a firm stance against any infringement of the Group's intellectual property rights, including issuing warnings and filing intellectual property infringement lawsuits, and we do not tolerate infringement of our rights. https://www.ajinomoto.co.jp/company/jp/presscenter/press/detail/2020_11_17.htmlhttps://www.ajinomoto.com/cms_wp_ajnmt_global/wp-content/uploads/pdf/2023_02_27E.pdf

The Group also owns a number of product brands with a long history and proven track record, and considers these brands to be important intangible assets. In particular, the trademark assets of our core product, umami seasoning AJI-NO-MOTO®, which has been sold around the world for many years, and the global brand logo commonly used by the Group, are extremely important advantages that differentiate us from competitors and latecomers. In order to maintain and enhance the asset value of this trademark, we have taken numerous measures against becoming generic names and inferior counterfeit products to keep unauthorized use at a low level.

In fiscal 2022, the Ajinomoto Group's R&D expenditures totaled 25,867 million yen, with 1,188 patents held in Japan and 2,788 patents held overseas. In addition, the number of domestic and overseas trademarks held by the Group totaled 1,217 and 4,164, respectively, and are on an increasing trend due to the Group's trademark application strategy in line with the progress of its overseas business. Specific details of our R&D and intellectual property initiatives and results are disclosed in the following URLs, the ASV Report (Integrated Report), and the Sustainability Data Book.

Innovation	https://www.ajinomoto.com/innovation
ASV Report (Integrated Reports):	https://www.ajinomoto.co.jp/company/en/ir/library/annual.html
Sustainability Data Book:	https://www.ajinomoto.co.jp/company/en/ir/library/databook.html

[Supplementary Principle 4.1.1] (Scope of Matters Delegated to Management)

The Board of Directors consists of a variety of Directors, discusses and examines important management matters that greatly affect corporate value, encourages risk-taking of execution by indicating a major direction, verifies the validity of execution processes and results, and appropriately supervises execution. On the other hand, the execution, the Chief Executive Officer who has been greatly delegated authority from the Board of Directors will take the lead in making important business execution decisions at the Executive Committee, will realize sustainable corporate value enhancement with one team. In order to closely communicate with the Board of Directors and the Executive Committee, governance rules are established based on the Company's approach to increasing corporate value, proposals and reports are made from the Executive Committee to the Board of Directors, and deliberations and resolutions are made by the Board of Directors. Furthermore, details are provided with regard to procedures for the delegation of authority and decision making in "II.2 ○Execution of duties," "IV.1. (2) Status of the development of the Internal Control System," and "Chapter 2: Basic Approach" of the Ajinomoto Principle on Corporate Governance.

[Principle 4.9] (Independence Standards and Qualification for Independent Directors)

The standards used by Ajinomoto Co., Inc. to determine the independence of Outside Directors is the same as that found in "II.1: [Independent Directors] Matters relating to Independent Directors" in this report.

[Supplementary Principle 4.11.1] (Composition and Diversity of the Board of Directors)

Our philosophy of composition and diversity of the Board of Directors is on "Chapter 4.1.(1) Composition and Diversity of the Board of Directors", and the capability requirements for Director candidates is on "Chapter 5.1. (2) Capability Requirements for Director candidates" in Ajinomoto Principle on Corporate Governance. The Board of Directors composed of six independent Outside Directors (three out of six are females) and five Internal Directors (one out of five is female).

The skills matrix is shown in the attached [The skills matrix of the Director].

[Supplementary Principle 4.11.2] (Other Mandates of Directors)

The status of other important mandates held by Directors is found in the biographical outline in "Section 1, 4.4(2): Status of Officers" of the Securities Report for the 145th fiscal year.

The Securities Report for the 145th fiscal year is disclosed on the following website: https://www.ajinomoto.co.jp/company/jp/ir/library/securities.html(written in Japanese only)

The status of other important mandates held by Outside Directors also found in "II.1 [Outside Directors] Outside Directors' Relationship with the Company (2)" in this report.

[Supplementary Principle 4.11.3] (Self Evaluation of Effectiveness of the Board of Directors)

The evaluation of the effectiveness of the Board of Directors is set out in "Chapter 4.7: Evaluation of Effectiveness of the Board of Directors" of the Ajinomoto Principle on Corporate Governance.

The Summary of the Evaluation of the Effectiveness of the Board of Directors for fiscal 2022 is disclosed on the following website: https://www.ajinomoto.co.jp/company/en/ir/strategy/corp_gov/main/0/teaserItems1/03/linkList/02/link/evaluation_E.pdf

[Supplementary Principle 4.14.2] (Training Policy for Directors)

The training policy for Directors and Executive Officers is set out in "Chapter 5.3: Training" of the Ajinomoto Principle on Corporate Governance.

[Principle 5.1] (Policy for Constructive Dialogue with Shareholders)

The policy for constructive dialogue with shareholders is set out in "Chapter 3.2: Dialogue with Shareholders and Investors" of the Ajinomoto Principle on Corporate Governance.

2. Capital Structure

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Percentage of shares held by foreign	30% or more
investors

[Description of major shareholders]

	Name / Company Name	Number of Shares	Percentage
				Owned	(%)
	The Master Trust Bank of Japan, Ltd. (trust account)		100,279,600	18.93%
	Custody Bank of Japan, Ltd. (trust account)		42,182,500	7.96%
	JP MORGAN CHASE BANK 385632		28,022,027	5.29%
	The Dai-ichi Life Insurance Company, Limited		26,199,500	4.95%
	Nippon Life Insurance Company		25,706,886	4.85%
	Meiji Yasuda Life Insurance Company		11,362,505	2.15%
	STATE STREET BANK WEST CLIENT - TREATY 505234	8,257,654	1.56%
	MUFG Bank, Ltd.		8,162,348	1.54%
	JP MORGAN CHASE BANK 385781		6,363,287	1.20%
	Sompo Japan Insurance Inc.		6,282,894	1.19%
	Controlling Shareholder		- - -
	(except for Parent Company)
	Parent Company		None

Supplementary Explanation

• Major Shareholders (as of March 31, 2023)

1. Shareholding ratio is calculated excluding treasury stock (122,314 shares).

1. The number of shares held by The Dai-ichi Life Insurance Company, Limited does not include 2,000,000 shares of the Company's stock contributed by the company as trust assets for a retirement benefit trust. The voting rights pertaining to these shares are reserved by the company.
2. Although the Sumitomo Mitsui Trust Bank, Limited and its joint holders are listed as owning the following shares as of January 19, 2023, in the large shareholding (change) report made available for public inspection as of January 13, 2023, we are unable to confirm the number of shares actually held by each as of March 31, 2023. Therefore they are not included in the "Status of Major Shareholders" above. The contents of the "No.2. Matters Concerning the Submitter" of the report on substantial shareholdings (changes) are as follows.
   [Name/Number of Share Certificates and Other Securities Held/Percentage of Share Certificates and Other Securities Held] Sumitomo Mitsui Trust Asset Management Co., Ltd./17,817 thousand shares/3.32%
   Nikko Asset Management Co., Ltd./14,987 thousand shares/2.79%
3. Although Capital Research and Management Company and its joint holders are listed as owning the following shares as of January 13, 2023 in the large shareholding report made available for public inspection as of January 20, 2023, we are unable to confirm the number of shares actually held by each as of March 31, 2023. Therefore, they are not included in the "Status of Major Shareholders" above. The contents of the "No.2. Matters Concerning the Submitter" of the report on substantial shareholdings are as follows.
   [Name/Number of Share Certificates and Other Securities Held/Percentage of Share Certificates and Other Securities Held] Capital Research and Management Company/27,022 thousand shares/5.03%
   Capital International Inc./815 thousand shares/0.15%
4. Although Mitsubishi UFJ Financial Group, Inc. and its joint holders are listed as owning the following shares as of January 23, 2023 in the large (change) shareholding report made available for public inspection as of January 30, 2023, we are unable to confirm the number of shares actually held by each as of March 31, 2023. Therefore, they are not included in the "Status of Major Shareholders" above. The contents of the "No.2. Matters Concerning the Submitter" of the report on substantial shareholding (changes) are as follows.
   [Name/Number of Share Certificates and Other Securities Held/Percentage of Share Certificates and Other Securities Held] MUFG Bank, Ltd./8,162 thousand shares/1.52%
   Mitsubishi UFJ Trust and Banking Corp./23,776 thousand shares/4.43% Mitsubishi UFJ Kokusai Asset Management Co., Ltd./6,857 thousand shares/1.28% First Sentier Investors (Hong Kong) Limited)/626 thousand shares/0.12%

3. Corporate Attributes

Listed Stock Market and Market Section

Fiscal Year-End

Type of Business

Number of Employees (consolidated) as of the End of the Previous Fiscal Year

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

Number of Consolidated Subsidiaries as of

the End of the Previous Fiscal Year

Tokyo Stock Exchange Prime

March

Foods

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

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5. Other Special Circumstances which may have Material Impact on Corporate Governance

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