Yaskawa Electric : Corporate Governance

05 Corporate Governance

Message from the Chairman of the Board of Directors

Achieve further growth by constantly
pursuing forms of governance that
contribute to our group's long-term	Hiroshi Ogasawara
enhancement of corporate value	Representative Director,
Chairman of the Board

Pursuing governance for long-term	external directors. Therefore, we have expanded our
enhancement of corporate value	activities, including meetings to exchange opinions and
	visits to business sites. As we discuss how to conduct
We are thinking about how Yaskawa's corporate gov-	business operations based on the respective knowledge
ernance should be, while focusing on "enhancing our	listed in the Directors' Skill Matrix, we strive to turn the
corporate value over the long term by providing high	PDCA cycle of management with a sense of speed while
value-added proposals with differentiated products and	receiving fresh opinions from outside directors.
services and building strong relationships of trust with
customers as a B-to-B global manufacturing company."	Appointment of New President
In addition, we have implemented new measures to
Mr. Ogawa became the new President in FY2023 after
enhance corporate governance in order to build an
effective system by gaining awareness from norms	deliberation by the Nomination Advisory Committee
such as the Corporate Governance Code, rather than	and resolution by the Board of Directors. In FY2016,
aiming at them. We intend to continue discussions and	as President and Representative Director, I set forth
deliberations.	the major direction of our group, the solution concept
At our group, the president is responsible for the	"i3-Mechatronics," and promoted the transformation
execution of operations, and the chairperson is respon-	of our business model. What our group needs now is
sible for supporting the president's business manage-	to enhance the effectiveness of "i3-Mechatronics" on a
ment, including building smooth relationships with	global scale and move toward further growth. Under the
external stakeholders, including industry associations	direction of "i3-Mechatronics" as General Manager of the
and government agencies. As chairman, I am in a posi-	Robotics Division, Mr. Ogawa promoted overall optimiza-
tion to promote governance throughout our group, and	tion and high value-added while sharing his ideas with
as a former president, I provide advice on the direction	me. Furthermore, with his experience in global business
of business execution.	operations and, above all, his passion for the direction
As chairman of the Board of Directors, the Board of	we are headed, I am confident that he is the right person
Directors monitors the status of implementation of impor-	to lead our group in the future.
tant issues and themes and the execution plan for them,	Under the new management structure, we will
while keeping in mind that the Board of Directors will	always pursue a form of governance that contributes to
exercise its supervisory function in order to improve the	our group's long-term enhancement of corporate value
effectiveness of corporate governance with the ultimate	and realize further growth. I appreciate our stakeholders'
objective of sustainable corporate value enhancement.	continued support.
In order to achieve this, it is particularly important to
share and understand the status of individual operations
of our group's distinctive business with internal and

71 YASKAWA Report 2023

05 Corporate Governance

Corporate Governance

Basic Approach to Corporate Governance

01 Drivers of Value

Yaskawa Electric recognizes the importance of corporate ethics based on compliance with laws and regulations and considers it an important issue to enhance corporate value by speeding up management decision- making in response to changing social and economic environments and improving management soundness.

To achieve this, we will build good relationships with our stakeholders, including shareholders, customers, business partners, local communities, and employees. We will also further strengthen our current institutions, including the General Meeting

of Shareholders, Board of Directors, Audit and Supervisory Committee, and Accounting Auditor, while enhancing corporate governance.

For our shareholders and investors, we will strive to disclose information promptly and accurately, and at the same time, enhance management transparency by disclosing a wide range of information.

Yaskawa has established the Yaskawa Electric Corporate Governance Policy, which sets forth its basic views on corporate governance, and discloses it on the website.

Creation

02 Management Policy

History of Initiatives to Enhance Corporate Governance

In order to improve the effectiveness of the Board of	on Yaskawa's distinctive business situation. We will
Directors and other organizations in order to enhance	continue to pursue the best for Yaskawa, enhance
corporate value in a sustainable manner, Yaskawa	management transparency, and further enhance cor-
has developed a governance system by strengthen-	porate governance.
ing both offensive and defensive governance based
History of initiatives to enhance corporate governance
Fiscal year		FY2012-2014	FY2015-2017	FY2018-2022
					FY2018
					• More than 1/3 of the board of
					directors are independent outside
			FY2012	FY2015	directors
			FY2019
			• Adoption of executive officer	• Transition to a company with Audit	• Disclosed skill matrix of the board
			system	and Supervisory Committee	of directors
			• Number of Directors was reduced	• Nomination Advisory Committee	FY2020
Main measures		to 12 from 20	established	• Determination of basic policies for
			executive compensation
				FY2016
			FY2014	• Established Corporate
			• Compensation Advisory	• Evaluation of the effectiveness of	Governance Policy
			Committee established	the Board of Directors	FY2021
				commenced	• Established Sustainability Policy
					FY2022
					• Commenced the Board of
					Directors' opinion exchange
					meeting
					• Improving the independence and
				• Strengthening of offensive and	objectivity of the Board of
				Directors
			• Faster and more efficient	defensive governance	• Enhancement of information
			management decision-making and	• Ensuring transparency and	disclosure
Aim and purpose		execution	fairness in nomination of director	• Contributing to the realization of a
	• Ensuring the appropriateness and	candidates	sustainable society in addition to
			transparency of executive	• Improving the functions of the	improving corporate value
			compensation	Board of Directors to increase	• Deepening the understanding of
				corporate value	the business of outside directors to
					further improve the effectiveness
					of the Board of Directors
Institution establishment	Company with Board of	Company with Audit and Supervisory Committee
Corporate Auditors
Composition of the		Internal	6	8*	8*
	Independent			5*
Board of Directors		1	3*
	outside	(2)
		(Female)
Composition of Audit		Internal	2	2	2
and Supervisory
Committee		Independent	2	3	4
(Up to FY2014, data		outside	(2)
indicated as "Board of		(Female)
Corporate Auditors")

* Including directors who are members of the Audit and Supervisory Committee.

Note: The No. of members of the Board of Directors and the Audit and Supervisory Committee are of the latest figure of the corresponding fiscal years on the table.

03 Creating Social Value and Solving 04 Foundation of Value Creation Social Issues through Business

05 Corporate Governance

06 Corporate Data

YASKAWA Report 2023 72

05 Corporate Governance

Corporate Governance

Corporate Governance System

Yaskawa Electric has adopted a corporate structure with an Audit and Supervisory Committee in order to further strengthen the oversight function of the Board of Directors over management and corporate governance, as well as to enhance the soundness and efficiency of management. The Company believes that the supervisory function of the Board of Directors will be further enhanced by utilizing the legal functions of Audit and Supervisory Committee Members, such as the ability of Audit and Supervisory Committee Members as directors to exercise voting rights at the Board of Directors on

important matters of the Company, such as the appointment and dismissal of Representative Directors, and the ability to examine the results of the execution of business by Executive Directors and to express opinions at the General Meeting of Shareholders on the appointment, dismissal and remuneration of Executive Directors. In addition, the Company has introduced an executive officer system to separate management decision-making and business execution functions, enhance each func- tion, and speed up business execution.

Corporate governance structure

General Meeting of Shareholders

Election/dismissal	Election/dismissal of the
Board of Directors
Monitor/verify	Audit/

		Audit and Supervisory	Supervise
		Committee
Cooperation

Election/dismissal of the

Board of Directors

		Consult		Nomination Advisory
				Committee
Board of Directors
	Compensation
		Submit		Advisory Committee

Accounting Auditors

Cooperation

Cooperation

Accounting Audit

Instruct	Report		Audit/
	Supervise

Instruct

Audit Div.

Report

Internal Audit

	Supervise	Election,		Apply/Report
	etc.
						Consult		Executive Committee
Representative
Director, President			• Executive Directors
		• Executive Officers, etc.

Submit

Apply/Report

Head Quarters and Strategic Business Divisions / Group Companies

Board of Directors

In addition to the regular meetings of the Board of Directors, the Board of Directors convenes extraordinary meetings as necessary to decide on important matters related to management and matters stipulated by laws and regulations, and to supervise the status of business execution on an ongoing basis.

In deliberations by the Board of Directors, Outside Directors fully understand the current status of Yaskawa based on information submitted or reported by the Internal Audit and Control Division, Corporate administration operations and other functions, and the Accounting Auditor provide advice and proposals based on their respective knowledge, thereby fulfilling appropriate supervisory functions.

*Specific initiatives are explained in "P. 77 Key Themes and Results of Initiatives at the Board of Directors Meeting" and "P. 78 Evaluating and Improving the Effectiveness of the Board of Directors."

Audit and Supervisory Committee

The Audit and Supervisory Committee fully understands the current status of Yaskawa Electric based on information reported by the Internal Control Division, the Internal Audit Division, and the head office business divisions, while full-time Audit and Supervisory Committee Members conduct audits based on actual inspections. In addition, the Audit and Supervisory Committee carries out duties in cooperation with the Accounting Auditor, and monitors and verifies the duties of the Accounting Auditor.

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Executive Committee

Among matters decided by the Board of Directors, discussions are held on matters that require prior consultation and important decisions for business execu- tion. Executive Committee meetings are held once a month in principle, but are held on an extraordinary basis if necessary.

Nomination Advisory Committee

The Nomination Advisory Committee, of which the majority are independent outside directors, has been established under the Board of Directors to ensure the transparency and fairness of the nomination of director candidates, the selection process of representative directors and officers, etc., and to ensure a forum for outside directors to obtain sufficient information and discuss to form opinions on the nomination of director candidates, etc. When submitting proposals regarding the nomination, etc. of director candidates, etc. to the Board of Directors, the details thereof shall be fully reflected upon the report of the Committee.

• Contents of discussions and initiatives of FY2022
  Nominations of Representative Directors, Directors, and Executive Officers, including the President and Representative Director, were considered and deliberated (held 6 times in total in FY2022)
• Procedures for nominating a new president
  The Nomination Advisory Committee met several times to explain the concept of selecting a Representative Director, President. After deliberation, the Nomination Advisory Committee received approval.
• Policy for initiatives in FY2023 and beyond
  We will further ensure transparency and fairness in the selection process by explaining more specifically our approach to the selection of representative directors, directors, and executive officers.
  We also rely on the selection policies stipulated in our Corporate Governance Policy for the independence of outside directors. We will consider diversity based on the skills matrix of directors.

Compensation Advisory Committee

The Compensation Advisory Committee consisting of a majority of independent outside directors is established under the Board of Directors to ensure the appropriateness and transparency of the remuneration of directors (excluding directors who are Audit and Supervisory Committee Members) and executive officers through fair deliberations, and to ensure a forum for outside directors to obtain sufficient information and discuss the remuneration in order to form opinions. When submitting a proposal on remuneration for directors and officers to the Board of Directors, the Company deliberates on the remuneration for directors and officers calculated in accordance with the remuneration rules and other matters necessary for remuneration for directors and officers from the viewpoint of appropriateness, and after receiving a report from this Committee, fully reflects the contents of the proposal.

• Contents of discussions and initiatives of FY2022
  The Company reviewed and deliberated the appropriate- ness of the allocation and level of basic remuneration, performance-linked remuneration (single-year remunera- tion), and stock remuneration (medium- to long-term remuneration) for directors (excluding directors who are Audit and Supervisory Committee Members.) and execu- tive officers (held a total of 3 times in FY2022).
• Policies for initiatives in FY 2023 and beyond
  With the launch of mid-term business plan "Realize 25," we reviewed stock compensation (medium- to long-term compensation) in light of targets thereof.

01 Drivers of Value Creation

02 Management Policy03 Creating Social Value and Solving 04 Foundation of Value Creation Social Issues through Business

05 Corporate Governance

06 Corporate Data

YASKAWA Report 2023 74

05 Corporate Governance

Corporate Governance

Directors' Compensation

Basic policy on directors' compensation

With the aim of continuously increasing corporate value and strengthening competitiveness, directors' compensation at Yaskawa is designed to maintain a level of compensation that secures talented human resources and provides incentives for short-term, medium- to long-term performance improvement.

• Basic policy for performance-linked compensation

i) Single-year compensation

In order to raise awareness of the continuous improvement of profits as a whole, compensation will be paid according to the profit performance of the previous year.

ii) Medium- and long-term compensation

Raise awareness of improving corporate value over the medium to long term and share benefits with stakeholders.

Composition of directors' compensation

• Directors (excluding directors who are Audit and Supervisory Committee Members)

a. Directors (excluding outside directors)

It consists of basic remuneration, which is fixed remuneration, performance-linked remuneration (single-year remuneration) and stock remuneration (medium- to long-term remuneration), which are linked to business performance. The index setting of this stock remuneration includes ESG targets in addition to business performance.

b. Outside Directors

It consists of basic compensation and stock compensation.

• Directors who are Audit and Supervisory Committee Members
  It consists of basic compensation and stock compensation.

Remuneration to Directors (Excluding Audit and Supervisory Committee Members)

1. Basic compensation

At the 99th Ordinary General Meeting of Shareholders held on June 18, 2015, a resolution was passed to set a fixed limit of 430 million yen or less for the basic remuneration of Directors. Details are as follows.

• Directors (excluding outside directors)
  As directors assume the responsibility of improving corporate value, a certain amount will be paid according to the perfor- mance evaluation and position of each Director.

• Outside Directors
  Outside directors are responsible for supervising the execu- tion of duties, so an amount fixed in advance is paid.

2. Performance-linked compensation

The maximum amount of performance-linked remuneration (single-year remuneration) for directors was resolved as follows at the 99 Annual General Meeting of Shareholders held on June 18, 2015.

• Directors (excluding outside directors)
  In order to clarify the linkage with consolidated business results, the amount shall be no more than 1.0% of profit attributable to owners of the parent company of the previous fiscal year of the general meeting of shareholders elected or reappointed. The amount of remuneration for each director is calculated by taking into account the relative results to Yaskawa's business results from the standard deviation based on operating profit rate, operating profit growth rate and ROA of other companies in the same industry.
• Outside Directors
  Performance-linked compensation is not provided.

3. Stock compensation (medium- to long-term compensation)

The Board Benefit Trust (BBT), a stock compensation system for directors, is a stock compensation system linked to the achievement of performance indicators in mid-term business plan. As a result, directors share not only the benefits of rising stock prices but also the risk of falling stock prices with shareholders, thereby encouraging directors to improve the medium- to long-term business performance and their motivation to increase corporate value. At the 105th Annual General Meeting of Shareholders held on May 26, 2021 it was resolved as follows:

• Directors (excluding outside directors)
  Points are awarded according to the degree of achievement of the targets listed in mid-term business plan (performance-linked).
• Outside Directors
  A predetermined number of points will be awarded based on the assumption that mid-term business plan goals are achieved (not linked to performance).

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