Corporate Governance Framework

Organizational Structure

OMRON has chosen to adopt the organizational structure of a "Company with Audit & Supervisory Board."

Board of Directors strives for sustainable enhancement of the OMRON Group's corporate value by exercising oversight over overall management through the election of directors, Audit & Supervisory Board members, and executive officers; the determination of compensation for directors and executive officers; and making important operational decisions.

Audit & Supervisory Board and Audit & Supervisory Board members work to secure the integrity of the OMRON Group and achieve the sustainable enhancement of corporate value by conducting audits on legality and appropriateness of directors' duties, and the fulfillment of Board of Directors' oversight obligations. In addition, each Audit & Supervisory Board member can exercise his/her authority on his/her own as a single-person organ in which the power over final decision-making is given to one person. This allows them to play a crucial role in strengthening internal controls.

Furthermore, to enhance the oversight functions of Board of Directors, four voluntary advisory committees are attached to Board of Directors. The President & CEO does not belong to any of these committees. CEO Selection Advisory Committee, Personnel Advisory Committee, and Compensation Advisory Committee are chaired by an independent outside director, and a majority of each committee's members shall be composed of independent outside directors. CEO Selection Advisory Committee is dedicated to the deliberation and nomination of candidates for CEO, which is the top-priority matter in management oversight. In addition, the Corporate Governance Committee, established for the purpose of enhancing corporate governance, is to be chaired by an independent outside director, and its members to consist of independent outside directors, independent outside Audit & Supervisory Board Members, and non-executive inside directors. Through these unique initiatives, OMRON has established and adopted a system that enhances the transparency and objectivity of management's decision-making process.

By incorporating the best aspects of the corporate governance system of a "Company with Committees (Nomination, etc.)," OMRON has created the kind of hybrid corporate governance structure that we feel is most appropriate for OMRON as a "Company with Audit & Supervisory Board."

Board of Directors

Roles and Responsibilities

The Board recognizes its fiduciary responsibility to shareholders and assumes the responsibility of sustainably improving the OMRON Group's corporate value through appropriate exercise of its authority. To fulfill the above responsibilities, the Board exercises oversight functions over the overall management in order to ensure fairness and transparency of management practices. The Board does so through election of directors, Audit & Supervisory Board members, and executive officers. It also determines compensation for directors and executive officers, and makes important operational decisions. The Board is also responsible for establishing a system to respond to cases when Audit & Supervisory Board members or external auditors have discovered fraud within the OMRON Group and demanded appropriate remedies or pointed out deficiencies or problems.

Meeting Attendance

In order to make sure that the Board of Directors effectively fulfill its roles and responsibilities, all Directors and Audit & Supervisory Board members are required to maintain the target attendance rate of 75% or higher.

The meeting attendance for fiscal 2023 is as follows.

Policy regarding Composition of the Board of Directors

In order to strengthen the supervision function of the Board of Directors, at the Company, management oversight and business execution are kept separate, and a majority of the Board of Directors shall consist of Directors who are not involved with business execution. In addition, at least one-third of the Board of Directors shall consist of Outside Directors. Regarding Outside Directors and Outside Audit & Supervisory Board Members, from the perspective of ensuring their independence, they are elected in accordance with the Company’s “Independence Requirements for Outside Executives.” Based on the above, the Board of Directors shall consist of diverse members who possess the experience, specialized knowledge, and insights necessary to realize the OMRON Group’s management vision and shall ensure diversity without distinction as to gender, nationality, international experience, or age.

Policy regarding Appointment of Directors and Audit & Supervisory Board Members

• Directors, Audit & Supervisory Board Members, and Executive Officers are composed of human resources with the experience, specialized knowledge and insight necessary for the realization of the management vision.
• To swiftly respond to the need for global-scale growth and greater competitive strength, as well as significant changes in the business environment, the Personnel Advisory Committee shall work to ensure diversity in the Board of Directors, Audit & Supervisory Board, and among executive officers in terms including work experience, specialized knowledge, insights, gender, nationality, international experience, and age.
• The experience, specialized knowledge, and insight necessary for the realization of the management vision related to Directors and Audit & Supervisory Board Members is presented in the skill matrix.

[Criteria for Appointment of Outside Directors]

• Outside Directors are deeply involved in the CEO Selection Advisory Committee, which specializes in matters such as the appointment of the President, which is the top-priority matter in management oversight. In order to establish a highly transparent and objective system for appointing a President and CEO, Outside Directors must have management experience or equivalent experience.

[Criteria for Appointment of Outside Audit & Supervisory Board Members]

• Audit & Supervisory Board Members must possess the necessary insight, high ethical standards, fairness, and integrity as an Audit & Supervisory Board Member, as well as specialized knowledge in law, finance, accounting, management, or other areas.

Composition of the Board of Directors

The composition of the Board of Directors for fiscal 2023 is as follows.

Audit & Supervisory Board

Roles and Responsibilities

Audit & Supervisory Board bears in mind its fiduciary responsibility to shareholders and works to secure the integrity of the OMRON Group toward sustainable enhancement of corporate value, and acts for the common interests of the shareholders. To fulfill the above-mentioned responsibility, Audit & Supervisory Board strives to develop a system to ensure effectiveness of audits conducted by each of its members. Audit & Supervisory Board works in collaboration with independent outside directors and the internal auditing department. Audit & Supervisory Board also exchanges views with independent outside directors and provides them with information acquired through auditing.

Meeting Attendance

The meeting attendance for fiscal 2023 is as follows.

Composition

To effectively fulfill its duties and responsibilities, Audit & Supervisory Board is composed of members with experience, specialized knowledge, and deep insight in a well-balanced manner.

Principles of Conduct for OMRON Audit & Supervisory Board Members

Audit & Supervisory Board Members shall strive for self-improvement, be trustworthy at all times, uphold high ethical standards, and conduct themselves with humility.

1. We not only conduct compliance audits (Audit 1.0) and point out deficiencies; but also conduct risk-based/internal control audits (Audit 2.0) and state our views; and conduct management issue audits (Audit 3.0) and provide advice.

2. We emphasize listening attentively, dialogue, and empathy,
(1) Ask questions with curiosity and discuss freely and openly.
(2) Express opinions vigorously, including harsh ones, and be persistent.
(3) Strive for objective, fair, and impartial discussion and opinions based on data and evidence.

3. In the spirit of "throwing stones to make waves," we question conventional wisdom inside OMRON from diverse perspectives, including those of stakeholders.
(1) Insight into the true causes and issues, not just the surface of things
(2) An inquiring mind based on a healthy skepticism that does not accept the status quo
(3) Assumption that there are two sides to everything (light and shade)

4. We promote behavioral changes in management that will enable future-oriented, transparent, fair, swift, and decisive decision-making.

Fiscal 2024 Advisory Committee

• CEO Selection Advisory Committee
• Personnel Advisory Committee
• Compensation Advisory Committee
• Corporate Governance Committee

CEO Selection Advisory Committee

Roles

CEO Selection Advisory Committee has been established for the purpose of bolstering the management oversight function of Board of Directors by enhancing the transparency, objectivity, and timeliness of the decision-making process regarding nomination of candidates for CEO. CEO Selection Advisory Committee that specializes in selection of the President and appoints a candidate for the President and CEO for the next fiscal year, and deliberates about CEO succession planning and contingent succession planning to take over the position in emergency situations.

Composition

CEO Selection Committee is chaired by an independent outside director, and a majority of committee members shall consist of independent outside directors. The committee comprises Directors who are not engaged in business execution.

FY23 Activities and Activity Status

Personnel Advisory Committee

Roles

Personnel Advisory Committee has been set up for the purpose of bolstering the management oversight function of Board of Directors by enhancing the transparency, objectivity, and timeliness of the decision-making process regarding nomination of candidates for directors, Audit & Supervisory Board members, and executive officers. Personnel Advisory Committee sets criteria and policies relating to the selection of Directors, Audit & Supervisory Board Members and Executive Officers. The committee also deliberates about candidates.

Composition

Personnel Advisory Committee is chaired by an independent outside director, and a majority of committee members shall consist of independent outside directors. The committee comprises directors excluding Chairman and CEO.

FY23 Activities and Activity Status

Compensation Advisory Committee

Roles

Compensation Advisory Committee has been established for the purpose of bolstering the management oversight function of Board of Directors by enhancing transparency and objectivity in determining compensation amounts for each director and executive officer. Compensation Advisory Committee deliberates about compensation levels and amounts for Directors and Executive Officers, as well as setting compensation policies and carrying out compensation assessments.

Composition

Personnel Advisory Committee is chaired by an independent outside director, and a majority of committee members shall consist of independent outside directors. The committee comprises directors excluding Chairman and CEO.

FY23 Activities and Activity Status