Yokogawa Corporate Governance Report Updated (PDF:1.01MB/40P)

The following is an English translation of a document written initially in Japanese. Should there be any inconsistency in the contents of the translation and the official Japanese version, the latter shall prevail.

Corporate Governance Report

Last Update: June 22, 2022

Yokogawa Electric Corporation

Hitoshi Nara, President and Chief Executive Officer Contact: Hirohiko Nakatani, Department Manager Investor Relations Department Securities Code: 6841 https://www.yokogawa.com/

The corporate governance of Yokogawa Electric Corporation (the "Company") is described below.

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

Other Basic Information

1. Basic Views

The Yokogawa Electric Group (hereinafter referred to as the "Group") has established a corporate philosophy, the Yokogawa Philosophy, and the Yokogawa Group Code of Conduct that apply to the entire Group, and strives to maintain appropriate relationships with all stakeholders as well as aims for sustainable corporate growth and increased corporate value over the medium to long term. In addition, based on the philosophy that "a company is a public entity of society," the Group positions answering the trust of all stakeholders, including shareholders, customers, business partners, society, and employees, via sound and sustainable growth, as the basic mission of its corporate management.

In order to maximize its corporate value, the Group believes that efforts such as thorough compliance, appropriate management of risks, and information disclosure in order to ensure constructive dialogue with shareholders and other stakeholders are important.

In addition, we believe that solving environmental and social issues is the raison d'etre of the Group, and we have established Yokogawa's Purpose as "utilizing our ability to measure and connect, we fulfill our responsibilities for the future of our planet," in which the top management itself demonstrates strong conviction and leadership to promote management that values sustainability.

In order to experience healthy and sustainable growth of the Group and to maximize its corporate value, the Group believes that efforts such as thorough compliance, appropriate management of risks, and information disclosure in order to ensure constructive dialogue with shareholders and other stakeholders are also essential

The Group formulates and discloses these Yokogawa Corporate Governance Guidelines which serve as the basic policy for continually working on corporate governance in line with the above views.

https://cdn-nc.yokogawa.com/1/20520/tabs/ir_cg_guidelines-en.pdf

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

The Company complies with all principles of the Corporate Governance Code revised in June 2021, including details for the

Prime Market.

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

[Principle 1.4]

The Group shall strategically hold shares, provided such shares are determined to contribute to maintaining and increasing corporate value. With respect to all cross-holding shares, the Board of Directors shall uphold a policy of keeping the minimum necessary amount of cross-holding shares and decide every year if it is suitable to hold the shares by examining the purpose and economic rationale, etc. of individual shares from a medium- to long-term perspective. Any strategically held share that is

- 1 -

deemed as no longer suitable to hold as a result of the examination shall be sold with the attempt of reducing shares held. In the examination, the shares held are classified into the following three categories, and it is determined whether holding is suitable, with transaction status, share price and dividends, and capital costs deemed as KPIs.

a. Business partners (for the purpose of maintaining and strengthening business transaction and partner relationships) b. Financial institutions (for the purpose of attempting to conduct financial transactions smoothly)

c. Others (those which do not fall under the above categories)

Specifically, it is assessed and determined for each share held through the process of a. to d. below whether holding is suitable. a. Examination based on quantitative assessment of share price (market value, cost and carrying amount after impairment)

b. Examination based on quantitative assessment with ROIC, which is calculated on the basis of each of market value and cost, compared with the share price assessed in a.

(In the calculation of ROIC, after-tax gross income from sales and dividend income are used.)

c. Examination based on qualitative assessment of purpose of holding, transaction results, estimate for future transactions, and other factors for each share held.

d. The assessments through the examinations in a. to c. are taken into account comprehensively from perspectives of medium- to long-term economic value, business expansion and strengthening of relationships, and others.

With respect to exercising the voting rights of strategically held shares, the Group shall make decisions based on sufficient examination, from the standpoint of increasing the corporate value of the Company and the companies that the Company has invested in over the medium to long term.

Particularly in the following cases, the Company shall exercise the voting rights based on careful examination on whether or not to exercise the voting rights:

1. Cases where any violation of law, misconduct or anti-social behavior has occurred at the companies in which the Company has invested
2. Cases of proposals that are considered to be likely to undermine the Company's corporate value, for organizational restructuring including merger or acquisition and business transfer, advantageous issue of shares to third parties, etc.

[Principle 1.7]

The existence or non-existence of business transactions between the Company and its Directors, Audit & Supervisory Board Members, or their close relatives, and between the Company and its key shareholders, etc., (hereinafter referred to as the "related party transactions") shall be investigated regularly and reported to the Board of Directors. In conformity with applicable laws and regulations including the Companies Act and the Financial Instruments and Exchange Act, and other applicable rules, related party transactions shall be disclosed upon resolution by the Board of Directors.

[Supplementary Principle 2.4.1]

The Company has established its approach to ensuring diversity, its policy to develop human resources, and its policy to maintain its internal environment. These are specified in the human resources management codes within the Group Management Standards (GMS), which are positioned as the most important set of company rules for the Yokogawa Group. Regarding disclosure, the Company has made a D&I declaration, which pledges "to promote diversity and inclusion (D&I), proactively hire, develop, and promote human resources with diverse experiences, knowledge, emotions, perspectives, cultures, backgrounds, and values, to promote the creation of working environments in which anyone can work safely and securely, while being themselves, and to contribute to realizing an abundant human society for the next generation." This declaration, along with our policy and the status of activities to ensure diversity, are disclosed in the Sustainability Report issued by the Company.

Sustainability Report:

English: https://www.yokogawa.com/about/sustainability/report/

Manager ratio and promotion of female employees (activities to promote the active participation of female employees)

In April 2015, the Company set up a dedicated body to promote diversity. The Company has continuously worked to provide opportunities for experience and increased career awareness by creating individual development plans for each female leader candidate and by confirming progress. As a result, the female manager ratio, which was only 0.7% in 2005 (non-consolidated basis), rose by a multiple of more than ten to 8.2% in July 2021 and the growth rate has risen by a multiple of four since fiscal year 2014. Furthermore, in April 2021, the Group produced its first two female executive officers through internal promotion. The KPI for the female manager ratio in Accelerate Growth 2023 is 9.3% on a non-consolidated basis and 12.5% for the overall Group. As we head toward 2023, we have set an overall Group KPI of 20% for the female manager ratio as we aim to create an environment in which anyone can exercise their abilities.

- 2 -

Manager ratio and promotion of foreigners

The Company's foreign manger ratio as of March 31, 2022 was 3.9% on a non-consolidated basis and 60.9% for the overall Group. We aim to continue to increase the foreign manager ratio in Japan. Furthermore, regarding the promotion of foreigners, the ratio of foreigners being developed for promotion in our talent management system is 67.6%, as we proactively move forward with both diversity and promotions. *The Group's overall ratio of foreign employees is 61%, with employees of more than 80 nationalities working for the Group.

Manager ratio and promotion of mid-career hires

The Company's mid-career hire manager ratio as of March 31, 2022 was 23.3% on a non-consolidated basis. Together with the increasing ratio of mid-career hires, the mid-career hire manager ratio is rising each year, now approaching 25.9% of the manager ratio of the Company overall. The Company endeavors to conduct fair, broad promotions without discrimination or bias. Furthermore, the Company now has six executive officers that were either invited from outside of the Company or hired as mid- career hires.

[Principle 2.6]

Corporate pensions of the Company and major group subsidiaries in Japan are defined-contribution pensions. The financial condition shall never be affected by future performance of management of the pensions.

The Company regularly monitors the institutions of corporate pension management with the aim of assisting stable asset building of the employees.

[Principle 3.1]

1. The Company has disclosed its corporate goals as the corporate philosophy. The management strategy and business plan are disclosed on the Yokogawa Report, its website and others when they are formulated. The current management strategy and business plan have been disclosed as "Accelerate Growth 2023," a mid-term business plan.
   The Yokogawa Philosophy:
   "As a company, our goal is to contribute to the realization of a sustainable society through broad-ranging activities in the areas of measurement, control and information. Individually, we aim to combine good citizenship with the courage to innovate."

Accelerate Growth 2023, a Mid-term Business Plan:

https://www.yokogawa.com/about/company-overview/corporate-strategy/

Yokogawa Report:

https://www.yokogawa.com/about/ir/reports/annual/

1. The basic views on corporate governance and basic policy are presented in "I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information, 1. Basic Views" of this report. In addition, the Group has established and disclosed the Yokogawa Corporate Governance Guidelines which serve as the basic policy for continually working on corporate governance.
2. At the Board of Directors meeting held on March 2, 2021, the Company resolved the policy in relation to decisions concerning the details of compensation for individual Directors. Prior to the resolution at the Board of Directors meeting, the matters to be resolved were consulted with the Compensation Advisory Committee and reported to the Board of Directors.
   In addition, the Board of Directors has confirmed regarding the compensation for individual Directors for the fiscal year under review that the method of determining the details of compensation and the content of determined compensation are consistent with the policy resolved by the Board of Directors and that the reports of the Compensation Advisory Committee are respected, has also judged that such procedures are in accordance with the policy.

The contents of the policy in relation to decisions concerning the details of compensation for individual Directors are as follows.

(1) Basic Policy

The basic policy on compensation for Directors shall be as follows:

1. Plan that promotes sustainable, medium- to long-term improvement in corporate value
2. Plan that reflects the medium- to long-term management strategy and strongly motivates the achievement of medium- to long-term management objectives
3. Plan that prevents bias toward short-term thinking
4. Plan and monetary amounts that secure and maintain excellent human resources
5. Plan that includes transparency, fairness, and rationality for stakeholders, decided through an appropriate process to ensure these factors
6. • 3 -

(2) Policy for determining compensation, etc. for officers

The amount of compensation for Directors shall be determined individually within the limits approved at the General Meeting of Shareholders. Compensation for Audit & Supervisory Board Members shall also be determined through consultation among Audit & Supervisory Board Members within the limits approved at the General Meeting of Shareholders.

Performance-linked compensation covers directors and executive officers, excluding Outside Directors, Audit & Supervisory Board Members and non-executive Directors. This is because variable compensation such as performance-linked compensation is not appropriate for Outside Directors and Audit & Supervisory Board Members, who maintain position independent from the performance of duties, and as such only fixed compensation is paid, identically for non-executive Directors.

Furthermore, regarding medium-tolong-term incentives, at the 142nd Ordinary General Meeting of Shareholders held on June 26, 2018, the Company introduced the Performance Share Unit Plan (the "PSU Plan"), a performance-based stock compensation plan under which shares and cash are paid based on the achievement of our consolidated return on equity (ROE) and other factors in the final fiscal year of the period covered by the mid-term business plan.

The levels of compensation for executives are set through a comparison with companies from the same industry and of the same scale, both domestically and internationally, based on the results of surveys conducted by external organizations, and the Company's financial conditions.

Compensation levels for each position are based on the level of 50%iles by peer companies. From the viewpoint of flexible management in response to changes in the environment and the acquisition and retention of talented management personnel, compensation levels shall generally be within the range of 25%iles to 75%iles.

Compensation for personnel hired overseas may be determined individually based on a compensation benchmark analysis that takes into account the responsibilities of each position based on executive compensation survey data in that overseas region. Additionally, the retirement bonuses for directors were eliminated on the day of the 2004 Annual General Meeting of Shareholders held on June 25, 2004.

1. Policy and procedure for appointment and dismissal of Directors, Audit & Supervisory Board Members and officers are as follows:
   Policy for nomination of Director and Audit & Supervisory Board Member candidates, and appointment of officers
   The Board of Directors shall be composed so as to be well balanced in knowledge, experience, and capabilities to effectively fulfill its roles and responsibilities, and it shall be constituted in such a manner as to achieve both diversity and appropriate size. Under this premise, human resources that contribute to improvement of corporate governance are nominated as Director and Audit & Supervisory Board Member candidates. Furthermore, human resources that are familiar with the Group's business and contribute to the appropriate execution of business and supervision of highly effective management and that have experience and knowledge required for formulation of management strategies aiming at an increase in the Company's corporate value over the medium to long term and contribute to right management decisions and supervision of highly effective management are nominated as Director candidates, while human resources that are familiar with the Group's business and contribute to appropriate auditing of management of the Company and Group companies and that have knowledge on accounting, finance, legal affairs and corporate management and contribute to appropriate auditing of management are nominated as Audit & Supervisory Board Member candidates. Officers are appointed after confirmations of whether the candidate has sufficient experience, knowledge, etc. and whether he or she has an intention and attitude suitable for the management are made.

Procedure for nomination of Director and Audit & Supervisory Board Member candidates, and appointment of officers

With respect to nomination of Director candidates and Audit & Supervisory Board Member candidates as well as appointment of officers, the Company has established the Nomination Advisory Committee, which is a voluntary advisory body comprised of at least three (3) Directors, of whom a majority are independent Outside Directors based on the resolution of the Board of Directors, in order to enhance the objectivity and transparency of the nomination and appointment.

Matters with respect to nomination of Director candidates and appointment of officers are resolved by the Board of Directors on the basis of recommendation from the Nomination Advisory Committee prepared through deliberations made in accordance with the prescribed standard and procedure for new appointment or reappointment. Matters with respect to nomination of Audit

• Supervisory Board Member candidates are resolved by the Board of Directors on the basis of recommendation from the Nomination Advisory Committee prepared through deliberations made in accordance with the prescribed standard and procedure for new appointment and reappointment, upon having gained the consent of the Audit & Supervisory Board.

Policy and procedure for dismissal of Directors and Audit & Supervisory Board Members

The Nomination Advisory Committee has prescribed the standard and procedure for dismissal of Directors and Audit & Supervisory Board Members. In reference to the deliberation and recommendation from the Nomination Advisory Committee based on the dismissal standard and procedure, the Board of Directors deliberates proposals of dismissal of the Directors and Audit & Supervisory Board Members.

- 4 -

Policies and procedures for evaluation, new appointment, reappointment, and dismissal of President and Chief Executive Officer The Nomination Advisory Committee has also prescribed the standard and procedure for new appointment, reappointment, and dismissal of President and Chief Executive Officer. The evaluation of President and Chief Executive Officer is conducted every year and takes into account basic evaluation criteria that have a quantitative aspect including business performance. The Nomination Advisory Committee ensures objectivity, timeliness, and transparency of processes by recommendations on new appointment, reappointment and dismissal presented to the Board of Directors following deliberation based on the prescribed standard and procedure for new appointment, reappointment, and dismissal in reference to evaluation results and succession plan.

Policy and procedure for dismissal of officers

Dismissal of officers is also resolved by the Board of Directors based on the Nomination Advisory Committee's recommendation and in reference to the prescribed standard and procedure.

1. Reasons for election of Directors and Audit & Supervisory Board Members are as follows: Explanation of reasons for election of Directors
   Takashi Nishijima Chairman
   Mr. Takashi Nishijima properly supervises management as a Director. He has been responsible for the management of the Company as President and Chief Operating Officer since fiscal year 2013 and as Chairman since fiscal year 2019 after being engaged in product planning and development in the Company's industrial automation and control business and department management and serving as President of a subsidiary in the test and measurement business, and has abundant experience and track records as a corporate manager. Because he is expected to continuously contribute to improvement of corporate value and strengthening of the decision-making function and the management supervision function of the Board of Directors by utilizing his experience in management and track records, he has been elected as Director.

Hitoshi Nara President and Chief Executive Officer

Mr. Hitoshi Nara properly supervises management as a Director. He has spearheaded the execution of business as President and Chief Executive Officer since fiscal year 2019 after being engaged in operations for the sales department of the Company's industrial automation and control business, serving as President of domestic and overseas subsidiaries and working on the launch of new business, and has abundant experience and track records as a corporate manager. Because he is expected to continuously contribute to improvement of corporate value and strengthening of the decision-making function and the management supervision function of the Board of Directors by utilizing his experience in management and track records, he has been elected as Director.

Junichi Anabuki Director and Executive Vice President

Mr. Junichi Anabuki properly supervises management as a Director. He possesses many years of operational experience in the Company's corporate administration & treasury department, currently demonstrates his high ability and expertise in management as Head of Corporate Administration Headquarters, and has abundant experience and track records. Because he is expected to continuously contribute to improvement of corporate value and strengthening of the decision-making function and the management supervision function of the Board of Directors by utilizing his experience and wide knowledge, he has been elected as Director.

Yu Dai Director and Senior Vice President

Mr. Yu Dai properly supervises management as a Director. He experienced administrative operations for construction projects and corporate management at several global companies in petroleum and chemical industries, then became the Chief Executive of the Company's subsidiary in the ASEAN and Pacific region, currently leads the solution business, one of core businesses in the industrial automation and control business, and has abundant experience and track records. Because he is expected to continuously contribute to improvement of corporate value and strengthening of the decision-making function and the management supervision function of the Board of Directors by utilizing his wide experience and knowledge, he has been elected as Director.

Explanation of reasons for election of Audit & Supervisory Board Members Kouji Maemura Audit & Supervisory Board, Standing Member

Mr. Kouji Maemura is well-versed with respect to the Company's organization and business, and also has experience playing a leadership role in carrying out the Group's managerial reforms, in addition to the possession of his many years of practical experience in the Company's business management and operation of business divisions, as well as experience acting as a full- time audit and supervisory board member. He has been elected as an Audit & Supervisory Board member because he is expected to continuously execute effective auditing that reflects such knowledge and experience.

- 5 -