<Characteristics of Nitto’s Corporate Governance Structure>

From the standpoint of unitary audits, independent of execution that contribute to the Company’s enhanced governance, Nitto has chosen to be a company with accounting auditors. It has also adopted the executive officer system and promotes quick decision-making by making each Vice President’s authority clear. Further, it has established the Management, Nomination and Remuneration Advisory Committee that mainly consists of Independent Outside Officers to build a system to hear neutral opinions. Nitto’s corporate governance structure has the following characteristics:

1. Diversity of the Board of Directors and the Board of Corporate Auditors to consolidate multifaced opinions
   Comprehensively taking into account diversity including elements such as the balanced allocation of specializations (e.g., skill, specialty, and length of tenure) to be fully acquired, gender, age, work experience, race, ethnicity, or cultural background, Nitto appoints members of the Board of Directors and the Board of Corporate Auditors, who can practice The Nitto Way or a set of values that expresses what the Nitto Group should cherish and its standard for judgment. Half of Nitto’s Board of Directors comprise Independent Outside Directors.
2. Open and robust discussions by the Board of Directors
   The Nitto Board Effectiveness Evaluation, which the Company conducts annually, confirms that open and robust discussions on each management issue are among its Board of Directors’ strengths.
3. The Management, Nomination and Remuneration Advisory Committee as a place to hear broad opinions
   As a place for its members to exchange opinions and provide advice for Representative Directors, the Management, Nomination and Remuneration Advisory Committee hears valuable opinions each time its meeting is convened. In addition, it is characteristic of Nitto not to restrict the Management, Nomination and Remuneration Advisory Committee’s targets to the areas of Nomination and Remuneration but to add Management to cover broader ones. Please note that since, according to the Companies Act, Nomination and Remuneration are to be determined by the Board of Directors, which has open and robust discussions, the Management, Nomination and Remuneration Advisory Committee is not deliberately obliged to report to the Board of Directors.
4. Triple axis management for adequate resolution of management issues
   Nitto has built a system for adequately resolving management issues through supplementary and collaborative operations of the following three axes: the business axis centering on the business execution departments, the functional axis centering on the special function departments, and the regional axis centering on the regional oversight function.
5. ESG management promotion system to ensure effectiveness
   Under the slogan, “Place ESG at the core of our management,” Nitto has appointed a Director or Vice President in charge of ESG promotion and established a department in charge within a specialized functional department. The relevant department makes proposals on sustainability, including the identification of materiality issues, based on which the Board of Directors and the Corporate Strategy Meeting make decisions. The Representative Directors and Vice Presidents, who are members of the Board of Directors and the Corporate Strategy Meeting, instruct the responsible business execution departments and Group companies in their respective areas to implement the proposals, ensuring the effectiveness of ESG management promotion.
   Please note that Nitto has not established a sustainability or ESG committee to which some members belong. Rather, it designates the Corporate Strategy Meeting for which the President is responsible and to which all Vice Presidents belong as a place to discuss ESG management promotion.
6. Compliance and risk management promotion system leading to voluntary activities
   Nitto has appointed a Director or Vice President in charge of compliance and risk management and established a department in charge within the specialized functional departments. These systems promote compliance and risk management. In addition, the department in charge puts together the status of compliance and risks (human rights, human capital, whistleblowing, environment, safety, information security, etc.) to report to the Board of Directors and the Corporate Strategy Meeting on a regular basis. Representative Directors and Vice Presidents, who are members of the Board of Directors and the Corporate Strategy Meeting, instruct the responsible business execution departments and Group companies in their respective areas to make improvements, thereby ensuring the effectiveness of internal control monitoring.
   Please note that Nitto has not established a risk committee or a committee for each target risk as a place for final monitoring. Rather, it has a system in place where the Corporate Strategy Meeting for which the President is responsible and to which all Vice Presidents belong receives compliance and risk monitoring results as their own problems.
7. Alignments to ensure audits by Corporate Auditors
   It is characteristic of Nitto for Corporate Auditors to participate in its key meetings and strongly align with the departments in charge of internal audits and the Nitto Group’s auditors, in order to ensure the effectiveness of audits by Corporate Auditors.