Nippon Electric Glass : Corporate Governance Report

TRANSLATION FOR REFERENCE ONLY

Corporate Governance Report

Last update: June 27, 2022

Nippon Electric Glass Co., Ltd.

President: Motoharu Matsumoto

Contact: Takashi Chisaka, General Manager of Administrative Division:

Tel: [phone]

Securities Identification Code: 5214

https://www.neg.co.jp/

The corporate governance of Nippon Electric Glass Co., Ltd. (the "Company") is described below.

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

1. Basic Views

The basic view of the Company is that enhanced corporate governance is beneficial in ensuring managerial transparency and strengthening operational supervisory functions.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company complies with all of the Principles of the Corporate Governance Code.

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

The Company has presented information in this report in accordance with the Corporate Governance Code as it stands after its revision in June 2021.

[Principle 1.4 Cross-Shareholdings]

The Company does not hold cross-shareholdings except in cases where it recognizes the rationale for cross-shareholdings, such as business alliances and maintaining/enhancing business partnerships.

The Board of Directors examines the suitability of cross-shareholdings both from qualitative perspective, such as the suitability of purposes to hold each individual cross- shareholding, and the quantitative perspective, such as the economic rationale based on

the cost of capital. In cases where the intended purposes of the shareholding are diluted, the Company will consider reducing cross-shareholdings after consulting with the issuing companies.

The Company exercises the voting rights relating to the cross-shareholdings after comprehensively considering issues like whether or not the proposal effectively complies with the Company's shareholding policy and whether or not it would be expected to increase the corporate value of the issuing company.

[Principle 1.7 Related Party Transactions]

In the Company, conflict-of-interest transactions involving the Directors and corporations over which any of the Directors have effective control require consideration and resolution by the Board of Directors, and the track records of these transactions are regularly reported to the Board of Directors.

NEG Group Code of Conduct specifies fair and proper transactions with all partners in compliance with related laws and regulations. These requirements also apply to transactions with major shareholders.

[Supplementary Principle 2-4-1]

The Company has established diversity as one of its priority themes for CSR, and based on the belief that the collective strength of diverse human resources, including diversity of gender and race, will serve as a driving force for corporate growth, aims to further accelerate its proactive initiatives for promoting women, foreign nationals and midcareer hires to middle managerial positions.

In addition, as its policy for internal environment development, the Company is developing systems to enable more diverse work styles, enhancing existing systems, implementing measures to reduce overtime work, encouraging employees to use their annual paid leave days, promoting employment of persons with disabilities and encouraging employees to take childcare leave. The Company appropriately discloses the implementation status of these various measures in the Integrated Report, etc.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

The Company has introduced a defined contribution pension plan. Although the Company is not involved in the accumulation, etc. or management of corporate pension funds as an asset owner, the Company provides ongoing investment education to its employees.

[Principle 3.1 Full Disclosure]

1. The Company operates under the following Corporate Philosophy: "We strive to build a brighter future for the world by uncovering the unlimited possibilities of glass for more advanced creative manufacturing". The Company also sets the Medium- term Business Plan, "EGP 2026", and discloses such business plan on the Company's website (https://www.neg.co.jp; see Notice of Investor Relations).
2. The basic views and policy on corporate governance of the Company are described in the above section of "I. Basic Views on Corporate Governance Capital Structure, Corporate Profile, and Other Basic Information" of this Corporate Governance Report.
3. In order to ensure transparency and objectivity with regard to Director remuneration, the Company established a Nomination and Remuneration Advisory Committee with an Outside Director serving as the Chairperson and a majority of the committee members composed of Outside Directors. Based on the consultation by the Board of Directors, the committee discusses the policies and system of Director remuneration as well as the amount of Director remuneration, reports the results to the Board of Directors, and the Board of Directors makes decisions after serious consideration of the reports from the committee. The monthly remuneration and bonus amount for each Director determined by the committee shall be deemed to have been resolved by the Board of Directors, except in the case of a tie in the committee.
4. In order to bring diversity to the Board of Directors in terms of experience, knowledge, and expertise, the President recommends candidates for Directorship who have a great sense of integrity, deep insight, strong ability, broad knowledge, and extensive experience and have achieved substantial results in their professional fields. An explanation of such candidates is also given to Outside Directors in advance, and the Board of Directors deliberates on the appointment based on the advice of the Outside Directors.

In a case where there is misconduct or a serious violation of relevant laws and regulations and the Articles of Incorporation in the execution of duties of the senior management, an explanation of such conduct is given to Outside Directors in advance, and the Board of Directors deliberates on the dismissal of the senior management based on the advice of the Outside Directors.

The Board of Directors deliberates on the appointment of Corporate Auditors, examining candidates who have a great sense of integrity, deep insight, strong ability, broad professional knowledge, and extensive experience, with the consent of the Board of Corporate Auditors.

1. The reasons for the appointment/dismissal and nomination of all Director and Corporate Auditor are described in reference document for General Meeting of Shareholders.

[Supplementary Principle 3-1-3]

The Company appropriately discloses its initiatives on sustainability, investments in human capital and intellectual property, and other information in the Integrated Report, securities reports, etc. In addition, the Company has formulated a plan for achieving carbon neutrality and started working on the related initiatives. Regarding disclosures concerning climate change-related risks and earning opportunities, the Company has declared its support of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and will enhance its disclosures based on the associated disclosure framework.

[Supplementary Principle 4-1-1]

In addition to the matters stipulated in the laws and regulations and the Articles of Incorporation, the Board of Directors makes decisions on important matters for the Company Group, such as the basic management policy of the Company, the content of which is clearly defined in the Rules of Board of Directors and the Standard for Agenda of Board of Directors. Decision-making for other matters is delegated to the Management Committee and Executive Officers.

[Principle 4.9 Independence Standards and Qualifications for Independent Directors]

When appointing a candidate to serve as an independent Outside Director, the Company examines the independence of the candidate in accordance with the independence standards set by the Tokyo Stock Exchange.

[Supplementary Principle 4-10-1]

In order to ensure transparency and objectivity with regard to the appointment and dismissal of the Representative Director and Directors' remuneration, the Company established the Nomination and Remuneration Advisory Committee with an

independent Outside Director serving as the Chairperson and a majority of the committee members composed of independent Outside Directors. The committee discusses the appointment and dismissal of the Representative Director, the policies and system of Directors' remuneration and the amount of Directors' remuneration, reports the results to the Board of Directors, and the Board of Directors makes decisions after serious consideration of the reports from the committee.

[Supplementary Principle 4-11-1]

The Company's basic stance regarding structure of the Board of Directors is to have twelve or fewer Directors and four or fewer Corporate Auditors in consideration of the balance of knowledge, experience, and skills as well as utilization of external human resources. The independent Outside Directors include individuals with management experience in other companies. The skills matrix is shown in the attachment.

[Supplementary Principle 4-11-2]

The status of the Outside Directors and Outside Corporate Auditors who serve at other companies is disclosed annually in business reports, the securities reports, the Corporate Governance Report, and other relevant materials.

[Supplementary Principle 4-11-3]

The Company has conducted an annual questionnaire survey of effectiveness of the Board of Directors by asking all Directors. As a result of the survey, the Company has confirmed that the Board of Directors is functioning adequately and the effectiveness is secured. The Company will work continuously on conducting an evaluation of effectiveness and improving a debate in the Board of Directors.

[Supplementary Principle 4-14-2]

The Company provides training for Directors and Corporate Auditors that takes into consideration the Company's Corporate Philosophy and management strategy.

For executive Directors and full-time Corporate Auditors, the Company holds compliance seminars inviting external lecturers during Compliance Awareness Month every October.

In addition, the Company holds a training session for Directors once a year to help them enhance their understanding of corporate governance and compliance, as well as the conditions surrounding management, including those related to corporate governance.

The Corporate Auditors acquire knowledge related to auditing through seminars and