Board Evaluation for Fiscal 2024

The Company utilizes the board evaluation in order for the Board and Directors (the Board) themselves to assess their current status and identify issues to be addressed, continuously making efforts to improve the functions and effectiveness of its the Board.

The Company has conducted board evaluation of the Board every fiscal year and addressed the issues identified for improvement through the board evaluation. In the subsequent board evaluation, the Company assesses the latest status and confirms the status of improvement from the previous fiscal year.

The Company utilizes the Board evaluation in order for the Board themselves to assess their current status and identify issues to be addressed, continuously making efforts to improve the functions and effectiveness of its the Board.

The Company determines the board evaluation items including the items to be evaluated by the Directors themselves in addition to the evaluation of the Board as a whole as the contents and items for evaluation relating to the effectiveness of the Board as a whole with reference to the principle and supplementary principle associated with the general principle 4, “Roles and Responsibilities of the Board” of Japan’s Corporate Governance Code.

The Company has conducted the Board evaluation every fiscal year and addressed the issues identified for improvement through the Board evaluation. In the subsequent Board evaluation, the Company assesses the latest status and confirms the status of improvement from the previous fiscal year.

The fiscal 2024 Board evaluation was conducted by a third-party organization. All Directors and Audit & Supervisory Board Members completed a questionnaire-based self-evaluation and sat for interviews conducted by the third-party organization. The analyses thereof and results of the evaluation were reported to the Company by the third-party organization. Moreover, this fiscal year, an Outside Director peer review was conducted.

Results of the Board evaluation for fiscal 2024

The third-party organization reported the result of the Board evaluation for fiscal 2024, which concluded that in terms of its roles, responsibilities, operation and composition, the Board of the Company, as well as the Nomination Committee and the Compensation Committee, which are advisory bodies to the Board, are functioning appropriately, and that the effectiveness of the Board as a whole has been ensured. Furthermore, based on our business environment and other factors, it has been evaluated that high-quality discussions are being held with clear points of focus through the formation of a common understanding of the roles and functions of the Board, appropriate selection of agenda items, facilitation of discussions by the Chairperson of the Board, and individual prior explanations of the Board proposals to outside directors.

In addition, it was confirmed that through the following efforts, improvements are being made to items (1) through (3) below, which were identified as items that need further improvement in the evaluation of the previous fiscal year.

• At the Board meeting, Director and Audit & Supervisory Board Member meetings for opinion exchanges and meetings for Directors and Audit & Supervisory Board Members, and other venues, the Board especially focused on the discussions regarding long-term strategies, medium-term management plan, globalization, sustainability, ESG management, and risk management.

• The Company discussed the optimal balance between oversight and execution for the Company and operated the Board based on revised optimizing matters for deliberation and reported matters of the Board.
• The Company has continued to set up opportunities for discussion, including occasions other than the Board meeting (e.g. Director and Audit & Supervisory Board Member meetings for opinion exchanges, meetings for Directors and Audit & Supervisory Board Members, meetings for Outside Directors and Outside Audit & Supervisory Board Members and briefing sessions for Outside Directors and Outside Audit & Supervisory Board Members).

• In the Board and Nomination Committee, the members discussed the optimal composition of members of the Board for the Company with the objective of enhancing corporate governance and further strengthening the oversight functions of the Board.
• The percentage of Outside Directors on the Board was increased to 50% by increasing the number of Outside Directors by one.
• The Board selected inside Director candidates who were women and non-Japanese.

Priority measures for fiscal 2025

The fiscal 2024 Board evaluation confirmed that progress with improvement issues in the evaluation for the previous fiscal year is being made, but there is a recognition that it is necessary to continue to make improvements. In order to further improve the functions and effectiveness of the Board, the Board will continue to strive to implement the following priority measures in fiscal 2025.

• (1) Enhancement of discussion on key matters for further strengthening the oversight functions of the Board (long-term strategy, medium-term management plans, globalization, etc.)
• (2) Enhancement in terms of operation for further strengthening of the decision-making functions and oversight functions of the Board
• (3) Further considerations for optimizing the Board composition

Going forward, the Company plans to conduct a board evaluation every fiscal year and conduct evaluations by a third-party organization on a regular basis.

Reference: Implementation method of the board evaluation

The Company determines the Board evaluation items including the items to be evaluated by the Directors themselves in addition to the evaluation of the Board as a whole as the contents and items for evaluation relating to the effectiveness of the Board as a whole with reference to the principle and supplementary principle associated with the general principle 4, “Roles and Responsibilities of the Board” of Japan’s Corporate Governance Code.

The major evaluation items in the questionnaire are as follows:

• (1) Roles and responsibilities of the Board
• (2) Operation of the Board
• (3) Composition of the Board
• (4) Functions of the Nomination Committee and the Compensation Committee
• (5) Issues and matters for improvement regarding effectiveness of the Board
• (6) Resolution of issues identified in the previous fiscal year’s Board evaluation, and improvement measures
• (7) Overall corporate governance

The fiscal 2024 Board evaluation was conducted by a third-party organization. All Directors and Audit & Supervisory Board Members completed a questionnaire and were interviewed, and the results were analyzed and evaluated. Transparency and objectivity were ensured by having the third-party organization conduct interviews. This fiscal year, an Outside Director peer review was conducted. All Directors and Audit & Supervisory Board Members and some corporate officers were interviewed regarding whether each of the five Outside Directors was fulfilling the role expected of them, and the results were provided to Outside Directors as feedback.

The following is the role of the third-party organization.

• To confirm and analyze the Board agendas for the past three years
• To provide advice on survey evaluation items and analyze and evaluate the responses
• To conduct, analyze, and evaluate individual interviews
• To conduct, analyze, and evaluate Outside Director peer reviews
• To provide advice on improvement measures for selected issues