State of Each Organization

Board of Directors

Composition of Board of Directors (As of June 30, 2024)

Directors

Director Attributes and Committee Membership (as of June 30, 2024)

The selection was made at the Board of Directors meeting held on June 26, 2024.

Ratio of Independent Outside Directors

Target ratio of Independent Outside Directors	Result	Name
One-third of the Board of Directors	1/3 or more	Emiko Hamada, Hiroshi Sakuma, Noriko Kawakami, Kengo Miyamoto

Ratio of Female Directors

Target Ratio of Female Directors	Result	Name
30% of Directors	30%	Mayumi Inagaki, Emiko Hamada, Noriko Kawakami

Director/Audit and Supervisory Board Member Skill Matrix and Reasons for Item Selection

Director/Audit and Supervisory Board Member Skill Matrix and Reasons for Item Selection

Reasons for selection as field of experience/specialized knowledge

Nomination and Compensation for Directors and Audit & Supervisory Board Members

Board of Directors Diversity Policy

The Articles of Incorporation specify a maximum of 15 directors on the NGK Board of Directors. NGK does not discriminate on the basis of gender, age, nationality, and race. Based on this policy, NGK strives to enhance diversity in both gender and internationality of the Board of Directors by electing women directors and directors who possess experience in the management of overseas subsidiaries. NGK also strives to ensure the independence of the Board of Directors by specifying that one-third or more of directors be independent outside directors.
NGK deems the following director skills necessary: Practical experience and demonstration of leadership in areas in which the NGK Group operates its business; professional expertise in finance, legal affairs, human resources and labor, information and communications, and other areas. We also think it is necessary to have highly independent outside directors who possess a high degree of expertise in legal affairs or corporate finance, or who possess knowledge of international affairs, trends in technology, and corporate management. The skill matrix (expertise) of the current Board of Directors is shown above.

Activities of Board of Directors

No. of members: 10; Convened 15 times in FY2023

The Board of Directors is composed of ten directors (seven male, three female; one-third or more of directors are outside directors). It discusses and votes on matters designated under the Companies Act, NGK’s Articles of Incorporation and Rules for the Board of Directors (These matters include company-wide unified budgeting, strategic planning such as dissolution, mergers, and alliances of the company, appointing and dismissing representative directors, and authorizing business reports and financial statements etc., the disposal and acceptance of transfer of important assets, the appointment and removal of important employees, etc.). The Board also monitors the job performance of all company directors. The chair of the Board of Directors is a non-executive director. In addition, both the full-time and outside members of the Audit & Supervisory Board attend meetings of the Board of Directors and provide their opinions when necessary.

The key topics and time allocated for each category in FY2023 were as follows.

[Medium- to Long-Term Issues and Group Vision]

• Identifying Materiality
• Initiatives for creation of new business (Progress report on New Value 1000)
• Initiatives for business portfolio
• Intellectual property strategy

[Financial Results, Budget, and Finances]

• Budget and financial results
• Sale of long-term shareholdings
• Report on IR/SR activities, etc.

[Environmental, Social, Governance (ESG)]

• Formulation of NGK Group Basic Sustainability Policy
• Progress report on the 5th Five-Year Environmental Action Plan
• Information disclosure based on TCFD
• Formulation of Anti-trust law compliance program

[Committee Report]

• Report on major committee activities

[Personnel/Human Resources]

• Organization and Personnel
• Formulation of NGK Group Human Capital Management Policy

[Individual Projects]

• Investment in production facilities, R&D, etc.
• Revision of company regulations

Time Allocated to Key Topics

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Audit & Supervisory Board / Audits

Composition of the Audit & Supervisory Board (As of June 30, 2024)

This applies to the board of directors and board of auditors held after the appointment on June 26, 2023.

Audit Policy and Audit Plan

At the beginning of each fiscal year, the Audit & Supervisory Board formulates an audit policy and audit plan, and sets important audit items. For FY2024, these are as follows.

[Audit Policy]

The Audit & Supervisory Board and each of its members focus on monitoring management risks to ensure that NGK's internal control systems function properly in light of the business environment and other conditions, and that the entire group can be maintained in good health. This includes checking our crisis management systems for natural disasters, as well as various other risk cases. Especially because three years have passed since the NGK Group Vision was formulated, we believe that it is vital to check on its progress and permeation both inside and outside the company.
We base our audits on managing risk during execution of day-to-day business and confirming the rationality of management decisions. Where necessary, we conduct investigations into individual matters, and work to improve governance.

[Important Audit Items]

(1) NGK Group Vision

• The status of ESG-related initiative penetration
• The progress of new business, business restructuring, etc.
• Business-specific risk awareness and reasonableness of the management decision-making process

(2) Confirm framework for handling risk management and readiness to face future changes

Status of Audits by Audit & Supervisory Board Members

No. of members: 4; Convened 14 times in FY2023

The Audit & Supervisory Board is composed of four Audit & Supervisory Board members (all male). Audit & Supervisory Board members supervise directors’ decision-making process and job performance, by attending meetings of the Board of Directors and other important meetings, receiving reports from directors, employees, etc. and requesting explanations where necessary. In addition, they review the establishment and operation of so-called internal control systems, and confirm the appropriateness of accounting auditors’ auditing methods and results.

The major resolutions and reports for FY2023 were as follows.

[Resolutions]

• Audit & Supervisory Board members’ audit policy and audit plan and audit reports of the Audit & Supervisory Board
• Consent to the proposal for the appointment of Audit & Supervisory Board members
• Consent to the compensation, etc. for the Accounting Auditor
• Confirmation of proposals and documents to be submitted to the General Meeting of Shareholders
• Consent to comprehensive advance agreement process for non-assured engagement provided by the auditing firm to which the accounting auditors belong and its network firm

[Reports]

• Report on audit activities by full-time Audit & Supervisory Board members
• Audit plan by the Accounting Auditor
• Report on Financial Results by the Finance & Accounting Department
• Financial audit report by the Accounting Auditor
• Report on the results of internal audits by the Auditing Department
• Confirmation of the Convocation notice of the annual shareholder’s meeting

Internal Audits

The Auditing Department (19 members: as of March 31, 2024) was established to perform an internal auditing function. The general manager of the Auditing Department is a member of the Internal Control Committee. The Auditing Department audits the status of business execution in NGK and each domestic and overseas Group company based on audit plans approved by resolution of the Board of Directors, and reports the results of audits to the President, Board of Directors, and Audit & Supervisory Board.
While internal audits are conducted independently of Audit & Supervisory Board audits and accounting audits, the Auditing Department regularly discusses audit policy, plans, and results with Audit & Supervisory Board members and the accounting auditor to improve the effectiveness and efficiency of audits. It also compiles the results of individual audits and reports them to the President and Audit & Supervisory Board members whenever necessary. Moreover, because audits in areas such as quality, environment, and safety and health require specialized knowledge, the dedicated departments serving as secretariats of the committees involved with each area perform internal group audits. They report the results of these audits within each committee and report the committee summaries to the Board of Directors.

Accounting Audits

Accounting audits are performed by an auditing firm and include financial statement and internal control auditing carried out in line with the Financial Instruments and Exchange Act and auditing carried out in line with the Companies Act.
Selection of the auditing firm to perform accounting audits was carried out by the Audit & Supervisory Board according to a variety of criteria. Among the key criteria were whether the firm maintains systems and structures in line with the Regulation on Corporate Accounting (“Matters Related to the Performance of Duties of Financial Auditor(s)”); whether it possesses professional expertise and can carry out appropriate auditing while maintaining a position of independence; and whether there are any grounds for dismissal of financial auditors, as per the Companies Act. Based on the results of this confirmation, NGK selected Deloitte Touche Tohmatsu LLC as the current accounting auditor.
In addition to the above criteria for the selection of the accounting auditor, Audit & Supervisory Board members and Audit & Supervisory Board also evaluated the suitability of the accounting auditor from the perspective of whether it communicates with management, Audit & Supervisory Board members, the Finance Department, and Internal Auditing Department, performs Groupwide audits, and addresses risk of fraud appropriately, through the daily audit activities. Based on this, Deloitte Touche Tohmatsu LLC (“Deloitte”) has been determined to be qualified to serve as the accounting auditor for NGK.

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Board of Directors Audit Advisory Committee

Nomination and Compensation Advisory Committee

No. of members: 6; Convened 4 times in FY2023

The Nomination and Compensation Advisory Committee was established in order to ensure fairness and enhance transparency in officers’ personnel matters, the determination of compensation, and other matters as an advisory body to the Board of Directors. The committee receives inquiries from the Board of Directors and then deliberates on personnel matters for directors and the Audit & Supervisory Board members, matters relating to compensation for directors and executive officers, upper limit on the total compensation amount for directors and Audit & Supervisory Board members, and a succession plan for the Chief Executive Officer, etc. The committee reports its results to the Board of Directors. The committee consists of a majority of independent outside directors and a committee chairperson who is selected from among the independent outside directors. It is composed of four male members and two female members. One outside Audit & Supervisory Board member attends committee meetings as an observer to confirm the appropriateness of the deliberation process.

The major matters discussed by the committee in FY2023 were as follows.

• Appointment of directors, representative directors, and directors with specific titles
• Compensation (cash and stock-related compensation) commensurate with the position of each individual director and executive officer
• Amount of performance-linked bonuses to be paid to each individual director in FY2023
• State of development of successors to the Chief Executive Officer

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Other Various Types of Meeting Bodies

Business Ethics Committee

No. of members: 7; Convened 5 times in FY2023

The Business Ethics Committee is comprised of outside officers and one internal director who is in charge of compliance. The committee conducts necessary investigations into fraudulent acts and violations of laws and regulations involving corporate officers and employees and advises the Board of Directors on how to prevent recurrence. To ensure compliance with competition laws and the Foreign Corrupt Practices Act, the committee makes recommendations to the Board of Directors on building a compliance system and considering compliance activities. The Committee strives to strengthen the compliance system by establishing, in addition to the current Helpline System, a whistle-blowing system (hotline), which is directly linked to the Business Ethics Committee, as a mechanism to prevent any such fraudulent act or violation of laws and regulations. The committee is composed of four male members and three female members.

Corporate Council

No. of members: 12; Convened 2 times in FY2023

The Corporate Council is a council where outside officers and internal directors, and others can exchange opinions. It provides an opportunity for management to actively seek advice from outside officers on various issues concerning management. The council is composed of nine male members and three female members.

Conference of Outside Directors and Outside Audit & Supervisory Board Members

No. of members: 6; Convened 2 times in FY2023

This conference consists only of outside officers and is a conference where outside officers can exchange opinions concerning corporate management issues and other matters to actively contribute to discussions in Board of Directors meetings. The committee is composed of four male members and two female members.

Hearing Convened by Audit & Supervisory Board Members and Outside Directors

No. of members: 8; Convened 13 times in FY2023

Hearings consist of Audit & Supervisory Board members and outside directors. The purpose of these hearings is to collect information from relevant internal personnel concerning the corporate business environment and company issues. The hearing is composed of six male members and two female members.

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Business Execution System

Executive Committee

No. of members: 16; Convened 20times in FY2023

The Executive Committee is the body that deliberates necessary matters to assist the president in making decisions. It consists of the president, executive vice presidents, group executives of each business group, the group executive of Corporate NV Creation, the group executive of Corporate R&D, the group executive of Corporate Manufacturing Engineering, directors in charge of each department, and full-time Audit & Supervisory Board members, as well as corporate officers, committee chairs, general managers and division heads designated by the president. Fifteen committee members are male and one is female.

Other BodiesNote: The number of times held refers to the cumulative total from April 2023 to March 2024.

Strategy Committee Times held: 22	This committee conducts a broad range of discussions aimed at discovering problems and considering solutions concerning issues important to business management, strategy and policy planning, and reporting on the execution status and progress of various businesses and projects.
Sustainability Management Committee (former ESG Management Committee) Times held: 6	This body assists the president, who is the Sustainability Management Committee chairperson, in decision-making about strategy, action plans, and important issues related to NGK Group sustainability (medium-to-long-term), as well as Environmental, Social, and Governance, and Sustainable Development Goals. It also performs deliberation for the presentation of agenda items deemed important to the Board of Directors or the Executive Committee. Note: In April 2022, we renamed the former “ESG Committee” to the “ESG Management Committee.” The Committee will more proactively address the NGK Group’s sustainability issues and the activities will be appropriately supervised by the Board of Directors.
Risk Management Committee Times held: 3	This is a body established to report important matters relating to risk management to the Board of Directors and Executive Committee, to assist the Board of Directors in supervising the Group’s risk management, and to contribute to increasing the sophistication of risk management.
Development and Commercialization Committee Times held: 7	This body deliberates items necessary to assist the decision-making of the president and Development and Commercialization Committee chair regarding policies, evaluations, budgets, major individual planning, and commercialization projects related to development and commercialization.
Capital Investments Committee Times held: 10 (Excluding joint meetings of the Development and Commercialization Committee)	This body deliberates items necessary to assist the decision-making of the president and Capital Investments Committee chair regarding the examination and evaluation of policies, budgets, performance, and major individual planning related to capital expenditure and information systems.
Quality Committee Times held: 2	Aiming to increase customer satisfaction and trust by realizing even higher-quality products and services, this body deliberates the matters necessary to help the president and the Quality Committee chair with decision-making regarding the following items. Determination, revision, or abolition of Quality Policy and Objectives Items pertaining to the prevention of serious quality defects in the market and technological responses after occurrence Items pertaining to the quality assurance framework and avoidance of quality risks in the commercialization of developed products Other quality-related matters determined to be important
Environment, Safety & Health Committee Times held: 2	This body performs overall management of the environment, safety and health for the NGK Group by regularly ascertaining overall conditions, and carrying out the necessary deliberations for making decisions on important policies, formulating action plans, and handling important matters.
Compliance Committee Times held: 3	This body assists the president and Compliance Committee chair with decision-making by deliberating essential matters pertaining to the following. Observance of laws, regulations, and corporate ethics 1.1.Determination, revision, or abolition of basic policies related to the observance of laws, regulations, and corporate ethics Note: Deliberation items for Board of Directors meetings 1.2.Determination of systems, structures, and strict observance of important activities pertaining to laws, regulations, and corporate ethics 1.3.Handling of Helpline matters 1.4.Determination, revision, or abolition of risk management structures pertaining to laws, regulations, and corporate ethics Response to the matters, incidents, or accidents related to laws, regulations, or corporate ethics that are special crisis management matters Other compliance-related issues deemed important by the committee chair
Internal Controls Committee Times held: 3	This body deliberates matters necessary to help the president and Internal Controls Committee chair with decision-making regarding internal controls system assessment and reporting related to financial reporting based on the Financial Instruments and Exchange Act. Determines the scope of reporting for each fiscal year, assessment and reporting schedules, standards to assess internal controls, and other basic matters Summarizes internal controls assessment and drafts internal controls report
HR Committee Times held: 7	This body assists the president with decision-making by examining issue presentation, research reporting, solution development, and other essential matters related to corporate obligations in respecting human rights (issue handling) and the important personnel policies within the NGK Group. Matters related to the determination, revision, or abolition of basic policy on human rights Matters related to raising human rights awareness among Group companies and implementing human rights due diligence Matters related to important personnel policies whose impact may potentially extend to Group companies Other human rights and personnel policy-related matters deemed serious by the committee chair
BCP Countermeasures Headquarters Times held: 1	Aimed at ensuring business continuity in critical situations such as disasters, terrorism, or systems failure, this body executes the operation and maintenance of business continuity plans (BCP) in normal times as well as gives instructions on and support to restoration systems, and prioritizes restoration orders when BCP is in effect.
Disaster Prevention and Control Headquarters Times held: 1	This body executes requisite duties under commands from the Head and deliberates items necessary to assist the decision-making of the president and Head of this body regarding items related to earthquakes, storm and flood damage, fires, and explosions that threaten or significantly impact the company.
Security Export Control / Specified Export and Customs Clearance Control Committee Times held: 1	This body deliberates and determines items necessary for guidance for subsidiaries and affiliates, legal compliance and the improvement of other internal systems with respect to security export controls, specified export declaration systems, and the management of customs clearance operations.

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Effectiveness of Board of Directors

Evaluation on the effectiveness of the Board of Directors

Analysis and Evaluation Results concerning the Effectiveness of Board of Directors

NGK’s Board of Directors conducts a survey of directors and Audit & Supervisory Board members at the close of each fiscal year on the effectiveness of Board of Directors meetings. The Board entrusts analysis and evaluation of the responses to an external organization, which reports the results to the Board of Directors. NGK continually strives to improve effectiveness through such means as considering the importance and necessity of each issue identified and reinforcing efforts in Board of Directors meetings during the next fiscal year.

1. Policy on Initiatives and Main Initiatives for FY2023, Based on the Effectiveness Evaluation Covering FY2022

• Board of Directors policy on initiatives
  • The following items should be monitored and regularly reported to the Board of Directors in order to achieve the NGK Group Vision
    • Status of the business portfolio revision
    • Progress of the New Value 1000 (aiming for sales of 100 billion yen from new commercialized products by 2030)
    • Progress of various committee activities and company-wide projects
    • Progress of human resources strategy
    • Status of company-wide risk management

      [Primary Initiatives]
      We have also established multiple reporting periods for each of the annual agenda items above.
      Above all, in FY2023, NGK established a company-wide Risk Management Committee as a supervisory committee under the direct control of the President. It deliberates on the formulation of policies on risk management, establishment of systems, and monitoring of the status of execution, and reports to the Board of Directors.

  • Work to deepen discussion related to business strategy

    [Primary Initiatives]
    Continuing from FY2022, the energy storage business strategy was discussed intensively at the expansion strategy meeting, which was held twice and also attended by outside officers.

  • Enhance opportunities for dialogue between senior management and outside officers

    [Primary Initiatives]
    Conferences between senior management and outside officers were held once a month.
    In addition, senior management attended hearings convened by Audit & Supervisory Board members and outside directors, and reported on the general state of the business.

  • Emphasize dialogue with shareholders and investors through IR activities

    [Primary Initiatives]
    The committee regularly reported on the status of SR activities and IR activities.
    Moreover, the committee published NGK financial results and shared the Q&A session at the Financial Results Briefing with attendees from the Board of Directors.

• Policy on initiatives for the Nomination and Compensation Advisory Committee
  • Strive to further share the state of committee discussions with the Board of Directors

    [Primary Initiatives]
    The state and content of committee discussions were carefully shared with the Board of Directors using committee materials.

  • Strive to further enhance provision of information to the Nomination and Compensation Advisory Committee

    [Primary Initiatives]
    More detailed data about the personal history, skills, and expected roles of new directorial candidates was provided by internal directors who are members of the committee, and by the committee secretariat.

2-1. Methods of Effectiveness Evaluation for FY2023

• A survey comprising a total of 30 questions, 6 questions evaluating the initiatives for FY2023, and two free-response entries was conducted on all directors (9 members) and all Audit & Supervisory Board members (4 members) at the beginning of April 2024, and the analysis and evaluation of the responses were entrusted to an external organization.
  The survey questions are also periodically reviewed in light of changes to the current environment.
• In addition, as part of the effectiveness evaluation of the Board of Directors, the Nomination and Compensation Advisory Committee has conducted a questionnaire to its members (chairperson, members, and observers), and entrusted the analysis and evaluation of the responses to an external organization.

2-2. Summary of Evaluation Results for FY2023

• A summary of the evaluation results was reported to the Board of Directors at its meeting on June 5, 2024.
• Based on the results of the questionnaire, the external evaluation of the effectiveness of the Board of Directors (including the Nomination and Compensation Advisory Committee) was high overall, and stated that the Board of Directors is operating appropriately.
• Overall comments from external organizations are as follows.
  • The NGK Board of Directors is appropriately composed of elements that form the foundation necessary as a Board of Directors, including the commitment of each member and a healthy culture. These have been maintained as strengths based on the results of the past few years.
  • The policies for initiatives in FY2023 were drawn up based on the results of the effectiveness evaluation for the previous fiscal year. This has been appropriately reflected in the operation of the Board of Directors and Nomination and Compensation Advisory Committee this fiscal year, and has plainly helped to enhance their effectiveness.
  • On the other hand, to further improve effectiveness, the Board of Directors has an awareness of issues related to its discussion of NGK’s long-term directions and strategies, including optimization of its business portfolio; monitoring of management resources including human and intellectual capital; succession planning and development of senior management; and understanding of corporate performance, etc. In order to appropriately address these issues, it is desirable that continuous efforts will be made in terms of management, such as the sharp distinction and narrowing down of agenda items to allow for sufficient discussion of important items, deepening discussions, and devising methods of reporting.

3. Policy for Initiatives for FY2024 to Further Improve Effectiveness

Based on the results of the evaluation in FY2023 and discussions by the Board of Directors, we have formulated the following policies for initiatives for FY2024.
We will strive to strengthen the effectiveness of the Board of Directors and the Nomination and Compensation Advisory Committee through continuous efforts.

• Policies for initiatives of the Board of Directors
  • To realize the NGK Group Vision, the following items shall continue to be regularly reported to and monitored by the Board of Directors.
    • Status of business portfolio revision
    • Progress of the New Value 1000 (aiming for sales of 100 billion yen from new commercialized products by 2030)
    • Progress of various committee activities and company-wide projects
    • Progress of human resources strategy
    • Status of company-wide risk management
    • IR and SR activities
  • Identify issues that should be given priority for discussion, and deepen discussion of long-term management plans and business strategies (including group companies)
  • Continue to enhance opportunities for dialogue between senior management and outside officers, while deepening discussions on succession planning and senior management development
  • Work to further enhance the sharing of information with outside officers
• Policies for initiatives of the Nomination and Compensation Advisory Committee
  • Continue working to further share the status of discussions from the committee to the Board of Directors
  • Continue working to enhance information provided to the committee on compensation and nomination

Training Policies for Officers

Directors and Audit & Supervisory Board members have been tasked with the responsibility of exercising the due care of a good manager. NGK therefore has established a training policy of providing the following types of opportunities to sharpen skills and knowledge so that they can fully execute their duties as experts in various kinds of management or as supervisors of business execution.

1.For internal officers: Training on the Companies Act, the Financial Instruments and Exchange Act, competition laws, and other aspects of corporate governance and compliance

2.For outside officers: Mainly providing separate explanations from the department in charge concerning items on the agenda of the Board of Directors and regularly providing information on the business environment and issues as well as opportunities for exchanging opinions

The results for FY2023 are as follows.

1.Training on the Companies Act, competition laws, etc. by invited lecturers (2 times in total)

2.Outside officer visits to factories (1 time in total, NGK CERAMIC DEVICE CO., LTD.'s Tajimi Plant)
Explanations before meetings of the Board of Directors and business explanations (13 times in total)
Interviews with executive departments by Audit & Supervisory Board members and outside directors (13 times in total)

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