Based on our management philosophy of “Integrity – Have Integrity and Sincerity,” we believe that establishing proper corporate governance is an extremely high-priority issue for meeting the trust and expectations of all stakeholders who support our business activities and for achieving sustainable growth and increasing corporate value.

Dexerials engages continuously in initiatives to enhance corporate governance in order to build a more efficient and effective management system.
Ever since we became a listed company in 2015, we have had a supervisory system in which the majority of our directors are outside directors with high independence and expertise, thereby ensuring transparency and objectivity of management.
The decision-making process for officers’ nomination and remuneration is handled by the Nomination and Remuneration Committee, an optional committee, which was established in 2019. The majority of the members and the committee chairperson are outside directors. It holds discussions on matters such as evaluation of executive directors, succession planning for officers, and the officer remuneration system to ensure the transparency and soundness of management.
In order to speed up decision-making when carrying out business, we also proactively delegate authority to executive officers. In 2019, we introduced an entrusted executive officer system to further spread the delegation of authority.
In 2021, we transitioned our institutional design from a company with an Audit and Supervisory Board to a company with an Audit and Supervisory Committee, which has allowed a more precise separation of management oversight and execution and accelerated the promotion of a monitoring model.

Dexerials’ Board of Directors consists of seven members, including four outside directors, therefore outside directors always accounting for the majority.
In principle, the Board of Directors conducts regular meetings once per month, where it decides legally mandated matters, determines major management policies and strategies, selects candidates for officers, determines remuneration of individual directors, and oversees execution of business. The outside directors each have extensive experience and knowledge as managers or experts in their field and are able to play their role in strengthening supervisory functions from an independent perspective.
In addition, off-site meetings are held separately from the Board of Directors meetings to discuss the future of the Board of Directors and its policies from the formulation stage. They also inspect business sites, including those belonging to Group subsidiaries. We are also working to expand communication between outside directors and executive officers to ensure that discussions in Board meetings are based on a proper understanding of the status of executive operations.

Dexerials is a company with an Audit and Supervisory Committee. The Company’s Audit and Supervisory Committee comprises three members (of which two are outside directors) and is chaired by an outside director, which ensures the transparency and independence in audits. In addition, a position for one standing Audit and Supervisory Committee Member has been created to secure the effectiveness of audits.

For business execution, executive officers delegate broad discretionary authority to nine appointed executive officers, aiming to build a system that makes quick decision-making and clarifies executive responsibility.
Of the executive officers, two also serve as internal directors. The seven executive officers who do not serve as internal directors have concluded a delegation agreement with the Company regarding the execution of business.
In principle, the Board of Executive Officers is held twice a month, with nine executive officers as members. It examines the status of, and issues regarding, business execution, in addition to conducting discussion of major proposals in advance in order to have meaningful dialogues at the Board of Directors meetings.

Click here for our list of officers

In order to guarantee appropriate and transparent decision-making processes for the selection, dismissal, and remuneration of officers, the Company has established a Nomination and Remuneration Committee as an advisory body to the Board of Directors.
The Nomination and Remuneration Committee consists of six directors, of which more than a majority (four) are independent outside directors. In addition, the committee’s chairperson is an independent outside director to ensure objectivity and transparency.
The Nomination and Remuneration Committee discusses succession planning and training for officers, including the Representative Director and President, as well as the skills required to serve on the Board of Directors, from the perspective of our corporate vision.
In addition, the Committee has repeatedly discussed the appropriateness of remuneration structures and the performance-linked compensation system, as well as targets and evaluation, with regard to the basic policy for officer remuneration. The Board of Directors makes final decisions on performance evaluations and other such matters on the basis of reports submitted following deliberations by the Nomination and Remuneration Committee.
In addition to five committee meetings, the Nomination and Remuneration Committee held three intensive　discussions outside of committee meetings in fiscal 2022. Discussions included the selection of officer candidates, confirmation of the training process for officer successors, skills required for the Board of Directors, evaluation of performance in determining remuneration for officers, the remuneration structure, and appropriate remuneration levels.

Date	Matters deliberated on
April 2022	Deliberation on the board composition and candidates Deliberation on the policy to determine officers’ remuneration Discussion on officers’ remuneration levels Transition to an entrusted executive officer system
May 2022	Deliberation on the amounts of officers’ remuneration Review of fiscal 2021 and evaluation of the Remuneration Committee
July 2022	Discussion on succession planning and skills matrix Report on fiscal 2022 commitments
October 2023	Deliberation on skills matrix of directors and report on the succession of the management team
January 2023	Discussion on the executive management structure for fiscal 2023 Report on benchmark comparisons of remuneration levels and systems

* In addition to the above, three intensive discussions were held outside the formal committee.

The Internal Audit Department strives to implement effective and efficient audits, establishes an internal control system for the Company and its Group companies, and audits the status of their implementation of, and compliance with, their respective compliance and risk management systems. In regards to the results of internal audits, the Internal Audit Department periodically reviews the status of enhancements, and reports those details to the Audit and Supervisory Committee, the representative directors, and any related departments.
Specifically, the section carries out internal audits based on the audit plan formulated at the beginning of the fiscal year, notifies the audited divisions of the results, while also informing the Audit and Supervisory Committee and the representative directors of the results. If there are any issues that require improvement, the section checks on the progress and results of their implementation.
The Department also regularly collaborates with the Standing Audit and Supervisory Committee Member to confirm the details of audits and exchange opinions.
Furthermore, the Department exchanges opinions with the Accounting Auditor every quarter, informing them on any material events concerning internal control that were found in internal audits and seeking their guidance and advice as needed.

The company has entered into an audit agreement with PwC Arata LLC, and that firm conducts accounting audits pursuant to the Companies Act and the Financial Instruments and Exchange Act.
PwC Arata and its managing partners who conduct audits of the Company have no special interests in the Company, and further, PwC Arata LLC has taken measures to prevent its managing partners from being involved in accounting audits of the Company exceeding a certain period.

When nominating director candidates (excluding directors who are Audit and Supervisory Committee members) the Company selects candidates based on criteria such as decision-making capabilities and ability in accordance with the Company’s management philosophy, excellent character and communication skills, and leadership.
With regard to outside directors, the Company invites individuals who have experience as managers at global companies, knowledge relating to technology development, professional experience and expertise in areas such as law or financial accounting, and are highly independent.
When nominating candidates for director who are Audit and Supervisory Committee members, the Company selects candidates from inside and outside the Company based on the criteria of selecting one or more persons who possesses experience and knowledge in areas including corporate management, financial accounting, and law. In particular, the Company looks for candidates who have sufficient knowledge in finance and accounting.
Also, outside directors are determined in consideration of the balance of the knowledge, experience, specialist areas, etc., of the Board of Directors as a whole. This includes those with management experience at other companies, etc.
A skills matrix is used to present the areas of expertise that the Board of Directors should have and the balance between these areas.
Independent outside directors make up a majority of the Company’s Board of Directors, and accordingly, the mechanism is such that officer candidates are selected from a neutral perspective.
In addition, when appointing and dismissing management executives and nominating officer candidates, decisions are made based on the deliberations and reports of the Nomination and Remuneration Committee, a majority of the members and the chair of which are independent outside directors.

Position	Name	Management positions and major concurrent posts	Reason for selection
Representative director and president	Yoshihisa Shinya	President and Executive Officer	Mr. Yoshihisa Shinya has been appointed as Representative Director because he plays a central role in product development in the Company's entry into new business areas, and has a deep knowledge of technology and a wealth of experience in business operations.
Representative director	Toshiya Satake	Senior Managing Executive Officer	Mr. Toshiya Satake has a wealth of experience and deep insight gained through his involvement in investment and financing business at financial institutions and as a manager of a company. In his capacity as representative director, he has contributed to enhancing the corporate governance and corporate value of the Company. The Company judges that he is capable of appropriately fulfilling his duties as a Director and therefore appointed him Director.
Outside director	Takashi Yokokura	Kikuchiseisakusho Co., Ltd. Outside Director	Mr. Toshiya Satake has a wealth of experience and deep insight gained through his involvement in investment and financing business at financial institutions and as a manager of a company. In his capacity as representative director, he has contributed to enhancing the corporate governance and corporate value of the Company. The Company judges that he is capable of appropriately fulfilling his duties as a Director and therefore appointed him Director.
Outside director	Satoshi Taguchi		Mr. Satoshi Taguchi has held important positions in a global company and has deep insight into corporate management, and the Company expects that he will provide useful advice for the Company’s management from an objective and professional perspective and contribute to reinforcing the Company’s risk management and oversight of business execution, and therefore invited him to serve as an Outside Director.
Outside director Audit and Supervisory Board Chair	Rika Sato	Lawyer (Partner at Sato & Partners Law Office) Outside Director of CMK Corporation Outside Director of Nihon Plast Co., Ltd.	Ms. Rika Sato has deep insight into corporate legal affairs as an attorney at law and has a track record of contributing to enhancement of the quality of auditing by the Company as an Outside Audit and Supervisory Board Member. The Company determined that she can contribute to reinforcing audit and supervisory functions from an objective and professional perspective and provide useful advice that contributes to enhancing compliance and corporate governance, and therefore invited her to serve as an Outside Director and an Audit and Supervisory Board Member.
Director and fulltime Audit and Supervisory Board Member	Masato Taniguchi	Audit & Supervisory Board Member, Kyoto Semiconductor Co., Ltd.	Mr. Masato Taniguchi has deep insight about the Group's business, gained through his experience of serving as general manager of engineering and manufacturing units and in key positions at overseas manufacturing sites, and a proven ability to engage in smooth communication with frontline operations. He also has a wealth of experience and insight about audit practice through his service at the Company's audit department and as an audit & supervisory board member of subsidiaries. Based on his experience and insight, the Company judges that he is capable of performing objective, appropriate auditing from a professional perspective and therefore nominates him as a candidate for Director serving as Audit & Supervisory Committee Member.
Outside director Audit and Supervisory Board Member	Tetsuyuki Kagaya	Professor, Graduate School of Business Administration, Hitotsubashi University	As a university professor, Mr. Tetsuyuki Kagaya possesses extensive knowledge concerning financial accounting, corporate valuation, and risk analysis. The Company determined that he can contribute to reinforcing audit and supervisory functions from an objective and professional perspective and provide useful advice that contributes to enhancing the implementation of ESG management, and therefore invited him to serve as Outside Director and Audit and Supervisory Board Member.

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 candidate has not held a position as director (excluding outside director. The same applies hereinafter), audit and supervisory board member (excluding outside audit and supervisory board member. The same applies hereinafter), executive officer, or agent (hereinafter “Director, etc.”) of the Company or any of its subsidiaries (hereinafter the “Dexerials Group”) either currently or in the ten years prior to being appointed.
• 2．
  The candidate is not related to a Director, etc. of the Dexerials Group within two degrees of consanguinity.
• 3．
  The candidate is not a major shareholder of the Company (or in the case of a major shareholder that is an organization such as a company, is not affiliated with said organization). (Note 1)
• 4．
  The candidate is not affiliated with an organization of that is a major shareholder of the Company. (Note 1)
• 5．
  The candidate is not a major trading partner of the Dexerials Group (or in the case of a major trading partner that is a company, etc. is not affiliated with said organization). (Note 2)
• 6．
  The candidate is not a major lender or other major creditor of the Dexerials Group (or in the case of a major lender that is an organization such as a company, is not affiliated with said organization). (Note 3)
• 7．
  The candidate has not received contributions of 10.00 million yen or more from the Dexerials Group in the current fiscal year (in the case the recipient of contributions is an organization such as a company or association, this applies to those who are affiliated with said organization or who have been affiliated with said organization in the previous five years).
• 8．
  The candidate has not received remuneration from the Dexeriels Group of 10.00 million yen or more as payment for the provision of specialist legal, financial, or taxation services, etc. or consulting, etc. in the current fiscal year (or in the case of a recipient that is an organization such as a company, is not affiliated with said organization).
• 9．
  The candidate is not subject to reciprocal appointment of outside officers between a company at which the candidate is a Director, etc. and the Dexerials Group. (Note 4)

• (Note 1) “Major shareholder” refers to a shareholder that directly or indirectly holds 10% or more of total voting rights.
• (Note 2) “Major trading partner” refers to companies for which payments made or payments received in transactions with the Dexeriels Group account for 2% or more of consolidated net sales of the Dexeriels Group or the trading partner.
• (Note 3) “Major lender” refers to a lender of a sum that amounts to 2% or more of consolidated total assets.
• (Note 4) “Reciprocal appointment of outside officers” refers to a scenario in which an outside officer is accepted from a company at which a Director, etc. of the Dexeriels Group serves as an outside officer.

For the purpose of ensuring objectivity and transparency in the evaluation of the effectiveness of our Company’s Board of Directors, once a year a third party conducts individual interviews with all the directors based on questionnaire items prepared by the Board of Directors Secretariat, analyzes and summarizes the responses of each Director, and formulates an action plan for the next fiscal year.

Category	Details
Composition of the Board of Directors	Number of directors, composition of members, and balance of　expertise of each officer Necessity to review the board composition Status of directors’ knowledge and understanding of our business fields
Operation of the Board of Directors	State of open exchange of opinions and discussions in board　　meetings
Corporate Governance-related	Deciding direction of management strategy Understanding stakeholders’ perspectives Creating an environment that supports risk-taking Sharing risk information Effectiveness of supervisory function
Evaluation of fiscal 2022 action plan	Build consensus on the roles and functions expected of outside directors, their evaluation, and succession Build consensus on the agendas of board meetings and their schedule Consider ways of information sharing and communication needed to allow the Board of Directors to fulfill its roles and functions

(1) Summary
The results of the evaluation for fiscal 2022 indicated that the Board of Directors is operating in a highly effective manner. The following items were highlighted as either current strengths of the Board or improvements over its previous results.

• 1．
  The composition of the Board of Directors remained optimal.
• 2．
  The Board held active discussions on various issues, including deliberations at the concept and policy formulation stages.
• 3．
  Determined efforts were made to implement improvements based on the previous evaluation of Board effectiveness.

(2) Action plan for fiscal 2023
The Board of Directors has devised the following action plan for fiscal 2023 with the goal of deepening discussions regarding the functions, roles, and activities of the Board that will contribute to the enhancement of corporate value from a medium- to long-term perspective. Under this action plan, the Board will discuss the following issues.

• 1．
  The future composition of the Board of Directors (including the future role of the Nomination and Remuneration Committee)
• 2．
  Engagement with institutional investors, etc
• 3．
  The provision of information to outside directors
• 4．
  Setting of agenda items

Policies concerning compensation paid to directors are determined by the Board of Directors after continual deliberations by the Nomination and Remuneration Committee, including objective discussions regarding our vision for the future corporate governance structure, and the development of an executive officer remuneration system that will contribute to sustainable growth and the improvement of corporate value.
The appropriate level of remuneration is confirmed based on a comparative examination of the Company’s current remuneration systems and levels with those of companies of similar size, type, and industry. Compensation levels are derived from executive compensation survey data provided by external research organizations.
Remuneration of directors (excluding outside directors) is determined by a resolution of the Board of Directors following the discussion by the Nomination and Remuneration Committee based on the amount calculated according to the job title and the degree of achievement of results for the fiscal year, etc., in view of the basic approach for determining officers’ remuneration described below.
Remuneration of Audit and Supervisory Committee Members is determined through consultation among directors serving as Audit and Supervisory Committee Members.

• Officer remuneration is paid according to the roles, responsibilities, and performance of each officer.
• Remuneration is designed to reflect medium- to long-term management strategies while providing strong motivation to achieve medium- to long-term growth.
• Remuneration levels are set at levels suitable for recruiting and retaining outstanding human resources.
• The process of setting remuneration shall be objective and highly transparent.

Amounts are determined according to the job title in accordance with internal rules (weighted allocation according to job responsibilities), and a fixed monthly amount of remuneration is paid. Only base remuneration is provided to outside directors and directors serving as Audit and Supervisory Committee Members.
The maximum amount of remuneration of directors (excluding directors serving as Audit and Supervisory Committee Members) was set to be no more than 300 million yen annually (including 40 million yen for outside directors) by a resolution adopted at the 9th Annual General Meeting of Shareholders held on June 18, 2021.
The maximum amount of remuneration of directors serving as Audit and Supervisory Committee Members was set to be no more than 50 million yen annually by resolution adopted at the above-mentioned Annual General Meeting of Shareholders.

Performance-linked compensation comprises “performance-linked pay,” which is paid according to performance during the fiscal year, and “stock-based compensation (BBT trust),” which is intended to foster the awareness that directors share interests with shareholders and to provide motivation for achieving objectives over the medium to long term.
Performance-linked compensation is designed to motivate the Company’s executive directors to manage with an awareness of performance and share prices not just in a single fiscal year, but also over the medium to long term. Performance-linked pay is set based on consolidated net sales, which correspond to the capability to earn revenue through the implementation of the strategy, and EBITDA, which corresponds to the capability to earn substantial profit, as evaluation indicators. In addition, the Nomination and Remuneration Committee evaluates and reflects the medium-term strategic initiatives, outstanding performance on ESG, and performance on initiatives for safety and human resource development. Regarding the above performance indicators, performance-linked pay is calculated at the ratio of 50% consolidated net sales and 50% EBITDA, and the amount determined is divided by 12 and the divided amount is paid monthly from the month following the conclusion of the Annual General Meeting of Shareholders.
“Stock-based compensation” is set separately from base remuneration for the purpose of increasing awareness of contributions to medium- to long-term continuous improvements in financial results and increases in corporate value. Specifically, money is contributed to a trust every three years for acquisition of the shares necessary for provision to directors, and thereafter, eligible directors are awarded points according to total shareholder returns (TSR) and ROE, which are evaluation indicators specified in order to ensure directors share interests with shareholders and to ensure that not only the benefit of the increase in the share price, but also the risk of the decrease in the share price is shared among the directors and the shareholders, thereby strengthening the directors’ awareness of their contribution to the medium- to long-term improvement in financial results and corporate value.
Each point granted can be converted into one share of the Company’s ordinary stock, and every three years, eligible directors are granted shares and monies converted at the market value of those shares according to the number of points.

In order to guarantee appropriate remuneration for officers and transparency of decision-making processes, the Company has established a Nomination and Remuneration Committee as an advisory body to the Board of Directors.
The decision-making process of the Board of Directors shall involve referral to and deliberation by the Nomination and Remuneration Committee for matters relating to the composition of remuneration of directors (excluding directors who are Audit and Supervisory Committee members) and executive officers, determination of the appropriateness of design and setting targets for the performance-linked compensation system, and evaluation of performance, etc.
The remuneration of individual directors (excluding directors who are Audit and Supervisory Committee members) shall be determined by a resolution of the Board of Directors following discussion by the Nomination and Remuneration Committee and within the range of remuneration determined by a resolution of the General Meeting of Shareholders in advance.

Job Title	Percentage of officer remuneration			Total
	Base remuneration	Performance-linked remuneration
		Performance-linked pay	Stock-based compensation
Representative director	50％	30％	20％	100％
Outside directors	100％	-	-
Directors who are Audit and Supervisory Board members	100％	-	-

• Note: The composition ratio of each remuneration is the ratio of each evaluation indicator set as a performance target that is achieved.

Officer classification	Total amount of remuneration, etc. (Yen in millions)	Total amount of remuneration, etc. by type (Yen in millions)			Number of eligible Base remuneration officers (Persons)
		Base remuneration	Performance-linked compensation
			Performance-linked pay	Stock-based compensation
Directors (excluding directors serving as Audit and Supervisory Committee Members)	336	103	102	130	4
Directors (Audit and Supervisory Committee Members)	37	37	-	-	3
Total	374	141	102	130	7
(of which outside officers)	40	40	-	-	4