Corporate Governance

Policy on Corporate Governance

DIC has prepared a Policy on Corporate Governance and published the policy on its global website.
The Company also fully implements the principles established in Japan’s Corporate Governance Code.

Corporate Governance Structure

(As of January 1, 2026)

Executive Leadership Structure

The Company conducts business operations under the supervision of the Board of Directors and the Audit & Supervisory Board, with execution carried out through an executive officer system. The following outlines the composition of directors and officers as of April 1, 2026.

Directors

Audit & Supervisory Board Members

Composition of the Board of Directors and the Audit & Supervisory Board

Corporate Governance System

As a company with Audit & Supervisory Board Members, the Company has a Board of Directors and an Audit & Supervisory Board. It has also instituted an executive officer system, a move aimed at separating decision making and implementation and thereby accelerating business execution and clarifying responsibilities. The Company has also established a Nomination Committee, Remuneration Committee, Corporate Value Improvement Committee, Management Committee, Executive Committee, Sustainability Committee and Quality Committee.

• Board of Directors

  From the perspective of making business decisions in a timely manner and reinforcing corporate governance, the Board of Directors consists of seven Directors, four of whom are Independent Outside Directors (of whom two are female). The Board of Directors typically meets once a month to make decisions on matters delegated to it under the Companies Act and on important business matters stated in the regulations for meetings of the Board of Directors, as well as to receive status reports on the execution of business operations and supervise the execution of the business.

• Nomination Committee

  To ensure objectivity in the nomination of Directors, Audit & Supervisory Board Members and Executive Officers, among others, the Company has established a Nomination Committee, which provides recommendations to the Board of Directors regarding the appointment and dismissal of Directors, Audit & Supervisory Board Members and Executive Officers. The Nomination Committee consists of six Directors, four of whom are Independent Outside Directors, with an Independent Outside Director serving as Chairman.

• Remuneration Committee

  To ensure objectivity in the determination of remuneration for Directors and Executive Officers, the Company has established a Remuneration Committee, which has been entrusted with responsibility for determining remuneration, among others, for Directors and Executive Officers. The Remuneration Committee consists of six Directors, four of whom are Independent Outside Directors, with an Independent Outside Director serving as Chairman.

• Corporate Value Improvement Committee

  The Corporate Value Improvement Committee was established to explore the role of companies in society from a high-level, broad viewpoint and advise the Board of Directors from a third-party perspective regarding the improvement of corporate value over the long term. The committee consists of four Outside Directors and depending on the theme invites external experts to serve as advisors.

• Management Committee

  The Management Committee, established in January 2026, advises on matters deliberated by the Executive Committee that are considered particularly important, including business withdrawals and M&As. The committee consists of executive officers and other individuals appointed by the Board of Directors. As part of the auditing process, one Audit & Supervisory Board member also attends Management Committee meetings. Details of deliberations at meetings and the results thereof are reported to the Board of Directors.

• Executive Committee

  Established as a body to advise on important matters related to the execution of business, the Executive Committee meets twice monthly in principle. The Executive Committee consists of Executive Officers and others appointed by the Board of Directors. As part of the auditing process, one Audit & Supervisory Board Member also attends Executive Committee meetings. Details of deliberations at meetings and the results thereof are reported to the Board of Directors.

• Sustainability Committee

  The Sustainability Committee, which functions as an advisory body, meets four times annually to formulate sustainability policies and activity plans, as well as to evaluate and promote sustainability initiatives. The Sustainability Committee consists of Executive Officers and others designated by the Board of Directors. As part of the auditing process, one Audit & Supervisory Board Member also attends Sustainability Committee meetings. Details of deliberations at meetings and the results thereof are reported to the Board of Directors.

• Quality Committee

  In addition to reporting on the status and progress of quality management, the Quality Committee functions as a deliberative body for the DIC Group’s quality policies, principal initiatives and important issues. In principle, the Committee meets four times annually. The Quality Committee consists of Executive Officers and others designated by the Board of Directors. As part of the auditing process, one Audit & Supervisory Board Member also attends Quality Committee meetings. Details of deliberations at meetings and the results thereof are reported to the Board of Directors.

• Audit & Supervisory Board

  The Audit & Supervisory Board comprises four members, including two Outside Members (one of whom is female). In principle, the Audit & Supervisory Board meets once monthly. Board activities include debating and determining auditing policies and auditing plans. Members also report on the results of audits conducted, as well as attend important meetings, including those of the Board of Directors, the Management Committee, the Executive Committee and the Sustainability Committee, meet with Representative Directors on a periodic basis to exchange information and opinions, and collect business reports from Directors, Executive Officers and employees. In addition, the Company has established an Audit & Supervisory Board Members’ Office, to which it assigns dedicated personnel to assist the Audit & Supervisory Board Members in their duties.

• Internal Auditing Department

  The Internal Auditing Department comprises local teams of employees covering Japan, the Asia–Pacific region, Greater China, and North America, EMEA and SCLA. This department is charged with formulating annual audit plans based on quantitative and qualitative risk assessments, which are finalized by receiving approval from the President and are reported to the Audit & Supervisory Board, which provides instructions regarding key concerns, and conducts internal audits, which includes monitoring the effectiveness of internal controls.

• Accounting Auditors

  The Company has engaged Deloitte Touche Tohmatsu LLC as its independent auditors. The Company strives to ensure an environment that facilitates the accurate disclosure of information and fair auditing. The Audit & Supervisory Board Members, Accounting Auditors and Internal Auditing Department conduct audits from their respective independent positions, but also liaise periodically to facilitate close cooperation, thereby ensuring the effectiveness of audits.

Rationale Behind Current Corporate Governance System

The Company has instituted an Executive Officer system, a move aimed at separating decision making and implementation and thereby accelerating business execution and clarifying responsibilities. The Company has appointed four highly independent outside individuals to its Board of Directors to reinforce its monitoring of business execution. The Company also has the Nomination Committee and the Remuneration Committee, both of which include four Outside Directors, to ensure objectivity in the nomination of, and in determining remuneration for, Directors and Executive Officers. Four Audit & Supervisory Board Members, which include one attorney and one certified public accountant as outside members, conduct audits in liaison with the Accounting Auditors and the Internal Auditing Department. This structure ensures the effective functioning of the Company’s corporate governance system.

System of Internal Controls and Related Matters

1. Basic Concept Regarding Internal Controls

In striving to conduct its operations in accordance with The DIC Way^* the DIC Group has prepared and operates a system of internal controls based on the Companies Act of Japan to ensure the appropriateness of its operations.

2. System of Internal Controls

Systems for ensuring that the performance of duties by Directors and employees of the DIC Group complies with laws, regulations and the Company’s Articles of Incorporation

• The Company shall prepare regulations for the Board of Directors and regulations for Ringi (approval by written circular) and shall clarify decision-making authority within the DIC Group.
• The Company shall appoint Outside Directors and shall work to bolster monitoring functions with regard to management.
• The Company shall work to set forth the DIC Group Code of Business Conduct as the standard regarding compliance, which Directors and employees should comply with, and to disseminate it.
• The Company shall establish an Internal Auditing Department and shall monitor the status of implementation and operation of the internal control systems of the DIC Group on a periodic basis. Important matters discovered through such monitoring, as well as the status of improvements, shall be reported to Representative Directors via internal audit reports and quarterly internal audit meetings, with those matters of particular importance also being reported to the Board of Directors. Additionally, internal audit reports shall be submitted to pertinent Executive Officers, among others, to encourage audited departments to implement corrective actions for issues cited, and the status of implementation is confirmed. The Internal Auditing Department shall further cooperate by providing copies of the internal audit reports to—and discussing the content thereof at monthly meetings with—the Audit & Supervisory Board Members. The Internal Auditing Department shall also directly report results of annual internal audits to the Audit & Supervisory Board and the Board of Directors.
• The Company shall, as part of its compliance activities, establish an internal notification system as a channel available for the employees of the DIC Group and set up multiple notification channels independent from channels used in the execution of business, thereby creating a structure that can quickly respond to domestic and international notifications. In addition, a system shall be put in place so that any person making a notification will not suffer any detriment.
• The Company shall sever any and all connections with antisocial elements and shall collaborate with legal counsel and the police, among others, in making resolute responses to unwarranted demands, etc., made on the DIC Group by such antisocial elements.

* The DIC Way was formulated to represent the DIC Group’s fundamental management philosophy and includes the Group’s mission: “We create enhanced value and utilize innovation to introduce socially responsible and sustainable products.”

Outside Directors and Outside Audit & Supervisory Board Members

Number of Outside Directors and Outside Audit & Supervisory Board Members and Relationship Between Them and the Company

There are currently four Outside Directors and two Outside Audit & Supervisory Board Members.

Prior to March 2016, Outside Director Masami Fujita was a Representative Director and Vice President of Fujitsu Limited. He also served as a Representative Director and President of Fujitsu Marketing Limited (currently Fujitsu Japan Limited) from April 2016 to December 2018. The Company had system-related transactions with the two companies in the fiscal year ended December 31, 2025. However, these transactions accounted for less than 1% of the annual consolidated net sales of both the Company and these companies for the period.

In the fiscal year ended December 31, 2025, the Company purchased products from and sold products to Tokuyama Corporation, at which Outside Director Shiro Saito also serves as an Outside Director. However, these transactions accounted for less than 1% of the annual consolidated net sales of both the Company and the relevant company for the period.

In the fiscal year ended December 31, 2025, the Company purchased furniture and other items from Okamura Corporation, at which Outside Audit & Supervisory Board Member Keiko Kishigami serves as an Outside Director. In addition, the Company purchased products from, sold products to and outsourced construction work to Sumitomo Seika Chemicals Company, at which Outside Audit & Supervisory Board Member Keiko Kishigami also serves as an Outside Director. However, these transactions accounted for less than 1% of the annual consolidated net sales of both the Company and the relevant company for the period. In addition, prior to June 2019, Keiko Kishigami was a Senior Partner of Ernst & Young ShinNihon LLC. The Company had consulting-related transactions with the company in the fiscal year ended December 31, 2025. However, these transactions accounted for less than 1% of the annual consolidated net sales of both the Company and the relevant company for the period.

Except as described above, there are no personal, capital or business relationships, or other interests, between the Company and the Outside Directors or between the Company and the Outside Audit & Supervisory Board Members.

Basic Philosophy Regarding the Function/Role of, and Standards for, Judging the Independence of Outside Directors and Outside Audit & Supervisory Board Members

The four Outside Directors have been involved in corporate management for many years, and thus have extensive experience and insight in this area, which they can be expected to leverage to help strengthen management of the Company. In addition to attending meetings of the Board of Directors, the four Outside Directors serve as members of the Nomination Committee, the Remuneration Committee and the Corporate Value Improvement Committee, enabling them to supervise management from an independent point of view, thereby helping to reinforce the Company’s corporate governance.

Outside Audit & Supervisory Board Member Keita Nagura is an attorney in the area of corporate legal affairs and has accumulated a wealth of specialized knowledge and experience. Outside Audit & Supervisory Board Member Keiko Kishigami is qualified as a certified public accountant, has engaged in the audit of companies for many years, and has extensive expertise in finance and accounting. As such, they are able to perform their duties from an expert, multifaceted and independent perspective, thereby helping to reinforce the Company’s auditing function.

The Company has established standards for evaluating the independence of individuals appointed to the position of Outside Director or Outside Audit & Supervisory Board Member, which are shown below. The Company’s Outside Directors and Outside Audit & Supervisory Board Members are individuals who, based on these standards, are unlikely to have conflicts of interest with ordinary shareholders and who comply with criteria for the independence of Directors/Audit & Supervisory Board Members set by the Tokyo Stock Exchange.

Independence Standards for Independent Outside Officers

The Company does not recognize individuals with the connections listed below as being independent in the appointment of Outside Directors and Outside Audit & Supervisory Board Members.

1. Individuals who are executives of the DIC Group at present or have been in the preceding 10 years.

2. Individuals to whom any of the following items has applied in the preceding three years:

• A principal business partner of the DIC Group (a business partner with which transactions in a single fiscal year exceed 3% of the DIC Group’s consolidated net sales in that year) or an executive of a business partner to which this description applies.
• An individual for which the DIC Group is a principal business partner (a business partner with which transactions in a single fiscal year exceed 3% of the partner’s consolidated net sales in that year) or an executive of an entity to which this description applies.
• A shareholder who holds 5% or more of the voting rights of the Company or an executive of a said shareholder to which this description applies.
• A principal lender to the DIC Group (a lender from which loans in a single fiscal year exceed 3% of the DIC Group’s total assets in that year) or an executive of a said lender to which this description applies.
• An individual who has received contributions from the DIC Group in a year that exceed 10 million yen or an individual who belongs to an entity to which this description applies.
• An accountant who serves as an accounting auditor or accounting advisor for the DIC Group or an individual who is an employee, partner or associate of an audit firm to which this description applies.
• Any individual to whom the previous point does not apply, but has received remuneration from the DIC Group that exceeds 10 million yen in a year, excluding remuneration received as a director or corporate officer of the DIC Group, as a provider of professional services, such as consulting, accounting or legal services, or an individual of an organization that received remuneration in excess of 3% of its consolidated net sales in a fiscal year as compensation for professional services.
• An executive of another company, in the event that an executive of the Company is appointed to an outside officer position at that company.

3. Spouses and relatives within the second degree of kinship of individuals listed in 1 or 2 above.

4. An individual whose term as an outside officer of the Company exceeds eight years.

Mutual Cooperation in the Supervision and Implementation of Audits by Outside Directors and Audit & Supervisory Board Members

Outside Directors regularly receive reports from management and the internal control department on important matters related to the Board of Directors’ agenda and management of the Company, and express their own opinions, as necessary.

Outside Audit & Supervisory Board Members regularly receive reports from the Accounting Auditors and the Internal Auditing Department and express their own opinions, as necessary. Outside Audit & Supervisory Board Members also attend regular quarterly meetings between Audit & Supervisory Board Members and top management, and receive reports from the individual in charge of the internal control department, and express their own opinions, as necessary. In addition, Outside Audit & Supervisory Board Members receive reports on the results of audits conducted by other Audit & Supervisory Board Members and on interviews with the internal control department and work to share information.

Policy on Overall Capabilities and Diversity of the Board of Directors

To enable the Board of Directors to resolve major operations-related issues as well as to facilitate the effective oversight of management, the Board of Directors comprises Outside Directors, who maintain independence, and other individuals having a thorough knowledge of the businesses of the DIC Group, with consideration given to ensuring a balance among necessary knowledge, experience and capabilities. The Board is of an appropriate scale based on the presumption that authority will be delegated to management. Additionally, in light of the DIC Group’s global operations and the need to manage its businesses in a manner that takes diversity into account, the Company also strives to ensure diversity in the Board’s composition, including by appointing women and foreign nationals.

Skills Matrix for Directors and Audit & Supervisory Board Members

The table below is a skills matrix summarizing the capabilities of current directors and Audit & Supervisory Board members.

Remuneration for Directors

The Company has established an executive compensation system based on a policy for remuneration designed to secure diverse, capable human resources to facilitate the steady implementation of management plans and business strategies to ensure sustainable development and the medium- to long-term improvement of corporate value, as well as to further advance global management. Remuneration for Directors consists of basic remuneration (fixed); bonuses, which are linked to consolidated operating results and achievement of individual targets (performance based); and stock compensation, which is linked to the achievement of medium- to long-term performance targets and year-on-year percentage change in income (performance based). Directors who serve concurrently as Executive Officers are eligible for bonuses and stock compensation, while other Directors and Outside Directors are eligible for basic remuneration only. Basic remuneration for Directors is determined based on level of responsibility, with consideration given to prevailing market rates. Bonuses are linked to increases/decreases in consolidated operating income, taking into account factors such as evaluation of Company-wide or departmental performance and individual contribution, with consideration given to prevailing market rates. Stock compensation, which is awarded as non-monetary remuneration to Directors who serve concurrently as Executive Officers, is determined based on degree of achievement of targets for consolidated operating income and net income attributable to owners of the parent set forth in the medium- or long-term management plan, as well as on year-on-year percentage change in both, and granted in the form of points each fiscal year. Upon retirement, these Directors receive shares of the Company or a cash equivalent to the market value of the Company’s shares commensurate with the number of points accumulated.

The Remuneration Committee was established by the Board of Directors to enhance the objectivity of procedures for determining remuneration for Directors and Executive Officers. At present, the majority of the committee’s members are independent Outside Directors, while the position of committee chair is also filled by an independent Outside Director. The committee deliberates and sets policies for determining and methods used to calculate remuneration for Directors and Executive Officers.

Effective from January 2026, degree of improvement in Return On Invested Capital (ROIC) has been adopted as a metric for determining bonuses, in addition to degree of achievement of current indicators related to operating income. Also, degree of improvement in Total Shareholder Return (TSR) and Return On Equity (ROE) have been adopted as indicators for determining stock compensation, in addition to degree of improvement in consolidated operating income and net income attributable to owners of the parent.

Remuneration for Directors and Audit & Supervisory Board Members in 2025

Changes Implemented to Reinforce the Corporate Governance System

The Group has progressively strengthened its corporate governance system through the following measures:

Policy on Strategic Shareholdings

The Company may strategically hold shares in listed companies, with the exception of affiliated companies, only when there is a reasonable expectation that they will contribute to sustainable growth or the improvement of corporate value over the medium to long term. The Board of Directors annually reviews the suitability of individual strategic holdings to verify their suitability, examining whether benefits associated with possession are commensurate with the cost of capital, as well as determining the risks of not holding the shares. If, as a result of this review, the significance of a holding is judged to have weakened, it will, in principle, be reduced. At the Board of Directors’ meeting held on March 3, 2023, the Company reviewed the suitability of all investment securities held for purposes other than pure investment as of December 31, 2022, as described above. As a result, it was confirmed that the significance of certain holdings was lacking. Accordingly, the Company will strive to reduce these holdings going forward, taking into account impact on the market and other factors. Regarding holdings judged to be suitable, should circumstances change that call this judgment into question the Company will consider reduction or other measures. The Company will continue its efforts to further reduce strategic shareholdings, aiming to lower them to 4% or less of net assets (based on market capitalization) by the fiscal year ending December 31, 2026.