Improving Our Internal Management System, Etc.

Improvement and Actions

Based on the initial version of the Improvement Plan and Status Report that it submitted to the Tokyo Stock Exchange on January 28, 2026, Nidec Corporation (“Nidec” or the “Company”) promotes the fundamental improvement of its governance and revamping of its corporate culture. The Company received the Third-Party Committee’s investigation report on February 27, 2026, takes seriously the identified facts, and is using the investigation report to advance its initial plan to implement improvement actions to form a new Nidec.

The investigation report by the Third-Party Committee is a summary of specific investigation results, including cause analysis and recommendations for recurrence prevention as of the issuance of the report. While the Third-Party Committee’s investigation continues, Nidec will disclose the final report upon receipt of it.

1. Identifying causes of issues and determination of facts (investigation by the Third-Party Committee)

As a basis to create effective recurrence prevention measures, the Company had the Third-Party Committee conduct an objective investigation.

  • Receiving the investigation report: The investigation report identified a number of accounting misconduct occurrences at many Nidec Group business bases and root causes of that misconduct (e.g., excessive pressure to achieve targets).
  • Examination of financial impact: In addition to the impact of identified matters, the Company continues to thoroughly examine derivative impacts including the downward revisions of past fiscal years’ profit/loss based on the results of the Third-Party Committee’s investigation, to disclose highly transparent information.
  • Reflecting recommendations into the improvement plan: Based on the recommendations from the investigation report, the Company will make necessary revisions to the improvement plan to enhance the effectiveness of its recurrence prevention measures.

2. Basic policy for improvement (revamping the management team and voluntary reform)

Under the leadership of the Nidec Corporate Reform Committee and with the revamping of its management team, the Nidec Group will launch a group-wide fundamental reform based on the following five pillars of business.

A) Our Response to the Investigation Report Revamping the management team:

Based on the results of the Third-Party Committee’s investigation, main executives, including Chairman, Executive Vice President, and CFO, resigned from office on March 03, 2026.

  • Returning the monthly base compensation: The Company’s President (CEO) will reduce 100% of his monthly base compensation until submission of the Written Confirmation of Internal Management System, which is scheduled to be submitted by the end of October 2026. Directors and other Executive Officers will reduce their monthly base compensation as well.
  • Seeking legal responsibility: Nidec will promptly establish a “Responsibility Investigation Committee” to investigate the legal responsibility regarding the execution of legal responsibility of current and former Directors and Executive Officers under Japan law.

B) Optimizing planning and performance management

  • Introducing a bottom-up planning system: Nidec will make a complete shift to a practicality-driven, front-line-based planning process to remove the excessive performance-achieving pressure that has been the hotbed of misconduct.
  • Revamping the assessment criteria: The Company will replace its policy of prioritizing short-term profits with an assessment system that incorporates mid- and long-term growth, compliance, and non-financial indexes.

C) Improving the accounting function and accounting policy

  • Securing independence of the accounting organization: Nidec will separate the accounting function from the business management functions (e.g., monitoring the execution of a management strategy) at Nidec Group affiliates, and consolidate authority over Nidec Group affiliates’ accounting function human resources to the accounting function of the Company’s head office, to enhance business departments’ checking function.
  • Firm unification of accounting policies: Group-wide, Nidec will abolish exception applications, which have contributed to the loss of substance in the operation of the Nidec Group’s accounting policy, and strictly adhere to the accounting rules, to eliminate arbitrary account processing.

D) Revamping the corporate culture

  • Reform by the Culture Transformation Lab: This Lab, launched on February 01, 2026, will convey the voices of front-line employees directly to management, and build a trustful relationship between employees and management (“Express your opinions, and you can make a change.”) to improve the current rigid and silencing corporate culture.

E) Fundamental improvement of governance and internal control

  • Diversifying the Board of Directors: To strengthen the Board of Directors’ supervisory function, the Company will review the composition of the Board of Directors and appoint individuals with corporate management and accounting experience to build a new system comprising both expertise and diversity.
  • Building corrective capability: Nidec will strengthen its internal audit and whistle-blowing systems to build an autonomous corrective capability to identify and correct misconducts in their early stage.

3. Upcoming schedule (plan)

Process (Planned) timing of execution
Establish the Culture Transformation Lab. Feb. 01, 2026 (executed)
Receive the Third-Party Committee’s investigation report. Feb. 27, 2026 (executed)
Renewal of management team and voluntary reforms From Mar. 03, 2026
Establishment of a Responsibility Investigation Committee. Promptly (by Mar. 31, 2026)
Receive the Third-Party Committee’s final investigation report.s TBD (To be disclosed upon receipt)
Submit the Written Confirmation of Internal Management System. Oct. 28, 2026

Improving Our Internal Management System, Etc.