Corporate Governance

Corporate Governance Basic Policy

The Morinaga Group will enhance its corporate governance with the aim of maximizing corporate value and achieving enduring corporate growth based on the basic policies of improving the health and efficiency of management, ensuring the reliability of its financial position, providing timely and appropriate disclosure of information, complying with laws and regulations, and strengthening the trust and relationships with all stakeholders.

(1) Positioning of Stakeholders

To enable us to fulfill our social responsibility in all areas of our business activities, we are committed to maintaining and further developing strong relationships with all stakeholders, who sustain our company, and achieving coexistence with society and sustainable growth in accordance with corporate principles and the code of conduct.

(2) Management Monitoring Functions

We are committed to building an effective internal control system by strengthening the management monitoring functions of the Board of Directors, appointing outside Directors and Statutory Auditors, requiring attendance by Standing Statutory Auditors at important meetings, and placing the Audit Division under the direct control of the President.

(3) Consistency in Thinking within the Entire Group

While respecting the independence of our subsidiaries, we endeavor to maintain close ties amongst the Group’s member companies.

Corporate Governance System

Management of Corporate Affairs

Morinaga’s “Rules on Decision-Making Criteria” states clear definitions of authority and responsibility for respective decision-making units, including the Board of Directors, Business Execution Meetings, Directors, Executive Officers, and General Managers of individual divisions and departments.

(As of June 26,2026)

＜Board of Directors＞

The Board of Directors deliberately makes decisions on statutory matters and the execution of important business based on the business judgment principle and supervises the execution of business. The Board consists of ten Directors, out of which four are Outside Directors, eight are male, and two are female Directors.

＜Business Execution Meetings＞

Business Execution Meetings, which is mainly comprised of Directors,Senior Operating Officer and Standing Statutory Auditors, deliberates and makes decisions on the execution of business and important management themes. To ensure the effectiveness and efficiency of deliberations at the Board of Directors and Business Execution Meetings, sufficient prior discussions are made at various committees that serve as advisory bodies for the Boards. These committees include the IR Committee, which is concerned with information disclosure, and the Officer Appointment and Remuneration Advisory Committee, a forum to discuss matters concerning Directors’ personnel and remuneration matters.

＜Executive Officer System＞

With the aim of increasing the agility to respond to the changing business environment and accelerating the decision-making process, Morinaga has adopted an executive officer system. With this move, the Company delegated authority and responsibility for executing regular business relating to the implementation of strategies to Executive Officers, ensuring efficient management and a clarification of responsibilities for business execution.

＜Auditing System＞

We have four Statutory Auditors, including three Outside Statutory Auditors. One of these three Outside Statutory Auditors is a Standing Statutory Auditor, and three of Statutory Auditors are male and one is female. In accordance with the Guidelines for Auditors, Statutory Auditors audit the Directors’ performance of their duties based on the Rules on Statutory Auditors’ Audit. Standing Statutory Auditors hold regular meetings with the Representative Director and attend Board of Directors, Business Execution Meetings of the Board of Directors and other important gatherings to audit the Directors’ performance of their duties. Audit Division, which is responsible for carrying out internal audit, directly reports to the President. Composed of eight members, the Division audits all divisions (including subsidiaries) in a planned manner, and exchanges opinions with the divisions jointly with Standing Statutory Auditors. To ensure close cooperation, opinion exchange sessions are held regularly and as needed basis between all Statutory Auditors and the Accounting Auditor, as well as between Standing Statutory Auditors and the General Manager of the Audit Division. The General Manager of the Audit Division and the Standing Statutory Auditors attend the meetings of the Internal Control Steering Committee, which is composed of members selected from major divisions and departments, and exchange opinions with the Committee members on a regular basis. Furthermore, the Audit Division enhances the effectiveness of internal audits by reporting directly not only to the President, but also to the Board of Directors and the Board of Statutory Auditors, as necessary and appropriate. Morinaga appointed Deloitte Touche Tohmatsu LLC as its accounting auditor.

＜Directors’ and Statutory Auditors’ Specialties and Experience (Skills Matrix)＞

In order to realize the Group’s purpose and vision, as well as its 2030 Business Plan and the Medium-Term Business Plan, we have specified the specialized knowledge and experience particularly expected of the Company’s Directors and Statutory Auditors as follows. When selecting candidates for Directors and Statutory Auditors, we give consideration to ensuring the balance and diversity of human resources who possess these skills.

Note:The ● symbol is included in the relevant items if the officer possesses specialized knowledge and experience, such as having background as a business manager in each field.

Skill	Reasons for selection
Corporate management/Management strategy	To build appropriate management strategies and make responsible management decisions in order to achieve the sustainable growth of the Group while responding to changes in the business environment
ESG/Sustainability	To co-create with stakeholders to resolve social issues related to our business, and to improve the corporate value of the Group and realize a sustainable society
Finance/Accounting/DX	To enhance our ability to generate funds through management practices that are conscious of optimizing capital costs, and achieve stable and continuous shareholder returns, and to strengthen our management foundation and sustainably improve corporate value by investing in digital technology, etc.
Human resources/Labor affairs	To promote the active participation of diverse human resources and realize the happiness of employees based on a relationship of mutual trust between the Company and its employees, and to create new value and achieve the sustainable growth of the Group
Legal affairs/Compliance/Risk management	To establish an appropriate risk management system, promote compliance management, build and maintain the management foundation of the Group
Marketing/Sales	To accurately identify changes in the business environment and changes in consumer needs, develop management strategies in response, and improve our brand value and corporate value
Global	To strengthen the foundations for overseas expansion while understanding and respecting local cultures, and promote further global expansion in order to realize a richer and healthier eating habits for people around the world
R&D/Production/Logistics	To promote structural reforms, strengthen our business foundation, and establish a system for competitive advantages in order to create new value based on technology, respond to changes in the business environment, and improve profitability

Exective Management

＜Executive Appointment Policy＞

An overview of the Executive Appointment Policy is as follows.

1. In order to realize the purpose and vision of the Morinaga Group, Directors and Statutory Auditors of the Company shall be persons with specialties and experience in the necessary fields, taking into consideration diversity such as nationality, gender and age.
2. Executive Directors shall meet the “Morinaga Group Management Personnel Requirements” (persons who demonstrate basic qualities, popularity, leadership, challenging spirit, foresight and imagination, practical ability, and the utilization of new technologies and new fields), and shall be persons who can contribute to the sustainable growth of the Group.
3. Outside Directors shall meet the Company’s Independence Standards stipulated separately, and shall be persons who can be expected to provide appropriate opinions and raise questions about the Group’s management issues, etc. from an independent and objective standpoint.
4. Statutory Auditors shall be persons who can be expected to conduct accurate audits from an objective and neutral perspective utilizing their knowledge and experience regarding the legality and appropriateness of business execution. At least one Statutory Auditor shall have sufficient knowledge of financing and accounting, and Outside Statutory Auditors shall be persons who meet the Company’s Independence Standards.

＜Morinaga Group Executive Independence Standards＞

The Company shall determine that Outside Directors, Outside Statutory Auditors, and candidates thereof are independent provided that they do not fall under any of the following categories.

1. A person for whom the Group is a major business partner, or a business executive thereof Specifically, a person, or a corporation to which said person belongs, for whom net sales to the Group in the most recent fiscal year account for 2% or more of the annual consolidated net sales of the Group
2. A major business partner of the Group, or a business executive thereof Specifically, a person, or a corporation to which said person belongs, to whom net sales by the Group in the most recent fiscal year account for 2% or more of the annual consolidated net sales of the Company
3. A consultant or accounting or legal professional who receives a large amount of money or other property from the Company other than executive remuneration, or a member of a corporation or organization, etc. that receives such property A large amount of property refers to an amount equal to or more than 2% of the annual consolidated net sales of said corporation, etc. in the most recent fiscal year, or \10 million, whichever is higher.
4. A person who falls under categories 1. to 3. in the past year
5. A person who was a business executive of the Company or a subsidiary of the Company at the time of their appointment and for a period of 10 years prior to their appointment
6. A relative within the second degree of kinship of any person described in 1. to 5. above.
7. A person who is in conflict with the independence criteria stipulated by the Tokyo Stock Exchange, or a person who may cause a conflict of interest with the shareholders of the Company
8. A person whose term of office is more than 8 years in total

Main Topics of Discussion at the Board of Directors

In FY2025/3, the Board of Directors discussed the following matters as main topics.

	Topics
Management strategy and sustainability-related	Progress status of the 2030 Management Plan Progress toward achieving the 2024 Medium-Term Management Plan Overseas business strategies Acquisition (purchase) of shares of other companies Capital expenditures (capital investment) in Japan and overseas Inorganic growth strategy Strengthening the quality assurance framework Medium- to long-term R&D strategy Activity status of the ESG Committee and other committees Initiatives to promote “health and productivity management” Securing/creating resources for the development of new businesses and new products
Governance-related	Evaluation of the effectiveness of the Board of Directors Conflict-of-interest transactions Status of policy shareholdings (strategic shareholdings) Executive appointments/personnel matters and remuneration
Compliance and risk management-related	Operational status of the internal control system Activity status of the Compliance Committee and the Total Risk Management Committee Investment management monitoring
Finance, investment, and loan-related	Implementation of financial measures (fund management and shareholder returns) Acquisition and cancellation of treasury shares; establishment of a retirement benefit trust Group treasury

Basic Policy on Officer Remuneration and Composition of Officer Remuneration

(1) Matters concerning the policy for determining the amount of executive remuneration and the calculation method thereof

1. Basic Policy

The Company’s Executive Remuneration Basic Policy is as follows.

1. 1) Contribute to the realization of the purpose and vision of the Morinaga Group.
2. 2) Promote the realization of medium- to long-term business plans in order to enhance corporate value into the future.
3. 3) Establish a system and standards that support appropriate risk-taking by Directors and strengthen their motivation to contribute.
4. 4) Ensure that the system is transparent, fair, and rational for stakeholders, and is determined through an appropriate process to ensure this.

2. Content of Executive Remuneration System

1. 1) Composition and content of remuneration, etc.
   1. a. Executive Directors

      Compensation consists of fixed remuneration and performance-linked remuneration. If the achievement of performance indicators is 100%, the proportion of performance-linked remuneration to total remuneration will be 35%

      1. (i) Fixed remuneration: Paid in a fixed amount monthly in cash.
      2. (ii) Performance-linked remuneration: If the achievement of performance indicators is 100%,20% of the 35% of performance-linked compensation to total compensation will be paid in cash every month and the amount equivalent to 15% of total remuneration will be paid as stock compensation at the time of retirement of the Executive Director (excluding non-residents of Japan).
   2. b. Outside Directors
      In light of their role, compensation is fixed remuneration only, and a fixed amount is paid in cash on a monthly basis.

   The Company’s basic approach to the breakdown of the percentage of each type of remuneration for each executive category is as follows (assuming the rate of achievement of business targets is 100%).

   Executive category	Fixed remuneration	Performance-based remuneration
   		Monetary remuneration	Stock compensation (non-monetary remuneration)
   Executive Director	65％	20％	15％
   Executive Director (non-resident of Japan)	65％	35％	-
   Outside Director	100％	-	-
   Statutory Auditor	100％	-	-

2. 2) Policy on determination of remuneration
   A standard amount is determined for each job title according to responsibilities. The standard amount is set at a level that ensures market competitiveness and strengthens the motivation of each Director to make a contribution.
3. 3) Matters concerning performance-linked remuneration
   1. a. For Representative Directors
      The indicators for performance-linked remuneration are the Group’s consolidated operating income for the monetary remuneration portion, and the medium- to long-term ESG numerical targets (the rate of positive responses to the Group’s employee awareness survey and the ESG score results from an external evaluation agency) for the stock compensation (non-monetary remuneration) portion.
   2. b. For Executive Directors other than Representative Directors
      The indicators for performance-linked remuneration are 50% each of the Group’s consolidated operating income for each fiscal year and individuals’ performance evaluations for the monetary remuneration portion, and the medium- to long-term ESG numerical targets (the rate of positive responses to the Group’s employee awareness survey and the ESG score results from an external evaluation agency) for the stock compensation (non-monetary remuneration) portion.
      The target figure and the actual figure of the performance indicators used for calculation of the amount of performance-linked remuneration for the fiscal year ended March 31, 2026 and the reason for selecting these performance indicators are as follows.

   3. Performance indicators selected	Target
      		Actual	Reason for selection
      Consolidated operating income	¥20.5 billion	¥21.2 billion	In order to enhance awareness about an improvement of performance for each fiscal year
      Rate of positive responses to the Group’s employee awareness survey	78.4%	79.3%	In order to improve corporate value from a medium- to long-term perspective
      ESG score results from an external evaluation agency	3.6	3.8	In order to improve corporate value from a medium- to long-term perspective

4. 4) Content of non-monetary remuneration
   As non-monetary remuneration, Executive Directors are provided stock compensation as non-monetary remuneration constituting the performance-linked remuneration portion, using medium- to long-term ESG numerical targets as performance indicators. for the purpose of motivating them to make contributions to an improvement of medium- to long-term performance and corporate value, and sharing profit awareness with shareholders.
   Based on the performance-linked stock compensation plan approved at the 170th Annual General Meeting of Shareholders, Out of 35% of the performance-linked compensation, Executive Directors receive points as stock compensation equivalent to 15% of total remuneration, which represents performance-linked remuneration portion, if they achieve 100% of the performance indicators each year, and receive Company shares, etc. through the BIP trust, in proportion to the points accumulated, when they retire.
   If, prior to the date on which the beneficiary rights become vested, a Director, etc. is found to have committed a material breach relating to the duties of Directors, etc., in violation of the mandate agreement of the mandate agreement or similar agreement between the Company and Directors, etc., said Director, etc. shall forfeit all rights to the share delivery, etc. (beneficiary rights under the Trust).
   If, on or after the date on which the beneficiary rights become vested, a Director, etc. is found to have committed a material breach relating to the duties of Directors, etc., in violation of the mandate agreement or similar agreement between the Company and Directors, etc., or to have taken employment, etc., with a competing company, etc. without the Company’s permission, the Company may seek compensation in the amount obtained by multiplying the number of shares corresponding to the share delivery points forming the basis for said share delivery, etc. by the closing price of the Company’s shares on the Tokyo Stock Exchange as of the date on which the beneficiary rights relating to said share delivery, etc. become vested.

3. Matters concerning Resolution by the General Meeting of Shareholders about Remuneration for Directors and Statutory Auditors

At the 175th Annual General Meeting of Shareholders held on June 29, 2023, a resolution was adopted to amend the maximum amount of remuneration for Directors of ¥500 million per annum (including the maximum ¥40 million per annum for Outside Directors) to the maximum amount of ¥500 million per annum for Directors (including a maximum of ¥80 million for Outside Directors). Director remuneration does not include the employee salaries of Directors who concurrently serve as employees. The number of Directors at the conclusion of the said Annual General Meeting of Shareholders was 11 (including 4 Outside Directors).
Moreover, separately from the said monetary remuneration, at the 170th Annual General Meeting of Shareholders held on June 28, 2018, the introduction of a performance-linked stock compensation plan using a trust for Directors (excluding Outside Directors and non-residents of Japan) was approved and which was partially revised at the 178 th Ordinary General Meeting of Shareholders held on June 26, 2026.
The revision newly added Senior Executive Officers (excluding non-residents of Japan) in addition to Directors (Excluding Outside Directors and Non-Residents in Japan.) as recipients of the performance-linked stock-based compensation system. The maximum amount of cash to be contributed by the Company to the trust for each target period covering three fiscal years was resolved to be ¥330 million in total, and the maximum number of points to be awarded as stock compensation was resolved to be24,000 points for one fiscal year. The contribution and the maximum number of points are for Directors (excluding Outside Directors and non-residents of Japan) and Senior Executive Officers (excluding Outside Directors and non-residents of Japan). Since the initial Target Period after the Partially Revised will be four (4) fiscal years, the total amount will be ¥440 million (The number of Directors eligible for the Plan at the conclusion of the said Annual General Meeting of Shareholders was 6, and the number of Senior Executive Officers was 4).
Taking into consideration the stock split of common stock effective January 1, 2024, the number of shares to be granted and delivered per point has been adjusted. The maximum amount of remuneration for Statutory Auditors was resolved at the 169th Annual General Meeting of Shareholders held on June 29, 2017 to be ¥80 million per annum. The number of Statutory Auditors at the conclusion of the said Annual General Meeting of Shareholders was 4.

4. Policy on Determination of Remuneration for Individual Directors

1. 1) Method of determination of the policy on determination of remuneration for individual Directors
   As stated above, the policy on determination of remuneration for individual Directors was resolved at the meeting of the Board of Directors held on February 10, 2021, and partial amendments were subsequently made at meetings of the Board of Directors held on March 23, 2023, February 8, 2024, March 6,2026(took effect as of 1 April 2026) and May 24,2026. All resolutions of the Board of Directors take into account recommendations by the Officer Appointment and Remuneration Advisory Committee.
2. 2) Summary of the Determination Policy
   1. a. Level of remuneration for Directors

      The level of remuneration is verified by the Officer Appointment and Remuneration Advisory Committee based on the Company’s financial performance, taking into consideration the remuneration level, etc. of peer companies or those of similar size as the Group.

   2. b. Amount of remuneration for individual Directors
      The Officer Appointment and Remuneration Advisory Committee determines the amount of remuneration for individual Directors after discussing the draft on individual amounts of remuneration, including performance evaluations, prepared by the President, and reports the determination process to the Board of Directors.
3. 3) Reasons that the Board of Directors judged that the content of remuneration for individual Directors for the fiscal year under review is in accordance with the Determination Policy
   The content of remuneration for individual Directors for the fiscal year under review was determined after the Officer Appointment and Remuneration Advisory Committee carefully examined the draft on the amounts of individual remuneration, including performance evaluations, prepared by the President from multifaceted perspectives, including its consistency with the determination policy. The Board of Directors has received reports on the determination process, and judges that the content of remuneration for individual Directors is in accordance with the Determination Policy.

5. Matters concerning delegation of authority concerning determination of remuneration for individual Directors

At a meeting of the Board of Directors, it was resolved to delegate to the Officer Appointment and Remuneration Advisory Committee, which consists of the Company’s all Outside Directors and the Representative Director, the authority to determine details of remuneration for individual Directors. The reason for the delegation is to ensure objectivity and fairness in determining the amount of remuneration for individual Directors. The Officer Appointment and Remuneration Advisory Committee makes its determination after deliberating the proposal on the amount of remuneration for individual Directors prepared by the President, including performance evaluations, and reports the determination process to the Board of Directors.
Regarding stock compensation, which is non-monetary compensation, its maximum amount is the amount resolved at the General Meeting of Shareholders, separately from monetary remuneration. The Company awards a certain number of points to Directors (excluding Outside Directors and non-residents of Japan) in accordance with the provision of the “Share Delivery Rules” following consultation with the Officer Appointment and Remuneration Advisory Committee and receiving its recommendations.

Evaluation of the Effectiveness of the Board of Directors

(1) Method of analysis and evaluation

In regard to the effectiveness of the Board of Directors as a whole, the Company conducted a survey of all Directors including Outside Directors, and all Statutory Auditors including Outside Statutory Auditors, February this year, as it does each year. The survey covered the composition, operation, and agenda of the Board of Directors, the nomination and remuneration of senior management, risk management, dialogue with shareholders, etc., systems to support the Board of Directors, and issues indicated in previous evaluations of the Board of Directors. The Board of Directors conducted an exchange of opinions on the results of the survey, and each Director executed an evaluation. In addition, the results of the survey were analyzed and evaluated by a third-party organization (law firm), in order to provide an expert and objective opinion, and the evaluation of the Board of Directors was discussed and decided at a meeting of the Board of Directors, with reference to this third-party analysis and evaluation.

(2) Result of the evaluation

As a result of analysis and evaluation by a third-party organization (law firm), the Company’s Board of Directors was determined to be functioning effectively in fiscal 2024. Based on this evaluation, the Company recognized that the Board of Directors was effective and functioning effectively in line with the basic views on corporate governance, etc. of the Company.

(3) Initiatives for improvement

With regard to the issues identified in the previous fiscal year: (i) aim to further activate the Board of Directors by selecting appropriate topics and ensuring time for deliberation in order to discuss a wide range of management issues; and (ii) further enhance discussions relating to medium- to long-term management issues, including sustainability and medium-term management plans, as future issues.

(4) Initiatives for the future

The Company will place particular emphasis in working on the following matters as future issues as part of ongoing efforts to further improve the issues identified in the previous fiscal year :
“We aim to further enhance discussions relating to medium- to long-term management issues by selecting appropriate topics and ensuring time for deliberation.”

Based on this effectiveness evaluation of the Board of Directors, we will further improve the effectiveness of the Board of Directors of the Company, and further strengthen corporate governance, including by taking the necessary initiatives to improve the above issues.

Changes in Our Response to the Corporate Governance Code

Internal Controls

The Morinaga Group is committed to maximizing corporate value and achieving an enduring corporate growth by strengthening our internal control system, increasing the management efficiency, operating its business properly, and ensuring effective supervisory and audit practices. To ensure appropriate execution of duties, the Board of Directors endeavors to establish an effective internal control system as well as a system of compliance to legal requirements and internal rules including the Articles of Incorporation, while Statutory Auditors are responsible for auditing the effectiveness and functionality of such systems. In addition, Morinaga and its subsidiaries home and abroad have introduced a helpline to collect a wide range of information about compliance issues take appropriate measures against them.