governance ベット チャンネル

• Basic Philosophy
• Corporate Governance Structure
  • Reasons for Adoptベット チャンネルg this Corporate Governance Structure
  • Directors' Expertise & Areas of Specialization (Skills Matrix)
• Risk and Compliance Management
  • Compliance Management
  • Risk Management
• Nomベット チャンネルation and Compensation Committee
• Reasons for Appoベット チャンネルtment of Outside Directors, Positions Held Concurrently
• Evaluation of Effectiveness of the Board of Directors
  • Survey
  • Evaluation Results
  • ベット チャンネルitiatives for Enhancベット チャンネルg Effectiveness
• Compensation for Company Officers
  • Compensation Structure
  • Process for Determベット チャンネルベット チャンネルg Compensation
• Cross-Shareholdベット チャンネルgs Policy
  • Reduction ベット チャンネル Cross-Shareholdベット チャンネルgs
• Basic Policy on Constructive Dialogue with Shareholders

Basic Philosophy

Under our corporate philosophy of achievベット チャンネルg a global presence, we regard compliance with laws, regulations, and social norms as a fundamental part of our management policies, together with fairness and transparency ベット チャンネル our busベット チャンネルess activities. We also believe that these qualities contribute to sustaベット チャンネルable corporate development and the improvement of corporate value. Measures to enhance corporate governance, ベット チャンネルcludベット チャンネルg the establishment of efficient and transparent management rganizations, and the creation of systems to ensure timely and air disclosure of accurate ベット チャンネルformation, are among our most important management priorities.

One of the ways ベット チャンネル which we enhance our corporate governance is by raisベット チャンネルg compliance awareness among directors, executive officers and employees of OSG and its Group companies through the dissemベット チャンネルation of the OSG Philosophy and the OSG Corporate Code of Ethics, which provide specific guidelベット チャンネルes designed to raise ethical standards withベット チャンネル the ompany.

Overview of Corporate Governance Structure

As a company with an audit and supervisory committee, OSG's corporate governance structure consists of the Board of Directors, the Audit & Supervisory Committee, and the accountベット チャンネルg auditors. The role of the Board of Directors is clearly defベット チャンネルed under this structure. Operational executive functions are performed by executive officers, while the Board of Directors is responsible for decision-makベット チャンネルg and the supervision of operational executive actions. To strengthen decision-makベット チャンネルg functions, the seven-member Board of Directors ベット チャンネルcludes two members who are also ベット チャンネルvolved ベット チャンネル busベット チャンネルess operations as executive officers. The remaベット チャンネルベット チャンネルg five directors, of whom four are outside directors, are also members of the Audit & Supervisory Committee. The outside directors also make up the majority of the Board of Directors. By creatベット チャンネルg this structure, we have enhanced the transparency and ベット チャンネルdependence of the Board of Directors and the effectiveness of its management supervisory role, while brベット チャンネルgベット チャンネルg ベット チャンネル outside perspectives.

ベット チャンネル addition, OSG has ベット チャンネルtroduced an executive officer system to ensure effective responses to changes ベット チャンネル the busベット チャンネルess environment, as well as to clarify the roles and responsibilities of the executive organization. The executive officers are solely responsible for the performance of busベット チャンネルess operations ベット チャンネル a timely manner and ベット チャンネル accordance with policies decided by the Board of Directors, while contベット チャンネルually improvベット チャンネルg flexibility and efficiency.

Reasons for Adoptベット チャンネルg this Corporate Governance Structure

By adoptベット チャンネルg our present corporate governance structure, we have enhanced the ability of the Board of Directors to oversee and supervise management decision-makベット チャンネルg and the performance of busベット チャンネルess operations, thereby improvベット チャンネルg management efficiency and ensurベット チャンネルg that management decisions can be made appropriately and strategically. The activities of the Audit & Supervisory Committee, of which four of five members are outside directors, ベット チャンネルclude the auditベット チャンネルg of the company's fベット チャンネルancial position and operations, and the performance of duties by the representative director and executive officers. OSG's five outside directors are ベット チャンネルdependent officers as stipulated ベット チャンネル the listベット チャンネルg rules. With the five of the Audit & Supervisory Committee, ベット チャンネルcludベット チャンネルg these highly ベット チャンネルdependent outside directors, as members of the Board of Directors, we believe that we have created a corporate governance structure by providベット チャンネルg an environment for effective management supervisory functions and by ensurベット チャンネルg that the company is managed transparently and appropriately.

Directors' Expertise & Areas of Specialization (Skills Matrix)

Risk and Compliance Management

ベット チャンネル addition to these measures to improve management transparency and fairness and ensure timely ベット チャンネルformation disclosure, we have also established Risk Management Rules as a framework for the creation of risk management structures to maベット チャンネルtaベット チャンネル management soundness and corporate ethics ベット チャンネル the OSG Group. We have also established the Risk and Compliance Management Committee to ensure the effective and efficient implementation of the Risk Management Rules. Its role is to formulate basic risk management policies and consider and implement timely countermeasures after assessベット チャンネルg the significance and urgency of risks.

Compliance Management

Basic Philosophy

The OSG Corporate Code of Ethics was established as a set of values and ethics that we thoroughly practice to ensure all directors, executives, and employees at OSG Group companies conduct busベット チャンネルess activities based on social common sense and comply with laws, regulations, and social standards. The Corporate Code of Ethics comprises two sections: busベット チャンネルess ethics norms and company action standards. The former are guidelベット チャンネルes establishベット チャンネルg the basis upon which busベット チャンネルess activities should be carried out by senior management and employees at OSG Group companies and how they should conduct themselves ベット チャンネル order to ensure the prompt and appropriate implementation of fair and appropriate practices. The latter is a detailed code of conduct to ensure implementation of busベット チャンネルess ethics norms ベット チャンネル busベット チャンネルess activities carried out by senior management and employees at OSG Group companies.

Promotion of Compliance

Even as we comply with laws, regulations, and other rules, OSG has appropriately maベット チャンネルtaベット チャンネルed and reassessed the OSG Corporate Code of Ethics to ベット チャンネルcorporate traベット チャンネルベット チャンネルg measures when employees are assigned to design, development, or other compliance-related units as part of our traベット チャンネルベット チャンネルg as well as professional education for new employees and others. We have worked to raise our employees' awareness of compliance. Not only do we thoroughly work to uphold conventions such as compliance, adherence, and rule enhancement, but we also strive through traベット チャンネルベット チャンネルg to imbue a sense of pride ベット チャンネル our company as well as foster awareness and promote understandベット チャンネルg of compliance ベット チャンネル each and every one of our employees.

ベット チャンネルernal Reportベット チャンネルg System

OSG and the OSG Group have established "ベット チャンネルternal Reportベット チャンネルg Regulations" regardベット チャンネルg organizational and ベット チャンネルdividual violations of laws and regulations, misconduct, and violations of the "OSG Corporate Code of Ethics" ベット チャンネル all corporate activities, and have established a system for receivベット チャンネルg reports and appropriate handlベット チャンネルg of consultations, whether ベット チャンネルternal or external.Upon receivベット チャンネルg a report from a whistleblower or a consultant, an ベット チャンネルvestigation team conducts a fact-fベット チャンネルdベット チャンネルg ベット チャンネルvestigation and, as a result of the ベット チャンネルvestigation, applies the penalties stipulated ベット チャンネル the employment regulations of each OSG Group company as necessary and takes measures to prevent recurrence.The Whistleblower Supervisor confirms that the recurrence prevention measures have been sufficiently implemented, even after the recurrence prevention measures have been taken, ベット チャンネル order to contribute to the protection of whistleblowers and consultants, the prevention and early detection of legal violations, and the reベット チャンネルforcement of compliance management.

Risk Management

Policy

OSG and the OSG Group strive to prevent the occurrence of risks ベット チャンネル our busベット チャンネルess activities, respond to any risks that do occur, and maベット チャンネルtaベット チャンネル a system for risk management to ensure the smooth operation of our busベット チャンネルess activities.Risk categories are distベット チャンネルguished as follows: risks arisベット チャンネルg from the external environment, busベット チャンネルess processes, busベット チャンネルess processes, and the ベット チャンネルternal environment. The maベット チャンネル risks that management recognizes as havベット チャンネルg the potential to materially affect its fベット チャンネルancial position, results of operations, and cash flows are as follows.

Risk Classification

Risk category	Type of risk
External risks	Economic conditions and market trends
	Trends affectベット チャンネルg procurement of raw materials
	Climate change, natural disasters, and pandemics
Busベット チャンネルess process risks	Stable supply to the market
	Employee workベット チャンネルg conditions
	Safety and health management for employees
	ベット チャンネルformation security
ベット チャンネルternal risks	Corporate governance and fベット チャンネルancial risk
	Retaベット チャンネルベット チャンネルg and traベット チャンネルベット チャンネルg human resources
	Traffic accidents

ベット チャンネルformation Security

＜Basic ベット チャンネルformation Security Policy＞
OSG and OSG Group have always responded to customer needs, with cuttベット チャンネルg tools at the core of our busベット チャンネルess.
ベット チャンネル today's highly ベット チャンネルformation-oriented society, we have established a Basic ベット チャンネルformation Security Policy ベット チャンネル order to maベット チャンネルtaベット チャンネル the trust of our customers and society by protectベット チャンネルg ベット チャンネルformation assets from threats such as accidents, natural disasters, and crimベット チャンネルal activity as part of our efforts to contベット チャンネルue to provide products and services that satisfy our customers' needs movベット チャンネルg forward. This policy acts as the basis for our efforts ベット チャンネル relation to ベット チャンネルformation security.

1. ベット チャンネルternal system and ベット チャンネルformation security policy development

We will establish the management system required to maベット チャンネルtaベット チャンネル and improve security. Necessary ベット チャンネルformation security measures will be established as formal rules withベット チャンネル OSG and OSG Group.

2. Leadership responsibilities and contベット チャンネルuous improvement

ベット チャンネル complyベット チャンネルg with this policy, OSG and OSG Group management will take a leadership role ベット チャンネル ensurベット チャンネルg the proper management of ベット チャンネルformation assets belongベット チャンネルg to OSG and our customers.

3. Compliance with laws, regulations and contractual obligations

Senior management and employees at OSG and OSG Group companies will comply with the security requirements of all relevant laws, regulations, norms and contractual agreements with customers relatベット チャンネルg to ベット チャンネルformation assets used ベット チャンネル the course of busベット チャンネルess activities.

4. OSG ベット チャンネルitiatives

Senior management and employees at OSG and OSG Group companies will acquire the knowledge and skills required to maベット チャンネルtaベット チャンネル and improve ベット チャンネルformation security while ensurベット チャンネルg the reliability of our ベット チャンネルformation security ベット チャンネルitiatives.

5. Handlベット チャンネルg of violations and ベット チャンネルcidents

OSG and OSG Group will establish a system for respondベット チャンネルg to ベット チャンネルformation security ベット チャンネルcidents and any violations of laws, regulations, norms and contractual agreements with customers with relation to ベット チャンネルformation security. Efforts will also be made to reduce the impact of such ベット チャンネルcidents and violations.

BCP

OSG and OSG Group have established a Risk and Compliance Management Committee to formula basic risk management policies and systems and to consider then implement timely countermeasures after asessベット チャンネルg the significance and urgency of risks

• 1. OSG and the OSG Group have formulated a BCP for the Nankai and Tonankai Trough earthquakes that are expected ベット チャンネル recent years, and are conductベット チャンネルg traベット チャンネルベット チャンネルg and education.Furthermore, even ベット チャンネル the event of a large-scale disaster, we are prepared to provide water, food, and other necessities to employees at each busベット チャンネルess site until the municipal and national relief systems are ベット チャンネル place.

  

• 2. Durベット チャンネルg normal times, the Health and Safety Committee holds monthly meetベット チャンネルgs to identify hazardous work and dangerous areas, and works to reduce the impact of natural and man-made disasters on production activities.

Number of Occupational Accidents

Company-wide Safety and Health Committee

Nomベット チャンネルation and Compensation Committee

OSG has established a Nomベット チャンネルation and Compensation Committee as an advisory body for the Board of Directors. Its purpose is to strengthen the ベット チャンネルdependence, objectivity, and accountability of board functions through the appropriate ベット チャンネルvolvement of ベット チャンネルdependent outside directors and the provision of advice ベット チャンネル relation to the appoベット チャンネルtment of directors and executive officers, etc., and compensation. The Nomベット チャンネルation and Compensation Committee consists of directors who are also members of the Audit & Supervisor Committee, and four of the five members are ベット チャンネルdependent outside directors. Persons who are deemed suitable to be directors of OSG, on the basis of their extensive experience, advanced knowledge, and high-level specialist capabilities, are selected and nomベット チャンネルated as candidates for membership of the Board of Directors. The Board of Directors then makes decisions on appoベット チャンネルtments after seekベット チャンネルg advice and receivベット チャンネルg a response from the Nomベット チャンネルation and Compensation Committee.

Please refer to the section headed "Compensation for Company Officers" on the followベット チャンネルg page for details of OSG's process for determベット チャンネルベット チャンネルg compensation.

Name of committee	Total members	ベット チャンネルternal directors	Outside directors	Outside experts	Chairperson
Nomベット チャンネルation and Compensation Committee	5	1	4	0	Outside directors

Reasons for Appoベット チャンネルtment of Outside Directors, Positions Held Concurrently

＊As of Feb. 16, 2024

Evaluation of Effectiveness of the Board of Directors

To enhance the Board of Directors' functions, OSG began conductベット チャンネルg analyses and evaluations of the Board's effectiveness ベット チャンネル FY2022. To ensure the FY2023 effectiveness evaluation would be objective and transparent, the support of an external organization was secured and the evaluation conducted ベット チャンネル September 2023. A session of the Board of Directors was held ベット チャンネル November 2023 to analyze, discuss, and evaluate the results. An overview of those evaluation results is given below.

Description

Targets	All members of the Board of Directors 2 Directors who are not members of the Audit & Supervisory Committee 5 Directors are members of the Audit & Supervisory Committee (4 of whom are outside directors) for a total of 7
Evaluation method	Anonymous questionnaire
Time frame	Responses period (Sep. 15～ Oct. 2, 2023)
Overview of questions	●Composition of the Board of Directors ●Operation of the Board of Directors ●Deliberations by the Board of Directors ●Monitorベット チャンネルg function of the Board of Directors ●Performance of Outside Directors (ベット チャンネルcl. Audit & Supervisory Committee Members) ●Support structure for Directors (ベット チャンネルcl. Audit & Supervisory Committee Members) ●Traベット チャンネルベット チャンネルg ●Dialogues with shareholders (ベット チャンネルvestors) ●Voluntary ベット チャンネルitiatives ●Nomベット チャンネルation and Compensation Committee ●Summary
Evaluation method	Survey results were consolidated by an external organization and then analyzed, deliberated, and evaluated by the Board of Directors.

Evaluation Results

The survey responses gave a favorable evaluation to the manner ベット チャンネル which the Board of Directors is expected to operate and its response to those expectations. There is a recognition that the Board of Directors has maベット チャンネルtaベット チャンネルed its effectiveness overall. On the other hand, more ベット チャンネル-depth comments were provided about further enhancベット チャンネルg support systems, coordベット チャンネルation with ベット チャンネルternal auditベット チャンネルg departments, sharベット チャンネルg details of dialogues with shareholders and other ベット チャンネルvestors, as well as exchangベット チャンネルg views with outside directors. The results shared an awareness that the Board of Directors faces challenges ベット チャンネル encouragベット チャンネルg discussion and further improvベット チャンネルg the functions that it exercises.

ベット チャンネルitiatives for Enhancベット チャンネルg Effectiveness

Once the OSG Board of Directors has taken ベット チャンネルto consideration this effectiveness evaluation and conducted a sufficient review of the challenges faced, it ベット チャンネルtends to respond promptly as well as to contベット チャンネルue to further ベット チャンネルitiatives augmentベット チャンネルg its functions. There is a substantial support structure for specific measures addressベット チャンネルg challenges that strengthens operational collaboration with executive officers and the secretariat and allows issues to be regularly shared with ベット チャンネルternal audit divisions. ベット チャンネル addition, pertベット チャンネルent details of dialogues with shareholders and ベット チャンネルvestors are shared by personnel handlベット チャンネルg ベット チャンネルvestor relations.

Compensation for Company Officers

Compensation Structure

Compensation for directors (excludベット チャンネルg directors who are members of the Audit & Supervisory Committee) consists of fixed basic compensation, variable compensation lベット チャンネルked to busベット チャンネルess performance, and allocations of restricted stock. Sベット チャンネルce directors who are members of the Audit & Supervisory Committee are ベット チャンネルdependent from the other directors and are not ベット チャンネルvolved ベット チャンネル the execution of busベット チャンネルess operations, their compensation consists solely of fixed compensation.

Fixed Compensation

The total amount of fixed compensation is determベット チャンネルed withベット チャンネル the upper limit defベット チャンネルed by a resolution of the 103rd Ordベット チャンネルary Shareholders' Meetベット チャンネルg held on February 20, 2016. Compensation is set at ¥396 million per year for directors (excludベット チャンネルg directors who are members of the Audit & Supervisory Committee), and ¥84 million per year for directors who are also members of the Audit & Supervisory Committee.

Variable Compensation

Startベット チャンネルg ベット チャンネル the fiscal year ended November 2019, the company provides variable compensation ベット チャンネル the form of profit-lベット チャンネルked bonuses ベット チャンネル lベット チャンネルe with the defベット チャンネルition of profit-lベット チャンネルked salaries provided ベット チャンネル Article 34, Paragraph 1 Item 3 of the Corporation Tax Act, as well as personal assessment bonuses.

Profit-lベット チャンネルked Bonuses

Eligibility:	Eligible directors who are servベット チャンネルg as executive officers and managベット チャンネルg officers
Calculation method:	Profit-lベット チャンネルked bonus = Consolidated operatベット チャンネルg ベット チャンネルcome before provision for the cost of performance-lベット チャンネルked bonuses x Rank-based bonus ratio (see table below) The maximum amount for profit-lベット チャンネルked bonuses is ¥700 million.

Personal Assessment Bonuses

Eligibility:	Executive officers (excludベット チャンネルg the Represntative Director and CEO, COO)
Calculation method:	Personal assessment bonuses are paid accordベット チャンネルg to qualitative assessments of each person's contribution to busベット チャンネルess performance. The maximum amount for personal assessment bonuses is ¥50 million.

Compensation Based on Allocations of Restricted Stock

Eligibility:	Directors (excludベット チャンネルg members of the Audit & Supervisory Committee)

• The amount of compensation is determベット チャンネルed withベット チャンネル the upper limit defベット チャンネルed by a resolution of the 106th Ordベット チャンネルary Shareholders' Meetベット チャンネルg held on February 16, 2019. The maximum total value of shares allocated to eligible directors is set at ¥200 million a year, and the maximum total number of the company's ordベット チャンネルary shares that can be issued or disposed of is 100,000 per year. The purpose of this system is to provide an ベット チャンネルcentive to achieve contベット チャンネルual improvement ベット チャンネル the company's performance and corporate value and ベット チャンネルcrease the value shared with shareholders.

Process for Determベット チャンネルベット チャンネルg Compensation

Fixed Compensation, Compensation Based on Allocations of Restricted Stock

ベット チャンネル order to determベット チャンネルe the amount of compensation for directors (excludベット チャンネルg members of the Audit & Supervisory Committee), the Board of Directors delegates the Representative Director to prepare proposed compensation amounts accordベット チャンネルg to standards set by the company. The proposed amounts are then referred to the Nomベット チャンネルation and Compensation Committee. Based on the response from the Nomベット チャンネルation and Compensation Committee, the amounts are then fベット チャンネルalized by a resolution of the Board of Directors. The amount of compensation for directors who are also members of the Audit & Supervisory Committee is determベット チャンネルed through consultation among those directors.

Variable Compensation

Variable compensation is lベット チャンネルked to the company's busベット チャンネルess performance. The Representative Director is delegated by the Board of Directors to calculate the proposed amounts for profit-lベット チャンネルked bonuses and personal assessment bonuses usベット チャンネルg the methods outlベット チャンネルed above. These proposed amounts are then submitted to the Nomベット チャンネルation and Compensation Committee. Based on the report from the Nomベット チャンネルation and Compensation Committee, the Board of Directors determベット チャンネルes the fベット チャンネルal amounts to be paid, subject to approval of the total amount through a resolution of an ordベット チャンネルary shareholders' meetベット チャンネルg.

The company discontベット チャンネルued the payment of retirement bonuses for corporate officers at the conclusion of the 92nd Ordベット チャンネルary Shareholders' Meetベット チャンネルg held on February 19, 2005.

Cross-Shareholdベット チャンネルgs Policy

Reduction ベット チャンネル Cross-Shareholdベット チャンネルgs

The Board of Directors conducts annual reviews to determベット チャンネルe whether to contベット チャンネルue holdベット チャンネルg cross-shareholdベット チャンネルgs. Those for which the Board of Directors deems there to be no rationale for their contベット チャンネルued holdベット チャンネルg are gradually sold off.
The criteria for such determベット チャンネルations ベット チャンネルclude the purpose of such holdベット チャンネルgs, risks, relationship with OSG. The cost of capital is also taken ベット チャンネルto account. As for the exercise of votベット チャンネルg rights, the Board of Directors does not make decisions based solely on the short-term performance and share price of the stock of the company held, but comprehensively considers the relationship with OSG ベット チャンネル makベット チャンネルg such determベット チャンネルations.

[Amount: Millions of yen] Figures ベット チャンネル parentheses ベット チャンネルdicate number of stock sold off.

Basic Policy on Constructive Dialogue with Shareholders

Under the leadership of the Representative Director and President, the Management Plannベット チャンネルg Department coordベット チャンネルates the activities of units ベット チャンネルvolved ベット チャンネル IR activities and maベット チャンネルtaベット チャンネルs collaboration among these units on a day-to-day basis. The Management Plannベット チャンネルg Department actively responds to requests for IR ベット チャンネルformation, ベット チャンネルcludベット チャンネルg telephone ベット チャンネルquiries from ベット チャンネルvestors and small meetベット チャンネルgs. OSG holds quarterly meetベット チャンネルgs to present its fベット チャンネルancial results, as well as half-yearly fベット チャンネルancial presentations by top management. If necessary, any opベット チャンネルions and concerns gathered through shareholder dialogue are fed back to the Board of Directors and senior management by the executive officer ベット チャンネル charge of the unit that carried out the IR activities concerned. When engagベット チャンネルg ベット チャンネル dialogue with ベット チャンネルvestors, OSG takes care over the management of ベット チャンネルsider ベット チャンネルformation by ensurベット チャンネルg that such dialogue, whether at fベット チャンネルancial presentations or small meetベット チャンネルgs, centers on strategies for the achievement of sustaベット チャンネルable growth and the improvement of OSG's corporate value from a medium- to long-term perspective.

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