Corporate Governance

1. Basic Principles on Corporate Governance
In order to realize higher transparency of management of the Company to the entire society including our shareholders, investors, customers and business partners, employees, and members of communities, and to make our business operations fair and efficient, the Company is working on enhancing corporate governance and management monitoring functions.
The Company will continue to work on improving its corporate value with consistency for long term, and to operate its business based on even higher standards of corporate ethics.

2. Introduction of the Audit and Supervisory Board
The Company has adopted a corporate governance structure based on audit and supervisory board. Based on the premise of auditing by a proven audit and supervisory board structure, the Companyʼs basic policy is to conduct business operations in a flexible and efficient manner through a top-down approach.

3. Board of Directors
Out of 12 members of the board of directors, 5 are external directors (42% of total directors) and 3 are female directors (25%) as of March 28, 2023. The Company has been responding to rapid changes in the business environment and technology trends that are unique to the machine tool industry.
Against this background, the Companyʼs management structure was based on a lean board of directors, which enabled quick decision making, supported by operating officers. Since 2015, the Company has been promoting the appointment of external directors to enhance higher transparency and objectiveness. Our external directors are professional in organizational management, while they have specialized knowledge and a wide range of perspectives as well as technological backgrounds. In March 2019, the top executives of DMG MORI AG and DMG MORI USA, INC. became members of the board of directors. At the general shareholders meeting in March 2021, a new female external director was appointed as the board of directors. This has led to management structure in which diverse opinions have been being represented. The board of directors holds discussions on business strategies which are important for the future of the Company. Discussions on daily business operations are conducted at the Executive Officers Meeting and Management Meeting. The contents of the discussions at the Executive Officers Meeting and the Management Meeting are reported and reviewed at the board of directors meetings. This structure enables quick action in business operations as well as transparency to the board of directors.

4. Audit and Supervisory Board
The audit and supervisory board consist of one full-time audit and supervisory board member (“Corporate Auditor”) who is well versed in internal affairs, and multiple highly independent external audit and supervisory board members. In accordance with the audit policy, Corporate Auditors attend and express opinions at the Board of Directors meetings, Executive Officers Meetings, Management Meeting and other important meetings, inspect important resolution documents, and conduct rigorous audits of departments in the head office, including those of overseas subsidiaries, as well as Campuses and affiliated subsidiaries. Thus, the Company has established an efficient corporate governance system that facilitates prompt decision-making and lively discussions by the Board of Directors and ensures fairness and transparency in its management.

5. Governance of DMG MORI AG
DMG MORI AG, a German subsidiary, has a governance structure that differs from that in Japan. The supervisory board, which is placed above the executive board, is responsible for appointing directors and approving major investments and business plans. The governance structure has been strengthened by the appointment of Dr. Masahiko Mori, president and CEO of DMG MORI CO., LTD., as chairman of the supervisory board of DMG MORI AG in May 2018. In addition, in March 2019, DMG MORI CO., LTD.ʼs Executive Vice President James Nudo and then Senior Executive Officer Irene Bader (currently DMG MORI CO., LTD.ʼs director) were appointed respectively as member of the supervisory board. Daily business progress of each sales and service office and production site had been managed by the Joint Committee, a monthly meeting attended by President Mori and executive-level managers from DMG MORI CO., LTD. and DMG MORI AG, to ensure unified decision-making as a global company. Currently, the function has been integrated into the Executive Officer Meeting held by DMG MORI CO., LTD.

6. Executive Officer
The Company has appointed executive officers to vitalize the board of directors by separating decision making and supervision from operation and to train next generation of executive-level managers. As of March 28th, 2023, the Company has 26 executive officers who vary in age, nationality, and gender. Each executive officer bears great responsibilities as the head of division, such as sales and R&D, or region.

DMG MORI has dynamically evolved and adapted to an ever-changing business landscape, one of the biggest changes being the business integration with DMG MORI AG. The Company is now developing the next generation of executive-level managers to keep its dynamism alive and ensure sustainable and long-term growth.