Nippon Sheet Glass : Corporate Governance Report submitted to the Tokyo Stock Exchange

Basic Approach Corporate Governance Structure

NSG Group adopts "Company with Three Committees" governance structure, and has in place, as statutory corporate organizations, Board of Directors and -Nomination Audit and Compensation Committees, and an office of Executive Officer. Currently, the Chairman of the Board as well as chairpersons of all three Committee are all appointed from among the Independent External Directors.

Various steps have been taken to date so that NSG Group has enhanced management transparency by further separation of functions between business execution and its supervision and strengthened role of independent external directors. For example, according to the NSG Group Corporate Governance Guidelines, the roles of Chairman of the Board and CEO are clearly distinguished. In the event that Chairman of the Board is not an Independent External Director an Independent External Director who is entrusted to perform specified tasks such as making of contribution to communication, coordination and cooperation between the Independent External Directors and the Executive Divisions and rendering of support to the Chairperson of the Board in relation to any issues of corporate governance shall be appointed from among Independent External Directors. Independent External Directors meet on an as-needed basis, even without presence of executives, for discussion concerning matters such as corporate governance and businesses.

As regards executive function, the Group also has Management Committee, Sustainability Committee, and Strategic Risk Committee. Currently, fourteen(14) Executive Officers are responsible for the business execution. Two(2) of them are Representative Executive Officer performing the duties of CEO and COO.

Overview of Corporate Governance Structure (As of 30 June 2022)

Key items	Description
Type of Governance structure	Company with Three Committees
Number of Directors / term of office	8 / 1 year
Number of Independent External Directors	4
Chair of the Board	Mr. Hiroshi Ishino (Independent External Director)
Chair of Three Committees	Nomination: Mr. Hiroshi Ishino (Independent External Director), Audit: Mr. Kunihito Minakawa (Independent External Director), Compensation: Dr. Jörg Raupach Sumiya (Independent External Director)
Number of Executive Officers (Representative Executive Officers) / term of office	14(2) / 1 year
Compensation system	Executive Officer (including those who concurrently serve as Directors)	(1) Fixed salary(Basic salary) (2) Performance-linked compensation ⅰ Management Incentive Plan (annual bonus) ⅱ Long- term Incentive plan (3)Stock Compensation
External Director	The level of compensation set at the appropriate level based on comparisons with other companies using benchmark data provided by specialist external advisers(Fixed salary)
Accounting Auditor	Ernst & Young ShinNihon LLC

Corporate governance mechanism(As of 30 June 2022)

Supervisory Function

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

【Board of Directors】

Role	Board of Directors is responsible for making decisions on the Group's material matters such as basic policies for business management, internal control system and duty allocation among Executive Officers, and supervision over business execution by executives.
Composition	4 Independent External Directors, 1 External Director and 3 Directors who concurrently serve as Representative Executive Officer Chaired by Mr. Hiroshi Ishino, Independent External Director
Number of times met in FY2022	10
Secretariat	Company Secretary Department

Composition of Nomination Committee, Audit Committee, and Compensation Committee as of 30 June 2022

Name	Position	Nomination Committee	Audit Committee	Compensation Committee
Hiroshi Ishino	Independent External Director	◎( Chair )	○	○
Jörg Raupach Sumiya	Independent External Director	○	○	◎( Chair )
Kunihito Minakawa	Independent External Director	○	◎( Chair )	○
Shinji Asatsuma	Independent External Director	○	○	○
Shigeki Mori	Director Representative Executive Officer	○	-	○
(5)	(4)	(5)

【Nomination Committee】

Role	Nomination Committee is responsible for making decisions on the General Meeting of Shareholders agenda items regarding the appointment and removal of Directors. It also oversees the succession plans for key executives, including President and CEO, and provides advice and recommendations for the Executive Officer candidates.
Composition	4 Independent External Directors and 1 Director who concurrently serves as Representative Executive Officer Chaired by Mr. Hiroshi Ishino, Independent External Director
Number of times met in FY2022	7
Secretariat	Company Secretary Department
Human resources Expert	Human Resources Department

【Audit Committee】

Role	Audit Committee is responsible for auditing the execution of duties by Directors and Executive Officers, preparing audit reports, and deciding details of proposals concerning appointment, removal or not reappointing the Accounting Auditor.
Composition	4 Independent External Directors Chaired by Mr.Kunihito Minakawa, Independent External Director Mr. Kunihito Minakawa has the career and experiences of serving as Corporate Senior Vice President (in charge of accounting) and Corporate Auditor of RICOH CO.,LTD., currently, he is a member of the Financial Services Agency Certified Public Accountant and Auditing Oversight Board Commissioner.
Number of times met in FY2022	11
Secretariat and how to ensure its independence	Audit Committee Office Any personnel affairs relating to staff of Audit Committee Office require a prior notice to Audit Committee and its consent. The head of Audit Committee Office shall not concurrently hold any position that may be involved in the execution of businesses and affairs of the Group, and shall report only to Audit Committee.
Audit methodology and cooperation with others	Audit by Audit Committee is such that it interviews executives, attends material executive meetings such as Management Committee, and inspects business operations and financial status of the company and major subsidiaries, being assisted by Audit Committee Office, in accordance with its audit policy and plans, as well as periodically monitors and reviews status of development and operation of the Group's internal control system. Audit Committee meets with Accounting Auditor and internal audit function on a regular and as needed basis to receive reports on such as progress of audits, exchange views and gather information.

【Compensation Committee】

Role	Compensation Committee is responsible for making decisions on a compensation policy for Directors and Executive officers as well as individual elements of compensation for Directors and Executive Officers.
Composition	4 Independent External Directors and 1 Director who concurrently serves as Representative Executive Officer Chaired by Dr. Jörg Raupach Sumiya, Independent External Director
Number of times met in FY2022	5
Secretariat	Company Secretary Department
Remuneration Expert	Human Resources Department

Board Effectiveness Evaluation

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

The overall summary of the results from the review made in relation to FY ended March 2022 is as follows:

[Our Effectiveness Review Process]
The Board confirmed the progress of the priority implementation items effective from prior years for improvement made during the year ended March 2022. In addition, as part of the annual evaluation process for the above financial year, the Board conducted an analysis and evaluation of the effectiveness review of the Board and Committees based on the feedback and views taken from each Director in terms of composition, status of meeting management, agenda setting, status of deliberations, performance of the role of the Board, communication with the Executive team and material agendas requiring further in depth deliberation by the Board on a going forward basis. The entire process was led and supervised by the Independent External Directors under the leadership of the Chairperson of the Board to ensure sufficient adequacy and independence.

[Evaluation Summary]
The effectiveness review endorsed that the Board and the Committees were all properly and soundly operated to ensure their effectiveness during the fiscal year under review.

At the same time, the following points were confirmed as issues to be addressed by the Board individually.

• NSG Group's Medium Term Management Plan (MTP)

  To deepen discussions on the medium- to long-term management strategy and important management issues with a view to enhancing the corporate value of the Group in a sustainable way. In addition, the Executives' initiatives to address the challenges incorporated in MTP (RP24) need to be specified further and their implementation needs to be accelerated in response to various changes occurring in the external environment.

• The Composition of Directors

  In order to properly deal with medium- to long-term important management issues, promote in-depth discussions on the skills and experiences required for the Board and enhance the effectiveness of the process of selecting Director candidates. At the same time, promote the appointment of a female Director who is currently absent.

[Priority Implementation Items (what to do next)]
By reference to and on the basis of the evaluation results and views, the Board adopted the following priority implementation items through the exchange of views at sessions consisting exclusively of Independent External Directors and discussions at the Board meetings, with a view to ensuring the execution of the Revival Plan (RP24) and improving the Group's corporate value over a medium to long term in a sustainable manner through the Board and the Committees.

• In addition to in-depth discussions of the medium- to long-term management strategy and important management issues, regarding key measures set forth in MTP (RP24), request the Executive Team to further specify implementation items to achieve the plan and monitor the progress to ensure their swift implementation in view of the ongoing changes in the business environment.
• Pursue the significance of diversity in the Board, work on realizing an appointment of a female Director, which is an ongoing issue.
• In order to properly deal with medium- to long-term important management issues, promote in-depth discussions on the skills and experiences required for the Board and the current composition of the Board, and select Director candidates.

In order to drive forward the management structure facilitating sustainable growth and enhancement of enterprise value of the Group in a medium to long term in light of establishing an appropriate corporate governance structure, these priority implementation items should be validated on a regular basis in terms of their implementation status and effects while their contents should be reviewed as appropriately. The plans are therefore anticipated to constitute a material part of the Board effectiveness evaluation process for the following year.

Executive Function

Fourteen Executive Officers (as of 30 June 2022), a professional group furnished with diverse backgrounds, are responsible for the business execution of NSG Group

【Executive Officer】

Role	Business execution of NSG Group
Composition	2 Representative Executive Officers(Chief Executive Officer(CEO) and Chief Operating Officer (COO)) and 12 Executive Officers

【Management Committee】

Role	Management Committee leads the Group's business operation and oversees the implementation status of businesses in order to realize the policies and targets set forth by the Board of Directors efficiently and appropriately.
Composition	The Management Committee is composed of executive officers with executive officers and above, other executive officers who supervise major businesses and functions, and general manager of the Corporate Planning Department as permanent members.
Number of times met in FY2022	14

【Sustainability Committee】

Role	Sustainability Committee builds the sustainability strategies, presides over all of the Group's sustainability related activities, and ensures effective communication with various stakeholders.
Composition	Group Sustainability Committee is chaired by CEO or a person who is nominated by CEO and composed of CEO, COO, CFO, Chief Legal Officer (CLO) and Chief Risk Officer (CRO), Chief Human Resources Officer (CHRO), Group Sustainability Director, the Heads of relevant Group Functions and the Heads of each Strategic Business Unit.
Number of times met in FY2022	2

【Strategic Risk Committee】

Role	Strategic Risk Committee periodically reviews policies, strategies and frameworks concerning risk management throughout the Group, and appropriately take into account the results of such review in forming the organization strategy and goals, in order to promote efficiency of the Group's business management and to enhance the medium and long-term corporate value.
Composition	Strategic Risk Committee is chaired by CRO and composed of CEO, COO, CFO, CLO and CRO, CHRO, the Heads of relevant Group Functions and the Heads of each Strategic Business Unit.
Number of times met in FY2022	3

External Director Criteria of Independency for External Director at NSG

An External Director is a director who has never been a director, executive officer nor employee of the company nor its subsidiary.

To enhance the transparency of business management, the Company has appointed five External Directors out of the eight Directors, four of whom are designated as Independent Directors under the TSE.

In addition to the criteria for independency defined by the TSE, the Company has established its own criteria of independency for External Directors, taking into consideration their relationship with the Group including such with its officers and major shareholders. All of the four External Directors satisfy the criteria of independency., its officers, major shareholders, etc. These all four External Directors meet the relevant criteria of independency.

Please refer to the Group's Criteria of independency for External Ddirectors.

Background , concurrent offices and activities of External Directors

Mr.Hiroshi Ishino * Independent External Director

Background Mr. Hiroshi Ishino was in charge of overseas operations at Mitsubishi Corporation, and since then has been promoting the Group's global strategy as president and CEO of Kansai paint Co.,Ltd. He has abundant experience and broad knowledge and perspectives with regard to business management. Concurrent offices Senior Corporate Advisor,Kansai paint Co.,Ltd. Activities Attended all 10 Board of Directors meetings, all 7 Nomination Committee meetings, all 11 Audit Committee meetings, and all 5 Compensation Committee meetings, held during the fiscal year under review, and made contribution to the deliberation mainly from a specialized viewpoint of an experienced business manager. At the board, he led discussions, especially on strategic marketing andsuply chain management, based on its in-depth knowledge of global management strategy. In FY2022, well performed as Chairperson of the Nomination Committee and led the committee about Group's human resource strategy mainly based on deep knowledge from abundant international experience.

Dr.Jörg Raupach Sumiya ※Independent External Director

Background Dr. Jörg Raupach Sumiya has international experience in the field of both business and academia, and is currently a professor at the collage of business administration, Ritsumeikan University, one of the Japan's famous private university. He has abundant experience and broad knowledge and perspectives with regard to an academic expert and business management. Concurrent offices Professor at the college of business administration, Ritsumeikan University. Activities Attended all 10 Board of Directors meetings, all 7 Nomination Committee meetings, all 11 Audit Committee meetings, and all 5 Compensation Committee meetings held during the fiscal year under review, and made contribution to the deliberation mainly from a specialized viewpoint of an experienced academic expert and business manager. At the board, he led discussions on sustainability (environment, climate change, etc.) , especially from the standpoint of management experience in a global company and academic experience. In FY2022, well performed as Chairperson of the Compensation Committee and led the committee about the design of the executive compensation system and evaluation system.

Mr. Kunihito Minakawa * Independent External Director

Background Mr. Kunihito Minakawa has been a Managing Executive Officer and an Audit & Supervisory Board Member at RICOH CO.,LTD., and has global experience, a wide range of insights and practical experience in finance and auditing. He has abundant experience and broad knowledge and perspectives with regard to business management and finance and accounting. Concurrent offices External Director, Santen Pharmaceutical Co., Ltd. Financial Services Agency Certified Public Accountants and Auditing Oversight Board Commissioner Activities Attended all 10 Board of Directors meetings, all 7 Nomination Committee meetings, all 11 Audit Committee meetings, and all 5 Compensation Committee meetings, held during the fiscal year under review, and made contribution to the deliberation mainly from a specialized viewpoint of an experienced business manager. At the Board, he led discussions on finance, accounting, auditing, internal control, etc., based on his deep knowledge of finance and accounting. In FY2021, well performed as Chairperson of the Audit Committee and led the committee about building a highly transparent governance system by appropriately auditing business execution and supervising executives.

Mr. Yoshihiro Kuroi

Background Mr. Yoshihiro Kuroi has been a president of an overseas subsidiary at Mitsubishi Corporation, and has a wealth of practical experience in overseas business, IR departments and risk management, etc. as an executive officer at Mitsubishi Motors Corporation and Kasai Kogyo Co., Ltd.He has abundant experience and broad knowledge and perspectives with regard to business management. Concurrent offices Advisor, Japan Industrial Solutions Co., Ltd. Activities Attended all 10 Board of Directors meetings held during the fiscal year under review, and made statements as mainly from a specialized viewpoint of an experienced business manager. At the Board, based mainly on his extensive experience and insight in overseas business, IR, and risk management, he led discussions on risk management in particular and contributed to the establishment of a highly transparent governance system.

Mr. Shinji Asatsuma * Independent External Director

Background Mr. Shinji Asatsuma has been in charge of the overall management division as a Director and Senior Executive Officer of Kansai paint Co.,Ltd., has promoted the formulation of business strategies and overseas business expansion and has global experience, a wide range of insights and practical experience in finance, accounting and risk management. He has abundant experience and broad knowledge and perspectives with regard to business management. Concurrent offices External Director, Kyushu Railway Company Activities Assumption of the office of Director on 30 June 2022

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

2008	Changed the company's fundamental governance structure from the traditional StatutoryAuditor system to the current three-Committee structure Four Independent External Directors were elected accordingly
2010	Created and adopted our original and stringent criteria for the independency of External Director, taking into account not only the standard of Tokyo Stock Exchanges but also those similar rules in other major jurisdictions
2012	All three (Nomination, Audit and Compensation) Committees became to be chaired by Independent External Directors respectively
2013	Board of Directors became to be chaired by an Independent External Director
2014	Made the independency criteria for External Directors more specific and publicly disclosed it Incorporated the share purchase element into Long Term Incentive Plan Set shareholding targets of Executive Officers
2015	Established NSG Group Corporate Governance Guidelines
2016	Started annual board effectiveness evaluation process
2018	Revised the "NSG Group Corporate Governance Guidelines" (December 2018) in response to the June 2018 revision of the Corporate Governance Code.
2019	Of the nine members of the Board of Directors(at that time), the majority of the Independent External Directors were five (5)
2021	Revised the "NSG Group Corporate Governance Guidelines" (December 2021) in response to the June 2021 revision of the Corporate Governance Code.

Corporate Governance Report

The Group has filed the Corporate Governance Report to TSE.

Please refer to the Group's Corporate Governance Report (as of 14 October 2022).

Disclosure based on the principles of the Corporate Governance Code

• Principle 1.4 : Cross-Shareholdings
• Principle 1.7 : Related Party Transactions
• Supplementary Principle 2.3.1 : Sustainability Issues, Including Social and Environmental
• Supplementary Principle 2.4.1 : Ensuring Diversity, Including Active Participation of Women
• Principle 2.6 : Roles of Corporate Pension Funds as Asset Owners
• Principle 3.1 : Full Disclosure (i)　Business principles, business strategies and business plan
  • NSG Group management principles "Our Vision"
  • NSG Group Medium Term Vision and Medium Term Plan "Revival plan 24" (RP24)(2022/4-2024/3)
  (ii)　Basic views and guidelines on corporate governance (NSG Group Corporate Governance Guidelines)(iii)　Policies and procedures in determining the compensation for the senior management and Directors(iv)(v)　Policies and procedures in appointment and dismissal of the senior management and the nomination of the Director candidates
• Supplementary Principle 3.1.3 : Initiatives on Sustainability
• Supplementary Principle 4.1.1 : A brief summary of the scope of authority delegated to the management
• Supplementary Principle 4.1.3 : Roles and Responsibilities od the Board(1) CEO's succession plan
• Supplementary Principle 4.2.1 : Roles and Responsibilities od the Board(2) Determination of the executive remuneration system and the remuneration amounts
• Supplementary Principle 4.2.2 : Roles and Responsibilities od the Board(2) Basic policy for the company's sustainability initiatives
• Supplementary Principle 4.3.2 : Roles and Responsibilities od the Board(3) Appointment of CEO
• Supplementary Principle 4.3.3 : Roles and Responsibilities od the Board(3) Dismissal of CEO
• Principle 4.8 : Effective Use of Independent Directors
• Principle 4.9 : Independence Criteria and Qualification of Independent Directors
• Principle 4.10.1 : Use of Optional Approach
  • Terms of Reference of Nomination Committee
  • Terms of Reference of Compensation Committee
• Supplementary Principle 4.11 : Preconditions for Board and Kansayaku Board Effectiveness
• Supplementary Principle 4.11.1 : Views on the appropriate balance of knowledge, experiences and competence of the Board of Directors as a whole, its diversity and appropriate size, and the policy and the procedure for nominating Director candidates
• Supplementary Principle 4.11.2 : Concurrent positions held by Directors
• Supplementary Principle 4.11.3 : Results of Evaluation of the Effectiveness of the Board of Directors
• Supplementary Principle 4.14.2 : The training policy for Directors and etc.
• Principle 5.1 : The policy for constructive dialogue with shareholders
• Principle 5.2 : Establishing and Disclosing Business Strategies and Business Plan
• Supplementary Principle 5.2.1 : Establishing and Disclosing Business Strategies and Business Plans

Compensation for Directors and Executive Officers

The Company adopts a company with three committees structure and the Compensation Committee, which holds a majority of Independent External Directors, decides the following matters.

• The policy on compensation and perquisites to be offered to the Directors and Executive Officers of the Company
• Individual compensation and perquisites to be offered to the Directors and Executive Officers of the Company.

Compensation Policy for Executive Officers

The objectives of the compensation policy are to ensure that packages of employment terms and conditions are market competitive and designed in such a way as to attract, retain and motivate Executive Officers of the highest world-class caliber in an international business.

The policy aims to ensure that each individual's basic salary and incentives are aligned with the performance of the Group and the interests of shareholders as well as reflecting the commitment and achievements of the individuals concerned. While some elements of the packages of the Executive Officers may vary depending on the market conditions in the countries in which they are directly employed, annual bonus and long-term incentive plans follow a global policy and are structured, designed and coordinated at the Group level.

Compensation Policy for Independent External Directors

The role of Independent External Directors is to supervise all Group business from their independent and objective standpoint as well as to engage in the material decision-makings as members of the Board of Directors. In order for them to fulfill this role adequately and effectively, and for the Group to retain individuals with the capability and experience required, the appropriate compensation level of Independent External Director is set based on comparisons with other companies using benchmark data provided by external specialists.

Independent External Directors receive compensation for the performance of their duties. They are not eligible for performance-linked bonuses or awards under long-term incentive plans.

For details, please see the following.