The Company recognizes that establishing corporate governance is an extremely important management priority for achieving our purpose, balancing economic and social value, and continuing to achieve sustainable growth and enhance corporate value.
The Company’s top management will determine the direction of management in the BANI(*) era and continue to maintain and improve a management structure that supports swift and decisive decision-making (risk-taking), while evolving corporate governance to be more effective and transparent.
Furthermore, since our listing, independent outside directors have constituted a majority of our Board of Directors, ensuring transparency and objectivity in management.

* BANI… Brittle, Anxious, Non-Linear, Incomprehensible

(For Reference) About Our Purpose

With regard to management oversight, since our listing in 2015, we have consistently maintained a structure in which independent outside directors—who possess a high degree of independence and expertise—constitute a majority of the board, thereby ensuring transparency and objectivity.

Furthermore, regarding the process for nominating and determining Executive Remuneration, we established a voluntary “Nomination and Remuneration Committee” in 2019. This committee discusses matters such as the evaluation of executive officers, executive succession plans, and Executive Remuneration structures, thereby ensuring the transparency and soundness of management. Additionally, to expedite decision-making, we have further delegated authority through the introduction of a “delegated executive officer system.”

In 2021, we transitioned our corporate governance structure from a “company with a Board of Auditors  ” to a “company with an Audit and Supervisory Committee.” We are promoting a “monitoring model” to achieve a clearer separation between management oversight and execution. Furthermore, in 2024, to more vigorously advance the sustainable growth and enhancement of corporate value outlined in our Mid-term Management Plan, we revised our Executive Remuneration system to further enhance incentive effects and strengthen the alignment of interests with our shareholders.

Going forward, it will be essential for us to expand our business portfolio—one that responds to significant environmental changes and contributes to the evolution of digital technology—and to achieve a balance between economic and social value. To this end, we believe it is essential to define the company’s direction, maintain and improve a management structure that supports swift and decisive decision-making, and evolve our corporate governance to ensure greater effectiveness and transparency.

Corporate Governance report

The Company’s Board of Directors consists of a total of eight members—five independent outside directors and three inside directors—with independent outside directors constituting a majority. The President and Representative Director serve as Chairperson based on a resolution of the Board of Directors. The Board of Directors meets regularly (generally once a month) to pass resolutions on statutory matters, determine important management policies and strategies, appoint candidates for executive positions, determine the individual remuneration amounts for directors who are not members of the Audit and Supervisory Committee, and supervise business operations. All independent outside directors possess extensive experience and deep insight as business executives and experts, and they play a role in strengthening oversight functions from an independent standpoint.

The Audit and Supervisory Committee consists of three members: two independent outside directors and one inside director. Mr. Tetsuyuki Kagaya, an independent outside director, serves as Chair of the Audit and Supervisory Committee, and Mr. Masato Taniguchi, an inside director, has been appointed as a standing member of the committee.

The Company has appointed eight executive officers (two of whom also serve as inside directors), and has established a system in which extensive discretionary authority is delegated from the directors in charge of business execution, enabling swift decision-making and clarifying responsibility for business execution. The Company has entered into delegation agreements with its executive officers regarding business execution. The Executive Officers’ Committee, chaired by the President, meets regularly (in principle, twice a month, with the eight executive officers as regular members) to review the status of business operations and identify challenges, as well as to discuss important matters in advance.

Click here for our list of officers

In determining the appointment, dismissal, and Remuneration of officers, the Company has established a “Nomination and Remuneration Committee”as an advisory body to the Board of Directors.

This committee consists of three independent outside directors and two representative directors, excluding directors who are members of the Audit and Supervisory Committee, and is chaired by Kazuo Hosoya, the lead outside director.

The process for succession planning and training programs for senior management, including the President and Representative Director; the level and composition of Executive Remuneration; the evaluation of the appropriateness of the performance- Based Remuneration system design; the setting of target values; and performance evaluations is such that these matters are decided by the Board of Directors following discussion within this committee.

In fiscal year 2025, the Nomination and Remuneration Committee met six times and discussed matters including the Board succession plan, director candidates, and the composition of the Nomination and Remuneration Committee.

Main Agenda Items	Month Held
(Overall) Annual discussion schedule for the Nomination and Remuneration Committee for FY2025	July
(Nomination) Discussion on board succession-related matters	April, July, September, December, February
(Nomination) Discussion on the skills of directors and the Board of Directors in alignment with the direction of management	July, December, February
(Remuneration) Review of the executive remuneration system and discussion of the basic policy	April
(Remuneration) Review of FY2024 performance of directors and executive officers	May
(Remuneration) Confirmation of each executive officer’s goals and KPIs for FY2025	July

In addition to the above, we communicate with leaders both in Japan and abroad.

The Audit Department strives to conduct audits effectively and efficiently. It audits the Company and its group companies regarding the establishment of internal control systems, compliance, and adherence to risk management frameworks. Furthermore, based on the results of internal audits, the department periodically verifies the status of improvements and reports the findings to the Audit and Supervisory Committee, the Representative Director, and relevant departments.

Specifically, the Department conducts internal audits based on the audit plan formulated at the beginning of the fiscal year, notifies the audited divisions of the audit results, and also communicates those results to the Audit and Supervisory Committee and the Representative Director. For any matters requiring improvement, it confirms the status of implementation of improvement measures and their results.

In addition, the Department regularly coordinates with the Standing Audit and Supervisory Committee Member to confirm the details of audits and exchange opinions. It also exchanges opinions with the Accounting Auditor on a quarterly basis, providing the Accounting Auditor with information on material matters relating to internal control identified through internal audits, and receiving guidance and advice as necessary.

We have entered into an audit agreement with PricewaterhouseCoopers Japan LLC, which conducts financial audits in accordance with the Companies Act and the Financial Instruments and Exchange Act.
There are no special conflicts of interest between the firm and the Company, nor between the partners of the firm engaged in the Company’s audit.
Furthermore, the firm has implemented measures to ensure that the same partner does not participate in the Company’s financial audit for more than a specified period.

The Board of Directors as a whole selects candidates with due consideration for balance in terms of knowledge, experience, and areas of expertise, as well as diversity in terms of gender, nationality, and other factors.
When nominating candidates for directors (excluding directors who are members of the Audit and Supervisory Committee), the Company selects candidates based on criteria such as the ability to make sound judgments and take decisive action in line with the Company’s corporate philosophy and strategic direction, as well as excellent character, communication skills, and leadership qualities. Furthermore, with regard to outside directors, we recruit individuals from outside the company who possess not only experience as executives at global companies, expertise in technology development, and experience and expertise as “professional experts” in fields such as legal affairs and financial accounting, but also a high degree of independence.
For candidates for directors who are members of the Audit and Supervisory Committee, we select candidates from both inside and outside the company based on the criteria that they possess experience and knowledge in specialized fields such as corporate management, financial accounting, and legal affairs that align with the company’s direction, and that at least one candidate has sufficient knowledge of finance and accounting in particular.
In addition, the “Skills Matrix” outlines the specialized fields and their balance that the Board of Directors should possess, and this matrix is reviewed periodically.
Since independent outside directors constitute a majority of the Company’s Board of Directors, the system is designed to ensure that candidates for directors are selected from a more neutral standpoint.
Furthermore, decisions regarding the appointment and dismissal of senior management and the nomination of candidates for directors are made based on deliberations and recommendations by the “Nomination and Remuneration Committee,” in which independent outside directors constitute a majority and the chairperson is an independent outside director.

Position	Name	Management positions and major concurrent posts	Reason for selection
Representative director and president	Yoshihisa Shinya	President and Executive Officer	He was selected as Representative Director because he has played a central role in product development as the Company expands into new business areas and possesses deep technical expertise and extensive experience in business operations.
Representative director	Katsushi Kitajo	Senior Managing Executive Officer	He was selected as Representative Director because, in addition to his experience in corporate management and investment and financing operations as a director and executive officer at a financial institution, he possesses extensive experience and profound insight as a business leader, gained through his tenure as a top executive overseas and his service as an outside director at other companies.
Outside Director, Chairperson of the Nomination and Remuneration Committee	Kazuo Hosoya	JAPAN POST INSURANCE Co., Ltd. Outside Director	Having served as Representative Director and Chairman at a global corporation, he possesses deep insight into corporate management. We have appointed him as an outside director in the expectation that he will contribute to strengthening our growth strategy and business development by providing useful advice on our management from an objective and professional perspective. Furthermore, in accordance with the Company’s “Criteria for Determining the Independence of Outside Directors,” he has been designated as an independent director.
Outside Director	Toshihiro Hagiwara		Having held key positions at foreign investment funds, M&A advisory firms, and technical staffing service companies, he is well-versed in the fields of corporate acquisitions, finance, accounting, and taxation. Furthermore, given his deep insight and extensive practical experience in corporate management with a focus on capital markets, we have appointed him as an outside director in the expectation that he will provide useful advice from an objective and professional perspective on our growth strategy, capital policy, and other matters. Furthermore, in accordance with the Company’s “Criteria for Determining the Independence of Outside Directors,” he has been designated as an independent director.
Outside Director	Kyoko Matsuba	FINDEX Inc. Outside Director	Based on her experience as an executive officer (including Head of the Strategic Business Division) at a major foreign-affiliated company, as well as her many years of involvement in university hospital management and consulting in the United States, she possesses a high level of insight into global corporate management. We have appointed her as an outside director in the expectation that she will provide useful advice on our management from an objective and professional perspective, thereby contributing to our growth strategy, business expansion, and the strengthening of our corporate governance. Furthermore, in accordance with the Company’s “Criteria for Determining the Independence of Outside Directors,” she has been designated as an independent director.
Outside Director, Chairperson of the Audit and Supervisory Committee	Tetsuyuki Kagaya	Professor at the Graduate School of Hitotsubashi University, a National University Corporation.	As a university professor, he possesses deep expertise in financial accounting, corporate valuation, and risk analysis. We have appointed him as an outside director serving on the Audit and Supervisory Committee in the expectation that he will contribute to strengthening audit and supervisory functions from an objective and professional perspective and provide valuable advice on promoting ESG management. Furthermore, in accordance with the Company’s “Criteria for Determining the Independence of Outside Directors,” he has been designated as an independent director.
Director, Standing Audit and Supervisory Committee Member	Masato Taniguchi		We have selected him as a Director (Standing Audit and Supervisory Committee Member) based on our determination that he can conduct objective and proper audits. This is due to his deep understanding of our business, gained from having served as General Manager of the Technology and Manufacturing Divisions and held key positions at overseas manufacturing facilities, which enables him to conduct audits from a professional perspective through smooth communication with the front lines; and his extensive experience and knowledge of audit practices gained as a member of our Audit Department and as a Corporate Auditor of our subsidiaries.
Outside Director, Audit and Supervisory Committee Member	Yoshiko Nakayama	KLA Corporation Senior Counsel	As a lawyer and corporate legal officer, she possesses deep insight and practical experience in corporate legal affairs, particularly international law. We have appointed her as an outside director serving on the Audit and Supervisory Committee in the expectation that she will contribute to strengthening audit and supervisory functions from an objective and professional perspective and provide valuable advice on compliance and corporate governance. Furthermore, in accordance with the Company’s “Criteria for Determining the Independence of Outside Directors,”she has been designated as an independent officer.

If it is determined that outside directors or candidates for outside director of the Company fulfil all of the following requirements, the Company shall deem said outside director or candidate for outside director to be independent from the Company:

• 1．
  The individual has not served as a director (excluding outside directors; the same applies hereinafter), auditor (excluding outside auditors; the same applies hereinafter), executive officer, or employee (hereinafter collectively referred to as “Directors, etc.”) of the Company or its subsidiaries (hereinafter referred to as the “Dexerials Group”) either currently or during the 10 years prior to assuming the position.
• 2．
  The individual must not be a relative within the second degree of kinship of any director, etc., of the Dexerials Group.
• 3．
  The individual must not be a Major shareholder of the Company (in the case of a corporate entity or other organization, a person belonging to such entity or organization). (Note 1)
• 4．
  The individual must not be a person belonging to an organization in which the Company is a Major shareholder. (Note 1)
• 5．
  The individual must not be a Major business partner of the Dexerials Group (in the case of a corporate entity or other organization, a person belonging to such entity or organization). (Note 2)
• 6．
  The individual must not be a Major lender or other major creditor of the Dexerials Group (or, in the case of a legal entity or other organization, a person affiliated with such entity or organization). (Note 3)
• 7．
  The individual must not have received a donation of 10 million yen or more from the Dexerials Group during the current fiscal year (if the recipient of such a donation is a legal entity, partnership, or other organization, this refers to individuals belonging to such an organization and those who belonged to it within the most recent five-year period).
• 8．
  The individual must not be a person who, in the current fiscal year, has received remuneration of 10 million yen or more from the Dexerials Group in exchange for providing professional services or consulting services related to law, finance, taxation, etc. in the current fiscal year in exchange for providing professional services or consulting work related to legal, financial, or tax matters, etc., to the Dexerials Group (in the case of a corporation or other organization, this refers to a person affiliated with that organization).
• 9．
  The individual must not be in a “Mutual appointment relationship for outside directors” between the company where the individual serves as a director or in a similar capacity and the Dexerials Group. (Note 4)

• (Note 1) “Major shareholder” refers to a person who directly or indirectly holds 10% or more of the total voting rights.
• (Note 2) “Major business partner” refers to a company for which the amount paid to or received from the Dexerials Group accounts for 2% or more of the consolidated net sales of either the Dexerials Group or the business partner.
• (Note 3) “Major Lender” refers to a lender from whom the amount borrowed is equivalent to 2% or more of consolidated total assets.
• (Note 4) “Mutual Appointment of Outside Directors” refers to the appointment of an outside director from a company where a director or other officer of the Dexerials Group currently serves as an outside director.

With the aim of achieving sustainable growth and enhancing corporate value over the medium to long term, the Company has continuously conducted annual evaluations of the effectiveness of the Board of Directors since fiscal year 2015, using the results to drive further strengthening and improvement.
The methodology used for the analysis and evaluation conducted at the end of fiscal year 2025, as well as a summary of the evaluation results, are as follows.

• 1．

  Analysis and Evaluation Methodology
  
  To ensure the objectivity and transparency of the evaluation, a third party conducts individual interviews with all directors based on a questionnaire prepared by the Board of Directors Secretariat, and analyzes and summarizes each director’s responses.
  Based on these findings, the Board of Directors reviewed and summarized the activities of fiscal year 2025 and discussed and formulated the “Action Plan” for fiscal year 2026.

• 2．

  Evaluation Results (Summary) and Action Plan
  
  （1）Summary
  
  Based on the summary from an objective third-party perspective, the Company’s Board of Directors was assessed as functioning effectively overall.
  Furthermore, based on the responses from each director, the following points were identified as the Board’s strengths and areas of improvement compared to the previous fiscal year:
  
  1) Establishing a Board of Directors capable of engaging in constructive discussions aimed at enhancing corporate value
  2) Organizing the risk management department and establishing a framework for collaboration with the internal audit department and the “Audit and Supervisory Committee”
  3) Revising the composition of the “Nomination and Remuneration Committee” to enhance its effectiveness and clarifying its roles in “requests for consultation  ” and “making recommendations”
  
  Furthermore, the following points were cited as strengths of the Company’s “Audit and Supervisory Committee” and areas of improvement compared to the previous fiscal year:
  
  1) Enhanced effectiveness of the “Audit and Supervisory Committee” following a review of the composition of the “Nomination and Remuneration Committee”
  2) Substantial information sharing from Standing Audit and Supervisory Committee Member
  
  (2)Action Plan for Improving Effectiveness in Fiscal Year 2026
  
  Based on the evaluation results in (1) above and multiple discussions at the Board of Directors, we have decided on the following action plan for fiscal year 2026:
  
  “Monitoring the Implementation of Growth Strategies in an Era of High Uncertainty and Promoting Board Succession with an Eye Toward Medium- to Long-Term Management Direction”
  
  1) Discussions on board and executive succession to realize medium- to long-term strategies and direction
  2) Prioritizing monitoring items to achieve sustainable growth and the renewal of the Mid-term Management Plan
  3) Monitoring of agile business operations in response to changes in the external environment
  4) Monitoring of concrete action plans aimed at ensuring effective future collaboration and division of roles between the “Audit and Supervisory Committee” and the corporate risk management organization, as well as improving the quality of both audit and operational functions
  5) Further improving the provision of information and expanding opportunities for discussion to deepen understanding of the Company (On-site inspections of key locations, expansion of flexible discussion forums, hosting of study sessions for board members led by outside experts, and operational improvements to enhance the quality of discussions).

The remuneration of the Company’s directors is determined by comparing and verifying the Company’s current remuneration system and levels with those of companies similar in size, industry, and business model, based on Executive Remuneration survey data from external research organizations.

The Remuneration for directors (excluding directors who are members of the Audit and Supervisory Committee and outside directors) is determined based on amounts calculated according to factors such as position, annual performance, and the degree of achievement of medium- to long-term goals, in accordance with the “Basic Approach to Determining Executive Remuneration” outlined below. This determination is made following discussions by the “Nomination and Remuneration Committee” and a resolution by the Board of Directors.

In addition, the Remuneration for members of the Audit and Supervisory Committee is determined through consultation among the directors who serve on the Audit and Supervisory Committee.

• Executive Remuneration shall be commensurate with their roles, responsibilities, and performance
• The Remuneration structure shall reflect the medium- to long-term management strategy while strongly incentivizing sustainable growth
• The Remuneration structure shall be designed to share profits and risks with shareholders, take the shareholder perspective into account, and provide stronger incentives to enhance corporate value
• Remuneration levels shall be set at a level appropriate for securing and retaining top global talent
• The Remuneration determination process shall be objective and highly transparent

Amounts are determined based on internal regulations according to position (with a weighted allocation based on job responsibilities) and are paid as monthly fixed Remuneration. Note that outside directors and directors serving on the Audit and Supervisory Committee receive only Base Remuneration.

Performance- Based Remuneration consists of “performance-based pay,” which is paid based on the fiscal year’s performance, and “stock- Based Remuneration,” which is designed to align interests with shareholders and motivate the achievement of medium- to long-term goals “stock- Based Remuneration,” designed to motivate the Company’s executive directors to manage the business with a focus on performance and stock price not only on a single-year basis but also from a medium- to long-term perspective.

Performance-based pay is calculated and determined based on evaluation indicators reflecting “earning power”—namely, net sales and EBITDA (50% consolidated net sales: 50% EBITDA)—as well as an evaluation by the “Nomination and Remuneration Committee,” and is paid monthly in 12 equal installments starting the month following the conclusion of the Annual General Meeting of Shareholders.

The stock-based remuneration plan is established separately from basic compensation; funds necessary to acquire shares to be granted to directors are contributed to a trust every five consecutive fiscal years, and shares are acquired. Shares are granted based on points assigned according to position, divided into: (1) RS (Restricted Stock), granted at a rate of one share per point, and (2) PSU (Performance Share Unit), granted at a rate of one share per point based on performance against the medium-term management plan. However, if certain requirements are met, a specified percentage of the shares may be replaced, in principle, with a cash payment equivalent to the market value of the Company’s shares at the time of retirement. Furthermore, the shares are subject to transfer restrictions until the director’s retirement.

PSUs are determined based on the degree to which the following indicators are achieved during the medium-term plan period.

• Total Shareholder Return (TSR) 5-year TSR (vs. benchmark companies) - 80%
• The sustainability strategic targets Degree of achievement of key indicators for “Technology” and “Human capital,” which are Materiality to sustainable growth - 20%

The level and composition of director’s Remuneration, the assessment of the appropriateness of the performance- Based Remuneration system design, the setting of target values, and the evaluation of actual performance are determined by the Board of Directors following discussions within the “Nomination and Remuneration Committee.”

The Remuneration for individual directors (excluding directors who are members of the Audit and Supervisory Committee) is determined by the Board of Directors following deliberation by the “Nomination and Remuneration Committee,” within the Remuneration limit approved in advance by the General Meeting of Shareholders.

Furthermore, the Remuneration for individual directors who are members of the Audit and Supervisory Committee is determined through consultation among those directors, within the Remuneration limit previously approved by the General Meeting of Shareholders.

At the shareholders’ meeting held on June 25, 2024, it was resolved that the maximum annual monetary remuneration for directors (excluding directors who are Audit and Supervisory Committee members) shall be no more than 450 million yen, of which 70 million yen is allocated for outside directors (hereinafter referred to as the “Monetary Remuneration Framework for Directors”). At the same meeting, it was also resolved—separately from the above monetary remuneration framework—that performance-linked stock-based remuneration shall be granted to directors (excluding directors who are Audit and Supervisory Committee members and outside directors). Under this scheme, points are granted based on position and performance indicators for each applicable period (every five fiscal years), with a maximum of 330,000 points. Following the stock split effective October 1, 2024, in which each common share was split into three shares, the maximum number of points granted per applicable period has been adjusted to 990,000 points. In principle, shares equivalent to one share per point are granted annually at a fixed time. If the conditions stipulated in the Executive Share-Based Remuneration Regulations are met, a certain portion of the points may be converted into cash equivalent to the market value of the shares at the time of retirement, instead of being granted as shares. Furthermore, the amount of remuneration received under this scheme is calculated by multiplying the total number of points granted to each applicable director (excluding Audit and Supervisory Committee members and outside directors) by the book value per share of the company’s stock held in the trust established for this remuneration system (hereinafter referred to as the “Stock-Based Remuneration Framework for Directors”). As of the date of submission of the Annual Securities Report, five directors (including three outside directors) are eligible for remuneration under the Monetary Remuneration Framework for Directors, and two directors are eligible under the Stock-Based Remuneration Framework for Directors.

The maximum annual remuneration for Audit and Supervisory Committee members was also resolved at the same shareholders’ meeting to be no more than 70 million yen (hereinafter referred to as the “Remuneration Framework for Audit and Supervisory Committee Members”). As of the date of submission of the Annual Securities Report, three directors serving as Audit and Supervisory Committee members are eligible for remuneration under this framework.

Officer classification	Total amount of remuneration, etc. (Yen in millions)	Total amount of remuneration, etc. by type (Yen in millions)			Number of eligible officers (Persons)
		Base remuneration	Performance-linked compensation
			Performance-linked pay	Stock-based compensation
Directors (excluding directors serving as Audit and Supervisory Committee Members)	420	140	111	168	7
Directors (Audit and Supervisory Committee Members)	50	50	-	-	4
Total	471	191	111	168	11
(of which outside officers)	78	78	-	-	7