Corporate Governance System

The Company conducts a diverse range of business globally. Accordingly, the Company has established a corporate audit governance model of a Company with auditors in which the Board of Directors consisting of Internal Directors and Outside Directors has been established in order to ensure rapid and efficient decision-making and appropriate supervisory functions in management. The Company has determined that this governance model is functioning effectively as set forth in items (a) and (b) below. Therefore, the Company will retain the current governance structure.

(a) Ensuring rapid and efficient decision-making

The Company ensures rapid and efficient decision-making by appointing Directors who serve concurrently as Executive Officers and are well-versed in the Company’s diverse business activities.

(b) Appropriate supervisory functions

The Company ensures appropriate aim for development that is in harmony supervisory functions by implementing various measures, including appointing Outside Directors that account for the majority of candidates for the Board of Directors; establishing the Audit & Supervisory Board Member’s Office; fostering collaboration among the Audit & Supervisory Board Members, the Audit Department and the Accounting Auditor; and carrying out advance briefings, on the same occasion, on matters referred to the Board of Directors for both Outside Directors and Outside Audit & Supervisory Board Members.

Board of Directors

The Board of Directors comprises 10 Directors (including six Outside Directors; eight males and two females), and makes decisions regarding management policy and other important matters and supervises the execution of duties by Directors.

To clearly segregate management and execution, the Chairman of the Board without representative rights and the authority for business execution, in principle, chairs the Board of Directors Meetings.

In FY2023, the Board of Directors met 15 times to make decisions regarding execution of duties by the Corporation and all members of the Board of Directors were present at all meetings during their terms of office, excluding Mr. Yoneda, who was absent for 1 meeting. In FY2023, the Board of Directors mainly deliberated as below:

- Review of the Mid-Term Management Strategy “GC2024,” “Green Strategy,” and progress of the initiatives in the area of sustainability

- Investment and financing projects (Acquisition of Interests in Los Pelambres Copper Mine and Pan Pacific Copper Co., Ltd., etc.)

- Financial results and other finance related matters (share repurchases, etc.)

- Remuneration for Directors/Audit & Supervisory Board Members, revision of the Standards and Policies for the Independence of Outside Directors/Audit & Supervisory Board Members of the Corporation

- Evaluation of the effectiveness of the Board of Directors, internal control related matters, etc.

The term of Board of Directors is one year to clarify management responsibility and flexibly build optimum management structure in response to changing management environment.

Audit & Supervisory Board

The Audit & Supervisory Board comprises five Audit & Supervisory Board Members (including three Outside Audit & Supervisory Board Members; 3 males and 2 females), and Mr. Toshiaki Kida, a Full-time Audit & Supervisory Board Member, serves as the chair. The Company adopts a corporate audit governance system and each of the Audit & Supervisory Board Members is responsible for overseeing Directors in the execution of their duties by attending important meetings, such as the Board of Directors Meetings, and by monitoring business activities and financial conditions in accordance with the auditing policies and plans set by the Audit & Supervisory Board.

The Audit & Supervisory Board Members and the Accounting Auditor exchange information and their opinions concerning, for instance, audit plans, audit status and results of the Corporation and each of its group companies (including quarterly review), each audit matter (including selection of key audit matters), important aspects of the financial results, and trends on accounting audits, etc. at monthly meetings. The Company's Accounting Auditor for FY2023 was Ernst & Young ShinNihon LLC. The Audit & Supervisory Board Members and the Audit Department, a department which performs internal audits, exchange opinions at regular meetings (9 times a year) and implement audit operations through close cooperation. In FY2023, the Audit & Supervisory Board met 19 times, and all Audit & Supervisory Board Members were present at all meetings of the Audit & Supervisory Board during their terms of office, excluding Mr. Ando, who was absent for 1 meeting.

The President holds meetings with the Audit & Supervisory Board Members on a regular basis, reports on execution of duties, and exchange opinions. Other Directors, CHRO, CSO, CFO, CAO, Group CEOs, the CDIO, Division COOs and Corporate Staff Group General Managers report their duty execution status to the Audit & Supervisory Board Members every year. Officers immediately report to the Audit & Supervisory Board Members when they discover that there is a concern that the Company will suffer significant damage.

Corporate Management Committee

The Corporate Management Committee is an advisory committee for the President and consists of three Representative Directors including the President, three Senior Managing Executive Officers, six Managing Executive Officers. It deliberates management-related policies and important company-wide matters.

Committee of Chief Operating Officers

The members of the Committee of Chief Operating Officers are the President, alongside Executive Officers and Chief Operating Officers appointed by the President.
They discuss matters pertaining to budgeting, account settlement and financial planning as well as other issues related to the execution of business.

Committee of Executive Officers

The Committee of Executive Officers consists of 41 Executive Officers (three of whom also serve as Director) and communicates management information and gives reports on matters that affect business execution such as financial performance and results of internal audits.

Nomination Committee

The memberships of the committee are composed so as to ensure independence, as Independent Outside Directors/Audit & Supervisory Board Members constitute the majority of the members and the committee is chaired by an Independent Outside Director as well. The Nomination Committee mainly deliberates on proposals regarding the selection of candidates of Director and Audit & Supervisory Board Member, proposals regarding the selection of the President for the next term, and successor plans formulated and operated by the President (including plans related to necessary qualities and requirements, successor candidate groups, and training), and reports to the Board of Directors. In FY2023, ten Committee meetings were held for deliberations regarding candidates of Director and Audit & Supervisory Board Member and succession plans etc.

Committee’s Members: Inside Director 1, Outside Directors 2
Chairperson: Outside Director

Governance and Remuneration Committee

The memberships of the committee are composed so as to ensure independence, as Independent Outside Directors/Audit & Supervisory Board Members constitute the majority of the members and the committee is chaired by an Independent Outside Director as well. The Governance and Remuneration Committee deliberates on the policy for determining remuneration for Directors and Executive Officers as well as appropriateness of the level of remuneration, and reports to the Board of Directors. Furthermore, it deliberates on important matters related to corporate governance and conducts assessments and reviews of the Board of Directors as a whole, including on its structure, operation, etc., and reports thereon to the Board of Directors. In FY2023, three Committee meetings were held for deliberations regarding remuneration for Directors and Executive Officers, review of compensation plans, revision of the Standards and Policies for the Independence of Outside Directors/Audit & Supervisory Board Members of the Corporation, evaluation of the effectiveness of the Board of Directors, and disclosure of information on Directors/Audit & Supervisory Board Members (including improvement of the disclosure of their skill matrix).

Committee’s Members: Inside Directors 2, Outside Director 1, Outside Audit & Supervisory Board Members 2
Chairperson: Outside Director

Overview of Corporate Governance Systems

Organization Form	Company with auditors
Chairperson of the Board	Chairperson
Number of Directors	10 (including 6 Outside Directors)
Number of Audit & Supervisory Board Members	5 (including 3 Outside Members of Audit & Supervisory Board)

Number of Times convened in FY2023 : Major Board and Committee Meetings

Board of Directors	15 times
Audit & Supervisory Board	19 times
Corporate Management Committee	35 times
Committee of Chief Operating Officers	1 time
Committee of Executive Officers	3 times

Committees

The Company has established various committees as an organization directly under the President for dealing with important matters related to business execution and internal control, etc.
The main committees and their roles are as follows:

Roles and Functions of Outside Directors and Outside Audit & Supervisory Board Members

Roles and Functions of Outside Directors

Outside Directors offer opinions on business management drawn from their broad experience and high-level perspective, and give advice to better implement corporate governance.
Outside Directors attend the meetings of the Board of Directors and the Committee of Executive Officers, making active contributions from the perspective of internal control. Prior to meetings, Outside Directors are provided with agendas and fully briefed on management issues and project execution status. Two of the Outside Directors are members of the Governance and Remuneration Committee (one is the chairman) and three are members of the Nomination Committee (one is the chairman).

*Please refer to [the Corporate Governance Report]for Reasons of Appointment.

Roles and Functions of Outside Audit & Supervisory Board Members

Outside Audit & Supervisory Board Members monitor the Directors' execution of duties and draw upon their wealth of professional expertise to offer various recommendations and advice to enhance the Audit & Supervisory Board.
Outside Audit & Supervisory Board Members attend meetings of the Audit & Supervisory Board and also the Board of Directors and Committee of Executive Officers. In addition, the Outside Audit & Supervisory Board Members meet with the President on a regular basis, as well as with members of the Audit Department, Corporate Accounting Department, and outside auditors, for an exchange of opinions. They receive audit-related information from Full-time Audit & Supervisory Board Member, which they use in the execution of their auditing duties. Two of the Outside Audit & Supervisory Board Members are also members of the Governance and Remuneration Committee.

*Please refer to [the Corporate Governance Report]for Reasons of Appointment.

Executive Compensation

The policy to determine the remuneration and other payments for Directors are as follows.

1．Remuneration policy
The remuneration for Directors of the Corporation is determined based on the following policy.
(1) The remuneration plan shall encourage Directors to face issues of society and customers and create new value with all stakeholders in accordance with the spirit grounded in the Company Creed of “Fairness, Innovation and Harmony” and reward them.
(2) The remuneration plan shall place emphasis on the linkage with business results and shareholder value and encourage the enhancement of corporate value over the medium to long term.
(3) The remuneration plan shall acquire, maintain and reward excellent human capital, the critical source of corporate value.
(4) The remuneration plan shall be a fair and just system by which decisions are made based on a highly transparent process according to responsibilities and performance.

2．Remuneration framework
The target persons of each type of remuneration and other payments are determined by his/her expected role. Please refer to the table below for details.

Note 1. Remuneration and other payments for the Chairman of the Board consist of the monthly remuneration as the basic compensation and the medium- and long-term incentive remuneration, considering that the Chairman of the Board is in the position to substantially contribute to the enhancement of corporate over the medium to long term through leveraging the business expertise gained through managing the Corporation on supervision.

Note 2. Remuneration and other payments for Outside Directors consist entirely of the monthly remuneration as the basic compensation (including remuneration for responsibilities as the chairperson, member, etc., of each respective committee), considering that Outside Directors are in the position to supervise management with independence.

Note 3. The Executive Officer & Chief Operating Officer of business division is eligible to receive the individuals’ evaluation-based compensation based on the organization’s performance evaluation, and currently there is no Executive Director eligible for the payment.

Note 4. Short-term incentive remuneration will be paid in a lump sum at the end of each fiscal year.

3．Remuneration levels and composition ratio
To ensure that remuneration levels of Directors are competitive so as to secure and maintain excellent human capital, the remuneration levels are examined by comparing them with objective research data on remuneration provided by outside specialized organizations and other sources to determine the appropriate remuneration levels. As for the composition ratio of remuneration and other payments, it shall focus on the medium- and long-term improvement of corporate value by increasing the composition ratio of the medium- and long-term incentive remuneration. For the President & CEO, its composition ratio of monthly remuneration/the short-term incentive remuneration/the medium- and long-term incentive remuneration shall be set as 1:1:1 when consolidated net profit is 400 billion yen and core operating cash flow is 500 billion yen. For other internal Directors, based on the remuneration composition ratio of the President and CEO, the Corporation shall set up the ratio considering the role and responsibilities of each position.

4．Malus and Clawback
The short-term and the medium- and long-term incentive remuneration shall be the subject of the clauses that allow the Corporation to reduce or cancel the remuneration (Malus) and request the return of the paid remuneration (Clawback) based on the resolution of the Board of Directors when there was an adjustment of financial results after an announcement due to a significant revision of financial statements or there was a significant violation or breach of internal rules by an officer.

5．Method to determine the remuneration and other payments for individual Directors
As for the policy to determine the remuneration and other payments for Directors (including the method to determine individual payments. Hereinafter referred to as the “Determination Policy”), the Governance and Remuneration Committee chaired by an Outside Director with the majority of its members consisting of independent Outside Directors/Audit & Supervisory Board Members deliberates on the Determination Policy, including the appropriateness of the remuneration levels, and provides reports to the Board of Directors for its determination of the Policy.
As for the determination of individual payments for Directors, the Governance and Remuneration Committee confirms the conformity to the Determination Policy and provides reports. Within the range of the maximum amount of remuneration resolved at a General Meeting of Shareholders, the payments are resolved at a meeting of the Board of Directors. However, as for the individual evaluation remuneration of the short-term incentive, the determination of payment for individual quantitative evaluation is commissioned to the President and CEO Masumi Kakinoki because it is judged that the person at the head of business execution is the most appropriate person. To improve the objectiveness, fairness and transparency, as for the amounts to be paid, the Governance and Remuneration Committee shall confirm that the evaluation has been conducted within the scope commissioned by the Board of Directors, and report them to the Board of Directors.

Regarding the remuneration and other payments for individual Directors for FY2023, since the Governance and Remuneration Committee deliberates on the conformity of the Determination Policy and provides reports to the Board of Directors, the Board respects the reports and they are deemed to be in conformity with the Determination Policy.

(Supplementary matter)
The process regarding remuneration for Executive Officers who do not concurrently serve as Director will be revised to the same remuneration framework and determination process as those for Directors.

The total amount of remuneration and other payments for Directors and that for Audit & Supervisory

The maximum total amount of remuneration and other payments for Directors and that for Audit & Supervisory Board Members for FY2023 (including the monetary compensation claims to be granted for allocating “Restricted Stock” and “TSR-linked Performance Share Units”) were determined as follows by the resolutions at the 99th Ordinary General Meeting of Shareholders.

Regarding “[Former plan] Market Capitalization-linked Performance Share Units” introduced at the 97th Ordinary General Meeting of Shareholders held on June 24, 2021, for those whose rights had been granted by FY2022, the annual amount of within 120 million yen resolved at the General Meeting (The upper limit of the Corporation’s common stock to be issued or disposed of is within 300,000 shares during each Evaluation Period) was maintained and the amount of the remuneration was included in the amount of remuneration for granting the above TSR-linked Performance Share Units.

* If any event arises that requires an adjustment of the total number of shares of common stock of the Corporation to be issued or disposed of, such as a stock split, gratis allotment, or consolidation of shares of common stock of the Corporation, such total number shall be adjusted to the extent reasonable.

Total amount of remuneration and other payments for directors and that for Audit & Supervisory in FY2023

*Notes: 1. The amounts below 1 million yen are rounded off.

2. The above-stated number of recipients includes 5 Directors (including 1 Outside Director) and 1 Internal Audit & Supervisory Board member who retired by the last day of FY2023. As of March 31, 2024, the Corporation had 10 Directors (including 6 Outside Directors) and 5 Audit & Supervisory Board Members (including 3 Outside Audit & Supervisory Board members).

3. “Performance-based bonuses” includes “Individuals’ evaluation-based compensation.” For performance-based bonuses, the amount calculated according to consolidated net profits of 471.4 billion yen and core operating cash flow of 548.0 billion yen are stated, based on the calculation method resolved at a meeting of the Board of Directors after deliberations by the Governance and Remuneration Committee.

4. The Corporation allocates “Restricted Stock” to Directors (excluding Outside Directors) as non-monetary compensation. The above-stated amounts are the amounts charged to expenses during FY2023. During FY2023, based on the resolution by the Board of Directors on June 23, 2023, 57,080 shares of common stock of the Corporation were issued to 4 Directors (excluding Outside Directors) by setting a no transfer period.

5. The Corporation allocates “TSR-linked Performance Share Units” to Directors (excluding Outside Directors) as non-monetary compensation. The above-stated amounts are the amounts charged to expenses during FY2023 by calculating the estimated amount of monetary remuneration claims corresponding to the estimated number of shares to be granted in FY2026. This compensation plan was introduced in FY2023, and the first evaluation period will end in July 2026. Therefore, there are no results for FY2023 regarding the performance indicators.

6. “[Former plan] Market Capitalization-linked Performance Share Units” was non-monetary compensation allocated as the remuneration of FY2021 and FY 2022, which is stock compensation whose final number of allotted shares is finalized according to the market value growth rate during the Evaluation Period of three years after the allocation. The above-stated amounts are the amounts charged to expenses during FY2023 by calculating the estimated amount of monetary remuneration claims corresponding to the estimated number of shares to be granted in FY2024 and FY2025. This compensation plan was introduced in FY2021, and the first evaluation period will end in July 2024. Therefore, there are no results for FY2023 regarding the performance indicators. This compensation plan was abolished except for those already granted, as after its introduction in FY2021, “TSR-linked Performance Share Units” were introduced in FY2023.

7. “[Former plan] stock-compensation-type stock options subject to market-capitalization-based exercisability conditions” was nonmonetary compensation allocated as the remuneration of FY2020. It is a stock acquisition right of which the number of exercisable shares will be determined in accordance with the growth rate of the market-capitalization-based exercisability conditions during three years of the evaluation period after the grant. The above-stated amount is the amount charged to expenses during the fiscal year for the stock acquisition rights of which the exercisable number was confirmed during the fiscal year after three years of the evaluation period. The actual record of the Corporation’s growth rate of the market-capitalization-based exercisability conditions used to calculate the number of exercisable stock acquisition rights for stock-compensation-type stock options subject to the market-capitalization-based exercisability conditions of which the evaluation period is completed during the fiscal year is 412%. After its introduction in FY2019, the remuneration system was abolished, excluding those already granted due to the introduction of Market Capitalization-linked Performance Share Units in FY2021.

Individuals to whom the total amount of compensation paid exceeded 100 million yen in the FY2023

Evaluation of the effectiveness of the board of directors

Since FY2016, the Corporation has conducted evaluations on effectiveness regarding the Board of Directors annually and made efforts to improve the Board by striving to address issues identified as a result of these evaluations and analyses.
The concept of the evaluations in FY2022 was “discuss the governance model suitable for the Corporation based on current circumstances and characteristics.” By further developing this, the evaluations of effectiveness regarding the Board of Directors in FY2023 (the “FY2023 Board Evaluations”) were conducted to enable the Board may discuss each issue identified in the evaluations in FY2022 and the direction toward the ideal governance structure suitable for the Corporation.

I. Evaluation Framework and Methodology

1. Evaluation Target

The Board of Directors (including Governance and Remuneration Committee and Nomination Committee)

2. Evaluation Process

Questionnaire and interviews conducted with all members of the Board of Directors and Audit & Supervisory Boad Members;
The Governance and Remuneration Committee analyzed and evaluated the results of the questionnaire and interviews; and
The Board then reviewed and deliberated upon the evaluations by the Governance and Remuneration Committee.

3. Evaluation items

1. - Roles of the Board
2. - Structure of the Board (composition, diversity, competencies, skills, etc.)
3. - Deliberations at the Board
4. - Utilization of the Governance and Remuneration Committee and the Nomination Committee
5. - Accountability to and dialogues with stakeholders

Additionally, the Corporation included a new question in the questionnaire to assess whether the Outside Directors fully performed their expected roles and responsibilities, though peer-review of each Outside Director was not carried out in the process of this FY2023 Board Evaluations.

4. Utilization of Outside Specialized Organization

Like the past Board evaluations, the Corporation appointed the outside specialized organization. Utilizing the outside specialized organization, the Governance and Remuneration Committee performed the analysis and evaluation based on advanced document inspection, as well as responses to the questionnaire and interviews.

The outside specialized organization mainly gave the following supports:

1. - Analysis of the agenda of the Board meetings over the past three years;
2. - Advice on questionnaire items from the outside perspective
3. - Independent analysis of the questionnaire responses and conducting the interviews;
4. - Review and evaluation of the questionnaire and interview results, and providing comments on them as the basis for deliberation at the Governance and Remuneration Committee and the Board; and
5. - Advice on improvement measures for the identified issues.

The Governance and Remuneration Committee ensured the questionnaire and interviews were conducted and the results analyzed and evaluated on an anonymous basis by the external specialized organization, thereby maintaining the transparency and objectiveness of the FY2023 Board Evaluations.

Ⅱ Overview of Evaluation Results

1. Overview

Through the process above, it has been confirmed that the Corporation’s Board of the Directors operates appropriately and that its effectiveness is secured.
Especially, thanks to the following points, sound and deep deliberations at the Board were highly evaluated:

1. (i) the Corporation selects the Board agenda items considering the Outside Directors’ opinions and comments;
2. (ii) the Corporation provides numerous opportunities to the Outside Directors to acquire deep understanding on the Corporation’s business, such as visits to the Group companies and interviews with their management, meetings with the divisional Chief Operating Officers; and
3. (iii) the Chairman manages the proceedings of the Board meetings effectively.

2. Further Improvement of Board Effectiveness

The Corporation has made efforts to improve the effectiveness of the Board by addressing the issues identified in the Board evaluations in FY2022 as follows:

(1) Deepening Discussions at the Board Regarding Overall Direction of the Board to Strengthen Its Supervisory Functions
The Chairman, the CEO, and the Outside Directors discussed (i) the functions and roles of the Board of Directors considering that the Outside Directors became a majority of Board membership and that the Board is gradually shifting toward being a “monitoring board,” and (ii) important management matters and other agenda that the Board should focus on and discuss in depth. Further, the Corporation solicited the opinions of each Director and Supervisory Board Member on (i) and (ii) in the questionnaire and interviews of the FY2023 Board Evaluations.
As stated in (3) of “3. Issues Identified In FY2023 Board Evaluations and How Corporation Will Address Them“ below, the Board will continue to discuss their functions and roles.

(2) Considering the Process of Selecting Agenda Items to Be Discussed at the Board and Supervisory Functions Related to Important Matters of Marubeni Group Management
In the process of selecting the agenda to be discussed at the Board, the Corporation takes into account the opinions of the Outside Directors. For instance, at the outset of FY2023, the Corporation gathered the thoughts of each Outside Director on the Board agenda. Further, the Chairman, the CEO, and the Outside Directors had an offsite meeting to discuss important management matters and other agenda the Board should discuss in depth.
In addition to the above, the Corporation enhanced the supervisory functions of the Board on the important management matters of the Marubeni Group as a whole by, for instance, reporting to the Board the discussions and measures on the Marubeni Group HR Strategy made by the management-side. Moreover, the meetings between the Outside Directors and each divisional Chief Operating Officer were held, and they discussed the business strategies of that division (including, the strategies on the Group companies), core business/focus areas, and concerns.
Like the item (1) above, the Corporation will continue to consider and take necessary measures to deepen the discussions at the Board as stated in (1) and (2) of “3. Issues Identified in FY2023 Board Evaluations and How Corporation Will Address Them” below.

3. Issues Identified in FY2023 Board Evaluations and How Corporation Will Address Them

(1) Clarifying Issues to Monitor Important Group Management Matters
Since the Corporation is an integrated trading and investment business conglomerate that handles products and provides services in a broad range of sectors, its business is highly complicated. Given that complexity and the management structure of the Marubeni Group, in order to strengthen the supervisory functions of the Board, the Corporation believes that it is necessary to facilitate sound and well-grounded deliberations at the Board from broader perspective. For that purpose, in the Board materials or when the management-side explains the agenda to the Board, the Corporation will clarify the key issues of each agenda that the Board should focus on by clearly showing the expected risks and other issues identified in the course of the discussion at the management-side.

(2) Enhancing Discussion on Management Strategy/Important Management Matters for Mid- to Long-Term Growth of Corporate Value of Marubeni Group Considering Comprehensive Group-Strengths
Although the management-side does conduct the business taking into account the capital cost and stock price, it is necessary to further enhance the discussions at the Board on the management strategy to improve the corporate value, such as capital allocation, capital efficiency, and necessary measures for growth. Furthermore, the Board will increase commitment to and deepen its involvement in the process to formulate the next mid-term management strategy (i.e., Post-GC2024).

(3) Continuing Discussion on Functions and Roles of the Board In Governance Structure Suitable for Marubeni
It is confirmed through the FY2023 Borad Evaluations that there is no issue on the current structure of the Board, however, the Corporation believes there is a room for discussion on the future structure (e.g., ideal composition, diversity, and necessary experiences and skills of the Directors) in order to further improve the corporate value of the Corporation.

Based on the results of the FY2023 Board Evaluations, the Corporation will continue to maintain and improve the effectiveness of the Board of Directors going forward and to pursue improvements of the long-term corporate value.