Wacom : Corporate Governance Report 2021/12/24

[Provisional Translation Only]

This English translation of the original Japanese document is provided solely for information purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

Corporate Governance Report

Last Update: December 24, 2021

Wacom Co., Ltd.

Nobutaka Ide, President & CEO

Contact: Yoichi Machida, CFO

Tel. [phone]

Securities Code: 6727

https://www.wacom.com/en-jp

The corporate governance of Wacom Co., Ltd. ("the Company") is described below.

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

Other Basic Information

1. Basic Views

The Company believes that it is a foundation for sustainable growth of corporate value, to fulfill social responsibilities as well as its compliance to legislations as a listed company conducting business globally, and to enhance transparency of management and reliabilities of disclosure, which will bring benefit to its shareholders, customers, and other stakeholders. Therefore, the Company believes that its most important responsibilities of every business group are to fully commit to compliance that can realize vision as its basic policy for corporate activities, and to establish and operate an effective internal control system that should continuously enhance corporate governance.

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

The Company complies with the principles of the Japan's Corporate Governance Code revised in June 2021, which includes the principles for companies listed on the Prime Market.

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

(Principle 1-4Cross-Shareholdings)

The Company may engage in cross-shareholdings if it finds positive synergy effect from the viewpoint of business strategies and economic rationale when it mainly looks into possibility of meaningful opportunities to realize for its future businesses. However, the Company shall not hold shares only for the purpose of short-term dividends nor capital gains. If the Company engages in cross-shareholdings, it shall regularly check business relation with the issuer and proceed to examination on sale of shares held in case it concludes that the cross-shareholding does not contribute to enhancement of the business relation. Regarding the exercise of voting rights pertaining to cross-shareholdings, the Company shall take into account whether each proposal will

- 1 -

contribute to improve corporate value of the Company, not solely depend on the business relation with the issuer.

(Supplementary Principle 1-4①② Cross-Shareholdings)

When the shareholder engaged in cross-shareholding with the Company conveys its intention to sell the shares issued by the Company, it shall not enforce holding the shares by inducing to change business conditions against the shareholder. The Company shall regularly check business relation with the shareholder and ensure that no unfair trade attributable to the cross-shareholding has been conducted.

(Principle 1-7 Related Party Transactions)

Regarding transactions with related parties conducted by members of the Board of Directors, the Board of Directors shall make resolution on whether to approve the transactions through careful deliberation in accordance with the Japanese Companies Act and other legislations. The Company has established a structure to properly monitor the transactions approved by the Board of Directors, enforcing report to the Board of Directors on the member engaged in the transactions. For the resolution, the Board of Directors shall make a careful decision not to be against the common interests of the shareholders in light of duty of diligence and loyalty.

(Supplementary Principle 2-3① Cooperation with Stakeholders)

In the medium-term business direction "Wacom Chapter 3" announced in May 2021, the Company established the vision of "Life-long Ink" and five key strategic initiatives, to continue to provide meaningful experiences for people and society over the long-term, and to contribute to making this world more humane through its technology. In the direction, it also clearly sets out to contribute to the development of sustainable society through its technology, aims for meaningful and muti- dimensional growth in addition to financial growth, and cooperate deeply with community. The Company established its "Quality and Environmental Policy", "Wacom Code of Ethics and Business Conduct" to make judgements and actions ethically and legally in its business, and "Wacom Suppliers Code of Conduct", and asks its suppliers to comply with these policy and conducts.

(Supplementary Principle 2-4① Ensuring Diversity)

As part of the Company's diversity and inclusion measures, based on its basic policy of building close relationships with individuals, it values interactions between team members, respecting their individuality, and promoting measures that allow them to make autonomous career choices. The Company places great importance on dialogue with each person in its team.

1. Recruiting human resources without regard to gender, nationality, age, or other personal attributes On a consolidated basis, the Company has about 1,200 team members working around the world, 60% of whom are employed locally at its Group companies outside Japan, working under local leadership amid the cultural and business characteristics of each country. More than half of the people with business execution responsibilities are non-Japanese team members. In key management positions, the Company places the highest priority on enthusiastic engagement and ability to realize our mission, regardless of gender, age, or nationality.
2. Creating a flat organization

Under the Company's policy of maintaining a flat organization, it aims to build an environment where each team member can demonstrate their responsibility by focusing on their own initiatives, so that work can be undertaken as the result of a relationship between professionals, rather than being defined by whether someone is a manager or a non-manager.

3. Developing human resources through real experience and practice

The Company is committed to considering the potential of each individual team member and supporting their growth through experience and practice so that each person can make the most of their opportunities. The Company nurtures the next generation of leaders by giving them actual experience in decision-making with the management team.

4. Creating an environment where people of all genders can be active in both work and family life With the increase in remote working during the pandemic, many of the Company's team members are now able to spend more time with their families. The Company actively supports new

• 2 -

approaches to where people live and work, the use of childcare leave, and other ways to make the most of telecommuting. As of 2021, each rate of female team members who took childcare leave and returned to work is around 90%, and the number of male team members taking childcare leave is also increasing.

5. Hiring people mid-career

More than 90% of the Company's annual new hires are mid-career hires. The Company selects people based on merit, motivation, and performance, regardless of nationality, gender, or age, and there is no difference between new graduates and mid-career hires in terms of assignment after joining the company.

The Company will continue to pursue diversity and inclusion through dialogue with its team members wherever they are in the world.

(Principle 2-6 Roles of Corporate Pension Funds as Asset Owners) It is not applicable due to no corporate pension plan in the Company.

(Principle 3-1 Full Disclosure)

(i)Corporate vision, business strategy, and business plan

The Company's corporate vision, business strategies, and business plan are stated in the timely disclosure information, in which "Wacom Chapter 3: Medium-Term Business Direction" (from FY 3/2022 to FY 3/2025)" announced on May 12, 2021. Explanatory presentation material of Wacom Chapter 3 is also referable.

Timely disclosure information on May 12, 2021 https://contents.xj- storage.jp/xcontents/AS95168/2aa8e6cc/71ba/4e3c/9052/30198d980fa1/20210512151250365s.p df

Medium-Term Business Direction: Wacom Chapter 3 (Explanatory material) https://contents.xj- storage.jp/xcontents/AS95168/dde1eb3a/5c4c/43f0/a5d1/37736b744880/20210512151156271s.p df

(ii)Basic view and basic polity of corporate governance based on each principle of the concerned code (draft)

The Company believes that it is a foundation for sustainable growth of corporate value, to fulfill social responsibilities as well as its compliance to legislations as a listed company conducting business globally, and to enhance transparency of management and reliabilities of disclosure, which will bring benefit to its shareholders, customers, and other stakeholders. Therefore, the Company believes that its most important responsibilities of every business group are to fully commit to compliance that can realize vision as its basic policy for corporate activities, and to establish and operate an effective internal control system that should continuously enhance corporate governance.

1. The Board of Directors' policies and procedures in determining the compensation for the senior management and directors

The Compensation Committee (which is an optional committee and composed of three or more directors of which more than half are outside directors) shall prepare a draft of method for calculating individual amount of compensation for directors (excluding Audit Committee member) with reference to the surveys on director's compensation of the other companies, which are the same size as the Company, and the survey results by an external research organization, and propose it to the Board of Directors,. The Board of Directors shall deliberate and resolve the proposal by the Compensation Committee, and delegate to the President & representative director of the Board of Directors and chairperson of the Compensation Committee to decide the individual amount of compensation for directors (excluding Audit Committee member).

- 3 -

The amount of compensation for each director of the Company is composed of fixed salary, which is paid monthly as basic compensation to all directors, and short-term incentives and long-term incentives, which is paid to directors (excluding outside directors). The total amount of compensation for directors consists of 15%- 20% of long-term incentives and 80%-85% of the following allocation, 60%-75% of fixed salary, and 25%-40% of short-term incentives, of which composition ratio is defined by each position.

Short-term incentives are performance-linked compensation (bonuses) consisting of company performance and individual performance and are paid once a year at a fixed timing. The company performance portion is calculated based on the performance targets for a single year, and the individual performance portion is calculated based on the individual performance evaluation. The both portions are paid between 0%-200% depend on the achievement rate.

Long-term incentives for directors are designed to continuously improve our corporate value and share its direction with shareholders. They are composed of performance-linked compensation and stock price-linked compensation, and the decision of whether or not to implement the program shall be made by the Board of Directors every year. The proportion of each compensation out of total long-term incentives shall be determined by the Board of Directors upon the proposal of the Compensation Committee. As for the performance-linked compensation, the Company shall set the performance evaluation period consisting of multiple fiscal years and its performance targets for the period. After the end of the period, the Company shall pay the compensation based on the payout rate linked to the extent to which the performance targets are achieved. The performance targets are resolved by the Board of Directors following the proposal of the Compensation Committee.

As for the stock price-linked compensation, in the form of a restricted stock compensation plan, the Company shall grant monetary compensation claims to the eligible directors for the allotment of restricted stock, each fiscal year in principle, upon a resolution by the Board of Directors of the Company, and by having them make contribution in kind using all the monetary compensation claims as contributed assets, shall issue or dispose of its shares of common stock to the eligible directors and release the transfer restriction when the directors retire. The specific timing of payments and allocation to each eligible director shall be determined by President & representative director of the Board of Directors and the chairperson of the Compensation Committee, which are delegated by the Board of Directors.

1. The Board of Directors' policies and procedures in appointment and dismissal of the senior management, and in nominating candidate of director

Regarding representative director and directors of the Board of Directors, and executive managers, the Nominating Committee which is composed of six directors including five outside directors and headed by an outside director set the criteria for selecting candidate and shall make a proposal to the Board of Directors for nomination. To select candidate, the Board of Directors comprehensively takes into main account understanding and sympathy for corporate vision and strategies, leadership and its qualification, ability of business execution and its expertise, and job experience in listed company or global company.

If representative director, a director, or an executive manager no longer satisfies the criteria for candidate selection or violate criteria for dismissal of representative director set by the Nominating Committee, the Committee shall make a proposal to the Board of Directors for dismissal of the said person.

1. Explanation on the individual appointment, dismissal, and nomination, when the Board of Directors make appointment or dismissal of senior management, and appointment of candidate for director, based on (iv).

When the Board of Directors make appointment of candidate for director or proposal for dismissal of director in office, the Company shall make explanation of the said person in the Notice of the Ordinary Shareholders' Meeting. Concerning important executive managers.

"Notice of the 38th Ordinary Shareholders' Meeting":

- 4 -

https://contents.xj- storage.jp/xcontents/AS95168/6f624988/cd61/4ead/be41/9cd9bcac4b49/20210602082501035s.p df

(Supplementary Principle 3-1③ Appropriate Disclosure and Ensuring Transparency)

In the medium-term business direction "Wacom Chapter 3" announced in May 2021, the Company established the vision of "Life-long Ink" and five key strategic initiatives, to continue to provide meaningful experiences for people and society over the long-term, and to contribute to making this world more humane through its technology. Based on the direction, the Company shall aim to contribute to the realization of the "multi-dimensional growth" of the individual communities and people by incorporating new perspectives and ideas that sustainably support "art, technology, and learning" from a medium- to long-term and social perspective. In addition, it shall strive to provide wide range of information about sustainable initiatives and investment in human capital and intellectual property, such as announcing specific activities as well as implementation examples at its community event "Connected Ink 2021", etc.

Regarding addressing climate change, the Company participates in JCI (the Japan Climate Initiative), sets and announces a mid-term target on CO2 emissions to be achieved in FY2030. Regarding TCFD (Task Force on Climate-related Financial Disclosures) or equivalent framework, the Board of Directors discusses strategies for climate changes from governance perspective, and ISO secretariat reports environmental performance to Group CEO for evaluation of risks and opportunities. The Company shall aim to enhance quality and quantity of disclosure based on this principle.

(Supplementary Principle 4-1① Roles and Responsibilities of the Board(1))

While the Board of Directors makes resolutions in accordance with the Japanese Companies Act, etc., it also conducts efficient management by delegating its authority of business execution to group CEO (Chief Executive Officer) and responsible person of each department, based on the rules of the Board of Directors and the basic policy of internal controls, etc. Regarding the scope of authority, the Company controls business execution by clarifying the authority in the Delegation of Authority which it reviews regularly. (For the internal control system, please refer "Reference material: Schematic of Internal Control System and Risk Management System" in this "Corporate Governance Report").

(Supplementary Principle 4-1③ Roles and Responsibilities of the Board(1))

In April 2017, the Board of Directors established the Nominating Committee, which set the selection criteria for the qualifications and figures of representative director, selected a candidate to succeed representative director upon the criteria, and proposed to the Board of Directors. The Board of Directors shall decide a candidate of succeeding representative director through thorough discussion upon proposal by the Nominating Committee.

The Company continues examination on establishing premeditated successor training for the future.

(Supplementary Principle 4-2① Roles and Responsibilities of the Board(2))

In November 2018, the Company established the Compensation Committee of which an outside director takes office as a chairperson. The Compensation Committee took initiatives to review the compensation of directors of the Company and designed the compensation system. With the resolution of the 37th Ordinary Shareholders' Meeting held on June 26, 2020, the Company introduced the restricted stock compensation plan.

(Supplementary Principle 4-2② Responsibilities of the Directors)

The Company recognizes that addressing issues concerning sustainability is an important element in its management strategies. Regarding issues related to sustainability, the Company starts ESG (Environment, Social, Governance) task force led by its President & CEO and discusses goals, measures, and information disclosure, etc. In addition, the secretariat of ISO9001 and ISO14001

- 5 -