Analysis and evaluation of effectiveness of the Board of Directors

A questionnaire for all Members of the Board of Directors and interviews with Outside Directors were conducted and the analysis and evaluation were conducted through multiple discussions in the Board of Directors, making reference to the results of the questionnaire and interviews.
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. These were carried out by a third party.

In the previous evaluation of effectiveness, the following points were recognized as having some challenges and problems and expected further improvement.

• Measures to examine the desired direction of the Board of Directors and further enhance and energize discussions
  With the aim of allocating more time for strategic discussions and discussions from a wider perspective, review the balance between decision-making functions, supervisory functions and advisory functions.
• Necessity to further enhance communications among Directors
  Aiming to eliminate the information gap between Inside Directors and Outside Directors, and facilitate smooth communications among Directors, the Company is conducting various initiatives by providing meeting opportunities outside of the Board of Directors meetings, including providing explanations and company information to Outside Directors in advance, holding meetings between the Outside Directors and management, and holding meetings for only the Outside Directors as meeting opportunities outside of the Board of Directors meetings. By arranging opportunities for such meetings, strives for more effective utilization of these initiatives.

Based on the above, we have mainly promoted the following initiatives in fiscal 2022.

• Examination of schemes to strike balance between the decision making function, oversight function and advisory function and to improve the effectiveness of the respective functions
• Based on the above examination, organizing the roles expected of Outside Directors and the positioning of meetings outside the Board of Directors (pre-meeting explanations, provision of company information, Board of Outside Directors Meetings, etc.)
• Measures to conduct more strategic discussions and discussions from a wider perspective
  • Improvement of operation of pre-meeting explanations
  • Review of agenda items and agenda criteria for Board of Directors meetings
• Strengthening the PDCA cycle to improve the operations of the Board of Directors
  • Setting a time for Directors to review Board of Directors meetings immediately after the meetings
  • Strengthening cooperation between the Chairperson and other inside directors and the Secretariat of the Board of Directors

With use of the analysis and reports of the questionnaire results and interview content conducted as described in (1) above, and discussions held by the Board of Directors in reference thereto, 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 number of Directors and their diversity, etc., composition of Board of Directors, as well as the selection of agenda items are generally appropriate.
• Under the appropriate leadership of the Chairperson, each member demonstrates his or her skills, experience, and knowledge, and an atmosphere that enables Directors to speak out freely and openly is being cultivated and broadminded and constructive discussions and exchanges of opinion are taking place.
• Outside Directors actively provide advice from their expert perspectives and ask effective questions. In addition, there is adequate communication with Inside Directors.
• With the support of the Secretariat of the Board of Directors, appropriate agenda items have been set, plans for deliberations have been formulated, and the information necessary for deliberations has been provided, leading to enhanced discussions.
• The Nomination Advisory Committee and Remuneration Advisory Committee are functioning effectively, and collaboration between committees and with the Board of Directors has been steadily strengthened.
• Substantial improvements have been made in points identified as challenges in the previous evaluation of effectiveness, with sufficient discussion on how to address them and monitoring of improvements.

On the other hand, it was recognized that mainly for the following points, there are some challenges and problems, and that further improvements are expected, and further efforts are needed in the future.

• Concretizing and clarifying a common understanding among the directors regarding the vision of the Company’s Board of Directors (balancing execution and oversight, etc.)
• Further development of discussions from a wider perspective and strategic discussions
  • Maturing the content of reports
  • Deepening Outside Directors’ knowledge and understanding of the Company
• Improving monitoring functions
  • Enhancing discussions from a risk perspective and promoting group-wide risk management
  • Enhancing discussions on the executive side (Management Committee, etc.)
• Enhancing discussions on individual themes
  • Ensuring diversity of core human resources
  • Operational condition of the internal control system

Based on the results of these evaluations and challenges to be considered, the Company will mainly take the following actions in fiscal 2023.

• Execution of discussions among directors 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
• Creating an environment for the timely and appropriate acquisition of company information by 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 Company will continue working to further improve the effectiveness of the Board of Directors.