ROHM : (Delayed) Corporate Governance Report

Corporate Governance Report

Last Update: December 10, 2021

ROHM Co, Ltd.

Isao Matsumoto, President, Chief Executive Officer

Contact: Public and Investor Relations Division TEL: [phone]

Securities Code: 6963

https://www.rohm.com

The corporate governance of ROHM is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

1. We strive to pursue the best possible corporate governance in order to achieve our mission and policy as described in the Company Mission and the Basic Management Policy.
2. We recognize that a company is supported by all of its stakeholders including its customers, business partners, employees, shareholders, investors, and local communities. We believe that the management and conduct of a company must be based on fairness, integrity, and transparency. Our basic view on corporate governance is to achieve sustainable corporate growth and maximize corporate value over the mid- to long- term from the stakeholders' perspective after accurately identifying the Company's cost of capital. We strive to improve corporate governance in accordance with the following guidelines.
   (1)To properly cooperate with all stakeholders including shareholders into consideration, and properly address and deal with sustainability management issues including ESG (environmental, social, and governance) elements .
   (2)To respect the rights of shareholders, secure their equal treatment, and engage in constructive dialog with shareholders to enhance corporate value.
   (3)To disclose corporate information in a timely and appropriate manner as a part of ensuring our transparency.
   (4)To make the roles and responsibilities of the Board of Directors clear, hold meetings of the Board of Directors in a timely and appropriate manner, facilitate decision-making processes, and ensure that Outside Officers proactively express their views from an independent and objective standpoint and that the Board of Directors oversees the execution of business.

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

ROHM has implemented all of the Principles of the Corporate Governance Code revised in June 2018.

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

ROHM had established the "ROHM Corporate Governance Policy" (hereinafter referred to as the "Policy") at the meeting of the Company's Board of Directors held on November 5, 2015 and revised on March 12, 2021.

The Policy is available at ROHM's website: URL:https://www.rohm.com/investor-relations/corporate-governance

・Principle 1-4【Cross-shareholdings】

Note: The original version of this report is written in Japanese. In the event of any discrepancies in words, figures, or the like between this report and the original, the original Japanese version shall govern. The original version of this report can be seen at the website of Tokyo Stock Exchanges. (www.tse.or.jp)

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1.The basic policy on cross-shareholdings of listed companies and the exercise of voting rights with respect to cross-shareholdings is established by the Board of Directors as follows:

< Basic Policy on Cross-shareholdings of Listed Companies >

To achieve sustainable corporate growth and increase corporate value over the mid- to long-term of the ROHM Group, we believe that cross-shareholding of our major business partners in order to maintain strong business relationships with them is an important way.

With this end in view, annually the Board of Directors quantitatively and qualitatively examines each of cross-shareholdings in terms of economic rationality, the benefits of holding and other factors.

And shares unneeded to continue holding will be gradually reduced.

< Basic Policy on the Exercise of Voting Rights with Respect to Cross-shareholdings >

We exercise the right to vote after scrutinizing proposals based on the purpose of shareholding and verifying that proposals will contribute to increase corporate value. Votes against such proposals may be casted if there is a situation that could damage corporate value or a concern that could arise over corporate governance for reasons like social misconduct.

・Principle 1-7【Related Party Transactions】

1.In order to protect the interests of shareholders, we endeavor to prevent directors, employees, and other persons related to ROHM from engaging in any transactions that may be detrimental to ROHM or its shareholders by exploiting their position.

2.When we engage in transactions with officers or major shareholders, we follow the proper approval procedures of the Board of Directors in accordance with the Company's rules and regulations.

Supplemental Principle 2-4-1【Ensuring diversity in promotion, etc. of core human resources】

At the ROHM Group, based on the Basic Management Policy that states, "ROHM will support a diversified work style, and broadly look for and develop talented human resources so they can be the foundation of the Company's growth", we actively promote the recruitment and promotion of core human resources at the global level, focusing on talented human resources with diverse values and views, regardless of nationality, gender, age or disability.

(1) Female employees

The proportion of women in managerial positions at the ROHM Group was 9.9% as of the end of September 2021. To further promote the career development of female employees, we have established the goal of increasing the proportion of women in managerial positions to 15% by FY 2025 in the Mid-term Management Plan released on May 10, 2021.

(2) Non-Japanese employees

As of the end of September 2021, there were 36 non-Japanese employees working at ROHM, one of whom was in a managerial position. We continue to actively recruit talented foreign nationals regardless of nationality, gender, age or disability and promote them, as appropriate, to managerial positions where they play a key role in our global business.

(3) Mid-career employees

The proportion of mid-career employees at ROHM was 27.7% as of the end of September 2021, 26.4% of whom were in managerial positions. To further strengthen our two focus business areas - power and analog solutions - as set out in the Mid-term Management Plan, we continue to actively recruit work-ready mid- career employees and promote them, as appropriate, to managerial positions.

・Principle 2-6【Roles of Corporate Pension Funds as Asset Owners】

1.Regarding the management of the reserve funds of the defined-benefit corporate pension plan, because the management of such funds impacts stable asset formation for our employees and the Company's own financial standing, we endeavor to allocate and develop personnel with necessary experience and qualification to perform monitoring and other necessary activities on the management institution.

2.We ensure appropriate management of such funds without causing a conflict of interest between the pension fund beneficiaries and the Company, asset management institutions are selected from among those having declared the adoption of Japan's Stewardship Code and entrusted to select individual investment destinations and to exercise the right to vote.

Note: The original version of this report is written in Japanese. In the event of any discrepancies in words, figures, or the like between this report and the original, the original Japanese version shall govern. The original version of this report can be seen at the website of Tokyo Stock Exchanges. (www.tse.or.jp)

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・Principle 3-1【Complete information disclosure】

ROHM endeavors to disclose information actively, disclosing in a timely and accurate disclosure in accordance with laws, and to secure transparency and fairness in our decision making and realize effective corporate governance.

1.Management philosophy and business strategies, business plans

(1) Basic management policy

In the pursuit of continuing and comprehensive corporate value creation and enhancement, the ROHM Group believes that we can improve customer satisfaction and contribute to society by developing innovative products and carrying out high-quality manufacturing in our business activities. By doing so, we will be able to give our employees more confidence and pride and encourage them to take on new challenges. Value added through these business activities should be appropriately allocated (or returned) to internal reserves for business investments to strengthen competitiveness and to shareholders, employees, communities, and other stakeholders. It is also essential that this idea is understood and supported by all the stakeholders. The ROHM Group calls the cycle of these activities CSV (Creating Shared Value). Making the ROHM Group more attractive to stakeholders through commitment to CSV activities is one of our priorities in business management.

With these perspectives in mind, we have established our basic policy, which is to constantly supply high- quality, cost-competitive products in high volume and take a leadership position in the global semiconductor and electronic parts market. We intend to achieve this by developing products that can lead the global market and drawing on our original production technologies.

(2) Mid- to long-term management strategy

The ROHM Group aims for mid- to long-term growth by responding to globally evolving markets and taking advantage of our excellence in matching technologies, vertical integration, comprehensive product competitiveness, and customer focus. Our growth strategy is specifically described below.

1) Market strategy

(1) Automotive and industrial equipment markets

Amid moves toward electrification and energy conservation, the automotive and industrial equipment markets call for a stable supply capacity combined with high quality and reliability, an area where the ROHM Group excels. In the growing automotive and industrial equipment markets, we will expand the supply of SiC and other power devices (e.g., IGBTs, MOSFETs), as well as isolated gate driver ICs and power-source ICs for electric vehicles and servers, to increase our sales. We will also develop new products, such as SiC power modules for electric vehicles and advanced LSIs for base stations and data centers, to acquire new demand over the mid- to long-term.

(2) Consumer equipment market

We intend to remain highly profitable by expanding our market share in sectors where smaller sizes and higher efficiency are demanded (e.g., energy-saving home appliances and data storage equipment) through pursuit of higher added value in our LSIs and power devices, while maintaining a high market share for general-purpose devices.

1. Strategy for sales, development, and manufacturing
   (1) Sales strategy
   Our System Solutions Engineering Headquarters, an organization recently formed, will propose customer- oriented solutions, in addition to discrete products, and enhance engineering support. Our sales headquarters has been reorganized and divided into two teams: the Japan Sales Headquarters and the International Sales Headquarters. With this two-fold organization, all sales bases will work together to build a marketing structure aligned to the corporate strategy.
   (2) Development strategy
   To emphasize customer focus, we will assign Product Marketing Engineers (PMEs),* who are well-versed in cutting-edge technologies and market information, to business sites outside Japan to enhance our product planning ability so that we can efficiently develop competitive products that take into account customers' issues.
   * PMEs are engineers engaged in product marketing and planning based on their advanced technical background.
   (3) Manufacturing strategy

Note: The original version of this report is written in Japanese. In the event of any discrepancies in words, figures, or the like between this report and the original, the original Japanese version shall govern. The original version of this report can be seen at the website of Tokyo Stock Exchanges. (www.tse.or.jp)

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To continue steady growth over the mid- to long-term, we will strengthen our production structure to acquire the ability to stably supply products worldwide. Specifically, we will build more automated and flexible production lines suitable for high-mix,low-volume production, while working to increase the productivity of existing production lines designed for low-mix,high-volume production, and strengthen our business continuity plan (BCP).

2.Basic views and guidelines on corporate governance Please refer I. 1. "Basic Views" in this report.

3.Policies and procedures for determining director remuneration

Please refer . 1. "Director Remuneration" "Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" in this report.

4.Policies and procedures in the appointments/dismissals of the President and Directors with title and Corporate Officer with title and for nominating Director candidates

Please refer . 1. "Directors" "Committee's Name, Composition, and Attributes of Chairperson" in this report.

5.Reasons for the appointments/dismissals of the President and Directors with title and Corporate Officer with title and the individual nominations of Director candidates

Reasons for the appointments/dismissals of the President and Directors with title and Corporate Officer with title and the individual nominations of Director candidates are disclosed on our website etc.

Please refer . 1. "Directors" "Outside Directors' Relationship with the Company (2)" in this report about Outside Directors.

Reasons for the individual nominations of Directors are described in the notice of the 62th Ordinary General Shareholders Meeting.

Supplemental Principle 3-1-3【Sustainability initiatives, etc.】

Recognizing that addressing issues around sustainability, including societal and environmental issues, is extremely important for enhancing corporate value over the medium to long term, we have agreed to endorse the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and are currently studying the disclosure of related information.

In addition, we have established the ROHM Group Sustainability Policy as the Group's basic policy on sustainability. We have also identified key sustainability issues (materiality) and have set a goal to address each of these issues.

For further details on our sustainability initiatives, etc., please visit our website and see our Integrated Report.

ＵＲＬ： https://csr.rohm.com/

The ROHM Group considers that human resources are the most important of all management resources. Although the Company's history, technologies and properties that have been amassed since its founding are all very important assets for the Company, it is people that have built them up. Recognizing that it is one of the Company's key responsibilities to provide a workplace environment where all employees can exert their full potential and grow through working with a sense of self-fulfillment and self-realization, we continue to perform human resource management that leads to the enhancement of corporate value as well as to the achievement of employee growth.

In addition, we believe that the spread and promotion of the work-life integration concept - a concept that should help employees to find fulfillment in both work (professionally) and life (personally) - enhance an employee's sense of happiness and wellbeing, which in turn leads to improved productivity and growth of the Company.

At ROHM, we have established two committees - the Work-Style Reform Committee and the Advisory Committee on Decent Work - with the aim of vigorously promoting the creation and establishment of a rewarding workplace environment where employees can reach their full individual potential.

Note: The original version of this report is written in Japanese. In the event of any discrepancies in words, figures, or the like between this report and the original, the original Japanese version shall govern. The original version of this report can be seen at the website of Tokyo Stock Exchanges. (www.tse.or.jp)

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Furthermore, "Basic Goals for Education and Training", set out in the Company Mission and Policies, which has existed as a universal philosophy since the Company's founding, clearly specifies what kind of human resources need to be developed through education and training. Based on this "Basic Goals for Education and Training", we have developed and implemented a company-wide education and training system and have also established the Management Human Resources Council with the aim of ensuring the systematic development of human resources who will be the next generation responsible for leading the management of the Company. In addition, we discuss and consider the systematic development of next generation leaders as an important theme at the Executive Meeting on an ongoing basis, and make a report, as appropriate, to the Board of Directors based on the discussion results.

At the ROHM Group, with the Management Vision, "We focus on power and analog solutions and solve social problems by contributing to our customers' needs for 'energy saving' and 'downsizing' of their products" as a guiding principle, we have been developing products for energy saving and downsizing by using our proprietary technologies, and we always respect intellectual property rights in all our business activities.

In the development of new technologies for the future, it is absolutely essential to invest in securing talented human resources as well as in research and development activities for Research and Development and for Product Development, and also to invest in intellectual property rights, which are the fruits of such research and development activities.

We make it a rule to incorporate intellectual property-related matters (if any) as an important discussion theme at the Executive Meeting, where a strategy for each business portfolio is discussed and considered to address such matters. Based on the discussion results, we make a report, as appropriate, to the Board of Directors.

The ROHM Group currently owns approximately 8,900 patents, primarily in Japan, the United States, Europe and China (5,900 patents in Japan and 3,000 patents overseas). A total of approximately 1,000 patent applications are filed by the ROHM Group annually in and outside Japan (600 in Japan and 400 overseas). With regard to trademarks, the Corporate Communication Department works closely with the Legal and Intellectual Property Division to secure trademark rights in the countries and regions where we sell products to further enhance the brand strength of the Company and its products.

・Supplemental Principle 4-1-1【Scope of delegation to the management team】

The rules governing the Board of Directors specify matters related to board resolutions, while company rules specify matters delegated to each Director. The Board of Directors resolves matters stipulated by law and the Company's Articles of Incorporation and the important matters of the Company and its Group companies, among other things.

・Principle 4-9【Qualifications and standards for judgment of independence of independent Outside Directors】

The Board of Directors establishes standards of independence for independent Directors. Please see "Independence Standards for Outside Officers" published in our website for details. We has designated all of five Outside Directors as Independent Outside Directors based on Outside Director's requirement by Companies Act and independent officer's requirement by the Tokyo Stock Exchange and "Independence Standards for Outside Officers". Also, we reported that information to the Tokyo Stock Exchange.

Supplemental Principle 4-10-1【Views on independence in the composition of the Nomination and Remuneration Committees, and the authorities, roles, etc. of such Committees】

In order to improve independence, objectivity and transparency regarding the nomination and remuneration of Officers and Directors, we have established, as an advisory body to the Board of Directors, the Director Remuneration Council and the Officer Nomination Council, where a majority of the Council members consist of Independent Outside Directors.

The Director Remuneration Council discusses the Company's director remuneration system and the remuneration of each Director based thereon. Based on the discussion results, the Director Remuneration Council then makes recommendations to the Board of Directors regarding the remuneration of Directors who are not members of the Audit and Supervisory Committee, and to the Audit and Supervisory

Note: The original version of this report is written in Japanese. In the event of any discrepancies in words, figures, or the like between this report and the original, the original Japanese version shall govern. The original version of this report can be seen at the website of Tokyo Stock Exchanges. (www.tse.or.jp)

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