Kao : Corporate Governance Report updated on August 13, 2020

(Translation)

Kao Corporation

Corporate Governance

Last updated on August 13, 2020

Kao Corporation

Michitaka Sawada, President and CEO

Contact: Legal, Legal & Compliance [phone] TSE Code: 4452

www.kao.com/global/en/

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

Our vision by 2030 is to make Kao a company with a global presence. In addition to financial strategies and initiatives including financial results, non-financial strategies and initiatives should be strengthened. It is important that the fruits from those strategies and initiatives are used as investments for sustainable growth. Kao Corporation (hereinafter referred to as the "the Company") has announced that it recognizes ESG (Environmental, Social and Governance) initiatives as an investment for the future, not as a cost, and is promoting them. The Company considers good corporate governance as a prerequisite and a driving force for strongly promoting the achievement of such a goal. The Company's basic stance on measures related to corporate governance is to set up and operate a management structure and an internal control system, timely implement necessary measures and achieve accountability so that the Company can swiftly respond to changes, realize efficient management that is sound, fair, and highly transparent, and continuously enhance corporate value. The Company views accomplishing such tasks as one of its most important management issues. The Company has been actively engaging in activities to listen to stakeholders' voices and based on input from stakeholders and social trends, it conducts reviews of its corporate governance and implements the necessary measures and improvements, as needed, in an appropriate manner.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] Ensure Adequate Coordination with External Accounting Auditor and Outside Directors (Principle 3.2.2 (iii))

The Company expects Audit & Supervisory Board Members, including Outside Audit & Supervisory Board Members, to fulfill the role of coordination with the external Accounting Auditor as contact points on the Company's side, and the external Accounting Auditor's views, issues and other matters are shared with Directors, including the Outside Directors, through the Audit & Supervisory Board Members. In the course of such information sharing, if Directors judge it necessary, they ensure efficiency and adequate coordination by establishing opportunities for direct exchange of information with the external Accounting Auditor.

Regular Exchange of Information Solely among Independent Outside Directors (Principle 4.8.1)

To promote discussions from diverse perspectives, independent Outside Directors and Outside Audit & Supervisory Board Members hold meetings exclusively for independent outside members on their own initiative to exchange information and share awareness of issues related to the Company's management and the activities of the Board of Directors, development of future Senior Management, and other matters. Given the current situation of having good communications, ad hoc meetings among independent outside members are considered more appropriate for such communication than regular meetings scheduled by the Company. Also, a newly appointed member who attended the meeting expressed his view that he was reassured by the fact that outside members can make their proposals directly to the Company through frank exchanges of opinions undertaken at the meeting.

[Disclosure Based on the Principles of the Corporate Governance Code]

As used in these matters to be disclosed, the definitions of the following terms shall be as follows:

"Management" means executive Directors and Executive Officers. "Senior Management" means Executive Officers with titles.

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1 Corporate Philosophy (Principle 3.1(i))

The "Kao Way" has been prescribed as a corporate philosophy which constitutes the foundation of the business activities of the Kao Group.

(1) Mission

Our mission is to strive for the wholehearted satisfaction and enrichment of the lives of people globally and to contribute to the sustainability of the world, with products and brands of excellent value that are created from the consumer's and customer's perspective. This commitment is embraced by all members of the Kao Group as we work together with passion to share joy with consumers and customers in our core domains of cleanliness, beauty, health and chemicals.

(2) Vision

We aim to be the global group of companies that is closest to the consumers and customers in each market, earning the respect and trust of all stakeholders.

(3) Values

1) Yoki-Monozukuri (The Company defines "Yoki-Monozukuri" as "a strong commitment by all members to provide products and brands of excellent value for consumer satisfaction.")

1. Innovation
2. Integrity

1. Principles

1. Consumer Driven
2. Genba-ism (The Company defines "Genba-ism" as the importance of observing things "on-site," in the actual location and environment, both internally and externally, in order to maximize our understanding of the business and optimize our performance.)
3. Respect & Teamwork
4. Global Perspective

(For further details regarding the "Kao Way," please see www.kao.com/jp/corporate/about/policies/kaoway/)

2 Long-termBusiness Strategy (Principle 3.1(i)) Long-term Targets

As vision by 2030 based on the above corporate philosophy, the Company aims to become a company with a global presence by combining sustained "profitable growth" and "contributions to the sustainability of the world" by making proposals to resolve social issues and conducting social contribution activities through its business operations. To achieve this vision, the Company will promote the further reinforcement of the existing businesses that are its strength and the creation of new markets from a global perspective utilizing the R&D capabilities that will create value for the future, in addition to implementing basic measures to further raise the level of safety and security.

It is becoming difficult to predict various changes which will occur throughout the world in all aspects such as speed, size, and directions. To deal with these situations, the Company aims to achieve the above target by boosting the company's comprehensive strength under the slogan of "transforming ourselves to drive change".

The Company's vision by 2030 is as below.

Make Kao a company with a global presence through: ■ A distinctive corporate image

■ A high-profit global consumer goods company that exceeds:

• 2.5 trillion yen in net sales (1.0 trillion yen outside Japan)
• 17% operating margin
• 20% ROE

• A high level of returns to stakeholders

3 Mid-term Business Plan (Principle 3.1(i))

The Company regards K20 as an important milestone toward achieving its vision by 2030, and it has established the Kao Group Mid-term Plan 2020 (K20) targeting the four years from FY2017 to FY2020 to enhance corporate value.

K20 Goals - Three Commitments

1. Commitment to fostering a distinctive corporate image Become a company that is always by the consumer's side
2. • Proposed image: Kao is a company that embodies KIREI*1
3. Commitment to profitable growth
4. • Continue to set new record highs for profits

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• Aim for like-for-like*2 net sales CAGR of +3%*, operating margin of 15%
• Three 100 billion yen brands (Merries baby diapers, Attack laundry detergents, Bioré skin care products)

*Taking into account factors including the current status of the Chemical Business, the progress of businesses with issues, and the possibility of a decrease in inbound demand, the Kao Group has revised its target for net sales CAGR on a like-for-like basis to +3% form +5% in the announcement of consolidated financial results for the year ended December 31, 2019. (Jan. 1, 2019 - Dec. 31, 2019)

3. Commitment to returns to stakeholders

• Shareholders: Continuous cash dividend increases (40% payout ratio target)
• Employees: Continuous improvement in compensation, benefits and health support
• Customers: Maximization of win-win relationships
• Society: Advanced measures to address social issues

Notes:

• 1 KIREI is a Japanese word that represents the concept of cleanliness, beauty, health, purity, and fairness.
• 2 Excluding the effect of currency translation change of sales system, etc.

The Company upholds Integrity, passed down from Kao's founder, as one of the core Values of its corporate philosophy the Kao Way. This Integrity will continue to be embraced as K20 guides the Group's daily business activities. The mid-term plan directs the Kao Group to maintain thorough quality control and information control, sincere consumer communications, strict compliance implementation and effective crisis management. Through such endeavors, the Company aims to reinforce its credibility in a global society.

Moreover, the Company promotes to extend its profitable growth by creating new asset bases while making the best use of Group's existing assets.

(For further details regarding K20, please see www.kao.com/jp/en/corp_ir/imgs/presentations_fy2016_k20_01.pdf)

4 Basic Position and Policy on Corporate Governance (Principle 3.1(ii), Principle 4.9)

(1) Basic Position on Corporate Governance

Our vision by 2030 is to make Kao a company with a global presence. In addition to financial strategies and initiatives including financial results, non-financial strategies and initiatives should be strengthened. It is important that the fruits from those strategies and initiatives are used as investments for sustainable growth. The Company has announced that it recognizes ESG initiatives as an investment for the future, not as a cost, and is promoting them. The Company considers good corporate governance as a prerequisite and a driving force for strongly promoting the achievement of such a goal. The Company's basic stance on measures related to corporate governance is to set up and operate a management structure and an internal control system, timely implement necessary measures and achieve accountability so that the Company can swiftly respond to changes, realize efficient management that is sound, fair, and highly transparent, and continuously increase corporate value. The Company views accomplishing such tasks as one of its most important management issues. The Company has been actively engaging in activities to listen to stakeholders' voices and based on input from stakeholders and social trends, it conducts reviews of its corporate governance and implements the necessary measures and improvements, as needed, in an appropriate manner.

1. Roles and Duties of the Board of Directors, etc. (Effective Utilization of the Diversity of Directors, Audit & Supervisory Board Members and Executive Officers)

In order to properly carry out the formulation of the business strategies including the improvement of profitability and capital efficiency, their execution, and the supervision and audit of execution, it is extremely important to place persons with the diverse experience and knowledge, high level of expertise and insight necessary for these purposes in a well-balanced fashion as the Directors and Audit & Supervisory Board Members who attend the Board of Directors meetings and as the Management that lead execution. By doing so, the Company believes it can raise the level of management by enabling each to properly fulfill their respective roles and duties as follows:

1. The members of Management, who have diverse experience and knowledge regarding the operation of each of the Kao Group's businesses and divisions, conduct discussions based on their understanding of the business environment in which the Company operates and the strengths and issues of the Kao Group to create proposals for the business strategies. In the event that consideration from more diverse perspectives, including evaluation of risks, is appropriate when

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planning and otherwise dealing with business strategies, the members of Management strive to utilize external experts.

1. Inside Directors and Full-time Audit & Supervisory Board Members who are familiar with the status of the Kao Group's management and businesses, its strengths and issues, and other matters, and Outside Directors and Outside Audit & Supervisory Board Members with diverse experience and knowledge of business and other areas, a high level of expertise and insight, and a neutral, objective perspective deliberate from their diverse perspectives, including evaluating risks, at Board of Directors meetings and make decisions on proposed business strategies submitted by the Management.
2. The members of Management quickly and properly execute the business strategies utilizing their respective diverse experience and knowledge.
3. Each year, the members of Management ascertain changes in the business environment that forms the premises of the business strategies, consider the status of progress of the strategies, issues in their achievement and response to such issues, the necessity of changes to the strategies and other matters and report to the Board of Directors.
4. In response to the above report from the members of Management, the Outside Directors and Outside Audit & Supervisory Board Members through their diverse perspectives supervise and audit whether the business strategies and other matters have been executed properly and makes decisions on the necessity of changing the business strategies and other matters at the Board of Directors meetings.

(3) Effective Utilization of Independent Directors and Audit & Supervisory Board Members, etc. (Principle 4.10.1)

The Company uses a structure with the appropriate number of independent Outside Directors and Outside Audit & Supervisory Board Members who satisfy the "Standards for Independence of Outside Directors/Corporate Auditors of Kao Corporation" (hereafter, the "Standards for Independence") to provide a check on the status of deliberations of the Board of Directors from an objective perspective independent of the Company's Management so that the Company's management judgment is not biased toward the logic of persons inside the Company.

To conduct examinations from an objective perspective independent from the Management, the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members, which examines candidates for Director and Audit & Supervisory Board Member, including for President and Chief Executive Officer (CEO), and the Compensation Advisory Committee, which examines the compensation system and remuneration levels of Directors and Executive Officers, both include all independent Directors and independent Audit & Supervisory Board Members, Outside Directors and Outside Audit & Supervisory Board Members (hereafter, the "Independent Directors and Audit & Supervisory Board Members, etc.").

(For further details regarding the Standards for Independence, please see www.kao.com/content/dam/sites/kao/www-kao-com/global/en/about/pdf/governance_002.pdf) (For information concerning appointment of Independent Directors and Audit & Supervisory Board Members, etc., please see "Outside Directors' Relationship with the Company (2)" in "Directors" below, as well as "Outside Audit & Supervisory Board Members' Relationship with the Company (2)" in "Audit & Supervisory Board Members" below.)

(4) Non-executive Director as Chairperson of the Board of Directors (Principle 4.6)

To more thoroughly separate execution and supervision, the Company uses a structure in which a non-executive Director serves as Chairperson of the Board of Directors.

(5) Company with an Audit & Supervisory Board

The Company has chosen to be a company with an Audit & Supervisory Board for the following reasons.

1. In addition to Outside Directors that include people with management experience, Outside Audit & Supervisory Board Members that include lawyers, certified public accountants and people with academic experience further increase the diversity of the Board of Directors by expressing opinions with a high level of expertise and insight and are useful for proper deliberation and supervision and audit of execution.
   (For the Company's stance on nomination of Outside Directors and Outside Audit & Supervisory Board Members, please see "7. Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size of the Board of Directors" below.)
2. Unlike in companies with a nominating committee and other committees or an audit committee, Audit & Supervisory Board Members with an independent perspective who do not concurrently serve as Directors enable objective audits of the execution of duties because they do not have the

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right to vote* at Board of Directors meetings. In particular, independent Outside Audit & Supervisory Board Members enable audits from a perspective that is more independent from the Management.

1. Ability of Full-time Audit & Supervisory Board Members to Collect Necessary Information for Audits
   The Company ensures cooperation on information collected by the Audit & Supervisory Board Members so that it is reported to the Outside Directors as necessary, in addition to audit reports to the Board of Directors.

• Audit & Supervisory Board Members do not have the right to vote, however the Companies Act guarantees their attendance at Board of Directors meetings and certain resolutions require their approval. Further, Audit & Supervisory Board Members are legally guaranteed the right to provide their opinion in their Audit Report and/or at the Annual General Meeting of Shareholders.

(6) Promoting Communications with Shareholders

In order to enhance its corporate value, the Company considers it important to communicate with shareholders and other stakeholders, thereby having better understanding of mutual views and positions, and taking appropriate measures based on the same. The Company has developed a structure to promote constructive communications with shareholders, and create opportunities to communicate with institutional investors and individual shareholders. In communication with shareholders, the members of Management participate to the extent possible in order to reflect the opinions of the shareholders in management properly. Also, the Company communicates with shareholders through its various publications, which communication includes messages not only from the CEO and other members of Management, but also from the Outside Directors, in their words. Pertaining to information of the Kao Group which is the basis for communication with stakeholders, the Company established Disclosure Guidelines that took into account fair disclosure, and is committed to timely, accurate and fair disclosure of information and proactively discloses information of social relevance as well as information which it is obligated to release publicly.

(For further details regarding IR Related Activities, etc., please see "14. Policy Concerning Measures and Organizational Structures to Promote Constructive Dialogue with Shareholders" and "2. IR Activities" in "III Implementation of Measures for Shareholders and Other Stakeholders" below.)

(For further details regarding Disclosure Guidelines, please see www.kao.com/global/en/investor-relations/management-information/disclosure/)

(7) Basic Strategy for Capital Policy

The Company's capital policy follows a basic strategy of securing a sound financial structure to make investments for sustainable growth and tolerate the related risks, and to make stable, continuous returns to shareholders. To realize this policy, the Company uses Economic Value Added (hereinafter "EVA**"), a management indicator that takes capital cost into account, as its main indicator and works to enhance its corporate value by improving EVA. Guided by EVA management which places importance on both continuous enhancements in corporate value and long-term profits for all stakeholders, the Company develops its business strategy and business plan.

The Company manages all equity and interest-bearing liabilities as subject of capital cost and intends to optimize capital cost from the viewpoint of safety and capital efficiency. For equity, the Kao Group aims for a streamlined and sound structure from a medium- to long-term perspective with efficiency in mind and, while maintaining interest-bearing liabilities at a moderate level, aims to maintain high credit ratings which will allow it to procure capital for large-scale investments. The Company is not subject to significant capital regulations except for general requirements under the Companies Act and others.

Although the Company emphasizes shareholder returns, it realizes that investment for growth will meet the expectations of its stakeholders, and therefore prioritizes such investment. In addition to providing stable dividends, the Kao Group aims to continuously increase dividends to reflect improvement in business results. The Company also uses surplus funds to flexibly conduct share repurchases.

In addition to making returns to shareholders, the Company retains the capital necessary to conduct investments for growth in a timely fashion and to ensure sufficient soundness to deal with situations that exceed assumptions while improving EVA.

The Company was selected as the Grand Prix recipient of the "Corporate Value Improvement Award*" (FY2016) due to the positive evaluation of its management, which has continued, aimed

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at corporate value improvement incorporating EVA, a concept used to measure true profit by factoring in the cost of invested capital. Continuous growth in EVA is linked to increase corporate value, which means long-term profit not only for shareholders, but for all Kao Group stakeholders as well.

*Corporate Value Improvement Award: The Corporate Value Improvement Award was founded in 2012 to spread and promote management aimed at enhancing corporate value which is deemed desirable by TSE from the perspective of a market provider. All listed domestic companies on the TSE market are eligible for the award. The award is to honor listed companies with high corporate value and management practices deemed to contribute to the appeal of the TSE market, such as by improving corporate value through initiatives which consider capital cost and other investor concerns.

**EVA is a monetary metric defined as NOPAT less capital cost. EVA is a registered trademark of Stern Stewart & Co.

5 Scope of Matters Delegated to the Management (Principle 4.1.1)

The Company has established the regulations of the Board of Directors and deliberation and reporting standards for the Board of Directors and the Management Committee to clearly set forth the matters to be deliberated on and reported at Board of Directors meetings and the matters to be delegated to the Management Committee, which is the highest executive decision-making body. As set forth in 4-(2) above, the purpose of these regulations and standards is to realize the separation of supervision and execution by mainly having the Board of Directors conduct deliberations from various perspectives, including evaluation of risks, and deciding on the medium-to-long-term direction of management in the business strategies and, regarding the execution of the business strategies, delegate wide-ranging authority to the Management Committee, which is mainly composed of members with the position of Managing Executive Officer or higher who have abundant experience in business execution as persons responsible for core businesses or divisions, to accelerate decision-making and management. The Management Committee, in turn, is expected to conduct proper supervision by making clear the matters to be reported to the Board of Directors.

For example, the following matters have been set forth as requiring deliberations by the Board of Directors.

• Direction of management, etc.: Basic management policies, basic business strategies, key investment strategies, mid-to-long-term plans and annual budgets
• Nomination or dismissal of key employees: Nomination or dismissal of Executive Officers, key persons in charge of organizations for which such Executive Officers are responsible, and key chairpersons of companywide committees in charge of corporate governance, compliance or other matters

Purchases of assets through merger and acquisition, investment or other means and large debts including borrowings and the issuance of corporate bonds are decided by the Management Committee, in principle. However, among these matters, extremely important items or items involving large outlays are submitted to the Board of Directors.

6 Policy on Nomination of Director and Audit & Supervisory Board Member Candidates and Senior Management (Principle 3.1(iv))

The Directors and Audit & Supervisory Board Members who attend the Board of Directors meetings deliberate on the appropriateness of the business strategies, the risks related to their realization and other matters in an objective and multifaceted fashion. They also supervise and audit the status of execution. To conduct these tasks, the Company considers it important those parties from inside and outside the Company with a greater diversity of experience, knowledge, expertise and insight conduct examinations through joint contributions of opinions from various perspectives. Consequently, the Company nominates the appropriate Directors and Audit & Supervisory Board Members to realize this objective.

In addition, to promote sharing of the knowledge and information obtained related to the Company's management and businesses from predecessor to successor, the Company sets staggered terms of office for Outside Directors and Outside Audit & Supervisory Board Members. Development of human resources including a succession plan for the President and CEO is one of the most important management issues and this issue has been discussed continuously at the Board of Directors meetings and at the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members. Based on The Kao Way and Kao Business Conduct Guidelines, the Company has been identifying and developing human resources globally who can execute K20's slogan "transforming ourselves to drive change." From such talent pool, the

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Company submits appropriate candidates for CEO who have quality, experience, skills and leadership to the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members. After the Committee verifies organization strategy based on the current business environment and direction of Management, members of the Committee discuss the appropriateness of the Management members that will surround the future CEO. Concerning the nominees who have passed the Committee's objective deliberations, the Board of Directors discuss and deliberate to evaluate the candidates appropriately and to determine their development plans.

Senior Management are nominated with emphasis on their understanding of the business environment and of the status of the Kao Group's businesses and management in order to deal with such environment necessary to plan the business strategies, and on their experience and ability to display strong leadership in quickly and properly executing the business strategies set by the Board of Directors.

7 Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size of the Board of Directors (Principle 4.11.1, Principle 2.4)

In accordance with the above policy on nomination, the Company ensures diversity and a balance among the knowledge, experience and skills of the Board of Directors as a whole as follows. In addition, the Company sets the appropriate size of the Board of Directors in consideration of the simplification of the Board of Directors to accelerate decision-making for dealing with business expansion and other matters, and the balance of diverse personnel required to conduct the proper deliberations and supervision of execution, premised on the delegation of responsibility to appropriately placed Executive Officers.

Inside Directors are nominated with emphasis on their experience of the operation, including global operation, of R&D, marketing, sales, production and other divisions related to

Yoki-Monozukuri and the operation of divisions related to corporate functions that support these divisions, as well as their understanding of the business environment in which the Company operates and the Company's strengths and issues for dealing with it, necessary for the appropriate planning and deliberation of business strategies.

Outside Directors are nominated with emphasis on diverse experience, expertise and high level of insight that cannot be obtained from Inside Directors alone in deliberations on business strategies, together with consideration for their independence. Examples include experience, including global experience, managing a company that provides products and services in a different field from the Company, and consulting or academic experience. In addition, the Company aims to have Outside Directors comprise approximately half of the Board of Directors to ensure its diversity and influence.

Full-time Audit & Supervisory Board Members are nominated with emphasis on the balance of business experience of each person to date and the knowledge gained therefrom, experience working overseas, and qualities that can ensure independence from persons executing business. The nominees are selected from inside the Company from persons involved in corporate management of accounting and finance, operation of business, the supply chain from R&D to production and sales and persons with overseas and other business experience.

Outside Audit & Supervisory Board Members are nominated with emphasis on factors necessary for auditing, including a high level of expertise, insight and abundance of experience relating to accounting and finance and laws and their high level of ethics as professionals, as well as by considering the legal and regulatory requirement for externality and independence. In addition, to increase the independence and neutrality of the Audit & Supervisory Board, a majority are Outside Audit & Supervisory Board Members who meet the Standards for Independence. When nominating Audit & Supervisory Board Members, the Company emphasizes experience, disposition, expertise and other characteristics necessary for deliberation, etc. of the business strategies.

Moreover, the Company recognizes that, in addition to knowledge, experience and ability, the diverse perspectives of people of various genders, races and nationalities and others contribute to the promotion of business, global expansion and proper supervision and auditing, and promotes the appointment of such diverse personnel as Directors, Audit & Supervisory Board Members and Executive Officers.

(For further details of the active participation of women, please see "Others Measures" in "Other" in "3. Measures to Ensure Due Respect for Stakeholders" in "III Implementation of Measures for Shareholders and Other Stakeholders" below.)

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8 Procedures for the Nomination and Dismissal of Director and Audit & Supervisory Board Member and the Appointment and Dismissal of Senior Management (Principle

3.1(iv))[Updated]

To objectively confirm that all Director candidates, including candidates for President and CEO, conform with the policy and stance in paragraph 6 above, the Company has a Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members, composed exclusively of all Outside Directors and Outside Audit & Supervisory Board Members. Usually, this Committee holds three to four times a year but can be held at any time as needed, and to keep its high level of objectivity it is chaired by the independent Director and all of its members are independent Directors and Audit & Supervisory Board Members. Prior to the election or

re-election of Directors and Audit & Supervisory Board Members, first the Committee deliberates about validity of above policies and other related matters. Then, it deliberates on each candidate's eligibility and submits its opinions of the nominees' appropriateness to a meeting of the Board of Directors. The Company has shortened the term of office for Directors to one year; therefore, all candidates including candidates for re-election are strictly examined by the Committee every year.

In case that the CEO, Directors and Audit & Supervisory Board Members should be dismissed, the Committee would be convened timely and conduct deliberations. Then, it would report to the Board of Directors for further deliberations and resolutions.

With regard to nominees for Audit & Supervisory Board Members, in addition to the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members, the Audit & Supervisory Board, which includes three (3) independent Outside Audit & Supervisory Board Members as its members, examines the appropriateness and qualifications, etc. of each nominee, based on its independent and objective perspective and in accordance with the above-described policy and the policy of nominating nominees for Audit & Supervisory Board Members established by the Audit & Supervisory Board. Eventually, with the consent of the Audit

• Supervisory Board, the Board of Directors determines such nominees as the nominees for Audit
• Supervisory Board Members to be presented in a proposal for the General Meeting of Shareholders.
  Further, in case that Directors and Audit & Supervisory Board Members should be dismissed, the Company complies with the procedures set forth in the Companies Act.
  With regard to Senior Management, the titles and responsibilities of all nominees of Executive Officers are reported to the Committee for the Examination of Nominees for Directors and Audit
• Supervisory Board Members and decisions are subsequently made by the Board of Directors. In case that Senior Management should be dismissed, the Board of Directors conducts deliberations in a timely manner.
  (For further information concerning the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members, please see, in "Supplementary Explanation" in "Directors" in "1. Organizational Composition and Operation" in "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" below.)

9 Explanations with Respect to Individual Nominations and Appointments of Directors, Audit & Supervisory Board Members and Senior Management, and Status of Concurrent Duties of Outside Directors and Outside Audit & Supervisory Board Members (Principle

3.1(v), Principle 4.11.2)

In line with the above nomination policy, the Company has nominated and appointed its current Directors, Audit & Supervisory Board Members and Senior Management as follows.

Inside Directors have abundant experience and knowledge of R&D, marketing, sales and other central functions of Yoki-Monozukuri, respectively, including their global operation. In addition, they are familiar with the global competitive environment in which the Company operates, stakeholders' expectations of the Company including environmental preservation and other issues, and the corresponding strengths and issues, etc. of the Company. They are nominated and appointed with the expectation that they will utilize this experience and knowledge in the planning and deliberation of the business strategies and in the supervision of their execution at the Board of Directors.

Outside Directors have abundant experience and a high level of insight as a management consultant, a top executive of a global airline company and a major financial institution, and an astronaut and medical doctor respectively and are nominated and appointed with the expectation that they will utilize such experience and insight in deliberation, etc., of the business strategies. Full-time Audit & Supervisory Board Members are nominated and appointed with the expectation that they will utilize their experience in R&D, the operation of business or other areas, their

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overseas experience and financial and accounting knowledge etc., in audits and will conduct audits independent of persons who execute business.

Outside Audit & Supervisory Board Members are nominated and appointed with the expectation that they will conduct audits from an independent standpoint utilizing perspectives based on their high level of expertise as a certified public accountant and a lawyer, respectively, and their abundant auditing experience and knowledge.

Every Audit & Supervisory Board Member is nominated with the expectation that he/she will utilize his/her experience, qualification and expertise in deliberation of business strategies and audit of execution.

For Outside Directors and Outside Audit & Supervisory Board Members, the Company will confirm that they would be able to devote sufficient time and effort to appropriately fulfill their respective roles and responsibilities despite their concurrent positions.

(For the reasons for nomination of each of the Outside Directors and Outside Audit & Supervisory Board Members, please see, in "II. Business Administration Organization for Managerial Decision-Making, Execution and Supervision, and Other Corporate Governance Structure" below, the section entitled "1. Organization Structure, Organizational Management, etc.," more specifically, the subsections "Relationship with the Company (2)" in "Matters Related to Directors" and "Relationship with the Company (2)" in "Matters Related to Audit & Supervisory Board Members."

(For the status of concurrent positions held by Outside Directors and Outside Audit & Supervisory Board Members and for the reasons for nomination of each of the Inside Directors, please see "Proxy Statement" and "Business Report" of "Convocation Notice of the Annual General Meeting of Shareholders" please see

www.kao.com/global/en/investor-relations/stock-information/shareholders/)

10 Details of Current Efforts to Effectively Use Independent Directors and Audit & Supervisory Board Members, etc. (Principle 4.8)

1. Status of Appointment of Independent Directors and Audit & Supervisory Board Members,
   etc.
   Four (4) of the eight (8) Directors are Outside Directors, all of whom satisfy the Standards for Independence. Three (3) of the five (5) Audit & Supervisory Board Members are Outside Audit & Supervisory Board Members, all of whom satisfy the Standards for Independence.
2. Chairperson of the Board of Directors (Principle 4.6)

In the current structure, independent Outside Director acts as Chairperson of the Board of Directors as a measure to further increase the neutrality and independence of the Board of Directors.

1. Communication and Cooperation among Independent Directors, Audit & Supervisory Board Members and Management (Principle 4.8.2)
   The Chairman of the Board of Directors takes the role of promoting communication and cooperation with members of Management and Audit & Supervisory Board Members. All the Audit & Supervisory Board Members, including the independent Outside Audit & Supervisory Board Members, and the Representative Directors hold meetings to exchange opinions multiple times during the year and from July 2018 all Outside Directors and all the Audit & Supervisory Board Members (including full-time) have started to hold periodic meetings to exchange information and opinions.

11 Analysis and Evaluation of Effectiveness of the Board of Directors Taken as a Whole and Summary of the Results Thereof (Supplementary Principle 4.11.3)

On at least an annual basis, an evaluation is conducted at a meeting of the Board of Directors, in order to make improvements aimed at enhancing the effectiveness of the Board of Directors. Based on the idea that the roles and responsibilities of the Board of Directors must be shared by the entire Board of Directors, the Company believes that it is effective for all members who participate in meetings of the Board of Directors, including Audit & Supervisory Board Members, to conduct an evaluation by expressing their own opinions and engaging in free and open discussions. Accordingly, evaluation of effectiveness of the Board of Directors is currently conducted through self-assessment by the participating members at the Board of Directors meeting, without the appointment of a third-party consultant from outside the Company.

For the FY2019 evaluation, prior to the exchange of opinions for self-assessment at the meeting of the Board of Directors held in January 2020, a survey of the eight (8) Directors and the five (5) Audit & Supervisory Board Members was conducted on the topics below. Feedback on the results was then provided before the meeting, during which the discussions and exchange of opinions

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were conducted. The following is a summary.

1. Efforts to address issues pointed out in the previous fiscal year's evaluation of effectiveness of the Board of Directors

1. With regard to human resources strategy, scouting and developing diverse human resources, including people who can excel globally, is an ongoing challenge. Further discussion is needed for the kind of human resources required based on the vision of the kind of company that Kao intends to be 10 years from now, and how to scout and develop those human resources.
2. With regard to management, the Board of Directors shall maintain dialogue in ways such as effectively sharing its discussions with executives and listening directly to the opinions of executives in order to further vitalize the Board of Directors and reflect its discussions in execution.
3. With regard to internal controls to comply with laws and regulations, the Board of Directors should not just maintain the control system, but should also conduct oversight in order to regularly revise operations to ensure the system functions even more effectively, in a timely and appropriate manner.

1. The Board of Directors has been able to conduct discussions of human resources strategy to a certain extent, which has enabled shared understanding of the issues. However, it needs to further deepen discussions regarding human resource requirements and development plans based on its vision for the future, from perspectives that include scouting and developing young human resources globally and using human resources from outside the Company.
2. Discussions at the Board of Directors are properly reported at the monthly meetings of Executive Officers, and reports regarding execution of business from Executive Officers at monthly meetings of the Board of Directors. These and other measures enable dialogue between Directors and Executive Officers. Especially, in FY2019, several Executive Officers presented and discussed forward-lookingmid-to-long-term strategy with the Board of Directors, and the opportunity for the Board of Directors to exchange opinions directly with the Executive Officers deepened mutual understanding. The Board of Directors intends to continue to provide opportunities for direct dialogue with executives.
3. An internal control system for legal compliance has been properly established. In the operation of this system, the amount and speed of information on problematic issues reaching the Board of Directors have increased. However, further improvements in system operation are required, as demonstrated by the lack of timely reports from worksites to senior management and issues with cooperation among departments, among other matters in some cases. Discussion of the background and nature of problematic issues that have arisen is also required.

1. Evaluation of measures for viewpoints 1.-3. below, which are particularly expected of Board of Directors in the Corporate Governance Code

1. Constructive discussion of the broad direction of corporate strategy and other matters

At meetings of the Board of Directors, explicitly sharing discussion of the Kao Way, which expresses the vision of the kind of company Kao intends to be, and incorporating the opinions of Outside Directors, lead to energetic and constructive discussions about management strategy and management plans. In FY2019, the Board of Directors devoted significant time to discussing ESG strategy, which led to Kao's public commitments. The Board of Directors also engaged in multifaceted discussions about technology innovation. In FY2020, discussing the next mid-term plan will be a key responsibility of the Board of Directors. As part of this, the Board of Directors will deepen discussions about Kao's global strategy, M&A strategy, and the kind of human resources required.

10

2. Establishment of an environment where appropriate risk-taking by senior management is supported

Systems are in place to support checks on risks and promote proactive risk-taking through the energetic voicing of opinions by members of the Board of Directors from multiple perspectives, based on their diverse insights. Outside Directors and Outside Audit & Supervisory Board Members are provided opportunities to directly obtain frontline information by visiting business sites in Japan and overseas and by attending research presentations. In addition, the Chairman of the Board (an Outside Director), who sits on the Management Committee, provides background explanations that help the Board of Directors get to the central issues of its agenda. These features deepen discussion among members of the Board of Directors and help senior management make decisions.

3. Carrying out effective oversight of Directors and management from an independent and objective standpoint

The Board of Directors operates under the Chairman of the Board of Directors, who is a

non-executive, Independent Outside Director. This ensures an atmosphere in which opinions can be freely expressed, transcending the boundaries separating internal and external perspectives. Moreover, Inside Directors who have executive responsibilities sincerely listen to the opinions of Outside Directors to maintain an approach to management that utilizes external perspectives, which vitalizes execution. The Board of Directors is composed of members with outstanding diversity in terms of their fields of expertise and experience. Inside Directors who are also executive officers, Independent Outside Directors with extensive knowledge, full-time Audit & Supervisory Board Members with regular access to detailed and specific internal information and Independent Outside Audit & Supervisory Board Members with diverse experience and expertise all cooperate with each other. As a result, highly effective oversight functions are carried out based on objective opinions that are premised on timely and accurate information.

1. Board of Directors composition, status of operation, status of deliberations, and support from the Company

1. Composition: The Board of Directors is structured appropriately, with a good balance of Directors and Audit & Supervisory Board Members from inside and outside the Company offering diverse experience and insight as well as a compact size that enables ample communication and active discussions. In FY2019, a female Director and a female Audit & Supervisory Board Member were appointed to improve its balance. On the other hand, promotion or appointment of a non-Japanese Director or other Director who plays a role with a cross-divisional view of the entire Company is an issue that still needs to be addressed.
2. Status of operation: To allow for productive discussions at meetings of the Board of Directors, materials are distributed beforehand to promote understanding of matters such as the background, purposes and content of agenda items. The frequency of meetings is also set appropriately.
3. Status of deliberations: Proceedings allow sufficient time for questions and discussions, and discussions and exchanges of opinion are free, open, constructive and active. However, to elicit useful discussion by the Board of Directors, allocation of time for discussion needs to be more clearly delineated and presentation materials should be narrowed down to the main points.
4. Support from the Company: Lectures for Directors and Audit & Supervisory Board Members, opportunities to visit business sites in Japan and overseas, and information regarding technical matters including research and development are properly provided and appropriate support is given. Ongoing and periodic support will also be required.

1. Operation of the Committee for Examination of Nominees for Directors and Audit & Supervisory Board Members and the Compensation Advisory Committee

Both committees have clear roles and authority, and discuss relevant themes at the appropriate times. Details of the discussions are duly shared with the Board of Directors. The Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members thoroughly discussed the next generation of human resources. The Compensation Advisory Committee shared the view that it was necessary to conduct discussions to review the compensation system in

11

FY2020 in anticipation of the next mid-term plan. (At the time of evaluation of effectiveness, it was named the Committee for the Examination of Nominees for Directors.)

(e) Issues to be addressed by the Board of Directors

1. The Board of Directors should set aside time to discuss key directions of the Kao Group, such as the mid-term plan, human resources strategy, global strategy, and M&A strategy.
2. The Board of Directors must continue discussions of human resources strategy. It must incorporate external opinions as it further deepens discussion of human resource requirements and development plans based on the vision of the kind of company Kao intends to be and on the next mid-term plan.
3. With regard to internal controls to comply with laws and regulations, the Board of Directors needs to constantly monitor the controls to ensure proper operation so that the control system functions more effectively throughout the Kao Group.

The Audit & Supervisory Board conducts an evaluation of its auditing effectiveness once a year as well.

At an Audit & Supervisory Board meeting held in February 2020, all Audit & Supervisory Board Members expressed their opinions on the activities of the Audit & Supervisory Board Members in FY2019 referring to the checklist of focus points for "Self-Evaluation of the Effectiveness of Kao's Audit & Supervisory Board Members and Audit & Supervisory Board Meeting." The attendees engaged in discussions based on those opinions, and made evaluations. The results of the self-evaluation are shared with the Board of Directors by incorporating them in the audit plan for the following fiscal year. The following topics were reported at the Board of Directors.

• Audit & Supervisory Board members attend the Board of Directors meetings, audit the management decision-making process, the status of development and operation of the internal control environment, and provide opinions as necessary.
• Full-timeAudit & Supervisory Board members attend important meetings such as those of the Management Committee, Internal Control Committee and other related committees. In addition, Full-time Audit & Supervisory Board members actively conduct on-site visit at factories and research laboratories, interview business units and functional divisions, and conduct surveys of affiliated companies in Japan and overseas. Outside Audit & Supervisory Board members were provided with ample opportunity to participate in such activities. Based on the findings and opinions obtained through these audit activities, the Audit & Supervisory Board held meetings to exchange opinions with Representative Directors of the Company and its important subsidiaries, as well as meetings with all Outside Directors, and made suggestions as necessary.
• At Audit & Supervisory Board meetings, members frankly exchange opinions based on their respective experiences and expertise, incorporating an objective perspective and the Board is functioning effectively in general.
• The Audit & Supervisory Board has the opportunity to report on the activities of the Audit & Supervisory Board at the Board of Directors meeting regularly.

To respond appropriately and flexibly to changes in the business environment and business expansion,

• Regarding internal control, we will proactively make proposals to ensure effectiveness and efficiency in both its development and operation globally.
• From the perspective of group governance, it is also important to strengthen the framework for auditors of subsidiaries to function more effectively.
• As the expectations of the activities of corporate auditors in society increase, we will continue to consider how to proceed with audits.

12 Measures for Directors and Audit & Supervisory Board Members to improve understanding and knowledge required to fulfill their roles and duties (Principle 4.14.2 "Training Policy for Directors and Audit & Supervisory Board Members)

The Company provides Directors and Audit & Supervisory Board Members with opportunities to

12

improve their understanding of the Company's business and business environment and knowledge about corporate governance, etc. and pays expenses which are required to fulfill their respective roles and duties. In particular, the Company provides Inside Directors and Full-time Audit & Supervisory Board Members with basic training as top management and auditors, knowledge regarding the Companies Act, corporate governance and related issues, useful information for observance of laws and regulations and for management, and other matters. Also, to deepen the understanding of Outside Directors and Outside Audit & Supervisory Board Members of the details and current status and other matters regarding the Kao Group's business strategies and businesses, the Company explains these matters at the time of inauguration and thereafter conducts tours of factories and business sites, explanations by the relevant officer and other measures as necessary.

• Details of Current Efforts＞

• As future candidates for Director or Audit & Supervisory Board Member, participation by Executive Officers in training programs held by external institutions to acquire the skills and knowledge and attain the deep discernment required of top management
• Explanation of the Companies Act, corporate governance and related issues upon inauguration
• Explanation of the business strategies, details of businesses, operating structure and other matters upon inauguration
• Visits to main factories and major business sites, etc.
• Lectures to foster well-rounded character and insight as a top management
• Lectures on the Companies Act, corporate governance and other matters by experts and lectures on useful information regarding management by top management of other companies and knowledgeable persons
• Briefings on compliance, including prevention of insider trading

13 Policy and Procedures for Determining Remuneration for Directors and Senior Management

In order to ensure remuneration for Directors and Officers is an effective incentive, etc. for achieving business plans, the Company's fundamental position on remuneration of Directors and Executive Officers is as follows: (1) a compensation system which attracts a diverse range of excellent candidates in order to establish and improve competitive advantages; (2) compensation which promotes continuous improvement of corporate value and shares interests in common with shareholders; and (3) a highly objective and transparent decision-making process regarding compensation. Further, long-term incentives include criteria from an ESG perspective.

The Company has a Compensation Advisory Committee composed of all the Independent Directors and Audit & Supervisory Board Members, etc. and all the Representative Directors to examine and evaluate whether the compensation system and remuneration levels for Directors and Executive Officers adequately match the abovementioned basic stance. The Company also deliberates as necessary on the abovementioned basic stance.

In addition, the Company will consider the appropriate global remuneration system for officer, managers and employees to promote global business expansion.

(For further information, please see "Disclosed Details of Policy for Determining Amount and Calculation Method of Remuneration" in "Remuneration for Directors" in "II. Business Administration Organization for Managerial Decision-Making, Execution and Supervision, and Other Corporate Governance Structure" below.)

14 Policy Concerning Measures and Organizational Structures to Promote Constructive Dialogue with Shareholders (Principle 5.1)

The Company considers its shareholders and investors to be important stakeholders. It emphasizes constructive dialogue to raise corporate value, and considers it important to deepen mutual understanding of stances and standpoints and to adopt proper responses based on such understanding.

To contribute to realizing constructive dialogue with shareholders and investors to raise corporate value, the Company proactively discloses socially useful information about the Kao Group in addition to disclosures required by law. The Company established rules on information disclosure and the prevention of insider trading, conducts information disclosures fairly without selective disclosure to specified persons, clarified the obligation to maintain confidentiality of insider information, as well as regularly conducts education for their thorough implementation.

An investor relations division is in charge of measures for dialogue with institutional investors, and in addition to routine meetings with institutional investors inside and outside Japan, it conducts briefings and other presentations on summaries and the progress of the business strategies, the status of operating results and businesses, shareholder returns and other matters.

13

The President and CEO and Management participate to the extent possible in order to have opportunities for direct conversations with institutional investors that enable dialogue for increasing corporate value from a long-term perspective, and to make it easier to reflect the results of the dialogues in management.

The content of questions and opinions received from institutional investors and other matters from the abovementioned briefings and other presentations are reported as required at meetings of the Board of Directors and of the Executive Officers for utilization in the future management of the Company.

A shareholder relations division is primarily in charge of measures for dialogue with individual shareholders, and conducts tours of factories and facilities that introduce details of the Company's businesses so that individual investors understand such details and hold the Company's stock with a longer-term perspective. Moreover, when conducting these initiatives, the members of Management participate to the extent possible in order to have opportunities for dialogue with shareholders. In addition, the Company regards the operation of the General Meeting of Shareholders as an opportunity for dialogue with its valued and important shareholders, and secures sufficient time for questions, among other measures.

In the future, in addition to explaining financial information, the Company intends to further enhance its explanation of non-financial information including its stance on corporate governance. To promote constructive dialogue with shareholders, relevant divisions including the investor relations, accounting and finance, legal and compliance, and corporate strategy will cooperate to consider and implement methods for explaining non-financial information such as publication on the Company's website and holding presentations, an organizational structure for dealing with dialogue with shareholders and other matters. Executive officers in charge of the corporate strategy, legal and compliance and corporate communications, will work together to integrate and promote these activities.

(For further details regarding IR Related Activities, etc., please see, in "III. Status of Measures Taken in Respect to Shareholders and Other Stakeholders" below, the section entitled "2. Status of IR Related Activities.")

15 Policies for Cross-Shareholdings* and Standards for Exercise of Voting Rights (Principle 1.4)

The Company holds the shares of other listed companies only in cases where it considers such shareholdings, including the number of shares held, to be reasonable in consideration of their necessity in terms of business activities such as maintaining and strengthening business alliances and transactions and other matters. These cross-shareholdings are subject to the impact of trends in stock markets and the business environment in which the Company operates. However, each year the Board of Directors ascertains the reasonableness of cross-shareholdings and reviews their continuance and the number of shares held for each stock, by considering the following criteria: purpose of retention, unrealized gains and losses, EVA, trading volume and others. As a result, the number of issues of cross-shareholdings the Company holds as of December 31, 2019 decreased to 45 from 49 as of December 31, 2018 (the total amount on the balance sheet decreased from ¥5,726 million to ¥5,105 million). Prior to the corporate governance code became effective in 2015, the Company held 83 issues (¥9,384 million) as of December 31, 2014.

The Company exercises the voting rights of cross-shareholdings after comprehensively determining whether the proposals contribute to the establishment of a proper corporate governance system and to increasing the medium-to-long-term corporate value of the issuing company, as well as their impact on the Company. The Company engages in dialogue with the issuing company on the details of the proposals and other matters as necessary.

All voting rights at annual general meetings of shareholders held during 2019 by companies in which the Company holds shares were used to approve proposals, because there were no proposals that raised concerns of damage to the corporate value of the relevant company.

The above details were reported at the meeting of the Board of Directors.

*Cross-Shareholdings: There are cases where listed companies hold the shares of other listed companies for reasons other than pure investment purposes, for example, to strengthen business relationships. Cross-shareholdings here include not only mutual shareholdings but also unilateral ones.

16 Roles of Corporate Pension Funds as Asset Owners (Principle 2-6)

Kao Group Corporate Pension Funds manages a reserve for corporate pension funds for the Company and its group companies in Japan. The Company assigns personnel with necessary experience and qualifications for the Kao Group Corporate Pension Funds considering the impact

14

that corporate pension funds have on the ability of employees to maintain stable asset management not only but also the potential impact on the Company's financial stability. Also, the Company established an Asset Management Committee. Kao Group Corporate Pension Funds maintains healthy pension fund management, and sets composition of assets, if necessary, incorporating the opinions of third parties.

Regarding stewardship initiatives, the Company monitors the stewardship activities of each asset management institution through quarterly reporting sessions.

All assets are invested through passive portfolio management to assure that there would be no conflict of interest between beneficiaries of corporate pension funds and the Company.

17 Procedures for Approval of Related Party Transactions (Principle 1.7)

To obligate Directors, Audit & Supervisory Board Members, Executive Officers and employees of the Kao Group to act with priority on the interests of the Kao Group, the Company has established the "Kao Guidelines on Preventing Conflicts of Interest" after their approval by the Board of Directors. In cases where Directors and Officers, managers and employees of the Kao Group engage in transactions with the Kao Group on behalf of themselves or of a third party, these guidelines provide that a notification be submitted to the Compliance Committee Secretariat and that, depending on the details of the notification, the Compliance Committee Secretariat shall require notification of or approval from the Board of Directors, the Management Committee or the Compliance Committee Secretariat Meeting.

In addition to these guidelines, Directors obtain the approval of the Board of Directors in cases of self-dealing or transactions involving conflicts of interest pursuant to the Companies Act. Because the Company has no major shareholders who hold 10% of more of its stock, the Kao Group has not established procedures for approval of transactions with major shareholders.

2. Capital Structure

Foreign Shareholding Ratio: More than 30%

[Status of Major Shareholders] [Updated]

	(As of June 30, 2020)
Name / Company Name	Number of	Percentage
	Shares	(%)
The Master Trust Bank of Japan, Ltd. (Trust Account)	54,769,500	11.37
Japan Trustee Services Bank, Ltd. (Trust Account)	33,101,300	6.87
Japan Trustee Services Bank, Ltd. (Trust Account 7)	13,859,300	2.88
STATE STREET BANK AND TRUST COMPANY 505223	13,181,449	2.74
Japan Trustee Services Bank, Ltd. (Trust Account 5)	9,866,900	2.05
JP MORGAN CHASE BANK 385781	8,024,283	1.67
STATE STREET BANK WEST CLIENT-TREATY 505234	7,127,767	1.48
STATE STREET BANK AND TRUST COMPANY 505103	6,770,802	1.41
Nippon Life Insurance Company	6,691,215	1.39
SSBTC CLIENT OMNIBUS ACCOUNT	6,671,722	1.38

Controlling Shareholders (except for Parent		None
Company)
Parent Company		None

Supplementary Information [Updated]

• The number of shares in the list above may include the number of shares held in trusts or subject to share administration.
• The ratio of shareholding for each shareholder above has been calculated based on the number of issued shares excluding treasury shares.

1. The amendment to the large shareholdings report filed by BlackRock Japan Co., Ltd. and seven other persons on March 22, 2017, which is open to the public, stating that they held shares of the Company as shown below as of March 15, 2017. However, these shareholdings were not included in the above list of major shareholders because the Company could not confirm the number of beneficial shares held as of June 30, 2020.

15

Name	Number of shares	Ratio of shareholding
(thousand shares)	(percentage)
BlackRock Japan Co., Ltd. and	30,938	6.25
seven other persons

2. The amendment to the large shareholdings report filed by Mitsubishi UFJ Trust and Banking Corporation and three other persons on May 8, 2020,which is open to the public, stating that they held shares of the Company as shown below as of April 27, 2020. However, these shareholdings were not included in the above list of major shareholders because the Company could not confirm the number of beneficial shares held as of June 30, 2020.

Name	Number of shares	Ratio of shareholding
(thousand shares)	(percentage)

Mitsubishi UFJ Trust and

Banking Corporation and three26,6225.52 other persons

Also, the amendment to the large shareholdings report filed by Mitsubishi UFJ Trust and Banking Corporation and five other persons on July 20, 2020, which is open to the public, stating that they held shares of the Company as of July 13, 2020 increased to 34,987 thousand shares which is 7.26% to the total number of outstanding shares.

3. The amendment to the large shareholdings report filed by Sumitomo Mitsui Trust Bank, Limited and two other persons on July 6, 2020, which is open to the public, stating that they held shares of the Company as shown below as of June 30, 2020. However, these shareholdings were not included in the above list of major shareholders because the Company could not confirm the number of beneficial shares held as of June 30, 2020.

Name	Number of shares	Ratio of shareholding
(thousand shares)	(percentage)
Sumitomo Mitsui Trust Bank,	29,965	6.22
Limited and two other persons
Also, the amendment to the large	shareholdings report filed	by Sumitomo Mitsui Trust Bank,

Limited and two other persons on July 21, 2020, which is open to the public, stating that they held shares of the Company as of July 15, 2020 increased to 30,074 thousand shares which is 6.24% to the total number of outstanding shares.

4. The amendment to the large shareholdings report filed by Nomura Securities Co., Ltd. and two other persons on July 6, 2020, which is open to the public, stating that they held shares of the Company as shown below as of June 30, 2020. However, these shareholdings were not included in the above list of major shareholders because the Company could not confirm the number of beneficial shares held as of June 30, 2020.

Name	Number of shares	Ratio of shareholding
(thousand shares)	(percentage)
Nomura Securities Co., Ltd. and	28,873	5.99
two other persons
Also, the amendment to the large	shareholdings report filed	by Nomura Securities Co., Ltd.

and two other persons on July 21, 2020, which is open to the public, stating that they held shares of the Company as of July 15, 2020 decreased to 27,431 thousand shares which is 5.69% to the total number of outstanding shares.

5. The amendment to the large shareholdings report filed by Mizuho Securities Co., Ltd. and two other persons on July 7, 2020, which is open to the public, stating that they held shares of the Company as shown below as of June 30, 2020. However, these shareholdings were not included in the above list of major shareholders because the Company could not confirm the number of beneficial shares held as of June 30, 2020.

Name	Number of shares	Ratio of shareholding
(thousand shares)	(percentage)
Mizuho Securities Co., Ltd. and	26,522	5.50
two other persons

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3. Corporate Attributes

Listed Stock Market and Market Section		Tokyo Stock Exchange, First Section
Fiscal Year-End		December 31
Type of Business		Chemicals
Number of Employees (consolidated) as of the End of		More than 1,000
the Previous Fiscal Year
Sales (consolidated) as of the End of the Previous		More than ¥1 trillion
Fiscal Year
Number of Consolidated Subsidiaries as of the End of		From 50 to less than 100
the Previous Fiscal Year

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
   None
2. Other Special Circumstances which may have Material Impact on Corporate Governance
   None

1. 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 Audit & Supervisory Board
		Members

Details of the information about Audit & Supervisory Board Members are reported on the Japan Audit & Supervisory Board Members Association's website. www.kansa.or.jp/support/el009_130711_2.pdf

[Directors]
Maximum Number of Directors Stipulated in Articles		0	(Not stipulated)
of Incorporation
Term of Office Stipulated in Articles of Incorporation	1	year
Chairperson of the Board		Outside Director
Number of Directors	8
Number of Outside Directors	4
Number of Independent Directors	4

Outside Directors' Relationship with the Company (1)

Name

Attributes

Relationship with the Company (*)

A

B

c

d

e

f

g

h

i

j

k

Sonosuke Kadonaga

From another company

Osamu Shinobe

From another company

△

Chiaki Mukai

Others

Nobuhide Hayashi

From another company

△

△

*Categories for "Relationship with the Company"

△

*"○ " when the director presently falls or has recently fallen under the category;

"

" when the director fell under the category in the past;

*" △

●" 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

1. Executive of the Company or its subsidiaries
2. Non-executivedirector or executive of a parent company of the Company
3. Executive of a fellow subsidiary company of the Company
4. A party whose major client or supplier is the Company or an executive thereof
5. Major client or supplier of the listed company or an executive thereof
6. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director
7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
8. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only)

17

1. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board Members are mutually appointed (the director himself/herself only)
2. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
3. Others

Outside Directors' Relationship with the Company (2)

Name	Designation as	Supplementary Explanation of	Reasons of Appointment
	Independent	the Relationship
	Director
Sonosuke	○	None	(i) Mr. Kadonaga has expertise in
Kadonaga		relation to international
			corporate management gleaned
			from his considerable experience
			at a foreign-affiliated consulting
			company. In addition, as a
			measure to enhance the neutrality
			and independence of the Board of
			Directors, Mr. Kadonaga, as an
			Independent Outside Director,
			has chaired the meetings of the
			Board of Directors since March
			2014, and has thereby
			contributed to enabling active
			discussions at such meetings
			without any distinction between
			Inside/Outside Directors. In view
			of these facts, the Company
			expects him to supervise the
			management of the Kao Group as
			an Independent Outside Director.
			(ii) The Company determined
			that none of the requirements for
			prior discussion as provided in
			Section III. 5. (3) 2 of the
			"Guidelines Concerning Listed
			Company Compliance, etc." of
			the TSE applies to him, and also
			that he has the necessary
			independence based on the
			"Standards for Independence of
			Outside Directors/Audit &
			Supervisory Board Members of
			Kao Corporation" established by
			the Company in line with the
			above guidelines.
Osamu Shinobe	○	Mr. Shinobe previously had	(i) He has considerable
	executive authority at ALL	experience and expertise in
		NIPPON AIRWAYS CO., LTD.,	relation to global corporate
		but ceased to have such authority	management and risk
		from April 2017. ALL NIPPON	management, gleaned principally
		AIRWAYS CO., LTD. provides	from his time in the maintenance
		public transportation services as	sections where safety and
		an airline company, and the	security took top priority at an
		Company engages in regular	airline company which actively
		transactions with ALL NIPPON	promotes passenger and cargo
		AIRWAYS CO., LTD. in terms of	businesses around the world, that
		the directors, officers and	enable appropriate responses to
		employees of the Company using	changes in business environment.
		its services as a means of	He has been actively presenting
		transportation in making	opinions and proposals in
		business trips and there are	deliberations of the Board of

18

		transactions related to the	Directors concerning material
		payment of advertising expenses	matters in the management of the
		for its in-flight magazine and	Kao Group, based on his
		others. However, the amounts	considerable experience and
		involved in such transactions	expertise. In view of these facts,
		account for less than 0.1% of the	the Company expects him to
		ALL NIPPON AIRWAYS CO.,	supervise the management of the
		LTD.'s net sales and the	Kao Group as an Independent
		Company's net sales for the	Outside Director.ii) The
		latest fiscal year, respectively.	Company determined that none
			of the requirements for prior
			discussion as provided in Section
			III. 5. (3) 2 of the "Guidelines
			Concerning Listed Company
			Compliance, etc." of the TSE
			applies to him, and also that he
			has the necessary independence
			based on the "Standards for
			Independence of Outside
			Directors/Audit & Supervisory
			Board Members of Kao
			Corporation" established by the
			Company in line with the above
			guidelines.
Chiaki Mukai	○	Ms. Mukai previously had	She has an extensive and high
	executive authority at Tokyo	level of expertise in the scientific
		University of Science, but ceased	field, gleaned through her
		to have such authority from April	experience as an astronaut and
		2016. In addition, although the	medical doctor. Since January
		Company makes donations to	2016 to March 2019, she served
		Tokyo University of Science, the	as a Corporate Executive Fellow
		amounts of such donations	of the Company and actively
		account for less than 0.1% of the	gave advice principally in
		university's income from	respect of the Kao Group's R&D
		educational activities for the	activities. Based on such
		latest fiscal year. Although the	experience and expertise,
		Company has transactions with	including her insights from a
		the Tokyo University of Science,	female perspective, she has been
		which involve the entrustment of	actively presenting opinions and
		research projects to the	proposals in deliberations at the
		university, the amounts of such	Board of Directors concerning
		transactions account for less than	material matters in the
		0.1% of the university's income	management of the Kao Group.
		from education activities and the	In view of these facts, the
		Company's net sales for the	Company expects her to
		latest fiscal year, respectively.	supervise the management of the
		Also, she has served as a	Kao Group as an Independent
		Corporate Executive Fellow of	Outside Director.
		the Company since January 2016	ii) The Company determined that
		to March 2019, however, the	none of the requirements for
		annual compensation amount is	prior discussion as provided in
		well below the 10 million yen	Section III. 5. (3) 2 of the
		limit set forth in the "Standards	"Guidelines Concerning Listed
		for Independence of Outside	Company Compliance, etc." of
		Directors/Outside Audit &	the TSE applies to her, and also
		Supervisory Board Members of	that she has the necessary
		Kao Corporation."	independence based on the
			"Standards for Independence of
			Outside Directors/Audit &
			Supervisory Board Members of
			Kao Corporation" established by
			the Company in line with the

19

above guidelines.

Nobuhide

○

Mr. Hayashi previously had

Over many years, he has played

Hayashi

executive authority at Mizuho

an active role on an international

Bank, Ltd., but ceased to have

basis in the fields of finance and

such authority from April 2017.

financial affairs, such as by

The Company conducts regular

experiencing an extensive range

bank transactions with Mizuho

of duties in sales, international

Bank, Ltd., and receives

business planning, etc. at leading

consulting service in overseas

financial institutions. He has an

markets, however, the amounts

abundance of experience and a

involved in such transactions

high level of expertise in

account for less than 0.1% of

company management, such as

Mizuho Bank, Ltd.'s ordinary

having served as a corporate

income and the Company's net

manager amidst global changes

sales for the latest fiscal year,

in the business environment

respectively. Also, the Company

surrounding the financial

conducts regular bank transactions

with Mizuho Bank, Ltd.

industry. He has been actively

presenting opinions and

proposals in deliberations of the

Board of Directors concerning

material matters in the

management of the Kao Group,

based on his considerable

experience and expertise.

In view of these facts, the

Company expects him to

supervise the management of the

Kao Group as an Independent

Outside Director.

ii) The Company determined that

none of the requirements for

prior discussion as provided in

Section III. 5. (3) 2 of the

"Guidelines Concerning Listed

Company Compliance, etc." of

the TSE applies to him, and also

that he has the necessary

independence based on the

"Standards for Independence of

Outside Directors/Audit &

Supervisory Board Members of

Kao Corporation" established by

the Company in line with the

above guidelines.

Voluntary Establishment of Committee(s) Corresponding to

Established

Nomination Committee or Remuneration Committee

Committee's Name, Composition, and Attributes of Chairperson

[Updated]

Committee Corresponding to

Committee Corresponding to

Nomination Committee

Remuneration Committee

Committee for the Examination of

Compensation Advisory

Committee's Name

Nominees for Directors and Audit &

Committee

Supervisory Board Members

All Committee Members

7

10

Full-time Members

0

0

Inside Directors

0

3

Outside Directors

4

4

20

Outside Experts		0	0
Other		3	3
Chairperson		Outside Director	Outside Director
Supplementary Explanation	[Updated]

The Company has established the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members and the Compensation Advisory Committee which fulfill functions similar to the nominating committee and compensation committee of a "company with committees." (As of July 29, 2020, the Committee for the Examination of Nominees for Directors was renamed to the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members which examines the nominee(s) of Audit & Supervisory Board Members as well.)

To incorporate an independent and objective perspective, the Committee for the Examination of the Nominees for Directors and Audit & Supervisory Board Members consists exclusively of all Outside Directors and all Outside Audit & Supervisory Board Members, with the chairman chosen by the members, and in FY2019 an Independent Outside Director held the position again.

Prior to the election or re-election of Directors (including Representative Directors, Chairman of the Board of Directors and President & CEO) and Audit & Supervisory Board Members, the Committee conducts examinations and submits its opinions of the nominees' appropriateness to the Board of Directors. Furthermore, with the appointment by the chairman, President & CEO attends the meeting to contribute by submitting necessary and sufficient documents for an examination (including a summary of the new management structure, incorporating a classification of duties of the Directors and Executive Officers, in addition to materials related to the subjects of the examination) to each member of the Committee and work to enhance the examination by making arrangements such as creating opportunities for the Director nominees and the Committee members to meet beforehand.

The Committee met five times in FY2019, and in addition to examining the appropriateness of nominees, it discussed the composition and diversity of the Board of Directors, including the proportion of Inside Directors and Outside Directors, and the qualities and abilities required of the CEO and Directors of the Company, among other issues, and reported the results of its examination to the meeting of the Board of Directors.

Members of the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members (as of July 29, 2020)

Sonosuke Kadonaga, Outside Director (Chairman) Osamu Shinobe, Outside Director

Chiaki Mukai, Outside Director Nobuhide Hayashi, Outside Director

Hideki Amano, Outside Audit & Supervisory Board Member

Nobuhiro Oka, Outside Audit & Supervisory Board Member Takahiro Nakazawa, Outside Audit & Supervisory Board Member

The Compensation Advisory Committee is composed of the all Outside Directors and all Outside Audit & Supervisory Board Members to incorporate independent and outside perspectives, and all Representative Directors who are familiar with the current compensation system and the duties of each position. The chairman is chosen by a vote among the Committee members, and in FY2019 an independent Outside Director served as the chairman again. The Committee is asked to provide its opinion on and conducts reviews of the compensation system and remuneration levels of the Directors and Executive Officers. In FY2019, the Committee met one time in October, all members were present, and reviewed and reported that keeping the current compensation system and remuneration levels of them is reasonable at the meeting of Board of Directors in December.

Members of the Compensation Advisory Committee (as of March 25, 2020)

Sonosuke Kadonaga, Outside Director (Chairman)

Michitaka Sawada, Representative Director

Toshiaki Takeuchi, Representative Director

Yoshihiro Hasebe, Representative Director

Osamu Shinobe, Outside Director

Chiaki Mukai, Outside Director

Nobuhide Hayashi, Outside Director

Hideki Amano, Outside Audit & Supervisory Board Member

21

Nobuhiro Oka, Outside Audit & Supervisory Board Member

Takahiro Nakazawa, Outside Audit & Supervisory Board Member

[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory		Established
Board
Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles of		0 (Not stipulated)
Incorporation
Number of Audit & Supervisory Board		5
Members

Cooperation among Audit & Supervisory Board Members, Accounting Auditors and Internal Audit Departments

• Cooperation between Audit & Supervisory Board Members and the Accounting Auditor

At the start of the accounting audit for each fiscal year, the Audit & Supervisory Board Members receive from the Accounting Auditor an audit plan describing matters such as the fundamental audit policy, the major items and sites to be audited and the main contents of the audit. The Audit

• Supervisory Board Members also exchange views with the Accounting Auditor regarding the contents of the audit plan.

In each quarterly settlement of accounts, the Audit & Supervisory Board Members receive from the Accounting Auditor, in the course of the quarterly audit conducted by the Accounting Auditor, reports on the main content of the audit and whether any material problem has been found in the audit so far conducted, and also exchange views with the Accounting Auditor. At the time when the Accounting Auditor submits a quarterly audit report to the Board of Directors of the Company, a quarterly audit report meeting is held, where the quarterly summary of the audit results are reported to the Audit & Supervisory Board Members by the Accounting Auditor.

Similarly, in the settlement of accounts for each fiscal year, the Audit & Supervisory Board Members have opportunities to mutually discuss with the Accounting Auditor the contents of their audits, in the course of the audit conducted by the Accounting Auditor. Furthermore, the Audit & Supervisory Board Members receive an audit report from the Accounting Auditor within the time frame prescribed by law, as well as a summary of the audit results, which are later used by the Board of Audit & Supervisory Board Members in preparing its audit report.

The Audit & Supervisory Board Members also contact the Accounting Auditor whenever necessary to cooperate in forming their respective audit opinions.

• Cooperation between Audit & Supervisory Board Members and Internal Auditing Divisions Audit & Supervisory Board Members regularly and when necessary meet with the Department of Internal Audit and other departments that preside over internal control throughout the Kao Group such as Accounting and Finance, Legal and Compliance, Enterprise Information Solution and Product Quality Management to exchange information and opinions.

Appointment of Outside Audit & Supervisory Board		Appointed
Members
Number of Outside Audit & Supervisory Board		3
Members
Number of Independent Audit & Supervisory Board		3
Members
Outside Audit & Supervisory Board Members' Relationship with the Company (1)

Name

Attribute

Relationship with the Company (*)

a

b

c

d

e

f

g

h

i

j

k

l

m

Hideki Amano

CPA

Nobuhiro Oka

Attorney-at-law

〇

Takahiro Nakazawa

CPA

*Categories for "Relationship with the Company"

• "○" when the Audit & Supervisory Board Member presently falls or has recently fallen under the category;

22

"△" when the Audit & Supervisory Board Member fell under the category in the past;

• "●" when a close relative of the Audit & Supervisory Board Member presently falls or has recently fallen under the category;
  "▲" when a close relative of the Audit & Supervisory Board Member fell under the category in the past

1. Executive of the Company or its subsidiary
2. Non-executivedirector or accounting advisor of the Company or its subsidiaries
3. Non-executivedirector or executive of a parent company of the Company
4. An Audit & Supervisory Board Member of a parent company of the Company
5. Executive of a fellow subsidiary company of the Company
6. A party whose major client or supplier is the Company or an executive thereof
7. Major client or supplier of the Company or an executive thereof
8. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an Audit & Supervisory Board Member
9. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
10. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the Audit & Supervisory Board Member himself/herself only)
11. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board Member are mutually appointed (the an Audit & Supervisory Board Member himself/herself only)
12. Executive of a company or organization that receives a donation from the Company (the an Audit & Supervisory Board Member himself/herself only)
13. Others

Outside Audit & Supervisory Board Members' Relationship with the Company (2)

			Designation as		Supplementary
			Independent Audit &
	Name			Explanation of			Reasons of Appointment
		Supervisory Board
				the Relationship
			Member
	Hideki Amano	○		None		(i) Mr. Amano has a high level of
							professional expertise as a certified
								public accountant. At a major auditing
								firm, he has acted as a chief auditor for
								numerous leading companies operating
								overseas, and based also on his
								experience as a steering committee
								member of a major international
								auditing firm in alliance with such
								auditing firm, he has considerable
								expertise in global management. The
								Company expects that he will to make
								full use of his experience in the
								auditing of the entire Kao Group.
								(ii) The Company determined that none
								of the requirements for prior
								discussion as provided in Section III.5
								(3) 2 of the "Guidelines Concerning
								Listed Company Compliance, etc." of
								the TSE applies to Mr. Amano, and
								also that he has the necessary
								independence based on the "Standards
								for Independence of Outside
								Directors/Audit & Supervisory Board
								Members of Kao Corporation"
								established by the Company in line
								with the above guidelines.
	Nobuhiro Oka	○		Mr. Oka is		(i) He, in his career as an attorney, has
				involved in		obtained considerable professional

23

			executing business	expertise and experience in relation to
			as a Professor at	corporate legal affairs and corporate
			Keio University	governance. Having served as an audit
			Law School. The	& supervisory board member of
			Company has	principal subsidiary of the Company
			transactions with	since 2014, he also has expertise in
			Keio University,	relation to the business of the Kao
			which involve the	Group. The Company expects that he
			entrustment of	will to make full use of his experience
			research projects to	in the auditing of the entire Kao
			such university;	Group.
			however, the	(ii) The Company determined that none
			amounts of such	of the requirements for prior
			transactions	discussion as provided in Section III.5
			account for less	(3) 2 of the "Guidelines Concerning
			than 0.1% of the	Listed Company Compliance, etc." of
			university's income	the TSE applies to Mr. Oka, and also
			from education	that he has the necessary independence
			activities and the	based on the "Standards for
			Company's net	Independence of Outside
			sales for the latest	Directors/Audit & Supervisory Board
			fiscal year,	Members of Kao Corporation"
			respectively.	established by the Company in line
						with the above guidelines.
Takahiro		○			None	(i) Mr. Nakazawa has a high level of
Nakazawa					professional expertise as a certified
						public accountant. During his service
						with major auditing firms, he has been
						involved in providing auditing services
						for leading companies and has also
						engaged in various advisory services
						such as those relating to the
						introduction of U.S. accounting
						standards and the International
						Financial Reporting Standards (IFRS),
						thereby gleaning significant and
						valuable insights concerning
						governance and internal control
						systems which contribute to the growth
						of globally-operating companies. The
						Company expects that he will to make
						full use of his experience in the
						auditing of the entire Kao Group.
						(ii) The Company determined that none
						of the requirements for prior
						discussion as provided in Section III.5
						(3) 2 of the "Guidelines Concerning
						Listed Company Compliance, etc." of
						the TSE applies to Mr. Nakazawa, and
						also that he has the necessary
						independence based on the "Standards
						for Independence of Outside
						Directors/Audit & Supervisory Board
						Members of Kao Corporation"
						established by the Company in line
						with the above guidelines.
[Independent Directors/Audit & Supervisory Board Members]
Number of Independent Directors/Audit &			7
Supervisory Board Members

24

Matters relating to Independent Directors/Audit & Supervisory Board Members

All Outside Directors and all Audit & Supervisory Board Members of the Company meet qualification for Independence and the Company has reported these members to the TSE as Independent Directors/Audit & Supervisory Board Members.

• The Company's Policy for Independence of Outside Directors/Outside Audit & Supervisory Board Members
  The Company has adopted at a meeting of its Board of Directors the "Standards for Independence of Outside Directors/Audit & Supervisory Board Members of Kao Corporation", with the unanimous consent of its Audit & Supervisory Board Members. The purpose of establishing these Standards is to provide clear criteria for an outside director/Audit & Supervisory Board Member to qualify as an independent director/Audit & Supervisory Board Member.
  Please read these Standards on the Company's website. /www.kao.com/content/dam/sites/kao/www-kao-com/global/en/about/pdf/governance_002.pdf
  [Incentives]

Incentive Policies for Directors	Performance-based Remuneration

Supplementary Explanation

It is described in following "Disclosed Details of Policy for Determining Amount and Calculation Method of Remuneration" in Remuneration for Directors.

Recipients of Stock Options

Supplementary Explanation

The Company grants stock options to applicable stock option grantees for the purpose of further increasing the Company's corporate value by aligning the interests of the stock option grantees with those of the shareholders of the Company. The Company selects as stock option grantees Inside Directors and Executive Officers, who are in charge of management and conform to this purpose.

[Director Remuneration]

Disclosure of Individual Directors'Selected Director

Remuneration

Supplementary Explanation

The remuneration, etc., paid to Directors for FY2019 is as follows:

Measures taken in respect to remuneration, etc., to Directors include: implementing a new performance share plan under which the Company's shares etc. will be vested or paid to Directors etc. depending on, among others, the level of achievement of performance targets in the mid-term plan and the non-financial targets related to ESG, etc. and clarification of the link between bonus amounts and corporate performance, based on EVA and other factors.

Aggregate amount of remuneration, etc. paid to Directors and Audit & Supervisory Board Members for FY2019

		Aggregate	Amount by Type of Remuneration, etc. (million yen)
				Performance-based
	Number of	Amount of		Bonus as
		share incentive
Category	Remuneration,		short-term
Members	Base Salary	plan as long-term
	etc. (million	incentive
			incentive
		yen)		compensation
			compensation
Directors
(including, in	10	404	264	35	105
parentheses,
(54)	(71)	(71)	(-)	(-)
Outside
Directors)
Audit &
Supervisory
Board Members	6	78	78	-	-
(including, in
(3)	(30)	(30)	(-)	(-)
parentheses,
Outside Audit &
Supervisory

25

Board
Members)
Total
(including, in
parentheses,
Outside	16	482	342	35	105
Directors and
(8)	(101)	(101)	(-)	(-)
Outside Audit &
Supervisory
Board
Members)

Notes:

1. The above numbers of Directors/Audit & Supervisory Board Members include one Director, one Outside Director and one Outside Audit & Supervisory Board Member who resigned at the conclusion of the 113th Annual General Meeting of Shareholders held on March 26, 20189
2. The Maximum aggregate amounts of remuneration, etc., are as follows:

(1) Maximum aggregate amounts of remuneration, etc., are follows:

An annual amount of 630 million yen (as resolved at the 101st Annual General Meeting of Shareholders held on June 28, 2007). The Company had 15 Directors (including two Outside Directors) at the time such resolution was adopted. Such maximum aggregate amount includes the maximum annual amount of 100 million yen to be paid to Outside Directors (as resolved at the 110th Annual General Meeting of Shareholders held on March 25, 2016) but does not include the salary amounts, etc. to be paid to Directors who also serve as employees of the Company, for their service as employees. The Company had seven Directors (including three Outside Directors) at the time such resolution was adopted.

(For reference) Based on a resolution adopted at the 111th Annual General Meeting of Shareholders held on March 21, 2017, the Company has introduced a performance-based share incentive plan for its Directors (excluding Outside Directors) and its Executive Officers, which shall be applicable separately from the maximum aggregate amount of remuneration, etc., for the Directors. Under this stock incentive plan, trust money of up to 1.85 billion yen is contributed concerning the fiscal years subject to the Company's mid-term plan (the initial period to be covered being the period of four fiscal years from the fiscal year ending December 31, 2017 to the fiscal year ending December 31, 2020), and the Company's shares are acquired through a trust and are then vested, etc. through the trust, based on factors such as the level of achievement of performance targets in the mid-term plan and the non-financial targets related to ESG perspective.

(2) Maximum aggregate amount of remuneration, etc., to be paid to Audit & Supervisory Board Members:

An annual amount of 120 million yen (as resolved at the 113th Annual General Meeting of Shareholders held on March 26, 2019). The Company had five Audit & Supervisory Board Members (including three Outside Audit & Supervisory Board Members) at the time such resolution was adopted.

1. Aggregate amount of remuneration, etc. paid to Outside Directors and Outside Audit & Supervisory Board Members by the Company's subsidiaries, etc., other than the aggregate amount of remuneration, etc. paid to Outside Directors and Outside Audit & Supervisory Board Members:
   Remuneration paid to one Outside Audit & Supervisory Board Member for his service as an Audit & Supervisory Board Member of Kao Group Customer Marketing Co., Ltd. was 4 million yen.

Policy on Determining Remuneration		Established
Amounts and Calculation Methods

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

The purpose of the Company's compensation system for Directors, Audit & Supervisory Board Members and Executive Officers is as follows:

• Securing and retaining diverse and excellent talent to establish and improve competitive advantages;

26

• Promoting prioritized measures for continuous increases in corporate value; and
• Sharing interests in common with shareholders.

Remuneration of Directors, other than Outside Directors, and Executive Officers consists of (a) a base salary, (b) a bonus as short-term incentive compensation, and (c) performance-based share incentive plan as long-term incentive compensation, and is designed to provide an impetus for continuing annual improvement in business results and medium-to-long-term growth. Linkage of remuneration to business results increases with rank and takes into account the responsibilities of each position and individual performance. An overview of the components of remuneration is as follows:

(a) Base salary

A base salary is paid as fixed monthly remuneration in an amount determined in accordance with duties and rank as a Director or Executive Officer.

(b) Bonus as short-term incentive compensation

When the bonus payment rate is paid at 100%, the bonus is set at 50% of the base salary for the President and CEO, 40% of the base salary for the Executive Officers with titles other than the CEO and 30% of the base salary for other Executive Officers. In order to achieve "profitable growth," the Company determines the bonus payment rate within the range of 0% to 200% as follows:

• Net sales (calculated using before the adoption of IFRS 15 excluding the effect of currency translation) and profit (gross profit minus selling and general administrative expenses) results against the single-year target;
• Net sales (calculated using before the adoption of IFRS 15) and profit (same as above) improvement from the previous year's results; and
• The achievement level against the single-year target of EVA which is a management index that the Company holds in high regard as an indicator to measure the degree of corporate value.

The net sales and profit targets have been made consistent between Directors and employees so that they can work together to achieve them. These targets are different from the figures in the announced forecasts, taking into account a certain level of relevance and consent as the company-wide goals. On the other hand, regarding the EVA target, the Company has set target based on publicly announced performance forecasts as executive performance indicators. The objectivity and transparency of the decision-making process are ensured by determining these targets based on deliberations by the Management Committee and the Board of Directors.

The targets of these evaluation indicators for the FY2019 were net sales (single-year target) 1,659.1 billion yen, (improved target from the previous fiscal year) 1,557.4 billion yen, profit (single-year target) 221.5 billion yen, (improved target from the previous fiscal year) 209.2 billion yen, and EVA (single-year target) 97.7 billion yen. The results were net sales (single-year) 1,585.2 billion yen, (improved from the previous fiscal year) 1,556.1 billion yen, profit

(single-year) 210.6 billion yen, (improved from the previous fiscal year) 210.6 billion yen, and EVA (single-year) 87.4 billion yen.

(c) Performance-based share incentive plan as long-term incentive compensation

Within a four-year target period from FY2017 to FY2020, the period covered by the current mid-term plan K20, Company shares, etc. are delivered to Directors, other than Outside Directors, and Executive Officers based on factors such as the level of achievement of the performance targets adopted under K20 and the non-financial targets related to ESG perspective. This performance-based share incentive plan comprises two parts: a performance-based part in which Company share, etc. is delivered in accordance with the degree of achievement of targets adopted under K20, etc., and a fixed part in which a certain number of Company share, etc. is delivered annually. The purpose of the performance-based part of the system is to provide an impetus for achieving the targets of the Company's K20 as well as to increase the link between performance and compensation over the medium to long term. The purpose of the fixed part of the system is to strengthen shared interest with the Company's shareholders by promoting the holding of shares by the Directors, other than Outside Directors and Executive Officers. The performance-based part accounts for 70% of shares delivered, with the fixed part accounting for 30%. When the performance-based coefficient for the performance-based part of the system is at 100%, the yearly share remuneration amount is set at approximately 40% to 50% of a base salary.

In calculating the performance-based share incentive plan, the "like-for like net sales CAGR" and "operating margin" are used as financial indicators from the targets set in K20, and evaluations are made based on the degree of achievement.

In addition, as a non-financial indicator, the Company uses the evaluation of Ethisphere Institute,

27

a U.S. think tank specializes in corporate ethics and corporate social responsibility through its "World's Most Ethical Companies"* award.

Long-term incentive compensation is determined in the range of 0% to 200% according to the results of these indicators.

• "World's Most Ethical Companies" and "Ethisphere" are registered trademark of Ethisphere LLC.

Compensation for the Outside Directors, who hold a position independent from the Company's business execution function, is limited to a fixed monthly salary.

The compensation system and compensation standards for the Directors and Executive Officers are examined by the Compensation Advisory Committee and determined by the Board of Directors. The Committee comprises all of the Company's representative directors, all of the Company's Outside Directors and all of the Outside Audit & Supervisory Board members, from the perspective of ensuring objectivity and transparency in the decision-making process. As such, over half of the Committee's members are independent.

Compensation for Audit & Supervisory Board Members consists of fixed monthly remuneration. Compensation standards are determined at meetings of the Audit & Supervisory Board. Compensation standards for Directors, Executive Officers, and Audit & Supervisory Board Members are determined each year after ascertaining standards at other major manufacturers of a similar size, industry category, and business type to the Company using officer compensation survey data from an external survey organization.

The Company has no retirement bonus system for the Directors or Audit Supervisory Board Members.

[Supporting System for Outside Directors and Outside Audit & Supervisory Board Members]

To allow for active discussions at meetings of the Board of Directors, the Board of Directors Secretariat provides Outside Directors with sufficient explanations by distributing materials on matters such as the background, purposes, and content of the respective agenda items, as necessary, prior to the meeting of the Board of Directors as necessary.

Furthermore, under this support system, administrative divisions such as the Department of Internal Audit, and the Legal and Compliance Department provide the Outside Audit & Supervisory Board Members with assistance upon the Outside Audit & Supervisory Board Members' request.

[Status of Persons who have retired from Representative Director and President, etc.]

Name of Consultants, Advisors, etc. who have retired from Representative Director and President, etc.

Form and Conditions of

Name

Title/

Description

Services (Full-time,

Date of Retirement

Term

Position

of Tasks

Part-time, Paid or Unpaid,

from President, etc.

etc.)

-

-

-

-

-

-

Total number of Consultants, Advisors, etc. who

have retired from Representative Director and

0

President, etc.

Others

The Company has no such system.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)

■Outline of the Current Corporate Governance Structure

The Company has introduced, within the framework of a "Company with an Audit & Supervisory Board*," the Executive Officer system in order to separate the supervision function from the execution function. Following the conclusion of the 114th Annual General Meeting of Shareholders held in March 2020, the Company has: eight (8) Directors, including four (4) Outside Directors; five (5) Audit & Supervisory Board Members and three (3) Outside Audit &

28

Supervisory Board Members; and twenty-seven (27) Executive Officers, including five (5) Executive Officers, with the title of Senior Managing Executive Officer or Managing Executive Officer and without concurrent positions in the Board of Directors). All Outside Directors and all Outside Audit & Supervisory Board Members maintain their neutrality, independent from the Company's management. In order to improve the transparency and other aspects of discussions in the Board of Directors, an Independent Outside Director has become the chairman of the Board after the 108th Annual General Meeting of Shareholders held in March 2014. The term of office for Directors and Executive Officers is one (1) year.

*For information concerning reasons for adopting a company with an Audit & Supervisory Board, please see "(5) Company with an Audit & Supervisory Board" in "4.Basic position and policy on corporate governance" in "Matters to be disclosed based on each principle of the Corporate Governance Code" in "1.Basic Position on Corporate Governance" in "Basic Position on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information" above.

Activities of the Board of Directors in FY2019

• Number of times held: 14 times
• Attendance status: 100% for Directors and 100% for Audit Supervisory Board Members (For further details regarding the attendance by individual, please see P3 and P20 of

Convocation Notice of the 114th Annual General Meeting of Shareholders at www.kao.com/content/dam/sites/kao/www-kao-com/global/en/investor-relations/pdf/shareholders _01.pdf)

Major topics discussed by the Board of Directors

First Quarter

Revision of Business Conduct Guidelines

Evaluation of effectiveness of the Board of Directors

ESG strategy

Department of Internal Audit's audit reports

Audit & Supervisory Board Members' audit repot summaries

Overseas IR roadshows reports

Second Quarter

ESG strategy

Mid-to-long-term strategy

Current status of Research & Development and topics

Compliance Committee reports

Third Quarter

Cosmetics Business strategy

ESG strategy

Strategic Innovative Technology strategy

Department of Internal Audit's audit reports

Human capital development strategy

Fourth Quarter

Research & Development progress reports

ESG strategy

Internal Control Committee reports

Cross-shareholdings status

Free discussion

On the agenda of the mid-to-long-term strategy, several Executive Officers made presentations, and lively discussions were made between Directors and Executive Officers. In addition to the above, each month Kao has business execution reports from Directors currently serving as Executive Officers, as well as on matters discussed during the Management Committee from Executive Officers in charge.

• Activity for strengthening the auditing function of the Audit & Supervisory Board Members For improving the auditing effectiveness and strengthening the auditing function, the Company increased the number of its outside Audit & Supervisory Board Member by one from the 107th Annual General Meeting of Shareholders held in March 2013. Five Audit & Supervisory Board Members, including three Outside Audit & Supervisory Board Members who are independent from Kao's management, have attended important meetings such as meetings of the Board of

29

Directors, the Management Committee, the Internal Control Committee and related committees, etc., made site visits to plants and research laboratories, etc. for auditing purposes, heard opinions from business sections and functional sections, performed investigations concerning domestic and overseas subsidiaries, held meetings for exchanging opinions with Representative Directors of the Company and its material subsidiaries, held Conference of Auditors of Domestic Group Companies (which are held semiannually and intended principally for the exchange of opinions between the Audit & Supervisory Board members of the Company and its subsidiaries) and enhanced cooperation with Compliance Hotlines. To assist the Audit & Supervisory Board Members with their duties, the Company assigns three (3) staff members, who have considerable financial and accounting knowledge, legal knowledge and internal control knowledge. Administrative departments such as the Department of Internal Audit, the Legal and Compliance Department and the Accounting and Finance Department also perform some staff tasks.

In addition, the accounting firm, Deloitte Touche Tohmatsu LLC as the Company's Accounting Auditor, ensures, in accordance with applicable laws, regulations, etc., that none of its employees who become involved in the audits of the Company will be involved in such audit for more than 7 accounting periods. The Company executed an audit contract with Deloitte Touche Tohmatsu LLC with respect to audits required under the Companies Act and the Financial Instruments and Exchange Law, and pays remuneration to the accounting firm in accordance with this contract. To ensure the reliability of disclosed information relating to the Company's financial results and audit quality, the Accounting Auditor formulates an audit plan and secures necessary and sufficient time for audits. In addition, the Accounting Auditor conducts sufficient coordination, including holding regular meetings and exchange of information with the Executive Officer in charge of accounting and finance, the Audit & Supervisory Board Members and Department of Internal Audit, respectively.

The names of the certified public accountants (CPA) who engaged in the audit for FY2018 (ended December 31, 2018) and the composition of the assistants in the audit are as follows:

• Name of the CPAs engaged in the audit:

Designated Limited Liability Partner/Engagement Partner: Toshiyuki Ono, Taiji Suzuki and Kenichiro Shiga

• Composition of assistants in the audit: 11 CPAs and 24 others

The election, reappointment and dismissal of the Accounting Auditor are appropriately evaluated and decided at the Audit & Supervisory Board meeting, after collecting information from the Company's finance and management divisions, internal auditing divisions and the Accounting Auditor, based on evaluation criteria established by the Audit & Supervisory Board, taking into account factors such as the existence of a cooperative network with partner auditors overseas made up of multiple accounting firms and the quality, expertise and independence of proposals and advice for resolving issues, accelerating the settlement of accounts and increasing audit efficiency. As a result, the Audit & Supervisory Board confirmed the suitability of the audit methods and results of the current Accounting Auditor, and resolved at a meeting in January to reappoint the current Accounting Auditor. This resolution was reported at the meeting of the Board of Directors in February.

• Summary of liability limitation agreements

According to Article 427, Paragraph 1 of the Companies Act and Articles of Incorporation of the Company, the Company entered into an agreement with each Outside Director and Audit & Supervisory Board Member to effect that the liability of each Outside Director or Audit & Supervisory Board Member under Article 423, Paragraph 1 of the Companies Act will be limited to the higher of: 10 million yen; or any amount prescribed by applicable laws and regulations.

3. Reasons for Adoption of Current Corporate Governance System

The Company has made continuous efforts to improve its corporate governance structure in order to respond changes in the business and management environment. The Company will continue to examine the issue of corporate governance structure improvement as part of its managerial challenges. The Company considers it appropriate to make efforts to improve its corporate governance structure through establishing the Committee for the Examination of the Nominees and the Compensation Advisory Committee , on the basis of its current structure as a "Company with an Audit & Supervisory Board*" which has the Board of Directors (consists of four (4) Inside Directors and four (4) Outside Directors) and the Audit & Supervisory Board (consists of two (2) Inside Audit & Supervisory Board Members and three (3) Outside Audit & Supervisory

30

Board Members.)

*For information concerning reasons for adopting a company with an Audit & Supervisory Board, please see "(5) Company with an Audit & Supervisory Board" in "4.Basic position and policy on corporate governance" in "Matters to be disclosed based on each principle of the Corporate Governance Code" in "1.Basic Position on Corporate Governance" in "Basic Position on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information" above.

• Matters Related to Outside Directors (Roles and Functions of Outside Directors)

The Outside Directors are expected to share, in the course of management of the Company, their considerable experience and expertise as a management consultant, the top executive of a global airline company and a major financial institution, and an astronaut and medical doctor respectively, and the Outside Directors fulfill the checking functions from neutral positions, independent of the Company's management, to ensure that the managerial decisions of the Company are not biased by the views of its internal members. Also, an Independent Outside Director has become the chairman of the Board.

1. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights

		Supplementary Explanations
Early Notification		The Company strives for the early dispatching and disclosure of the convocation
of General		notice of its Annual General Meeting of Shareholders ("AGM") every year so that
Shareholder		our shareholders can fully examine agenda items of AGM. Prior to the dispatching of
Meeting		the printed convocation notice, on February 21, 2020, the Company uploaded and
		disclosed it on the Timely Disclosure Network of the Tokyo Stock Exchange and on
		the Company's website for the AGM to be held on March 25, 2020.
		（ www.kao.com/global/en/investor-relations/stock-information/shareholders/）
		The printed copy of convocation notice was dispatched on March 3, 2020.
Allowing		The exercise of voting rights by electromagnetic means was started at the Annual
Electronic
Exercise of Voting		General Meeting of Shareholders held in 2006.
Rights
Participation in		The use of an electronic voting right exercise system for institutional investors
Electronic Voting		("Platform" operated by ICJ, Inc.) was also started at the Annual General Meeting of
Platform		Shareholders held in 2006. Furthermore in order to encourage the exercise of voting
		rights by the foreign shareholders, who hold close to 50% of the Company's total
		shares, the Company conducts surveys on shareholders who actually own the shares
		and provides them with the summary of the notice of Annual General Meeting of
		Shareholders in English. The Company also encourages the exercise of voting rights
		by Japanese Institutional Investors at analyst meeting and interviews for full-year
		financial results.
Providing		English translation (summary) of the convocation notice is published on the
Convocation
Notice in English		Company's website on the same day as Japanese.
Other
		Shareholders>
		The Company decides on a date for its Annual General Meeting of Shareholders
		within the three-month period after the fiscal year-end by designing a schedule
		premised on providing sufficient time for deliberation by shareholders who have
		received a convocation notice and ensuring a sufficient number of days for an audit
		of the financial statements by the Accounting Auditor then considering factors
		including securing an assembly hall with the capacity to hold the attendees and days
		when Directors and Audit & Supervisory Board Members, including Outside
		Directors/Audit & Supervisory Board Members, and Executive Officers can attend.
		The Company works to enhance the content of its convocation notices for Annual
		General Meetings of Shareholders by conducting regular revisions to proactively
		incorporate information considered conducive to appropriate judgments by

31

shareholders, in addition to items required by law. Also, it provides institutional investors and others with explanation as necessary. At the Annual General Meeting of Shareholders, the Company provides shareholders with easy-to-understand explanations of the main parts of the business report, major issues and the medium-to-long-term outlook using projected images and a thorough

question-and-answer session. The Company also provides opportunities for shareholders who desire to make the acquaintance of Directors and Audit & Supervisory Board Members and Executive Officers to do so after the close of the Annual General Meeting of Shareholders. (However, at the Annual General Meetings of Shareholders in March 2020, it was canceled to prevent the spread of COVID-19.)

by the Company>

For proposals against which a considerable number of votes have been cast at the Annual General Meeting of Shareholders, after conducting an analysis of the causes,including confirmation of matters such as benchmarks for the exercise of voting rights by institutional investors, the Company works to gain understanding of its stance through explanations to institutional investors by sending letters or conducting direct dialogues. In addition, the Company takes the advice and opinionsof institutional investors seriously, and uses them to reconsider and improve items related to such proposals against which votes were cast.

The Company enables the delegation of certain powers of the Annual General Meeting of Shareholders, such as issuing an interim dividend and exempting Directors and Audit & Supervisory Board Members from liability, to the Board of Directors. Such delegation is premised on the attendance at Meetings of the Board of Directors (eight (8) Directors and five (5) Audit & Supervisory Board Members) ofthe seven (7) outside members, who consist of four (4) Independent Outside Directors, and the three (3) independent Outside Audit & Supervisory Board Members, representing more than half of attendees, thus maintaining a structure forconducting checks from the perspective of shareholders.

Since the Annual General Meeting of Shareholders in 2018, the Company has postedvideos of the business report including the presentation by the chairman on the Company's website. The videos are available only in Japanese. (www.kao.com/jp/corporate/investor-relations/stock-information/shareholders/)

2. IR Activities

				Supplementary Explanations			Explanation by
						Representative(s)
							of the Company
	Preparation and			The Company has established and published Disclosure Guidelines
	Publication of			which set forth its commitment to strict compliance with the Companies
	Disclosure			Act, the Financial Instruments and Exchange Law, the rules set down by
	Policy			the Tokyo Stock Exchange (TSE) and other applicable laws and
				regulations. In Addition, based on the revision of the Financial
				Instruments and Exchange Law in April 2018, Kao Disclosure Guidelines
				have been updated, which takes into account fair disclosure.
				The Company's Disclosure Guidelines are published on the Company's
				website.
				www.kao.com/global/en/investor-relations/management-information/disc
				losure.html
	Regular			Financial results briefings are held twice a year, on the date of the
	Investor			announcement of full-year and interim financial results. A business
	Briefings for			management overview and management policy are reported and
	Analysts and			explained by the President and CEO, and the actual and expected		Yes
	Institutional			corporate performance are reported and explained by the Senior Vice
	Investors			President of the Accounting and Finance. For the first quarter and the
				third quarter, the Company holds conference calls. As part of a
				constructive dialogue with a view to enhance the corporate value, small

32

			meetings between the President and CEO and analysts and institutional
			investors are held regularly. Furthermore, plant tours and business
			operation seminars are held whenever appropriate.
	Regular		To hold constructive dialogues with a view to enhance the corporate
	Investor		value and to facilitate the exercise of voting rights, the President and
	Briefings for		CEO visits North America and Europe, respectively, and also visits to
	Overseas		hold dialogues with various institutional investors whenever appropriate.		Yes
	Investors		Also, other members of the management visit Asia adequately, and they
			explained the Company's management policy, as well as matters such as
			the managerial environment and business performance and outlook, and
			answered questions subsequently asked by investors.
	Posting of IR		Reports of financial results, annual securities reports, quarterly reports,
	Materials on		quarterly securities reports, notices of convocation of shareholders
	Website		meetings, integrated report, shareholders' reports (year-end and interim)
			and presentation materials at shareholders meetings and financial results
			briefing sessions are published on the Company's website. Furthermore,
			reports of financial results, summaries of quarterly reports, notices of
			convocation of shareholders meetings and presentation materials at
			financial results briefing sessions are translated into English and
			published on the Company's website on the same days that they are
			announced. Presentation materials at shareholders meetings in Japanese
			and English are disclosed promptly at the same time on the Company's
			website. From fair disclosure perspectives, Q&As from various meetings
			such as interim and full-year financial results briefings and conference
			calls are disclosed in Japanese and English. Financial results briefings
			videos are posted on the website as well.
			Investor information in Japanese:
			www.kao.com/jp/corporate/investor-relations/
			Investor information in English:
			www.kao.com/global/en/investor-relations/
	Establishment		Corporate Strategy performs IR functions, aiming to reinforce strategic
	of Department		disclosure of information, communicate with securities analysts and
	and/or Manager		institutional investors, hold events and disclose information on the
	in Charge of IR		website. A total of five members respond to IR issues at the head of one
			Vice President.
	Other			[Updated]
			The Company publishes shareholders'	reports	(year-end and interim) to
			shareholders every March and August.
			Also, the Company holds a "Kao Museum Tour" (Tokyo), a "Kao
			Kawasaki Plant Tour" (Kanagawa), a "Kao Eco-Lab Museum Tour"
			(Wakayama) and a "Company Briefing" for shareholders who own one
			unit share or more. However, this June we cancelled all tours due to the
			COVID-19 pandemic. The Company Briefing was reduced in size to
			prevent the risk of infection and was held in Osaka at the end of June
			2020. First, the CEO explained the business overview, non-financial
			activities, activities and initiatives in COVID-19, etc. and we provided
			sufficient time for dialogue between the CEO and shareholders.
			The Company conducts exchanges of opinions with multiple institutional
			investors in Japan and outside Japan regarding how to promote
			constructive dialogues and ESG, and makes use to improve information
			disclosure and daily IR activities.
			Also, the Company held a seminar on Kao Group Mid-term Plan 2020
			(K20).
			Kao Group has embarked on the Kao Group Mid-term Plan 2020 (K20) as
			of FY2017. The company aims to enhance its corporate value globally
			through this four-year plan.
			The vision outlined in K20 is to make Kao a company with a global
			presence. This will be accomplished by achieving sustainable and

33

profitable growth and contributions to the sustainability of the world through business activities focused on resolving social issues, as well as various corporate social responsibility initiatives. With the launch of K20, the company decided to release the Kao Integrated Report, which covers both financial and non-financial information. Kao's Financial Report is also available in PDF format.

Integrated Report www.kao.com/global/en/investor-relations/library/reports/ Financial Report

www.kao.com/global/en/investor-relations/library/financial-report/

The Company received the Best IR Award from the Japan Investor Relations Association and 2019 Award for Excellence in Corporate Disclosure in the Cosmetics and Personal Care Industry from the Securities Analysts Association of Japan.

3. Measures to Ensure Due Respect for Stakeholders

	Supplementary Explanations
Stipulation of	The Kao Way, an essence of the Company's corporate philosophy, declares, "Our
Internal Rules	mission is to strive for the wholehearted satisfaction and enrichment of the lives of
for Respecting	people globally and to contribute to the sustainability of the world, with products
the Position of	and brands of excellent value that are created from the consumer's and customer's
Stakeholders	perspective." The "Vision" section of the Kao Way further states, "We aim to be the
	global group of companies that is closest to the consumers and customers in each
	market, earning the respect and trust of all stakeholders."
	Furthermore, the Principles of Corporate Ethics in "Kao's Business Conduct
	Guidelines" state, "Kao Corporation seeks to be an honest and exemplary company,
	guided by sensible and fair actions and driven by a fundamental adherence to ethical
	principles that go beyond mere compliance with laws to earn the true respect of all
	stakeholders. The Business Conduct Guidelines also give specific guidance about
	respecting the standpoint of stakeholders.
Implementation
of	The Company intends to strengthen ESG initiatives to enhance its long-term
Environmental	corporate value. The Company aims to make Kao a company with a global presence
Activities, CSR	by pursuing activities that are "dynamic," "global" and "distinct to Kao." The
Activities etc.	Company sees promoting ESG initiatives through its businesses as an investment for
	future growth rather than as a cost. In July 2018, the ESG division was newly
	established headed by a non-Japanese. Also, the Sustainability Committee has been
	renamed the ESG Committee to promote global initiatives. Under this new division,
	the Company will promote "Kirei* Action" to create unique experiences and touch
	the hearts of all the stakeholders through products filled with passion and to pursue
	initiatives that consider the entire life-cycle of such products.
	*Kirei is a Japanese word that represents the concept of cleanliness, beauty, health,
	purity and fairness.
	Selected for Water A list and Supplier Engagement Leader by CDP
	The Company's active water-related activities were highly evaluated based on the
	CDP's environmental response survey of the companies surveyed worldwide, and
	selected as the A List for Water. This is the third time following 2016 and 2019.
	Also, the Company has been recognized, for the third consecutive year, as a
	Supplier Engagement leader for its initiatives in reducing carbon emissions and
	tackling climate change across its supply chain by CDP, an international non-profit
	organization that drives companies and governments to reduce their greenhouse
	emissions.
	*CDP: CDP is a not-for-profit charity that runs the global disclosure system for
	investors, companies, cities, states and regions to manage their environmental
	impacts.
	Included in Stock Indices for ESG Investing

34

• Dow Jones Sustainability World Index (DJSI World)
• Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific)

Stock indexes developed jointly by U.S.-based S&P Dow Jones Indices and Switzerland-based RobecoSAM. The indexes analyze corporate activities based on economic, environmental, and social factors and select companies with outstanding sustainability performance. Kao has been selected for the DJSI World and DJSI Asia Pacific indexes in 2008, 2009, and every year since 2014.

• FTSE4Good Global Index

Index developed by FTSE Russell, a unit of the London Stock Exchange Group. Companies that satisfy its environment, social, and governance standards are selected for the index. Kao has been continuously selected for the index since 2008.

• MSCI ESG Leaders Indexes
• MSCI SRI Indexes

Indexes developed by U.S.-based MSCI. Companies with excellent environment, social, governance (ESG) ratings are selected for the indexes. Kao has been continuously selected for the index since 2017.

		Details on Kao's sustainability-related initiatives can be found at following
		websites.
		Kao Sustainability Statement and Contributions to the SDGs:
		www.kao.com/global/en/sustainability/statement/
		Kao Sustainability Data Book:
		www.kao.com/global/en/sustainability/databook/
Development of		The Company has established Disclosure Guidelines which set forth its commitment
Policies on		to timely, accurate, and impartial disclosure of information to shareholders,
Information		investors, and all stakeholders in strict compliance with the Companies Act, the
Provision to		Financial Instruments and Exchange Law, the rules set down by the Tokyo Stock
Stakeholders		Exchange (TSE) where the Company's shares are listed, as well as other applicable
		laws and regulations. In Addition, based on the revision of the Financial Instruments
		and Exchange Law in April 2018, Kao Disclosure Guidelines have been updated,
		which takes into account fair disclosure.
		www.kao.com/global/en/investor-relations/management-information/disclosure/
Other
		The Company stresses the respect for diversity, which includes culture, nationality,
		belief, race, gender, etc., in "the Kao Way," the Company's corporate philosophy.
		The Company believes that bringing out the power of our diverse employees,
		combining their diverse strengths, and capturing the changing times to create a new
		breakthrough will lead to the sustainable growth of the Company. Top management
		is actively committed to promoting diversity and various initiatives, including
		training and promotion. In FY2018, the Company appointed a non-Japanese
		employee as an executive officer, and in FY2019, had endorsed the 30% Club Japan
		and the Valuable 500.
		In terms of the active participations of women, on a consolidated basis, the
		percentage of female employees in executive positions is 8.0%, for Kao Group in
		Japan it is 5.7%, and for Kao Corporation alone it is 8.3%. Furthermore, Sofina
		Beauty Counseling Co. Ltd. and Kanebo Beauty Counseling Co., Ltd. were
		established in January 2018, and women took office as presidents of these
		companies. On a non-consolidated basis, the percentage of female employees is
		24.4%, while the percentage of female employees in managerial positions is 18.2%.
		In particular, in areas such as marketing, product development, consumer lifestyle
		research, customer communications and product public relations, the ratio of women
		in managerial positions is 36.9%. Many women play a leading role.
		While continuing to develop and promote motivated women, the Company is going
		to increase the number of female candidates for executive positions through the
		promotion of women's participation in management training and other initiatives.
		Furthermore, the Research and Development division has set certain targets to hire
		non-Japanese people in Japan for its laboratories, not only to recruit international
		students who study at Japanese universities, but also working with a subsidiary in
		Germany to recruit students from overseas universities.

35

The Kao Group in Japan is hiring disabled persons according to their characteristics and wishes at its regular workplaces and special subsidiaries. The employment rate for persons with disabilities is 2.42%, exceeding the statutory employment rate of 2.2%.

*30% Club: A global campaign aimed at increasing the percentage of women in key corporate decision-making bodies, including the Board of Directors, established in the UK in 2010.

*The Valuable 500: An initiative was launched at the World Economic Forum Annual Meeting in 2019 aimed at encouraging business leaders to launch reforms that will help to unlock the latent business, social and economic value of people with disabilities.

Kao Group's philosophy and initiatives to promote diversity and inclusion, as well as the organizational culture in which employees can play active roles regardless of gender or other attributes, have been highly evaluated. In 2018, the Company was included in MSCI Japan Empowering Women Index (WIN)*1, and in 2019 and in 2020 selected for inclusion in the Bloomberg Gender-Equality Index*2. Also, the Company was selected as a "Nadeshiko Brand*3" in 2013, 2015, 2018 and 2020 and "Semi-Nadeshiko Brand" in 2019. Also, the Company was selected "Diversity Management Selection 100 Project*4" in 2013, the year it was established and in 2019, received the Prime Minister's Award for "Leading Companies Where Women Shine*5."

• 1 MSCI Japan Empowering Women Index (WIN): Index by U.S.-based MSCI: Companies with outstanding assessments for empowering women and promoting gender diversity are selected from among the MSCI Japan IMI Top 500 Index.
• 2 Bloomberg Gender-Equality Index: Index developed by U.S.-based Bloomberg to track the performance of those companies most committed to transparency in gender reporting and to advancing women globally.
• 3 Nadeshiko Brand: The Tokyo Stock Exchange and the Ministry of Economy, Trade and Industry jointly select and publicize enterprises listed on the first section of the Tokyo Stock Exchange that are exceptional in encouraging women's success in the workplace from 2013.
• 4 Diversity Management Selection 100: The Ministry of Economy, Trade and Industry selects enterprises that create innovation and conduct business which leads to creation of value, by utilizing various human resources and by giving them opportunities to fully show their competence.
• 5 Leading Companies Where Women Shine: The Gender Equality Bureau Cabinet Office publicly recognizes companies that disclose information about their policies, initiatives, and results of promoting women to managerial and executive positions, and from this information demonstrate outstanding achievements.

Based on the Kao Group Health Declaration established in 2008, the Company is engaged in health management mobilizing a robust organizational framework led by a dedicated department and involving the participation of the employer, the health insurance union, industrial healthcare staff, and external specialists. In 2017, Kao launched the Kao GENKI Project to promote the health maintenance of employees and their families as a key activity for achieving K20, the Kao Group Mid-term Plan. The Company is using the know-how it has built up in the area of health to implement innovative programs, and is assessing their efficacy and making improvements using collected health data.

Due to the positive evaluation of the Company's measures and results, it was selected as a "Health and productivity management brand" sixth consecutive year and also recognized by METI, for the fourth consecutive year, as a Certified Health and Productivity Management Organization (White 500) for its outstanding practice of health-conscious management.

*Health and productivity management brand: The Tokyo Stock Exchange and the Ministry of Economy, Trade and Industry jointly select enterprises which set the

36

management of employee health as a corporate management issue and actively implement relevant strategies.

Also, in March 2017, the Company won the Development Bank of Japan Inc.'s highest rating in its "DBJ Employees' Health Management Rated Loan Program" as a company that is particularly superior in terms of its consideration for the health of its employees. This is the second time Kao has been given this highest rating. The last time was in 2012 when the Program was first introduced. Kao successfully procured financing under preferential conditions as provided by the Program.

*Loans with discounted interest rates according to the Rating

DBJ evaluates the health management efforts of corporations and applies three different interest levels based on the result of the evaluation.

Kao was Selected as the "World's Most Ethical Companies 2020" of the U.S. think tank Ethisphere Institute. Kao is the only Japanese company that has been selected for 14 consecutive years since the award was established in 2007.

*World's Most Ethical Companies: The Ethisphere Institute is a leading international think tank focused on developing and sharing best practices in business ethics and corporate social responsibility. For the World's Most Ethical List, it surveys and evaluates companies the world over in five categories: ethics and compliance programs, corporate citizenship and responsibility, culture of ethics, governance and leadership, and innovation and reputation.

The Company received the "Grand Prize Company" for FY2017 since Kao has been working on corporate governance from early stage and practicing well-balanced corporate governance from both proactive and protective aspect.

*The Corporate Governance of the Year: Japan Association of Corporate Directors honors the companies which have achieved and maintained long term profitability by implementing good corporate governance with the ultimate goal of revitalizing the Japanese economy, since 2015.

IV. Matters Related to the Internal Control System

1. Basic Views on Internal Control System and the Progress of System Development

The Company has established an Internal Control Committee chaired by the President and CEO. An important task of the committee is to develop a management structure, organization and system that facilitates legally compliant, efficient, sound and highly transparent management that aims to consistently enhance corporate value, and for this objective, the Company implements the following systems:

1. Systems to Assure Appropriate Business Operations of the Company

The Board of Directors made the following resolution with respect to the "Policy regarding the Development of the Internal Control System."

Basic Policy Regarding the Internal Control System

The Company has established an Internal Control Committee chaired by the President and Chief Executive Officer. An important task of the committee is to develop a management structure, organization and system that facilitates legally compliant, efficient, sound and highly transparent management that aims to consistently increase corporate value, and for this objective, the Company implements the following systems:

1. A system to ensure that execution of duties of Directors and employees of the Company and its subsidiaries conforms to laws and the Articles of Incorporation
   Directors, Executive Officers and employees of the Company and its subsidiaries (Kao Group) should act with integrity based on "Kao's Business Conduct Guidelines (BCG)," which governs compliance with laws, the Articles of Incorporation, internal rules and social ethics. The Compliance Committee, chaired by the Director in charge of compliance, promotes Kao Group's

37

compliance as a whole. On the basis of the provision of BCG which declares Kao's position to reject any relationship with anti-social forces, the Company promotes cooperation with governmental agencies, etc. and collection and management of information regarding anti-social forces and establishes and maintains its internal system. Monitoring by the Department of Internal Audit as well as notices and reports to the Compliance Reporting Hotline from concerned parties in and outside the Company enable Kao to quickly gauge the state of compliance, work to quickly resolve any issues that arise, and take appropriate steps to prevent the recurrence of similar cases.

1. A system for retention and management of information concerning Directors' execution of their duties
   Information (minutes, decision records and their relevant materials, account books and records, and other information and the like) related to the Directors' execution of their duties is properly retained and managed according to the document retention and management policies and other related policies. The Directors, Audit & Supervisory Board Members and employees designated by them may access such information at any time.
2. Rules and other systems concerning management of risk of losses by the Company and its subsidiaries
   With regard to the risk of losses, the Company regards potential negative impact on management targets and business activities as "risks" and the manifestation of such risks as a "crisis," and has established systems for appropriate risk and crisis management. Based on the Risk and Crisis Management Policy, the Risk & Crisis Management Committee, chaired by the Director or Executive Officer in charge of risk and crisis management, ascertains the progress of
   cross-divisionalCompany-wide risk management and establishes a plan for the preparation and application of risk and crisis management activities. Based on this policy and plan, departments concerned with risk or subsidiaries and affiliates appropriately manage risk by ascertaining and assessing risks, formulating and implementing necessary countermeasures, and other activities. In addition, after deliberation by the Management Committee, the President and Chief Executive Officer specifies major Company-wide risks as corporate risk and appoints a person to appropriately manage such risk. When a crisis occurs, the Company responds promptly by establishing an organization for countermeasures centered on this person in charge for corporate risk, and on departments concerned with risk or subsidiaries and affiliates for other types of risk. In addition, depending on the magnitude of the impact on the Group as a whole, the Company also establishes a countermeasures headquarters with the President and Chief Executive Officer or other person as its general manager. Management of the abovementioned risks and crises is reported to and discussed at the Meeting of the Board of Directors or the Management Committee on a regular basis as well as in a timely fashion whenever necessary.
3. A system to ensure that Directors of the Company and its subsidiaries efficiently execute their duties
   After determining the direction to be focused on in a mid-term business plan, the Board of Directors reflects such direction in the mid-term plans of each department and subsidiary. The mid-term plans are reviewed annually by the Board of Directors and the Management Committee, and necessary adjustments are made in response to the progress of the plans and changes in the business environment. The Management Committee reviews, monthly or whenever appropriate, the progress of the revenue and expenditure plan and other important business plans of each division and subsidiary, extracts the main issues and then implements measures in response. In order to separate supervision and execution functions and to ensure the effectiveness of these functions and to accelerate execution, the decision rules for the Board of Directors and the Management Committee including items that arise from subsidiaries are established and reviewed as necessary.
4. A system to ensure the appropriateness of business operations in the Company and its subsidiaries
   The Internal Control Committee and related committees promote various policies to make sure that the business activities of the Kao Group conform to laws and the respective Articles of Incorporation. In addition, they promote and monitor efforts to ensure the appropriateness and efficiency of business operations throughout the Kao Group, and report regularly to the Board of Directors. Representative Directors, Directors and Executive Officers in charge of business operations provide guidance for the development of appropriate internal control systems for subsidiaries, according to their respective duties.

38

1. A system concerning reporting to the Company regarding execution of duties of Directors of the Company's subsidiaries
   The Company applies the Group Management rules (Policy Manual) to all subsidiaries, which require prior approvals of or reporting to the Company. The Company requires them to gain prior approvals or make a report on important management matters to the Board of Directors, Management Committee or an executive officer who are in charge of the subsidiary in accordance with such rules as well as the decision and reporting rules for the Board of Directors and Management Committee, In addition, Directors of the Company's subsidiaries, regularly or as necessary, discuss or report to the periodic meetings held every month in principle and established by each business area or functional area which supports business. Also, Department of Internal Audit and responsible divisions, regularly or as necessary, monitor the state of implementation of prior approvals or reporting based on the rules.
2. A system to ensure the reliability of financial reports

In order to ensure the reliability of financial reports, the Company evaluates, improves and documents in writing the state of the Company's internal control system and the process of business operations based on the principles of the Internal Control Committee and the Board of Directors confirms these activities regularly.

1. Employees to be assigned if Audit & Supervisory Board Members request staff to assist in their duties
   In the event that a request is made by Audit & Supervisory Board Members for the assignment of staff to provide assistance to conduct their audits effectively, the Directors should assign employees after discussing the selection of specific personnel with the Audit & Supervisory Board Members.
2. Independence of employees in the preceding paragraph from Directors and ensuring effectiveness of instruction by Audit & Supervisory Board Members to such employees
   In assignment, evaluation, transfer and disciplinary action of or to employees who assist in the duties of Audit & Supervisory Board Members, the prior consent of the Audit & Supervisory Board should be obtained. Instructions by the Audit & Supervisory Board to such employees should not be restricted unreasonably, and such employees must follow the instructions.
3. A system for Directors, Executive Officers and employees of the Company and Directors, Auditors and employees, etc. of the Company's subsidiaries to report to Audit & Supervisory Board Members of the Company
   Audit & Supervisory Board Members may attend meetings of the Management Committee, the Internal Control Committee and related committees, and may access the minutes, decision records and other documents of important meetings at any time. They may also receive activity reports from the head of each division and subsidiary regularly or as necessary, and have periodic exchanges of views with Representative Directors of the Company and major subsidiaries and exchanges of views with Representative Directors of the Company's subsidiaries when conducting an audit. In addition, Directors, Executive Officers and employees of the Company and Directors, Auditors and employees of subsidiaries, etc. should promptly report to Audit & Supervisory Board Members when any fact that may potentially cause significant harm to the Company or to its subsidiaries or any fact of a serious violation of laws or the Articles of Incorporation occurred or when those fact were reported. Compliance Committee reports information delivered to Compliance Hotline and Department of Internal Audit reports audit results to Audit & Supervisory Board Members regularly or as necessary. Auditors of subsidiaries share audit results with Audit & Supervisory Board Members of the Company at the Conference of Auditors for Domestic Group Companies held periodically.
4. A system to ensure that those who made such reports in the preceding paragraph shall not receive any disadvantageous treatment due to his/her submission of the reports
   Directors and employees of Kao Group who made reports to Compliance Hotline or to Audit & Supervisory Board Members, etc. shall not receive any disadvantageous treatment due to his/her submission of the reports and the Company stipulates prohibiting any disadvantageous treatment in Kao Business Conduct Guideline and ensures compliance of this rule.
5. Policy concerning payment or reimbursement of expenses pertaining to execution of duties by Audit & Supervisory Board Members including advance payment of expenses and reimbursement procedure, etc.

39

In the event of requests for appropriation to the fiscal year budget for the payment of expenses and other expenditures arising in the execution of the duties of Audit & Supervisory Board Members, a budget is accordingly provided. When expenses provided for in the budget arise, or when the necessity arises for the execution of non-budgeted emergency or additional auditing or other duties and Audit & Supervisory Board Members charge expenses pertaining to execution of their duties or debt disposal, the Company shall promptly accept such requests, except in the cases set forth in Article 388 of the Companies Act.

1. A system to ensure that audits by Audit & Supervisory Board Members are conducted effectively
   In order to conduct efficient and effective audits, Audit & Supervisory Board Members maintain a close cooperative relationship (including through exchanges of information) with the Accounting Auditor, Department of Internal Audit, internal auditing departments, as well as with Auditors and internal auditing departments of subsidiaries. In addition, Audit & Supervisory Board Members are entitled to hold meetings with Outside Directors to exchange information and opinions and independently receive support from outside specialists such as lawyers and certified public accountants when necessary.
2. Implement of a system to ensure the appropriateness of business operations

The Board of Directors conducts periodic reviews of implement of a system to ensure the appropriateness of Kao Group's business operations, and includes the summary of state of implement in the business report.

2. Outline of Management of Systems to Assure Appropriate Business Operations of the Company

Based on the above policies, the Company is working to set up and properly operate its internal control system. Principal efforts made during this fiscal year, which are considered to be important in terms of internal control, include the following:

Efforts Concerning Compliance

Under the initiative of the Compliance Committee chaired by the Representative Director, Senior Managing Executive Officer responsible for compliance, efforts have been continuously made in this area, involving both domestic and overseas Kao Group companies, such as by improving related regulations, including Kao's Business Conduct Guidelines (BCG), which are conduct guidelines for implementing the Kao Way, as well as by carrying out educational and awareness activities and setting up and properly operating the Compliance Hotline.

This fiscal year, the following efforts were made in order to reduce material compliance risks:

• The BCG was revised in April 2019 for the purpose of further organizing the items thereof to make the BCG easier to understand, contributing to the achievement of SDGs, and enhancing the effectiveness of internal reporting systems; explanatory meetings were held at domestic and overseas Kao Group companies concerning such revisions.
• To further ensure thorough compliance with applicable laws and regulations, organizations and systems for monitoring activities of the departments that are primarily in charge of promoting compliance with significant laws and regulations relating to the Company's business were clearly prescribed. In addition, activities to promote further reduction of other risks which may result in material violations of compliance were also continued.
• In October 2018, which was designated as "Compliance Month," messages from the Chairman of the Compliance Committee and presidents of the respective overseas Kao Group companies were posted on bulletin boards and intranets within workplaces, and BCG verification tests were taken by all employees of domestic Kao Group companies, in order to enhance the awareness of compliance.
• To ensure thorough compliance, as well as to create workplaces which have a favorable communication flow that will allow for any wrongdoing to be reported at an early stage and appropriate measures to be taken, training sessions were held and lectures were given by the heads of each of the overseas Kao Group companies, wherein such company heads directly conveyed messages to the employees of their companies.
• Tasks were sorted out from the evaluation items obtained through the principal outside surveys and such tasks were added to the future activity plans.

Efforts Concerning Risk and Crisis Management

This fiscal year, efforts were primarily made to strengthen our practical abilities in responding to

40

corporate risks, namely, material risks involved in corporate operations, and to strengthen the management of material risks within all divisions of the Company, as well as in overseas Kao Group companies, with the Risk & Crisis Management Committee managing the progress thereof. Corporate risks include not only risks such as large earthquakes, natural disasters or pandemics which would affect the continuation of business, but also risks affecting the maintenance of corporate credibility or those involved in management strategies.

In order to strengthen the ability to respond to crises upon the occurrence thereof, efforts were made such as conducting training drills based on large-earthquake scenarios (disaster prevention plan and business continuity plan), with management also participating therein. Furthermore, commentaries and information concerning risk and crisis-related subjects were issued each month to enhance all divisions of the Company and domestic Kao Group companies employees' awareness and sensitivity toward risks and crisis.

Efforts Concerning Subsidiary Management

Agenda items have been submitted and reports made from subsidiaries to the Company whenever necessary, in accordance with the Group Management rules, known as the "Policy Manual," that set forth matters regarding which subsidiaries are required to obtain prior approval from the Company or to make a report to the Company. Based on the "Policy Manual," all matters pointed out by the Department of Internal Audit (in its roles as the department in charge of internal audits) are shared among directors and officers of the relevant subsidiaries, at the time of ordinary executive meetings at such subsidiaries, along with the measures to be taken and the results thereof.

Furthermore, overseas subsidiaries are required to internally share information concerning any material risks and the measures to be taken, at the time of ordinary executive meetings at such subsidiaries. In addition, risks which may be identified by the respective subsidiaries based on instructions given by the Company are reported to the Company's departments that are principally in charge of the matters involved, along with the measures to be taken.

At periodic meetings established based on the businesses and the functions for supporting such businesses, agenda items have been submitted and reports made whenever necessary, based on the criteria for submission of agenda items. In addition, the Department of Internal Audit and sections in charge of subsidiary management have verified that agenda items have been submitted and reports made in accordance with regulations, etc., by way of site visits for auditing purposes or by causing checklists to be submitted.

Moreover, Executive Officers have supervised the setting up and operation of an internal control system in respect of subsidiaries, in accordance with the division of their duties.

Efforts Concerning Auditing by Audit & Supervisory Board Members

The Audit & Supervisory Board Members attend meetings of the Board of Directors, audit managerial decision-making processes and matters such as the status of development and management of the internal control environment, and express their opinions whenever necessary.

Full-time Audit & Supervisory Board Members also attend important meetings including meetings of the Management Committee, the Internal Control Committee and related committees, etc. In addition, Full-time Audit & Supervisory Board Members visit plants and research laboratories, etc. for auditing purposes, listen to opinions from business and functional sections, and perform investigations concerning, and listen to opinions from domestic and overseas affiliates, with the participation of Outside Audit & Supervisory Board Members where appropriate. Based on the findings and opinions obtained through such auditing activities, meetings for exchanging opinions are held with Representative Directors of the Company and its material subsidiaries, as well as with Outside Directors, with all Audit & Supervisory Board Members being in attendance and making proposals whenever necessary.

Also, for the purpose of recognizing the status of group governance and confirming the operational status of internal control systems, etc., meetings of the Conference of Auditors for Domestic Group Companies were held, and the Audit & Supervisory Board Members exchanged information and opinions with the auditors of affiliates at the time they performed investigations and listened to opinions at the respective affiliates, and worked closely together with the Department of Internal Audit and other internal auditing related departments, such as by exchanging information and opinions both periodically and whenever necessary, thereby striving

41

to improve the effectiveness and efficiency of audits, including those performed by overseas affiliates

Furthermore, the Audit & Supervisory Board Members received an annual audit plan and accounting audit results (quarterly reviews and annual audit results) from, and duly exchanged information and opinions with, the Accounting Auditor, while supervising the independence and appropriateness of audits performed by the Accounting Auditor.

Status of Revisions to Basic Policy Regarding the Internal Control Systems

At the Board of Directors meeting held in February 2019, minor amendments were made to the wording of the Basic Policy Regarding Internal Control Systems ("Policy"). Furthermore, at the Board of Directors meeting held in December 2019, the Board of Directors adopted a resolution to the effect that no amendment would be made to the Policy, having confirmed that there had not been any revisions, etc. to applicable laws or regulations which would require amendments to the Policy, and also having confirmed that, as a result of listening to the opinions of the respective subcommittees of the Internal Control Committee, the respective departments, the Audit & Supervisory Board Members and others, internal control systems were actually being operated pursuant to the Policy.

2. Basic Views on Eliminating Anti-Social Forces

The Company has made the following declaration in Kao's Business Conduct Guidelines, as well as stating establishment of system in above Basic Policy Regarding the Internal Control System. The Company has familiarized all employees of Kao Group companies with this policy and posted Kao's Business Conduct Guidelines on the Company's website.

We shall not engage in any activities which are detrimental to society. Furthermore, we shall resolutely resist pressure by any individual, group or organization to support such activities.

• We shall maintain a resolute attitude against activities which are unlawful or contrary to the public welfare.
• We shall not participate in any activities that are illegal or contrary to the public welfare regardless of any competing pressure to do so.
• We shall reject any relationship with groups that act contrary to the public welfare, and shall not yield to any attempt of blackmail or threat. We shall not involve ourselves in any activities or conduct which offends social norms or morality, such as money laundering, offers of illegal interest, etc.

On the basis of provision above, the Company promotes cooperation with governmental agencies etc. and collection and management of information regarding anti-social forces and establishes and maintains its internal system under normal circumstances.

Please see the reference material "Status of Corporate Governance System" in the "Appendices" at the end of this policy.

1. Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures	Not Adopted

Supplementary Explanation

The Company has not submitted a proposal for anti-hostile takeover measures to the Annual General Meeting of Shareholders. However, the Company considers the adoption of anti-hostile takeover measures to be a crucial management issue and is giving ongoing consideration to preparations for a hostile takeover with a close attention to the legal system, public trends and other matters.

The Company wants its shareholders to hold its stock for the long term, and therefore believes that it should provide profit to long-term shareholders by raising its corporate value over the long term through vigorous business activities that increase EVA as well as by enhancing shareholder returns through dividends and other measures. The Company believes that by increasing corporate value and enhancing shareholder returns, it will raise its stock price and market capitalization, thus making it difficult to conduct a hostile takeover that is counter to shareholder profit.

42

The Company believes that concurrently increasing trust in its Management by gaining understanding from all stakeholders of its contributions to society through activities for sustainability and other measures is a major deterrent to hostile takeovers.

In addition, in the event of a tender offer for the Company's stock, the Company will request an explanation of measures for improving the corporate value of the Kao Group from the tender offer or and disclose its own stance to shareholders.

2. Other Matters Concerning to Corporate Governance System

■Outline of Organization for Timely Disclosure

Internal policies regarding timely disclosure of the Company's information is as follows:

1. Basic Position of Timely Disclosure

To earn the trust and support of society, the Company is committed to timely, accurate and fair disclosure of information to its shareholders, investors and all other stakeholders. The Company strictly adheres to the Japanese Companies Act and the Financial Instruments and Exchange Law and other regulations, as well as the regulations set down by Tokyo Stock Exchange(TSE), Inc., and promptly discloses information in accordance with the Securities Listing Regulations. In addition, the Company proactively discloses information of social relevance pertaining to the Kao Group.

2, Internal System of Timely Disclosure

The Company has established a system which the secretariat of Disclosure Committee consolidates the management of material corporate information including all the decisions, occurrence of material facts and earnings information of the Company and of the Company's subsidiaries. The Disclosure Committee reviews whether certain material corporate information should be disclosed pursuant to the Securities Listing Regulations of TSE in consultation with relevant divisions such as Accounting & Finance, Legal, Public Relations, R&D and Production. If necessary, the Committee decides the contents, time and methods of disclosure after getting an approval of Representative Director and CEO, or if absent, one of the other Representative Directors or Corporate Information Handling Officer registered at TSE.

In principle, Representative Director or its assignees discloses information by TDnet, and press conference and posting of news release if necessary, in accordance with the decision by the Committee. The information registered at TDnet will also be promptly posted on the Kao website. The Public Relations manages the disclosed information.

The system for the secretariat of Disclosure Committee to collect material corporate information is as follows:

(1) Decisions by the Company

The secretariat shall be informed of all proposals and reports at the meetings of Management Committee and Board of Directors of the Company. All decisions that are required to be disclosed shall always be made at the meetings of Management Committee and Board of Directors of the Company. Therefore, the secretariat is aware of all the decisions.

(2) Occurrence of Material Fact

Immediately after any of the officers and employees of the Company has the knowledge of occurrence of a material fact or the possibility thereof, he or she is required to inform the secretariat of such information.

(3) Earnings Information

Accounting and Finance Division prepares earnings information of the Company, which is concurrently audited by the Accounting Auditor of the Company. Management Committee and Board of Directors of the Company deliberate earnings information and its main items with analytic data before disclosure thereof.

Burden of the end of term audit by Accounting Auditor is reduced by conducting interim audit, which enables the Company to accurately and timely disclose earnings information.

(4) Information regarding Subsidiaries

Immediately after any of the officers and employees of the Company in charge of subsidiaries has the knowledge of occurrence of a material fact or the possibility thereof regarding subsidiaries for which he or she is responsible, he or she is required to inform the secretariat of such information.

43

Corporate Governance Structure Updated *Renamed to the Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members

Shareholders Meeting

Appointment/dismissal	Appointment/dismissal
	Audit & Supervisory Board Members
Collaboration	The Board consists of 3 Independent
	Outside Audit & Supervisory Board	Audit
	Members and 2 Full-time
	Audit & Supervisory Board Members

Appointment/dismissal

Directors

The Board consists of 4 Independent Outside Directors and 4 Inside Directors

Board of Directors

Opinion

*Committee for the Examination of Nominees for Directors and Audit & Supervisory Board Members

Report

Audit & Supervisory

Board

Chairman: Independent Outside Director

Directors and Audit & Supervisory Board Members

attend the meetings

Opinion

Compensation Advisory Committee

Accounting Auditor

Audit

Lawyers Outside

Audit

Audit

Audit

Collaboration

Compliance Hotline

	ESG Committee Opinion	ESG External Advisory Board
Internal Control Committee
	Supervision
Disclosure Committee
Compliance Committee
Information Security Committee
Risk & Crisis Management Committee
Committee for Responsible Care Promotion
Quality Management Committee

Collaboration			Management Committee
	Department	Internal	Executing Divisions
		Audit
		of Internal

Audit	Executive Officers Responsible for Each Division
(Business, Function, Corporate Function)

Investigation			Subsidiaries/Affiliates
			Audit
Hosting	Conference of Auditors for Domestic Group Companies	Attendance	Auditors
			Audit

	Accounting Auditor
44	Certified Public Accountant

Chart regarding Timely Disclosure

Timely disclosure by registering on Tdnet (＊1)

Timely disclosure	Disclosed by Representative Director or its
assignees, and managed by Public Relations.

The Disclosure Committee reviews whether certain material corporate information should be disclosed pursuant to the Securities Listing Regulations of TSE in consultation with relevant divisions(＊2). If necessary, the Committee decides the contents, time and methods of disclosure after getting an approval of Representative Director and CEO.

Decisions by the Board of Directors

Deliberationｓ by the Management Committee ( ＊3)

The secretariat of Disclosure Committee consolidates the management of material corporate information.

Inform		Inform
Officers and employees of the Company responsible for		Officers and employees of the Company
such material corporate information		in charge of such subsidiaries
★Decisions by the Comany		★Decisions by subsdidiaries
★Occurrence of Material Fact		★Occurrence of Material Fact
★Earnings Information		★Earnings Information
regarding the Company		regarding subsidiaries

＊1: Disclosure by press conference and posting of news release, if necessary, in addition to registering at TDnet and posting on the Kao website.

＊2: Relevant divisions consulted by Disclosure Committee are Accounting & Finance, Legal, Public Relations, R&D and Production etc.

＊3: The Management Committee is a board which deliberates the most important issues other than the Board of Directors.

45

List of the state of implementation of Corporate Governance Code

	Corporate Governance Code		Implementation
		Status
General	Principle	Supple-			Corresponding articles in the report or on the Company's website
mentary	Comply	Explain
Principle
		Principles
			-	●		The Company respects and complies the code.
						"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise
			1.1.1	●		of Voting Rights" in "III. Implementation of Measures for Shareholders and Other
	1.1	Securing the Rights of				Stakeholders" in the report
	Shareholders				"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise
			1.1.2	●		of Voting Rights" in "III. Implementation of Measures for Shareholders and Other
						Stakeholders" in the report
			1.1.3	●		The Company respects and complies the code.
						"1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting
			-	●		Rights" in "III. Implementation of Measures for Shareholders and Other Stakeholders" in
						the report
						"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise
			1.2.1	●		of Voting Rights" in "III. Implementation of Measures for Shareholders and Other
						Stakeholders" in the report
						"Early Notification of General Shareholder Meeting" in "1. Measures to Vitalize the General
		Exercise of Shareholder	1.2.2	●		Shareholder Meetings and Smooth Exercise of Voting Rights" in "III. Implementation of
					Measures for Shareholders and Other Stakeholders" in the report
	1.2	Rights at General
		Shareholder Meetings				"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise
			1.2.3	●		of Voting Rights" in "III. Implementation of Measures for Shareholders and Other
						Stakeholders" in the report
						"Allowing Electronic Exercise of Voting Rights", "Participation in Electronic Voting Platform"
			1.2.4	●		and "Providing Convocation Notice in English" in "1. Measures to Vitalize the General
Section 1:				Shareholder Meetings and Smooth Exercise of Voting Rights" in "III. Implementation of
Securing the						Measures for Shareholders and Other Stakeholders" in the report
Rights and
		1.2.5	●		The Company respects and complies the code.
Equal
Treatment of
					"(7) Basic Strategy for Capital Policy" in "4. Basic position and policy on corporate
Shareholders
	1.3	Basic Strategy for Capital	-	●		governance" in 【Disclosure Based on the Principles of the Corporate Governance Code】 in "
		Policy				Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
						Basic Information" in the report
						"15. Policies for Cross-Shareholdings and Standards for Exercise of Voting Rights" in
			-	●		【Disclosure Based on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views
				on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information"
						in the report
						"15. Policies for Cross-Shareholdings and Standards for Exercise of Voting Rights" in
	1.4	Cross-Shareholdings	1.4.1	●		【Disclosure Based on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views
		on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information"
						in the report
						"15. Policies for Cross-Shareholdings and Standards for Exercise of Voting Rights" in
			1.4.2	●		【Disclosure Based on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views
				on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information"
						in the report
	1.5	Anti-Takeover Measures	-	●		"1.Adoption of Anti-takeover Measures" in "V. Other" in the report
	1.5.1	●		"1.Adoption of Anti-takeover Measures" in "V. Other" in the report
		Capital Policy that May
	1.6	Harm Shareholder	-	●		The Company respects and complies the code.
		Interests
		Related Party				"16. Procedures for Approval of Related Party Transactions" in 【Disclosure Based on the
	1.7	-	●		Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate Governance,
	Transactions
					Capital Structure, Corporate Profile and Other Basic Information" in the report
		Business Principles as the				"1. Corporate philosophy" in 【Disclosure Based on the Principles of the Corporate
					Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
		Foundation of Corporate
	2.1	-	●		Corporate Profile and Other Basic Information" in the report
		Value Creation Over the				・"The Kao Way" on the company's website:
Section 2:		Mid- to Long-Term
				www.kao.com/global/en/about/policies/kaoway/
Appropriate
Cooperation						"Kao Business Conduct Guidelines" on the Company's website:
with		Code of Conduct	-	●		www.kao.com/content/dam/sites/kao/www-kao-
Stakeholders	2.2				com/global/en/about/pdf/compliance_all.pdf
Other Than
				"Kao Business Conduct Guidelines" on the Company's website:
Shareholders			2.2.1	●
				www.kao.com/content/dam/sites/kao/www-kao-
						com/global/en/about/pdf/compliance_all.pdf
			-	●		"Kao Sustainability Statement and Contributions to the SDGs" on the Company's website:
		Sustainability Issues,		www.kao.com/global/en/sustainability/statement/
	2 3	Including Social and

46

	Corporate Governance Code		Implementation
		Status
General	Principle	Supple-			Corresponding articles in the report or on the Company's website
mentary	Comply	Explain
Principle
			Principles
	2.3		Including Social and
			Environmental Matters	2.3.1	●		"Kao Sustainability Statement and Contributions to the SDGs" on the Company's website:
					www.kao.com/global/en/sustainability/statement/
							"Respect & Teamwork" in "Principles" in "Kao Way" on the Company's website:
							www.kao.com/global/en/about/policies/kaoway.html
							・"7. Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size
			Ensuring Diversity,				of the Board of Directors" in 【Disclosure Based on the Principles of the Corporate
	2.4		Including Active		●		Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
			Participation of Women				Corporate Profile and Other Basic Information" in the report
							・"Other" in "1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise
							of Voting Rights" in "III. Implementation of Measures for Shareholders and Other
							Stakeholders" in the report
				-	●		"Compliance Hotlines" on the Company's website:
					www.kao.com/global/en/about/policies/compliance/compliance-contact.html
	2.5		Whistleblowing
		2.5.1	●		"Compliance Hotlines" on the Company's website:
					www.kao.com/global/en/about/policies/compliance/compliance-contact.html
			Roles of Corporate				"16 Roles of Corporate Pension Funds as Asset Owners" in Disclosure Based on the
	2.6		Pension Funds as Asset	2.6	●
			Principles of the Corporate Governance Code
			Owners
				-	●		"Disclosure Guidelines" on the Company's website:
					www.kao.com/global/en/investor-relations/management-information/disclosure.html
							"2. Long-term Business Strategy" and "3. Mid-term business plan" in 【Disclosure Based on
				(i)	●		the Principles of the Corporate Governance Code】 in "1. Basic View" in "Ⅰ Basic Views on
					Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information" in
							the report
							"4. Basic position and policy on corporate governance" in 【Disclosure Based on the
				(ii)	●		Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate Governance,
							Capital Structure, Corporate Profile and Other Basic Information" in the report
							"13. Policy and Procedures for Determining Remuneration for Members of the Board of
				(iii)	●		Directors and Senior Management" in 【Disclosure Based on the Principles of the Corporate
					Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
							Corporate Profile and Other Basic Information" in the report
	3.1		Full Disclosure
					"6. Policy on Nomination of Director and Audit & Supervisory Board Member Candidates and
							Senior Management" and "8. Procedures for the Nomination and Dismissal of Director and
				(iv)	●		Audit & Supervisory Board Member and the Appointment and Dismissal of Senior
					Management" in 【Disclosure Based on the Principles of the Corporate Governance Code】 in
							"Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
							Basic Information" in the report
Section 3:
						"9. Explanations with Respect to Individual Nominations and Appointments of Directors,
Ensuring
						Audit & Supervisory Board Members and Senior Management, and Status of Concurrent
Appropriate
			(v)	●		Duties of Outside Directors and Outside Audit & Supervisory Board Members" in 【Disclosure
Information
						Based on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
Disclosure
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
and
Transparency
			3.1.1	●		The Company respects and complies the code.
				3.1.2	●		The Company's website︓
					www.kao.com/global/en/
							"Activity for strengthening the auditing function of the Audit & Supervisory Board Members"
							in "Matters on Functions of Business Execution, Auditing, Oversight, Nomination and
				-	●		Remuneration Decisions (Overview of Current Corporate Governance System)" in "Ⅱ
							Business Management Organization and Other Corporate Governance Systems regarding
							Decision-making, Execution of Business, and Oversight in Management"
							"Activity for strengthening the auditing function of the Audit & Supervisory Board Members"
							in "Matters on Functions of Business Execution, Auditing, Oversight, Nomination and
				3.2.1	●		Remuneration Decisions (Overview of Current Corporate Governance System)" in "Ⅱ
	3.2		External Auditors				Business Management Organization and Other Corporate Governance Systems regarding
					Decision-making, Execution of Business, and Oversight in Management"
							・"Activity for strengthening the auditing function of the Audit & Supervisory Board
							Members" in "Matters on Functions of Business Execution, Auditing, Oversight, Nomination
							and Remuneration Decisions (Overview of Current Corporate Governance System)" in "Ⅱ
				3.2.2	●	●	Business Management Organization and Other Corporate Governance Systems regarding
				Decision-making, Execution of Business, and Oversight in Management"
							・【Reasons for Non-compliance with the Principles of the Corporate Governance Code】 in "
							Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
							Basic Information" in the report
							"(2) Roles and Duties of the Board of Directors, etc." in "4. Basic position and policy on
				-	●		corporate governance" in 【Disclosure Based on the Principles of the Corporate Governance
					Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and
							Other Basic Information" in the report

47

	Corporate Governance Code		Implementation
		Status
General	Principle	Supple-			Corresponding articles in the report or on the Company's website
mentary	Comply	Explain
Principle
		Principles
						"5. Scope of Matters Delegated to the Management" in 【Disclosure Based on the Principles
		Roles and Responsibilities	4.1.1	●		of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital
	4.1				Structure, Corporate Profile and Other Basic Information" in the report
	of the Board (1)
					"3. Mid-term business plan" in 【Disclosure Based on the Principles of the Corporate
			4.1.2	●		Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						"Supplementary Explanation" in "Committeeʼs Name, Composition, and Attributes of
			4.1.3	●		Chairperson" in "Ⅱ Business Management Organization and Other Corporate Governance
						Systems regarding Decision-making, Execution of Business, and Oversight in Management"
						・"(2) Roles and Duties of the Board of Directors, etc." in "4. Basic position and policy on
						corporate governance" in 【Disclosure Based on the Principles of the Corporate Governance
						Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and
			-	●		Other Basic Information" in the report
				・"13. Policy and Procedures for Determining Remuneration for Members of the Board of
	4-2.	Roles and Responsibilities				Directors and Senior Management" in 【Disclosure Based on the Principles of the Corporate
	of the Board (2)				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						"13. Policy and Procedures for Determining Remuneration for Members of the Board of
			4.2.1	●		Directors and Senior Management" in 【Disclosure Based on the Principles of the Corporate
				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						"8. Procedures for the Nomination and Dismissal of Director and Audit & Supervisory Board
			-	●		Member and the Appointment and Dismissal of Senior Management" in 【Disclosure Based
				on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
						"8. Procedures for the Nomination and Dismissal of Director and Audit & Supervisory Board
			4.3.1	●		Member and the Appointment and Dismissal of Senior Management" in 【Disclosure Based
				on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
	4.3	Roles and Responsibilities
				"8. Procedures for the Nomination and Dismissal of Director and Audit & Supervisory Board
	of the Board (3)
					Member and the Appointment and Dismissal of Senior Management" in 【Disclosure Based
			4.3.2	●
				on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
						"8. Procedures for the Nomination and Dismissal of Director and Audit & Supervisory Board
			4.3.3	●		Member and the Appointment and Dismissal of Senior Management" in 【Disclosure Based
				on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
			4.3.4	●		"Kao Integrated Report" on the Company's website:
				www.kao.com/global/en/investor-relations/library/reports/
		Roles and Responsibilities	-	●		The Company respects and complies the code.
		of Audit & Supervisory				"Activity for strengthening the auditing function of the Audit & Supervisory Board Members"
	4.4	Board Members and the
				in "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and
		Audit & Supervisory
		4.4.1	●		Remuneration Decisions (Overview of Current Corporate Governance System)" in "Ⅱ
		Board
					Business Management Organization and Other Corporate Governance Systems regarding
						Decision-making, Execution of Business, and Oversight in Management"
		Fiduciary Responsibilities
	4.5	of Directors and Audit &	-	●		（The Company respects and complies the code)
	Supervisory Board
		Members
						・"(4) Non-executive Director as Chairperson of the Board of Directors" in "4. Basic position
						and policy on corporate governance" in 【Disclosure Based on the Principles of the Corporate
		Business Execution and				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
					Corporate Profile and Other Basic Information" in the report
	4.6	Oversight of the	-	●
		・"10. Details of Current Efforts to Effectively Use Independent Directors and Audit &
		Management
					Supervisory Board Members, etc." in 【Disclosure Based on the Principles of the Corporate
						Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						"(3) Effective Utilization of Independent Directors and Audit & Supervisory Board Members,
	4.7	Roles and Responsibilities	-	●		etc." in "4. Basic position and policy on corporate governance" in 【Disclosure Based on the
		of Independent Directors				Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate Governance,
						Capital Structure, Corporate Profile and Other Basic Information" in the report
						"10. Details of Current Efforts to Effectively Use Independent Directors and Audit &
			-	●		Supervisory Board Members, etc." in 【Disclosure Based on the Principles of the Corporate
				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report

48

	Corporate Governance Code		Implementation
		Status
General	Principle	Supple-			Corresponding articles in the report or on the Company's website
mentary	Comply	Explain
Principle
		Principles
Section 4:		Effective Use of				【Reasons for Non-compliance with the Principles of the Corporate Governance Code】 in "Ⅰ
4.8	4.8.1		●	Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic
Responsibilities
Independent Directors				Information" in the report
of the Board
						"10. Details of Current Efforts to Effectively Use Independent Directors and Audit &
			4.8.2	●		Supervisory Board Members, etc." in 【Disclosure Based on the Principles of the Corporate
				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						・"4.(3) Effective Utilization of Independent Directors and Audit & Supervisory Board
						Members, etc." in 【Disclosure Based on the Principles of the Corporate Governance Code】
		Independence Standards				in "Ⅰ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
					Basic Information" in the report
	4.9	and Qualification for	-	●
		・"Standards for Independence of Outside Directors/Audit & Supervisory Board Members of
		Independent Directors
					Kao Corporation" on the Company's website:
						www.kao.com/content/dam/sites/kao/www-kao-
						com/global/en/about/pdf/governance_002.pdf
						"Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or
			-	●		Remuneration Committee" in "Ⅱ Business Management Organization and Other Corporate
				Governance Systems regarding Decision-making, Execution of Business, and Oversight in
						Management"
						・"(3) Effective Utilization of Independent Directors and Audit & Supervisory Board
	4.10	Use of Optional Approach				Members, etc." in "4. Basic position and policy on corporate governance" in 【Disclosure
						Based on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
			4.10.1	●		Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
				・"Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or
						Remuneration Committee" in "Ⅱ Business Management Organization and Other Corporate
						Governance Systems regarding Decision-making, Execution of Business, and Oversight in
						Management"
						・"7. Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size
						of the Board of Directors" in 【Disclosure Based on the Principles of the Corporate
						Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
			-	●		Corporate Profile and Other Basic Information" in the report
		Preconditions for Board				・"11. Analysis and evaluation of effectiveness of the Board of Directors taken as a whole
					and summary of the results thereof" in "Ⅰ Basic Views on Corporate Governance, Capital
		and Audit & Supervisory				Structure, Corporate Profile and Other Basic Information" in the report
		Board Effectiveness
					"7. Stance on Balance among Knowledge, Experience and Skills, and on Diversity and Size
			4.11.1	●		of the Board of Directors" in 【Disclosure Based on the Principles of the Corporate
	4.11			Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
					Corporate Profile and Other Basic Information" in the report
						"8. Procedures for the Nomination of Director and Audit & Supervisory Board Member
			4.11.2	●		Candidates and the Appointment of Senior Management" in 【Disclosure Based on the
				Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate Governance,
						Capital Structure, Corporate Profile and Other Basic Information" in the report
						"11. Analysis and evaluation of effectiveness of the Board of Directors taken as a whole and
			4.11.3	●		summary of the results thereof" in "I Basic Views on Corporate Governance, Capital
						Structure, Corporate Profile and Other Basic Information" in the report
			-	●		（The Company respects and complies the code)
		Active Board
	4.12				"Supporting System for Outside Directors and Outside Audit & Supervisory Board Members"
	Deliberations				in 1. Organizational Composition and Operation" in "Ⅱ Business Management Organization
		4.12.1	●
				and Other Corporate Governance Systems regarding Decision-making, Execution of
						Business, and Oversight in Management"
			-	●		(10), (11) and (12) in "Basic Views on Internal Control System and the Progress of System
				Development" in "Ⅳ. Matters Related to the Internal Control System"
			4.13.1	●		(10) in "Basic Views on Internal Control System and the Progress of System Development"
				in "Ⅳ. Matters Related to the Internal Control System"
		Information Gathering
	4.13
	and Support Structure				(12) and (13) in "Basic Views on Internal Control System and the Progress of System
			4.13.2	●
				Development" in "Ⅳ. Matters Related to the Internal Control System"
			4.13.3	●		(13) in "Basic Views on Internal Control System and the Progress of System Development"
				in "Ⅳ. Matters Related to the Internal Control System"
						"12. Measures for Directors and Audit & Supervisory Board Members to improve
			-	●		understanding and knowledge required to fulfill their roles and duties" in 【Disclosure Based
				on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report

49

	Corporate Governance Code		Implementation
		Status
General	Principle	Supple-			Corresponding articles in the report or on the Company's website
mentary	Comply	Explain
Principle
		Principles
		Director and Audit &				"12. Measures for Directors and Audit & Supervisory Board Members to improve
		4.14.1	●		understanding and knowledge required to fulfill their roles and duties" in 【Disclosure Based
	4.14	Supervisory Board		on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
		Members Training				Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
						"12. Measures for Directors and Audit & Supervisory Board Members to improve
			4.14.2	●		understanding and knowledge required to fulfill their roles and duties" in 【Disclosure Based
				on the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
						Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
						"14. Policy Concerning Measures and Organizational Structures to Promote Constructive
			-	●		Dialogue with Shareholders" in 【Disclosure Based on the Principles of the Corporate
				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						"14. Policy Concerning Measures and Organizational Structures to Promote Constructive
			5.1.1	●		Dialogue with Shareholders" in 【Disclosure Based on the Principles of the Corporate
				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
		Policy for Constructive
					Corporate Profile and Other Basic Information" in the report
	5.1	Dialogue with
Section 5:		Shareholders				"14. Policy Concerning Measures and Organizational Structures to Promote Constructive
Dialogue with			5.1.2	●		Dialogue with Shareholders" in 【Disclosure Based on the Principles of the Corporate
Shareholders				Governance Code】 in "Ⅰ Basic Views on Corporate Governance, Capital Structure,
						Corporate Profile and Other Basic Information" in the report
						"Participation in Electronic Voting Platform" in "1. Measures to Vitalize the General
			5.1.3	●		Shareholder Meetings and Smooth Exercise of Voting Rights" in "III. Implementation of
						Measures for Shareholders and Other Stakeholders" in the report
		Establishing and				"2. Long-term Business Strategy" and "3. Mid-term business plan" in 【Disclosure Based on
		Disclosing Business
	5.2	-	●		the Principles of the Corporate Governance Code】 in "Ⅰ Basic Views on Corporate
	Strategy and Business
					Governance, Capital Structure, Corporate Profile and Other Basic Information" in the report
		Plan

50