Oki Electric Industry : Corporate Governance Report (As of March 29,2024)

[Principle 2-4 (1) Ensuring Diversity in Appointment of Core Personnel]

(1) Approach to Ensuring Diversity

The OKI Group has adopted a number of human resources policies, positioning people as one of its most critical management resources for adapting to changes in the social environment and for sustainable development. In our Medium- Term Business Plan 2025, "promote measures that enable diverse talent to proactively thrive" is included as a component of "transform into a corporate culture that continually creates value," one of our Material Issues. We have begun activities to transform our corporate culture, centered on the Organizational Culture Reform Department created in fiscal year 2023.

Promoting Diversity and Inclusion is a management strategy for strengthening human resources. The OKI Group brings together diverse human resources and, by respecting and valuing diversity, aspires to create innovation, increase motivation, and achieve sustainable organizational growth. To create a situation in which people with various experiences, knowledge, and skills can play an active role, we will attract outside talent, diversify the experiences of the talent we have internally, and encourage the diversification of attributes such as gender, age, disability, SOGI (Sexual Orientation and Gender Identity), and nationality.

To help incrementally motivate female employees from the early stages of their careers, the OKI Group provides career training for female employees in their fourth year of employment as well as selective leadership strengthening training. We aim to increase the female management ratio to at least 5%(OKI) by April 2026. (The ratio of female managers in fiscal year 2022 was 3.9% for OKI.) Going forward, we aim to achieve an equal female management ratio in proportion to the number of female employees, and will continue to strengthen our initiatives for policies to encourage female employees to play an active role.

non-Japanese employees to managerial positions>

OKI hires people of all nationalities who can play an active role globally. For this reason, we do not set targets based on nationality, etc., for non-Japanese employees appointed to managerial positions.

mid-career employees to managerial positions>

The career employment rate in fiscal 2022 was 32% for OKI. As for appointments to management positions, there is no difference between career hires and new graduates, and the ratio of career hires to management positions is not set as a target. Because the ratio of career hires is determined comprehensively based on experience, ability, etc.

From the perspective of sustainable growth, the OKI Group is working to increase the number of new graduates and mid- career hires to secure human resources for existing businesses and simultaneously to advance the hiring of human resources with diverse perspectives and knowledge to create new businesses.

1. Content and Status of Implementation of the Human Resources Development Policy and the Internal Environment Development Policy for Ensuring Diversity

The key to steering toward growth is to make the active participation and growth of diverse human resources the strength of OKI. To enable diverse and sufficient human resources to proactively take on challenges and grow so that individuals and the organization align their goals, we will promote diversity and inclusion, foster a rewarding organizational culture, implement human resources policies to secure, develop, and assign the right people for the right positions, and create a positive work environment.

In April 2023, the OKI Group revised its personnel systems for managers for the first time in about 20 years in order to improve organizational performance and create new value. In addition, OKI supports the personal growth of its employees through the use of a career design system, target management system and personnel evaluation system in order to maximize the performance and foster growth and job satisfaction of each employee.

Focusing on well-being to create an environment in which diverse human resources can take on challenges with a positive mindset, the OKI Group defined the state of enabling "workplaces offering psychological safety," "mental and physical health," and "fostering of job satisfaction" as "OKI Well-Being" and makes efforts to disseminate this concept to the workplace.

To enable everyone to balance work and Private Life, OKI maintains a host of systems to support balancing work and Private Life, including the flextime (with/without core time) system, the teleworking system, systems to provide special work conditions for people caring for children and nursing the elderly, as well as a Special Leave for Particular Purposes system, which can be used to nurse family members, to attend children's school events, Shinkansen (bullet train) commuting system and so forth. In addition, in order to encourage male employees to take childcare leave, OKI introduced a system that allows employees who care for children within eight weeks of birth to take paid leave of up to 25 days (working days) during that period in October 2022. It also adopted a partnership system that treats sexual minority partnerships the same as legal marriage in some in-house systems, including leaves and leaves of absence, in April 2023.

For further details, please refer to OKI Report 2023.

https://www.oki.com/en/ir/finance/library/ar2023.html

[Principle 2-6: Roles as Asset Owners of Corporate Pension Funds]

The OKI Corporate Pension Fund manages funds for corporate pensions of the Company and its domestic group companies.

Each year, the Investment Management Committee drafts investment targets, asset allocations, and investment consignees, which are decided by the Board of Trustees. Members of both the Investment Management Committee and the Board of Trustees include employee representatives as well as people with expertise in the finance and human resources departments, appointed by the Company. Committee members and clerical staff improve their expertise by receiving advice from pension management consultants.

Important matters related to the operation of the Fund have been resolved at the Board of Representatives in accordance with the Fund's Articles of Incorporation, and conflicts of interest that may arise between our company and beneficiaries are also managed appropriately.

The Company entrusts the specific selection of fund investments to multiple investment institutions, monitoring the status of investment at quarterly management reporting meetings.

[Principle 3-1: Full Disclosure]

(ⅰ) Company objectives (management philosophy, etc.), management strategies, and management plans

1. The Company discloses its objectives (management philosophy, etc.) and corporate philosophy on the Company website.

https://www.oki.com/en/profile/spirit/

1. As for management strategies, and management plans, in May 2023 we made public the Medium-Term Business Plan 2025, which ends in fiscal year 2025.

Details are disclosed on the company website.

https://www.oki.com/en/ir/corporate/strategy/

(ⅱ) Basic views and guidelines on corporate governance based on each of the principles of the code

These are described in "I.1. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, and Other Basic Information" in this report.

(ⅲ) Board policies and procedures in determining the remuneration of senior management and Directors These are described in "II.1. [Director Remuneration]" in this report.

(ⅳ) Board policies and procedures in the appointment/dismissal of senior management and the nomination of candidates for Directors and Audit & Supervisory Board Members

To ensure transparency in the process of nominating candidates for Directors, Audit & Supervisory Board members, and executive officers, the Company consults with the Personnel and Compensation Advisory Committee, a voluntary committee. After receiving the committee's response, the Board of Directors and the Audit & Supervisory Board decide on candidates. The committee consists of five non-executive Directors, and the chairman is elected from among the outside directors.

In the nomination and appointment of candidates for Directors, Audit & Supervisory Board Members and executive officers, the Company comprehensively considers the legal requirements and the following matters.

・Nobility of character, wisdom, a high level of ethics, fairness, honesty, and a law-abiding spirit

・The ability to conduct duties in a manner that will help realize the OKI Group's corporate philosophy and enhance corporate value sustainably

・Length of tenure

・Audit & Supervisory Board members must have the necessary financial, accounting, and legal knowledge. ・The Company's independence criteria for Outside Officers

The criteria for submitting a proposal to dismiss a Director, an Audit & Supervisory Board Member, or an executive officer take into consideration the following: where the person's act violates or infringes on the law and the Articles of Incorporation; whether the person has become unable to properly perform his/her duties. Such proposals are immediately deliberated by the Personnel Affairs and Compensation Advisory Committee, which then submits its proposal to the Board of Directors.

1. Explanation of individual appointments, dismissals and nominations when the Board of Directors appoints and dismisses senior management and nominates candidates for Directors and Audit & Supervisory Board Members based on (iv) above
   Reasons for appointment and dismissal as well as brief backgrounds and responsibilities are described in reference documents for the General Meeting of Shareholders, business reports, corporate governance reports, financial reports, and other documents.

[Supplementary Principle 3-1 (3) Sustainability Initiatives]

(1) Sustainability Initiatives

The OKI Group has been pursuing initiatives to contribute to resolving social issues through the key Japanese concepts of "Mono-zukuri (manufacturing)" and "Koto-zukuri (creation of solutions and services)" under an enterprising spirit, as stated in its corporate philosophy, together with efforts to sustainably practice corporate activities built on integrity that meet the expectations of stakeholders. By compiling the actions that all OKI Group employees should take in the OKI Group Charter of Corporate Conduct and the OKI Group Code of Conduct and positioning them as the foundation of the values that the OKI Group should share, the OKI Group aims to foster the awareness of employees through more familiar actions.

In order to maintain this stance over the long term and practice sustainability management as a company "Delivering OK! to your life.," the OKI Group has updated its material issues (Materiality) by reorganizing OKI's issues according to the process when formulating its Medium-Term Business Plan 2025 announced in May 2023. Based on both OKI's vision and contribution fields, as well as the expectations/demands of society and stakeholders and the social issues confronting OKI, we are practicing key issues that we need to address which have been organized into four categories: providing products and services that help solve social issues, reducing environmental impact through business activities, transforming into a corporate culture that continuously creates value, and strengthening the management foundation to support sustainable growth. Based on these materialities, we will continue to steadily pursue environmental, social, and governance (ESG) initiatives.

The materiality and environmental, social, and governance (ESG) initiatives in fiscal 2022 are shown in OKI Report

2023.https://www.oki.com/en/ir/finance/library/ar2023.html

On April 1, 2023, the Sustainability Promotion Division was established as a dedicated organization to further promote sustainability activities within the OKI Group. Under the new structure, we will promote initiatives based on the updated Material Issues, appropriately disclose progress, and engage in dialogue with stakeholders based on this to accurately grasp our own issues and the demands of society, which will lead to the strengthening of our activities.

(2) Investments in Human Capital and Intellectual Property

We are building a personnel system that will lead to the further revitalization of manufacturing sites toward the realization of sustainable growth. Under the Medium-Term Business Plan 2025, we will increase our investment in human capital from the previous mid-term total and enhance human resource development, recruitment, and grading systems to secure necessary and sufficient human resources. With regard to intellectual property, the Company has formulated a Medium- Term Intellectual Property Plan to build a business portfolio in growth/focus areas and reduce intellectual property risks in existing businesses. Appropriate management is carried out through setting targets such as for the number of patent applications. OKI will continue to actively invest in important management resources.

(3) Disclosure Based on TCFD or Equivalent Framework

The OKI Group has adopted an "Environmental Policy" to realize a better global environment and pass it on to the next generation and makes it the foundation of its environmental management. Above all, the OKI Group has been working to systematically manage measures to respond to climate-related risks and opportunities, and endorsed the Task Force on Climate-related Financial Disclosures (TCFD) in May 2019 to further enhance the disclosure of information on governance, strategy, risk management, and indicators and targets. Along the time axis, the Strategy section analyzes climate-change scenarios if the temperature rise is limited to 1.5 degrees Celsius and in the event of a temperature rise to 3 to 4 degrees Celsius. It also covers the perspectives of resource circulation and pollution prevention, identifies risks and opportunities under these scenarios, sets countermeasures, and improves flexibility in responding to events that may occur in the future. Under this strategy, the Group seeks to create and expand products that contribute to the environment, and promotes various decarbonization measures by revising the fiscal 2030 decarbonization targets in the Environmental Vision 2030/2050 in compliance with science-based targets (SBTs) for greenhouse gas reduction that are consistent with the Paris Agreement.

For further details, please refer to OKI Report 2023.

https://www.oki.com/en/ir/finance/library/ar2023.html

[Principle 4-1(1): Scope and Overview of Delegation to Management]

The Company has stipulated in the rules of the Board of Directors that important matters, such as laws and regulations, matters stipulated in the Articles of Incorporation, and basic management policies are to be discussed by the Board of Directors. The details of matters to be decided by the Board of Directors are decided by the Representative Director, who also serves as President and Executive Officer, after deliberation by the Management Committee or approval procedures. Executive officers carry out their duties in accordance with basic management policies determined by the Board of Directors.

[Principle 4-9: Independence Standards and Qualifications for Independent Directors] This information is described in "II.1. [Independent Officers]" in this report.

[Principle 4 -10 (1) Utilization of Voluntary Committees]

OKI has adopted a corporate structure with an Audit & Supervisory Board. As the Board of Directors requires both decision-making and supervisory functions, we believe that the balance between internal and executive directors and independent outside directors should be roughly evenly balanced. As of the end of June 2023, the Board of Directors consisted of four independent outside directors out of a total of eight directors, and the chairperson of the Board of Directors is a female independent outside director. The Personnel Affairs and Compensation Advisory Committee has been established as a voluntary committee to ensure transparency in the process of appointing and dismissing Directors and determining compensation for Directors. The Committee consists of five non-executive Directors and meets as necessary. Prior to resolution at the Board of Directors meeting, the Committee receives advice on the appointment and dismissal of directors, executive officers, etc., as well as the remuneration system and level, deliberates from an objective viewpoint, and reports to the Board of Directors. The Board of Directors shall consist of non-executive directors selected by resolution of the Board of Directors, the majority of which shall be independent outside directors, and the Chairperson of the Committee shall be elected by the members from among others, as stipulated in the regulations of the Personnel Affairs and Compensation Advisory Committee. As of the end of June 2023, there were five members, all of whom are outside directors (including one woman).

In fiscal year 2022, the committee deliberated and reported to the Board of Directors on such issues as the executive structure for achieving the Medium-Term Business Plan 2025, the revision of the executive compensation system so that it functions sufficiently as an incentive to enhance performance for the continuous enhancement of corporate value, and the long-term issue of development plan of successors (management human resources development).

[Principle 4-11 (1): Views on the Balance, Diversity and Size of Knowledge, Experience and Capabilities of the Board of Directors as a Whole]

OKI maintains a corporate auditor system, with the Board of Directors and the Audit & Supervisory Board. With an executive officer system in place, it strives to promote timely decision making processes by separating business execution and oversight. In order to carry out the above, the Board of Directors is required to have both decision-making and supervisory functions. In consideration of the balance between internal and executive directors and independent outside directors, as of the end of June 2023, the Company has elected 4 independent outside directors out of 8 directors. (In order to further improve the independence and objectivity of the Board of Directors, Ms. Izumi Kawashima, Independent Outside Director, serves as Chairman of the Board of Directors.)

Our approach to the Board of Directors as a whole is structured in a way that balances knowledge, experience, and ability, and balances diversity, including gender, international exposure, work experience, and age, with an appropriate size. The Articles of Incorporation of the Company stipulate that the Company shall have no more than 15 Directors to enable prompt decision-making and achieve an appropriate number of Directors. The Board of Directors has appointed five people who have sufficient knowledge, experience, and ability in areas necessary for the creation of social value, such as marketing, technology and innovation, manufacturing and SCM, and areas necessary for the strengthening of management foundations, such as human resources, finance and accounting, legal and risk management, as internal and executive directors. In addition, the Company appoints two people with experience in corporate management and two people with relevant knowledge and experience as independent outside directors in the expectation that they will provide appropriate supervision and advice based on their experience and expertise in each field. The Board of Directors is attended by four corporate auditors with experience in business execution (two internal and full-time Audit & Supervisory Board members and one independent external Audit & Supervisory Board member) and Audit & Supervisory Board members who are certified public accountants (two independent external corporate auditors).

As of June 27, 2023, the skill matrix for Directors elected at the 99th Annual General Meeting of Shareholders is as described in the Notice of Convocation of the 99th Annual General Meeting of Shareholders.

https://www.oki.com/en/ir/meeting/pdf/99all_e.pdf

[Principle 4 -11 (2) Concurrent Positions of Directors and Audit & Supervisory Board Members]

Significant concurrent positions of Directors and Audit & Supervisory Board Members (including candidates) are disclosed in the reference documents for the General Meeting of Shareholders and business reports in the "Notice of Convocation of the General Meeting of Shareholders," as well as in security reports.

・Notice of Convocation of General Meeting of Shareholders: https://www.oki.com/en/ir/stock/meeting.html

・Security Report (Japanese only):https://www.oki.com/jp/ir/data/report/

The status of Outside Directors and Outside Audit & Supervisory Board Members is also described in "II.1. [Related to Directors]" and "[Related to Audit & Supervisory Board Members]" in this report.

[Principle 4-11 (3) Evaluation of the Effectiveness of the Board of Directors]

The Company conducts evaluations and analyses every year to improve the effectiveness of the Board of Directors by recognizing, sharing, and improving the directions that the Board of Directors should take and the issues related to that

direction.

[Method for Evaluating the Effectiveness of the Board of Directors]

The Board of Directors discussed methods for evaluating the effectiveness of the plan in FY2023.

1. We judged that self-evaluation is appropriate for conducting research and evaluation in line with our company's circumstances. Meanwhile, we have determined that conducting a third-party evaluation aimed at verifying the objectivity and validity of the evaluation process once every few years is appropriate and decided to conduct the next third-party evaluation in FY2024.
2. As usual, the assessment was performed in three stages: a questionnaire, individual interviews and the deliberations of the Board of Directors. The scope of the assessment included all Directors and Audit & Supervisory Board members. The Secretariat of the Board of Directors compiled the results.
3. As usual, the questionnaire was based on the Corporate Governance Code and related materials and was reorganized with questions that reflect free and frank evaluation of each officer.

[Results of Evaluation of the Effectiveness of the Board of Directors]

As a result of the FY2023 evaluation, we were able to confirm that the Board of Directors of our company is functioning effectively. We primarily discussed the analysis of the progress in the implementation of Medium-Term Business Plan 2025.We also discussed earnings management (including ROIC) for the appropriate allocation of management resources and reviewed the functions and roles of subsidiaries. We have decided to further discuss the development of core human resources in the upcoming fiscal year.

The Board of Directors will proceed with the initiatives below to further improve its functions in FY2024.

・Continually monitor the progress of initiatives in Medium-Term Business Plan 2025 and discuss whether the plan needs to be changed according to changes in the environment.

・Flexibly review the allocation of management resources, including human resources, especially core human resources, and financial resources based on the progress of the business plan.

・Identify potential risks early on that may hinder the implementation of growth strategies and make appropriate decisions regarding actions to eliminate or avoid the risks.

OKI will strive to continuously improve the effectiveness of the Board of Directors with the goal of increasing corporate value.

[Principle 4-14 (2): Training for Directors and Audit & Supervisory Board Members]

The Company provides opportunities for Directors and Audit & Supervisory Board Members to participate in seminars and training conducted by external specialized agencies necessary to fulfill their roles and responsibilities. Based on this policy, necessary support is provided such as holding seminars by experts and utilizing training by external organizations. Training is also provided for newly appointed officers. When outside officers are appointed, explanations are given to them to deepen their understanding of the OKI Group's business activities, and visits are also made to business sites and factories.

Full-time Audit & Supervisory Board Members are also provided with opportunities to participate in seminars held by external organizations such as the Japan Audit & Supervisory Board Members Association.

[Principle 5-1: Policy for Constructive Dialogue with Shareholders]

Based on the recognition that constructive dialogue with shareholders and other stakeholders and the appropriate use of market feedback in management and business activities leads to greater management efficiency and greater corporate value, OKI has established the following systems and initiatives to promote constructive dialogue with shareholders.

(ⅰ) The Company appoints senior management in charge of IR and supervises them so that constructive dialogue can be realized.

1. A dedicated IR department (IR Division) is established within the Corporate Planning Department of the Company to support dialogue. This department works in a coordinated fashion to share information with related departments, including the Accounting Department, Corporate Planning Department, and business divisions. In addition, each division reports important occurrences to the person responsible for handling information, and based on this information, related divisions cooperate with each other to conduct mutual checks. A system has been established to promote cooperation among divisions, such as in the area of disclosure.
2. The president and the chief financial officer take the lead in engaging in dialogue with shareholders, and the IR Division and the Corporate Secretariat, which are dedicated departments, support this dialogue. Specifically, we hold various meetings, including management briefings and quarterly financial results briefings, and hold individual meetings with major shareholders, providing opportunities for direct dialogue with shareholders and other stakeholders to a reasonable extent.
3. Opinions of institutional investors, etc., obtained through IR/SR activities are periodically fed back to senior management at Board of Directors meetings.

1. We will ensure that senior management and employees are thoroughly informed of the strict management of insider information in accordance with the Rules for Prevention of Insider Trading to prevent insider information leaks. In addition, the Company has established the Disclosure Policy, which relates to the establishment of systems and

measures to promote constructive dialogue with shareholders.

https://www.oki.com/en/ir/corporate/disclosure.html

[Principle 5-2: Establishing and Disclosing Business Strategies and Business Plans]

In the process of formulating the Medium-Term Business Plan 2025, OKI reorganized its business into four business segments, which had previously been divided into two segments, and reclassified them as growth or stabilization businesses. The Medium-Term Management Plan 2025 is a management plan that appropriately allocates resources to each segment based on market growth and profitability.

In addition, with the aim of achieving a more efficient management resource allocation by evaluating our business portfolio with high accuracy, we plan to upgrade our management by introducing ROIC.

Supplementary Explanation

Major shareholders are listed based on the shareholders' register as of September 30, 2023.

The Report of Possession of Large Volume (Change Report), which was opened for public inspection on January 10, 2023, stated that Sumitomo Mitsui Trust Asset Management Co., Ltd. and its joint holders owned a total of 8,032,700 shares (holding ratio of 9.21 %) as of December 30, 2022. However, as the Company is unable to confirm the actual number of shares held as of September 30, 2023, OKI has not included them in the above status of major shareholders.

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
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2. Other Special Circumstances That May Have a Material Impact on Corporate Governance

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1. Business Management Organization and Other Corporate Governance Systems Related to Decision-Making, Execution of Business, and Management Supervision
   1. Organizational Composition and Operation

Outside Directors' Relationships with the Company (1)

Categories of "Relationship with the Company"

"○" indicates a category into which the Director presently falls or has recently fallen. "△" indicates a category into which the Director has fallen in the past. "●" indicates a category into which a close relative of the Director presently falls or has recently fallen. "▲" indicates a category into which a close relative of the Director has fallen in the past.

1. Executive of the Company or its subsidiary
2. Non-executiveDirector or executive of a parent company of the Company
3. Executive of a fellow subsidiary company of the Company
4. A party whose major client or supplier is the Company or an executive thereof
5. Major client or supplier of the Company or an executive thereof
6. Consultant, accountant, or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a Director
7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
8. Executive of a client or supplier company of the Company (which does not correspond to d, e, or f) ( the Director himself/herself only)
9. Executive of a company to which Outside Directors are mutually appointed (the Director himself/herself only)
10. Executive of a company or organization that receives a donation from the Company (the Director himself/herself)
11. Other

Outside Directors' Relationships with the Company (2)