Nihon Unisys : 【Delayed】Corporate Governance Report

Nihon Unisys, Ltd.

Corporate Governance Report

Note) This is an English translation of the Corporate Governance Report of Nihon Unisys, Ltd. prepared for reader's convenience. Should there be any inconsistency between the translation and the original Japanese text, the latter shall prevail.

The following is an overview of corporate governance of Nihon Unisys, Ltd. (the "Company").

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

1. Basic Views

A mechanism of corporate governance which enables management to make prompt and sound management decisions under appropriate and effective supervision is indispensable for enabling the Nihon Unisys Group (the "Group") to continuously grow and increase its mid-andlong-term corporate value, and the Company shall create, maintain and ceaselessly improve this mechanism.

Furthermore, the Company believes that a company`s "raison d`etre" lies in its contribution to society. Based on this belief, the Company stipulates as part of its corporate philosophy 'Listen sincerely to our stakeholders to improve our corporate value' in order to create relationships of trust with all stakeholders, and shall proceed with its business activities in accordance with this principle.

The Company complies with every principle of the Corporate Governance Code revised in June 2021 (including the principles for companies listed on Prime Market applicable from April 4, 2022).

[Principle 1-4 / Supplementary Principle 1-4[1]Cross-Shareholdings]（1） Policy related to 'Cross-Shareholdings'

The Company may sometimes hold shares of its business partners, if they are found to contribute to the enhancement of the Company's corporate value, such as leading to the expansion of its revenue base through maintaining or strengthening relationships with such business partners.

The Company acquires such shares after adjudicating the appropriateness of acquiring them pursuant to its internal regulations. After acquiring the shares, the Company's Board of Directors examines the

- 1 -

appropriateness of holding such shares each year, and based on such examination, the Company proceeds the reduction of cross-shareholdings.

（2） Contents Examined by the Board of Directors

The Company examines the appropriateness of each and every listed stock that it holds at Board of Directors meetings by taking into consideration purposes for holding, consistency with its business strategies and business related profits, etc.

The Company verified the stocks that it held as of the end of March 2021 at the Board of Directors meeting convened in June 2021. The results are stated below.

・The Company examined if the holdings of those stocks are still meaningful and in compliance with the business strategies from a mid- to long-term perspective. It confirmed that some stocks were to be sold due to diminished significance in holding them.

・In addition, the Company examined the business related profits with respect to the other stocks from the perspective of capital cost, and it confirmed that holding them is economically rational.

(3) Responses to indications to sell the Company's shares by cross-shareholders

When cross-shareholders that hold the Company's shares indicate their intension to sell the Company's shares, the Company will never prevent them from selling them. It will appropriately respond to their indication of sales.

（4） Concepts on Exercising Voting Rights relating to "Cross-Shareholdings"

With respect to the voting rights related to shareholdings, the Company decides to vote for or against an individual proposal based on the content of that proposal and from the viewpoint of shareholder value of portfolio companies and consistency with its business strategy. The Company exercises voting rights for each proposal by itself.

[Principle 1-7 Procedure for Transactions between Related Parties]

1. Transactions involving conflict of interests with directors or corporate officers of the Company are checked by the departments concerned (such as the Legal Department) before being approved by the Board of Directors. The results of these transactions are reported to the Board of Directors.
2. Transactions between the Company and its shuyokabunushi (meaning a shareholder that holds voting rights constituting 10% or more of all shareholders' voting rights, pursuant to the definition by the Financial Instruments and Exchange Act; hereafter, the "Major Shareholder") other than the above are reported to or approved by the Board of Directors pursuant to standards put in place in advance.

[Principle 2-4 / Supplementary Principle 2-4[1] Ensuring Diversity in the Promotion to Core Human Resources, etc. ]

（1） Policies for Ensuring Diversity in the Promotion to Core Personnel, etc.

In order to promote "For Customer (promotion of DX for customers)" and "For Society (promotion of DX for society)" as stated in the Company's "Management Policies (2021-2023)," it is necessary to create innovations and solve various social issues. In order to achieve this, we believe it is necessary to human resources with diversity and comprehensive capabilities and a work environment where employees can respect each other and maximize their performance.

For us, "diversity" includes not only "attributes" such as gender and nationality, but also "intrapersonal diversity" such as knowledge, experiences, and values within individuals. We aim to foster a corporate culture in which everyone can increase their individual diversity, exercise their creativity without being bound by attributes or various restrictions, and actively seek and utilize diversity. To this end, we are implementing the following initiatives to realize the diversity we aim for.

（2） Measurable Targets, Human Resources Development Policy, Internal Environment Development Policy and Implementation Status

We have promoted corporate culture reform so that employees can maximize their abilities without being bound by attributes.

We regard promoting active participation of women as one of our important issues, and are making efforts in order to achieve the targets below based upon the General Employers Action Plan pursuant to the Act on Promotion of Women's Participation and Advancement in the Workplace. Specifically, we have increased the ratio of women hired as new graduates to approx. 40%. Also, we have formulated a managerial

- 2 -

appointment plan for each department and built a monitoring and reporting system for the Social Committee and the Board of Directors to strengthen the formation of a female human resources pipeline. Furthermore, we have been conducting diversity training for managers and implementing a child-rearing support system and related measures.

Measurable Targets of the Company (on a non-consolidated basis) (Target date: April 1, 2025)

• A ratio of female executives of 20%

• Double the number of female managers from fiscal 2020 levels (to 126 persons) Status Quo
  ① 16.7% (as of June 2021)
  ②67 persons (as of April 2021)

With regard to mid-career hires, we are actively recruiting people from different industries as a means of acquiring new knowledge, experience, and expertise, as well as strengthening our core competencies.

In fiscal 2020, we hired about 70 people, accounting for about 30% of the total number of hires. The percentage of mid-career hires in management positions is approximately 10%.

For mid-career hires, we conduct follow-up programs after they join the Company to promote their understanding of the corporate culture and company systems, and support their early retention in the organization and performance. At present, we have not set any voluntary and measurable goals, but we will continue to work toward ensuring diversity in the management and core human resources.

With regard to foreign human resources, we are hiring talented new graduates and mid-career hires regardless of nationality. In light of our current business situation, which is mainly focused on Japanese domestic market, we have not set a voluntary and measurable target, but we will promote non-Japanese recruitments along with borderless businesses development pursuant to our new management policies.

With regard to improving the diversity of individuals, we are working to visualize the diversity of individuals by defining the roles played in business execution (jobs) and the skills and competencies required for these roles, and linking them to the employees who are engaged in them. Through assignments and rotations, this initiative contributes to promote the acquisition of experience and knowledge beyond the boundaries of individual employees.

The details are described in the website page below.

(Sustainability information (diversity promotion)) https://unisys.disclosure.site/ja/themes/107#229

[Principle 2-6 Function as a Corporate Pension Asset Owner]

・The Company together with its group company UNIADEX, Ltd., has joined the Nihon Unisys Company Pension Fund. The Company has assigned personnel appropriately skilled for operating the pension and managing the Fund to the fund secretariat.

・The Fund has been making efforts to encourage secretariat personnel to acquire expertise and enhance their skills, such as obtaining certifications approved by the Japan Association for Financial Planners.

・The Fund operates in accordance with the "Key Policies for the Management of Pension Assets" established pursuant to the Fund's provisions. The Fund makes it a rule to have registrations/cancellations of investment products examined by the 'Asset Management Committee' before having them submitted to and examined by the council, which is partly comprised of delegates appointed by the Company. Such registrations/cancellations are approved thereafter.

The 'Asset Management Committee' is operated by the two councilors of the Fund as well as personnel from the Accounting Department/Financial Department due to their expertise in asset management. Furthermore, the 'Asset Management Committee' has been using an external pension consulting company to complement its expertise and reliability.

・The Fund conducts quantitative and qualitative assessments on a quarterly basis, including on its stance on acceptance of Japan's Stewardship Code in order to monitor institutions contracted to undertake asset management.

[Principle 3-1 (i) Management Philosophy, Management Strategies and Management Plan] ■ Corporate Philosophy

The Company sets out below its corporate philosophy, which is the basis for its management and rooted in the social responsibility which the Nihon Unisys Group bears as a whole.

- 3 -

Our Mission

Work with all people to contribute to creating a society that is friendly to people and the environment.

Our Vision

Be a group that strives to be sensitive to the expectations and needs of society and that thinks through how ICT can contribute to meet them.

Our Values

1. Pursuit of High Quality and High Technology
   Always have the latest knowledge that is useful for society while improving our skills.
2. Respect for Individuals and Importance of Teamwork
   Identify each other's good points, encourage each other to improve those good points and harness the strengths of each person.

3.Attractive Company for Society, Customers, Shareholders and Employees Listen sincerely to our stakeholders to improve our corporate value.

■Vision 2030 and Management Policy

The Company formulated Vision 2030 towards 2030 and the new Management Policy (2021 -2023) beginning from fiscal 2021 to indicate the direction of the Group. Please refer to the following our company website. （https://www.unisys.co.jp/com/management_policy.html）

The outline is as follows.

Vision 2030, which says "We will develop the Digital Commons which is a platform that helps create a society where everyone can live happily", aims to create and provide a business ecosystem and platform that can connect various services, products, companies, and users as a Digital Commons, a common asset of society in order to enable a sustainable society with the power of technology.

The Management Policy (2021 -2023) to achieve Vision 2030 promotes business activities from two perspectives: "For Customer" promoting customer DX that contributes to the sustainable growth of customers, and "For Society" promoting social DX that promotes the resolution of social issues together with customers and partners in various industries.

The Company will build on our customers' best practices in promoting digital transformation, promote digital transformation for society, and expand our business ecosystem together with our customers and partners within a broad framework that encompasses a whole society.

The Company will also promote corporate culture reforms and investment strategies to support these initiatives.

[Principle 3-1 (ii) Basic Approach to and Policy for Corporate Governance]

• Basic Approach of Corporate Governance
  The basic approach to corporate governance is as described in '1 Basic Views' of ' I. Basic Views on

Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information' of this report.

• The basic policy on corporate governance is set out in 'Corporate Governance and Internal Control Principles', which can be found posted on the below website:https://www.unisys.co.jp/invest-e/com/pdf/internal_control_rules.pdf

[Principle 3-1 (iii) Policy and Procedure for Setting Remuneration for Directors]

The remuneration for executive directors shall consist of a) fixed remuneration (monthly remuneration), b) bonus linked to a short-term performance, and c) restricted stock remuneration linked to medium- to long- term performance(the Restricted Stock Remuneration). The ratio of a):b):c) is set at 4:4:2 .

The above ratio assumes that 100% of the short-term performance profit target is achieved in the final year of the evaluation period for c) stock remuneration and 100% of each condition of stock remuneration is achieved. In addition, non-executive directors, such as outside directors, are paid only fixed remuneration that is not linked to business performance.

The Nomination and Remuneration Committee is delegated to decide contents of remunerations for each director in order to reflect objective and fair opinions outside of the Company.

[Principle 3-1(iv) / Supplementary Principle 4-3[3] Policy and Procedure for Appointing/Dismissing Senior Management and Nominating Director/Auditor Candidates]

■Nomination of Director Candidates

- 4 -

For director candidates who are concurrently serving as corporate officers (hereinafter referred to as 'senior management'), the Company will select those who have the appropriate knowledge and experience with high motivation and ethical sense and carry out the Company management accurately and efficiently.

Director candidates from outside the Company are nominated, by taking diversity into consideration, from individuals who have extensive management experience and expertise and who are capable of advising on and overseeing the overall management from an external, objective and professional point of view.

For senior management and director positions, candidates are nominated by the Nomination and Remuneration Committee, which partly consists of one or more independent outside directors, pursuant to the selection standards and procedures it has established. The Board of Directors then appoints the successful candidates based on those nominations.

■Nomination of Auditor Candidates

For auditor candidates, the Company will select those who have the appropriate knowledge and experience to audit directors' execution of duties from a fair and objective perspective and who also have a high ethical sense. The candidates are nominated by the Nomination and Remuneration Committee, which partly consists of one or more independent outside directors, pursuant to the selection standards and procedures it has established. Auditor candidates are approved by the Audit & Supervisory Board and then appointed by the Board of Directors. At least one of the auditor candidates shall have the appropriate expertise in finance and accounting.

■Dismissal of Senior Management including CEO

In the event that a member of senior management, including the CEO, violates laws and regulations or the articles of incorporation, commits an act of fraud, act of tort, or act of betrayal, or it is judged that they have not sufficiently served their office or fulfilled their function, the Company will remove such member[s] from their senior management position[s] if it determines that the removal is justifiable based on deliberations by the Board of Directors.

[Principle 3-1 (v) Reasons for Appointing and Dismissing Senior Management as well as Nominating Director and Auditor Candidates]

Reasons for appointing and dismissing senior management and nominating director and auditor candidates are described in the reference documents that accompany the notice of the general shareholders' meeting (https://www.unisys.co.jp/invest-e/stock/meeting.html).

[Principle 3-1/ Supplementary Principle 3-1[3] Initiatives on Sustainability, etc. ] ■Initiatives on Sustainability

The Group has declared its corporate philosophy as "work with all people to contribute to creating a society that is friendly to people and the environment," and has defined the significance of its existence (the Purpose) as "creating a sustainable society using foresight and insight to unlock the full potential of technology."

With this as its foundation for sustainable growth as a company and starting with corporate activities that focus on the environment, society and governance, the Group aims to be a sustainable corporate group having established a sustainable growth cycle through the creation of value by contributing to the development of a sustainable society and through earnest initiatives to resolve various social issues.

By moving forward with the introduction of digital commons into society through the sharing of a clear vision of the future, each member possessing a long-term perspective and ambition, and fusing our experience and knowledge of solving issues faced by society with a network of people who possess the same ambition and digital technology based on our many years of experience, we want to create both social and economic value and pursue mutual sustainability for the environment, society, and the Group.

we revised our materiality to realize Vision 2030 that we set in the fiscal year 2021. See the materials below for details.

The Integrated Report 2021 https://www.unisys.co.jp/invest-j/ir/ar.html

Our sustainability (ESG) information web page https://unisys.disclosure.site/ja

■Sustainability Promotion System

Material issues concerning the Group's efforts to solve problems related to the environment and sustainability of society are deliberated and reported on by the Executive Council and various committees. The Board of Directors receives reports on core activities, including the response to sustainability issues, from committees and organizations and discusses the issues from various perspectives.

- 5 -