Analysis and evaluation of effectiveness of the Board of Directors

In the fiscal 2022 evaluation of effectiveness, the following points were recognized as having some challenges.

• Concretizing and clarifying a common understanding among the directors regarding the vision of the Board of Directors and the boundary between execution and supervision
• Further development of discussions from a wider perspective and strategic discussions
  • Maturing the content of reports
  • Timely and appropriate acquisition of Company information by Outside Directors
• Further improvement of monitoring functions
  • Discussions from a risk perspective
  • Improving the effectiveness of the Management Committee
• Enhancing discussions on individual themes
  • Ensuring diversity of core human resources
  • Internal control system

Based on the above, we have mainly promoted the following initiatives in fiscal 2023.

• Execution of in-company discussions regarding the ideal form of the Board of Directors
• Further maturing the management of pre-meeting explanations, including the realization of the identification of issues to be discussed at the Board of Directors meetings
• Enhancement of the provision of Company information to Outside Directors
• Further enhancing the Management Committee, etc. and strengthening cooperation with the Board of Directors
• Strengthening cooperation between organizations in charge of agenda items and the Secretariat of the Board of Directors, particularly with regard to themes requiring enhanced discussions

The fiscal 2023 evaluation of effectiveness was conducted using the following process.

• A questionnaire for all Members of the Board of Directors*
• Individual interviews of Outside Directors*
• Individual interviews of Inside Directors
• In-company analysis and discussion
• Discussions among the directors

• *The questionnaire and individual interviews of Outside Directors were carried out by a third party.

Through conducting the questionnaire and interviews, various confirmations were carried out regarding the composition of the Board of Directors, agenda items submitted to meetings, status of deliberation, participation stance of the Directors, operation of each committee including voluntary advisory committee, and other matters regarding the operation of the Board of Directors.

Results of the process of the analysis and evaluation as described above, the Board of Directors of the Company has been assessed to be functioning with sufficient overall effectiveness in consideration of its duties and obligations.

• The composition of the Board of Directors including the number of Directors, their diversity, and the ratio of Inside to Outside Directors are generally appropriate.
• The selection of agenda items, leadership by the Chairperson, and operation of the Secretariat are appropriate.
• Discussions are steadily becoming more strategic and from a wider perspective.
• In general, Outside Directors effectively provide advice and pose questions, and Inside Directors take the advice statements and questions of Outside Directors with sincerity and fully take them into consideration when making decisions and determinations.
• The Nomination Advisory Committee and Remuneration Advisory Committee are functioning effectively, and there has been adequate collaboration between these committees and with the Board of Directors.
• Steady progress is being made to address the challenges recognized in the previous evaluation of effectiveness

On the other hand, the following points were expected further improvement.

• (1) Consolidating opinions and knowledge from inside and outside the Company and deepening deliberations that contribute even more to enhancing corporate value
• (2) Supporting bold risk-taking by executives and further reinforcing structures including the Board of Directors

Based on the results of these evaluations, the Company will mainly take the following actions in fiscal 2024.

Regarding issue (1) :

• Engage in healthy debate that takes into consideration more diverse perspectives and opinions from inside and outside the Company
• Further enhance the quality of explanations by reinforcing collaboration between the department in charge of explanation and the Secretariat to identify fundamental discussion topics and secure adequate time for deliberation
• Provide additional opportunities for Outside Directors to learn about initiatives relating to execution

Regarding issues (1) and (2) :

• Conduct ongoing discussions within the Directors concerning the optimal status of the Board of Directors and individual organizations that embodies the spirit of Murata

The Company will continue working to further improve the effectiveness of the Board of Directors.