Yokogawa Electric : Corporate Governance Report Updated

The following is an English translation of a document written initially in Japanese. Should there be any inconsistency in the contents of the translation and the official Japanese version, the latter shall prevail.

Corporate Governance Report

Last Update: June 18, 2024

Yokogawa Electric Corporation

Hitoshi Nara, President & CEO, Representative Executive Officer Contact: Hirohiko Nakatani, Department Manager Investor Relations Department Securities Code: 6841 https://www.yokogawa.com/

The corporate governance of Yokogawa Electric Corporation (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

The Yokogawa Electric Group (hereinafter referred to as the "Group") has established a corporate philosophy, the Yokogawa Philosophy, and the Yokogawa Group Code of Conduct that apply to the entire Group, and strives to maintain appropriate relationships with all stakeholders as well as aims for sustainable corporate growth and increased corporate value over the medium to long term. In addition, based on the philosophy that "a company is a public entity of society," the Group positions answering the trust of all stakeholders, including shareholders, customers, business partners, society, and employees, via sound and sustainable growth, as the basic mission of its corporate management. In addition, we believe that solving environmental and social issues is the raison d'etre of the Group, and we have established Yokogawa's Purpose as "utilizing our ability to measure and connect, we fulfill our responsibilities for the future of our planet," in which the top management itself demonstrates strong conviction and leadership to promote management that values sustainability.

In order to maximize its corporate value, the Group believes that efforts such as thorough compliance, appropriate management of risks, and information disclosure in order to ensure constructive dialogue with shareholders and other stakeholders are important.

In order to experience healthy and sustainable growth of the Group and to maximize its corporate value, the Group believes that efforts such as thorough compliance, appropriate management of risks, and information disclosure in order to ensure constructive dialogue with shareholders and other stakeholders are also important.

The Group formulates and discloses these Yokogawa Corporate Governance Guidelines which serve as the basic policy for continually working on corporate governance in line with the above views.

https://cdn-nc.yokogawa.com/1/20520/tabs/ir_cg_guidelines-en.pdf

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company complies with all principles of the Corporate Governance Code revised in June 2021, including details for the Prime Market.

[Disclosure Based on the Principles of the Corporate Governance Code]

[Principle 1.4]

The Group shall strategically hold shares, provided such shares are determined to contribute to maintaining and increasing corporate value. With respect to all cross-holding shares, the Board of Directors shall uphold a policy of keeping the minimum necessary amount of cross-holding shares and decide every year if it is suitable to hold the shares by examining the purpose and economic rationale, etc. of individual shares from a medium- to long-term perspective. Any strategically held share that is deemed as no longer suitable to hold as a result of the examination shall be sold with the attempt of reducing shares held. In the

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examination, the shares held are classified into the following three categories, and it is determined whether holding is suitable, with transaction status, share price and dividends, and capital costs deemed as KPIs.

a. Business partners (for the purpose of maintaining and strengthening business transaction and partner relationships) b. Financial institutions (for the purpose of attempting to conduct financial transactions smoothly)

c. Others (those which do not fall under the above categories)

Specifically, it is assessed and determined for each share held through the process of a. to d. below whether holding is suitable. a. Examination based on quantitative assessment of share price (market value, cost and carrying amount after impairment)

b. Examination based on quantitative assessment with ROIC, which is calculated on the basis of each of market value and cost, compared with the share price assessed in a.

(In the calculation of ROIC, after-tax gross income from sales and dividend income are used.)

c. Examination based on qualitative assessment of purpose of holding, transaction results, estimate for future transactions, and other factors for each share held.

d. The assessments through the examinations in a. to c. are taken into account comprehensively from perspectives of medium- to long-term economic value, business expansion and strengthening of relationships, and others.

With respect to exercising the voting rights of strategically held shares, the Group shall make decisions based on sufficient examination, from the standpoint of increasing the corporate value of the Company and the companies that the Company has invested in over the medium to long term.

Particularly in the following cases, the Company shall exercise the voting rights based on careful examination on whether or not to exercise the voting rights:

1. Cases where any violation of law, misconduct or anti-social behavior has occurred at the companies in which the Company has invested
2. Cases of proposals that are considered to be likely to undermine the Company's corporate value, for organizational restructuring including merger or acquisition and business transfer, advantageous issue of shares to third parties, etc.

[Principle 1.7]

The existence or non-existence of business transactions between the Company and its Directors, Vice President & Executive Officers, or their close relatives, and between the Company and its key shareholders, etc., (hereinafter referred to as the "related party transactions") shall be investigated regularly and reported to the Board of Directors. In conformity with applicable la ws and regulations including the Companies Act and the Financial Instruments and Exchange Act, and other applicable rules, related party transactions shall be disclosed upon resolution by the Board of Directors.

[Supplementary Principle 2.4.1]

The Company has established its approach to ensuring diversity, its policy to develop human resources, and its policy to maintain its internal environment. These are specified in the human resources management codes within the Group Management Standards (GMS), which are positioned as the most important set of company rules for the Yokogawa Group. Regarding disclosure, the Company has made a DE&I declaration, which pledges "to promote diversity and inclusion (DE&I), proactively hire, develop, and promote human resources with diverse experiences, knowledge, emotions, perspectives, cultures, backgrounds, and values, to promote the creation of working environments in which anyone can work safely and securely, while being themselves, and to contribute to realizing an abundant human society for the next generation." This declaration, along with our policy and the status of activities to ensure diversity, are disclosed in the Sustainability Report issued by the Company.

Sustainability Report: https://www.yokogawa.com/about/sustainability/report/

Ratio of female employees among managers and their promotion (activities to promote the active participation of female employees)

In April 2015, the Company set up a dedicated body to promote diversity. Through its career development training for young employees, the Company strengthens the motivation of young women to become leaders by communicating the message that Yokogawa "provides opportunities for everyone to actively participate as a leader regardless of their attributes or career background." During human resource management audits, which are conducted globally, the promotion of active participation of female employees is one of the items to be checked. In fiscal year 2020 we began rolling out "This we believe" DE&I mindset training globally. The female manager ratio, which was only 0.7% in fiscal year 2005 (non-consolidated basis), rose by a multiple of more than ten to 9.5% and the growth rate has risen by a multiple of four since fiscal year 2014. Furthermore, in April 2021, the Group produced its first two female executive officers through internal promotion. As we head toward 2030, we have set 20% as a target for the female manager ratio (KPI) for the overall Group, aiming to create an environment in which anyone can exercise their abilities.

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Ratio of foreigners among managers and their promotion

The ratio of foreign personnel among the Company's mangers as of March 31, 2023 was 5.2% on a non-consolidated basis and 63.2% for the overall Group. We aim to continue to increase the ratio of foreign managers in Japan. Furthermore, regarding the promotion of foreigners, the ratio of foreigners being developed for promotion in our talent management system is 64.0%, as we proactively move forward with both diversity and promotions. *The Group's overall ratio of foreign employees is 64%, with employees of more than 80 nationalities working for the Group.

Ratio of mid-career hires among managers and their promotion

The ratio of mid-career hire personnel among the Company's managers as of March 31, 2023 was 26.7% on a non-consolidated basis, which is greater than the ratio of mid-career hires 23.2% among employees of the Company overall. The Company endeavors to conduct fair, broad promotions without discrimination or bias.

[Principle 2.6]

Corporate pensions of the Group are defined-contribution pensions. The financial condition shall never be affected by future performance of management of the pensions.

The Company regularly monitors the institutions of corporate pension management with the aim of assisting stable asset building of the employees.

[Principle 3.1]

1. The Company has disclosed its corporate goals as the corporate philosophy. The management strategy and business plan are disclosed on the Yokogawa Report, its website and others when they are formulated. The current management strategy and business plan have been disclosed as "Growth for Sustainability 2028," a medium-term business plan.
   The Yokogawa Philosophy:
   "As a company, our goal is to contribute to the realization of a sustainable society through broad-ranging activities in the areas of measurement, control and information. Individually, we aim to combine good citizenship with the courage to innovate."

Growth for Sustainability 2028, a Medium-term Business Plan: https://www.yokogawa.com/about/company-overview/corporate-strategy/

Yokogawa Report: https://www.yokogawa.com/about/ir/reports/annual/

1. The basic views on corporate governance and basic policy are presented in "I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information, 1. Basic Views" of this report. In addition, the Group has established and disclosed the Yokogawa Corporate Governance Guidelines which serve as the basic policy for continually working on corporate governance.
2. Based on the resolution at the Annual General Meeting of Shareholders held on June 18, 2024, the Company transitioned from a company with Audit & Supervisory Board to a company with Nominating Committee, etc. Following the transition of the organizational design, the Compensation Committee will engage in many discussions going forward and review the current approach to executive compensation as appropriate.
   The following is an explanation of the Company's compensation system as a company with Audit & Supervisory Board in fiscal year 2023.
   At the Board of Directors meeting held on March 2, 2021, the Company resolved the policy in relation to decisions concerning the details of compensation for individual Directors. Prior to the resolution at the Board of Directors meeting, the matters to be resolved were consulted with the Compensation Advisory Committee and reported to the Board of Directors.
   In addition, the Board of Directors has confirmed regarding the compensation for individual Directors for the fiscal year under review that the method of determining the details of compensation and the content of determined compensation are consistent with the policy resolved by the Board of Directors and that the reports of the Compensation Advisory Committee are respected, has also judged that such procedures are in accordance with the policy.

The contents of the policy in relation to decisions concerning the details of compensation for individual Directors are as follows.

(1) Basic Policy

The basic policy on compensation for Directors shall be as follows:

1. Plan that promotes sustainable, medium- to long-term improvement in corporate value
2. Plan that reflects the medium- to long-term management strategy and strongly motivates the achievement of medium- to long-term management objectives
3. Plan that prevents bias toward short-term thinking
4. • 3 -

1. Plan and monetary amounts that secure and maintain excellent human resources
2. Plan that includes transparency, fairness, and rationality for stakeholders, decided through an appropriate process to ensure these factors
   (2) Policy for determining compensation, etc. for officers
   The amount of compensation for Directors shall be determined individually within the limits approved at the General Meeting of Shareholders. Compensation for Audit & Supervisory Board Members shall also be determined through consultation among Audit & Supervisory Board Members within the limits approved at the General Meeting of Shareholders.
   Performance-linked compensation covers directors and executive officers, excluding Outside Directors, Audit & Supervisory Board Members and non-executive Directors. This is because variable compensation such as performance-linked compensation is not appropriate for Outside Directors and Audit & Supervisory Board Members, who maintain position independent from the performance of duties, and as such only fixed compensation is paid, identically for non-executive Directors.
   Furthermore, regarding medium-tolong-term incentives, at the 142nd Ordinary General Meeting of Shareholders held on June 26, 2018, the Company introduced the Performance Share Unit Plan (the "PSU Plan"), a performance-based stock compensation plan under which shares and cash are paid based on the achievement of our consolidated return on equity (ROE) and other factors in the final fiscal year of the period covered by the medium-term business plan.
   The levels of compensation for executives are set through a comparison with companies from the same industry and of the same scale, both domestically and internationally, based on the results of surveys conducted by external organizations, and the Company's financial conditions.
   Compensation levels for each position are based on the level of 50%iles by peer companies. From the viewpoint of flexible management in response to changes in the environment and the acquisition and retention of talented management personnel, compensation levels shall generally be within the range of 25%iles to 75%iles.
   Compensation for personnel hired overseas may be determined individually based on a compensation benchmark analysis that takes into account the responsibilities of each position based on executive compensation survey data in that overseas region. Additionally, the retirement bonuses for directors were eliminated on the day of the 2004 Annual General Meeting of Shareholders held on June 25, 2004.

1. Policy and procedure for appointment and dismissal of Directors and Vice President & Executive Officers are as follows: Policy for nomination of Director and Vice President & Executive Officer candidates
   Directors and Vice President & Executive Officers shall be composed so as to be well balanced in knowledge, experience, and capabilities to effectively fulfill its roles and responsibilities, and it shall be constituted in such a manner as to achieve both diversity and appropriate size. Under this premise, human resources that contribute to improvement of corporate governance, supervise of highly effective management and that have experience and knowledge required for formulation of management strategies aiming at an increase in the Company's corporate value over the medium to long term and contribute to right management decisions, that have knowledge on accounting, finance, legal affairs and corporate management and contribute to appropriate supervision of management are nominated as Director candidates. Human resources that have sufficient experience and knowledge in light of the expected roles required for each Vice President & Executive Officer position, and that have the will and attitude appropriate for the management team are nominated as Vice President & Executive Officer candidates.

Procedure for nomination of Director and Vice President & Executive Officer candidates

Nomination of Director candidates and Vice President & Executive Officer candidates are determined after deliberations based on the new appointment and reappointment standard and procedure established by the Nominating Committee,

Policy and procedure for dismissal of Directors and Vice President & Executive Officers

The Nominating Committee has prescribed the standard and procedure for dismissal of Directors and Vice President & Executive Officers. The Nominating Committee deliberates proposals of dismissal of the Directors and Vice President & Executive Officers based on the dismissal standard and procedure.

Policies and procedures for evaluation, new appointment, reappointment, and dismissal of President & CEO, Representative Executive Officer

The Nominating Committee has also prescribed the standard and procedure for the new appointment, reappointment, and dismissal of the President & CEO, Representative Executive Officer. The evaluation of the President & CEO, Representative Executive Officer is conducted every year and takes into account basic evaluation criteria that have a quantitative aspect including business performance. The Nominating Committee deliberates based on the prescribed standard and procedure for new appointment, reappointment, and dismissal in reference to the evaluation results and succession plan.

1. Reasons for election of Directors are as follows: Explanation of reasons for election of Directors

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Hitoshi Nara Director, President & CEO, Representative Executive Officer

Mr. Hitoshi Nara properly supervises management as a Director. He has spearheaded the execution of business as President and Chief Executive Officer since fiscal year 2019 after being engaged in operations for the sales department of the Company's industrial automation and control business, serving as President of domestic and overseas subsidiaries and working on the launch of new business, and has abundant experience and track records as a corporate manager. Because he is expected to continuously contribute to improvement of corporate value and strengthening of the decision-making function and the management supervision function of the Board of Directors by utilizing his experience in management and track records, he has been elected as Director.

Hikaru Kikkawa Director

Mr. Hikaru Kikkawa has many years of experience in the Company's accounting and treasury departments and business units including overseas subsidiaries. Most recently, he has demonstrated his high level of competence and expertise in business audits as Head of Audit & QHSE Headquarters, and he has extensive experience and achievements in management in the Company. Because he is expected to contribute to improvement of corporate value and strengthening of the decision-making function and the management supervision function of the Board of Directors by utilizing his experience in management and track records, he has been elected as Director.

Michiko Nakajima Director, Vice President & Executive Officer

Ms. Michiko Nakajima has many years of experience in the accounting and treasury departments of the Company and currently serves as Head of Accounting & Treasury Headquarters, and has a wealth of knowledge and achievements in management of the Company. Because she is expected to contribute to improvement of corporate value and strengthening of the decision- making function and the management supervision function of the Board of Directors by utilizing her experience in management and track records, she has been elected as Director.

Please refer to "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management, 1. Organizational Composition and Operation, [Outside Directors], Outside Directors' Relationship with the Company (2)" of this report for reasons for election of Outside Directors.

[Supplementary Principle 3.1.3]

The Company's sustainability initiatives, management resources including human capital and intellectual capital, and response to the TCFD (Task Force on Climate-related Financial Disclosures) are regularly reported to and supervised by the Board of Directors. They are disclosed in the Yokogawa Report (Integrated Report), Yokogawa Sustainability Report, etc.

Yokogawa Report:

https://www.yokogawa.com/about/ir/reports/annual/

Sustainability Report:

https://www.yokogawa.com/about/sustainability/report/

[Supplementary Principle 4.1.1]

The Board of Directors is to base its decisions on the Decision Making Management Code and on the Rules Governing the Board of Directors. All the Directors, including independent outside members, bear supervisory responsibility for the execution of business as the members constituting the Board of Directors. Decisions concerning statutory matters and important matters for the Group's execution of business that are matters which have a serious impact on the Group's management or matters other than those specified to be decided by the Board of Directors in the above code and rules, such as important strategic matters related to the Group, are delegated to the Vice President & Executive Officers. The Vice President & Executive Officers are responsible for decision-making regarding individual businesses and business execution, and are held accountable for results.

[Principle 4.9]

The Company developed the Company's Independence Standards for Outside Directors and has presented the standards in the Yokogawa Corporate Governance Guidelines and "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management, 1. Organizational Composition and Operation, [Independent Directors], Matters relating to Independent Directors" of this report.

The Company's independent Outside Directors meet these independence standards, have deep insights as corporate managers and abundant experience in markets different from those for the Company, and state their opinions from a multidimensional perspective at the Board of Directors meetings and other opportunities.

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[Supplementary Principle 4.11.1]

The Board of Directors shall be comprised so as to be well balanced in knowledge, experience, and capabilities to effectively fulfill its roles and responsibilities, and it shall be constituted in such a manner as to achieve both diversity-including in terms of gender, internationality, career within and outside the company, and age-and appropriate size.

With respect to the diversity of the Board of Directors as a whole, the Nominating Committee regularly holds discussions from the viewpoint of enhancing corporate governance and sets down experience, knowledge, attitude, etc. expected of next Directors.

At the Board of Directors, deliberation is held on the makeup of the Board of Directors, including the organizational design and scale, as well as the required knowledge, experience, and capabilities, etc. of the Directors and Vice President & Executive Officers, and upon realizing the effective discussion, it has been confirmed that current Board of Directors has the appropriate scale, and that its diversity is being considered. After one woman was appointed as an independent Outside Audit & Supervisory Board Member in fiscal year 2017, one foreign national was appointed as a Director in fiscal year 2019, and one woman was appointed as an independent Outside Director in fiscal year 2021, currently three female Directors out of 11 Directors has been elected, thus continuing to ensure diversity.

The main expertise and experience of the Company's officers are disclosed in the Notice of General Meeting of Shareholders and the Yokogawa Report (Integrated Report), and the Company also discloses a skill matrix. In addition, two Outside Directors currently have management experience at other companies.

Notification of General Shareholder Meeting:

https://www.yokogawa.com/about/ir/reports/meeting/

Yokogawa Report:

https://www.yokogawa.com/about/ir/reports/annual/

[Supplementary Principle 4.11.2] Concurrent positions of Director Not applicable

Please refer to Supplementary Explanation of the Relationship in "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management, 1. Organizational Composition and Operation, [Outside Directors], Outside Directors' Relationship with the Company (2)" of this report for significant concurrent positions of Outside Directors.

[Supplementary Principle 4.11.3]

Based on the evaluations of each Director, each year the Board of Directors shall identify issues for further boosting the strengths and effectiveness of the Board of Directors, and make analysis and evaluations in order to clarify the points that should be emphasized when working on each issue. To make evaluations, the Board of Directors has used third-party evaluation organizations as appropriate. The outcomes of evaluations shall be disclosed in a timely and proper manner.

[Fiscal Year 2023 Board of Directors Evaluation Process]

In fiscal year 2023, during the Board of Directors evaluation through self-assessment by the Board of Directors, we gathered opinions with a view to changing the organizational design starting in fiscal year 2024.

・All Directors and Audit & Supervisory Board Members responded to questionnaires, the creation of which was led by the Chairman of the Board of Directors.

・The questions included fixed-point observations related to the evaluation of the size, composition, and operation of the Board of Directors, as checks on the status of activities aimed at bringing about improvements, and other items. An open text box was also provided to encourage the identification of new issues.

・An analysis of these responses was reported to the Board of Directors and discussed by Board members before the forming of the final evaluation.

・Based on this evaluation, etc. the Board of Directors held discussions to identify issues to further enhance the effectivenes s of the Board of Directors, then passed a resolution to implement action plans for their improvement.

[Summary of the Fiscal Year 2023 Board of Directors Evaluation Results]

* In fiscal year 2023, we evaluated the Board of Directors as a company with Audit & Supervisory Board.

As a result of the Board of Directors evaluation, the Board of Directors was evaluated as open and highly effective, and it was also confirmed that it is important to develop a system for setting appropriate management-related targets and indicators, and to exercise a function that encourages risk-taking.

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・Roles, size and composition of the Board of Directors

• The Group has engaged in initiatives to transform a company continuously creating values in the rapidly changing business environment. The Board of Directors appropriately fulfills its role based on the recognition that its important roles and functions are to provide medium- to long-term management direction, and to supervise and support the execution of operations from the perspective of each stakeholder. The Chairman and Directors appropriately fulfill their roles, and Audit & Supervisory Board Members also contribute to improving the effectiveness of the Board of Directors.
• While the size of the Board of Directors, the ratio of outside directors to inside directors, and the diversity of its members are recognized as appropriate, further enhancement of international and gender diversity is considered desirable. Some respondents also expressed the need to establish a system that enables discussion of best practices from a global perspective.

・Management Status of the Board of Directors

• The frequency and duration of Board of Directors meetings were found to be appropriate, with open and constructive discussions. It is also considered that the agenda setting should be further focused on important management issues.
• The Board of Directors contributes to the formulation and implementation of the Medium-term Business Plan and Long- term Management Concept from a variety of knowledge and perspectives. The Board of Directors recognizes that securing and transforming human resources, expanding business, and improving profitability are issues that need to be addressed, and it is believed that the progress and results of these efforts should be strengthened.

[Efforts for Future Improvement]

In order to further accelerate the transformation of the Group based on the results of the Board of Directors evaluation, the Board of Directors will work to enhance effectiveness by bolstering the supervisory function further through the following initiatives.

・Establishment of governance structure as a company with Nominating Committee, etc.

• The Board of Directors and others had studied the optimal organizational design and decision-making process, and the Board of Directors resolved to make a proposal to the Annual General Meeting of Shareholders regarding the transition to a company with Nominating Committee, etc. After the transition, we aim to achieve sustainable growth and increase corporate value over the medium to long term by clearly separating management oversight and execution and further improving the quality and speed of business execution and decision-making.

・Deepen discussion of medium- and long-term management strategies

• In fiscal year 2023, the Board of Directors and the executive side reviewed the current medium-term business plan and discussed the formulation of a new medium-term business plan, which was resolved by the Board of Directors. In fiscal year 2024, important medium- to long-term management issues will be selected for the agenda in light of the start of the new medium-term business plan and the transition to a company with Nominating Committee, etc. Among them, we will take up as agenda items important management issues that should be discussed by the Board of Directors, which were raised in the Board of Directors evaluation and Outside Directors Meeting. In order to deepen these discussions, we will also further strengthen communication with the executive side.

・Strengthen monitoring functions

• With the transition to a company with Nominating Committee, etc., the Board of Directors will confirm whether the quality of execution is ensured as well as whether the speed of execution is increased by delegating significant authority to the executive side. In addition, as a company with Nominating Committee, etc., the Board of Directors will develop an appropriate governance system and confirm the status of the system. As for the three statutory committees, we will also ensure their flexible operation while putting their operation on track.

[Supplementary Principle 4.14.2]

The Company shall provide Directors and Vice President & Executive Officers with necessary training and information as appropriate to allow them to fulfill their roles and responsibilities.

1. When Directors and Vice President & Executive Officers newly assume their positions, lectures and training by experts in laws and corporate governance shall be provided, and during their tenures training with respect to amendments to laws and management issues shall be provided on an ongoing basis.
2. In addition to the above, when independent Outside Directors newly assume their positions, the Company shall provide them with briefings about the Company's businesses and conduct tours of key business sites and other locations.
3. Each year, the Board of Directors shall interview the persons responsible for each business concerning business strategies, progress in carrying out such strategies, and other matters.
4. The Company shall provide independent Outside Directors with necessary information about the Company's business issues and other matters in a timely and proper manner.
5. • 7 -

[Principle 5.1] Basic Views

In conformity with the Yokogawa Group Code of Conduct and the Disclosure Policy, in order to contribute to sustainable growth and increased corporate value over the medium to long term, the Company will promote constructive dialogue with shareholders and investors.

The responsible officer for dialogue with shareholders and investors will be the officer responsible for IR, who will ensure that information sharing between departments that assist in such dialogue and other types of cooperation take place.

The department in charge of IR, which is under the oversight of the responsible officer, will play the central role in the handling of dialogue. However, based on the wishes of a shareholder or other stakeholder and the matter of main interest in a meeting, the department will positively consider whether the President & CEO, Representative Executive Officer or Outside Directors can participate in the meeting to achieve a quick response if needed.

To flexibly accommodate the needs of shareholders and investors, the Company will strive to ensure opportunities for communication and promote understanding of the Company through various means including in-person meetings, teleconferences, and web conferencing. When making dialogue, the Company will ensure to prevent leakage of insider information.

In order to encourage constructive dialogue with shareholders and others, when meeting with a shareholder for the first time, for example, we will try to enhance the content of the meeting by providing explanations not only about financial information, but also about non-financial information. In addition, we will strive to deepen shareholders' and investors' understanding of the Company by holding financial results briefings, business briefings, factory tours, and other events. The Company discloses Investors' Guide on its website, compiling basic financial and non-financial information on the Company, and uses it to provide explanations as appropriate.

The responsible officer and the department in charge of IR will regularly hold meetings with the president and, as necessary, share the details of meetings with related departments, and regularly provide reports to the Board of Directors, etc., thereby leading to improvements targeting effective dialogue.

[Principle 5.2] Action to Implement Management that is Conscious of the Cost of Capital and the Stock Price (English disclosure)

We formulate management strategies and business plans based on an accurate understanding of our capital costs. Our goal is to maximize shareholder value over the medium and long term, while being aware of the need to realize ROIC and TSR (Total Shareholders Return) that exceed the cost of capital (WACC) and the cost of equity.

In addition, we believe that explaining to shareholders in an easy-to-understand and logical manner the basic concepts and targets that form the foundation of our management strategies and plans, as well as specific measures, will lead to an increa se in the number of shareholders who correctly understand and agree with us, and should be implemented accordingly. To this end, we publish the Yokogawa Report, an integrated report that encompasses traditional annual reports and CSR reports, as well as information on our medium-term business plan.

We have formulated the policy to enhance our disclosure based on the request for "Action to implement management that is conscious of the cost of capital and stock price." In the new medium-term business plan GS2028, we will continue to indicate KPIs such as EPS, ROE and ROIC to investors and other external stakeholders, as well as the company's capital cost and an explanation of the process for making investment decisions with an awareness of the cost of capital.

We have also formulated a policy to improve disclosure of specific initiatives to strengthen intangible capital (human capital, intellectual capital, social capital, etc.) by linking non-financial information with financial information in various disclosure materials such as the Yokogawa Report. Through these efforts, we are striving to provide explanations to shareholders in an easy-to-understand and logical manner the basic concepts.

Medium-term Business Plan:

https://www.yokogawa.com/about/company-overview/corporate-strategy/

Yokogawa Report:

https://www.yokogawa.com/about/ir/reports/annual/

2. Capital Structure

Foreign Shareholding Ratio

More than 30%

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[Status of Major Shareholders]

	Name / Company Name	Number of Shares Owned		Percentage (%)
Master Trust Bank of Japan Limited (trust account)	51,680,800		19.87
Custody Bank of Japan, Ltd. (trust account)	18,160,300		6.98
The Dai-ichi Life Insurance Company, Limited	15,697,000		6.03
Nippon Life Insurance Company	13,484,615		5.18
State Street Bank and Trust Company 505223	6,272,625		2.41
Retirement Benefit Trust in Mizuho Trust &
Banking Co., Ltd. (Mizuho Bank, Ltd. account);	6,141,000		2.36
Custody Bank of Japan, Ltd. as a Trustee of Retrust
BNYM as AGT/Clients 10 percent	5,951,986		2.29
State Street Bank and Trust Company 505038	5,482,722		2.11
State Street Bank West Client-Treaty 505234	4,887,463		1.88
Yokogawa Electric Employee Shareholding Program	4,645,849		1.79
	Controlling Shareholder (except for Parent	-
	Company)
	Parent Company	None

Supplementary Explanation

1. The Company holds 8,473 thousand shares of treasury stock (Percentage of the number of shares owned in the number of issued shares: 3.15%), but they are excluded from the capital positions of the above major shareholders. The shareholding ratio is calculated after deducting treasury stock.
2. Reports of possession of large volume or change reports to reports of possession of large volume were submitted as follows. However, since the Company cannot confirm the actual ownership as of the end of the fiscal year under review, the following shareholders are not included in the above status of major shareholders.
   [Name or Company Name] [Date on which the reporting obligation arose] [Number of Shares Owned (thousand shares)] [Percentage (%)]

(1)	Sumitomo Mitsui Trust Asset Management Co., Ltd. and one other company,	August 21, 2019,	16,537	6.16
(2)	Nomura Securities Co., Ltd. and other one (1) company,	July 20, 2020,	17,287	6.44
	(3) Mizuho Bank, Ltd. and other one (1) company,		December 7, 2021,	13,913	5.18
(4)	Massachusetts Financial Services Company and other one (1) company,	February 21, 2022,	10,737	4.00
(5)	Three (3) companies of Mitsubishi UFJ Financial Group,	June 20, 2022,	11,117	4.14
(6)	FIL Investments (Japan) Limited,		October 21, 2022,	10,345	3.85
(7)	Invesco Asset Management (Japan) Limited and other two (2) companies,	June 21, 2023,	11,819	4.40
	(8) BlackRock Japan Co., Ltd. and other eight (8) companies,	December 5, 2023	19,872	7.40
3. Corporate Attributes
		Listed Stock Market and Market Section		Tokyo Stock Exchange Prime Market
		Fiscal Year-End		March
		Type of Business		Electric Appliances
		Number of Employees (consolidated) as of the		More than 1000
		End of the Previous Fiscal Year
		Sales (consolidated) as of the End of the Previous		From ¥100 billion to less than ¥1 trillion
		Fiscal Year
		Number of Consolidated Subsidiaries as of the		From 100 to less than 300
		End of the Previous Fiscal Year
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1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
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2. Other Special Circumstances which may have Material Impact on Corporate Governance

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- 10 -