Yamaha : Corporate Governance Report 2021/11/15

CORPORATE GOVERNANCE

Date of last revision: November 15, 2021 YAMAHA Corporation Takuya Nakata

President and Representative Executive Officer Contact: Stocks and Official Documents Department Legal Division Securities Code: 7951

https://www.yamaha.com/en/

The status of corporate governance in Yamaha Corporation ("the Company") is as follows:

• Basic Policies for Corporate Governance and Basic Information on Capital Structure, Corporate Attributes, and Other Matters

１．Basic Policy

Yamaha Corporation and our Group companies (hereinafter referred to as "Yamaha" or "the Company" and the "Yamaha Group" or "the Group") have issued the Yamaha Philosophy as our Corporate Philosophy and our Promises to Stakeholders, which we have made to all related parties, starting with our shareholders. By fulfilling our social responsibilities in such areas as compliance, the environment, safety, and contribution to the community even as we ensure a high level of profitability based on our global competitive prowess and increased business efficiency, we are working to ensure sustainable growth and to enhance the enterprise value over the medium-to-longer term.

To realize this vision, based on the "Basic policies for corporate governance" presented below, along with putting in place the organizational design, operating framework, and mechanisms as well as implementing various measures to manage the Company, we are carrying out quality business management in a transparent manner through the appropriate disclosure of information.

[Basic policies for corporate governance]

• From a shareholder's perspective, ensure the rights and equal treatment of shareholders
• Taking into consideration our relationships with all stakeholders, proactively fulfill the Company's social responsibilities
• Ensure that information is disclosed appropriately and the management is transparent
• By separating the oversight and executive functions and strengthening the oversight function, ensure that the Board of Directors is highly effective while at the same time executing decisions appropriately and with a sense of urgency
• Proactively engage in dialogue with shareholders

[Yamaha Philosophy]
◆ Corporate Philosophy:	Sharing Passion and Performance
	With our unique expertise and sensibilities, gained from our devotion to sound and music,
	we are committed to creating excitement and cultural inspiration together with people around
	the world.
◆ Customer Experience*1	Joy, Beauty, Confidence, Discovery
◆ Yamaha Quality*2	Excellence, Authenticity, Innovation
◆ Yamaha Way*3	Embrace Your Will, Stand on Integrity, Take Proactive Actions, Go Beyond the Limits,
	Stick to the Goals

*1 The Customer Experience exemplifies the meaning of "Sharing Passion and Performance" from the customer's viewpoint. When customers experience, use, or own Yamaha products and services they should experience a profound response that will stimulate both their emotions and senses.

*2 The Yamaha Quality is a set of criteria that supports Yamaha's insistence on quality in products and services and our dedication to excellence in manufacturing. These criteria assist in making the Corporate Philosophy a reality.

*3 The Yamaha Way explains the mindset that all employees of the Yamaha Group should adopt, and the manner in which they should act on a daily basis, in order to put the Corporate Philosophy into practice.

[Promises to Stakeholders]

• Customer-Orientedand Quality-Conscious Management

Yamaha fully satisfies its customers by offering quality products and services that incorporate new and traditional

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technologies as well as refined creativity and artistry.

• Transparent and Sound Management

Yamaha delivers proper returns to shareholders by ensuring a solid business performance and achieves lasting development through transparent and sound management.

• Valuing People

Yamaha strives to be an organization where each person's individuality and creativity are respected and all can demonstrate their full potential through their work.

• Harmony with Society

Yamaha is a good corporate citizen that contributes to the development of society, culture, and the economy by observing laws, demonstrating high ethical standards, and endeavoring to protect the environment.

Our Corporate Governance Policies, including the basic policies above, can be seen on our website, here: https://www.yamaha.com/en/ir/governance/

【Reasons why we are not able to fully comply all aspects of the Corporate Governance Code】

The Company fully complies all aspects of the Corporate Governance Code.

【Disclosure based on the principles of the Corporate Governance Code】

The Company discloses information based on Corporate Governance Code revised as of June 11, 2021.

[Principle 1-4]Cross-holdings

It is Yamaha's basic policy to have cross-holdings only to the extent that this is reasonable because it contributes to the Company's sustainable growth and the enhancement of corporate value over the medium-to-longer term. "Reasonable because it contributes to the Company's sustainable growth and the enhancement of corporate value over the medium-to- longer term" refers to enhancing the value of our brand, supporting sustainable growth, and ensuring a strong financial base by maintaining stable relationships with companies with which we have important cooperative relationships, business partners, and financial institutions.

Yamaha Motor Co., Ltd. uses the same "Yamaha" brand as the Company. Yamaha Motor Co., Ltd. and the Company have established the Joint Brand Committee, YAMAHA Brand Charter, and Joint Brand Regulations. Along with carrying out various initiatives together, initiatives in furtherance of each other's sustainable growth are monitored appropriately through shareholdings and the assignment of directors. By building this kind of relationship of monitoring and cooperation with Yamaha Motor Co., Ltd., the Company aims to maintain and enhance the value of the "Yamaha" brand, thereby contributing to the enhancement of the Company's corporate value over the medium-to-longer term.

The Board of Directors regularly reviews the reasonableness of individual cross-holdings on an ongoing basis and works to reduce cross-holdings based on such verifications as whether the purposes for such shareholdings are appropriate and whether the benefits accruing from these holdings and the risks associated with them cover the cost of capital.

In exercising the voting rights associated with cross-holdings, the decision of how to vote is made comprehensively from the standpoint of whether the resolution enhances the corporate value of the company in question over the medium-to- longer term, whether it is in accordance with our "Basic policy concerning cross-holdings," and whether it leads to the enhancement of our corporate value over the medium-to-longer term. The Company exercises the voting rights in accordance with such decision.

[Principle 1-7] Transactions with related parties

When engaging in transactions with Directors, Executive Officers, or close relatives thereof, necessary systems are put in place to ensure that they are not detrimental to the Company or the shareholders' common interests. With the approval of the Board of Directors pursuant to the Companies Act, the results of related party transactions shall be reported after a transaction is completed.

[Supplementary Principle 2-4-1] Ensuring diversity

Pursuant to the Valuing People pledge in our Promises to Stakeholders, Yamaha endeavors to achieve sustainable growth and enhance the corporate value over the medium-to-longer term by taking advantage of the perspectives and values of our diverse personnel. And, going forward, we will become even more proactive in the furtherance of diversity at the global level.

We have set and are implementing numerical targets such as the multi-nationalization of important posts and the ratio of

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female managers, and in the future we will work even more actively to promote diversity on a global level. Human resource diversity and development policies can be seen on our website, here:

https://www.yamaha.com/en/csr/human_rights_and_labor_practices/

[Principle 2-6] Roles of Corporate Pension Fund as Asset Owner

To ensure that Yamaha can make pension payments now and into the future through the Pension Fund of Yamaha, Yamaha manages these pension assets by preparing policies for the composition of pension asset holdings from a medium- to long- term perspective.

Decisions on fund management are made by the Committee of Representatives based on the deliberations of the Asset Management Committee. Yamaha appoints persons with the appropriate qualifications from general managers of the corporate finance divisions, human resource divisions to the Asset Management Committee and Committee of Representatives, and, to serve as representatives of the beneficiaries, also appoints senior members of Yamaha Union. In addition, Yamaha selects and appoints personnel with appropriate qualifications to serve in the Corporate Pension Fund Secretariat.

[Principle 3-1] Improving information disclosure

In addition to disclosing information as required by laws and regulations, including the regulations of the Tokyo Stock Exchange, Yamaha discloses information in a timely, suitable, and proactive manner through our Corporate Governance Report and other reports, which are also published in English. These reports contain our basic policies for corporate governance, including our Corporate Philosophy, business strategies, and business plans; the policies and procedures by which director candidates are nominated; descriptions of the individual appointments and nominations; the policies and procedures by which compensations for the Directors and the Executive Officers are set

1. We have formulated a Corporate Philosophy and a Medium-Term Management Plan. They can be seen here:

Corporate Philosophy	https://www.yamaha.com/en/about/philosophy/
Medium-term Management Plan	. https://www.yamaha.com/en/ir/presentations/slideshow_201904/

1. Our Corporate Governance Policies contains our basic concept of corporate governance. It can be found on our Website here:
   https://www.yamaha.com/en/ir/governance/
2. The compensation of members of the Board of Directors, excluding Outside Directors, and the compensation of the Executive Officers shall consist of basic compensation and a bonus that reflects short-term Company performance. In addition to these forms of compensation, restricted stock of the Company will be paid with the objective of reflecting the medium-term performance of the Company in compensation and aligning the interests of the corporate officers with those of the shareholders. Compensation is determined by the Compensation Committee after due consideration. The compensation of Operating Officers shall also be determined after deliberation in the Compensation Committee based on a similar compensation structure. Note that the compensation of Outside Directors and the compensation of Audit Officers will consist of basic compensation only, in view of the roles these officers must play.
   For details, see the section on "Matters related to remunerations for Directors and Executive Officers", under "1. Matters related to the structure, operation, etc. of the organization" on Part II.

4. The Nominating Committee determines the contents of proposals regarding the election and dismissal of the Directors to be submitted to the General Shareholders' Meeting, and the election and dismissal of the Executive Officers, the Operating Officers and Audit Officers to be submitted to the Board of Directors.

Regarding the selection of candidates for Director, the Nominating Committee selects candidates based on; human resource requirements that are required of directors as defined by their respective roles such as basic personal qualities and capabilities, competency, experience and record of achievements; and skills matrix that lists the expertise required in light of management strategy, and then decides on the content of selection proposals to be submitted to the General Shareholders' Meeting.

Regarding the selection of members and the chairs of the Nominating Committee, Audit Committee, and Compensation Committee, the Nominating Committee select candidates based on personal qualities and capabilities as defined by the roles of the committee. The Nominating Committee then decides on the content of selection proposals to be submitted to the Board of Directors. Note that for the selection of candidates for members and the chair of the Audit Committee, the Nominating Committee gathers opinions from the Audit Committee in advance.

For Executive Officers, the Nominating Committees selects candidates based on basic personal qualities and capabilities, competency, experience, and record of achievements that are required of Executive Officers as defined by their respective roles, and then decides on the content of selection proposals to be submitted to the Board of Directors.

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For Operating Officers and Audit Officers, the Nominating Committee selects candidates based on personal qualities and capabilities they are required to play as defined by their respective roles, and then decides on the content of selection proposals to be submitted to the Board of Directors. Note that for the selection of candidates for Audit Officers, the Nominating Committee gathers opinions from the Audit Committee in advance.

5. Reasons for appointment of Directors

Takuya Nakata Having served in positions such as General Manager of our Pro Audio & Digital Musical Instruments Division, President and Director of Yamaha Corporation of America, Mr. Takuya Nakata has a wealth of experience and achievements alongside broad insight in business. He has led the Group as President and Representative Director since June 2013 and as Director, President and Representative Executive Officer since June 2017 after our transition to a Company with Three Committees (Nominating, Audit, and Compensation). Additionally, he has been a leader in Corporate Governance reform via initiatives such as the transition to a Company with Three Committees (Nominating, Audit, and Compensation), and has worked to strengthen the oversight function of the Board of Directors. He has been appointed as a director on expectations that he will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

Satoshi Yamahata In addition to work experience at an overseas subsidiary, Mr. Satoshi Yamahata has served as General Manager of the Accounting and Finance Division, General Manager of the Corporate Planning Division, Executive General Manager of the Operations Unit, and Executive General Manager of the Corporate Management Unit, and has a wealth of experience and achievements alongside broad insight. He has promoted Corporate Governance reform as Director and Senior Executive Manager since June 2015 and as Director and Managing Executive Officer since June 2017, and has worked to strengthen the oversight function of the Board of Directors. He has been appointed as a director on expectations that he will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

Yoshimi Nakajima Having been involved in management as the person responsible for the Asian region and Japanese arm of a global financial institution, Ms. Yoshimi Nakajima has a wealth of experience and achievements alongside broad insight as a corporate manager. Since assuming the position of Outside Director of the Company in June 2017, she has provided highly effective supervision while supporting the determination of major corporate actions and quick and decisive execution on decision-making, based on her wealth of achievements and insights, etc., as a corporate manager. She has been appointed as a director on expectations that she will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

Taku Fukui With a mastery of corporate law and corporate governance in Japan and overseas as an attorney, Mr. Taku Fukui has a high degree of expertise, wealth of experience and achievements alongside broad insight. Since assuming the position of Outside Director of the Company in June 2017, he has provided highly effective supervision while supporting the determination of major corporate actions and quick and decisive execution on decision-making, based on his high degree of expertise, wealth of achievements and insights, etc. He has been appointed as a director on expectations that he will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

Yoshihiro Hidaka Having been involved in management at one of the largest global transportation equipment manufacturers in Japan, Mr. Yoshihiro Hidaka has a wealth of experience and achievements alongside broad insight as a corporate manager. Additionally, as President and Representative Director of Yamaha Motor Co., Ltd., a company that shares a common brand with the Company, he is a person with one of the deepest understandings of the Yamaha brand. Since assuming the position of Outside Director of the Company in June 2018, he has provided highly effective supervision while supporting the determination of major corporate actions and quick and decisive execution on decision-making, based on his wealth of achievements and insights, etc., as a corporate manager. He has been appointed as a director on expectations that he will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc., and improve the Yamaha brand value.

Mikio Fujitsuka Having been involved in management as CFO at one of the largest global construction machinery manufacturers in Japan, Mr. Mikio Fujitsuka has a wealth of experience and achievements alongside broad insight as a corporate manager, as well as adequate knowledge of finance and accounting. Since assuming the position of Outside Director of the Company in June 2019, he has provided highly effective supervision while supporting the determination of major corporate actions and quick and decisive execution on decision-making, based on his wealth of achievements and insights, etc., as a corporate manager. He has been appointed as a director on expectations that he will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

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Paul Candland Having been involved in management as the person responsible for the Asian region and Japanese arm of a global entertainment company, Mr. Paul Candland has a wealth of experience and achievements alongside broad insight as a manager. Since assuming the position of Outside Director of the Company in June 2019, he has provided highly effective supervision while supporting the determination of major corporate actions and quick and decisive execution on decision- making, based on his wealth of achievements and insights, etc., as a corporate manager. He has been appointed as a director on expectations that he will help further strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

Hiromichi Shinohara Having been involved in management as a representative director of one of the largest communications and ICT companies in Japan, Mr. Hiromichi Shinohara has a wealth of experience and achievements alongside broad insight as a corporate officer. He also has wide-ranging and in-depth knowledge of communications systems and electronics. He has been appointed as a director on expectations that he will help strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

Naoko Yoshizawa Having been involved in management as an executive officer of one of the largest electronics and ICT companies in Japan and as the CEO of its overseas group company, Ms. Naoko Yoshizawa has a wealth of experience and achievements alongside broad insight as a corporate officer. She also has a high degree of expertise in digital and AI technologies. She has been appointed as a director on expectations that she will help strengthen the oversight function of the Board of Directors through these achievements and insights, etc.

[Supplementary Principle 3-1-3] Disclosure of Efforts of Sustainability

1. Our efforts of sustainability can be seen on our website, here:

Annual Report	https://www.yamaha.com/en/ir/publications/
Sustainability Report	https://www.yamaha.com/en/csr/

2. "Endorsement of TCFD Recommendations" can be seen on our website, here: https://www.yamaha.com/en/csr/environment/global_warming/

[Supplementary Principle 4-1-1] Scope of delegation to the management team

With the aim of achieving sustainable growth and the enhancement of corporate value over the medium-to-longer term, the Board of Directors makes decisions on important matters as specified in laws and regulations, the Articles of Incorporation, and the Regulations of the Board of Directors, including basic management policies.

The Board of Directors delegates important decisions concerning matters of executing business, other than those above mentioned as delegated to the Executive Officers. Thereby, the Company seeks to separate the oversight and execution functions, and realize the appropriate conduct of business with a sense of urgency.

[Supplementary Principle 4-1-3] The Successor Plan for CEO and other officers

Regarding the succession plans for the CEO and other officers' successors, the Board of Directors oversees appropriately through the system planning and oversight by the Nominating Committee.

[Principle 4-9] Standards and qualities of independence of the independent outside directors

In addition to the requirements for independence established by the Companies Act and the Tokyo Stock Exchange, the Company has established independence criteria.

The Company's standards for the independence of independent outside directors are:

1. Persons for whom any of the following apply may not serve as independent outside directors of the Company. If after the appointment of an independent outside director any of the following are found to apply, the appointment shall be nullified.
   1. Persons who do not meet the requirements and qualifications of an outside director as stipulated in the Companies Act.
   2. Persons or executives with whom the Group is a significant business partner, or persons or executives which are significant business partners for our Group.
   Here, "significant business partner" means, in any one of the most recent three years, any company for which the amount the Company receives from the group of business partners exceeds 2% of the Company's consolidated net sales, or the amount to be paid to the Company that exceeds 2% of those companies' consolidated net sales or any of the top five banks with which we transact business.
   3. Principal shareholders in the Company or executives of the Company, or directors or corporate auditors of companies in which the Company is a principal shareholder.
   Here, "principal shareholder" means any entity holding more than 10% of the outstanding shares or other form of equity

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