Corporate Governance Organizational Structure

MOL Corporate Governance Organizational Structure

The Board of Directors of the Company is the highest management executive and supervisory organ, in which independent outside directors and non-executive inside directors take up 2/3 of its members and three out of five inside directors also serve as executive officers and which carries out effective supervisory functions and high-level strategy deliberation functions (The figures are as of June 25, 2024.). The Company also secures the audit function of the Audit & Supervisory Board, which is independent from the Board of Directors, and is a company with an Audit & Supervisory Board as prescribed in the Companies Act. We believe that, by ensuring effective supervisory functions and strategy deliberation functions by the Board of Directors and audit functions by the Audit & Supervisory Board, the Company has an institutional design that is appropriate for achieving legality, appropriateness, and efficiency of business operations, and will continue working on strengthening our governance.

In addition, the Board of Directors, by its resolution, has established a basic policy for developing a system to secure the properness of operations (internal control system). The MOL Group’s officers and employees, under the president serving as the chief executive officer for management, carry out business operations in accordance with the management policy set by the Board of Directors and the above-mentioned basic policy, while being subject to supervision by the Board of Directors and audits by the Audit & Supervisory Board. In FY2021, the Corporate Governance Council was established under the Board of Directors to serve as a forum for facilitating unrestricted discussion while incorporating outside knowledge with respect to the overall direction of the entire MOL corporate governance. We expect that the council will contribute to improving the effectiveness of the Board of Directors by providing reports and advice to the Board of Directors.

We also believe that the true worth of the MOL corporate governance structure will not be achieved through the existence of the framework and organization constructed as described above. Instead, the true worth of the MOL corporate governance structure will result from whether the framework is functioning properly and effectively.

Board of Directors

As the central decision-making body of the Company, the Board of Directors deliberates and makes decisions on the basic policies and the most important matters for the management of MOL Group. The Board of Directors consists of five (5) inside directors (as of June 25, 2024 including two (2) non-executive directors) and four (4) outside directors (as of June 25, 2024), who hold no interest in MOL. Outside directors play a major role in vitalizing the Board of Directors by checking the reasonableness of management decisions and of the status of business execution based on their respective experience and knowledge from an independent standpoint without an interest in the Company and expressing useful opinions on overall management. We have developed a supporting system for outside directors whereby agenda at the Board of Directors' meetings are explained in advance and inspections of domestic and overseas business offices, as well as the execution of important businesses, are reported to them each time. In addition, the Board of Directors also conducts "Deliberation on Corporate Strategy and Vision" sessions during which inside and outside directors and audit & supervisory board members exchange opinions freely on management strategies, the long-term vision and other important topics related to overall management. In addition to the "Deliberation on Corporate Strategy and Vision," the "Deliberation on Sustainability" will be newly held starting from FY2024 to strengthen the involvement of the Board of Directors in reviewing sustainability management policies and strategies. The Board of Directors meets regularly about 10 times a year at appropriate intervals to formulate management plans, decide on major investments, approve budgets for each fiscal year, approve quarterly financial results, and make decisions on strengthening corporate governance, among others.

FY2023 "Deliberation on Corporate Strategy and Vision": Main Agenda Items

	Agenda
April	Company-wide risk management deepening project Geopolitical risks
May	Progress monitoring of management plan
July	BLUE ACTION 2035 management plan monitoring
August	Company-wide risk management deepening project Decoupling (diversification) scenario
September	Progress of regional strategies
November	Review of BLUE ACTION 2035 1H
January	Super Megatrend Project 2024

Nomination Advisory Committee and Remuneration Advisory Committee

MOL has established the Nomination Advisory Committee and the Remuneration Advisory Committee as arbitrary organizations under the Board of Directors. For making the outside directors supervise the executive directors more effectively, both committees are chaired by outside directors and are composed of all four (4) outside directors, the Chairman and the President, so that the majority are outside directors.

The Nomination Advisory Committee deliberates on the election, appointment and dismissal of directors and executive officers, as well as the necessary criteria for their determination and proposals for the next President based on the succession plan (including reappointment and dismissal of the incumbent President), thereby increasing the objectivity and transparency of the processes. The Remuneration Advisory Committee appropriately reviews the remuneration plan for directors and executive officers, and determines appropriate levels of remuneration for directors, including incentives for long-term enhancement of corporate value from an objective standpoint, while putting a high priority on the "stakeholders' perspective." In addition to the committee members, the outside audit & supervisory board members may also attend meetings of the respective committees in order to gain an understanding of the deliberation process and provide their opinions. The Board of Directors respects the contents of reports from both Advisory Committees and uses them to pass necessary resolutions.

Main Agenda Items for Review by the Advisory Committees (FY2023)

Corporate Governance Council

The Corporate Governance Council has been established under the Board of Directors to serve as a forum for facilitating unrestricted discussion while incorporating outside knowledge with respect to the overall direction of the entire MOL corporate governance. By taking into account the perspectives from independent outside directors and independent outside audit & supervisory board members, the Council examines the status and direction of corporate governance of the entire MOL Group and verification of the effectiveness of the Board of Directors, and provides reports and advice to the Board of Directors.

Main Agenda Items for Review by the Corporate Governance Council (FY2023, held five times in total)

• Review of BLUE ACTION 2035 management plan
• Roles of Audit & Supervisory Board
• The Company's ESG ratings, and other matters

Succession Planning

The Company has drawn up President and CEO (hereinafter collectively referred to as "President" for the purpose of this section) succession plans consisting of the position's requirements, selection process, and plan for training successor candidates, with the aim of selecting a President who is appropriate for the Company. In FY2023, based on said plan, the Nomination Advisory Committee deliberated on the requirements for the next President and the measures to develop the next generation of executive candidates.

Evaluation of Effectiveness of Board of Directors

The Board of Directors annually conducts a questionnaire survey, including self-evaluation by each director and audit & supervisory board member, regarding the agenda and deliberations of the Board of Directors and its subordinate committees, the Nomination Advisory Committee, Remuneration Advisory Committee and Corporate Governance Council, the contribution of each member, and the effectiveness of their operations, etc. It then analyzes and evaluates the effectiveness of the Board of Directors as a whole, identifies issues and examines measures for improvement, and discloses a summary of the results. In FY2023, we received responses from all directors and audit & supervisory board members in the form of a self-questionnaire in February 2024, and in April 2024, the Corporate Governance Council evaluated and analyzed the effectiveness of the Board of Directors, identified issues, and formulated improvement measures. A summary of the results will be disclosed in the Corporate Governance Report.

Business Execution System

MOL introduced the executive officer system in 2000. Executive officers who are appointed by the Board of Directors and to whom authority is delegated by representative director work to increase the speed of management by operating business in accordance with the highest management policy determined by the Board of Directors. The Executive Committee (chaired by the President), which is the highest decision-making organ at the business execution level, functions as a deliberative organ to make decisions on basic management plans and important issues related to execution of business in accordance with the basic policy determined by the Board of Directors. MOL has established six (6) committees as subordinates under the Executive Committee. In addition to the members of each respective committee, officers and general managers related to each issue attend the committee meetings to examine and deliberate on various matters such as important matters submitted to the Executive Committee for discussion and matters pertinent to multiple divisions. In FY2023, we introduced the Chief Officer system to oversee the Group's corporate functions across the board and provide strong support for integrated and strategic initiatives. Each Chief Officer is delegated with a portion of the authorities and responsibilities of the President (CEO), and is tasked with directing and controlling not only the Company (headquarters), but also the entire MOL Group in specific cross-functional areas. Additionally, the three axes, which consist of corporate organizations which are overseen by Chief Officer, business organizations which are overseen by Director General of business headquarters, and regional organizations which are overseen by Regional Executive Officer, are cross-functional structure in which the three axes coordinate and cooperate with each other and appropriately keep each other in check. Through this structure, we aim to strike the right balance between the centralization and decentralization of authority in the management of our group, as well as promote more flexible business operations and improve group governance.

Auditing System

The Audit & Supervisory Board consists of two (2) full-time audit & supervisory board members and two (2) outside audit & supervisory board members who hold no interest in the Company. The audit & supervisory board members periodically hold Audit & Supervisory Board’s meetings to draw up audit plans and report and share audit results, etc., and prepare audit reports at the end of fiscal years. Each audit & supervisory board member attends meetings of the Board of Directors and other important meetings to audit the deliberation and decisionmaking processes. They also audit the development and operational status of internal control systems by conducting interviews with directors, executive officers, and employees, as well as through researches of MOL Group companies. KPMG AZSA LLC, the accounting auditor, conducts accounting audits. In addition to the above, the Corporate Audit Division, which receives directions from the President and is independent from any other management body, conducts internal audits including internal audits on MOL Group companies. Three entities—namely, the Audit & Supervisory Board, the accounting auditor, and the Corporate Audit Division— take initiatives to improve the effectiveness of audits through close coordination with each other.

Compliance System

The Company is aware of the crucial role that compliance plays in living up to its broad corporate social responsibilities, and that compliance with laws and regulations is at the core of this role.
We have established the Compliance Committee chaired by the Chief Operating Officer, who will serve as the Representative Director/Executive Vice President, and vice-chaired by the Chief Compliance & Legal Officer and formulated the Compliance Policy to assure strict adherence to rules and regulations. The general manager, unit manager, branch manager, sales manager, or corporate function manager, and for "group companies belonging to the head office organization," the general manager of the sales division in charge or the director in charge are appointed as Compliance Officers. In this role, they are responsible for enforcing compliance regulations and are also required to report to the Compliance Committee in the event of a compliance breach. The Corporate Audit Division, a body that operates independently of the Company's divisions, provides an Internal Compliance Advisory Desk. The Corporate Audit Division undertakes investigations of breaches and reports the results to the Compliance Committee. In addition to the Internal Compliance Advisory Desk, we have established an External Compliance Advisory Desk, operation of which is entrusted to an outside attorney. The Desk provides anonymous consultation services.

For details, please visit "Compliance".