Hino Motors : Corporate Governance Report

• NOTE > English translation from the original Japanese-language document

Corporate Governance Report

Last Update: June 30, 2023

Hino Motors, Ltd. Satoshi Ogiso, President & CEO, Member of the Board of Directors Contact: Corporate Communications Dept., Public Affairs Division +81- (0)42-586-5494 Securities Code: 7205 https://www.hino-global.com/

The corporate governance of Hino Motors is described below.

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

Other Basic Information

1. Basic Views

UPDATED

As a company that manufactures and sells trucks and buses needed for distribution and transportation, Hino Motors is working to fulfill its corporate mission: "To make the world a better place to live by helping people and goods get where they need to go―safely, economically and with environmental responsibility―while focusing on sustainable development." The HINO Credo forms the cornerstone for decisions and actions together with the basic policy composed of "Integrity, Contribution, Empathy," which are the three values that Hino Motors will pass on into the future.

In addition, the HINO Credo, the HINO Sustainability Policy, the Company's declaration aimed at realizing a sustainable society, and the HINO Code of Conduct, which lays out the specific standards for the conduct of each and every employee, are collectively called the HINO Way, which the Company has made public as the uniquely HINO value and origins it holds dear.

To fulfill its corporate mission based on the HINO Way, Hino Motors is striving to build on the positive relationships it has established with its stakeholders, which include shareholders, customers, business partners, local communities around the world, and employees. Based on this stance, Hino Motors is working to enhance its corporate governance with the goal of achieving sustainable growth and raising its corporate value over the medium to long term as a global company.

In addition, Hino Motors endorses the Corporate Governance Code prescribed by the Financial Services Agency of Japan and has devised various measures based on the objectives and intent of the code's guidelines and principles. As a basic policy, Hino Motors intends to pursue these measures as a means of strengthening its corporate governance.

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

Hino Motors has implemented all the principles of the Corporate Governance Code.

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

UPDATED

[Principle 1.4 Cross-Shareholdings]Cross-Shareholdings>

Fundamentally, the policy is to reduce cross-shareholdings, but the Company holds on to shares on an exceptional basis when determined necessary for business strategy from the perspective of enhancing corporate value over the medium to long term.

Every year, in addition to quantitatively evaluating matters such as whether the benefits of shareholding counterbalance the capital cost, the Board of Directors conducts a qualitative assessment of the significance of ownership to comprehensively determine suitability. Stocks whose ownership is no longer recognized as justified will be disposed of after discussion with the issuer.

Cross-Shareholdings>

With regard to the exercise of voting rights related to cross-shareholdings, Hino Motors makes a comprehensive decision on each proposal based on a judgement of whether a proposal will lead to an increase in corporate value from a medium- to -long- term perspective, whether a proposal will undermine the justification for ownership of the stock and other criteria.

[Principle 1.7 Related Party Transactions]

Hino Motors complies with the procedures stipulated in Japan's Companies Act regarding conflict of interest transactions with officers. In addition, transactions with executive vice presidents and senior managing officers who are not directors have to be approved by and reported to the Board of Directors.

Sales of products and other goods to TOYOTA MOTOR CORPORATION, the parent company of Hino Motors, are determined in price negotiations each fiscal year by taking into account such factors as the market prices of raw materials and the contracted production volume. Purchases of parts are conducted at a reasonable market price following discussions with the parent company. They take into full account of such factors as market prices in the same way as for regular terms of transactions. The interest rate when borrowing funds is determined by taking the market interest rate into account in the same way as for regular transactions. The Board of Directors determines the validity of these important transactions between Hino Motors and the Toyota Group after having received consultation and recommendations in advance from the Special Committee, which is comprised solely of independent outside directors.

[Principle 2.4 Ensuring Diversity within the Company, including Encouraging Women to Take Active Roles] Supplementary Principle 2.4.1

Hino Motors creates a work-friendly environment for diverse human resources that facilitates demonstration of their talents, regardless of attributes such as sex, age, nationality, disability, sexual orientation and gender identity. In this environment, diverse perspectives and values coexist, reflecting different experiences, skills, and characteristics within the Company, and this promotes ongoing growth.

In 2021, a special organization was established for the promotion of diversity. It encourages various endeavors with the goal of building a vibrant corporate culture that ensures respect for employees' human rights.

Aims and current status of promotion for core human resources, etc.

1. The promotion rate for women into management positions is 16% compared to 9% for men, when comparing employees hired at the same time for the past three years. The Company will continue active promotion of women with the aim of promoting 65 women to management positions by 2026.
   * Active promotion has led to 54 women managers in 2023, up from 19 in 2014 (2.8 times more).
2. In regard to promoting non-Japanese people to management positions, the Company seeks to hire and develop outstanding human resources, aiming to increase the proportion of management positions held by non-Japanese people from 4.8% as of March 2023 to 5% in 2026.
3. In comparison to the current 39% promotion rate to management positions for regular hires, the promotion rate for mid-career hires to management is 40% due to encouraging promotion of human resources capable of leadership by acquiring outside human resources with digital expertise, etc. The Company will continue to actively promote mid-career hires.

[Principle 2-6. Roles of Corporate Pension Funds as Asset Owners]

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Hino Motors has established an expert committee so that the organization responsible for the corporate pension fund can take appropriate action, such as monitoring the investment manager, for proper management of the corporate pension reserve fund and the sound operation of the pension plan into the future. Hino Motors also strives to further strengthen the required human resources for the expert committee.

In addition, if necessary, external experts and the labor union are invited to the above expert committee to ensure that any conflicts of interest that may arise between the beneficiaries of corporate pension funds and the Company are managed properly.

[Principle 3.1 Full Disclosure]

(1) Company objectives (management philosophy, etc.), business strategies and business plans

Please refer to the HINO Way, the corporate philosophy, and business strategies posted on the Hino Motors corporate website.

HINO Wayhttps://www.hino-global.com/corp/about_us/hino_credo.htmlHino's business strategies for the futurehttps://www.hino-global.com/corp/for_investors/business_strategy.html

(2) Basic views and guidelines on corporate governance

Please refer to "I.1 Basic Views" in this document where this is noted.

1. Board policies and procedures determining the remuneration of the senior management and directors Please refer to II.1 Director Remuneration and Policy on Determining Remuneration Amounts and Calculation Methods in this document, which notes the policies and procedures in determining the remuneration of senior management and directors.
2. Board policies and procedures in the appointment and dismissal of senior management and the nomination of directors and Audit & Supervisory Board member candidates
   The policies and procedures for the appointment and dismissal of senior management and the nomination of candidates for directors and Audit & Supervisory Board members at Hino Motors are as below.

Hino Motors' Board of Directors assumes the role of appropriately supervising corporate activities based on the perspectives of stakeholders and in accordance with the Company's medium-to-long-term policies and strategies, such as the Hino Environmental Challenge 2050 and Challenge 2025, based on the Hino Credo, to achieve sustainable growth and ongoing improvements in corporate value.

To fulfill the above role, the skill set (experience, insights, expertise, etc.) considered necessary to the Board of Directors has been listed as a skill matrix by making selections based on skills forming the basis of organizational management (examples include corporate management, legal work, compliance, and internal controls) and skills that can be linked to the Company's unique strategies and visions (examples include R&D and Hino's Monozukuri [manufacturing]).

In addition to fulfilling the aforementioned skill set, when appointing directors and auditors, the Company selects individuals who can contribute to sustainable growth by comprehensively taking into consideration matters such as the person's achievements, character, and insights from the perspective of accurate and prompt decision-making and with a focus on placing the right person in the right job, with consideration given to maintaining the diversity and appropriate size of the Board of Directors.

Hino Motors selects outside directors and Audit & Supervisory Board members from the viewpoint of enhancing management monitoring and supervisory functions, giving comprehensive consideration to factors such as experience of management at other companies, industry understanding, and expertise, in addition to independence.

The skill matrix for the directors is provided on Appendix Sheet 2.

When appointing and dismissing directors and auditors, the Proposal Review Committee for Officers, the majority of which is comprised of independent outside directors, selects candidates according to the

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aforementioned policy and prepares a proposal to be submitted to the Board of Directors and a proposal to be recommended to the Audit & Supervisory Board. (The Committee met in March and April 2022.)

In addition, following the recommendation from the Proposal Review Committee for Officers (auditors are selected with approval from the Audit & Supervisory Board), the Board of Directors makes a tentative decision on the candidates, and the selections are then officially determined after deliberation by the general meeting of shareholders.

1. Explanations with respect to the individual appointments and dismissals and nominations based on the board policies and procedures in the appointment of the senior management and the nomination of directors and Audit & Supervisory Board member candidates:
   Refer to the Notice of Convocation for the General Meeting of Shareholders posted on the corporate website, which contains explanations with respect to the appointments and dismissals of senior management and the nominations of individual directors and Audit & Supervisory Board members.

[Principle 3.1 Full Disclosure]

Supplementary Principle 3.1.3

Hino Motors has contributed to solving social issues and challenges by providing trucks and buses since the Company was established. In 2022, Hino Motors established the HINO Sustainability Policy as part of the HINO Way to clarify the Company's commitment to realizing a sustainable society. Specific sustainability initiatives are disclosed in the HINO Sustainability Report, which is posted on the Company's website.

When it comes to climate change, Hino Motors' products (trucks and buses) play an important role in supporting the societal lifelines of transportation and logistics. At the same time, the Company is aware of these products' impact on the global environment. Hino Motors prioritizes resolving environmental issues, as one of its most important management goals and has established its environmental vision, the Hino Environmental Challenge 2050, and that initiative's mid-term target, the Hino Environmental Milestone 2030. Based on these, the Company strives to reduce environmental impact and build a prosperous and livable world for the next generation.

In addition, Hino Motors endorsed the Task Force on Climate-related Financial Disclosures (TCFD) in December 2022 and joined the TCFD Consortium. Hino Motors has disclosed information on the impact of climate change-related risks and opportunities on the Company's business activities and earnings in accordance with the TCFD framework, so please refer to the Company's website for more details.

HINO Sustainability Policyhttps://www.hino.co.jp/corp/about_us/hino_credo.html

Disclosure Based on TCFD Recommendations https://www.hino.co.jp/corp/csr/parts/pdf/environment_TCFD.pdf#zoom=100

[Investment, etc., in Human Capital]

Hino Motors wants to be a company that is chosen by employees, where they personally feel fulfilled in work and grow by contributing to customers and society. In order to implement the Corporate Mission, which states, "To make the world a better place to live by helping people and goods get where they need to go," Hino Motors treats human resources as an important corporate asset and continues to invest proactively in human capital.

Hino Motors works to enhance personnel systems so that they support individual growth and stives to build an environment and benefit and welfare systems that enable employees to work with confidence. The Company works to foster "human resources with empathy for the HINO Way and company vision, who think for themselves, act independently, and create new value for the benefit of customers and society."

Hino Motors reaffirms that "human growth" is essential for overcoming important issues in the commercial vehicle industry, and the Chief Human Resources Officer (CHRO), appointed in February 2023, works closely with the Board of Directors to drive investment in human resources with the aim of creating a cycle linked to "corporate growth."

[Investment, etc., in Intellectual Property]

Hino Motors appropriately utilizes intellectual property, including inventions, know-how, and brands. It treats intellectual property as an important management resource that is vital for passing on technology, maintaining innovation, and continuing to provide products and services that are useful for customers. Hino Motors' policy is to improve product and technical capabilities as well as overall quality, all of which are sources of its

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competitiveness, by taking initiatives such as, "Best-fit products incorporating safety and environmental technologies," "Total Support customized for each vehicle," and "New Activity areas."

In order to help build a global environment in which everyone can continue living into the future and sustainable human societies in which all people can continue to lead affluent lives, Hino Motors will strengthen systems for "selection and concentration." The aim is to ensure effective investment by identifying areas in which the Company will "focus on its own competitiveness" and areas in which the Company will "maximize value for customers through collaboration with partners."

In addition, in accordance with the intellectual property strategy based on its business and technology strategies, Hino Motors works to create and secure intellectual property in technologies related to CASE, carbon neutrality and other major development issues in its development division by practicing close collaboration between intellectual property, research and development and other relevant departments, to enhance product and corporate value and contribute to society.

[Principle 4.1 Roles and Responsibilities of the Board (1)] Supplementary Principle 4.1.1

The Board of Directors at Hino Motors decides on the implementation of important business as well as supervising the execution of duties by the directors. Hino Motors has also secured a system to ensure that the duties of the directors are executed efficiently. The Board of Directors and the directors lead and supervise the executive officers based on management policy while collaborating with them from a management perspective. At the same time, they delegate executive authority in each organization to Chief Officers and Operating Officers to carry out flexible decision making.

Matters relating to the judgements and decisions of the Board of Directors and matters related to the delegation of authority and the judgements and decisions of Chief Officers and Operating Officers are clearly stipulated in the Articles of Incorporation of the Company and the Regulations of the Board of Directors in addition to the Rules for Approval of Important Issues. Of these, the Regulations of the Board of Directors defines the matters to be resolved and reported at the Board of Directors as follows, and these matters are deliberated and resolved at the Board of Directors' meeting, which is composed of the President, Member of the Board of Directors who chairs the Board of Directors, and all the directors.

1. Matters provided for in Japan's Companies Act and other laws and regulations
2. matters provided for the Company's Articles of Incorporation
3. matters delegated by resolution of the general meeting of shareholders
4. other important matters of management

1. The state of execution of business and other matters provided for in Japan's Companies Act and other laws and regulations
2. Other matters deemed necessary by the Board of Directors

[Principle 4.9 Independence Standards and Qualification for Independent Directors]

Please refer to II. 1 Independent Directors/Audit & Supervisory Board Members in this document.

[Principle 4-10. Utilization of an optional framework] Supplementary Principle 4-10-1

Please refer to II. 1 Relationships of Directors in this document.

[Principle 4.11 Preconditions for Board and Audit & Supervisory Board Effectiveness] Supplementary Principle 4.11.1

Refer to the above Principle 3.1 Full Disclosure (4) Board policies and procedures in the appointment and dismissal of senior management and the nomination of directors and Audit & Supervisory Board member candidates.

Supplementary Principle 4.11.2

The concurrent service of officers at other listed companies is noted in the HINO Report (Business Report) and the Notice of Convocation for the General Meeting of Shareholders posted on the Company's corporate

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